Rahat Gupta vs Sandhya Kumar Gupta And Ors.

M.M. Kumar, CJ

This petition filed under Section 241 of the Companies Act, 2013 alleges mismanagement and oppression of the petitioner. The prayer made in this petition in Para 7 reads as under:-

"a) Declare the respondent No. 1 and 2 being as 'delinquent director' and be removed from the Board of Directors of the respondent No. 1 for their blatant acts of mismanagement perpetrated against the petitioner as well as against the respondent No. 3;

b) Reconstitute the Board of Directors of respondent No. 3 in exclusion of respondent No. 1 and 2 and/or his officer, agent, servant or representative;

c) Direct respondent Nos. 1 and 2 to restitute under gains made by themselves which lead to losses being suffered by the petitioner and respondent No. 3;

d) Direct the respondent No. 1 and 2 to restitute and restore the wealth of respondent No. 3 which got eroded due to their unlawful actions.

e) Direct the respondent No. 1 and 2 to return the funds unlawfully taken from the respondent No. 3 and the petitioner;

f) Direct the respondent No. 1 and 2 to disclose their assets, bank accounts and net worth;

g) Costs of and/or incidental to this petition he said by the respondents; h) Direct the respondent No. 1 and 2 not to alienate any interest in any asset anywhere so that recoveries can be effected against them;

i) Such further or other order or orders be made and/or direction or

j) Directors be given, as this Hon'ble Tribunal may deem fit and proper."

A perusal of the aforesaid prayer would show that no relief has been sought by the petitioner to declare him share-holder to the extent of 20% or over 10%. In para 1 and 2 all that has been stated is that the petitioner had subscribed to the share capital to the extent of 20% at the time of incorporation. However, it is conceded position that at that time he was holding 20% shareholding and thereafter ceased to be the shareholder. The present share-holding has been given in para 1.2 which is as under:-

Name of Share Holder

Number of Shares

Percentage of Share Holding

Sandhya Gupta

55000

58%

Arzoo Gupta

40000

42%

Total

95000

100%

Learned counsel for the petitioner was confronted with the provisions of Section 244 of the Companies Act, 2013 and we asked him as to how the petitioner answers the requirement of 244(1) (a), so as to acquire eligibility to prefer the present petition under Section 241 & 242 of Companies Act, 2013. The provisions contained in Section 244 of the Companies Act, 2013 in regard to maintainability of the petition are mandatory which envisage as follows:

Right to apply under section 241.--(1) The following members of a company shall have the right to apply under section 241, namely:--

(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares;

(b)............

(emphasis added)

A perusal of the aforesaid provision shows that in order to maintain a petition under Section 241, a threshold has been provided for a member to invoke the jurisdiction. Accordingly, a member or the members must be holding not less than 1/10 of issued share capital. There is no averment in the petition to show that on the date of filing of the petition on 26.10.2018, the petitioner held 1/10 of the issued share capital of the company.

There is no whisper challenging the transfer of share-holding, as the petitioner himself has annexed certified copy of the resolution passed in the meeting of the Board of Directors on 25.07.2016 which shows his share was transferred to Ms. Sandhya Gupta. In item No. 2 under the caption TRANSFER OF SHARES' 2000 equity shares belonging to Rahat Gupta were transferred to Sandhya Gupta. The resolution of the Board of Directors reads as under:-

"RESOLVED THAT Pursuant to Section 56 of the Companies Act, 2013 and sub-rule (1) of Rule 11 of the Companies (Share Capital and Debentures) Rules 2014 and the other applicable provisions of the Act, 1 (One) no. of Share Transfer Application comprising of 2000 (Two Thousand) Equity Shares be and is hereby approved and that the shares be transferred as per details mentioned below:-

Date

Transfer or Name

Share Dist. No

Share Cert. No

No of Share

Transferee Name

25.07.2016

Rahat Gupta

6001-8000

2

2009

Sandhya Gupta

FURTHER RESOLVED THAT Mr. KAMAL KUMAR GUPTA and Ms. SANDHYA GUPTA, Directors of the Company be and is hereby authorized to approve the Transfer of shares and sign all the documents or transfer deed relating to transfer of share and also authorized to make the necessary entries in the Register of Members/ Transfer".

A perusal of the aforesaid resolution does not leave any manner of doubt that from July, 2016 the petitioner ceased to be a member of respondent No. 3 company and there is no challenge in the petition in respect of the aforesaid transfer nor there is any such prayer.

The petitioner would not qualify under the other part of the provision which entitle one tenth of the total number of its members because petitioner is not a member of the Company having 'no share'.

The challenge to the resignation rendered by the petitioner on 22.07.2016 would also not be acceptable on the pretext that the petitioner came to know about his removal as director only in October, 2018. A large number of meetings of the Board of Directors have been held since then. The Annual General Meetings have been held every year and a vigilant member of the company as a director is bound to raise question if he fails to receive notice of AGM; or even otherwise denied participation in the meeting of the Board of Directors since 22.07.2016. The AGM have passed accounts which was held in September 2016, 2017 and 2018. It is not acceptable that a person who assumes himself to be a shareholder in the past would not know that he has been removed as a director and that he is no longer a shareholder in respondent No. 3 company. The petitioner has misused the process of law. The petition is not maintainable as it fails to answer the discretion required by Section 244 (1) of the Act. Even on merit the petition lacks content.

Accordingly, the petition is dismissed with cost of Rs. 1,00,000/-.