Case Brief

World Phone India Pvt. Ltd. & Ors. Vs Wpi Group Inc., USA
Facts: -
 WPIPL is a private company partly owned by WPI group which holds the share of
(43.75%) while Mr. Vivek Dhir having shares of (43.75%) and Mr. Pankaj Patel having
shares of (12.5%) in WPIPL.

(1st petition)
 On 22nd September, the shares of Mr. Pankaj Patel (12.5%) were transferred to Mr.
Vivek Dhir & his wife, Mrs. Malini Dhir, who was also appointed as an Additional
Director.
 Therefore, Mr. Vivek and his wife now possessing shares of (56.25%) in WPIPL group.
 Mr. Aditya Ahluwali (the representative of Wpi group Inc.) was not aware of the transfer
of shares from Mr. Pankaj to Mr. and Mrs. Vivek.
 Mr. Aditya filled a petition in CLB (Company law board) challenging the transfer of
shares as it was initially agreed that Mr. Pankaj Patel would transfer shares in equal
proportion both to Mr. Vivek Dhir and WPI group. However, as a result of his entire
shareholding being transferred to Mr. and Mrs. Vivek jointly, the WPI group was reduced
to a minority shareholder.

(2nd petition)

 While the suit of transferability of shares was pending, on 31st October, there was a
board meeting conducted by the board of directors regarding passing the resolution
approving the rights the issue of 1,49,303 equity shares in accordance with the Article of
company.
 During board meeting Mr. Aditya Ahluwali was not present even though he informed his
absence from the meeting and requested to postponed the board meeting as he was in the
USA stuck because of natural calamities.
 But the board meeting went on and passed the resolution which ultimately led to making
Aditya Ahluwalia a minority shareholder.
 Hence, Mr. Aditya challenged the board meeting and claimed as it is violating clause 6.2
of the JVA (Joint venture agreement) made between Mr. Aditya and shareholders
granting an affirmative vote in the resolution of the company and he also claimed that the
board meeting should be called ‘NULL & VOID’ by filing a petition in CLB (Company
law board).

Issue: - Whether the provisions of an agreement, that are not inconsistent with the act, but are
also not part of the AOA, can be said to be applicable?

Held: -
 The CLB held that, in the present case, since there were only three shareholders and all of
them were also Directors, the holding of the Board meeting in the absence of a party (Mr.
Aditya) who had an affirmative vote was in violation of the JVA. Consequently, the
Board meeting of 31st October 2012 was held null and void and a direction was issued to
 hold a fresh Board meeting over the rights issue in compliance with Clause 6.2 of the
JVA.

 The decision of CLB was appealed in High Court, the court said that in present case there
was no amendment to the AOA to provide for the affirmative vote for WPI group and,
therefore the CLB was in error in proceeding on the basis that Clause 6.2 of the JVA had
to be applied to decide the validity of the decision taken at the Board meeting held on
31st October.

 In the end, HC said that in given circumstances, the interim order was passed by the
CLB, regarding the issue on fresh board meeting (shall not be given effect) and granted
the time period of 8 to 12 weeks for CLB to clarify the issue of the 1st appeal filed by the
Mr. Aditya, if it is not solved by the given time period either party can approach this
court for further direction.

The appeal is disposed.