THE BOARD OF DISCIPLINE

THE INSTITUTE OF COMPANY SECRETARII!,S OF INDIA

ICSIIDC: 24812014

In the complaint of professional or other misconduct filed by Mr. M. Vancbinathan against Mr. S. Mutburaju, ACS - 8825 (CP No. 4181).

Date of decision : 12'h August, 2015

Quorum: CS Ahalada Rao V, Presiding Officer

CS Vineet Chaudhary, Member

CS Sutanu Sinha, Member

ORDER

I. A complaint dated 191h August, 2014 in Form T was filed under Section 21 of the Company Secretaries Act, 1980 (the Act) read with sllb-rule (I) of Rule 3 of the Company Secretaries (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007 (the Rules) by Mr. M. Vanchinathan (hereinafter referred to as the 'Complainant') against Mr. S. Muthuraju, ACS-882S (CP 4181) (hereinafter referred to as the 'Respondent').

2 . The Complainant inter-alia stated that he is a Director-cum-Shareholder of Mis. Sun Brushware Pvt. Ltd., and Mi s. Intreccio Textiles Pvt. Ltd. The Complainant inter-alia alleged that he has been removed from the directorship of Mis. Intreccio Textiles Pvt. Ltd. and from Mis. Sun Brushware Pvt. Ltd ., on 15'h July, 2014 and 16'h July, 2014, respectively without his knowledge and consent. He further stated that he has not res igned from the directorship of both the companies and has alleged that the present management has forged his signature on the resignation . He further stated that he also has not submitted DIR-II. The Complainant further stated that the Respondent being a PCS is responsible to check the originality I genuineness of the documents and has indulged himself in malpractices and filed DIR-12 relating to hi s cessation from the directorship using fake documents produced by the management of the company. The Complainant further stated that the present management has conducted a Board meeting and EOGM to appoint Mr. S. Premsiva as a director of the above mentioned two companies on 15'h July, 2014 and 16'h July, 2014, respectively without sending any notice to him for the Board meeting as well as EOGM. The Complainant further stated that there is no sufficient notice period for calling EOGM and he has also not given his consent letter to convene EOGM as on 16'h July, 2014 in a shorter period and not received any notices for conducting BoardlEOGM meeting pertaining to appointment of Mr. Shanmugavel Premsiva as director of the company. Hence, the appointment of Mr. Shanmugavel Premsiva as a director of the company is null and void.

3 . Pursuant to sub-rule (3) of Rule 8 of the Rules, a copy of the complaint was sent to the Respondent vide letter dated 26'h August, 2014 calling upon him to submit written statement. The Respondent vide letter dated 30'h August, 2014 submitted the written statement.

4. The Respondent inter-alia stated that he had verified the original document i.e., the resignation letter tendered by the Complainant. The Respondent further stated that the original resignation letter and copy of the resolution of the acceptance of resignation by the Board of Directors of both the companies were brought to his office ~y Mr. B. Shivakumar, the MD of

stated that 011 the basis of the documentsboth the companies. The Respondent further

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produced before him by Mr. B. Shivakumar, MD of both the companies, DIR-12 (for the resignation of Shri M. Vanchinathan) which was digitally signed by him and as a PCS he certified DIR-12 of MIs. Sun Brushware Pvt. Ltd ., and as the authority under certified filing centre, he had filed both forms with the MCA. The Respondent further stated he was not aware of the differences between Mr. B. Shivakumar and other directors at all. The Respondent stated that he was not aware of the fact of the appointment of another director, Shri Shanmugavel Premsiva in both the companies without the knowledge of the Complainant. He further slated that it is the decision of the shareholders and directors of the respective companies and he doesn't know anything about the internal functions of the company. The Respondent further stated that as a PCS he cannot interfere in the decisions of the board meetings and general body meetings. The Respondent further stated that sending notices to the directors and shareholders are the duty of management of the company and they alone can be held responsible for the defects I deficiencies in the process of conducting the Board meetings and General body meetings.

5. Pursuant to sub-rule (4) of Rule 8 of the Rules, a copy of the written statement was sent to the Complainant vide letter dated 3rd September, 2014 asking him to submit the rejoinder. The Complainant submitted rejoinder dated 15th September, 2014 wherein the Complainant inler­alia reiterated his earlier submissions and made certain additional submissions.

6. A letter dated 7'h October, 2014 was sent to the Respondent asking him to submit copies of all the documents he had relied upon for certifIcation of (i) DIR- 12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of MIs. Sun Brushware Pvt. Ltd. and (ii) DIR- 12 for appointment of Mr. Shanmugavel Premsiva as a director of Mis. Sun Brushware Pvt. Ltd .

7 . A letter dated 11th October, 201 4 was received from the Respondent attaching therewith copies of the following documents relied upon by him for certification of aforesaid DIR­Forms.

(A) For certification of DIR-1 2 pertaining to removal of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan from the directorship of Mis. Sun Brushware Pvt. Ltd., the Respondent submitted copies of the fOllowing documents­

(I) Extracts of the Minutes of the Board meeting of Mis. Sun Brushware Pvt. Ltd., held on 17,h July, 2014;

(2) Resignation letter dated 7'h July,2014 of Mr. Jerome Joseph Alphonse; (3) Resignation letter dated 7'h July, 2014 of Mr. Vanchinathan Munogan.

(B) For certification of DIR-12 pertaining to appointment of Mr. Shanmugavel Premsiva as director of Mis. Sun Brushware Pvt. Ltd ., the Respondent submitted copies of the following documents­

(I) Extracts of the Minutes of the EOGM of Mis. Sun Brushware Pvt. Ltd ., held on 16'h July, 201 4;

(2) Form DIR 2 along with ID proofs of Mr. Shanmugavel Premsiva (PAN Card and Aadhar Card)

8. Pursuant to Rule 9 of the Rules, the Director (Discipline), on examination of the complaint, written statement, rejoinder and other material on record, prima-facie observed that the Respondent has certified (i) DIR-12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of MIs. Sun Brushware Pvt. Ltd., (ii) DIR-12 for appointment of Mr. Shanmugavel Premsiva as a director of MIs. Sun Brushware Pvt. Ltd. , on the basis of the documents produced before him by one Mr. B . Shivakumar, MD of both the companies. It is further observed that the Respondent has not certified DIR-12 for the appointment of Mr.

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Shanmugavel Premsiva as a director in MIs. Interccio Textiles Pvt. Ltd., and cessation ofMr. Bernard Thomas Stephen, Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan from the directorship of MIs. Interccio Textiles Pvt. Ltd.

9. The Respondent was asked to provide the copies of all the documents he had relied upon for certification of (i) DlR-12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of MIs. Sun Brushware Pvt . Ltd. and (ii) DIR-12 for appointment of Mr. Shanmugavel Premsiva as a director of MIs. Sun Brushware Pvl. Ltd. The Respondent vide his lener dated Illh October, 2014 submitted copies of the documents relied by him for certification of (i) DIR-12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of MIs. Sun Brushware Pvl. Ltd ., (ii) DIR-12 pertaining to the appointment of Mr. Shanmugavel Premsiva as a director of MIs. Sun Brushware Pvl. Ltd.

(A) For certification of DlR-12 pertaining to removal of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan from the directorship of MIs. Sun Brushware Pvl. Ltd., the Respondent su bmitted copies of the following documents­

1. Extracts of the Minutes of the Board meeting of MIs. Sun Brushware Pvl. Ltd. , held on 171h July,2014;

II. Resignation letter dated 71h July,20 14 of Mr. Jerome Joseph Alphonse; III. Resignation letter dated 71h July, 2014 of Mr. Vanchinathan Murugan.

(B)For certification of DlR-12 pertaining to appointment of Mr. Shanmugavel Premsiva as director of MIs. Sun Brushware Pvl. Ltd., the Respondent submitted copies of the following documents­

1. Extracts of the Minutes of the EOGM of MIs. Sun Brushware Pvt. Ltd., held on 16th July, 2014;

II. Form DIR 2 along with ro proofs of Mr. Shanmugavel Premsiva (PAN Card and Aadhar Card)

As per records, there are two resignation letters dated 71h July, 2014, one of Mr. Jerome Joseph Alphonse and another of Mr. Vanchinathan Murugan and the same have been

1haccepted by the Board of the company in its meeting held on 17 July, 2014. However, the Complainant is alleging that his resignation letter has been forged and he has claimed that he has not filedl certified form DIR 11 in this regard .

The Respondent in this case has relied on the aforesaid documents given at para (A) (1);(2);(3) provided by the MD of the company. There was apparently no suspicion on the genuineness of the documents.

As per records, D1R-12 for the appointment of Mr. Shanmugavel Premsiva as a director in MIs. [nterccio Textiles Pvl. Ltd ., and cessation of Mr. Bernard Thomas Stephen, Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan from the directorship of MIs. Interccio Textiles Pvt. Ltd., has not been certified by the Respondenl. The Complainant has only presumed that the Respondent has indulged with mala-jide intentions to appoint Mr. Shanmugavel Premsiva as director of MIs. Interccio Textiles Pvl. Ltd. without any evidence to substantiate his allegations, nothing can be concluded. Hence, therefore in view of the foregoing, the Respondent is prima-facie not gllilty of professional misconduct under the Company Secretaries Act, 1980.

10. The Board of Discipline on 81h May, 2015 considered theprimajacie opinion dated 6lhMarch, 2015 of the Director (Discipline). The Board advised the Director (Discipline) to investigate

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the matter further; and if needed, to call upon the parties and witnesses related to the matter in terms of Section 21 C of the Company Secretaries Act, 1980.

II. Accordingly, the parties were called upon to appear before the Director (Discipline) on 8thJune, 2015 vide letter dated 14thMay, 2015. Shri Shivakl'mar Biksheswaran, Managing Director, Mis. Sun Brushware Pvt. Ltd., was also called upon to appear before the Director (Discipline) vide letter dated 22""May, 2015 . The Managing Director Mis. Sun Brushware Pvt. Ltd., vide letter dated 3'd June, 2015 inter-olio informed that his health is not permitting him to travel to Delhi for the scheduled hearing and he attached a medical certificate in support. He also submitted his affidavit and other related documents duly notarized. He requested to take the said documents on record and proceed in the case.

12. The proceedings were held before the Director (Discipline) on 8'h June, 2015. The Respondent appeared and made submissions. The Director (Discipline) after considering the submissions made by the Respondent and the material on record continued to holds his primajacie opinion dated 6thMarch, 2015 intact and placed it before the Board for its consideration.

13. The Board on 16t" June, 2015 considered the matter and advised Director (Discipline) to investigate the matter further; and to call upon the Complainant and Shri Shivakumar Biksheswaran, Managing Director, Mis. Sun Brushware Pvt. Ltd. , before him. The Board also advised to seek confirmation from the concerned ROC as to whether a similar complaint has been lodged with his office directly or indirectly related to (i) removal of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of Mis. Sun Brushware Pvt. Ltd. and (ii) for the appointment of Mr. Shanmugavel Premsiva as a director of Mis. Sun Brushware Pvt. Ltd.

14. A copy of the Jetter dated 3"' June, 2015 received ITom the MD, Mis. Sun Burshware Pvt. Ltd ., was sent to the Complainant vide letter dated 17th June, 2015 asking him to submit his comments on the same.

15 . A letter dated 18'" June, 2015 was also sent to the ROC, Chennai asking to confirm whether a similar complaint has been lodged with his office directly or indirectly related to (i) removal of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of Mis. Sun Brushware Pvt. Ltd . and (ii) for the appointment of Mr. Shanmugavel Premsiva as a director of Mis . Sun Brushware Pvt. Ltd.

16. The Complainant was again called upon to appear before the Director (Discipline) on 6'h July, 2015 vide letter dated 22"" June, 2015. MD of Mis . Sun Brushware Pvt. Ltd., vide letter dated 22"d June, 20 J 5 was asked to produce all the original documentsl records of the company in relation to the DlR 12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan filed for their removal ITom the directorship of the company and DIR-12 for appointment of Mr. Shanmugavel Premsiva as a director of the company before Director (Discipline) on 6th July, 2015 . The Complainant vide letter dated 23"' June, 2015 submitted his comments along with cettain documents to the letter dated 3"' June, 2015 of MD of Mis. Sun Burshware Pvt. Ltd.

17. The ROC, Chennai vide its letter dated 5~ July, 2015 inter-alia confirmed that it has received a complaint dated 13'" August, 2014 from Mr. M. Vanchinathan against Mr. S Muthurahju, ACS and supplied a copy of the said complaint.

18. On 6'" July, 2015, the Complainant and the MD of Mis. Sun Burshware Pvt. Ltd., appeared before the Director (Discipline) and made oral submissions. MD of Mis. Sun Burshware Pvt. Ltd., produced original documents of which he had earlier submitted the photocopies. The proceedings of the hearing held before Director (Discipline) on 6'h July, 2015 along with the

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documents submitted by the Complainant and MD of Mis. Sun Burshware Pvt. Ltd., are placed at The Complainant vide letter dated 8'" July, 2015 gave his written submissions.

19. The Director (Discipline) after considering the submissions made by the parties and the material on record continues to hold his prima-facie opinion dated 6'" March, 2015 intact and placed the same before the Board of Discipline for its consideration on 12'" August, 2015.

20. The Board of Discipline on 12" August, 20 15 after considering the material on record and in totality of the circumstances of this case, agreed with the prima-facie opinion dated 6'" March, 2015 of the Director (Discipline) and held that the Respondent not guilty of professional misconduct under the Company Secretaries Act, 1980, as it is seen from the records that the Respondent had exercised due diligence as required, while certifying(i) form D1R-12 of Mr. Jerome Joseph Alphonse and Mr. Vanchinathan Murugan for removal from the directorship of Mis. Sun Brushware Pvt. Ltd., (ii) form D1R-12 pertaining to the appointment of Mr. Shanmugavel Premsiva as a director of Mis. Sun Brushware Pvt. Ltd., on the basis of the requisite documents provided to him by the Managing Director of the company. More so, the doctrine of Indoor Management affords that persons dealing with a company having satisfied themselves, are not bound to inquire into the regularity of any internal proceeding therefore, the Respondent was not supposed to go on the validity of the meetings. In this case, the Respondent has filed the relevant documents on the basis of which he certified and filed the alleged DIR 12 forms. The allegations levied by the Complai~ant against the Respondent do not find any merit to say that the Respondent has not exercised due diligence in the conduct of his professional duties.

Accordingly, the complaint stands disposed-off.

~ (Abalada Rao V)4s~J (v'~"dh'~'

Member Member Presiding Officer

Date: 0 4 · 0,,\ . :lo~5""

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