ASIA STONE S L Vs. B AND G IMPEX P LTD

JUDGEMENT

(1.) THE present company application is filed under Section 186(1) of the Companies Act, 1956 ("the Act"), before this Bench seeking various reliefs as prayed in paragraph 8 of the application.

(2.) Shri A. Narayanan, learned counsel for the applicant-company which is registered under the laws of Spain, submitted that M/s. B & G Impex P. Ltd., the first respondent-company herein ("the company") has been incorporated as a private company limited by shares on July 14, 2006, in the State of Karnataka with an authorised share capital of Rs. 10 lakhs divided into 1,00,000 equity shares of Rs. 10 each. Subsequently, at the extraordinary general meeting held on December 21, 2006, the authorised capital was enhanced to Rs. 2.97 crores divided into 29,70,000 equity shares of Rs. 10 each. The applicant-company is a shareholder and holds 99.67 per cent. of the paid-up capital of the company and also having an investment of more than Rs. 2.95 crores. He further submitted that the first board meeting of the company was held on July 17, 2006 and in the said meeting Shri V. Satyanarayana was appointed as the additional director of the company. Shri Davide Barbera, i.e., the second respondent herein has been appointed as the additional director at the board meeting held on July 24, 2006. Ms. Heide Moyano Stradmann, i.e., the third respondent herein was appointed as the additional director at the fourth board meeting held on August 21, 2006. The first directors, i.e., respondents Nos. 4 and 5 and the additional director Mr. V. Satyanarayana have resigned from the office of directors and the said resignations were accepted at the sixth board meeting held on November 24, 2006. The company was managed by the board consisting of respondents Nos. 2 and 3 herein. He submitted that it came to the knowledge of the applicant-company that the respondent-company purportedly held the first annual general meeting on July 25, 2007, without giving any notice to the applicant and the applicant requested the board of directors by a letter dated December 18, 2007 (enclosed as annexure 8 to the application) to furnish a copy of the notice of the first annual general meeting along with the copies of the audited statement, auditors' report and directors' report. Instead of furnishing the documents sought for by the applicant-company, the company replied (annexure A9) that the applicant can have an inspection of the records. In response to the said letter, the applicant appointed one Shri Rim Zhim Gupta, company secretary and/or Shri Pramod Sunku, advocate as their authorised representatives to visit the registered office of the company. However, the third respondent requested the applicant to produce the board resolution authorising the above said persons for the purpose of inspection as well as obtaining the copies of the records. The applicant sent the same by e-mail on the same day. Subsequently, the third respondent fixed the date on April 21, 2008, at 10.30 a.m., for inspection of records. The applicant requested the third respondent to fix the date on February 7, 2008, for inspection of records, but no confirmation was received from the third respondent for the said date. The authorised representative of the applicant visited the registered office of the company on February 18, 2008, but it was found that the office was closed and no responsible person to answer them. Thereafter, the applicant made all efforts for inspection and obtaining the records but all went in vain. The authorised representative has made out a report to the applicant on the entire event which took place when they visited the registered office of the company. The applicant apprehends that all is not well with the company and the applicant has been kept in total dark regarding the affairs of the company. The applicant was served with a copy of the plaint along with enclosures from where it could get a copy of the notice dated June 25, 2007 (enclosed as annexure 22 to the application) convening the first annual general meeting which was held on July 25, 2007. The gist of the agenda supposedly transacted at the said annual general meeting are (a) adoption of audited balance-sheet, profit and loss account, directors' and auditors' report thereon ; and (b) appointment of auditor and fixing their remuneration. From the notice it is evident that the company had not appointed any director at the said annual general meeting, when the two directors are only members of the board and could hold office up to the date of annual general meeting to be held on July 25, 2007, in terms of Section 260 of the Act. The company as on date has no directors to look after its interest or carrying on its business effectively and to get control over the business of the company. The company is now boardless as well as directorless and the applicant cannot invoke the provisions of Section 169 of the Act dealing with calling of extraordinary general meeting on requisition, for the simple reason that there is no board to act. Respondents Nos. 4 and 5, who are the members of the company not evincing any interest in the appointment of directors in the company. He further submitted that the applicant undertook an inspection of the documents filed with the Registrar of Companies through the MCA portal, which revealed that the company had not taken any steps to file the annual returns and annual accounts along with the directors' and auditors' report for the year ending March 31, 2007 and the due date for filing the same with normal filing fee has already expired. He also submitted that the applicant in paragraph 6.21 of the application specifically pleaded that the board does not exist and there is a dire need to induct two directors on the board for steering back the company's affairs on right track. The applicant fears of any action by the Registrar of Companies, Karnataka, for statutory violations and non-performing of statutory obligations, if any, gravely prejudice the interest of the applicant and bring in severe financial loss. The applicant is also concerned about statutory violations under various laws committed by the respondent-company. In these circumstances, the applicant invoking the provisions of Section 186 of the Act for passing appropriate orders/directions in the interest of justice and prayed that the Company Law Board may appoint an independent chairman and also give directions in relation to calling/holding and conducting the extraordinary general meeting of the company for the purpose of appointing two individuals to the board of directors of the company. He further prayed that a single member present in person or proxy shall be deemed to constitute the valid quorum for the purpose of extraordinary general meeting.

(3.) MS. V. Alamelu, learned counsel for the fifth respondent has filed counter statement while denying the allegations made in the application, submitted that the company was incorporated with just two shareholders, i.e., respondents Nos. 4 and 5 in the year 2006, holding 5,000 shares each. As the applicant is not interested in the company, the Company Law Board need not entertain the same. The applicant being the majority shareholder was well within the power to call for a meeting and the fifth respondent could have attended the same. Further, the fifth respondent is willing to attend the meeting if so convened by the applicant and further submitted that respondents Nos. 2 and 3 herein continued to be the directors of the company and the applicant is having knowledge of the same. In view of the fact and circumstances of the case she submitted that the application is devoid of merits and liable to be dismissed.