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Judgment
Justice Anant Bijay Singh;
The appellants have 5 in numbers preferred this Appeal being aggrieved and dissatisfied by the order dated 23.12.2021 passed by the National Company Law Tribunal, Cuttack Bench, Cuttack in IA No. 3/CB/2021 in CP No. 108/CB/2021 wherein IA filed by the Respondents herein raising questions about the legality of Annual general Meeting sought to be convened on 23.11.2021 by the Respondents (the Appellants herein), and other incidental reliefs. By which the National Company Law Tribunal passed the following orders:
“14.As a matter of fact, at this stage, this Tribunal ALLOWS the instant application to the extent that AGM of the Company held on 23.11.2021 is void and thereby Orders that no decision taken in the said AGM shall be implemented. Status Quo as before conduct of the AGM on 23.11.2021, to be maintained in all the matters taken up in the meeting. Respondents to disclose all details of sale of assets of the Company and the utilization of funds for the period from 01.04.2020 till 31.10.2021 on affidavit.
15.Accordingly, this IA No. 3/CB/2021 is C.P. (IB) No. 108/CTB/2021 is disposed of.”
The facts giving rise to this Appeal are as follows:
The Appellant Company is engaged in providing of healthcare related services and the Respondents herein were the Directors and shareholders of the Company who were essentially running the management and administration of the Company since its inception till last quarter of 2020.
ii) Further case is that the Company even after having a set clientele base and good reputation among the general public had run into severe losses due to the mismanagement and financial embezzlement committed by the Respondents while they were incharge of the administration, financial affairs and management of the Appellant No. 1 Company.
iii) That due to the continuous losses occurring in the Company, the Board of Directors of the Company, conducted a Board meeting on 13.10.2020 and passed a resolution for conducting a special audit of the accounts of the Company by engaging an independent auditor. The appointment of an independent auditor for conducting a special audit of the Company was in process, the Respondents herein filed a case before the NCLT against the Appellants alleging that the Appellants were engaging in the acts of oppression and mismanagement in the Company and it was registered as CP No. 108/CTB/2021.
iv) Further case is that the Appellant being present incharge of the Company are also duty bound to comply with the statutory norms and in consonance of that they had called for the Annual General Meeting of the Company on 23.11.2021 for conducting ordinary business of the Company relating to adopting of audited balance sheets as on 31.03.2021, Profit and Loss account, cash flow statement of the year together with schedules and notes attached thereto along with report of the Auditors and Directors etc. A detailed agenda for the Annual General Meeting held on 23.11.2021 as provided in the notice.
Further case is that in terms of Section 96 of the Companies Act, 2013 read with the order dated 23.09.2021 passed by the RoC, Bilaspur, Chhattisgarh, the Appellant was legally required to convene and hold its Annual General Meeting for the year FY 2020-21 on or before 30.11.2021. Thereafter, the Appellants called for the Annual General Meeting on 23.11.2021.
vi) It is further case is that as per the Article 43(iii) of the Article of Association of the Appellant Company, a general meeting of the Company can be called by giving at least seven days of prior notice to the members and in the instant case 9 days prior notice was given for holding the meeting.
vii) Further case is that after receipt of the notice regarding conducting of Annual General Meeting on 23.11.2021, the Respondents filed an interim application before the Ld. Tribunal and after hearing the parties the said application was disposed of with the above (supra) findings. Hence this Appeal.
From the perusal of the order dated 29.09.2022 it appears that the parties were directed to file their written submissions. After perused the record, it appears that the Ld. Counsel for the Respondent has filed their written submissions and Ld. Counsel for the Appellant has not filed their written submissions.
The Ld. Sr. Counsel for the Appellant during the course of argument and assailing the impugned order submitted that the Article 42 of the Articles of Association of the Appellant Company excludes Annual General Meeting from the definition of General Meeting.
It is further submitted that the Annual General Meeting of the Company conducted on 23.11.2021 was in accordance with the Articles of Association of the Company and other applicable laws. This aspect of the matter has not been considered by the Tribunal while passing the impugned order, therefore, the impugned order is fit to be dismissed and the instant Appeal be allowed.
The Ld. Counsel for the Respondent during the course of argument and in his written submissions submitted that not every General Meeting can be referred as Annual General Meeting under the Companies Act, and Annual General Meeting is a special meeting which is conducted once in a financial year to enable the Board Members and Shareholders to interact, to discuss the performance of the Company and to ponder upon the roadmap for coming financial year. The agendas discussed for Annual General Meeting are extensive and are different from those circulated for other meetings. Hence, Section 101 of the Companies Act, 2013 provides for 21 days’ notice to convene Annual General Meeting as also it provides for shorter notice if consent in writing or through electronic mode is accorded by not less than 95% of the members entitled to vote thereat.
It is further submitted that the main petition i.e. CP No. 108/CTB/2021 is still pending before the Tribunal and the Appellants preferred this Appeal against the interim order.
To bring clarity on related provisions of the Companies Act, 2013, Sections 96 & 101 are extracted below with which Learned Tribunal (NCLT) may take to glance through and pass appropriate orders:
“96.Annual general meeting.- (1) Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:
Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year:
Provided further that if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation:
Provided also that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall be held, by a period not exceeding three months.
(2)Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate:
Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance:
Provided that the Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose. Explanation.—For the purposes of this sub-section, “National Holiday” means and includes a day declared as National Holiday by the Central Government.
101.Notice of meeting.- (1) A general meeting of a company may be called by giving not less than clear twenty-one days’ notice either in writing or through electronic mode in such manner as may be prescribed:
Provided that a general meeting may be called after giving a shorter notice than that specified in this sub-section if consent, in writing or by electronic mode, is accorded thereto-
(i)in the case of annual general meeting, by not less than ninety-five per cent. of the members entitled to vote thereat; and
(ii)in the case of any other general meeting, by members of the company-
(a)holding, if the company has a share capital, majority in number of members entitled to vote and who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
(b)having, if the company has no share capital, not less than ninety-five per cent. of the total voting power exercisable at that meeting:
Provided further that where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter.
(2)Every notice of a meeting shall specify the place, date, day and the hour of the meeting and shall contain a statement of the business to be transacted at such meeting.
(3)The notice of every meeting of the company shall be given to—
(a)every member of the company, legal representative of any deceased member or the assignee of an insolvent member;
(b)the auditor or auditors of the company; and
(c)every director of the company.
(4)Any accidental omission to give notice to, or the non-receipt of such notice by, any member or other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting.”
After hearing the parties and having gone through the record, we noticed that main petition is pending before the Tribunal for consideration. We dispose of the instant Appeal with a request to the National Company Law Tribunal, Cuttack Bench, Cuttack to expedite the matter and dispose of at an early date by considering all the issues raised by the parties including issue of Annual General Meeting.
With these observations, the instant Appeal is disposed of.
Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the National Company Law Tribunal, Cuttack Bench, Cuttack, forthwith.