Bikki Raveendra Babu, Member - (1.) By this petition under Sections 241, 242 and 245 read with Sections 100, 101, 102, 115 and 169 of the Companies Act, 2013, the petitioner is challenging his removal as Director of the second respondent company without following the procedure laid down under the provisions of the Companies Act, 2013.
(2.) The petitioner was a partner of a partnership firm by the name Arihant Color Chem. On 26.07.2013, the third respondent joined as a partner in the partnership firm, Arihant Color Chem, by executing a new partnership deed. The object of admitting the third respondent into the partnership firm was to stabilize the business of the partnership firm, which was, by then, facing financial difficulties. The third respondent showed interest to take over the partnership business and formed a company by name Arihant Dye Stuff Private Limited (2nd respondent) on 16.09.2013. On 1st February, 2014, a memorandum of understanding was executed between the petitioner and other partners of M/s. Arihant Color Chem. The main purpose of the said MOU was to convert the partnership business into a private limited company. Subsequently, on 01.04.2015, shareholding pattern was decided among the partners and Shareholders' Agreement was entered into. The petitioner was taken as a shareholder of the second respondent company and he was allotted 15% of shares of the second respondent company. The petitioner and his partner handed over the possession, control and management of the erstwhile partnership firm to the third respondent out of confidence. The assets of the partnership firm, at the time of handing over According to the petitioner, he was working sincerely for the business of the second respondent company. Respondents No. 3 to 5, by making false allegations against the petitioner, threw him out from the company with a view to snatch the business of the petitioner. It is the case of the petitioner that he was busy in arranging the marriage of his friend's son, which was scheduled on 14th February, 2017. In the meantime, to the surprise of the petitioner, he received a notice, sent on 30th January, 2017, from the second respondent company stating that an Extraordinary General Meeting of the company was scheduled to be held on 11.02.2017 for passing a resolution to remove the petitioner as Director of the company by invoking Section 169 of the Companies Act, 2013. The said notice was received by the petitioner on 31.01.2017. In the said notice, the petitioner was asked to make representation against the proposed resolution for his removal within 9 days. The allegation made against the petitioner was that he had given instruction to one of the creditor banks for the change of signature of the signing authority and produced resolution by forging the signature of the third respondent. According to the petitioner, the said allegation was a baseless allegation. In fact, it was only the third respondent, who was authorised to sign and administer all financial affairs of the company as per the Shareholders' Agreement. No bank will accede to the request of the petitioner for change of signature for any transaction. The petitioner gave a detailed reply to the members of the company. The petitioner was required to read out the said explanation in the EOGM. The petitioner requested to postpone EOGM since the marriage function of his friend's son was scheduled on 14th February, 2017. The petitioner also requested the respondent to give opportunity of personal hearing. But to the shock and surprise of the petitioner on 15th February 2017 the petitioner indicating to the petitioner that he should not enter into the property, The petitioner made a representation to the first respondent on 23.02.2017 against his illegal removal, but the first respondent did not respond. The resolution removing the petitioner as Director of the second respondent company was passed without following the procedural law and in violation of the principles of natural justice. The petitioner stated that he is having 15% share capital and he has got a right of voting in the EOGM, which was curtailed. According to the petitioner, EOGM can be called by giving not less than 21 days' advance notice or through electronic mode. But, in this case, by giving less than 21 days' notice, EOGM was called for. According to the petitioner, the second respondent company was required to take consent of 95% of the members of the company for calling EOGM by giving notice shorter than 21 days and the petitioner was denied the opportunity of personal hearing. The removal of the petitioner as Director, according to the petitioner, is against the Shareholders' Agreement and the MOU dated 1st February, 2014. As per the Shareholders' Agreement, the party which appointed the Director can only remove him and not otherwise. It is also stated in the said Shareholders' Agreement that when there is a conflict between the terms of the Agreement and the Articles of Association, the terms of the Agreement would prevail.
(3.) Respondents No. 2 to 5 filed reply stating that the petitioner, in connivance with Shri Girishbhai Amratbhai Patel, forged the signature of the third respondent by misusing the letterhead of the second respondent company and furnished a forged resolution to The Kalupur Commercial Co-operative Bank Ltd. and got changed the instructions for signature on forged signature of respondent No. 3, and correspondence exchanged by respondents Nos. 2 and 3 with The Kalupur Commercial Co-operative Bank Ltd. According to the respondent, the above said documents go to show that the petitioner committed fraud with the company. Thereafter, the third respondent came to know that the officers of The Kalupur Commercial Co-operative Bank Ltd. are also hand in glove with the petitioner and Shri Girishbhai Amratbhai Patel. In spite of written requests by the respondents, the officers of The Kalupur Commercial Co-operative Bank Ltd. did not transfer the amount standing to the credit of the second respondent company to the bank account of the company with HDFC Bank. Therefore, according to the respondent, when the company lost confidence in the petitioner and Shri Girishbhai Amratbhai Patel, the respondents resorted to the provisions of the Companies Act to remove the petitioner and Shri Girishbhai Amratbhai Patel as Directors to protect the interest of the company, its Directors and shareholders. Article 32 of the Articles of Association of the second respondent company provides only for notice of seven days. Article 33 of the Articles of Association of the second respondent company says that the quorum for the General Meeting is only two members. The company has given due notice of seven days as per the provisions of the Act. The notice for EOGM was received by the petitioner on 31.1.2017 and the meeting was convened on 11.2.2017. Respondents No. 3, 4 and 5 gave requisition on 20th January, 2017 for calling Special General Meeting under Section 169(2) read with Section 115 of the Companies Act, 2013 for removal of the petitioner and Shri Girishbhai Amratbhai Patel. The petitioner, having received the notice, gave written submissions, but did not choose to remain present in person. The company considered the representation of the petitioner and thereafter removed the petitioner and Shri.;