Naseer Ahmad Akhtar v Suresh Agarwal and another

• Jurisdiction: Singapore
• Judge: Hoo Sheau Peng JC
• Judgment Date: 02 October 2015
• Neutral Citation: [2015] SGHC 256
• Plaintiff Counsel: Khoo Boo Teck Randolph and Tan Huiru Sally (Drew & Napier LLC)
• Docket Number: Originating Summons No 217 of 2015 (Summonses Nos 4299 and 2918 of 2015)
• Date: 02 October 2015
• Hearing Date: 14 September 2015,04 August 2015,30 June 2015,07 September 2015,03 July 2015,06 August 2015,24 August 2015
• Subject Matter: Civil Procedure,Stay of Proceedings,Stay of Execution,Companies,Members,Meetings
• Year: 2015
• Citation: [2015] SGHC 256
• Defendant Counsel: Ranvir Kumar Singh (Unilegal LLC)
• Court: High Court (Singapore)
• Published date: 07 October 2015

Hoo Sheau Peng JC: Introduction

In Originating Summons No 217 of 2015 (“the present application”), the plaintiff, Naseer Ahmad Akhtar, a member and director of Infotech Global Pte Ltd (“Infotech”) sought an order that: (a) an extraordinary general meeting (“EGM”) of Infotech be convened; and (b) one person be sufficient to constitute a quorum at the EGM. This application was brought under s 182 of the Companies Act (Cap 50, 2006 Rev Ed) (I will refer to this provision simply as “s 182” and the Companies Act as the “CA”). He sought these orders so that a set of nine resolutions, which provide, inter alia, for the removal of the first defendant, Suresh Agarwal, from his directorship and for the appointment of one Eric Tiong Hin Won (“Eric Tiong”) in his place, may be considered.

After considering the matter, I granted the application and ordered that: An EGM of Infotech be convened for the purpose of considering the resolution set out in the first paragraph of the schedule to the present application: ie, the resolution to remove the first defendant as director and to appoint Eric Tiong in his place. At the said EGM, the presence of one member of Infotech, either in person or by proxy, shall be deemed to constitute a meeting and that the presence of the said member shall be sufficient to form a quorum.

As the defendants have appealed against my decision, I now provide detailed reasons to supplement the brief grounds I gave at the making of the orders on 24 August 2015.

Facts

Infotech is a limited exempt private company engaged in the business of providing software consultancy and system integration services. Infotech’s Articles of Association (“Infotech’s AA”) are based largely on Table A of the CA. Article 68 of Infotech’s AA provides that no business may be transacted at a general meeting unless a quorum comprising two members are present either in person or by proxy.

At the time of its incorporation on 12 March 2007, Infotech’s founding directors and shareholders were the plaintiff and the first defendant. Up to the time of the application, they remained the only directors on Infotech’s Board of Directors (“BOD”). The plaintiff, a citizen of Pakistan, is ordinarily resident outside Singapore. The first defendant, a Singapore citizen, was appointed the managing director of Infotech on 2 May 2007, a position he continued to occupy at the time of the application. In this capacity, the first defendant managed Infotech’s day-to-day operations. On 26 February 2010, the first defendant’s wife, Agarwal Shilpa Suresh, was appointed as the company secretary. Subsequent to incorporation, there were five other allotments of shares to the plaintiff and the first defendant. A different number of shares were distributed through each allotment, but always in the ratio of 65:35 in the plaintiff’s favour.

On 2 July 2014, the second defendant, Pang See Hon, was appointed as an advisor to Infotech. He resigned on 4 June 2015. At the time of his appointment, the second defendant was given 5,000 shares, which came out of the existing shareholdings of the plaintiff and the first defendant (also in the ratio of 65:35). Following these transfers to the second defendant, the 500,000 issued shares in Infotech were held by the parties in the following proportions: the plaintiff held 321,750 shares (64.3% of the total share capital); the first defendant held 173,250 shares (34.7% of the total share capital); the second defendant held 5,000 shares (1% of the total share capital).

Not long after, the relationship between the plaintiff and the first defendant deteriorated, culminating in multiple allegations and counter-allegations of malfeasance and defalcation that were also repeated in the present application. In the main, the plaintiff questioned the first defendant over substantial withdrawals of funds from Infotech. In turn, the first defendant queried the plaintiff over, inter alia, the propriety of inter-company payments made by Infotech to Infotech (Private) Ltd (“Infotech (Pakistan)”), a company in Pakistan founded by the plaintiff in 1995.

Attempt to call for meeting for removal of first defendant

After many exchanges of emails, the plaintiff took steps to remove the first defendant as director and managing director of Infotech. At this juncture, I reproduce Arts 98 and 99 of Infotech’s AA, which pertain to the removal of directors: 98 The Company may by Ordinary Resolution of which notice has been given to all Members entitled to receive notices remove any Director from office notwithstanding anything in these Articles or in any agreement between the Company and such Director. Such removal shall be without prejudice to any claim such Director may have for damages for breach of any contract of service between him and the Company. 99 The Company may by Ordinary Resolution appoint another person in place of a Director removed from office under the immediately preceding Article.

[emphasis added in italics and bold italics]

On 13 February 2015, the plaintiff requisitioned the BOD of Infotech under s 176(1) of the CA to convene an EGM (“the 13 February 2015 requisition”). This meeting was to be called for the purpose of considering a set of nine resolutions (collectively known as the “proposed resolutions” and individually referred to as “resolution 1”, “resolution 2” etc.) Of particular note are resolutions 1, 2, and 4: resolution 1 called for the removal of the first defendant from his directorship and for Eric Tiong to be appointed in his place; resolution 2 called for the immediate termination of the first defendant from his employment as managing director; while resolution 4 proposed to authorise the plaintiff to appoint “investigative accountants and/or such relevant forensic experts and solicitors” to investigate Infotech’s affairs. The next day (14 February 2015), the plaintiff requisitioned the BOD under s 183 of the CA to circulate a notice of resolutions 2 to 9 to the members of Infotech in order that agreement may be sought for them to be passed by written means pursuant to s 184A of the CA (“the 14 February 2015 requisition”).

On 25 February 2015, M/s UniLegal LLC (“Unilegal”) replied on the first defendant’s behalf. In the letter, Unilegal stated that, “[o]ur client vehemently objects to the passing of the proposed resolutions by any means, which are not only baseless but are also oppressive and gravely prejudicial to our client.”

On 27 February 2015, M/s Drew & Napier LLC (“D&N”) responded on the plaintiff’s behalf. In the letter, the plaintiff maintained that the BOD was obliged to consider his requisitions and proposed that a BOD meeting be held at 11.00am on 11 March 2015 at the Shangri-La Hotel to consider the following two resolutions: (a) that the BOD seek members’ approval for the second to ninth resolutions to be passed by written means; and (b) that an EGM be held on the same day (ie, 11 March 2015) to consider passing any of the proposed resolutions for which agreement had not been obtained to be passed by written means. Annexed to the letter was a notice of directors’ meeting sent under Article 114 of Infotech’s AA with the aforementioned two items on the agenda. It was also acknowledged that consent would be required for the BOD to call the EGM on short notice since the requisite 14 day notice period (as required under Art 65(1) of Infotech’s AA) would not have been satisfied.

On 4 March 2015, the plaintiff, acting in his capacity as a member of Infotech, purported to call for an EGM to be held on 11 March 2015. The opening paragraph of the notice read:

NOTICE IS HEREBY GIVEN that, in view of the failure of the directors of [Infotech] to convene an Extraordinary General Meeting (‘EGM’) of [Infotech] as requested by the Notice of Requisition dated 13th February 2015 under section 176 of the Companies Act, Cap. 50, I, the undersigned, being a member representing not less than 10% of the capital of the Company having voting rights at general meetings, hereby convene an EGM of the Company … for the purpose of considering and, if thought fit, to pass with or without any modification, the following resolutions … [emphasis added]

The notice contained the full list of nine resolutions that was first found in the 13 February 2015 requisition. The plaintiff requested: (a) that the defendants sign and return a form indicating his written consent to having the EGM convened on short notice; and (b) a reply stating whether the defendants would be attending the meeting.

On 6 March 2015, Unilegal replied to D&N’s letter of 27 February 2015 to record the first defendant’s refusal to (a) have resolutions 2 to 9 passed by way of writing (asserting his right to have them subject to a vote at a general meeting of the company as provided for under s 184D(1) of the CA); (b) attend either the proposed BOD meeting or EGM to be held on 11 March 2015; or (c) give his consent to have the EGM convened on short notice. There was no reply from the second defendant.

On 11 March 2015, neither the first nor the second defendant turned up at the Shangri-La Hotel at the appointed time either for the BOD meeting or the EGM. Given that the requisite quorum of two was not present (see Art 113 of Infotech’s AA which provides that “two shall be a quorum” for a BOD meeting), the BOD meeting could not be validly constituted. Likewise, since the requisite quorum of two was not present for the EGM (see [4] above), the meeting was dissolved at 11.30am pursuant to Art 69 of Infotech’s AA. On the same day, the plaintiff commenced the present application.

Subsequent applications

On 16 June 2015, the defendants filed Summons No 2918 of 2015 (“SUM 2918/2015”) to apply for the present application to continue as if begun by writ or, in the alternative, for leave to cross examine the deponents of the affidavits. Separately, on 25 June 2015, the first defendant...