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2014 (3) TMI 1100 - Board - Companies LawOppression and mismanagement - no information of money the petitioner invested in R-l Company - accountability - Investment of petitioner's money in the form of subscription money - Held that:- Every transaction the management enters with third parties shall be as clear as daylight. This transaction of putting 123.5 crores in R-7 is nothing but changing hands from left to right, because R-7 is wholly owned subsidiary of R-4, this R-4 is in the absolute control and management of Kabul Chawla (R-5), the same R-4 is the holding company to R-2 which is holding 49.90% shareholding in R-1 company. The same Chawla (R-5), who is in direct control of R-4, is the nominee director of R-1 Company, Therefore, it is clear money has gone into R-7 for the benefit of one person that is Mr. Kabul Chawla (R-5). On seeing the picture available in this case, it appears as though R1 was brought into existence and made the petitioner invest money in R1 to make business in R7 Company with the money of the petitioner. Here, the petitioner put in its money five years ago, nothing has happened in R-1 Company. It has virtually remained a shell company, but whereas the money invested by the petitioner - about ₹ 123.50 Crores, has gone into R-7 company and R-7 company has been carrying its business which is nothing but alter ego of Chawla, who is managing R-1 company. When the petitioner asked for the inspection and audit of the accounts financials of R-7 Company, it has virtually refused to provide any clue as to what has been happening to the investment made by the petitioner. Since it is abundantly clear that R-4, R-7, R-8 & R-9 and other companies are alter egos of R-5 who is managing R-l Company, he is under obligation to explain to the petitioner as to what is happening with the money the petitioner invested in R-l Company. The conduct of R-5 and R-6 continuing as directors in R1 Company, clearly discloses that they are not inclined to disclose the information relating to the money invested by the petitioner though it is clear that R7 has come into existence for the benefit of Chawla. The conduct of R5&6, who are running all these companies, is oppressive and prejudicial to the interest of the petitioner. This Bench is of the opinion that the petitioner has prima facie satisfied this Bench that investment of petitioner's money in the form of subscription money of R1 in R-7, as per articles of association, is a related transaction. Though the petitioner agreed to let this money go into R-4 or its subsidiaries, it does not mean the respondents are not under obligation to disclose every information relating to its money, it shall also give assurance to the petitioner that its money is safe and being used for the good of R1 Company. This Bench has not passed any restraint order against the assets of R-7 company because R-10 to R-20 have around 55 acres in the name of them and I believe the value of the land today may be much higher than the investment of the petitioner. If any restraint order is passed against the fixed assets of R-7 company involved in development, it will have further ramifications over the rights of others. In view of the reasons above mentioned, hereby direct that, 1. Deloitte is hereby appointed to audit R1 and R7 Companies and complete audit within two months hereof, therefore R2-6 are hereby directed to cooperate Deloitte to audit as directed by this Bench. 2. R1 Company is directed to maintain status quo over the shareholding, board pattern and fixed assets if any, pending disposal of the case. 3. The remuneration shall be paid to the Deloitte by R1 company as agreeable to Deloitte, in default, the petitioner is at liberty to pay the remuneration and collect the same from R1 company thereafter. 4. R10 to 20 companies are hereby directed not to create any third party rights over the company land pending disposal of the company petition.
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