Mohan Thomas vs The Senior Manager
2021 Latest Caselaw 8480 Ker

         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                          PRESENT

           THE HONOURABLE MR.JUSTICE N.NAGARESH

 MONDAY, THE 15TH DAY OF MARCH 2021/24TH PHALGUNA, 1942

                 WP(C).No.5943 OF 2021(P)

PETITIONERS:

     1     MOHAN THOMAS, MANAGING DIRECTOR,
           M/S. FORBES EWART AND FIGGIS PVT. LTD.
           HAVING REGISTERED OFFICE AT SEBROF HOUSE,
           PO BOX 545, SUBRAMANIAM ROAD,
           WILLINGDON ISLAND, COCHIN-682 003.

     2     M/S.FORBES EWART & FIGGIS PVT. LTD.,
           REPRESENTED BY ITS MANAGING DIRECTOR,
           SEBROF HOUSE, PO BOX 545, SUBRAMANIAM ROAD,
           WILLINGDON ISLAND, COCHIN-682 003.

           BY ADVS.
           SRI.C.RAJENDRAN
           SRI.B.K.GOPALAKRISHNAN

RESPONDENTS:

     1     THE SENIOR MANAGER, CENTRAL BANK OF INDIA,
           KALLELIL BUILDING, KADAVANTARA BRANCH,
           KADAVANTARA, COCHIN-682 020,
           STATE OF KERALA.

     2     REGIONAL MANAGER, CENTRAL BANK OF INDIA,
           REGIONAL OFFICE, METRO PALACE,
           OPPOSITE NORTH RAILWAY STATION,
           ERNAKULAM-682 018.

     3     MEERA JOSEPH, FORBES BUNGALOW,
           VELI ROAD, COCHIN, ERNAKULAM-682 001.

     4     ANNU KURIEN,B 10, 2ND FLOOR,
           GREEN PARK MAIN, GREEN PARK,
           NEW DELHI-110 001.

           R1-R2 BY ADV. SRI.K.M.ANEESH
           R1-R2 BY ADV. SRI.K.SANTHOSH KUMAR (KALIYANAM)
           R1-R2 BY ADV. SRI.ADARSH KUMAR
 WP(C) No.5943/2021
                             :2 :


              R1-R2 BY ADV. SRI.BIJU VARGHESE ABRAHAM
              R1-R2 BY ADV. SRI.DILEEP CHANDRAN
              R1-R2 BY ADV. SRI.SHASHANK DEVAN
              R3-4 BY ADV. SRI.SANTHOSH MATHEW
              R3-4 BY ADV. SRI.ARUN THOMAS
              R3-4 BY ADV. SRI.JENNIS STEPHEN
              R3-4 BY ADV. SMT.KARTHIKA MARIA
              R3-4 BY ADV. SMT.VEENA RAVEENDRAN
              R3-4 BY ADV. SRI.ANIL SEBASTIAN PULICKEL
              R3-4 BY ADV. SMT.DIVYA SARA GEORGE
              R3-4 BY ADV. SMT.JAISY ELZA JOE

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 15.03.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 WP(C) No.5943/2021
                                      :3 :




                              JUDGMENT

~~~~~~~~~

Dated this the 15th day of March, 2021

The 1st petitioner is the Managing Director of the 2 nd

petitioner-Company. Petitioners 1 and 2 are before this Court

challenging Ext.P9 communication of the 1 st respondent, who

is the Senior Manager of the Central Bank of India, by which

the 1st respondent has disallowed banking operations in

respect of the 2nd petitioner-Company.

2. The petitioners state that the 1 st petitioner is the

Managing Director of the 2nd petitioner-Company and

respondents 3 & 4 are Independent Directors of the Company

appointed with effect from 30.09.2019 for a period of two

years. The National Company Law Tribunal, as per Ext.P4

order dated 19.01.2021, declared the appointment of

respondents 3 and 4 as Independent Directors as invalid. The

Tribunal directed convening of Board meeting and EGM/AGM

for the appointment of respondents 3 and 4 as Non-Executive WP(C) No.5943/2021

Directors after complying with the legal provisions of the

Companies Act, 2013.

3. While so on 02.03.2021, the 1 st respondent

communicated that the operating mandate of the bank

account of the Company has been changed due to a

resolution passed on 25.02.2021. The 1 st respondent required

the 1st petitioner to communicate the details regarding the

change of mandate. The 1 st petitioner thereupon sent Ext.P8

communication to the 1st respondent. However, the 1st

respondent, as per Ext.P9, communicated that the bank is not

in a position to allow operations or pass any cheques of any

amount on behalf of the Company in the light of the new or

existing resolution submitted.

4. The petitioners are before this Court challenging

Ext.P9 communication. The petitioners submit that the action

of the 1st respondent in stopping financial transactions of the

Company without giving any notice is illegal and arbitrary. The

petitioner-Company was sanctioned overdraft facilities to the

tune of ₹5,00,00,000/- against collaterals. The amounts are WP(C) No.5943/2021

not at the risk of the Bank in view of the collateral security.

Therefore, the Bank committed an error in stopping the

operations of the account.

5. The learned counsel for the petitioners argued that

the Company is engaged in the business of tea and coffee

broking and rubber mixing job work. The Company need to

pay employees' salaries and wages. The Company is also

required to pay advance amounts to tea estates. Therefore,

abrupt stopping the banking operations would ruin the

Company. Ext.P4 order of the NCLT, Kochi Bench is being

challenged before the appellate authority under Section 421 of

the Companies Act.

6. I have heard Sri. C Rajendran, counsel appearing

for the petitioners, and Sri. Santhosh Mathew, counsel

appearing for respondents 3 and 4. I have also heard Sri.

Aneesh K.M., the Standing Counsel for respondents 1 and 2.

7. From the pleadings and arguments in the writ

petition, it is evident that in CP/117/KOB/2019 and

CP/19/KOB/2020, the National Company Law Board Tribunal, WP(C) No.5943/2021

Kochi Bench has passed the following orders:-

"(i) The Board of Directors Meeting dated 14.10.2019 has been conducted as per the provisions of the Companies Act. However, the decisions taken regarding the declaration of interim dividend, appointment of Mr. W.C. Thomas as Executive Director-Tea Operations and signatory powers to Mr. Paulose Joseph & Mr. W.C. Thomas are hereby declared as invalid. Since there is no error in the appointment of Mr. Paulose Joseph as CEO, it should be treated as a valid appointment.

(ii) The appointment of Mrs. Meera Joseph and Mrs. Annu Kurien as Independent Directors in the 72nd AGM held on 30.09.2019 is hereby declared as invalid.

(iii) Board of Directors are directed to convene an EGM/AGM within 30 days from date of receipt of this order to appoint Ms. Meera Joseph and Ms. Annu Kurien as non-Executive Directors and appointment of Mohan Thomas as Managing Director of the Company. The Board is also directed to appoint an internal auditor for the financial year 2019-'20 and to file the Annual Financial Statements and Annual Returns upto 31.03.2020 with RoC within 60 days from the date of receipt of this order.

(iv) Board Meetings held on 18.10.2019, 01.11.2019, 04.02.2020 and 21.08.2020 are hereby declared as invalid. Therefore, a separate Board Meeting of the Company is to be conducted within 30 days with the physical presence of all the three directors by complying with the provisions of the Companies Act, 2013 for deciding on the following points:

                       a.    Appointment of Mr. W.C. Thomas
         as President-Tea Operations.
                       b.    Appointment of Oomen Thomas

(Jr), who is the son of Mr. Mohan Thomas as an employee of the Respondent No.1 Company and to prepare a new employment contract, if necessary.

c. Cancellation of Momestic Enquiry against Mrs. Birdie Nirmal, revocation of her suspension Order and re-instatement.

WP(C) No.5943/2021

d. Re-instatement of the resigned employee Mr. Ramachandran.

e. Preparation of Corporate Governance Framework for managing the operations of the Respondent No.1 Company following the provisions of the Companies Act, 2013.

f. Handing over of the property of Respondent No.1 Comapny, including documents and keys of bungalows held by Mr. Mohan Thomas, Ms. Annu Kurien, Ms. Meera Joseph, Mr. Paulose Joseph and Mr. W.C. Thomas to the Registered Office of the Company.

g. To take note of Disclosure of Interest by Directors pursuant to Section 184(1) of the Companies Act, 2013.

h. Signing of Bank Accounts, Depository Accounts and Mutual Fund Accounts for facilitating administrative efficiency."

Ext.P4 appears to be final in nature.

8. It is the action of the Directors of the Company

pursuant to Ext.P4 order of the NCLT that resulted in the

present stalemate as regards operation of bank accounts of

the 2nd petitioner-Company and the 1st respondent has

disallowed certain banking transactions. Therefore, the

petitioners may have to approach either the NCLT for further

orders or the NCLAT in appeal, for resolving issues arising out

of Ext.P4 order of NCLT.

WP(C) No.5943/2021

9. It will be improper and inappropriate for this Court

to interfere with the issues in the facts of the case, as the

issues, if any, have arisen consequent to the orders of NCLT

and the petitioners are proposing to file statutory appeal

against Ext.P4 order of the NCLT. In this writ petition, the

petitioners are seeking to "direct to maintain status quo till the

finality of the decision taken by the appropriate court of law"

(paragraph 9 of the writ petition). In Ground E of the writ

petition, the petitioners have stated that Ext.P4 order passed

by the NCLT is being challenged before the Appellate

Authority as per Section 421 of the Companies Act, 2013.

In the circumstances of the case and in view of the

alternate remedy available to the petitioners, this Court deems

it fit to decline jurisdiction under Article 226 of the Constitution

of India. The writ petition is therefore dismissed.

Sd/-

N. NAGARESH, JUDGE

aks/15.03.2021 WP(C) No.5943/2021

APPENDIX PETITIONER'S EXHIBITS:

EXHIBIT P1 A COPY OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY.

EXHIBIT P2 A TRUE PHOTOCOPY OF THE RESOLUTION PASSED BY THE AGM DATED 29.9.2018.

EXHIBIT P3 A TRUE PHOTOCOPY OF THE MINUTES OF THE AGM DATED 30.9.2019 SHOWING THE REJECTION OF APPOINTMENT OF THE SAID MR.PAULOSE JOSEPH AS MANAGING DIRECTOR.

EXHIBIT P4 A TRUE COPY OF THE ORDER DATED 19.1.2021 PASSED BY THE HON'BLE NCLT, KOCHI.

EXHIBIT P5 A TRUE PHOTOCOPY OF THE NOTICE ISSUED BY 3RD RESPONDENT DATED 1.1.2021.

EXHIBIT P6 A COPY OF THE MINUTES OF THE EGM DATED 16.2.2021.

EXHIBIT P7 A TRUE PHOTOCOPY OF THE NOTICE DATED 19.2.2021 AND ITS MINUTES.

EXHIBIT P8 A TRUE PHOTOCOPY OF THE EMAIL COMMUNICATION SENT BY THE 1ST PETITIONER TO THE 1ST RESPONDENT DATED 2.3.2021.

EXHIBIT P9 A TRUE PHOTOCOPY OF THE EMAIL DATED 2.3.2021 ORIGINATED BY THE 1ST RESPONDENT BANK TO THE PETITIONER.

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