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TMI Blog2009 (9) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... panies with the transferee company. Directions were sought for by the petitioners in Company Petitions Nos. 7, 8 and 9 of 2008 for exempting certain meetings and holding of certain meetings of the shareholders and creditors of the companies. Detailed orders were passed in all these petitions on June 4, 2008, wherein after going through the entire company petitions this court, on the basis of the documents placed on record came to the prima facie conclusion that the merger of the companies would result in better synergy since all the companies are engaged in the same business. Therefore, separate directions were issued in all the petitions. 2. In the case of M/s. Nu-Line Industries transferor No. 1 the meeting of the unsecured creditors was dispensed with since all the unsecured creditors had consented to the scheme. Therefore, it was directed that meeting to ascertain the views of the equity shareholders and the secured creditors be held. 3. In respect of transferor company No. 2 the meeting of the unsecured creditors was dispensed with since there was only one secured creditor whose claim was also not very significant. It was directed that the meeting of the equity shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharda Gupta by filing objections to the company petitions on various grounds. Shri S.S. Gupta one of the objectors is the brother of Shri M.L. Gupta and Shri Ramesh Gupta. According to the objectors these three brothers along with their families had promoted the three petitioner-companies and six other companies which are all family companies. It is alleged that in Nu-Line Industries Ltd., Transferor Company No. 1 Shri S. S. Gupta and Shri M.L. Gupta were the two directors. According to the objectors on February 10, 2007, Shri Amit Gupta son of Shri M.L. Gupta was shown to have been inducted as additional director without any board meeting having been conducted. It was stated that Shri S.S. Gupta was not present in any such meetings. It was alleged that Shri S.S. Gupta had been removed from the directorship of the company without holding any proper meeting and without issuing notice to him in accordance with law. Another ground raised is that the shareholding pattern of the companies was changed only with a view to show majority in favour of Shri M.L. Gupta, etc. 8. In respect of M/s. Swati Storwel P. Ltd., transferor company No. 2 it was stated that Smt. Sharda Gupta was one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jyotsna Rewal Dua, learned counsel for the objectors and Mr. P. Nagesh, learned counsel for the petitioners at length. I have also perused the entire record of the case. 14. The first and foremost question which arises for consideration is whether Shri Amit Gupta was properly appointed as director of M/s. Nu-Line Industries or not. Shri Amit Gupta is alleged to have been appointed as additional director of transferor company No. 1 in a meeting of the board of directors held on February 10, 2007. It is not disputed that at that time there were only two directors of the company, namely, Shri M.L. Gupta and objector No. 1 Shri S.S. Gupta. According to Shri S.S. Gupta, he was not present when the meeting was allegedly held and therefore Shri Amit Gupta was not validly appointed as the additional director. Shri S.S. Gupta in fact filed an FIR with the police on June 28, 2007, alleging that he had wrongly been shown to be present on the said date. It is further alleged that even if the appointment of Shri Amit Gupta as additional director was valid this came to an end on the date when the next annual general meeting (AGM) was held, i.e., on September 29, 2007. In terms of section 260 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Minutes of the meeting of the board of directors of the company held on 10th day of February 2007 at 1215 hours at the registered office of the company present As per attendance register." 17. The moot question is whether Shri S.S. Gupta was present or not. Despite having filed documents even after arguments were heard, the petitioners for reasons best known to them have not filed a copy of the attendance register which would have borne the signatures of Shri S.S. Gupta if he was present. Since they have not filed any document to show the presence of Shri S.S. Gupta on the said date, adverse inference can be drawn against them. 18. According to the petitioners, in the annual general meeting held on September 29, 2007, Shri Amit Gupta was appointed as the director of the company. Minutes of the annual general meeting have been filed after the arguments were heard on the previous date. The opening portion of that meeting reads as follows : "Minutes of the annual general meeting of the company held on 29th of September, 2007, at 14.15 hours at the registered office of the company present 1.Mr. Mohan Lal Gupta-Shareholder 2.Mr. Ramesh Gupta-Shareholder 3.Mrs. Usha Gupta-Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other affidavit filed by the chartered accountant of the company before the Company Law Board on November 4, 2008, which reflects the shareholding as before. It is alleged that there is nothing on record to show that these shares were ever transferred. 22. On the other hand the petitioners submit that a resolution was passed on February 18, 2008, approving the transfer of shares. Shri Ramesh Gupta is purported to have transferred portion of his shares to as many as 15 other persons including Mr. Rajpal. By the same resolution transfer of the shares by S/Shri B.L. Surana, S.L. Nuberia, B.C. Jain and Nathi Kanwani in favour of Shri C.D. Jain have also been approved. It has been pointed out that Nathi Kanwani and C.D. Jain had died much earlier and therefore it is obvious that this approval is a forged document. 23. Admittedly, as per the stand of the petitioners, Mr. Rajpal only has 10 shares in the company which were transferred to him by Ramesh Gupta and approval for such transfer was given on February 18, 2008. It was argued by Mr. P. Nagesh on behalf of the petitioners that these transfers were made prior to February 18, 2008 and were only approved on the said date and it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the shareholders did not put their signatures on the ballot paper but have only initialed the same. This explanation cannot be accepted in all the cases. In some case even according to the petitioners the signatures do not tally at all. 28. It is also pointed out that whereas the affidavits are purported to have been signed at one place the stamp papers have been signed at some other place. This fact has not been specifically denied but it has been stated that this was done due to convenience. A large number of cases have been brought to the notice of this court where the stamp papers are purchased in Himachal but the deponents are residents of some other place but all the affidavits have been shown to have been attested by the notary public at Hyderabad. Even the manner of attestation of the affidavits leaves much to be desired. In some of the cases the dates of verification of the affidavits are totally blank. In some of the cases the date of verification does not tally with the date of attestation of the affidavits. The explanation given is that the stamp papers were purchased in Himachal Pradesh. The affidavits were got prepared and sent for signatures of the deponents who g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed up by the requisite majority vote as required by section 391(2). (3) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. (4) That all necessary material indicated by section 393(1)(a ) is placed before the voters at the concerned meetings as contemplated by section 391(1). (5) That all the requisite material contemplated by the proviso to sub-section (2) of section 391 of the Act is placed before the court by the concerned applicant seeking sanction for such a scheme and the court gets satisfied about the same. (6) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme with a view to be satisfied on this aspect, the court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded differently. The purport of section 391(2) is that all the material facts relating to the company including the pendency of any investigation proceedings in relation to the company under sections 235 to 251 and the like, ought to be disclosed to the court in order to enable the court to decide whether or not the scheme ought to be sanctioned in view of such facts. The manner of exercise of discretion would then depend upon the facts of each case." 33. Similarly reliance is placed on the judgment of the Delhi High Court in Modiluft Ltd., In re [2004] 119 Comp. Cas. 142 , wherein the court held as follows (page 150) : "Secondly, the mere filing of suits on the original side by one of the rivals to the propounder of the scheme cannot be construed to be a bar to entertaining a scheme in the absence of any interim order. If Mr. Sawhney's plea as to the existence of dispute as to the management pending in this court as bar for propounding a scheme by the existing management is accepted, then all that an objector/opponent has to do is to file a suit and dub the management as disputed, to thwart a scheme. If such a plea is accepted even a suit without merit filed to ostensibly disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself. Admittedly, there should have been at least two directors in the company. If Amit Gupta was not a validly elected director then there was no proper directorship of the company. I do not want to delve further into the matter since this matter is pending before the Company Law Board. 35. Similarly, the removal of Shri S.S. Gupta and Smt. Sharda Gupta has been challenged on the ground that their removal was not in accordance with law. No doubt these matters are pending before the Company Law Board. It is the Company Law Board which has the jurisdiction to decide these matters. However, these matters go to the root of the case because these are closely held family companies where change in directorship can change the entire scenario. The shareholding pattern has also admittedly changed drastically. There can be no fetters to the transfer of shares but here we are considering the case where after disputes have arisen the shares are allegedly sold by one of the warring groups that is Ramesh Gupta to a large number of persons. 36. As already held above there seems to be something amiss even in the transfer of shares since the document evidencing the appointment of Amit Gupta as d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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