1. The Union of India has filed this instant petition under section 388B/397/398/408 of the Companies Act seeking various reliefs in respect of M/s. Maytas Properties Limited. The company is a closely-held public company having only 7 members and 3 directors. The main business of the company is development of residential properties in various towns. This petition was mentioned seeking for ex parte interim reliefs to restrain the respondents 2 to 4 from acting as directors, respondents 2 to 5 from dealing with their personal properties and for allowing the Central Government to appoint ten nominee directors to function as directors. Since the company had filed a caveat, I directed the petitioner to serve copies of the petition on all the respondents and kept the matter for the hearing on 24-2-2009 to decide on the interim reliefs. During the intervening period, certain shareholders and certain lenders to the company had also filed applications for impleadment/intervention.
2. I heard the extensive arguments of the counsel appearing for the respective parties—Shri Sanjay Shorey for the petitioner, Shri Mukul Rohatgi, Sr. Advocate for the 1st respondent, Shri Nisar Ahmed, PCS for the 2nd respondent, Shri Anil Diwan, Sr. Advocate for the 3rd respondent, Shri Haksar, Sr. Advocate for the 4th respondent, Shri Niranjan Reddy, Advocate for the shareholders, Dr. Singhvi, Sr. Advocate for the 5th respondent, Ms. Shroff, Advocate for the 6th respondent, Shri Mookherjee, Sr. Advocate for SRS Orion. In view of the order that I propose to pass, I am not elaborating their arguments.
3. During the hearing, Shri Mukul Rohatgi submitted that since the company is executing only one project, this Board could appoint an independent person to visit the project site and give a report before considering any of the interim prayers. He further submitted that if need be, this Board could appoint an observer to be present in board meetings. When I asked him whether, instead of an observer, I could appoint two nominees of this Board as nominee directors on the board, he submitted that instead of two directors, for appointment of one nominee director, his client would have no objection. However, since the Central Government urged that I should also consider the suspension of the board, I reserved the order on the interim prayers.
4. On 3-3-2009, the Central Government has filed an affidavit stating “That Government is agreeable to the suggestion of having at least one Director on the Board of Maytas Properties Ltd. subject to the condition that no meeting will take place without presence of nominee directors.”
5. In view of the fact that both the company and the Central Government have consented for the appointment of one nominee director of this Board on the board of the company, without going into the merits of the case, in terms of section 402/403 of the Act, I pass the following order:
(a) There shall be a nominee of this Board as a director on the board of the company. Since this Board is not equipped to identify and select a proper person, I authorize the Central Government to appoint, in the name and on behalf of this Board, an eminent person as a director on the board of the company. No Governmental agency - State/Centre shall initiate any criminal or civil or punitive action against this director without the prior approval of this Board.
(b) The quorum for board meetings shall be 3 directors including the nominee director and his affirmative vote on any decision is mandatory.
(c) All Government agencies including the banks shall co-operate with the board in carrying out the affairs of the company smoothly, more particularly in relation to the present project that is being implemented by the company.
(d) Within 10 days of the constitution of new board, it shall convene a meeting of the flat holders to get their feed back on the project under implementation and ensure that their complaints, if any, are attended to without any loss of time.
(e) The board shall furnish to the Central Government as well as this Board, a monthly report on the affairs of the company preferably during the 1st week of every month starting from April, 2009.
(f) The board shall co-operate with the investigating/inspecting authorities by furnishing all the information/document as required by them.
6. Applications by the shareholders and SRS Orion, I, II, III Investments Limited are allowed. Replies to the petition and the applications to be filed by 31-5-2009 and rejoinder by 31-7-2009. Date of hearing will be notified after completion of pleadings. Liberty granted to the Central Government to file additional affidavits/documents as may be necessary to adjudicate on the petition and also to seek further interim reliefs.