2019] 161
Moral.
These
transactions
are
contained
in
three
resolutions
dated
27. 7. 2004 ,
7. 1. 2005
and
10. 5. 2005.
It
has
been
submitted
on
behalf
of
Mr.
Ashok
Mittal
that
the
aforesaid
transactions^
which
were
conducted
in
the
meetings
of
the
Board
of
Directors
of^
which
no
notice
had
been
given
to
him,
though
he
was
then
a
Director
of
HQRL,^
are
illegal,
nulland
voidand
oppressive.
In
v.^ Parmeshwari Prasad Gupta
Union of India[ 1973 ]
2
SCC
543 ,
this
Court
held
Section
286
of
the
Com
panies -
Act
to
be
mandatory
and
violation
thereof
has
been
held
to
render
the
resolution^
passed
in
such
meeting
void.He
submitted
that
Resolutions
passed
in
aforesaid
meetings
are
also
vio
lative -
of
section
300
of
the
Companies
Act
as
in
all
of
them
arrangements
and
contracts^
in
favour
of
two
Directors
namely
Mr.
R.P.
Mittal
and
Mrs.
Sarla
Mittal
have^
been
discussed
and
voted
upon
by
said
two
persons
themselves.
It
is
well
settled^
that
Directors
act
as
fiduciaries
when
they
conduct
a
Board
meeting
and^
as
fiduciaries
they
cannot
participate
in
decisions
in
their
own
favour.
It^
is
not
only
an
established
principle
of
law
of
equity
relating
to
fiduciaries
but^
is
expressly
forbidden
by
section
300
of
the
Companies
Act.
Reliance
has
been^
placed
upon
Dale & Carrington Invt.(
P)
Ltd.v. P.K. Prathapan
[ 2004 ]
54
SCL^
601
(SC);
Firestone Tyre and Rubber Co.v
[ 1971 ]. Synthetics and Chemicals Ltd.
41
Comp.
Case
377
and
[ 1985 ]^ Madras Tube Co. Ltd. v. Hari Kishon Somani
1
Comp.
LJ.
195
(Mad.).He
further
submitted
that
the
decision
to
transfer
shares
from
Moral
to
Mr.^
R.P.
Mittal
on
10. 5. 2005
is
in
violation
of
section
108
of
the
Companies
Act^
because
it
has
been
found
as
a
fact
by
the
High
Court
that
physical
share
certificate^
was
not
in
possession
of
Moral
on
the
relevant
date.
In
proceedings
under^
section
397
filed
by
Hillcrest
and
Mr.
Ashok
Mittal,
the
Company
Law
Board^
found
that
the
resolution
had
been
passed
illegally
but
it
declined
to
set^
aside
the
allotment
and
transfer
on
unsustainable
grounds.
It
is
well
set
tled -
that
in
a
petition
under
section
397
of
the
Companies
Act
it
is
normally
desirable^
unless
any
special
circumstances
exist,
to
pass
an
order
which
to
all^
intents
and
purposes
would
be
beneficial
to
the
company
itself
and
the
majority^
of
its
members.It
was
finally
contended
that
the
High
Court
order
be
upheld
without
up
setting -
the
existing
position
in
relation
to
management
of
company.It
was
submitted
by
Mr.
Mihir
Kumar,
learned
counsel
for
Hillcrest
that
the^
appellants
have
filed
two
appeals
namely
C.A.
No.
3934 / 2017
and
C.A.
No.
3935 / 2017.^
The
sole
legal
question
arising
in
the
instant
matters
is
whether
the^
3
meetings
of
the
Board
of
Directors
of
HQRL
held
on
27. 7. 2004 ,
7. 1. 2005
and^
10. 5. 2005
were
legal
and
valid.
The
following
issues
were
not
germane
to^
the
question:
( 1 )
whether
HQRL
is
a
public
limited
company
or
a
private
limited
company?
( 2 )
whether
Hillcrest,
a
preference
shareholder
had
any
voting
rights
in
terms
of^
section
87
of
the
Companies
Act,
1956?Ram Parshotam Mittal
v.
Hotel Queen Road (P.) Ltd. (SC)