TMI Blog2017 (6) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... R-2 to R-4. There is absolutely no reason forthcoming as to why all the transferees of the shares from R-2 to R-4 have not been impleaded as party despite the objections to this effect taken in the written reply filed in February, 2010 by R-1 and R-5 to R-9. List of the shareholders as on 29.05.2008 are given at page 65 and 66 of the reply of contesting respondents, which is in consonance with the plea taken in paragraph 6 (g) of the written statement. No merit in the instant petition, which is hereby dismissed - CP NO. 11 (ND) of 2010, AND RT NO. 20 Chd./Pb/2016 - - - Dated:- 21-4-2017 - MR. R.P. NAGRATH, J. For The Petitioner : Gaurav Mankotia, Adv. For The Respondent : Arun Saxena, Adv. JUDGMENT R.P. Nagrath, J. (MEMBER JUDICIAL) 1. Respondent No.1 is a private limited company incorporated on 08.06.1995 with the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh, Annexure A-1 is the copy of Certificate of Incorporation accompanied with the Memorandum and Articles of Association. 2. The company was formed with the main objects of carrying on the business of processing/selling and marketing of par boiled paddy and rice including any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said form was filed under the signatures of Laxmi Narayan Aggarwal-Respondent No.2 (R-2). The petitioners were not even provided with the opportunity of being heard. Copy of form 32 is attached as Annexure A-3 showing that P-1 and P-2 ceased to be the Directors with effect from 15.09.2006. However, the names of P-1 and P-2 were again included in the list of Directors in the Annual Return for the year ending 31.03.2006 based on AGM, dated 30.09.2006 with the office of ROC, but e-form for the said reappointment has not so far been filed. Copy of the Annual Return for the year ending 31.03.2006 is Annexure A-4. 6. P-3 had even filed a civil suit for permanent injunction against R-2 for restraining him from selling any asset or shares of R-1 company and further from obtaining loan from any Bank. The Civil Court vide order dated 06.08.2008 directed the parties to maintain status-quo qua assets/shares of the Company Copy of the order of Civil Court is at Annexure A-5. However, R-1 Company has shown the transfer of shares in the Annual Return for the Financial Year ending 31.03.2008 with the office of ROC. 7. The other allegation of oppression and mis-management set up by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking loan from Small Industrial Development Bank of India (SIDBI) to the tune of ₹ 25 Lacs. The petitioners joined the company as Directors on 25.11.1996 and 05.11.1996. Since the company could not pay the instalments by due dates, SIDBI took possession of the factory and locked the unit in the year 2002. As per the understanding between the petitioners and R-2 to R-4, the petitioners paid the dues of SIDBI and in turn, they were allotted 5500 shares in the company. 12. It is further stated that the business of R-1 company went on smoothly, but in the year 2006, due to poor quality of paddy purchase from the market, the company suffered a setback and suffered losses. R-1 company was closed for a period of six months. Since R-1 company was suffering from paucity of funds, the authorised share capital was increased from ₹ 70,00,0007- to ₹ 80,00,000/-, which was given effect in the EOGM dated 01.07.2006. The petitioners resigned from the Board of Directors on 15.09.2006, which was given effect to in the resolution dated 20.09.2006. P-3 is said to have transferred his 1500 shares for a consideration of ₹ 1.50 Lac in favour of Manju Bala wife of R-2; P-3 als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinate and unexplained delay. It is further alleged that the main allegation is regarding the transfer of shares of the petitioners, but the instant petition has not been filed under Section 111A of the Act, but only on the allegations of oppression and mismanagement. 16. It is further stated that the petitioners have not come up with clean hands because they have concealed the filing of a petition for winding up of the company before the Hon'ble High Court of Punjab and Haryana in CP No.121 of 2007, which was dismissed on 22.02.2008, Copy of the order passed by the Hon'ble High Court in the said petition is at Annexure R-1. That petition was filed by P-1 and P-2 by joining Sahil Aggarwal and his father Vidya Sagar, as the co-petitioners. After the winding up petition was dismissed, they filed a civil suit in the Court at Ferozepur and obtained an ex-parte order on 6th of August, 2008. It is stated that the respondents have come to know that the status-quo order was vacated and so the petitioners have filed the instant petition. 17. According to the respondents, five groups are involved since incorporation of the company. Group 5 is referred to as other shareholders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of new members. Before the said date, P-1 was having 1000 equity shares, P-2 1200 and P-3, 3500 equity shares. Now as on 30.09.2002, it is shown that 1500 shares of P-3 were transferred in favour of Manju Bala wife of R-2 and 2000 shares in favour of Bhagirath Rai R-4. 1000 shares of P-2 are shown to have been transferred to Raja Parikshit AH the aforesaid 1000 shares of P-1 are stated to have been transferred in favour of Manju Bala. 21. In the year 2003, the share capital was increased from 50,000 to 70,000 equity shares. The increased equity shares of 20,000 are shown to have been allotted i,e, 10,000 each in favour of R-8 and R-9 thereby resulting in the change of percentage of shareholding of different groups. In the year 2005, R-8 and R-9 are stated to have transferred their 10,000 equity shares in the manner that R-8 transferred his 10,000/- share in favour of R-3 and R-9 transferred 5000 shares each out of his 10,000 equity shares in favour of P-1 and P-2. In this way, group-2 became majority shareholders having 55.71% of shares and group-1 was reduced to minority having 42.80% of the shares. 22. The controversy, which was vehemently agitated during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No.771219, dated 10.06.2006 for an amount of ₹ 8,41,200/- of OBC in favour of the creditor and R-1 company namely M/s Bansidhar Din Dayal, Ferozepur City. However, P-1 and P-2 in connivance with each other and without any resolution of the company transferred an amount of ₹ 14,40,000/- out of the subsidy amount to the account of firm of their father M/s Suraj Parkash Sons vide cheque No.771220, dated 11.06.2006. P-2 also gave cheque No.771222, dated 12.06.2006 for ₹ 8,45,000/- to his brother P-1. It is stated that the cheque issued in favour of M/s Bansidhar Din Dayal bounced, for which complaint under Section 138 of the Negotiable Instruments Act was filed. 25. ft is further pleaded toy respondents that when the petitioners were confronted with the aforesaid allegations and to remit the amount back to R-1 company, they submitted their resignation in September, 2006, which was accepted by the company and form 32 was filed. It is further stated that there is no allegation of financial mis-management against the respondents. It is rather R-8 and R-9, who are running the factory smoothly since the year 2003. 26. Regarding discrepancy in the date of resignat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up which was dismissed on inadequate grounds, the said fact was not rightly included at the time of filing of this petition. It is also admitted that after the winding up petition was dismissed, the petitioners filed a suit before the Civil Judge at Ferozepur and status-quo order dated 06.08.2008 was passed. It is stated that the order of status-quo was still continuing, when the instant petition was filed. It is, however, denied that the petitioners transferred 5500 shares as alleged in the written reply, as according to the petitioners, the original share certificates are still in their possession. 29. It is, however, admitted that R-8 and R-9 were inducted as Directors of R-1 company and they were allotted 10,000 equity shares each by R-1 company. It is also admitted that in August, 2005, R-8 and R-9 transferred their 5,000 each shares in favour of P-1 and P-2 and 10,000 shares in favour of R-3. It is also admitted that the authorized share capital was increased from ₹ 70,00,000/- to ₹ 80,00,000/- in the year 2006 and 10,000 shares were allotted to R-9 and R-2 and thereafter the said 10,000 equity shares of R-2 were transferred to R-8. It is, however, alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors of R-1 company w.e.f. 31.08.2009. 33. The petitioners further stated that R-8 and R-9 have wrongly denied that the lease deed was not acted upon. In fact, the petitioners have served a legal notice dated 25.09.2006 upon R-8 and R-9, to which reply dated 01.11.2006 was received from the counsel for R-8 and R-9, reaffirming the execution of the lease deed for the period from 01.09.2006 to 31.08.2009. Copy of the said reply is Annexure A-5 (attached with the rejoinder), wherein it is reiterated that fresh lease deed for the period from 01.09.2006 to 31.08.2009 and as per the said lease deed, R-8 and R-9 had every right to use the will premises, machinery, godown etc. and to work as per lease deed, cancel the Power of Attorney and the agreement. Therefore, R-1 company in reappointing R-8 and R-9 as Directors has contravened the provisions of Sections 253, 266-A, 266-B, 266-D, 266-E and 266-F of 1956 Act. Moreover, any notice of the Board meeting, in which alleged lease agreement was entered into, was never served upon the petitioners. The respondents have not produced on record any such notice or copy of the minutes of the meeting. 34. In rejoinder to the written statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain acts committed by the respondents to be illegal and against the Articles of Association of the Company, yet the petitioners having concealed the material facts, would not be entitled to the relief prayed for in the summary proceedings. It is a settled principle of law that in order to make out a case under Section 397 of 1956 Act, the facts should be of the nature that the company be wound up. Section 397 (2) of the Act reads as under: If, on any application under sub-section (1) the Tribunal is of opinion- (a) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. This is the intent of the legislature in relation to the petitions based on the acts of oppression as provided in clause (b) of sub Section 397 of 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Annexure P-1 with the rejoinder to the written statement or R-2 to R-4. 43. Learned counsel for the petitioners, however, made a statement during the course of arguments on 24.03.2017 that both the civil suits i.e. C.S.No.4401 of 04.01.2008 titled as Suraj Prakash v. Laxmi Narayan for permanent injunction and Civil Suit No.1503/1 of 13.03.2009 titled as Pawan Kumar and Ashok Kumar v. Laxmi Narayan and others for declaration have already been withdrawn. This would, however, not save the petitioners from the attack of having concealed the material facts from the Court. 44. On the aspect of having concealed the factum of filing the winding up petition, the plea of petitioners as set out in the rejoinder to the written statement of R-1 and R-5 to R-9, is that the winding up petition filed in the Hon'ble High Court is not in any way connected with the instant petition. This contention is untenable because it was a vital information supposed to have been disclosed, while presenting the case before the Company Law Board. It is alleged that the winding up petition was dismissed on inadequate grounds, but there are observations of the Hon'ble High Court while dismissing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mukhtiar Singh was not divided amongst the shareholders. It was further stated that the business of the Company was closed for the period from 01.09.2002 to 31.08.2003 causing further losses to the sharehofders. The allegation further in the winding up petition before the Hon'ble High Court and relevant to the instant petition was that R-2 without any authority entered into a lease deed in favour of R-8 and R-9 for an amount of ₹ 12,51,000/- per annum. This allegation in the winding up petition was thus most relevant to be disclosed in the instant petition as this is also an act of oppression alleged by the petitioners. I am, therefore, of the view that having concealed these material facts, the aforesaid acts cannot be accepted as the acts of oppression and mismanagement nor to grant relief to the petitioners. 48. It was for the first time during the course of arguments on 24.03.2017 that the Tribunal was informed about withdrawal of the civil suits, but copy of the final order was not placed on record nor it is clear as to when those civil suits were withdrawn. The petitioners, thus, have been trying to take recourse to the parallel proceedings, which cannot be perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re known as imperfect rights. In other words, it was observed further, that these rights are recognised by law, but no complaint of their breach could be made on account of efflux of time. 51. Similar is the view of Hon'ble Principal Bench in ABRO Technologies (P.) Ltd. v. Delhi Warehousing (P.) Ltd. CP No.41/ND/2016, decided on 22.12.2016 .The Hon'ble Principal Bench relied upon State of Punjab v. Gurdev Singh. [1991] 4 SCC 1 that even void and illegal order have to be challenged within the period of limitation. The issue is decided against the petitioners accordingly. 52. Coming to the merits of the case, the disputed points can be discussed under different heads. CHALLENGE TO THE REMOVAL OF THE PETITIONERS AS DIRECTORS 53. Learned counsel for the petitioners has challenged the documents of resignation of P-1 and P-2 as Directors on various grounds. Learned counsel referred to Annexure A-3 attached with the petition, which is Form No.32 filed with the Registrar of Companies regarding cessation of P-1 and P-2 as Directors. As per this form, resignations of P-1 and P-2 are accepted w.e.f. 15.09.2006. Along with this form are attached the resignation letters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e increased 10,000 equity shares. The fact that due to losses suffered by the Company, the share capital was increased from 70,000 to 80,000 is admitted in the re-joinder, as already stated while discussing the facts of the case. The controversy requiring adjudication is with regard to allotment of the increased share capital and also the transfer of the shares of R-2 to R-4 in favour of the group of R-5 to R-7. So far as the transfer of shares by R-2 and Suman Bala of their 5000 shares each, in favour of R-8 is concerned, that happened in the year 2006, for which the remedy of challenge to the petitioners is time barred. 56. However, the transfer of shares by R-2 to R-4 in the AGM dated 29.05.2008 in favour of the group of R-5 to R-7 is concerned, that can be a matter of serious challenge by the petitioners. R-2 to R-4 were holding 29,000 equity shares along with certain members of their family in the year 2006 and 2007 and entire 29,000 equity shares are shown to have been transferred in favour of six persons, out of whom, only Pawan Kumar Garg is respondent No.7 and rest of the five people namely Harish Mittal, Pankaj Garg, Hemant Mittal, Brij Bhushan Mittal and Sat Narayan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter called the transferring member shall give notice in writing to the Company of his intention to sell his share. Every such notice shall specify the distinctive number of shares proposed to be sold and shall constitute the Company as his agents for the sale of such shares to any members of the Company at a fair value to be determined by the Board The Company shall communicate the notice of sale to each of its members. No notice of intended transfer once given shall be withdrawn except with the sanction of the Directors. 60. The respondents should have placed on record the documents for showing the compliance of the aforesaid Articles of Association before accepting the transfer of shares in favour of Pawan Garg respondent and others, but such observations will not help the petitioners in the absence of impleading the other transferees of the shares as necessary parties. 61. Learned counsel for the petitioners, however relied upon V.B. Rangaraj v. V.B. Gopalakrlshnan [1992] 1 SCC 160. The Hon'ble Supreme Court held that the Articles of Association of the Company are the regulations of the Company binding on it and the shareholders. There cannot be any quarrel ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
