Aapico Hitech Public Company Limited vs A B T Limited

[Arising out of Order dated 29th March, 2022 passed by the National Company Law Tribunal, Division Bench-II, Chennai in Company Petition No. 25/CHE/2022]

IN THE MATTER OF: 1. Aapico Hitecy Public Company Limited 99 Mool Hitech Industrial Estate, Tambol Ban Lane, Amphur Bang, Pa-In, Ayutthaya 13160, Thialand ...Appellant No.1

2. Aapico Investment Pte. Ltd. 745 Toa Payoh Lor 5#01-07, The Actuary, 319455 Singapore ...Appellant No.2

3. Sakthi Global Auto Holdings Limited 100, New Bridge Street London EC4V 6JA, United Kingdom ...Appellant No.3

Versus

1. ABT Limited 4th Floor, Sakthi Sugars Bldg., No. 180, Race Course Road, Coimbatore - 641018 ...Respondent No.1

2. Sakthi Auto Component Ltd., 180 Race Course Road, Coimbatore, Tamil Nadu - 641018 ...Respondent No.2

3. Sakthi Sugars Limited Sakthinagar - 636315 Bhavani Taluk, Erode District, Tamil Nadu, India ...Respondent No.3

4. Orlandofin BV Prins Bernhardplein 200, 1 097JB Amsterdam, the Netherlands ...Respondent No.4

5. Sakthi Services S.A. Rua Jorge Ferreirinha, 679 4470 314 Maia, Portugal ...Respondent No.5

Company Appeal (AT) (CH) No. 27 of 2022 1 of 38 6. Sakthi Portugal S.A. Rua Jorge Ferreirinha, 679 4470 314 Maia, Portugal ...Respondent No.6

7. Sakthi Portugal SP 21 Rua Jorge Perreirinha, Vermoim, Maia, Portugal - 3750 860 ...Respondent No.7

8. Yeap Swee Chuan 53/259, Village No.1, Ban Klang, Mueang Pathum Thani, Pathum Thani, 12000 Thailand ...Respondent No.8

Present: For Appellants : Mr. Neeraj Kishan Kaul, Sr. Advocate for Appellant No.3 Mr. J. Sivanandaraaj, Advocate for Appellant No.1 Mr. M. S. Krishnan, Sr. Advocate for Appellant No.2

For Respondents : Mr. R. Vidhya Shankar, Advocate for Respondent No.1 M/s. Ramani & Shankar (Caveator)

(Virtual Mode)

KANTHI NARAHARI, MEMBER (TECHNICAL)

Preamble:

The Present Appeal is filed against the Order dated 29.03.2022 passed

by the National Company Law Tribunal, Division Bench-II, Chennai in

Company Petition No. 25/CHE/2022 whereby the NCLT restrained the

Appellants from acting upon or giving effect to any resolution passed at the

EGM held on 25.01.2022 till the disposal of the Company Petition.

Brief Facts:

Appellant's Submissions:

Company Appeal (AT) (CH) No. 27 of 2022 2 of 38

2. The Learned Senior Counsel appeared for the Appellants submitted that

the resolutions passed by the company i.e. SACL the 2nd Respondent herein

(Sakthi Auto Component Limited) at a validly conducted EGM by the

requisitionists i.e. the 3rd Appellant herein (Sakthi Global Auto Holdings

Limited) SGAHL who is a 77.04% shareholder of SACL. The impugned order

dated 29.03.2022 was passed in a petition that was filed in abuse of legal

process without effectively hearing the Appellants and without even giving

them an opportunity to file a counter to the Company Petition.

3. The Learned Senior Counsel submitted that the 2nd Respondent is a

subsidiary of 3rd Appellant. As per Shareholders Agreement dated 29.09.2018

(2018 SHA) and the Articles of Association of the 2nd Respondent read with

Shareholder Agreement, the Appellants have right to appointment of

additional nominee directors of the Appellants and for removing the current

nominee directors of the 1st Respondent and its Group Companies, who

wrongly and contrary to 2nd Respondents articles and 2018 SHA, continue to

be on the Board of Directors of SACL (2nd Respondent).

4. The impugned order has resulted in an absurd yet unfortunate

situation where the appellants through SGAH or not being allowed to manage

and take control of the Board of Directors, who own 77.04% in SACL by SGAH,

while the 1st respondent which has a negligible shareholding of allegedly

0.85% in SACL, continues to control the SACL Board. The current SACL

Board is incompetent and caused SACL to commit several non-compliances,

Company Appeal (AT) (CH) No. 27 of 2022 3 of 38 statutory violations and misgovernance. By the impugned order the

appellants are restrained from exercising its corporate and contractual rights.

5. The Learned Senior Counsel further submitted that under Article 12 of

the SACL Articles read with Clauses 4.1, 4.3 and 4.14 of 2018 SHA, the Aapico

has a right to representation on the SACL Board proportionate to its indirect

shareholding of 77.04 shares. It is submitted that the Sakthi Group

Companies namely ABT and ABT Investment Private Limited who having a

mere 3% shareholding stake in SACL continues to be on the board wrongfully

and in breach of contract. Further, the Chairman and Managing Director Mr.

Manickam refused to recognise the Aapico's full rights of management and

control of SACL. The respondents failed to provide information about the

operations of SACL including its financial and failed to file the adopted annual

accounts and hold the Annual General Meeting for a period of more than 3

years. Further, it is apprehended that the respondents are also taking steps

who empty SACL of its assets in an attempt to leave little to no value in SACL.

6. Due to SACL's and Mr. Manickam's deliberate failure and refusal to

honour the terms of the 2018 SHA, Aapico and SGAH invoked arbitration

under the terms of the 2018 SHA and issued a notice of arbitration on

11.10.2019 to ABT UK and SACL. Accordingly, commenced arbitration

proceedings pursuant to Rule 3.2 of the SIAC Rules. In the meantime, on

02.03.2020 the 3rd Respondent filed a frivolous CP No. 387 of 2020 under

Sections 241 to 244 of the Companies Act, 2013 alleging acts of oppression

Company Appeal (AT) (CH) No. 27 of 2022 4 of 38 and mismanagement by Aapico in respect of SACL. The said CP sought to

dress up simplicitor contractual disputes as an act of oppression and

mismanagement. The allegations made in the CP are substantially similar to

ABT's Company Petition filed though another Sakthi Group Company. It is

submitted that no orders have been passed by NCLT in above CP No. 387 of

2020 which was filed by SSL (3rd Respondent).

7. The Learned Senior Counsel further submitted that due to deliberate

failure and refusal to honour the terms of 2018 SHA, the Appellants invoked

arbitration under the terms of 2018 SHA and issued notice of arbitration on

11.10.2019. However, the ABT UK filed an application in the SIAC Arbitration

under Rule 30.1 of the SIAC Rules seeking an adjournment of the Arbitration

proceedings. On 30.06.2020 the Arbitral Tribunal in the SIAC Arbitration

passed an order allowing the relief sought in the interim relief application

whereby the Tribunal directed the ABT UK to undertake all necessary steps

and corporate actions to update its Articles of Association to incorporate the

relevant terms of SHA with respect to 2nd Respondent Company i.e. SACL.

8. The SACL failed to comply with the interim order of the Tribunal and

the 3rd Appellant took corporate steps under the Companies Act, 2013 and

issued a postal valid notice on 06.10.2020 for passing the necessary

resolutions for amendment of SACL Articles. While so the 3rd Respondent filed

I.A. No. 882/2020 before the NCLT inter-alia seeking an interim injunction

Company Appeal (AT) (CH) No. 27 of 2022 5 of 38 against the Appellants from amending the Articles of SACL. However, no

orders have been passed in the said I.A. by the NCLT.

9. On 05.11.2020 SACL passed resolutions for amending the Articles by

postal ballot. Thus, the terms of 2018 SHA came to be incorporated in the

Articles of SACL. The Articles as amended were taken on record by the ROC

Coimbatore on 26.08.2021. Accordingly, on 07.09.2021, the 3rd Appellant

issued a letter to the SACL Board seeking resignation of the 1st Respondent

ABT Nominee Directors on SACL Board and also issued notice under Section

169 of the Companies Act, 2013 for removal of these nominee directors and

requisitioned the SACL Board to call and EGM for passing the necessary

resolution. However, the SACL Board refused to comply with the above

requisition at a board meeting held on 11.10.2021.

10. While matter stood thus, the Arbitral Tribunal issued the final

Arbitration Award on 06.10.2021 upholds and recognises the Appellant's

rights of management and the rights of representation on the SACL Board

under the amended SHA. The award also recognises that the Aapico together

hold 100% shares in 3rd Appellant (SGAH) and SGAH holds 77.04% shares in

SACL. As such the Aapico is entitled to appoint directors on the Board of SACL

proportionate to its indirect shareholding of 77.04% in SACL through SGAH.

11. The final award of the Arbitration Tribunal has not been challenged by

any party and the final award is binding on all the parties. Despite the rights

Company Appeal (AT) (CH) No. 27 of 2022 6 of 38 under the Articles and the SHA, the SGAH as a 77.04% shareholding in SACL,

the Aapico has only one nominee director on the Board of Directors of SACL.

12. While so, on 15.11.2021 SGAH 3rd Appellant issued a requisition under

Section 100(2)(a) of the Companies Act, 2013 calling upon the current SACL

Board to call an EGM inter-alia to pass resolution for removing the existing

Directors who are Sakthi Groups/ABT Nominees from the SACL Board and

appointing Additional Aapico Nominee Directors in accordance with articles.

13. The SACL Board failed to act on the notice dated 15.11.2021

accordingly, the SGAH (3rd Appellant) exercised its statutory right under

Section 100 and issued a notice dated 29.12.2021 (EGM notice) calling for the

EGM of SACL to be held on 25.01.2022 by video conference at 10:00 am for

passing resolutions relating to appointment of Aapico Nominee Directors and

removal of the ABT Nominee Directors. The EGM notice was sent to the

members and also all the Directors of SACL, hence the procedure

contemplated under the Companies Act was strictly followed.

14. While so, the CP was listed before the NCLT on 17.01.2022 however,

the NCLT informs all the parties stating that in virtual mode they would not

be taking up regular matters, despite the above, the Counsel appearing for

the petitioner therein, without filing any application made an oral mention

and pressed for an urgent stay on the EGM schedule to be held on

25.01.2022.

Company Appeal (AT) (CH) No. 27 of 2022 7 of 38

15. The Learned NCLT was not inclined to hear the Appellant's arguments

opposing the stay of the EGM and to avoid an absolute injunction on the

conduct/holding of the EGM on 25.01.2022 and in order to ensure that the

EGM could atleast take place and the Appellant's rights not to be frustrated

even further, the Appellants offered the following undertaking on 18.01.2022:

"Respondent No.2, 3 and 4 hereby undertake to not act upon or implement the resolutions proposed to be passed by the shareholders of Respondent No.1 at the Extra-ordinary General Meeting (EGM) scheduled to be held on January 25, 2022 as per the attached Agenda and Notice dated December 29, 2021 till the next date of hearing in the matter." (Emphasis added)

16. The above undertaking was accepted by the NCLT, however, the daily

order sheet dated 17.01.2022 which was made available on 24.01.2022

wrongly recorded the undertaking as under:

"Counsel for R3 is directed to file a memo accompanied by an undertaking after serving copy on the other side.

In view of undertaking memo being filed by the Respondent Counsel, the report of the meeting should not be effected and the status quo be maintained until further orders by this Tribunal.

The Respondent shall file counter within two weeks from today. List the matter on 22.02.2022 for hearing." (Emphasis added)

17. In the EGM meeting held on 25.01.2022 the resolutions were

unanimously passed by the attending shareholders with the requisite

majority, however, the resolutions have not been implemented till date. The

Company Appeal (AT) (CH) No. 27 of 2022 8 of 38 Learned Senior Counsel submitted that the decisions taken at the EGM have

to be implemented immediately as the shareholders of SGAH i.e. Aapico even

after investing approximately INR 1,000 crores are being kept out of the

management and shockingly are kept at darkness as regards the

administration and management of SACL.

18. The Sakthi Group filed another CP under Section 241 to 244 of the

Companies Act, 2013 through another entity i.e. ABT. It is a matter of fact,

that the 1st, 2nd and 3rd Respondent have common directors and shareholders.

The said Company Petition makes identical allegations as in the earlier

Company Petition filed by 3rd Respondent. When the Company Petitions were

called out for hearing the Counsel for the Appellants requested for time to file

a counter to the 2nd Company Petition. However, the NCLT did not accede to

the requests and heard brief arguments and directed the parties to file written

submissions and the NCLT reserved the matter for passing interim reliefs. The

Appellants filed written submissions on the issue of interim reliefs.

19. On 29.03.2022 the impugned order was passed inter-alia granting the

relief that the Appellants are restrained from in any manner acting upon or

giving effect to any resolutions passed at the EGM held on 25.01.2022 till the

disposal of the Company Petition.

20. It is submitted that without dealing with the contentions raised by the

Appellants in their written submissions, the NCLT granted interim relief to

the Respondents/Petitioners. The Learned Senior Counsel submitted that the

Company Appeal (AT) (CH) No. 27 of 2022 9 of 38 impugned order is an egregious departure from the law settled by the Hon'ble

Supreme Court in LIC vs. Escorts Limited & Ors. (1986 (1) SCC 264) wherein

the Hon'ble Supreme Court held that the resolutions validly passed at an EGM

cannot be stayed. Further it is submitted that the impugned order does not

even apply or deal with the applicable standards of law and Supreme Court

case law. Further, there is no determination on whether even a prima-facie

case for oppression and mismanagement has been made out. The interim

relief granted is in effect interferes with the statutory rights in favour of the

Appellants as majority shareholders. In support of the contention the Learned

Senior Counsel relied upon the judgments of the Hon'ble Supreme Court, and

Hon'ble High Courts.

21. In view of the above, the Learned Counsel prayed this Bench to set aside

the order dated 29.03.2022 passed by the NCLT, Division Bench, Chennai in

CP No. 25/2022.

Respondent's Submissions:

22. The Learned Counsel appeared for the 1st respondent filed a detailed

counter affidavit and submitted that the appeal is unsustainable in law and

on facts. He submitted that the impugned order dated 29.03.2022 passed by

the NCLT does not suffer from any infirmity and is passed in the interest of

the company. Vide interim order dated 29.03.2022 the NCLT has preserved

the status quo in the constitution of the Board of Directors of the 2nd

Respondent i.e. SACL. The fact remains that the right of the 3rd Appellant to

Company Appeal (AT) (CH) No. 27 of 2022 10 of 38 control the holding company of SACL is disputed and is pending trial in UK

Court and the trial is scheduled for July 2022. Further, the foreign award

under which the Appellant claims right to Constitute the Board of SACL in its

entirety is yet to be held to be enforceable in India and enforcement

application filed by the Appellant is pending before the Hon'ble High Court of

Madras.

23. Further, the Learned Counsel submitted that the Appellants several

actions have been impugned as constituting oppression and mismanagement

is pending in a Company Petition before the NCLT. It is submitted that the

Appellant has representation on the Board of SACL and there is also an

independent observer to the Board of SACL appointed by the Hon'ble High

Court of Madras.

24. It is submitted that the Appellant transferred just one share each to 4

third parties in violation of pre-emption provision and has rushed through a

resolution to enmass remove all the directors of SACL and induct only

Appellant's nominees to the Board of SACL without awaiting for orders from

the Madras High Court, the UK Court and without awaiting the outcome of

the investigation ordered. It is an admitted fact that the 3rd Appellant holds

77.04% in SACL and 19.81% is held by SSL (3rd Respondent) herein. The 3rd

Respondent in the capacity as minority shareholder of SACL has filed CP No.

387 of 2020 impugning the oppressive actions of the Appellants herein. After

filing the above CP by SSL, the SSL transferred its shareholding to ARCIL as

Company Appeal (AT) (CH) No. 27 of 2022 11 of 38 and by way of pledge by SSL. The ARCIL has placed a memo on record before

NCLT that they authorised to continue prosecution of CP by SSL. It is

submitted that the remaining shareholding in the SSL is held directly by the

1st Respondent and individual promoters.

25. It is submitted that the Appellants secured an award from Singapore

Arbitration Tribunal holding that Aapico is entitled to ¾ representation in the

Board of SACL. It is to state that the award itself notes that UK Court is the

proper Court to decide on whether Aapico is entitled to control of SGAH (3rd

Respondent). In the circumstance, the Singapore Award presently not

enforceable since UK Court is yet to finally determine whether Aapico is at all

entitled to control SGAH. If Aapico is not entitled to control the SGAH,

naturally Aapico is not entitled to control SACL which is only a subsidiary of

SGAH.

26. It is submitted that the Aapico on its own requisitioned an EGM of SACL

to remove all the present directors of SACL and appoint only Aapico nominees

to the board and Aapico wanted to take control of SACL without awaiting

Court orders. The Board of SACL on 17.12.2021 rejected the requisition of

Aapico as not valid on multiple legal grounds. In the Company Petition it was

also contended that Aapico would have had no quorum to conduct to EGM

unless the promoters attend the EGM. As stated supra to get over the same

Aapico illegally transferred 4 equity shares to 4 distinct third parties to

claiming that they had valid quorum. However, the requisition meeting was

Company Appeal (AT) (CH) No. 27 of 2022 12 of 38 held by Aapico themselves on 25.01.2022 and the aforesaid events happened

during a pendency of the Company Petition before the NCLT and without

seeking any kind of leave of NCLT.

27. It is submitted that the 2nd Respondent i.e. SACL (target company) has

grown to great heights and is a leader in design and manufacture of steering

knuckles and breaking parts. It has a global base and the Aapico wants to tap

into this potential and seeking to unlawfully gaining illegal profits by ousting

the present management. As stated supra vide a requisition dated 15.11.2021

the SGAH called EGM to be held on 25.01.2022 and the notice convening to

EGM is proposed to removal of 5 of the existing directors and appointment of

5 new directors. The Board of SACL in its meeting dated 17.12.2021 after a

detailed considerations rejected the requests for a requisitioned EGM.

28. It is submitted that the Company Petition was listed for hearing on

13.03.2022 and both the parties were given adequate opportunity and time

to make representations before the NCLT. It is denied that the NCLT provided

only 10 to 15 minutes for arguments. The Learned NCLT heard the arguments

of the parties at length and reserved for passing orders in respect of the

interim relief sought for. The NCLT also permitted both parties to file their

written submissions. The Learned NCLT passed the impugned order on

29.03.2022. The impugned order records the reasons for grant of interim relief

in favour of the 1st Respondent herein. The interim order passed in the light

of the multiple actions of oppression complained by the Respondent/

Company Appeal (AT) (CH) No. 27 of 2022 13 of 38 Petitioner and viewing balance of convenience in favour of the Respondent

that the interim order restraining the Appellants from acting upon are giving

effect to any of the resolutions passed in the EGM.

29. The Learned Counsel further submitted that since the Appellants had

the numerical strength for requisition the EGM is erroneous on the fact that

the said numerical strength is itself in issue in the pending proceedings in the

Hon'ble UK Court and the Appellant has in the requisition set out specifically

that it is seeking to reconstitute the Board based on the SIAC Arbitration

Award which is still not declared as enforceable in India and the enforcement

petition is pending consideration before the Hon'ble Madras High Court.

Therefore, the Appellants do not satisfy even the threshold tests to call for a

requisition EGM.

30. The Learned Counsel for the Respondent also relied upon various

judgments of the Hon'ble Supreme Court and the Hon'ble High Courts in

support of his case.

31. In view of the reasons as stated above the Learned Counsel prayed this

Bench to dismiss the Appeal.

Analysis / Appraisal:

32. Heard the Learned Counsel for the respective parties, perused the

pleadings, documents and citations relied upon by them. After analysing the

pleadings, the moot point for consideration is whether the impugned order

passed by the NCLT is in accordance with law or called for any interference.

Company Appeal (AT) (CH) No. 27 of 2022 14 of 38

33. The 1st Respondent herein filed the Company Petition bearing No.25 of

2022 arraying the Appellants and the other Respondents as the Respondents

to the said Company Petition filed under Section 241 and 242 of the

Companies Act, 2013 alleging certain acts of oppression and mismanagement

and the petitioner therein (1st Respondent) pressed certain interim reliefs,

however, the Respondents therein objected and opposed for the grant of

interim relief. While so, the Learned NCLT vide order dated 29.03.2022 passed

the following interim relief:

"The Respondents are restrained from in any manner acting upon or giving effect to any resolution purportedly passed at the EGM held by the requisitionists on 25.01.2022 till the disposal of the present Company Petition."

34. The Learned Senior Counsel for the Appellant herein contend that the

interim order passed by the Learned NCLT is contrary to law and facts and

prayed this Bench to vacate the interim order passed by the NCLT.

35. The 1st Respondent in CP No. 25/2022 is Shakthi Auto Component

Limited (SACL), in which the Appellants and some of the Respondents are the

shareholders. Even the 1st Respondent herein (Petitioner) arrayed the SACL

as the 1st Respondent and made allegations against the Appellants herein.

36. This Tribunal intend to give the shareholding pattern of SACL as per

the pleadings of the parties for better appreciation.

37. The SACL consists of following shareholders:

Company Appeal (AT) (CH) No. 27 of 2022 15 of 38

a) SGAH Appellant No.3 holds 77.04%

b) ABT Limited Respondent No.1 holds 0.85%

c) ARCIL (Not a party) holds 19.81%

d) ABT India Investment Pvt. Ltd. (not a party) holds 2.48%

38. The 1st Respondent herein (Petitioner) also admitted the facts in the CP

No. 25/2022 and the same has been recorded in the impugned order by the

Learned NCLT that the 3rd Appellant is holding 77.04% shareholding in SACL

and 19.81% was held by Sakthi Sugars Limited (SSL) 3rd Respondent herein.

It is also stated that the 19.81% shareholding of SSL has been transferred to

Asset Reconstruction Company India Limited (ARCIL) in March, 2021 as and

by way of pledge by SSL. There is no dispute with regard to other shareholders

holding the shares as mentioned above in SACL.

39. It is submitted that the Appellants No.1 & 2 invested a sum of Rs.534/-

crores in 3rd Appellant by equity and debt. As a result, the Aapico entitles

collectively and acquired 49.99% in 3rd Appellant and the remaining 50.01%

in 3rd Appellant were held by the ABT Auto Investment Limited (ABT UK)

which belongs to the Sakthi Group. It is submitted that the Appellant No.1 &

2 also advanced approximately 641 crores under loan agreements dated

25.05.2017 and 29.09.2018. It is submitted that in respect of loan funds given

by Aapico, ABT - UK's 50.01% shareholding in 3rd Appellant was pledged to

Aapico.

Company Appeal (AT) (CH) No. 27 of 2022 16 of 38

40. On account of defaults under the loan agreements, Aapico appropriated

a share charge agreement (i.e. security in respect of the above loans) acquiring

the remaining 50.01% shares of ABT-UK's shares in 3rd Appellant. Thus,

Aapico holds 100% shares in 3rd Appellant (SGAH). In turn the 3rd Appellant

SGAH holds 77.04% shares in SACL.

41. As stated (supra) the 1st Respondent herein filed CP No.25/2022 under

Sections 241 to 244 alleging certain acts of oppression and mismanagement

in the 2nd Respondent Company (SACL) stating that the Petitioner being a

minority shareholder of SACL holding 0.85% of the paid up share capital of

SACL. Even the petitioner therein, has given the shareholding pattern of SACL

at page 613 Volume-3 admitting that 77.04% shares are held by (SGAH) 3rd

Appellant. Among other things the Petitioner therein sought certain interim

relief in above CP annexed at page 638 Volume-3 which is extracted as under:

"a. An Order of Temporary Injunction restraining the Respondents 4, 5 and 6 from either directly or through SGAH, amending or acting upon any amendment to the Articles of Association of the 1st Respondent Company;

b. An Order of Temporary Injunction restraining the Respondents 4, 5 and 6 either by themselves, or through their nominees, or through SGAH, from participating in the management of the affairs of the 1st Respondent Company or from in any manner interfering in the management of its operations or finances;

c. An Order of Temporary Injunction restraining the Respondents 4, 5 and 6 either by themselves or through

Company Appeal (AT) (CH) No. 27 of 2022 17 of 38 SGAH, from making any attempts to reconstitute the Board of the 1st Respondent Company;

d. An Order of Temporary Injunction restraining the Respondents from in any manner acting upon or giving effect to any resolution purportedly passed at the EGM allegedly held by the requisitionists on 25.01.2022."

42. The 1st Respondent (Petitioner) in the above CP, made averments that

the Aapico issued a special notice and requisition dated 07.09.2021

demanding that the board members of SACL including the Chairman of the

Group shall tender their resignation so that Aapico may in terms of the

amended articles reconstitute the board of SACL. Further, there is averment

that vide requisition dated 15.11.2021, SGAH called for yet another EGM to

be held on 25.01.2022. The said notice convening the EGM proposed for

removal of 5 existing directors of SACL. However, the Board of SACL in its

meeting dated 17.11.2021 and after a detailed consideration rejected the

request for requisitioned EGM.

43. In view of the above averments, the 1st Respondent (Petitioner) sought

the interim reliefs as extracted above. More particularly, interim relief (d) to

the extent that the petitioner sought an order of temporary injunction

restraining the respondents therein from in any manner acting upon or giving

effect to any resolution purportedly passed at the EGM allegedly held by the

requisitionists on 25.02.2022.

Company Appeal (AT) (CH) No. 27 of 2022 18 of 38

44. In view of the interim relief sought therein the NCLT having recorded

the said facts passed the impugned order on 29.03.2022.

45. As stated herein above, there is no dispute with regard to the

shareholding pattern of the parties thereto. However, the respondents herein,

vehemently opposed setting aside or modifying the impugned order dated

29.03.2022 for the reasons as stated hereunder:

a) It is the case of the Respondents that the Aapico invoked the pledge and claims control of SGAH and consequently SACL as well. The ABT-UK who pledged its shares with Aapico has challenged the invocation of shares before the High Court UK and the High Court has found prima facie case for trial and has directed trial to take place in July, 2022. Therefore, whether Aapico is entitled to control SGAH itself is an issue in the above court proceedings.

b) The Aapico has secured an award from Singapore Arbitration Tribunal holding that Aapico is entitled to ¾ th representation in the Board of SACL on the basis that Aapico currently has majority in SGAH. It is submitted that the Singapore Arbitration Award presently not enforceable since UK Court is yet to finally determine whether Aapico is at all entitled to control of SGAH.

c) The Aapico moved the Hon'ble High Court of Madras seeking enforcement of Singapore Award, but High Court is yet to permit enforcement and the same is pending consideration.

Company Appeal (AT) (CH) No. 27 of 2022 19 of 38

d) In the meanwhile, Aapico has taken law into its own hands and sought to unilaterally amend the Articles of Association of SACL, firstly, through a postal ballot. It is to state that the amendment to the articles without awaiting the orders of the High Court of Madras is contrary to Section 48 of the Arbitration and Conciliation Act.

e) The Board of SACL on 17.12.2021 rejected the requisition as not valid on multiple legal grounds as stated in above paras.

f) The Aapico had no quorum to conduct EGM unless the promotors attended the EGM. To get over the same, the Aapico illegally transferred 4 equity shares to 4 distinct 3rd parties and the said transfers effected in the month of December, 2021.

46. In rebuttal the Learned Senior Counsel for the Appellant submitted that

the ABT-UK created a charge on its 50.01% shares of SGAH in Aapico's favour

and the 1st Respondent herein (Petitioner) is not a party to the Share Charge

Agreement, therefore, the Petitioner therein cannot question the invocation of

pledge by Aapico. Due to defaults of the loan by the ABT-UK, shares in SGAH,

the Aapico invoked the share charge and appropriated 50.01% shares of ABT-

UK in August, 2019. Thus, the Aapico became 100% shareholder of SGAH as

on 15.08.2019 as per law. Though the SGAH holds 77.04% in SACL, the

Aapico who is a 100% shareholder in SGAH thus, indirectly became 77.04%

shareholding in the SGAH. With regard to UK High Court proceedings, it is

submitted that the ABT-UK on 26.06.2020 nearly after 10 months of

Company Appeal (AT) (CH) No. 27 of 2022 20 of 38 appropriation of the shares filed a proceeding in the High Court of Justice of

England and Wales challenging the invocation of the share charge. It is

submitted that the ABT-UK is a 3rd party who challenged the invocation of

share charge by Aapico. However, no stay order has been passed in these

proceedings. The Aapico holds 100% shareholding in SGAH and the said

position has not been interfered with. Therefore, the proceedings of UK High

Court have no impact or bearing on the right of SGAH, a 77.04% shareholder

of SACL to call for the EGM of the Company.

47. It is submitted that in November, 2019 Aapico and SGAH invoked

Arbitration in Singapore against SACL / ABT - UK under the Shareholders

Agreement for various breaches of the 2018 SHA, such as SACLs failure to

amend its AOA to incorporate the relevant terms of SHA, seeking

proportionate representation in the SACL Board as provided in the SHA and

appointment of CFO as per Clause 4 and 27 of SHA and other reliefs.

48. With regard to Singapore Arbitration proceedings are concerned it is

submitted that a Shareholders Agreement dated 29.09.2018 was entered into

between Aapico, SGAH, the SACL and ABT-UK setting out rights of

management, governance in SGAH and its subsidiaries including SACL. While

so, in November, 2019 Aapico and SGAH invoked arbitration in Singapore

against SACL/ABT-UK for various breaches of the SHA, 2018 viz. SACL's

failure to amend its Articles of Association to incorporate the relevant terms

of SHA, seeking proportionate representation in the SACL Board as provided

Company Appeal (AT) (CH) No. 27 of 2022 21 of 38 in the SHA, appointment of CFO as per Clause 4 and 27 of SHA and other

reliefs. Hence, the Learned Senior Counsel submitted that the Appellants have

every right to issue notice for calling and convening an EGM and implement

the resolutions passed therein in accordance with the law.

49. Having discussed the rival contentions of the parties, this Tribunal

intend to deal with the SHA dated 29.09.2018.

SHA: Date 29.09.2018:

50. It is an admitted fact that the parties have entered amended and re-

stated shareholders agreement dated 29.09.2018. From the preamble, the

following are the parties to the SHA viz.

i) Aapico Hitech Public Company Ltd. (Incorporated under the laws of Thiland).

ii) Aapico Investment Pte. Ltd. (Incorporated under the laws of Singapore)

iii) ABT Auto Investment Ltd. (Incorporated under the laws of England and Wales)

iv) Sakthi Global Auto Holdings Ltd. (Incorporated under the laws of England and Wales)

v) Sakthi Auto Component Ltd. (Incorporated under the laws of India)

vi) Sakthi Automotive Group USA, Inc. (Incorporated under the laws of USA).

51. Clause 4 of the SHA deal with Directors and Management. Clause 4.1

the board shall consists up to 8 persons of which;

a) Aapico shall be entitled to appoint and maintain in office up to such number of Directors (and to remove any Director so

Company Appeal (AT) (CH) No. 27 of 2022 22 of 38 appointed from office and to appoint another in the place of any directors so removed) at all times as is proportionate to their shareholding; and

b) ABT Auto shall be entitled to appoint and maintain in office up to such number of directors (and to remove any Director so appointed from office and to appoint another in the place of any directors so removed) at all times as is proportionate to their shareholding.

52. Clause 4.3 of SHA, the rights of Aapico under Clause 4.1 above shall

also be exercisable on all subsidiaries of the company. Clause 4.4 deal with

appointment of Chief Financial Officer. The Aapico shall be entitled to

nominate for appointment removal and replacement a CFO of the Company

and the Board shall appoint a CFO as may be nominated by Aapico. Further,

as per Clause 4.14 the Aapico shall also be entitled to nominate Director on

the Board of Directors of each of the subsidiaries in the proportion in

accordance with Clause 4.1 above.

AOA of SACL:

53. The above said Clauses of SHA have been incorporated in the Articles

of Association of SACL. As per Article 12 of AOA, which states that "the

Directors of the Company shall be appointed in accordance with the amended

and re-stated Shareholders Agreement".

54. Thus, there is no dispute with regard to the Clauses as mentioned in

the AOA of SACL. It is apt to note that the Company is bound by the Articles

and the Articles will regulate the affairs of the Company in its best interest.

Company Appeal (AT) (CH) No. 27 of 2022 23 of 38

55. On 15.11.2021 the 3rd Appellant being a majority shareholder of 2nd

Respondent (SACL) issued a requisition under Section 100(2) (a) of the

Companies Act, 2013 calling upon the existing SACL Board to call an EGM

inter-alia to pass resolution for removal of the existing Directors, who are

Sakthi Group/ABT Nominee from the SACL Board and appoint additional

Aapico Nominee Director in accordance with the Articles. (Page 524 Volume-

2.)

56. The SACL Board was required to issue a notice calling an EGM on or

before 06.12.2021, however, the Board did not issue any notice and the SACL

Board called a Board Meeting on 17.12.2021 to consider the EGM requisition.

However, the Board did not consider any requisition made by a Shareholder

under Section 100 of the Companies Act, 2013. Having failed to call the EGM

within 21 days, the SGAH became entitled to issue a notice convening an EGM

in accordance with Section 100 of the Companies Act, 2013 and accordingly,

in exercise of its statutory right, the SGAH issued a notice dated 29.12.2021

under Section 100 of the Companies Act calling for an EGM of SACL to be

held on 25.01.2021 by video conference at 10 a.m. for passing resolutions

relating to appointment of Aapico Nominee Directors and removal of the ABT

Nominee Directors (Page 550 of Volume-3). The EGM notice was sent to the

Members and also all the Directors of SACL and followed due procedure as

contemplated under the Companies Act, 2013.

Company Appeal (AT) (CH) No. 27 of 2022 24 of 38

57. When the CP was listed on 17.01.2022, the Counsel appearing for SSL

without filing any application or documents on records made an oral mention

and pressed for an urgent stay on the EGM scheduled to be held on

25.01.2022. Having, heard the matter by the NCLT on 18.01.2022, the

Counsel appearing for the Appellants had given an undertaking that the EGM

scheduled to be held on 25.01.2022 will take place, however, the

implementation of the resolution proposed to be passed by the shareholders

of SACL will not act upon.

58. It is seen that the EGM scheduled on 25.01.2022 was held and the

resolutions were passed, however, the resolutions have not been implemented

in view of the undertaking given by the Appellants. Finally, the Learned NCLT

passed the impugned order on 29.03.2022.

59. The moot point for consideration is whether the right of the

shareholders calling the EGM of the Company in view of the statutory right

enshrined in the statute can be interfered with by the Tribunal.

Provision of law:

60. Section 100 of the Companies Act, 2013 is deal with calling of

extraordinary general meeting. Sub-section (1) of Section 100 thus read as

under:

"Calling of extraordinary general meeting. - Sub-section (1) of Section 100 read thus:

The Board may, whenever it deems fit, call an Extraordinary General Meeting of the Company.

(2) The Board shall, at the requisition made by-

Company Appeal (AT) (CH) No. 27 of 2022 25 of 38 (a) in the case of a company having a share capital, such number of members who hold, on the date of the

receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on date carries the right of voting;

(b) in the case of a Company not having a share capital, such number of members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power of all the members having on the said date a right to vote, call an extraordinary general meeting of the company within the period specified in sub-section (4).

(3) The requisition made under sub-section (2) shall set out the matters for the consideration of which the meeting is to be called and shall be signed by the requisitionists and sent to the registered office of the company.

(4) if the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of the requisition.

(5) A meeting under sub-section (4) by the requisitionists shall be called and held in the same manner in which the meeting is called and held by the Board."

61. From the provision of law, two situation arises for calling the EOGM.

The Board on its own may call an EOGM of the Company. On the requisition

Company Appeal (AT) (CH) No. 27 of 2022 26 of 38 of the Members of the Company who hold not less than one tenth of paid-up

share capital. If the Board does not call the meeting despite requisition given

by the member of the Company, the requisitionists may call the meeting

themselves within a period of three months from the date of requisition. In

the present case, the requisitionist calling an EGM was given a notice on

15.11.2021. However, the Board rejected the calling of the EGM by the

requisitionists i.e. SGAH. While so, the SGAH issued notice under Section 100

dated 29.12.2021, calling for the EGM of SACL to be held on 25.01.2022. This

Tribunal is of the view that the requisitionists has followed the due procedure

of law in issuing a notice for convening an EGM. The Shareholder of the

Company has every right to issue a notice calling for an EGM. However, in the

first instance the SACL Board rejected the notice of the requisitionists calling

EGM. This Tribunal is of the view that the Shareholder of the SACL rightly

exercised its statutory right in calling EGM of the Shareholders and there is

no illegality in convening and holding the meeting on 25.01.2022.

62. This Tribunal is also of the view that the amended and re-stated

Shareholders Agreement dated 29.09.2018 provides for the appointment of

Directors by the Appellants group. As per Clauses 4.1, 4.3, 4.4 and 4.14.

Further, Clause 12 of the AOA of the SACL empowers that the Directors of the

Company shall be appointed in accordance with the amended and re-stated

Shareholders Agreement.

63. It is unequivocal that the Articles regulates the affairs of the Company

and the Shareholders have every right to act upon the Articles of the

Company Appeal (AT) (CH) No. 27 of 2022 27 of 38 Company. In exercise of the provisions of law the Appellant SGAH issued a

requisition in accordance with Clauses of Shareholders Agreement dated

29.09.2018 and as empowered by the Articles of the Company. This Tribunal

is of the view that the Board of the SACL failed to act upon the requisitionists

notice at the first instance, therefore, the 3rd Appellant constrained to issue

another requisition calling the EGM scheduled to be held on 25.01.2022,

specifying the agenda items to be discussed.

64. This Tribunal now deal with the judgments relied upon by the respective

parties.

Now Deal with Judgments:

65. Appellant's citations: On the point that no injunction can be granted to

restrain the convening and holding of EOGM meeting by a requisitionist to

remove a Director and appoint another, the Learned Counsel relied upon the

judgment of the Hon'ble Supreme Court in:

(i) Life Insurance Corporation of India Vs. Escorts Ltd.

& Ors. reported in (1986) 1 SCC 264, Paras 84, 95, 99 and 100.

At Para 84 the Hon'ble Supreme Court held as under:

"On an overall view of the several statutory provisions and judicial precedents to which we have referred we find that a shareholder has an undoubted interest in a Company, an interest which is represented by his shareholding. Share is a movable property, with all the attributes of such property. The rights of a shareholder are (i) to elect directors and thus to participate in the management through them (ii) to vote on resolutions at Company Appeal (AT) (CH) No. 27 of 2022 28 of 38 meetings of the company (iii) to enjoy the profits of the company in the shape of dividends (iv) to apply to the Court for relief in the case of oppression (v) to apply to the Court for relief in the case of mismanagement (vi) to apply to the Court for winding up of the Company (vii) to share in the surplus on winding up."

At para 95 the Hon'ble Supreme Court held as:

"The holders of the majority of the stock of a corporation have the power to appoint, by election, directors of their choice and the power to regulate them by a resolution for their removal. And, in injunction cannot be granted to restrain the holding of general meeting to remove a director and appoint another."

At para 99 held as under:

"Again in Bentley Stevens Vs. Jones, it was held that a shareholder had a statutory right to move a resolution to remove a director and that the Court was not entitled to grant an injunction restraining him from calling a meeting to consider such a resolution."

At para 100 held as under:

"Thus, we see that every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements, to the Companies Act. He cannot be restrained from calling a meeting and he is not bound to disclose the reasons for the resolutions proposed to be moved at the meeting. Nor are the reasons for the resolutions subject to judicial review. It is true that under Section 173(2) of the Companies Act, there shall be annexed to the notice o the meeting a statement setting out all material facts concerning each item of business to

Company Appeal (AT) (CH) No. 27 of 2022 29 of 38 be transacted at the meeting including, in particular, the nature of the concern or the interest, if any, therein of every director, the managing agent if any, the secretaries and treasures, if any, and manager, if any. This is a duty cast on the management to disclose, in an explanatory note, all material facts relating to the resolution coming up before the general meeting to enable the shareholders to form a judgment on the business before them. It does not require the shareholders calling a meeting to disclose the reasons for the resolutions which they propose to move at the meeting. The Life Insurance Corporation of India, as a shareholder of Escorts Ltd., has the same right as every shareholder to call an extraordinary general meeting of the company for the purpose of moving a resolution to remove some Directors and appoint others in their place. The Life Insurance Corporation of India cannot be restrained from doing so nor is it bound to disclose its reasons for moving the resolution."

(ii) Further the Learned Counsel relied upon judgment of the Hon'ble High Court of Bombay in Invesco Developing Markets Fund Vs. Zee Entertainment Enterprises Ltd. reported in (2022) SCC Online Bom 630, paras 82, 83, 97 to 100.

Para 82, the Hon'ble High Court held:

"By the impugned judgment, the Learned Single Judge has restrained a shareholder of a company from calling or holding an EGM. In our opinion, such an injunction is in the teeth of the decision of the Hon'ble Supreme Court in LIC Vs. Escorts."

Company Appeal (AT) (CH) No. 27 of 2022 30 of 38

(iii) Further the Learned Counsel relied upon the judgment of the Hon'ble High Court of Madras in N. Ram & 5 Ors.

Vs. N. Ravi & 15 Ors. reported in 2011-3-L.W.850 paras 44 to 48.

The Hon'ble High Court at para 44 held as under:

"On consideration, I find force in the contention raised by the Learned Senior Counsel appearing on behalf of the Appellants. The Hon'ble Company Law Board, cannot issue injunction in implementing the decision to be taken by the shareholders in its meeting, unless the prima-face finding is record that the decision is prejudicial to the public interest or the company at large.

At para 47 the Hon'ble High Court has held:

"The Hon'ble Supreme Court in the case of Life Insurance Corporation of India Vs. Escorts Ltd. & Ors. (supra) had categorically laid down that it is not open to the Company Law Board to issue injunction with regard to functioning of the company."

At para 62 the Hon'ble High Court has held:

"For the reasons stated above, the impugned order passed by the Hon'ble Company Law Board cannot be sustained. Consequently, these appeals are allowed and the decision of the Hon'ble Company Law Board, staying implementation of the decision taken in the EGM is ordered to be set aside."

66. Respondents' citations:

(i) Cosmo Steels Pvt. Ltd. & Ors. Vs. Jai Ram Das Gupta & Ors.

(1978) 1 SCC 215

Company Appeal (AT) (CH) No. 27 of 2022 31 of 38 (ii) Gordon Woodroffe and Company Ltd. UK Vs. M/s Gordon Woodroffe and Company Ltd. Chennai & 6 Ors. (1998) III CTC 589, Para 46, 47.

The Hon'ble High Court of Madras held at para 47 as under:

"That apart as we have seen above, the High Court has granted injunction with reference to the shares held by Trident Investments & Portfolio Services Pvt. Ltd. Hence, no one other than Tracstar or Trident can exercise the voting rights of 6.84%. In paragraph 120 of the petition there is an averment to the following effect:

"Even the amount paid by Tracstar and Shoe Specialities for acquisition of the shares in Gordon Woodroffe (India) were funded by Shaw Wallace."

Therefore, when the ownership of shares is seriously disputed with reference to 44.48% of shares., how the petitioner can claim that there is a material change in the control of the company by an alteration in the ownership of the company's shares? Even if we assume that there is change in the ownership of shares, there is no change in control of the company on account of such change in ownership'. The control of the company is undoubtedly with appellants. i.e. M.R. Chhabria's group."

(iii) V.S. Krishnan & Ors. Vs. Westfort Hi-tech Hospital Ltd. & Ors. (2008) 3 SCC 636, para 14

(iv) Mohan Lal Ganpatram Vs. Shi Sayaji Jibilee Cotton and Jute Mills Company Ltd. (1964) SCC Online Guj.

66

(v) M.S.D.C. Radharamanan Vs. M.S.D. Chandrasekara Raja & Anr. (2008) 6 SCC 750, para 22 to 24

Company Appeal (AT) (CH) No. 27 of 2022 32 of 38 Para 23, the Hon'ble Supreme Court held:

"23. Sections 397 and 398 of the Act empower the Company Law Board to remove oppression and mismanagement. If the consequences of refusal to exercise jurisdiction would lead to a total chaos or mismanagement of the company, would still the Company Law Board be powerless to pass appropriate orders is the question. If a literal interpretation to the provisions of Section 397 and 398 is taken recourse to, may be that would be the consequence. But jurisdiction of the Company Law Board having been couched in wide terms and as diverse reliefs can be granted by it to keep the company functioning, it is not desirable to pass an order which for all intent and purport would be beneficial to the company itself and the majority of the members? A court of law can hardly satisfy all the litigants before it. This, however, by itself would not mean that the Company Law Board would refuse to exercise its jurisdiction, although the statute confers such a power on it.

24. It is now a well-settled principle of law that the courts should lean in favour of such construction of statute whereby its jurisdiction is retained enabling it to mould the relief, subject of course, to the applicability of law in the fact situation obtaining in each case."

67. From the analysis of the citations relied upon by respective

counsel/parties in so far as the judgments relied upon by the Learned

Counsel for the Respondent (ii) (supra) in re- Gordon Woodroffe and Company,

the view taken by the Hon'ble High Court of Madras is that even if there is

Company Appeal (AT) (CH) No. 27 of 2022 33 of 38 change in the ownership of shares, there is no change in control of the

company on account of such change in ownership. The said observation of

the Hon'ble High Court is not applicable to the present facts of the case.

68. The Learned Counsel for the Respondents relief upon the judgment of

the Hon'ble Supreme Court in re-V.S. Krishnan (iii) (supra), the Hon'ble

Supreme Court observed that the claim "legitimate expectation" cannot be

extended to and there is no specific promise that the petitioners would be

given directorship permanently. The said observation of the Hon'ble Supreme

Court is in different context and therefore the said observation is not

applicable to the facts of the present case. Further, the Learned Counsel for

the Respondent relief upon the judgment in re-M.S.D.C. Radharamanan. The

Hon'ble Supreme Court while dealing with the powers of Sections 397, 398,

402, 433 and 443 held that the jurisdiction the Company Law Board having

been couched in wide terms and as diverse reliefs can be granted by it to keep

the company functioning. Further it is held that the Company Law Board

would exercise its jurisdiction the powers conferred on it by statute. There is

no quarrel with respect to the powers to be exercised by the respective

Tribunals the powers which conferred by statute on it, the facts in the present

case are different.

69. The judgment of the Hon'ble Supreme Court in LIC vs. Escorts had laid

down the law on the issue of rights of a shareholder to call an EGM and the

Tribunals/Courts cannot be restrained from calling a meeting. The Hon'ble

Company Appeal (AT) (CH) No. 27 of 2022 34 of 38 Supreme Court case, categorically held the rights of a shareholder at para 84.

Further, the Hon'ble Supreme Court has held that every shareholder of a

company has a right subject to statutorily prescribed procedural and

numerical requirements to call an EGM in accordance with the provisions of

the Companies Act.

70. In view of the law laid down by the Hon'ble Supreme Court in LIC Vs.

Escorts, the shareholder cannot be restrained from calling a meeting of an

EOGM of the Company. The Hon'ble Supreme Court categorically held that

an injunction cannot be granted to restrain the holding of a general meeting

to remove a director and appoint another. The Hon'ble High Court of Madras

in re-N. Ram & Ors. referring the decision of the Hon'ble Supreme Court in

LIC Vs. Escort, categorically held that the Company Law Board cannot issue

injunction in implementing the decision to be taken by the shareholders in its

meeting.

Finding:

71. After analysing the judgments of the Hon'ble Supreme Court and the

Hon'ble High Courts, this Tribunal comes to an affirmative finding, that the

order passed by the NCLT is in teeth of judgment of Hon'ble Supreme Court

in LIC Vs. Escorts.

72. In the present case, the requisitionist/shareholder i.e. SGAH admittedly

holding 77.04% of shares in SACL, has every right to issue a notice calling for

as EGM as per Section 100 of the Companies Act, 2013. However, the

Respondents have rejected the requisitionist request on 17.12.2021 on the Company Appeal (AT) (CH) No. 27 of 2022 35 of 38 ground that the Director Mr. Yeap is not authorised to requisition EGM on

behalf of SGAH. And the Aapico cannot seek to enforce Singapore Award until

Madras High Court uphold its validity and the Aapico cannot unilaterally take

law into their own hands.

73. Be that as it may, as per the provisions of Section 100(4) of the

Companies Act, 2013 if the Board does not within 21 days from the date of

receipt of a valid requisition in regard to any matter, proceed to call a meeting

for the consideration of that matter on a day not later than 45 days from the

date of receipt of such requisition the meeting may be called and held by the

requisitionists themselves within a period of 3 months from the date of the

requisition. Failing to call the meeting by the SACL Board, the requisitionist

itself convened a meeting of EOGM on 25.01.2022 is in accordance with law.

When a shareholder has a right to call and convene a meeting, more

particularly EOGM, the EOGM cannot be restrained as held by the Hon'ble

Supreme Court in LIC Vs. Escort. Further, the NCLT ought not to have

granted injunction in implementing the decision / resolutions passed by the

shareholders in EGM held on 25.01.2022 unless a prima-facie finding is

recorded that the decision is prejudicial to the public interest or the company

at large. In the present case, the Learned NCLT passed the impugned order

restraining the Appellants in giving effect to any resolutions that was passed

at the EGM held on 25.01.2022 till the disposal of the Company Petition, in

our view is without any proper analysis and no finding recorded with regard

to how the outcome of the resolution / decision is prejudicial to the public

Company Appeal (AT) (CH) No. 27 of 2022 36 of 38 interest or the company at large. The Learned NCLT merely recorded the

pending proceedings before the Hon'ble High Court of Madras and UK Court.

The NCLT ought to have seen that whether the requisitionist has right to call

for an EGM in accordance with law or not. Admittedly, the 3rd Appellant

holding 77.04% of shareholding in SACL.

74. This Tribunal is of the view that the right exercised by the requisitionist

is in accordance with shareholder agreement dated 29.09.2018 and in

accordance with Articles of Association of the SACL. This Tribunal in

unequivocal terms hold that validly passed resolution cannot be stayed.

75. In all respects this Tribunal comes to a resultant conclusion that the

order passed by the Learned NCLT is against the law laid down by the Hon'ble

Supreme Court in LIC Vs. Escorts.

76. For the foregoing reasons this Tribunal comes to an irresistible and

inescapable conclusion that the impugned order passed by the Learned NCLT

dated 29.03.2022 in CP No. 25/2022 is hereby set aside. Consequently, the

Appeal is allowed with a request to the Learned NCLT to dispose of the CP No.

25/2022 within a period of one month from the date of receipt of copy of this

order. The Learned NCLT is liberty to decide all aspects of the respective

parties uninfluenced the observations made in this order. Further, it is hereby

directed the parties to complete and exchange their pleadings before the date

of commencement of hearing before the Learned NCLT.

Company Appeal (AT) (CH) No. 27 of 2022 37 of 38

77. With the above directions the Appeal is allowed. IAs if any, pending

stand closed. However, no orders as to cost.

[Justice M. Venugopal] Member (Judicial)

[Kanthi Narahari] Member (Technical) 2nd August, 2022

pks

Company Appeal (AT) (CH) No. 27 of 2022 38 of 38