If Notice of the Board Meeting is not served to a director , then it tantamount to oppression of the minority director at the hands of majority director – Says NCLT Delhi Bench.

If Notice of the Board Meeting is not served to a director , then it tantamount to oppression of the minority director at the hands of majority directors – Says NCLT Delhi Bench.

In the matter of Mr.Daya Kishan & Ors v. Mr Dinesh International Ltd & Ors - NCLT - New Delhi- Bench III

Delhi Bench of NCLT ordered that Petitioner suffered oppression at the hands the Respondents for non-compliance of statutory requirements.

Facts of the Case:

It was alleged by the Petitioner that there was an abuse of Section 286 of the Companies Act, 1956 and Articles of Association (‘AOA’) of the Company on the footing of non-receipts of notice of Board Meetings which resulted in the  oppression  of the minority director and subsequently decision was in the EoGM to increase the share capital through allotment of shares which lead to the lessening of Petitioner’s percentage of equity shareholding of the company for which no advance notice was not served on the Petitioner.

 NCLT pronounced  that though Respondent Company was a closely held company consisting of family members however even as a matter of practice, company should have given at least oral information regarding convening of the Board Meeting when a association is at its low ebb. In such scenario, parties should confirm adherence not only according to the Company law but also in harmony with the AOA.

DECISION OF THE NCLT

NCLT accepted the Petitioner’s plea that no board meeting was really convened and the minutes recorded/ resolution passed were subsequently fictitious. NCLT held that transfer of assets of a corporate body to another group entity was wholly unfounded and mysterious even if there was partnership account of both parties.

NCLT further observed that  that the transfer of the Company’s documents and records from its registered office was not only against the legal obligation but also was kept out of Petitioner’s access thus holds that Respondent was clearly divesting the Petitioner of his privilege as a Director in the Company thereby tumbling it to a “zero”. Therefore, NCLT , Delhi Bench cancelled the resolutions passed / decision taken in the Board Meetings and EoGM.