The Chennai bench of the National Company Law Appellate Tribunal(NCLAT) has held that the allegation on the enhancement of authorised share capital belatedly even after non-attending board meetings despite service of notice is invalid.
Radhakrishnan Babu Nirmala, the appellant challenged the Impugned order passed by the National Company Law Tribunal, Kochi Bench on Appeal under Section 421 of the Companies Act, 2013 (Act).
By the Impugned Order, the NCLT has dismissed the Petition preferred by the Petitioner/Appellant. 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 complies with Section 61(1) of the Companies Act, 2013.
It was 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 as non-compliance with Clause 43 of the Articles of Association of the 1st Respondent Company and arrived at an erroneous conclusion.
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 to run an eye-care Hospital. The Petitioner was taking care of the administration of the Company and the 2nd Respondent was handling the 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.
Counsel for the Appellant argued that the enhancement of the Authorized Share Capital on 31.03.2016 is illegal. 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 to 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 was evident that the petitioner did not attend the AGM. In compliance with Section 103(3) of the Act, the AGM was held and the 3rd and 4th Respondents were appointed as Directors. 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.
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.
In light of the Circumstance, the Tribunal comprising Justice M. Venugopal, Member (Judicial) and Shreesha Merla, Member (Technical) upheld the order of the NCLT, Kochi Bench and dismissed the appeal.
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