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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
V.M. VELUMANI, J.
Yennarkay R. Rajarathinam S/o. Late Yennarkay Ravindran - Petitioner
Vs.
M/s. Selvarathnam Matches Private Limited & Ors. - Respondents
C.R.P. (MD) Nos. 2593 & 2594 of 2016 (PD) & C.M.P. (MD) Nos. 12247, 12246 of 2016; 1351, 1349 & 1350 of 2017
Decided On : 24-03-2017
Constitution of India, 1950 - Article 227 - Company - Shareholders - Petitioner in both Civil Revision Petitions is second respondent in C.P.No. on file of National Company Law Tribunal - Respondents 1 and 2 filed above Company Petition and T.C.P. No for interim orders - According to respondents 1 and 2, the third respondent Company [hereinafter referred to as Company] was started as a Partnership Firm, in year - He died in year - Subsequently, Firm was made a Private Limited Company - According to respondents 1 and 2, Company flourished during and subsequently, business of Company is reduced to various factors - A C.E.O. was appointed to improve business - In spite of same, there was no improvement in Company - At that stage, Director of first respondent Company wrote a Letter dated with regard to business of Company to C.E.O- A meeting was held between C.E.O. of Company and particulars of meeting was reduced into writing - Petitioner and fifth respondent rejected the suggestion made - Intention of petitioner and respondents 4 and 5 are to retain control over Company and to run same as their own Company – Held, petitioner is challenging interim order, dated - In said interim order, Tribunal did not restrain third respondent from considering issue of right shares - Tribunal has not held that Directors have no power to decide issue of right shares - On other hand, Tribunal has held that whether intention of third respondent to issue right share is bona fide one, can be decided only after hearing both parties - Learned counsel for petitioner submitted that liberty may be given to petitioner to raise issue of maintainability as preliminary issue and Tribunal may be directed to decide same - It is open to petitioner and respondents to raise all their objections before Tribunal including issue of maintainability - If any such issue is raised, Tribunal shall decide same on merits and pass orders in accordance with law - Learned counsel for the petitioner submitted that respondents 1 and 2 participated in right issue - Respondents 1 and 2 applied for right issue and issued a cheque which was dishonoured - Therefore, parties are not entitled to be restored to position before interim stay granted by this Court - In view of this rival contentions, it is open to parties to raise this issue before Tribunal and all contentions raised by parties shall be decided by Tribunal on merits and in accordance with law - Till that time, status quo as on today to be maintained by the parties - In result, C.R.P. (MD) No. is dismissed. C.R.P. (MD) No. is disposed of with the above observation - Consequently, connected miscellaneous petitions are dismissed.
C.R.P.(MD)No.2593 of 2016 has been filed to call for the entire records relating to proceedings in Company Petition filed in C.P.No.14 of 2016 on the file of the National Company Law Tribunal, Chennai Bench, Chennai and strike off the same.
2. C.R.P.(MD)No.2594 of 2016 has been filed against the order, dated 16.12.2016, made in T.C.P. No.... of 2016 in C.P.No.14 of 2016 on the file of the National Company Law Tribunal, Chennai Bench, Chennai.
3. Since the issues involved in both the Civil Revision Petitions are one and the same, they are heard together and disposed of by this common order.
4. The petitioner in both the Civil Revision Petitions is the second respondent in C.P.No.14 of 2016 on the file of the National Company Law Tribunal, Chennai Bench, Chennai. The respondents 1 and 2 filed the above Company Petition and T.C.P. No. ... of 2016 for interim orders. According to the respondents 1 and 2, the third respondent Company [hereinafter referred to as 'the Company'] was started by Yennarkay R. Rajarathnam, as a Partnership Firm, in the year 1939. He died in the year 1956. Subsequently, the Firm was made a Private Limited Company. The Company was owned by following three families with the shares mentioned therein.
(i) Yennarkay R. Ravindran Family - 34% shares
(ii) Pioneer Group of Companies - 33% shares
(iii) Bell Group of Companies - 33% shares
5. The first family Yennarkay R. Ravindran started three Private Limited Match Industries in the name of his three sons, namely, Yennarkay R. Rajarathnam, Yennarkay R. Chiranjeevirathnam and Yennarkay R. Selvarathnam, viz., M/s. Rajarathnam Matches (P) Ltd., M/s. Chiranjeevi Rathnam Matches (P) Ltd. and M/s. Selvarathnam Matches (P) Ltd. Each Company holds 11.09% of shares in M/s. Standard Fireworks Private Limited.
6. According to the respondents 1 and 2, the Company flourished during 1970 and 1990 and subsequently, the business of the Company is reduced to various factors. A C.E.O. was appointed to improve the business. In spite of the same, there was no improvement in the Company. At that stage, Yennarkay R. Selvarathnam, Director of the first respondent Company wrote a Letter, dated 01.07.2016 with regard to the business of the Company to the C.E.O. A meeting was held between the C.E.O. of the Company and Yennarkay R. Selvarathnam and particulars of meeting was reduced into writing. It was circulated to all the Directors. The petitioner and other respondents are not taking any interest in the affairs of the Company. Only the petitioner and the fifth respondent herein were making all the decisions and other Directors simply agreed for the same. The shareholders of the Company are family members and all the shareholders have shares in the running of business. The petitioner and the fifth respondent rejected the suggestion made by Yennarkay R. Selvarathnam. The intention of the petitioner and the respondents 4 and 5 are to retain the control over the Company and to run the same as their own Company. In the circumstances, the first respondent issued a Letter dated 19.08.2016 for convening Extraordinary General Body Meeting of the Company for removal of the petitioner and the fifth respondent herein from the Company and to appoint R. Selvarathnam as Director of the Company.
7. The petitioner instead of convening Extraordinary General Body Meeting, as requested by the first respondent, instigated his henchmen to file O.S.No.188 of 2016 before the District Munsif Court, Sivakasi and sought for an order of injunction restraining the Directors appointed in the Annual General Body Meeting of the first respondent, held on 30.09.2016, as illegal and null and void. They also sought for permanent injunction restraining the third respondent Company from conducting the Extraordinary General Body Meeting/Annual General Body Meeting based on the request made by Yennarkay R. Selvarathnam, dated 27.09.2016. An order of injunction was granted. The petitioner did not convene any Extraordinary General
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