Radhakrishnan Babunirmala vs Jayaram Velekkat Ravindranathan

Company Appeal (AT) (CH) No. 48/2023 (Filed under Section 421 of the Companies Act, 2013)

(Arising out of the Impugned Order dated 16/03/2023 in TCP/42/KOB/2019, passed by the National Company Law Tribunal, Kochi Bench, Kerala)

In the matter of: Radhakrishnan Babu Nirmala S/o Babu Rajendran, TC-4/1490(1), CVRA 28, Cliff Valley, Kuravankonam Kowdiar, Thiruvananthapuram - 695003, Kerala ...Appellant

V

1. Precise Limbus Eye Care Private Limited TC-85/975, (Old TC 29/728), DERA 16, Palkulangara, Pettah P O, Thiruvananthapuram 695024 Kerala, India 2. Jayaram Velekkat Ravindranathan S/o Ravindranathan Velekkat Kunjayyappan, TC-85/975, Prabhatham, DERA 16, Palkulangara, Pettah P O, Thiruvananthapuram 695024 Kerala, India 3. Aswathy Chandranath W/o Jayaram Velekkat Ravindranathan Prabhatham, DERA 16, Palkulangara, Pettah P O, Thiruvananthapuram 695024 Kerala, India

Company Appeal (AT) (CH) No. 48/2023 Page 1 of 6 4. Vishnulal Murali Mohanlal S/o Murli Mohanlal, Thettivelil, Kappil Mekku, Krishnapuram Post, Alappuzha-690533, Kerala ...Respondents

Present : For Appellant : Mr. Bijoy P Pulipra, Advocate

JUDGMENT

(Physical Mode) [Per: Shreesha Merla, Member (Technical)]

1) Aggrieved by the Impugned order dated 16-03-2023 in TCP/42/KOB/2019 passed by

the National Company Law Tribunal, Kochi Bench, the Petitioner/Mr. Radhakrishnan Babu

Nirmala preferred this Appeal under Section 421 of the Companies Act, 2013 (hereinafter

referred to as 'Act').

2) By the Impugned Order, the NCLT has dismissed the Petition preferred by the

Petitioner/Appellant framing the following issues:

(i) Whether the enhancement of authorized share capital by resolution dated 31.03.2016 is valid? (ii) Whether the Annual General Meeting held on 05.10.2017 is valid?

(iii) Whether the Form DIR-12 in respect of appointment of 3rd and 4th respondents is valid?

The Learned Counsel for the Appellant submitted that the 'Tribunal' while passing the

Impugned Order has failed to consider the legality of the enhancement of the authorized Share

Capital from Rs.1 lakh to Rs.20 lakhs made on 31.03.2016 and the consequent Amendment to

the Memorandum of Association (MOA) and arrived at an erroneous conclusion that the same

is in compliance with Section 61(1) of the Companies Act, 2013.

Company Appeal (AT) (CH) No. 48/2023 Page 2 of 6

3) It is submitted that the Tribunal has failed to consider the legality of the Extraordinary

General Meeting (EGM) conducted on 31.03.2016 without the approval of the Board of

Directors is non-compliance with Clause 43 of the Articles of Association of the 1st Respondent

Company and arrived at an erroneous conclusion.

4) It is also submitted that the Board meeting held on 07.03.2017 was illegal as it is

contrary to the declaration, the Annual Returns filed by the Company. It is vehemently argued

that the convening of the Extraordinary General Meeting (EGM) and filing of returns with

ROC, for enhancing the Authorized Share Capital amounts to fraud within the meaning of

Sections 447, 448 and 449 of the Companies Act, 2013. Form SH7 and NGT-14 requirements

were not complied with. The allotment of 14,000 equity shares ought to have been declared as

null and void. E-Form, PAS No.3 contains the wrong particulars about the name of the

Company, the amount of share application money received, shares allotted, names of allottees

and their addresses and thereby ought not to have been taken into consideration. The Meeting

held on 01.09.2016 is in violation of the Provisions of Section 101 of the Act together with the

adjourned AGM 28.09.2017, which was called without the approval of the Board and is

therefore non-est due to the violation of Clause-43 of the Articles of Association (AoA). A

Single Member does not constitute a quorum which is provided for under Section 97 of the Act

and therefore the AGM on 03.10.2017, is non-est. It is argued that the Tribunal has also not

considered the legality of INC-22 filed with the Registrar of Companies authorizing the shifting

of the Registered Office based on the AGM conducted on 05.10.2007 and failed to note that

the actions of the Respondents amount to fraud, within the meaning of Sections 447, 448 and

449 of the Act.

Company Appeal (AT) (CH) No. 48/2023 Page 3 of 6

5) It is seen from the record that the Petitioner and the 2nd Respondent are the

Promoters/shareholders of M/s. Precise Limbus Eye Care Pvt. Ltd./1st Respondent Company,

which was incorporated for the purpose of running an eye-care Hospital. The Petitioner was

taking care of the administration of the Company and the 2nd Respondent was handling finance

function. Admittedly the Authorized Share Capital of the Company was Rs.1 lakh and it was

increased to Rs.20 lakhs and the paid-up capital was also increased from Rs.1 lakh to Rs.15

lakhs on 31.03.2016. It is the case of the Appellant that this increase is illegal and fraudulent

and is liable to be set aside.

6) It is the case of the Appellant that the 2nd Respondent submitted incomplete forms with

the ROC to give an impression that there was a Board Meeting on 07.03.2016 to call and hold

an Extraordinary General Meeting (EGM) and a General Meeting on 31.03.2016.

7) It is the case of the Appellant that though the record of the RoC shows that there were

several Board meetings held, no such Meeting was ever held. It is also the case of the Appellant

that there are only two Directors and two Shareholders and without the presence of the

Petitioner/Appellant there was no proper quorum. The Petitioner had received the Notice dated

07.09.2017 for the AGM to be held on 28.09.2017 for adopting the Annual Accounts of the

Company for the year ended 31.03.2017, but there was no Board Meeting on 07.09.2017 to

approve the Notice of the AGM and hence the Notice is invalid.

8) A perusal of the material on record shows that the Petitioner had sent an e-mail dated

26.09.2017 objecting to the AGM held on 28.09.2017 and on 03.10.2017 the

Petitioner/Appellant received a Notice that the AGM would be held on 05.10.2017. Another

notice was also received on 07.10.2017 calling for a Board Meeting on 14.10.2017 only to add

more number of Members. It is contended that the 2nd respondent has filed INC-22 with the

Registrar of the Companies, authorizing the shifting of the office from its registered office

which is based on the meeting said to be conducted on 05.10.2017, against which act the

Company Appeal (AT) (CH) No. 48/2023 Page 4 of 6 Petitioner/Appellant had lodged a Complaint with the Police. On 13.10.2017, the Petitioner

received an e-mail informing that due to the administrative reasons, the meeting was postponed

to 18.10.2017. It is seen from the record that the Company Petition was filed on 25.10.2017. It

is the case of the Petitioner/Appellant that the 2nd Respondent had digitally signed and filed the

DIR-12 on 04.11.2017 showing that the 3rd and 4th Respondents were appointed as Directors

in the AGM held on 05.10.2017.

9) As regarding the contention of the Learned Counsel for the Appellant that the

enhancement of the Authorized Share Capital on 31.03.2016 is illegal, it is seen from the record

that the extract of the Resolution Anx.R6 in which the Petitioner and the 2nd Respondent had

signed, establishes the enhancement of the Authorized Share Capital. The Financial Statements

of the Assessment Year of 2015-16, 2016-17 showing the enhanced share capital further

substantiates that the enhanced share capital was accepted by the Petitioner as the Anx-4

document shows that these Financial Statements have been duly signed by the Petitioner, the

2nd Respondent and the Auditor of the Company. Therefore, this Tribunal agrees with the

finding of the NCLT that the enhancement of the Share Capital of the 1st Respondent Company,

vide a Company Resolution dated 31.03.2016, is valid.

10) A perusal of the material on record shows that there is some strained relationship

between the two Directors viz. the Petitioner and the 2nd Respondent. A notice dated

07.09.2017 was issued to the Petitioner adhering with the statutory compliances of convening

the AGM before 30.09.2017 and the Petitioner/Appellant is informed that the said AGM is

scheduled to be held on 28.09.2017. It is not in dispute that the 'Appellant did not attend the

meeting held on 28.09.2017 and hence for want of quorum, the AGM was adjourned to the

same date in the next week i.e. 05.10.2017 and once again a Notice was sent to the Appellant

informing the adjourned date of AGM, vide a letter on 29.09.2017 and also an e-mail on

03.10.2017. Admittedly, on 05.10.2017 the petitioner did not attend the AGM. In compliance

Company Appeal (AT) (CH) No. 48/2023 Page 5 of 6 of Section 103(3) of the Act, the AGM was held and the 3rd and 4th Respondents were appointed

as Directors. In this meeting, a Resolution was passed shifting the Registered Office of the 1st

Respondent Company. A Board Meeting was once again called on 14.10.2017 for approving

the Financial Statements and the Directors and Auditor's report. Once again the Appellant did

not attend the Board Meeting held on 14.10.2017.

11) The record shows that the Petitioner owns 10% shares and the Minority Shareholder

and had not attended the Board Meetings held on 28.09.2017, 05.10.2017 and also on

14.10.2017, despite service of notice, and therefore, now belatedly cannot raise the contention

that the induction of the 3rd and 4th Respondents as Directors, is invalid, filing of the financial

statements is non-est and that the very meetings have to be declared as illegal.

For all the aforenoted reasons, we do not find any legality or infirmity in the well-

reasoned order of the NCLT, Kochi Bench and therefore this Appeal is dismissed at the

threshold. No costs. Any pending IAs stand closed.

[Justice M. Venugopal] Member (Judicial)

[Shreesha Merla] Member (Technical) 08.08.2023 SE/TM

Company Appeal (AT) (CH) No. 48/2023 Page 6 of 6