Three shareholders of Premier Automobiles Ltd have sent a special notice to the company seeking the removal of three of its directors, Arvind Doshi, Maitreya Doshi and Vinod Doshi, at the company's annual general meeting slated to be held on August 22.
The notice has been served under section 284 of the Companies Act, which pertains to the removal of directors before the expiry of their term.
The notice has cited a government inspection report (the inspection was done under section 209A of the Companies Act) as the basis for serving the notice, in addition to other violations.
In a faxed reply to a Business Standard questionnaire, PAL company secretary L Krishnamoorthy said that the grounds on which the shareholders sought to remove the directors as mentioned in their notice were malicious, baseless and defamatory and that the company would initiate legal proceedings against them.
He said that the three shareholders held 78 shares, about 400,000 shares and 1,000 shares, respectively.
The notice said that the regional director of the Department of Company Affairs, in a reply to the DCA secretary, forwarded the view that the directors of PAL had violated the provisions of section 274 (1) (G) of the Companies Act as the company had failed to pay dividends for more than one year after dividends were declared and as such they were disqualified from being directors.
It further added that the company had failed to pay the dividend declared on June 15,1999 and the amended section of 274 (1)(G) came into force from December 13,2000.
The section states that a person shall not be eligible to be appointed the director of a company if it has failed to repay its deposits or interest on deposits on the due date or to redeem its debentures on the due date or pay dividend and such failure continues for more than a year.
The notice says that the three directors were also directors of PAL- Peugeot Ltd, which had not complied with its obligations to repay debenture money and the default continued beyond the stipulated date.
Krishnamoorthy, however, said that the registrar of companies had issued show cause notices to the company.
PAL promptly replied to these affirming its view that it had not violated any provisions of the Companies Act, 1956.
But the ROC had nevertheless initiated legal proceedings against the company and its directors, which the company is contesting. The matter is sub judice, Kirshnamoorthy said.
He said that PAL had defaulted on the payment of interest because of a cash crunch but cleared all dues of individual shareholders in March 2000.
Regarding the non-payment of debenture redemption money by PAL-Peugeot Ltd, the PAL company secretary stated that the debentures became due for redemption on February 27, 2002, February 27, 2003 and February 27, 2004.
When the first instalment was due, the three directors were not directors of PPL and were appointed at the AGM held in April 2002 under the chairmanship of retired justice S.K. Desai as per the directions of the Company Law Board.
As these directors resigned from the board of PPL in September 2002, the question of section 274 (1)(G)(B) of the Companies Act, 1956, becoming applicable did not arise.
Krishnamoorthy also told Business Standard that no CLB or DCA order barred the Doshis from being directors of PAL.