TMI Blog2011 (1) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... s of determining the true persons- (a)who are or have been financially interested in the success or failure, whether real or apparent, of the company ; or (b)who are or have been able to control or materially to influence the policy of the company. 3. On the other hand, section 237(b) of the Act operates in an entirely different field whereunder if in the opinion of the Company Law Board, there are circumstances suggesting- (i)that the business of the company is being conducted with an intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose ; (ii)that the persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members ; or (iii)that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the present Company Petition No. 71 of 2008 was filed on November 19, 2008, only after the petitioner had, on the subject matter of the present petition, filed Company Petition No. 29 of 2008 under sections 397, 399, 402, 403 and 406 of the Act before the Company Law Board Western Region Bench at Mumbai and an interim order dated June 9, 2008, was passed in their favour whereby respondents Nos. 14 to 21 in C.P. No. 29 of 2008 were restrained from selling, disposing of, creating third party rights or parting with possession of the flats in which they had purportedly acquired interests from respondent No. 2 company. By an order dated November 20, 2008, passed in C. P. No. 71 of 2008, my learned predecessor, the then Chairman, Company Law Board, granted an ex parte stay on the proceedings in C. P. No. 29 of 2008 filed before the Mumbai Bench by the petitioners herein. As a result thereof, proceedings in C. P. No.29 of 2008, filed by the petitioners before the Western Region Bench of Mumbai are stayed. While the ex parte interim injunction granted in C. P. No. 29 of 2008 continues to operate. Application C. A. No. 111 of 2010 filed by respondents Nos. 12 and 13 for setting aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof through the newly opened bank account, being No. CD/24696 with Abhyudaya Co-operative Bank Ltd. The amounts realised in the same account are the alleged sale proceeds in relation to the purported sale of flats in the Babylon building by respondent No. 2 in the name of the company. Despite repeated requests, respondent No. 2 has suppressed all documents and information from the petitioners, respondents Nos. 21 to 23 and the Company Law Board, Western Region Bench at Mumbai and refused to furnish and provide complete inspection of the aforesaid bank account since its inception. Copy of the bank statement for the period from April 1, 2008 to July 23, 2008, furnished by respondent No. 2 in respect of the aforesaid bank account (annexure 19) show that every alleged payment to respondent No. 1 is preceded by large infusion of funds into the account of respondent No. 13, who in turn, transferred it to the account of respondent No. 12, who in turn allegedly paid respondent No. 1. The transaction is thus circuitous. 12. In the petition, the petitioner has also alleged that in the extraordinary general meeting held on January 23, 2008, the shareholding of respondent No.1 company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be transferred back in favour of respondent No. 2 which clearly shows the intent of respondent No. 2 to wrest control of the company back again after siphoning off its assets in collusion with respondents Nos. 3 to 20 to the detriment of the other members/shareholders, including the petitioners. Admittedly, as per respondent No.2 s own admission, the Babylon Project is valued at Rs. 200 crores. Thus, the question of allotting shares in respondent No. 1 company to the purported flat purchasers at par value and/or transferring the same to respondent No. 2 thereafter cannot and does not arise. In the circumstances aforesaid, the petitioner state and submit that, it is just and necessary that this hon ble Board be pleased to issue directions under section 237(a)(ii) read with sections 240, 241 and 250 of the Companies Act, 1956 and order an investigation into the affairs of respondent No. 1 company relating to (but not limited to), the acts of omissions and commissions relating to the conduct of business on or after April 1, 2007, by or in the name of respondent No. 1 company including : (emphasis supplied by me) (i)the purported sale of flats in favour of respondents Nos. 6 to 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 2 to alter and siphon of the assets of the company is evident, inasmuch as, despite his own admission, a project worth Rs. 200 crores is sought to be frittered away for an aggregate of Rs. 14,23,34,000. In the aforesaid circumstances, the petitioners have every reason to apprehend that respondent No. 2 and respondents Nos. 3 to 5 and 14 to 20 and/or his family members presently claiming to be the shareholders and/or directors of respondent No. 1 company may further dilute the petitioners shareholding in respondent No. 1 company. Even the alleged allotment of shares to respondents Nos. 2 and 3 to 5 and 14 to 20 is fraudulent. 17. Again in paragraph 45, the petitioners reiterated that if an independent inquiry/investigation is not ordered respondent No. 2 would continue to play further fraud on the members, shareholders and the company at large and siphon of the assets of respondent No. 1 company to the detriment of its shareholders/members, including the petitioners. An order of investigation/inquiry and necessary direction would not only help in the orderly management of respondent No. 1 company but would also set at naught the fraud perpetuated by respondent No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interested in the success or failure of respondent No. 1 company ; and (ii)the true persons who were and/or are and/or have been able to control the policy of the company on or after April 1, 2007, including (but not limited to) the alleged allotment of flats to respondents Nos. 3 to 13 and also the allotment of the alleged shares to respondents Nos. 2 and 3 to 5 and 14 to 20. (c)that this hon ble Board be pleased to issue directions under section 247 to investigate : (i)the source of funds of respondents Nos. 6 to 13 and respondents Nos. 14 and 20 including the trail thereof which are claimed to have been paid/transferred to respondent No. 1 company allegedly or purchase of flats and for the alleged allotment of share ; (ii)the companies/entities/associates/individuals and/or the person/s acting in concert under the direct or indirect control and/or management of respondents Nos. 3 to 5 and 14 to 20 and/or the companies which are associates/sister concerns/group companies of respondents Nos. 6 to 20, including the flow of funds amongst these entities inter se (jointly or severally) in relation to and/or prior to and/or subsequent to the payment said to be made above. 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition also, I am also of the considered opinion that the question of ordering an investigation into the affairs of respondent No. 1 company on the grounds stated in clauses (ii) to (ix) of paragraphs 49 and 50 of the petition is squarely covered under section 237(b)(i) to (iii) of the Act and does not fall under section 247(1A) of the Act. There is not an iota of doubt that present C. P. No. 71 of 2008 and the Company Petition No. 29 of 2008 filed by the petitioners before the Western Region Bench of the Company Law Board at Mumbai under sections 397 and 398 of the Act are founded on the same factual averments. The entire allegations of fraudulent acts committed by respondent No. 2 are covered under clauses (i) and (ii) of section 237(b) of the Act and allegation regarding refusal by respondents Nos. 1 and 2 to furnish any inspection of the statutory records is also covered under clause (iii) of section 237(b) of the Act. The details of fraud allegedly perpetuated by respondent No. 2 in collusion with the corespondents/buyers of the flats, more specifically respondents Nos. 12 and 13 in selling the flats as per annexure 2 is depicted in paragraphs Nos. 24 to 29 of the petition. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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