TMI Blog1999 (11) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... mi employees, etc. On the basis of these allegations, the petitioner has sought for appointment of a special officer, investigation into the affairs of the company, cancellation of the transmission of shares, restraining the second respondent from functioning as a director of the company. 2. Shri Malik, advocate appearing for the petitioner submitted as follows : The head of the Bhavnani group--father of respondents Nos. 2 to 5 who held 660 shares in the company expired on June 17, 1998. He had reportedly left a will in which the shares held by him in the company were bequeathed to one Reshma Bakshi with whom the said deceased had intimate relationship during his life time. The second respondent, suppressing this will, had engineered transmission of the shares as intestate succession in a board meeting held on March 22, 1999. This was done in spite of the protest by the petitioner who attended the meeting and also against the protest of another director of this group, namely, the sister of the petitioner. Further, of the 660 shares, 500 shares were allotted to the fifth respondent, who is an American citizen without the approval of the RBI and in violation of the Foreign Exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per year out of the company funds. 4. He further submitted as follows : The respondents have entered into a catering contract with the sixth respondent, a company owned by respondents Nos. 2 and 3. In turn, the sixth respondent has given a subcontract of running the restaurant to one Devender Nath Sharma. The respondents collect 18 per cent, commission on sales while they account for only 9 per cent, in the books of account of the company, pocketing the balance. In an earlier contract, the company used to collect 20 per cent, commission on sales. The commission payable would work out to about ₹ 2 lakhs per month but the respondents collect about ₹ 70,000 in cash and pocket the same. In addition the entire Bhavnani family use the restaurant for which the company pays about ₹ 50,000 to the restaurant. 5. Summing up his arguments, learned counsel submitted that even though the petitioner was not a director, he was allowed to involve himself in the management of the company and during the period he was so associated, the profits of the company increased from ₹ 14 lakhs per year to ₹ 52 lakhs in the year 1998-99. Since the various allegations made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 4.5 lakhs on behalf of the petitioner. In this connection, he referred to the additional documents filed wherein the vouchers relating to the payments made by the company in respect of the expenses incurred by the petitioner for his personal benefit have been enclosed. Therefore, if at all anybody is using the funds of the company, it is the petitioner who does not have any status in the company. However, since he is one of the family members, the respondents did not raise any objection towards meeting his personal expenses. In regard to the allegation that there were two benami employees and the emoluments drawn in their favour were being siphoned off by the second and third respondents, learned counsel submitted that the very fact that the company has been depositing provident fund, etc., shows that these employees were actually in employment. He submitted that these two had recently resigned. In regard to drawal of salary for drivers, he pointed out that every director has been allowed to engage a driver on his own and an amount of ₹ 4,500 is being reimbursed to these directors to meet the salary paid by them to their respective drivers. The company as such has not em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch cannot be taken cognisance of. Accordingly, he submitted that there is no substance in the stand of the petitioner in this regard. 9. Summing up his arguments, learned counsel stated that the petitioner has not had a clean record and is temperamental in nature and that is the reason why the board consisting of the petitioners' brother and sister did not want to register the shares in his name resulting in his filing a petition before the Western Bench of the Company Law Board in 1995. However, later it agreed to transfer only on certain terms as contained in the consent terms. Since he was a member of the Thakur group, even though he was not a director, he was allowed to participate in the management and in the board meetings too. However, in view of his militant attitude, as is evident from the proceedings of the general body meetings, he was not allowed to have a free hand and, therefore, he has filed this petition. Since the petition is a motivated one and against the consent terms recorded by the Company Law Board in the earlier proceedings, the petition should be dismissed. 10. We have considered the pleadings and arguments of the counsel. It is a fact that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese allegations do not merit any consideration in the absence of impleadment of the managing director of the company, the brother of the petitioner, as a party to the proceedings. Further, we note that in spite of the detailed reply filed by the respondents on the allegations of siphoning off of funds, the petitioner has not reiterated these allegations in his rejoinder. Further, we note that the petitioner has averred in the petition that the sixth respondent is owned by the second and third respondents while in fact both the Thakur as well as Bhavnani groups hold more or less equal shares in the sixth respondent. It is a fact that the board consists of two representatives from each group of shareholders and making allegations only against one group of directors leaving alone the directors of the other group in which the petitioner is a member, leads us to the conclusion that this petition is a motivated one. We also find that the other two directors have not come forward to support the allegations of the petitioner. It is evident from the fact that these two directors are also in receipt of ₹ 4,500 per month towards the driver's salary while the petitioner has made all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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