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In the High Court of Kerala at Ernakulam Present The IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNESDAY, THE 09TH DAY OF SEPTEMBER 2020 / 18TH BHADRA, 1942 WA.No.1083 OF 2020 AGAINST THE COMMON JUDGMENT OF THE LEARNED SINGLE JUDGE IN WP(C) NO.14341/2020(P) DATED 22.07.2020 APPELLANTS/RESPONDENTS 1 AND 2: 1 SULOCHANA GUPTA, AGED 68 YEARS, W/O. RADHA BALLABH GUPTA, RESIDING AT HOUSE NO. CCVIII/2109, GUJARATI ROAD, MATTANCHERRY, KOCHI-682002. 2 MINAKSHI GUPTA, AGED 38 YEARS, W/O. MAHESH KUMAR GUPTA, RESIDING AT HOUSE NO. CCVIII/2109, GUJARATI ROAD, MATTANCHERRY, KOCHI-682002. BY ADVS. SRI.SUMUKAR NAINAN OOMMEN SMT. SHERRY SAMUEL OOMMEN RESPONDENTS/PETITIONERS 1 & 2 AND RESPONDENTS 3 & 4: 1 RBG ENTERPRISES PRIVATE LTD., HAVING ITS REGISTERED OFFICE AT VI/93 JEW TOWN, MATTANCHERRY P.O., KOCHI-682002, REPRESENTED BY ITS DIRECTOR RAJKUMAR GUPTA. 2 RAJKUMAR GUPTA, MANAGING DIRECTOR, RBG ENTERPRISES PRIVATE LIMITED, VI/93 JEW TOWN, MATTANCHERRY P.O., KOCHI-682002. 3 VISHNUKANT GUPTA, AGED 48 YEARS, S/O. RADHA BALLABH GUPTA, RBG ENTERPRISES PRIVATE LIMITED, RESIDING AT IB, SUNRISE APARTMENTS, INDIAN CHAMBER ROAD, MATTANCHERRY, KOCHI-682002. 4 MAHESH KUMAR GUPTA, AGED 43 YEARS, S/O. RADHA BALLABH GUPTA, DIRECTOR, RBG TRADING CORPORATION PRIVATE LIMITED, RESIDING AT HOUSE NO.CCVIII/2109, GUJARATI ROAD, MATTANCHERRY, KOCHI-682002. W.A.1083/2020 2 R1 & R2 BY ADVS. SRI.P.SANJAY SMT.A.PARVATHI MENON SRI.BIJU MEENATTOOR SRI.KIRAN NARAYANAN SRI.PAUL VARGHESE (PALLATH) SRI.P.A.MOHAMMED ASLAM SRI.PRASOON SUNNY SRI.RAHUL RAJ P. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 09.09.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.1083/2020 3 “C.R.” JUDGMENT Dated this the 9th day of September, 2020 Manikumar, CJ Instant writ appeal is filed by respondents 1 and 2, against the common judgment passed in W.P.(C) No.14341 of 2020 and other connected cases dated 22.07.2020, by which, a learned single Judge of this Court disposed of the writ petitions, by ordering thus: “................It is an admitted fact that the company petitions nine in number were pending before the NCLT. In the impugned order itself, the NCLT refers to the prayers in the company petitions and post the matter for hearing of the I.A. to 7.8.2020. The learned counsel for the petitioners has submitted that the proper course of action is to file an appeal before the NCLAT. It is submitted that such a course of action is presently rendered impossible due to the prevailing pandemic situation in the country and the petitioners are disabled from travelling to Delhi to prefer the appeal in view of the restrictions and the rising number of cases in the country. Though it is contended by the learned counsel appearing for the respondents that the writ petitions are not maintainable without the NCLT on the party array, I am of the opinion that in the facts and circumstances of the instant cases, especially in view of Ext.P6 request for adjournment made by the counsel for the petitioners before the NCLT, the passing of an order interdicting all financial transactions by running companies would create serious prejudice to the company. The technical objection raised that the NCLT is not made a party to these proceedings, according to me, should not stand in the way of the consideration of these writ petitions in the peculiar circumstances prevalent at present. W.A.1083/2020 4 In view of the fact that an appeal before the NCLAT is not practically possible, it would be for the petitioners to approach the NCLT seeking appropriate modification of the orders. However, till such time, in view of the present situation prevalent, I am of the opinion that the petitioners should be permitted to carry out the day-to-day financial transactions as are necessary for the conduct of the companies. It is made clear that general body meetings shall not be conducted and withdrawal of amounts from the accounts of the company shall not be made except for the carrying out of the day-today administration. The further financial transaction shall be subject to further orders to be passed either by the NCLT after hearing the parties or by the NCLAT in appeal. These writ petitions are ordered accordingly.” 2. Facts leading to the appeal are that, appellants are the shareholders of RBG Enterprises Pvt. Ltd., Kochi, represented by its Managing Director, respondent No.1, owned by the members of a family consisting of the founder of the group named 'RBG', the husband of the 1st appellant; Radha Ballabh Gupta (HUF), their eldest son, Rajkumar Gupta, respondent No.2 herein, Ritu Gupta, wife of the 2nd respondent, Vishnukant Gupta, their son, and the 3rd respondent herein, Anika Gupta, wife of the 3rd respondent, Mahesh Kumar Gupta (HUF), their youngest son, the 4th respondent herein, and Minakshi Gupta, wife of the 4th respondent, the 2nd appellant herein. The company is a family enterprise and its management vests in the Board of Directors and not in any one individual, including the Managing Director, which is clearly stated in Clause 34 of the Articles of Association. W.A.1083/2020 5 3. Appellants have further stated that as per Section 96(1) of the Companies Act, 2013, the company should hold its Annual General Meeting (AGM) every year and not more than 15 months shall elapse between the date of one AGM and of the next. The failure to hold the AGM attracts penalty provided under Section 99 of the Act. Furthermore, the financial statements, including the balance sheet and profit and loss account with the Auditor's report and Director's report, are to be laid before the AGM, as per Section 136 of the Act. In case of default, the company would be liable to pay penalty of INR 25,000/- and every Director of the Company, who was in default, would be liable to pay penalty of INR 5,000/-. 4. Appellants have further stated that the 2nd respondent has not obtained approval from them or the above mentioned majority shareholders on the financial statements for the years 2015-16, 2016-17 and 2017-18, which have been filed by the 2nd respondent before the Registrar of Companies (ROC), Ernakulam and the Income Tax authorities surreptitiously. Appellants apprehended that the 2nd respondent has either forged or has caused to be forged the signatures of the majority shareholders with the intention to suggest that the financial statements have been approved by the shareholders at the Annual General Meeting, in the respective years. 5. Appellants have further contended that the financial statements filed before the Registrar of Companies, Ernakulam, for the years 2015-16, 2016- 17 and 2017-18 respectively, would disclose related party transactions, in W.A.1083/2020 6 contravention of the provisions of the Companies Act, 2013 and the transactions have not obtained the approval of the board of shareholders of the company. The majority shareholders, including the appellants, therefore, have sought intervention of the National Company Law Tribunal under Sections 96 and 97(1) of the Companies Act, for a direction to the 2 nd respondent viz., the Managing Director of RBG Enterprises Pvt. Ltd., to convene the AGM through company petitions viz., 98/KOB/291, 99/KOB/2019, 100/KOB/2019, 101/KOB/2019, 102/KOB/2019, & 103/KOB/2019. As an interim relief, NCLT has passed an order dated 03.10.2019 in C.P. No.99/KOB/2019, to restrain respondents 2 and 3 from resorting to related party transactions in the bank accounts of the company. 6. Appellants have further stated that they have filed C.P No.114/KOB/ 2019 before the National Company Law Tribunal under Sections 130, 241 & 242 of the Companies Act, 2013, for mismanagement and oppression of majority shareholders by the 2nd respondent in the above mentioned company. In the said petition, the appellants have elaborated various instances of mismanagement of the company, including misappropriation of funds, related party transactions and violation of the Act, in respect of holding of the AGM for the years 2015-16 to 2017-18. 7. Appellants have further stated that on 10.10.2019, the 2nd respondent convened a meeting of the Board of Directors, to consider, inter alia, holding of the AGM for the year 2018-19 on 30.10.2019. The majority shareholders of W.A.1083/2020 7 the company, including the appellants herein, challenged the proposals of the 2nd respondent before the NCLT, among other grounds, for violation of statutory provisions relating to convening of such meetings. The National Company Law Tribunal, vide order dated 25.10.2019 in I.A. No.49/2019 in C.P. No.99/KOB/2019, directed that the decisions taken at the Board Meeting on 10.10.2019 and at the AGM on 31.10.2019 would be subject to its approval. The 3rd respondent has suppressed the said order in W.P.(C) No.14341/2019. 8. Appellants have further stated that the majority shareholders have thereafter, adopted a number of resolutions, including one, to remove the 2nd respondent, as the Managing Director of the company. They have appointed the first appellant as the MD. The appellants have presented the resolutions to the NCLT for its approval in I.A. No.58/2019 in C.P. No.114/KOB/2019 and a transcript of the proceedings at the AGM in their rejoinder, in the same company petition. The National Company Law Tribunal referred the inter-party litigation to Retd.
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