9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 1337 - Board - Companies LawOppression and Mismanagement - Siphoning of funds - Ownership of 3000 shares with the shareholding in his own name - attachment of 3260 shares by the income tax department - The Petitioner was allotted 10 shares of the Respondent Company in the name of Lt. Col. Sawai Bhawani Singh as per Minutes dated 15.7.1972 and further allotment of 3250 shares in his name as per Minutes dated 17.3.1976. However 3000 shares were allotted vide the said Minutes dated 17.3.1976 in the name of His Highness Maharaja Sawai Bhawani Singh of Jaipur. HELD THAT - The contention of the Petitioner Advocate that the Petitioner held 6260 shares under two different Folios out of the issued 33260 equity shares is correct to the extent that 3260 shares were owned by the Petitioner in his individual capacity and the balance 3000 shares were held as Karta of HUF. It is also factually true that there are allegations in the Company Petition that the Respondent Company has committed serious acts of Oppression and Mismanagement including dilution of shareholding of the Petitioner and siphoning of funds of the company. But the Respondents/Applicants Advocate has challenged the maintainability of the aforesaid Company Petition on the ground of law u/s. 399 of the Companies Act 1956 on the argument that the Petitioner does not fulfill the mandatory provisions of Section 399 of the Companies Act 1956 to entitle the Petitioner to file the Petition - in terms of Section 159 of the Companies Act 1956 the Annual Returns are prima facie evidence of any matter stated therein and the Annual Returns clearly show that the Petitioner is the owner/member holding 6260 fully paid shares of Respondent Company under two different folios. In addition it has also been highlighted that the shares cannot be held in the name of HUF which is not a legal entity. After perusal of the contentions of the Petitioner Advocate and Respondents Advocate it is observed that while looking into the maintainability of the Petition only averments made in the Petition and documents filed by the Petitioners are to be looked into and the same is assumed to be correct and no defense or new facts not alleged in the Petition and the documents could be looked into. In fact it was in this spirit only when the matter was initially heard on 25.9.2008 and on the same day status quo as of date in regard to shareholding was allowed against the company. However at the same time it does not debar the Respondents to challenge the maintainability by way of moving separate Company Application and hence the instant Company Application being No. 49/2009 has been filed challenging the maintainability on the ground of suppression of facts and non-fulfillment of the mandatory provisions of Section 399 of the Companies Act 1956. Therefore the present Company Application needs to be decided on merits. 3000 shares in the name of His Highness Maharaja Bhawani Singh as Karta of HUF are in the custody of the Receiver appointed by the Supreme Court of India and the Receiver appointed is in the custody of the shares as officer of the Court to determine the entitlement thereto. Under these circumstances the Petitioner cannot claim that he is entitled to all the 3000 shares of the Respondent Company till the Partition Suit is so decided by the Competent Court in his favour. At the same time there is no consent/no objection from the Co-parceners of HUF to initiate the present legal proceedings u/s. 397 and 398 of the Companies Act 1956. At the most the Petitioner may be entitled to his share in these 3000 shares presently in the name of His Highness Maharaja Bhawani Singh as Karta of HUF only when the Partition Suit is finally disposed of in his favour and based on the said Order the shares are recorded in the Register of Members in his individual capacity. In the instant case the 3260 shares have been attached by the Income Tax Department u/s. 226(3) of the Income Tax Act and the said shares can be sold in the process of recovery under provisions of Sections 226(ix) and (x) and Sec. 281 of the Income Tax Act 1961. Therefore these 3260 shares cannot be considered for the fulfillment of the mandatory requirement u/s. 399 of the Companies Act 1956. Consequently the Petitioner has not fulfilled the requirements of Section 399 of the Companies Act 1956 due to the Partition Suit in respect of 3000 shares held in the name of His Highness Sawai Bhawani Singh and 3260 shares held by the Petitioner in his own name but the said shares have been attached by the Income Tax Department. Thus due to non compliance of the statutory requirements of Section 399 of the Companies Act 1956 the Company Petition is not maintainable. Due to non compliance of the statutory requirements of Section 399 of the Companies Act 1956 the Company Petition is not maintainable. As such the present Company Application is hereby allowed and consequently the Company Petition is dismissed.
Issues Involved:
1. Alleged acts of oppression and mismanagement. 2. Maintainability of the petition under Section 399 of the Companies Act, 1956. 3. Suppression of material facts by the petitioner. 4. Attachment of shares by the Income Tax Department. 5. Appointment of a Receiver by the Supreme Court for certain shares. Detailed Analysis: 1. Alleged Acts of Oppression and Mismanagement: The petitioner alleged serious acts of oppression and mismanagement by the respondent company, including the dilution of the petitioner's shareholding and siphoning of company funds. The petitioner claimed to hold 6260 equity shares, representing approximately 19% of the total issued shares, and argued that this entitled him to file the petition. 2. Maintainability of the Petition under Section 399 of the Companies Act, 1956: The respondents challenged the maintainability of the petition, arguing that the petitioner did not fulfill the mandatory provisions of Section 399. They contended that the petitioner held less than 10% of the total paid-up shares, and the shares were either attached by the Income Tax Department or held as Karta of an HUF, which were under litigation. 3. Suppression of Material Facts by the Petitioner: The respondents alleged that the petitioner suppressed material facts, including: - The appointment of a Receiver by the Supreme Court for 3000 shares held as Karta of HUF. - The attachment of 3260 shares by the Income Tax Department due to tax arrears. 4. Attachment of Shares by the Income Tax Department: The respondents argued that 3260 shares held by the petitioner in his personal capacity were attached by the Income Tax Department under Section 226(3) of the Income Tax Act. This attachment meant that all dividends from these shares were to be remitted to the Income Tax Department, and the shares could not be transferred without the department's permission. 5. Appointment of a Receiver by the Supreme Court for Certain Shares: The respondents highlighted that 3000 shares held by the petitioner as Karta of HUF were under the custody of a Receiver appointed by the Supreme Court. This meant the petitioner could not initiate any action based on these shares without appropriate directions from the Supreme Court. Judgment: Analysis of Shareholding: The petitioner held 6260 shares under two different folios: 3260 shares in his personal capacity and 3000 shares as Karta of HUF. The court observed that the 3000 shares were under litigation in a Partition Suit, and a Receiver was appointed by the Supreme Court. The 3260 shares were attached by the Income Tax Department, which meant the petitioner could not transfer these shares or use them to fulfill the requirements of Section 399. Legal Position: The court emphasized that while deciding the maintainability of the petition, only the averments made in the petition and the documents filed by the petitioner are to be considered. However, the court also acknowledged that the respondents could challenge the maintainability based on suppression of facts and non-fulfillment of Section 399 provisions. Conclusion: The court concluded that the petitioner did not fulfill the requirements of Section 399 due to: - The pending Partition Suit and the appointment of a Receiver for the 3000 shares held as Karta of HUF. - The attachment of 3260 shares by the Income Tax Department. As a result, the court dismissed the petition, granting the petitioner the liberty to file a fresh petition either after obtaining necessary approval from the Central Government under Section 399(4) of the Companies Act, 1956, or after getting suitable directions from the Supreme Court regarding the 3000 shares or from the Income Tax Department regarding the 3260 shares. Orders: - The CA No. 49/2009 and CP No. 60(ND)2008 were disposed of accordingly. - Stay orders, if any, were vacated. - No orders as to cost.
|
