Calcutta High Court
Eastern India Educaional ... vs Hindustan Gum And Chemicals ... on 23 September, 2022
1
OD- 34 to 36
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
IA NO. GA/3/2022
In CS/235/2022
EASTERN INDIA EDUCAIONAL INSTITUION
Vs.
HINDUSTAN GUM AND CHEMICALS LIMITED AND ORS
IA NO. GA/2/2022
In CS/235/2022
EASTERN INDIA EDUCAIONAL INSTITUION
Vs.
HINDUSTAN GUM AND CHEMICALS LIMITED AND ORS
IA NO. GA/1/2022
In CS/235/2022
EASTERN INDIA EDUCAIONAL INSTITUION
Vs.
HINDUSTAN GUM AND CHEMICALS LIMITED AND ORS
BEFORE :
The Hon'ble JUSTICE KRISHNA RAO
Date: 23rd September, 2022.
2
Appearance:
Mr. Jishnu Saha, Sr. Adv.
Mr. Anirban Ray, Adv.
Mr. Rajarshi Dutta, Adv.
Mr. Sankarsan Sarkar, Adv.
Ms. Pritha Basu, Adv.
Mr. Rahul Sharma, Adv.
...for the petitioner
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Debanjan Mondal, Adv.
Mr. Sanjit Trivedi, Adv.
Mr. Soumya Roy Chowdhury, Adv.
Mr. Satadip Bhattacharyya, Adv.
Mr. I. Hassan, Adv.
Mr. Sanket Sarogi, Adv.
Ms. Mahima Cholera, Adv.
....For the defendant No. 2
Mr. Jishnu Chowdhury, Sr. Adv.
...For the defendant No. 11
Mr. Rupak Ghosh, Adv.
Mr. Roshan Pathak, Adv.
...For the respondent nos. 3, 4 and 5 (CS No. 235 of 2022)
Mr. Ranjan Bachawat, Sr. Adv.
Mr. Paritosh Sinha, Adv.
Mr. Sayan Roy Chowdhury, Adv.
Mr. Saunak Mitra, Adv.
Mr. Satyaki Mukherjee, Adv.
Mr. Saubhik Chowdhury, Adv.
Mr. Tirthankar Das, Adv.
...for the defendant no. 1.
Mr. Joy Saha, Sr. Adv.
Mr. Avishek Guga, Adv.
Ms. A. Chopra, Adv.
...for the defendant no. 13.
3
ORDER
The petitioner is a charitable Society registered under the West Bengal
Societies Registration Act, 1961, having its office at 'Birla Building', 4th Floor,
9/1 R.N. Mukherjee Road, Kolkata within the Ordinarily Original Civil
Jurisdiction of this Court.
The petitioner is governed by its Memorandum of Association and Rules
and Regulations. The petitioner has been set up solely for educational purposes
and not for purposes of profit. To carry out the said objects, the petitioner is,
inter alia, empowered to establish, set up, open, promote, take over, support,
maintain, run schools, colleges, universities or other institutions for imparting
education.
The petitioner has two tier management pattern, namely, the Board of
Trustees and Managing Committee, which governs and manages the petitioner
in accordance with the Memorandum of Association and Rules and
Regulations. The trustees have the power to delegate their authority to
Managing Committee in relation to the affairs of the petitioner, and the
Managing Committee would be entitled to exercise only such power as are
delegated by the trustee from time to time. The trustee may, by a resolution,
delegate any of its authority and such delegation of the authority may be by a
general or special resolution passed without any meeting of the trustee and
evidenced in writing under the hands of majority of the trustee and it shall be
valid and effectual as a resolution passed at the meeting of the trustee.
The trustees are thus empowered to act by a majority and have all along
since inception been doing so during the tenure of Late M.P Birla (hereinafter
referred to as "MPB") and Late Priyamavada Devi Birla (hereinafter referred to
as "PDB") and after their demise even while Late Rajendra Singh Lodha
(hereinafter referred to as "RSL") and Harsh Vardhan Lodha (hereinafter
referred to as "HV Lodha") were part of Board of Trustee including holding of
office of Chairman of the Board of Trustees.
Subject to delegation of powers by the trustees in terms of Regulation 23,
the management of the affairs of the petitioner is entrusted to the Managing
Committee consisting of not less than five and more than fifteen person. In
terms of Regulation 5 (f) of the Rules and Regulations of the petitioner, a
person ceases to be a member of the Managing Committee, inter alia, if so
resolved by the trustee.
Ordinarily, all decisions of the Managing Committee of the petitioner
shall be according to the opinion of the majority on show off hands. Only upon
the demand of a member present at the meeting, a question under
consideration at the meeting shall be decided by ballot. A resolution by
circulation passed by a majority members of the Managing Committee without
any meeting of the Managing Committee and evidenced in writing under the
hands of the majority of the members of the Managing Committee and signed
by either Chairman or Honorary Secretary shall be valid and effectual as a
resolution duly passed a meeting of the Managing Committee called and held in
accordance with the provisions of the Rules of the petitioner.
The petitioner, respondent no. 1 and respondent nos. 3 to 5 form part of
M.P Birla Group. The petitioner was formed by or under the authority of MPB
and PDB. The members of the first managing committee, inter alia, included
the close relation and confidents of the MPB and PDB. PDB continue to be a
trustee and member of the managing committee of the petitioner till her date.
MP Birla Group comprises of large number of companies and prominent
Charitable Societies and Trusts. During his lifetime, MPB was the principal
promoter and controlled all the companies, societies and trusts of M.P Birla
Group. He was the single directing mind and hand of the MP Birla Group. Even
though all entities whether companies or trust or societies comprised in M.P
Birla Group had their respective Boards, but the fact remained that all
decisions were taken only under the aegis and directions of the PDB after the
death of MPB. After the death of PDB, RSL propounded a Will as executor
thereof.
The shareholding pattern of the respondent no. 1 is as under :
Sl. Name of Shareholder No. of Shares % Remarks
No.
1 Eastern India Educational 1,80,000 20% M.P. Birla
Institution Group
2 Gwalior Webbing Co. Pvt. 90,000 10% M.P. Birla
Ltd. Group
3 Baroda Agents & Trading 90,000 10% M.P. Birla
Co. Pvt. Ltd. Group
4 The Punjab Produce & 90,000 10% M.P. Birla
Trading Co. Pvt. Ltd. Group
5 Solvay India Holding Inc. 4,50,000 50% Foreign
U.S.A. Venture
Partner
Total 9,00,000 100%
The petitioner holds 1,80,000 equity shares representing 20% of total
issued subscribed and paid up share capital of and in the respondent no. 1
and is a part or constituent of the 50% shareholding of the M.P. Birla Group in
the respondent no. 1. The remaining portion of the 30% of the issued,
subscribed and paid up share capital of and in the respondent no. 1 is held by
the three companies of M.P. Birla Group being proforma respondent nos. 3 to 5
all jointly are Indian partners as per the Joint Venture Agreement.
The respondent no. 2 is presently the Chairman and Director of
respondent no. 1 representing the M.P. Birla Group. The said respondent was
originally appointed as director on May, 2004 as representing the M.P. Birla
Group, the Indian partner of Joint Venture Company respondent no. 1, and
since then the respondent no. 2 has been getting reappointed on retirement by
rotation from time to time based on the support of and as representing the M.P.
Birla Group. The respondent no. 2 was also formally a trustee and the
Chairman and member of the Managing Committee of the petitioner but has
ceased to be so pursuant to the orders passed by the Coordinate Bench of the
Court dt. 18.09.2020 and 01.10.2020 in the proceeding arising out of TS No. 6
of 2004 (Harsh Vardhan Lodha -vs- Arvind Kumar Newar & Ors.).
PDB died on 03.07.2004 and after her death, disputes pertaining to
succession of the estate left behind by PDB arose in view of an application for
grant of probate of the last Will and testament said to have been left behind by
PDB being filed before this Court. The said application for grant of probate
being PLA No. 242 of 2004 was taken as contentious cause and was numbered
as Testamentary Suit No. 6 of 2004. After the death of the executor in the said
suit is now for grant of Letters of Administration.
In the said suit, an Administrators Pendente Lite Committee (hereinafter
referred to as "APL") has been appointed for the purpose of protection and
administration of the estate left behind PDB till the disposal of the
Testamentary suit.
In the said Testamentary Suit, an order was passed on 18.09.2020 and
the operative portion of the said order reads as follows:-
"a. The plaintiff shall implement the decision dt. 19.07.2019 and
13.07.2019 of the APL Committee taken by majority as also all
consequential decision of the APL in furtherance of the said decision and
shall be restrained from drawing any benefit personally from out of the
assets of the estate of the deceased during pendency of the Testamentary
Suit.
b. Plaintiffs are also restrained from interfering with the decision of
the APL and any decision which might be taken in future by majority if the
same directly or indirectly relates to the estate of the deceased and further
the plaintiff no. 1, Harsh Vardhan Lodha is restrained from holding any
office in any of the entities of M.P. Birla Group during pendency of the suit.
c. Defendants are also restrained by an order of temporary
injunction from interfering with the APL's decision by majority during
pendency of the suit."
The order dt. 18.09.2020 was subsequently clarified by and interim order
dt. 01.10.2020 by the Appellate Court which reads as follows:-
"20. We may, however, clarify that the word "implement occurring in
paragraph (a) among the three directions issued by the Learned Judge
means "abide by". It is further clarified that the operation of paragraph (b)
among the directions would be a restriction on the plaintiff no. 1, Harsh
Vardhan Lodha to the extent of it being a restriction from holding any office
in any of the entities of M.P. Birla Group during the pendency of the suit,
on the strength of shares referable to the estate of PDB."
Despite being ineligible to hold any officer in the petitioner, the
respondent no. 2 has been continuing making illegal attempts to interfere with
the affairs of the petitioner for making wrongful, illegal and unlawful gain and
is causing irreparable loss and injury to the petitioner and is attempting to
usurp control over the various investee companies of the M.P. Birla Group
through the petitioner.
On 09.09.2022, the APL Committee had issued a letter to the petitioner
as well as the other entities of M.P. Birla Group regarding the manner of
exercise of voting rights at the AGM of the respondent no. 1 i.e. scheduled to be
held on 26.09.2022. In the said letter, the APL Committee informed to the
petitioner as well as the other entities for following directions concerning the
AGM of the respondent no. 1.
a. Resolution no. 4 : To vote against the resolution for re-appointment of
the respondent no. 2.
b. To vote in favour of the resolution, if proposed pursuant to the notice of
the Proforma Respondent no. 5 in terms of provisions of Section 160 of
the Companies Act, 2013 for appointment of Mr. Sudeep Roy as
Director, liable to retire by rotation, of the respondent no. 1.
On 09.09.2022, the proforma respondent no. 5 has issued a notice under
Section 160 of the Companies Act, 2013 to the respondent no. 1 proposing
candidature of Mr. Sudeep Roy for his appointment as Director on the Board of
the respondent no. 1 to fill up the vacancy caused by the retirement of the
respondent no. 2.
The petitioner apprehends that the respondent nos. 1 and 2 and their
respect men, agents, servants and assigns are restrained, even at the ensuing
the AGM of the respondent no. 1 to be held on 26.09.2022, the respondent no.
2 in collusion and conspiracy with the respondent no. 1 and others are likely to
again try to disrupt the day to day internal management of the petitioner,
refuses to accept certified copy of the resolution of the Board of Trustees of the
petitioner and also interfere in the lawful exercise of voting rights of the
petitioner in respect of shares held in the respondent no. 1 as they have done
in the past.
The petitioner submits that as the AGM is going to be held on
26.09.2022 and unless and until an ad interim order of temporary injunction is
not granted by restraining the respondent no.2 to represent in any manner or
purpose, as representative of the Indian promoters of the respondent no. 1 for
seeking reappointment as Director of the respondent no. 1, the petitioner will
be badly prejudiced.
Counsel for the respondent no. 1 submits that the estate does not hold
any share and APL and PDB were not having any share as per the shareholding
pattern of the respondent no. 1. The Solvay India Holding Inc. USA who is the
Foreign Venture partner having 50% share but he has not made as party to the
instant suit. The respondent no. 1 company is having the registered office at
Bhiwani, Rajasthan and thus this Court has no jurisdiction to try the instant
suit.
The Learned Counsel of the respondent no. 1 submits that in the order
passed by the Coordinate Bench of this Court dt. 18.09.2020, the Hon'ble
Court has held that the Probate Court cannot decide any issue against a
stranger to the probate proceedings and no order in this probate proceeding
can be passed against the noticee company. He further submits that in the
said proceeding, it was also held that the Probate Court cannot extent its
jurisdiction over a person or entity who is not the party to the proceeding.
Learned Counsel further submits that in the contempt proceeding, the
following allegations were made against the respondent no. 1 :
"1. HVL continued to hold office as Director/ Chairman in UCL, BCL,
BCab and VTL.
2. HVL partici0ated in the meeting of the Board of Directors of the
above companies held on 5th November, 2020, 9th November, 2020 and
10th November, 2020 as Director and/or Chairman thereof.
3. HVL failed to abide by the directions of the APL Committee dt.
19.07.2019, 30.07.2019, 23.07.2020 and 30.07.2020 by which the APL
Committee decided not to support the re-appointment of HVL as Director in
the four companies.
4. HVL failed to abide by the directions of the APL Committee
contained in the letter dt. 4th/ 5th November, 2020 issued by the Board of
Directors of the said companies."
The Hon'ble Division Bench while deciding the said issue held that "We
are not deciding in this contempt case whether the 'estate of PDB' as given by
the respondents or the one given by the petitioner is correct or not. That
question has to be decided in the pending appeals. For the purpose of this
proceeding, it is sufficient to say that HVL participation in Board meetings
cannot be termed as contemptuous violation of the order of this Court as the
wilful disobedience has not been proved beyond reasonable doubt and there is
a possibility that HVL could continue to hold office on the strength of votes of
the public shareholders in exclusion to the votes of the APL Committee and the
promoter and promoters group and PACs.
Learned Counsel for the respondent no. 2 had referred Section 152 (6) (e)
of the Companies Act and submits that at the annual general meeting at which
a Director retires as aforesaid, the Company may fill up the vacancy by
appointing the retiring director or some other persons thereto. Learned Counsel
for the respondent no. 2 further submits that as per Clause 103 of the
Memorandum of Association, it is crystal clear that subject to Article 86 of the
company at the Annual General Meeting at which a Director retires by rotation
in manner aforesaid may fill up the vacated office by appointing the retiring
Director or some other persons thereto. Learned Counsel for the respondent
no. 2 further contended that the Hon'ble Division Bench of this Court while
disposing of the appeal against the common judgment and order dt.
27.08.2010 in connection with PLA No. 242 of 2004, the Hon'ble Division
Bench has held that "the appellants/petitioners have specifically sought in their
application for being appointed as APL to enable him to collect devident paid
against the shares and all other incomes of the estate which is one of the trait
and characteristic of the different kind of rights emanating from ownership of
shares, stocks of company as provided under the Companies Act."
Considering the said facts, the joint Administrators were appointed to
administer property of the deceased including the shareholdings and stocks
held by the deceased in various companies with the assured objects of its
protection and preservation.
Learned Counsel for the respondent no. 2 further submits that the
respondent no. 1 is having the registered office at Bhiwani, Rajasthan and thus
the suit filed by the petitioner against the respondent is not maintainable as
this Court is not having any jurisdiction.
The Learned Counsel for the respondent no. 2 further submits that the
suit filed by the petitioner is also barred under Section 430 of the Companies
Act.
Counsel for the respondent no. 13 has supported the case of the
petitioner and submits that the respondent no. 2 may be restrained for
represent in any mode or manner as representative of Indian promoters of the
respondent no. 1 for seeking reappointment as Director of the respondent no.
1.
Heard, the Learned Counsel for the respective parties, perused the
application and documents available on record. The main contention of the
petitioner is that, the Coordinate Bench of this Court vide order dt. 18.09.2020
has restrained the respondent no. 2 from holding any office in any of the
entities of M.P. Birla Group during the pendency of the suit. The APL vide letter
dt. 09.09.2022 informs the petitioner as well as the other entities regarding
holding Annual General Meeting of BCL, UCL, VTL, BCab and HGCL. On
09.09.2020, the PPT had issued notice under Section 160 of the Companies Act
proposing the candidature of Sudeep Roy as Director on the Board of
Hindustan Gum and Chemical Limited. The HVL has issued a letter to the
petitioner as well all the entities wherein it is mentioned that :
Appointment of Director in
place of Mr. Harsh V Lodha
(DIN : No. 00394094), To vote in
4 retiring by rotation and favour.
being eligible offered himself
for reappointment.
As per Clause 103 of the Memorandum of Association, the Annual
General Meeting at which Director retires by rotation in manner aforesaid may
fill up in the vacated office by appointing the retiring Director or some other
person thereto. Admittedly, the office is going to be vacated and the same is to
be filled up and accordingly the respondent no. 2 had also forwarded the
resolution informing that he is retiring by rotation and being eligible offered
himself for reappointment.
The scrutinizer at the AGM who is otherwise authorized to scrutinize the
votes in view of the statutory provision as an embedded authority to see
whether the voting rights have been exercised in compliance of the Rule and
Regulation. The plaintiff is not a private individual shareholder that the voting
rights are to be exercised by such individual or through his authorized person.
The Hon'ble Division Bench while deciding the contempt application held
that HVL's participation in the Board Meeting cannot be termed as
contemptuous violation of order of this Court as the wilful disobedience has not
be proved beyond reasonable doubt and there is a possibility that HVL could
continue to hold office on the strength of the votes of public shareholders in
exclusion to the votes of the APL Committee and the promoter and promoters
groups of PACs.
The APL had preferred an SLP before the Hon'ble Supreme Court and
vide order dt. 04.02.2022, the Hon'ble Supreme Court has clarified that the
APL Committee would be at liberty to seek reliefs as may be necessitates to
ensure its effective functioning. Moreover, as clarified by this Court in its
earlier order, extracted above, the observation has been made while declining
to exercise the contempt jurisdiction shall not influence the disposal of the
appeals.
In the present case, the petitioner came before the Court by filling the
suit praying for perpetual injunction restraining the respondent no. 2 to
represent any mode or manner or purposes as representative of Indian
promoters of the defendant no. 1 for seeking reappointment as Director of the
defendant no. 1 and other reliefs but the APL has not came before this Court
for any allegation that the defendant no. 2 has no right for reappointment. It is
the scrutinizer of AGM to see whether the defendant no. 2 is entitled to be
reappointed as Director but the petitioner herein has not made any request to
the scrutinizer to scrutiny of the request of the respondent no. 2.
In view of the above, this Court do not finds any prima facie material to
pass any ad interim order of injunction in favour of the petitioner at this stage
and thus the application filed by the petitioner is to be decided only after
exchange of affidavit.
Let, affidavit in opposition be filed within two weeks after puja vacation,
reply if any thereto be field by a week thereafter.
As regard, the point of maintainability of the suit raised by the
respondents, it is find from record that the parties have filed separate
application for rejection of plaint and the same is to be decided on merits
accordingly this Court has not decided the point raised by the respondents at
this stage.
(KRISHNA RAO, J.)
p.d
