9911796707
TMI Blog2011 (6) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... as if it were a sole proprietary concern. The petitioner has approached the Company Law Board on seeing construction activities in the 10 acres of land belonging to the company in Coimbatore. The petitioner could understand that it was a joint development work along with the seventh respondent-company. On further inquiry, it was revealed to the petitioner that a total of 6.63 acres, out of the 10 acres, was sold to the two sons of the fourth respondent. They are arrayed in the petition as respondents Nos. 5 and 6. The sale value was remarkably less than the then prevailing market value. On the basis of a search effected by the petitioner, the creation of charge by equitable mortgage of company property was revealed. The mortgage was for the purpose of securing facilities to Akkammal Steel Private Limited, a company under the total control of the respondents. Though the property with an extent of 3.37 acres was released, the petitioner apprehends that it is a prelude for further alienation. This is evident, as claimed by the petitioner, from the annexed brochure issued by the seventh respondent. The petitioner is aggrieved by the feeling that his brothers are trying to divide and ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... founder and as on March 31, 2009 are tabulated and furnished along with the counter affidavit as exhibit R2. According to the respondents, the petitioner was always keeping himself away from the affairs of the company and he is interested only in having his share of the property without his share in the liability. While disposing of C. P. No. 33 of 2000 Dr. K. Balasundaram v. G.K. Steels (Coimbatore) Ltd. [2003] 48 SCL 540 (CLB - Chennai), filed by the petitioner in respect of another company in the group-G.K. Steels (Coimbatore) Private Limited, the Company Law Board gave him an option to exit. He did not avail of that opportunity. Instead, he has again approached the Company Law Board with the oblique purpose of securing an unreasonable partition of family assets sans liabilities. 3. According to the respondents, the pretended ignorance of the petitioner about the affairs of the company is false. The respondent-company along with other companies in the group became sick during the lifetime of the founder. The secured borrowing and/or obligations to banks and other institutions are detailed in the counter affidavit. The petitioner's averment regarding the creation of a charge to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count the rights of the parties in the company petition. The respondents pray that the Board may not interfere with the joint development scheme as it will harm the interests of the company. 6. In the rejoinder filed to the counter affidavit, the following contentions are raised : "That the petitioner is further entitled to 33.33 per cent of the shares and voting rights, out of the 14,147 shares that belonged to the father (expired in 1999) and mother (expired in 2006), that the company was a deemed public limited company by operation of law until December 24, 2001, that the appointment of respondent No. 3 as additional director on July 4, 2001 is invalid, that the directorship of respondent No. 4 following his reappointment on October 29, 2001 has been lost for not holding the annual general meeting before September 30, 2002, that there has never been a validly constituted board from July 4, 2001 onwards that respondents Nos. 3 and 4 have fabricated the statutory records and minutes, and there is collusion between respondent Nos. 3, 4 and 7 for their personal gains and thereby caused loss to the company, and the company was unable to file its financial statements from 2001, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idator, Kerala High Court v. Victory Hire Purchase Co. (P.) Ltd. [1982] 52 Comp. Cas. 88 (Ker). 17.Syed Mahomed Ali v. R. Sundaramurthy [1958] 28 Comp. Cas. 554 (Mad.). 18.Starlinger & Co. Ges. M.B.H. v. Lohia Starlinger Ltd. [2008] 144 Comp. Cas 642 (All.). 19.Bennet Coleman & Co. v. Union of India [1977] 47 Comp. Cas. 92 (Bom.). 20.V.S. Krishnan v. Westfort Hi-tech Hospital Ltd. [2008] 83 SCL 44 (SC). 21.Manish Mohan Sharma v. Ram Bahadur Thakur Ltd. [2006] 67 SCL 91 (SC) 22.T. Balan v. Unicentre Agencies & Engg. (P.) Ltd. C.A. No. 44 of 2009/C.P. No. 7 of 2004, dated 9-11-2009 Cases relied on by respondent Nos. 1 to 6 : 1.Sheth Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton & Jute Mills Co. Ltd. [1964] 34 Comp Cas 777 (Guj.) 2.K.S. Mothilal v. K.S. Kasimaris Ceramique (P.) Ltd. [2007] 135 Comp. Cas. 609 (CLB - Chennai). 3.K.J. Kumar v. Sneva Diamond Tools (P.) Ltd. [2005] 62 SCL 67 (CLB - Chennai). 4.Roshan Lal Agarwal v. Sheoram Bubna [1980] 50 Comp. Cas. 243 (Patna). 5.D. Srinivasan v. H.S. Viswanatha [2007] 75 SCL 59 (CLB - Chennai). 6.Nagarathna Textiles v. Sundaram Clayton Ltd. [2008] 145 Comp. Cas. 598 (IPAB). 7.Palghat Exports (P.) Ltd. v. T.V. Chandran [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 30, 1993. But the commissioner's report revealed that Kandaswamy individually held 10,242 shares and 878 shares as Hindu undivided family, so it is not explained as to how the respondents get 22,405 shares as shown in the family arrangements and that there is no explanation about the 3,027 shares of the mother. Even if the memorandum of family arrangement is taken as genuine it is not clear why there is no mention about the share transfer or transmission at the time of the commissioner's inspection on September 24, 2009. It is pointed out that the shares continued to remain in the name of the deceased mother. According to the petitioner, with this kind of shareholding pattern no shareholder meeting is possible whether it is for the appointment of the director or for sale of properties or for any other purpose. It is pointed out that the anomaly in the shareholding pattern shows that respondents Nos. 2 and 4 have been conducting the affairs of the company according to their whims and fancies, and without notice to the petitioner. 9. With regard to the argument of the petitioner that shares held by the father and mother were never represented in the decision making process, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of institution of the present proceedings, the petitioner was silent about his alleged grievances which amount to laches. Though the petitioner was aware of the family arrangement in 2002, he did not care to challenge it, nor was there any action for partition. As early as in the year 2000, he filed a company petition against another group company alleging oppression and mismanagement. As rightly pointed out by the respondents, in a proceeding under sections 397 and 398, the Company Law Board is not bound to pass orders on this point. 11. It was in the annual general meeting held on September 28, 2001 that the articles were altered to insert "private company". According to the petitioner until the company had reported to the Registrar of Companies in December 2001, it was only a public limited company. It is argued that until intimation under sub-section (2A) is given to the Registrar of Companies, the benefit of removal of section 43A is not available and hence the company shall have a minimum of three directors. Therefore, it is pointed out that respondent No. 2 was the only remaining director at that time, which could not constitute a quorum. With regard to the composition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that sense the sale was never properly approved in 2005 and 2007. The gist of the arguments is extracted below : Respondents Nos. 2 and 4 were the directors, on July 4, 2001, respondent No. 4 resigned and respondent No. 3 was appointed as executive director. The only other director was respondent No. 2. The company was public company till December 2001. Respondent No. 3 could not have continued beyond September 30, 2001 the date of the next annual general meeting (section 260). In the board meeting held on October 29, 2001 respondent No. 4 was co-opted as additional director. The averment that a single director would constitute a quorum for inducting another director is an afterthought. When the strength of the board is not below the number fixed for quorum, there is no question of invoking Regulation 75 of Table A of Schedule I of the Regulations for Management of a Company Limited by Shares. If respondent No. 4 had been appointed as director in the board on October 29, 2001, he would have lost his office on the due date for the next annual general meeting in 2002. As per the records produced by the respondents (volume XIV page 170) (volume XX page 30) an extra ordinary general m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentional and it was properly raised in the rejoinder Malgireddy Venkata Ramana's case (supra). Enquiry into the charges against delinquent directors is properly within the scope of the petition Syed Mahomed Ali's (supra). 13. Regarding the resolution on July 4, 2001 it was argued by the respondents that, it can be presumed that the third respondent was appointed as director before the fourth respondent tendered his resignation, indicating a valid quorum consisting of respondents Nos. 2 and 4. It was argued that even if there is no quorum the continuing directors may act and their decisions are protected under Schedule I, Table A, regulation 75 of Regulations for Management of a Company Limited by Shares to the Act which is as hereunder : "75. The continuing directors may act notwithstanding any vacancy in the board ; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum, or of summoning a general meeting of the company, but for no other purpose." 14. Relying on the articles of association (article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the company had regained its private limited status on December 13, 2000 with the repeal of section 43A of the Companies Act. In this context, the challenge against the validity of the constitution of the board of directors will not stand. What was the prejudice caused to the petitioner and the company due to this irregularity ? There is no explanation. I am also not inclined to further elaborate on the alleged delay in filing papers before the Registrar of Companies at this distance of time. In the absence of any prejudice being caused to the company, I am of the view that minor aberrations need not stand in the way of deciding major issues. The real intention of the petitioner obviously is to get the impugned land sold in 2005 and 2007 set aside. It is for that purpose only he is pointing out various irregularities in the constitution of the board in 2001. The petitioner has not cared to point out any loss or damages caused to the company as a result of those aberrations. I think in these proceedings, I can confine myself to the land transactions alone as the petitioner, in the absence of any bona fide grievance over the other aspects of the matter, will be content himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court has to secure notice to him by publication, and even then he remained ex parte. Instead of clearing the decade old liabilities and salvage the company, he has been avoiding the legal proceedings. Notice sent to him even few months prior to the filing of the company petition was returned with the endorsement "not claimed", indicating his indifference to the company and absence of bona fides. In the Debts Recovery Tribunal he remained ex parte. Even if it is accepted that notice of the annual general meeting was not served on the petitioner, the non compliance of the provisions of the Act before taking such action will not invalidate the sale since the action has been in the interest of the company and shareholders, and not oppressive to the petitioner. 20. According to the learned representative appearing for the petitioner, the respondents have manipulated the situations by ignoring the winding up order passed by the company court in 2006. The winding up petition was pending since 2002 and winding up was ordered in 2006 and the company's assets were put in the custody of the official liquidator. It has been pointed out that under section 445(3), the winding up order amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd respondent No. 2 have diverted the valuable properties for their personal aggrandisement. It is pointed out that there is no explanation about the source of income of respondents Nos. 5 and 6, and the conduct of the respondents is revealed in the communication from Dena Bank (pages 83, 84 and 88 of volume V). Even if a circumstance existed that bank would auction properties, it was not necessary to sell the unencumbered properties, particularly when the company is a family company. It is pointed out that there was no strangulating chase against the company by the creditors, as evident from the letter from the bank (page No. 102 volume V), as per which the bank asked the company to remit an amount of Rs. 10 lakhs, so that the bank could consider the one time settlement offer towards recovering the dues of Akkammal Steels P. Ltd., the bank was only proceeding against 3.37 acres of the company's property (the tail shaped and commercially not important) though Dena Bank had several securities. This notice was subsequent to the sale of 0.79 acres and 2.55 acres. Relying on the tabulation of receipts and payments (page 8 of counter), petitioner argued that the story of the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69] LR 4 Ch App 376. The decision in Cook's case (supra ) was cited to argue that respondents Nos. 2 and 3 who were interested in the conduct of the affairs of the company, intentionally concealed all circumstances relating to their negotiations until a point had been reached when the whole arrangement had been concluded in their own favour, with no scope for any interference, and thus acted in order to make personal gains without protecting the interest of the company. Respondents Nos. 5 and 6 who had knowledge of the entire facts and circumstances of the case have come forward to buy the properties and hence they are liable to be treated as constructive trustees under the principles of equity Selanaor United Rubber Estates Ltd.'s case (supra). In the above circumstances respondents Nos. 5 and 6 also had a fiduciary duty in respect of the affairs of the company and hence guilty of oppression of the minority shareholders along with respondents Nos. 2 and 3 (Bombay High Court in Vaishnav Shorilal Puri & Seaworld Shipping & Logistics (P.) Ltd. (supra ). Relying on the decision in Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp. Cas. 351 (SC) at pages 355-366 it is contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase (supra) is not applicable to the facts of this case. That was a case where the property held in the name of the managing director of the company was treated as the property of the company, and where the respondents failed to establish the market value. The properties valued (Rs. 2.5 lakhs per acre) in 1993 was sold in 2006 at Rs. 2.80 lakhs per acre, to the son of the power agent of the respondent who in turn sold the same for Rs. 4.12 lakhs per acre. The sale was without the consent of the general body or board of directors and during the pendency of the company petition at a price not beneficial to the interest of the company. This decision of the Company Law Board has been recently set aside by the hon'ble High Court of Madras (vide judgment in Company Appeal No. 24 of 2009 dated April 29, 2011 T. Vinayaka Perumal v. T. Balan [2012] 22 taxmann.com 261 (Mad.). 23. On behalf of respondents Nos. 2 to 4, the following arguments were advanced : The borrowings made during the life time of the father and the mortgages and guarantees given at that time cannot be questioned at this distance of time (20-25 years). There was no option but to discharge the liabilities and redeem/salvag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution does not require notice to the petitioner since he is not in the board. He was having only minority stake and hence unable to defeat any resolution in the general body. Respondents Nos. 5 and 6 are the alinees as per the impugned three sale deeds. With regard to the jurisdiction of the Company Law Board to set aside the sale, Respondents Nos. 5 and 6 contended that the past events are not liable to be set aside "to bring an end to the matters complained of" unless there is an allegation of fraudulent preference under section 402(f) which is not pleaded in this case. The sale deeds are executed in 2005 and 2007 and the company petition is filed in 2009. It is pointed out that the petitioner obtained the certified copies of the sale deeds on July 24, 2008 (page 80 volume 2). It is also pointed out that section 402(e) and (d) are not applicable to the facts of the case. Regarding section 402(f) it is contended that the petition is not filed within three months of the impugned sale deeds and hence not applicable to the facts of the case, apart from the fact that the impugned sales do not come under the "fraudulent preference" provided under section 402(f) of the Act. The decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution passed by the board of directors. It is pointed out that the petitioner was fully aware of all the facts about the management of the company by respondents Nos. 2 and 3 and the complaint about non compliance is made in 2009 just to defeat the joint development. It is urged that the petitioner owes an explanation for his long silence after issuing the legal notice in 1999. Relying on the lawyer's notice issued by the petitioner in 1999, it is argued that the grievance of the petitioner is regarding the division of all the family properties and the filing of company petition is motivated for this collateral purpose. The decision in Palghat Exports (P.) Ltd.'s case (supra) is cited as an authority on this point. The petitioner does not have a case that the proposed development is not in the interest of the company, but his case is that the company ought to have directly undertaken the project with the developer. It is pointed out that this company petition suffers from delay and laches because the petitioner failed to explain the delay in not prosecuting the matter for more than four years. It is also pointed out that the petitioner was aware of all the sale deeds and he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 lakhs SBM-486 lakhs SBT-722 lakhs plus interest from 1999 Lord Krishna Bank Personal by Sri G. Kandasamy Short term loan 09.08.1995 Rs. 26,58,658 Case filed in DRT The petitioner was aware of the situation and he has no case that the liability created by his father olught not to be accepted and cleared by the sons. It was for the purpose of clearing the debt, on the basis of one time settlement terms offered by the banks, that 6.63 acres of unencumbered vacant land belonging to the company was sold. The 6.63 acres of land were sold in the following manner : S. No. Date of sale deed Purchaser Extent of land Purchase price (Rs.) Market price (Rs.) suggested by petitioner 1. 09.12.2005 Siranjeevi Saravanan (6th respondent), S/o. of 4th respondent 0.79 acres 2,50,000 79 lakhs 2. 20.12.2005 Siranjeevi Saravanan (6th respondent), S/o. of 4th respondent 2.55 acres 25,00,000 255 lakhs 3. 21.07.2007 M. Sujay Senthil (5th respondent), son of 4th respondent 3.29 acres 31,55,768 987 lakhs Total 6.63 acres 59,05,768 1,321 lakhs The sale was for the clear purpose of salvaging the factory, land and building. This is an accepted practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be at liberty to allot and sell the 64 per cent of remaining built up area and undivided share of the land. The amount of Rs. 3,00,00,000 (rupees three crores only) admittedly paid by the company to the owners is agreed to be appropriated towards an interest free refundable security deposit to the owner towards due performance of the agreement. The proceeds from the JDA was intended for discharging the liability of the company. The details of the liabilities discharged utilising the sale consideration received from respondents Nos. 5 and 6 and the advances/deposits received under the joint development plan from respondent No. 7 are given to me and extracted below : A tabulation of all receipts and payments including contribution by respondents Nos. 5 and 6 : Receipts Payments Date Particulars Amount Date Particulars Amount 09.12.2005 By sale of land (0.79 acres) 250000 09.01.2006 Payment to SBI (G. K. Alloy Steels P. Ltd.) 600000 20.12.2005 By sale of land (2.55 acres) 2500000 12.01.2006 Payment to SBI (G. K. Alloy Steels P. Ltd.) 2000000 21.07.2007 By sale of land (3.34 acres) 2400000 10.02.2006 Purchase of Genset G. K. Alloy Steels P. Ltd. 68650 09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the petitioner is admittedly having an interest in it through his father. Similarly, the petitioner is a shareholder of G. K. Steels in respect of which he had filed a company petition and suffered an order of exit. As against this the only suggestion of the petitioner is that the properties of all other companies including the industrial undertaking would have been sold, which in my view is most unreasonable and against the very existence of the company. In the above circumstances, the sale of 6.63 acres cannot be described as an irresponsible or mala fide exercise to save a small extent (3.37 acres) of land, nor an attempt to pocket two-third of the company's land by the children of respondent No. 4. As a prudent and reasonable directors it was the right option for respondents Nos. 3 and 4 to salvage the company. The alleged fraud pleaded is not proved by the petitioner. The petitioner has no case that the joint development agreement is not for the interest of the company. His case is that the company should have directly entered into the agreement with the developer. I see no force in this submission. In the absence of any serious challenge against the joint development plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.P. No. 33 of 2000 (exhibit R3), to understand the annoying nature of the petitioner. The Company Law Board at that time had given him the option of exit which he did not accept. The petitioner seems to be not amenable to any positive proposal and he is incapable of putting forward any alternative proposal. I find that the conduct of the petitioner disentitles him from claiming any equitable reliefs. 31. According to the respondents even if there are irregularities in the land sale, and even if there is undervaluation, this Bench cannot set aside past and concluded acts under the general powers available under sections 397 and 398 and that such power is an additional power conferred under section 402(f) of the Act. Learned counsel for the respondent further argued that section 402(f) is also not illustrative of any general power in the court to set aside or interfere with past and concluded transactions of this type between a company and third parties which are no longer continuing wrongs. Learned counsel pointed out that section 402(f) is not applicable since the impugned sales do not fall within the ambit of "fraudulent preference", nor the petition is filed within three month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to discharge the liabilities of the company and to salvage the factory, land and building of the company and the objective is completely in the interest of the company Needle Industries (India) Ltd.'s case (supra). To prove under valuation the petitioner is bound to produce documentary proof K.S. Mothilal's case (supra). Guideline value cannot be the basis for assessing the market value of the property R. Sai Bharathi's case (supra). The market value should never be worked out backwards and subsequent commercialisation or development cannot be the basis for determining the market value prior thereto Oil & Natural Gas Corpn. Ltd. 's case (supra). The petitioner relied on the following decisions as illustrative cases where sale of property has been set aside. P. Narayanasamy's case ( supra). J.K. Paliwal's case (supra ). T. Balan's case (supra ). I have already observed in this order above that the decision in T. Balan's case (supra) have been set aside in appeal. M. Moorthy's case (supra ) which distinguished the decision in Sheth Mohanlal Ganpatram's case (supra). The petitioner also pointed out that the decisions cited by the respondents have no application to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otally different, I have no difficulty to hold that the decision in M. Moorthy's case (supra) is not applicable to the facts of the case in hand. But I am inclined to follow the principles laid down in Sheth Mohanlal Ganpatram's case (supra) in deciding whether the impugned sale deeds are part of a continuous and continuing course of oppressive or prejudicial conduct on the part of respondents Nos. 2, 3 and 4 and if so whether they are liable to be set aside under sections 397 and 398 and 402(f) of the Act. I have already held that the impugned land sale and joint development agreement were genuine and does not amount to an act of oppression. Even if all the contentions of the petitioner are correct, as per the decision in Sheth Mohanlal Ganpatram's case (supra) the remedy provided under sections 397 and 398 is of a preventive nature so as to bring to an end to oppression and mismanagement on the part of controlling shareholders and not to allow its continuance to the detriment of the aggrieved the shareholders or the company, and the remedy is not intended to enable the aggrieved the shareholders to set at naught what has already been done by the controlling shareholders, and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents Nos. 5 and 6. As already observed the petitioner had no case that JDA is not beneficial to the interest of the company. As found above, respondent No. 7 is clearly entitled to claim the protection of the doctrine of indoor management and the petitioners are not entitled to get the same set aside on the ground that there are irregularities committed in the passing of the resolution in the board and general meeting of the company. The doctrine of indoor management as discussed in the decision Sheth Mohanlal Ganpatram's (supra) is extracted below for easy reference (page 814 of 34 Comp. Cas.) : "Now it is a well settled rule of company law that an outsider dealing with a company is affected with notice only of its public documents and that if everything appears to be regular so far as it can be seen from the public documents, the outsider when dealing with the company is entitled to assume that all internal regulations of the company have been complied with, unless of course he has knowledge to the contrary or there are suspicious circumstances putting him on inquiry. This rule has come to be known as the rule in Royal British Bank v. Turquand [1856] 6 E. & B. 327. Since it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the limits of Coimbatore City Corporation, whereas Chinnavedampatti village is outside its limits. The petitioner is relying on a property located within the Corporation limits in order to support the exorbitant valuation suggested by him. The guideline value is not a determinative factor even for valuation for the purpose of the Indian Stamp Act, 1899. The respondents have produced the data sale deeds (exhibit R25 series), which is the most reliable evidence. Therefore the valuation report relied on by the petitioner is false and misleading. A Tabulation of the data sale deeds produced by the respondents is available at pages 5 and 6 volume XX. Details affecting the value of the property are spelt out in paragraph 10 at page 10 of volume V. Further valuation reports of Chartered valuers are also filed as exhibits R11 and R12. The group was faced with extensive claims by various bankers, the BIFR proceedings, and unsecured creditors claim remaining unpaid. In the above circumstances an advertisement for sale would be detrimental because there is a possibility that unencumbered asset would be attached by any creditor which will defeat the possibility of sale and discharge of bank d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prevailing market rate as on the date of inspection on July 1, 2009 and classifying the property as "residence" and also based on the guideline value per square feet. This is per se incorrect. During 2005 and 2007, these properties were not classified as "residence". As per annexure 24 the following are the rate as per prevailing market rate method and survey number wise guideline value : Date of sale Extent Purchased value Privilege market rate value Guideline value 09.12.2005 0.79 acres 2,50,000 79.16 lakhs 1.94 crores 20.12.2005 2.55 acres 25,00,000 2.55 crores 12.39 crores 21.07.2007 3.29 acres 31,55,768 6.16 crores 1.03 crores 41. The properties were sold in 2005 and 2007. Hence annexure 24 is not reliable since it is prepared on the basis of datas available in 2009. What is the basis for arriving at the value is not clear from the report. Moreover the basis for the guideline value is properties situated in other villages, besides treating the property as "residential". Moreover fixation of market value on the basis of the guideline value or valuation register summoned from the Sub-Registrar's office and the engineer is not reliable. The guideline val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a particular date should not be fixed on the potential importance it is likely to acquire after it is developed. Considering the entire facts and circumstances of the case, I can come to a logical conclusion that there is undervaluation in respect of the third land sale in 2007, since the price fixed appears to be not the best that could be expected when compared to the price offered in the year 2005, and I fix the amount as Rs. 20 lakhs, and hold that loss has been caused by respondents Nos. 2 to 4 to the company to that extent. Therefore I am inclined to surcharge respondents Nos. 2 to 4 for the loss caused to the company. Accordingly, respondents Nos. 2 to 4 are hereby directed to deposit this amount of Rs. 20 lakhs into the account of the company within 6 months from the date of this order. Issue No. 4 is accordingly found. 42. Finally, the petitioner wants this Bench to hold that the land sale, and the JDA entered into by the company are ultra vires the main object clause of the company. It may be noted that no specific plea to this effect had been raised in the petition. As per the memorandum of association the main objects to be pursued by the company are to carry on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner's argument that the shares of deceased parents of the parties has not been transmitted to the legal heirs cannot be entertained in a petition under sections 397 and 398 of the Act and that the alleged anomaly in the shareholding pattern cannot be taken as a ground to assume that respondents Nos. 2 and 4 have been conducting the affairs of the company according to their whims and fancies. The company has chosen to revert back to private company status with effect from December 13, 2000 with the repeal of section 43A of the Companies Act and the challenge against the validity of the constitution of the board of directors on this ground is not sustainable because the real intention of the petitioner is to get the impugned land sales in 2005 and 2007 set aside and for that purpose only he is pointing out various irregularities in the composition of the board in 2001. The petitioner's contention that there has never been a validly constituted board from July 4, 2001 due to the resignation of the fourth respondent is without any merit. The subsequent board meetings and general meetings are not liable to be invalidated since all the allegations are raised for the first time ..... X X X X Extracts X X X X X X X X Extracts X X X X
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