Sri Dhanada Laboratories Private ... vs Namireddy Raghu Ram Reddy & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI COMPANY APPEAL (AT) NO. 154 of 2020 (Arising out of the Order dated 18th August, 2020 passed by National Company Law Tribunal, Hyderabad Bench, in C.P. No. - 93/2013 in TP. No. 106/241/HDB/2016

IN THE MATTER OF:

1. Sri Dhanada Laboratories Private Limited Flat No. 104, Plot No. 441 & 442, Royal Cedar, HIG, Phase - VI, Kukatpally, Hyderabad, Telangana - 500072. ...Appellant No. 1

2. Dr. Namallapudi Kasthur Reddy Residing at: 705, Emerald Block, Myhome Jewels, Madinaguda, Hyderabad, Telangana - 500049. ...Appellant No. 2

3. Smt. N. Rama Devi Residing at: 705, Emerald Block, Myhome Jewels, Madinaguda, Hyderabad, Telangana - 500049. ...Appellant No. 3

4. Ms. N. Poorwa Reddy D/o N. Kashur Reddy, Residing at: 705, Emerald Block, Myhome Jewels, Madinaguda, Hyderabad, Telangana - 500049. ...Appellant No. 4

5. Master N. Suhruth Reddy, Represented by his father and Natural Guardian N. Kasthur Reddy, Residing at: 705, Emerald Block, Myhome Jewels, Madinaguda, Hyderabad, Telangana - 500049. ...Appellant No. 5

Versus

1. Namireddy Raghu Ram Reddy, S/o Sri N. Seetharama Reddy R/o Flat No. 502, Prakjyothi High Lands, Diary Farm Cross Roads, ...Respondent No. 1

Rajendra Nagar, Hyderabad - 500048, -2- Comp. App. (AT) No. 154 of 2020

Telangana.

2. Mr. Namireddy Raja Ram Reddy, S/o Sri N. Seetharam Reddy, Residing at: 18-111, Kamlanagar, Dilsukhnagar, Hyderabad, Telangana - 500060. ...Respondent No. 2

3. Mr. Srinivas Rao Marikanti, Plot No. 90, Flat No. 401, Sri Mahalakshmi Residency, Jayanagar, Kutatpally, Hyderabad, Telangana - 500072. ...Respondent No. 3

4. Mr. Vinit Reddy Kolanu, H. No. 2-21146/7/9/A New Nallankunta, Hyderabad, Telangana - 500044. ...Respondent No. 4

Present

For Appellant: Mr. Dhruba Mukherjee, Sr. Advocate with Mr. Kumar Anurag Singh, Ms. Ekta Bharati, Mr. Zain A. Khan, Mr. S. Udaya Kumar Sagar, Dr. K. Lakshmi Narasimha, Ms. Bina Madhavan & Mr. Lakshay Saini, Advocates.

For Respondent No. 1 Mr. S. Ravi, Sr. Advocate with Mr. L. & 2: Venkateshwar Rao, Advocates for R-1 & R-2.

(JUDGEMENT)

1. Challenge in this Appeal under Section 421 of the Companies Act, 2013,

(hereinafter referred to as 'The Act'), is against the Impugned Order dated

18.08.2020 passed by the National Company Law Tribunal, Hyderabad Bench in

C.P. No. - 93/2013 in T.P. No. 106/241/HDB/2016, by which Order, NCLT has

allowed the Company Petition observing that the Board Meeting held on

01.10.2012 is invalid in the eyes of law and therefore the appointment of

Respondents 2 to 5 is Additional Directors is also invalid; that the allotment of -3- Comp. App. (AT) No. 154 of 2020

shares made on 04.03.2013, 22.04.2013 to the second, third, sixth & seventh

Respondents is also illegal and directed the Company to cancel the said allotment

and rectify the register of Members in order to restore the original Shareholding

pattern; and lastly that the removal of the Petitioners from the directorship of the

Company under Section 284 of the Companies Act 1956 in the AGM held on

07.09.2013, is illegal and therefore null and void.

2. Submissions of the Learned Sr. Counsel appearing on behalf of the

Appellant:

• It is submitted by the Learned Counsel for the Appellant that on

23.11.2013, the first and the second Respondent filed an Application under

Sections 397 & 398 of the Companies Act, 1956 (now Sections 241 & 242

of the Act) and under Section 59 of the Act before the NCLT against the

Company seeking the Board Resolution dated 01.10.2012 as invalid and

declare the allotment of shares in favour of the Appellants nos. 2, 3, 4 & 5

as null and void. It is submitted that there is no clear averment in the

Company Petition alleging Oppression and Mismanagement which is the

condition precedent for entertaining any such Company Petition. NCLT

did not formulate any issues relating to oppressive acts against the

Respondents or if the Company Affairs have been conducted in a manner

prejudicial or oppressive to any Members or in any public interest. It is

further submitted that as on the date of the filing of the Company Petition

i.e., 23.11.2013, the term of the Appellants as Additional Directors came

to an end and hence the entire case is infructuous. -4- Comp. App. (AT) No. 154 of 2020

• Learned Counsel strenuously argued that the Tribunal cannot go into the

aspect of forgery and disputed questions of facts and law. It is argued that

as far as the alleged forgery is concerned, the matter is pending before the

Competent Tribunal Court and therefore this Tribunal cannot rely upon the

same as all the material papers filed by the Respondents by way of a

Rejoinder before the NCLT was not part of the documents filed before the

CLB. The alleged report of M/s. Truth Labs dated 06.05.2014 is

subsequent to the filing of the Company Petition 93/2013 and should not

be given any value as it is created by way of private arrangement by

Respondents 1 & 2. This was filed as CA 01/2014 before the Company

Law Board by the Respondents and the Appellants have also filed another

Report from the same Truth Labs declined to take a specific stand in the

matter, based upon which CA 01/2014 was disposed of. NCLT Hyderabad

had ignored this objection raised by the Appellants.

• It is vehemently contended by the Learned Counsel for the Appellant that

the second Respondent is possessing Digital Signature Certificates ('DSC')

since 2013; that while alleging that the second Appellant misused its DSC,

the second Respondent made no specific allegation about misuse of any

particular DSC. As per the documents uploaded on the MCA portal both

the Respondents attended the Board Meeting dated 01.10.2012 and

intentionally omitted to disclose as to who was marshalling the day to day

affairs of the Company during the period 2010 to 2013. Unless and until -5- Comp. App. (AT) No. 154 of 2020

the said Criminal Court gives a finding that these are forged, the

presumption of law is always in favour of the Appellants, these Minutes

were filed by the Respondents themselves before the CLB and never

challenged any of the proceedings in their Company Petition by the time

the Respondents have filed their original Company Petition it had become

infructuous as the term of the Appellant as Additional Directors ended on

30.09.2019.

• It is contended that the NCLT had decided the case based on assumptions

ignoring the fact that all the Directors were present in the Meeting which

is clearly evidenced by the Minutes of the Meeting prepared by the second

Respondent which is uploaded on the MCA portal that two Directors were

present and even assuming that only one Director was present, it means

that their attendance was 50%. It is the case of the Appellants that as per

Section 287(2) of the Act, which describes the quorum for Meetings, the

quorum for the Meetings of the Board of Directors shall be 1/3rd of its total

strength or two Directors whichever is higher. In terms of Section 287(2)

the quorum is complete as in the present case, the total Directors are only

two and even if one Director is present it comes to 50%. The question of

interplay of sub-Section (2) does not arise when the total number of

Directors is only two in number.

-6- Comp. App. (AT) No. 154 of 2020

3. Submissions of the Learned Sr. Counsel appearing on behalf of the

Respondents:

• It is submitted that the authorized capital of the Company is Rs. 5Crs./

divided into 50,00,000 Equity Shares of Rs.10 each and that Respondents

1 & 2 are the only subscribers to the entire issued and paid up capital of

Rs.1Lakh divided into 10,000 Equity Shares of Rs.10 each fully paid up.

The Respondents constituting the Board of Directors had indicated the

second Appellant as an Additional Director on 02.09.2011 in accordance

with the Article 135 of the Articles of Association read with Section 260

of the Companies Act, 1956 when he seems to be a Director by virtue of

oppression of law on 29.09.2011, on which date, the AGM of the Meeting

was held. As serious disputes had arisen between them, the Board did not

reappoint the second Appellant as an Additional Director. Cases were filed

by the Appellants against the Respondents invoking the Arbitration Clause

in the Partnership Deed.

• It is submitted that the second Appellant in connivance with an agent

'R3 e-consulting', for issuance of Digital Signature Certificate ('DSC'),

forged the signature of the second Respondent and obtained the DSC in the

name as second Respondent on 05.03.2013. The Minutes of the Meeting

showing that the Board Meeting took place on 01.10.2012, is also

fabricated. Respondents 3 & 4 were inducted as Additional Directors by

using the DSC uploaded Form 32 with the Ministry of Corporate Affairs -7- Comp. App. (AT) No. 154 of 2020

('MCA') on 05.03.2013. The second Appellant allotted shares to the

Company himself and Appellants 3 to 5 in two tranches of different dates

and appointed himself as a Managing Director and his Wife who is the third

Appellant as the Executive Director and further shifted to the Registered

Office and removed the first and second Respondents from the

Directorship, which amounts to Oppression and Mismanagement.

• It is submitted that the Board Resolution dated 01.10.2012 and the

uploading of the fabricated Form 32 can also be seen from the fact that

Respondent 4 who was said to be present at the Board Meeting on

01.10.2012 was actually not even present in India and R-3 had recorded

under Section 164 of the Criminal Procedure Code before the IXth

Metropolitan Magistrate that he had never attended any Board Meeting on

01.10.2012, nor did he given any consent to be the Director to the

Company.

• It is argued that the consent letters of Appellant 3 and Respondent 4

accepting their appointment as Directors, are both dated 01.10.2012

reflecting their respective DIN numbers but they were allotted the said DIN

numbers by MCA only on 26.12.2012 and 21.12.2012 respectively, which

goes to show that these consent letters were backdated.

• Learned Counsel drew our attention to the Complaint made to the Assistant

Commissioner of Police ('ACP') with respect to the details of the DSC

serial nos. of Sri Dhanada Laboratories Private Limited. It is submitted that -8- Comp. App. (AT) No. 154 of 2020

'Fraud vitiates everything' and the same was laid down by the Hon'ble

Supreme Court in a catena of Judgements. A few of them are detailed as

hereunder:

o 'Smt. Srisht Dhawan' Vs. 'M/s. Shaw Brothers'1. o 'Madhukar Sadbha Shivarkar' Vs. 'State of Maharashra'2. o 'Meghmala & Ors.' Vs. 'G. Narasimha Reddy & Ors.'3. o 'S.P. Chengalvaraya Naidu (Dead) by L.Rs.' Vs. 'Jagannath (Dead) by L.Rs. and Ors.'4.

• It is contended that a person who basis his case on falsehood has no right

to approach any Court. It is submitted that NCLT has given a right finding

that there was no quorum as required under Section 287(2) of the

Companies Act, 1956 for the alleged Board Meeting to have been held on

01.10.2012.

Assessment:

4. The issues framed by NCLT in para 10 of the Order are as follows:

"(1) Whether the board meeting held on 01.10.2012 and the appointment of R2 to R5 therein is valid or not;

(2) Whether the allotment of shares made on 04.03.2013 and 22.04.2013 to R2, R3, R6 and R7 is legal or illegal;

and

(3) Whether the removal of the petitioners from the directorship of the company under section 284 of the Act, 1956 is legal or illegal."

1 (1992) 1 SCC 534 2 (2015) 6 SCC 557 3 (2010) 8 SCC 383 4 (1994) 1 SCC 1 -9- Comp. App. (AT) No. 154 of 2020

5. It is argued by the Learned Counsel for the Appellant that these issues have

nothing to do with the case of Oppression and Mismanagement and that the main

reliefs sought for in the Company Petition filed under Sections 397 and 398 read

with Section 402 of the Act are as follows:

"7.1 To declare that the appointment of Second to Fifth Respondents at the alleged meeting of the Board of Directors dated 01.10.2012 as additional directors of the Company as invalid and non-est in law;

7.2 To declare the Board meeting dated 01.10.2012 where the Second, Third, Fourth and Fifth Respondents got inducted as additional directors of the First Respondent Company as null and void;

7.3 To declare that the alleged allotments purported to have been made on 04.03.2013 in favour of the Second, Third, Sixth and Seventh Respondent and the Second Petitioner as reflected in the Para 6.9 of the Petition and the form no. 2 filed on behalf of the First Respondent Company as totally invalid and without basis and consequently declare that the Second, Third, Sixth and Seventh Respondents are not shareholders of the First Respondent Company;

7.4 To declare that the alleged allotments purported to have been made on 22.04.2013 in favour of the Second and Third Respondents as reflected in Para 6.10 of the Petitioner and the form no. 2 filed on behalf of the First Respondent Company as totally invalid and without basis and consequently declare that the Second and Third Respondents are not shareholders of the First Respondent Company;

7.5 To grant such other reliefs as this Hon'ble Bench may fell just and proper in the facts and circumstances of the case;

7.6 To award costs relating to the present proceedings." -10- Comp. App. (AT) No. 154 of 2020

6. Learned Counsel for the Appellant contended that there was no pleading

regarding Oppression and Mismanagement, and that a bare perusal of the reliefs

show that they are basically with respect to 'Allotment of Shares'.

7. It is the case of the Appellant that NCLT did not formulate any issues

relating to Oppression and Mismanagement, and that there were no averments in

the Petition regarding Oppression and Mismanagement and that this is a condition

precedent for entertaining a Company Petition under Sections 241 and 242 of the

Companies Act 2013. At this juncture, we find it relevant to reproduce Sections

241 & 242 of the Companies Act, 2013, (Sections 397 & 398 of the Companies

Act, 1956) for ready reference:

"241. (1) Any member of a company who complains that--

(a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company;

or

(b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to -11- Comp. App. (AT) No. 154 of 2020

apply under section 244, for an order under this Chapter.

(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.

242. (1) If, on any application made under section 241, the Tribunal is of the opinion--

(a) that the company's affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and

(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

(2) Without prejudice to the generality of the powers under sub-section (1), an order under that sub-section may provide for--

(a) the regulation of conduct of affairs of the company in future;

(b) the purchase of shares or interests of any members of the company by other members thereof or by the company;

(c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital;

(d) restrictions on the transfer or allotment of the shares of the company;

-12- Comp. App. (AT) No. 154 of 2020

(e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case;

(f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e):

Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned;

(g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference;

(h) removal of the managing director, manager or any of the directors of the company;

(i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims;

(j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h);

(k) appointment of such number of persons as directors, who may be required by the Tribunal to -13- Comp. App. (AT) No. 154 of 2020

report to the Tribunal on such matters as the Tribunal may direct;

(l) imposition of costs as may be deemed fit by the Tribunal;

(m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made.

(3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal.

(4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company's affairs upon such terms and conditions as appear to it to be just and equitable.

(5) Where an order of the Tribunal under sub-section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles.

(6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said provisions shall apply accordingly to the memorandum or articles so altered.

(7) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register the same.

(8) If a company contravenes the provisions of sub-

section (5), the company shall be punishable with fine -14- Comp. App. (AT) No. 154 of 2020

which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty- five thousand rupees but which may extend to one lakh rupees, or with both."

(Emphasis Supplied)

8. Learned Counsel placed reliance on the ratio of the Hon'ble Apex Court in

'Needle Industries (India) Ltd. & Ors.' Vs. 'Needle Industries Newey (India)

Holding Ltd. & Ors.'5 and in 'V.S. Krishnan & Ors.' Vs. 'Westfort Hi-tech

Hospital Ltd. & Ors.'6, in support of his submissions that no relief was claimed

with regard to Oppression and Mismanagement which is required under Sections

397 & 398 of the Companies Act 1956.

9. The Learned Counsel for the Respondent relied on the ratio of the Hon'ble

Supreme Court in 'Shashi Prakash Khemka (Dead) Through Legal

Representatives & Anr.' Vs. 'NEPC MICON (Now NEPC India Limited) &

Ors.'7, wherein the Hon'ble Apex Court has laid down as follows:

"6. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the powers would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded."

5

(1981) 3 SCC 333 6 (2008) 3 SCC 363 7 (2019) 18 SCC 569 -15- Comp. App. (AT) No. 154 of 2020

10. This Tribunal having gone through the issues framed by the NCLT are of

the view that they relate to the acts of 'Oppression and Mismanagement' affecting

the functioning of the Company and therefore have the jurisdiction to entertain

and adjudicate these acts of 'Oppression and Mismanagement' alleged to have

been committed by the Appellants under Sections 397 & 398 of the Companies

Act, 1956, (Sections 241 & 242 of the Companies Act, 2013). The issues raised

by the Respondents are reflected in para 7 of the Company Petition 93/2019 and

therefore it cannot be said that these issues were never pleaded or that these issues

do not form part of the 'acts' falling within the ambit of the definition of

'Oppression and Mismanagement' as defined under Sections 241 & 242 of the

Companies Act 2013. Keeping in view that Sections 241 & 242 of the Companies

Act 2013, deals with all 'acts' of 'Oppression and Mismanagement' and the issues

arising out of any such 'Allotment of Shares' and 'Removal of Directors' would

fall within the ambit of the 'Oppression and Mismanagement', we do not find any

substance in the contention of the Learned Counsel for the Appellants that this

was never pleaded or that there was no finding with respect to Oppression and

Mismanagement per se by the NCLT.

11. Now we address ourselves to the issue whether the Meeting actually took

place on 01.10.2012. It is not in dispute that the second Appellant had ceased the

to be the Director by virtue of operation of law on 29.09.2012 on which date the

AGM was held. This is relevant from the Form No. 3 filed on 25.11.2012, along

with the Annual Returns of the Company for the year ending 31.03.2012, which

clearly shows that the second Appellant ceased to be a Director of the Company. -16- Comp. App. (AT) No. 154 of 2020

It is the case of the Respondents that the documents of the Company were

uploaded to the RoC using the DSC of the first Respondent as the Appellant did

not have access to the DSC of R-1, without which they could not have uploaded

the fabricated documents and that the Appellants had made an Application on

05.03.2013, in the name of the second Respondent by forging his signature for

obtaining the DSC. Using the said DSC, the second Appellant had uploaded Form

32 on the same day i.e., on 05.03.2013, showing that Appellants 2 & 3 along with

Respondents 3 & 4 were inducted as an Additional Directors in the Board

Meeting alleged to have been held on 01.10.2012. It is the case of the Appellants

that the Tribunal cannot go into the aspect of forgery and disputed questions of

fact and also that NCLT had wrongly relied on the statement recorded under

Section 164 which is not admissible and that the matter is still pending before the

Criminal Court. It is also contended by the Learned Counsel for the Appellants

that these Witness Statements filed before the Criminal Court, were filed by

Respondents 1 & 2 by way of Rejoinder before NCLT, but not when the Company

Petition was filed before the CLB. This argument that the material papers were

filed before NCLT and not before the CLB has no legs to stand as a Witness

Statement itself is not denied and moreover when the matter is transferred from

CLB to NCLT, the proceedings continued before NCLT, which has been laid

down by the Hon'ble Supreme Court, in a catena of Judgements. At this juncture,

we find it relevant to reproduce the Report of Truth Labs relied upon by NCLT

in giving a finding that the Meeting dated 01.10.2012 never took place and that -17- Comp. App. (AT) No. 154 of 2020

the documents were fabricated. The final opinion of the copy of the Report dated

06.05.2014, submitted by Truth Labs (Annexure R-9) is reproduced as under: -18- Comp. App. (AT) No. 154 of 2020

12. The aforenoted Truth Labs gave an opinion that the signatures do not match

and have also given cogent reasons for the same. Apart from this Report, NCLT

has also placed reliance on a copy of the Report dated 19.02.2015, 10.04.2015,

29.07.2015, and 01.10.2015 from Andhra Pradesh Forensic Science

Laboratories pertaining to documents in Cr. No. 199/2014 and observed that

signatures were forged as per the reports given. FIR 199/2014 was lodged based

on the complaint given and a detailed investigation was conducted in respect of

the generation of the DSC of the second Respondent and chargesheet was filed

after receiving a Report from the Andhra Pradesh Forensic Science Laboratory.

We do not see any illegality in the findings given by NCLT having relied upon

both the Government Forensic Laboratory and also Truth Labs that the signatures

of the DSC of the second Respondent was forged and also that the signature of

the second Respondent in the Board Minutes dated 01.10.2012 and the abstract

of the Resolution dated 04.03.2013 filed with the RoC was also fabricated. The

pendency of the Criminal Case has no relevance to the adjudication by the NCLT

regarding 'acts' of 'Oppression and Mismanagement'. NCLT has only based its

observations that the Meeting had never taken place on the findings given by

Truth Labs and the Government Forensic Laboratory, 'apart from other material

on record'. It appears from the record that Respondent No. 4 disputes his presence

at the Board Meeting dated 01.10.2012. It is significant to mention that the letter

dated 11.05.2015 addressed by the Bureau of Immigration, Ministry of Home

Affairs, Government of India shows that the fourth Respondent had never

attended any Board Meeting on 01.10.2012 as he was travelling abroad as on -19- Comp. App. (AT) No. 154 of 2020

01.10.2012. Learned Counsel for the Respondent drew our attention to the

statement made by R3 before the IXth Metropolitan Magistrate that he never

attended the meeting on 01.10.2012, nor gave his consent to be a Director of the

Company. At this juncture, we find it relevant to reproduce the said letter given

by the Ministry of Corporate Affairs to the Assistant Commissioner of Police,

Cyber Crime, which reads as follows:

13. It is further seen from the record that the consent letters of the third

Appellant and the fourth Respondent accepting their appointments as Directors is

dated 01.10.2012, reflecting from respective DIN Nos., whereas they were -20- Comp. App. (AT) No. 154 of 2020

allotted the said DIN Nos. by the Ministry of Corporate Affairs only on

26.12.2012 and on 21.12.2012 respectively, which shows that the consent letters

were backdated to establish that the Board Meeting had indeed not taken place

on 01.10.2012.

14. We are also conscious of the fact that the Board Meeting supposed to have

been held on 01.10.2012 was held immediately on the next working day after the

AGM in which the tenure of the second Appellant as Additional Director had

come to an end. The issue of quorum and the attendance of the second Respondent

is not being gone into, though it is the case of the Appellant that an error had crept

into the pleadings that the second Respondent had not attended the Meeting, when

he had actually been present and attended the Meeting. R2, has categorically

denied having attended any such Meeting. This aspect is not being gone into at

this stage as the other documents on record have clearly established that the

Meeting on 01.10.2012, never took place whereby and whereunder a Resolution

is stated to have been passed in the presence of R3 & R4 who is supposed to have

attended as 'special invitees', (R4 was not even present in India, while R3 denies

attendance).

15. At the cost of repetition, it is reiterated that the issue of 'Allotment of

Shares' and 'Removal of Director', if alleged to be 'illegal' do fall within the

ambit of the 'acts' of 'Oppression and Mismanagement' as they affect the overall

functioning of the Company. We also observe that the NCLT has not based its

opinion about the disputed Meeting on 01/10/2012, solely on the reports of Truth

Labs filed before NCLT or that of Government Forensic Laboratory which is part -21- Comp. App. (AT) No. 154 of 2020

of the record at the Criminal Court but rather on the other documents as well,

including the relevant dates which substantiate the stand of the Respondents that

the disputed Meeting never took place on 01.10.2012. Therefore, the contention

of the Learned Counsel for the Appellant that the statements made under

Section 164 is inadmissible and that the Criminal Case is still pending, is of no

relevance here keeping in view the facts of the attendant case on hand.

16. This Tribunal is of the earnest view that NCLT had rightly referred to the

consent letters of the third Appellant and the fourth Respondent both being

backdated as the DIN Nos. were allotted by the Ministry of Corporate Affairs

only on 26.12.2012 and 21.12.2012 respectively, together with all Reports of

Truth Labs and Andhra Pradesh Foresnic Science Laboratories and also the

evidence that the fourth Respondent was not even in India as on the date and has

passed the Impugned Order, allowing the Company Petition.

17. For all the aforenoted reasons, this Appeal fails and is accordingly

dismissed. No order as to costs.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

Principal Bench, New Delhi 06th December, 2022

himanshu