No Default u/s 97 If AGM Held Within RoC-Granted Extension | NCLT

Case Details: Vidya Pracharanam (P.) Ltd., In re - [2025] 175 taxmann.com 986 (NCLT-Kochi)

Judiciary and Counsel Details

• Vinay Goel, Judicial Member & Smt. Madhu Sinha, Technical Member
• Aravind Pandian, Ld. Sr. Counsel & Abhilash Nediyalil Abraham, PCS for the Petitioner.
• Pranoy Harilal, Ld. Counsel for the Respondent.

Facts of the Case

In the instant case, Respondent No.1 Company scheduled an Annual General Meeting (AGM) for the financial year 2023-24. However, the meeting was adjourned for technical reasons. The Respondent applied to the Registrar of Companies (RoC) for an extension of time to conduct AGM, and RoC granted such extension.

Subsequently, another meeting was held, and six individuals were appointed as directors, with respondent no. 2 being appointed as the Managing Director of the company. Thereafter, petitioners, shareholders of company, filed petition under section 97 of the Companies Act, 2013, claiming that apprehending their defeat in so-scheduled AGM, the Board of Directors by misrepresentation of facts and concealment of facts about scheduled AGM and its cancellation, sought permission from the RoC for extension of time and such concealment and misrepresentation tantamount to fraud.

It was noted that since there existed permission of the RoC to extend time for calling AGM, and AGM had been called within that period, alleged misrepresentation to the RoC to obtain such permission would not be considered as default for the purpose of section 97 of the Act. However, parties, including the RoC, would be free to proceed in accordance with the law for alleged misrepresentation, as per the provisions of the Act.

NCLT Held

The NCLT observed that since the petitioners had not proved on record the fraud and ill motive of the respondents, such concealment would not be considered as any act which would come within the ambit of default.

The NCLT held that if the petitioners had any doubts or grievances about how the respondent had conducted the AGM, or if they were not allowed to speak or vote, the petitioners were required to avail themselves of an efficacious remedy under the relevant provisions against the respondents.

Alternatively, they could file a complaint with the RoC. If there were any misstatement, concealment or misrepresentation by the petitioners while seeking an extension of time to conduct the AGM, even that offence would come within the ambit of section 448 of the Act.

Thus, the petitioners could not invoke the provisions of Section 97 on such grounds, and therefore, the instant petition was to be dismissed.

List of Cases Referred to

• NKGSB Cooperative Bank Limited v. Subir Chakravarty [2022] 135 taxmann.com 347/171 SCL 310 (SC) (para 31)
• K Prabhakaran v. P Jayarajan AIR 2005 SC 688 (para 31)
• Shri Balaganesan Metals v. M.N. Shanmugham Chetty (1987) 2 SCC 707 (para 31)
• Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. (1987) 1 SCC 424 (para 31).