TMI Blog2015 (11) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents failed to establish that this petition is not maintainable, on the allegations referred above, hereby decide this issue against the respondents. Whether the petitioner seized to continue as director of the company on an alleged letter dated 14.03.2007 or not ? - Held that:- The petitioner being the promoter director of shareholder of the company with a slightly majority shareholding in the company, it could not be assumed that the petitioner resigned from the company as director leaving his shareholding and his guarantees with the company. The petitioner being the elder brother of R2, being a promoter of the company, for still continuing as shareholder of the company, keeping his guarantee with the bank, it could not be construed by any stretch of imagination that the petitioner resigned from the company by submitting a resignation letter dated 10.03.2007. Thus have drawn this inference independent of the Hand Writing Expert opinion filed by the petitioner, therefore, hereby hold that alleged resignation letter used by the R2, to show petitioner resigned from the company as invalid. Whether appointment of R3 as director of R-1 company is oppressive against the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the respondents. For this allotment being held invalid, the shareholding existing before this increase and allotment, will come into force. Whether R2 to be directed to restore ₹ 91 lacs shown as taken out ? - Held that:- Since the siphoning of the funds is not proved, could not say that R2 has siphoned the funds of the company at this juncture. 1 also cannot say that R2 opened those two Bank accounts with a bona fide intention for the growth of the company. When a Bank account is opened in the name of the company without notice to the other shareholder who has, according to him, 50% shareholding, it only reflects that those accounts are opened to handle financial transactions without notice to the other shareholder or director of the company. The counsel of the Respondents relied upon a case in between Ramesh Bhajanlal Thakur v. Seaside Hotel (P.) Ltd. & Ors [1999 (11) TMI 869 - COMPANY LAW BOARD] to say that when no particulars are given in support of allegation siphoning the funds of the company, then obviously no relief can be granted, as to this principle, I, on principle, agree no relief can be granted when a petition has come without any details and proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf jointly by the petitioner and respondents; (f) To declare alleged the increase of authorized capital from ₹ 5 lackh to ₹ 10 lakh and Form 5 as null and void; (g) To direct RoC, Delhi to file prosecution u/s 628 of the Companies Act 1956 against R2 3 for making false statements and for filing forged documents with RoC Delhi. The case of the petitioner: 2. The petitioner is an Electrical Engineer, had worked in Gulf countries during 1987 to 1995; after having returned to India from Gulf in the year 1995 with lots of savings under NRI Account, he worked with Flour Daniel, world's No. l construction/Engg consulting company until February, 1996. He purchased a commercial office space in December 1995 at 70A-215, Chawla Complex, Shakarpur, Vikas Marg, Delhi, and established a sole proprietary concern on 18.03.1996 in the name and style of NOTAM to carry on electrical contract works. While this proprietary concern was making good business, the petitioner initially accommodated his brother (R2) in his sole proprietary concern 'NOTAM'. He looked after the needs of his brother and even spent huge money on his marriage in Nov. 1999. As they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held on 28.03.2008 for increase of authorized capital from ₹ 5 lakh to ₹ 10 lakh without any notice to the petitioner. Though meeting was shown as held on 283.2008, R2 did not file Form 5 immediately, he filed it on 02.04.2009 i.e., after more than one year from the date of alleged increase of share capital. 5. The petitioner submits that the shareholding pattern in the Annual Return dated 4-9-2002 was - the petitioner holding 6605 shares i.e., 57%, R2 holding 5,000 shares i.e., 43%. However, in the Annual Returns of 2003 2004, the shareholding started showing as the petitioner and R2 holding 25,000 shares each amounting to 50:50 in between them in reverse to the shareholding pattern of 57% in the name of the petitioner and 43% in the name of R2 as reflected in the AR of 2002. The petitioner submits that he has never signed over any of those documents which showing 25,000 shares each against the petitioner and R2. Since he was not a party to this change of shareholding in ARs 2003 2004, the petitioner says they shall be declared invalid. 6. When the relations in between petitioner and R2 have been strained, the petitioner asked R2 to deliver the cheque boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was shocked of seeing it as signed by him, because he never signed upon the said resolution. R2 deployed this to make customers believe that R2 is allowed by the petitioner to execute sale deeds on behalf of the company, to achieve this, R2 fabricated false board resolution dated 10.4.2007 forging the signature of the other director i.e., the petitioner. With this, he held out to the customers he is allowed to sell the flats and receive money from the customers, of course, he did it to his best. It is pertinent to note, the date on this resolution is 10.4.2007, whereas the resignation letter dated 14.3.2007 set up by R2 to show the petitioner resigned from the company as director is ante to the Board Resolution dated 10.4.2007. Summing it the petitioner submits that R2 forged the signatures of the petitioner left, right and center without foreseeing that he would fall into his own snare. R2 simply passed off the Board resolutions and shareholders resolutions one after another as if the petitioner signed all those resolutions set up by R2. 9. The petitioner filed a Handwriting Expert opinion dated 08.08,2009, indicating that the signature on the letter dated 14.03.2007 is not mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evident that R2 siphoned ₹ 9l lakh from these two accounts and not placed any kind of explanation as to what made him open these accounts and why he withdrew such a huge amount from these two accounts without any explanation. He submits R2 is guilty of misfeasance and breach of trust for having not placed any reasoning for opening other bank accounts behind the back of the petitioner and surreptitiously siphoned the funds of the company for a tune of ₹ 90 lakh. 12. The petitioner submits that he entered into profit sharing partnership with SOHO Construction Private Limited, it has not affected the project undertaken by the company. 13. The petitioner submits that he filed Civil Suit 818/09 in Ghaziabad civil court and was later withdrawn on 21.08.2009. He further submits that though cause of action in the earlier suit is cause of action in this CP filed u/s 397/398 of the Act 1956, the reliefs sought in this Company Petition being different and in relation to oppression and mismanagement by R2 against the petitioner and the right of remedy available to a member of the company under sections 397 398 of the Companies Act 1956 not being available before civil co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, Ghaziabad on the same issues which he raised in the present case. In that suit, the learned Judge, on 21-7-2009, dismissed the relief of temporary injunction sought by the petitioner on the ground that the petitioner has not been continuing in the management, so that he could not represent the company, and that the petitioner has not proved that his resignation letter as forged till date of passing the interlocutory orders. 18. For having the petitioner withdrew the suit unconditionally without seeking any liberty from the first court, and for having the ld Judge on 24-8-2009 dismissed the suit without giving any liberty to the petitioner to initiate new proceeding, this CP is hit by order 23 Rule (1) Sub-rule 4 CPC. The plea of forgery taken up by the petitioner requires comprehensive evidence, therefore only remedy available to him is by way of filing civil suit not the present petition. 19. R2 submits that the petitioner, on 3-3-2009, fraudulently transferred an amount of ₹ 1, 25,000/- from the company current account lying with Punjab Sindh Bank, Link Road, Sahidabad, Gaziabad to a saving Bank Account jointly operated by the petitioner and his wife using trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 2004 causing financial loss to the company- The petitioner refused to hear the old parents when they went to him to persuade not to continue with litigation between the brothers. R2 submits that this petition is not maintainable on the ground that the petitioner has not come with clean hands, and single act of removal of the petitioner as director or appointment of R3 as director will not amount to oppression under section 397 398 of the Act 1956. 20. R-2 says R-3 was appointed as director with the approval of the petitioner, his signature was not forged, the delay in filing form 32 is that no director of the company has DIN number as per provisions of section 253 of the Companies Act, since there is a rule that no director can file forms unless there is DIN number to him, they could not file it in time. 21. R-2 denies the petitioner supporting R-2 financially; in fact, the brothers invested their joint earnings in the company. It is an admitted fact that the petitioner purchased an office at 70 A-215, Chawla complex, Shakarpur, Vikas Marg, Delhi-110092 as an investment, then the petitioner started a firm in the name of NOTAM with the support of parents. R-2 claims th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this CP on 18.8.2009, OS 818/2009 was not withdrawn by 18.8.2009, it was indeed dismissed as withdrawn only on 24.8.2009, therefore R2 says that the petitioner indulged in giving false statement to the court and obtained an order, therefore he shall be prosecuted for perjury, hence CA under section 340 Cr P C has been moved. - That R2, for having the petitioner concealed the facts from the Company Law Board and obtained orders by making false statement, submits that this CP shall be dismissed on this ground alone. - That the petitioner is precluded from instituting this CP in terms of the provisions of Order 23 Rule 4 of CPC because Ld. Civil Judge dismissed OS 818/2009 without giving any liberty to initiate proceedings on the same cause of action, therefore, R2 says this petition is liable to dismissed on this ground itself. 25. The petitioner counsel, of course, denied all these allegations on the point of maintainability of the petition. He also relied upon a citation in between M/s SVT Spinning Mills Pvt. Ltd Ors Vs. M. Palanisami [(2009) 95 SCL Pg 112 Madras] to say that CP filed u/s 397 398 of the Act 1956 cannot be dismissed on the ground earlier proceeding was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing this CP u/s 397 398 of the Companies Act. 1956, the petitioner counsel relied upon a ratio cited in the case in between M/s S.V.T Spinning Mills Pvt. Ltd Ors Vs. M. Palanisami [(2009) 95 SCL Pg 112 Madras] which is as follows: Para:11 - Again, the mere fact that the Civil Suit stated above has been dismissed by the Court without giving liberty to the first respondent to take appropriate forum itself will not take away the rights of first respondent if the same are available and conferred on him under the provisions of the Companies Act, 1956, especially for approaching a forum viz. the Company Law Hoard complaining about the oppression and mismanagement u/s 397 398 of the Act, That being the statutory right available to a shareholder or member of the company, in my considered view, it does not require any leave to be granted by the Civil Court............. 30. Here also, the petitioner filed a withdrawal application before the Civil Court and then filed this CP before this Bench. The Suit was then dismissed. It was only a dismissal simplicitor. As per the ratio laid in the citation supra, it is clear that jurisdiction u/s 397 398 of the Companies Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen whether the jurisdiction exercisable by the Courts is one and the same or not. I agree, if the party seeks the relief on the same subject, then such issue cannot be re-agitated in the later proceedings unless permission is sought as envisaged under sub-rule 4 of Rule 1 of Order 23, CPC. Here, the petitioner no doubt, sought that R2 forged the signature of the petitioner on a letter said to have been executed by the petitioner and he also said, R2, till date, has not filed Form 32 informing ROC that the petitioner resigned from the company, but whereas he filed other Forms before ROC. Had there been no authority to file Form 32 showing the petitioner ceased to continue as director, R2 could not have filed other forms as well. R2 has not said anywhere he could not file any Form with RoC for want of DIN number, it could not be assumed that Form 32 showing the petitioner resigned from the company, was not filed for want of authority. If CLB can take a decision over any issue and safely conclude an issue, without touching the issue of forgery, then Company Law Board can very well take a decision over the said issue. When an issue is decided, the party will not be entitled to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the Company Law Board while passing an order on mentioning. It goes without saying that unless there is a statement on oath before a Court of Law giving false statement; it will not fall within the definition of Section 195 of IPC. For having R2 not mentioned in his application u/s 340 CrPC that the petitioner gave a statement on oath that earlier proceeding was withdrawn on the date CP was mentioned before this Court of Law, therefore, an observation of Presiding Officer cannot be deemed as statement given by the party on oath before Court of Law. Whenever Section 340 CPC is invoked, Courts will take every care to find out whether any statement is there from the party on oath which can be considered as evidence in the Court of Law. For there being no such statement from the petitioner, a presumption cannot be drawn that the petitioner gave a statement on oath before a Presiding Officer of the Court on seeing the observation in an order passed by the Presiding Officer. A proceeding under section 340 CrPC shall not be taken on vague allegation and without support of a definite statement. On seeing CA under section 340 CrPC, it appears R2 banked upon the order passed by the Hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 397 398 of the Act 1956 after withdrawing a petition on the same allegations. 40. It is true that it is undisputable when a proceeding is withdrawn unconditionally, there shall not be any later proceeding on the same cause of action, but when the reliefs are different which cannot be granted in the earlier proceeding, for such reliefs, if any statutory right is conferred on any person to proceed before a special forum for remedying the grievance of a party, then, like Honourable High Court of Madras held in M/s. S.V.T Spinning Mills (P.) Ltd. case supra, that a party is under no obligation to obtain liberty before withdrawal of suit from civil court to approach CLB u/s 397 398 of the Act 1956 for it is a statutory right given to a member to avoid oppression and mismanagement against member or the company, which a civil court cannot grant, therefore I, in the backdrop of this factual history, safely conclude that withdrawal of suit without liberty will not make this CP non-maintainable. 41. The counsel of the Respondents relied upon a case in between Upadhyay Co. v. State of U.P. [1999] 1 Supreme Court Cases 81] to support the argument that this CP is hit by Order 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact purchased two plots to construct apartments and sell them. They completed one project in the year 2006, thereafter it appears, differences arose between these two brothers, the result is the petitioner was shown as resigned from the company as director from 14.03.2007. The petitioner has submitted that he was looking after the construction work, his brother used to look after accounts of the company, whereby there was no occasion for him to go through the accounts of the company and books of the company on regular base. He only came to know that he was shown as resigned from the company and wife of R2, was appointed as director of the company in the year 2009, when he approached the bank of the company. The petitioner submits that R2 forged the signature of the petitioner over alleged resignation Letter dated 14.03.2007 and also on the resolution dated 19.02.2007, showing R3 was appointed as director of the company. On verification of the filings made before RoC it is nowhere shown the petitioner ceased to continue as director of the company. The petitioner filed a Board Resolution dated 10.04.2007, showing the petitioner also signed as a director, had he been ceased to contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company, it could not be assumed that the petitioner resigned from the company as director leaving his shareholding and his guarantees with the company. The petitioner being the elder brother of R2, being a promoter of the company, for still continuing as shareholder of the company, keeping his guarantee with the bank, it could not be construed by any stretch of imagination that the petitioner resigned from the company by submitting a resignation letter dated 10.03.2007. I have drawn this inference independent of the Hand Writing Expert opinion filed by the petitioner, therefore, I hereby hold that alleged resignation letter used by the R2, to show petitioner resigned from the company as invalid. Issue 3 - Whether appointment of R3 as director of R-1 company is oppressive against the petitioner or not ? 46. On the allegation made by the petitioner that R3 has never been appointed as a director of the company in any of the Board meetings he attended, it has to be seen whether any consent was there from the petitioner in appointing R3 as director of the company. 47. R3 is not a shareholder of the company, it is nowhere said what is the reason for appointing her as dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank. The explanation given by R2 saying they could not file Form 32 because DIN number has not come to the directors, is not believable, therefore, appointing R3, who is not a shareholder in the company as director by shunting the petitioner out of the company, is oppressive and prejudicial to the interest of the petitioner who is admittedly 50% shareholder in the company. It need not be seen whether the petitioner signed on the resolution or not, on seeing the overwhelming evidence disclosing that R2 set up appointment of R3 as director in the company only after the petitioner approached the Bank on 4.3.2009 for requesting the Bank to change mode of operation of the account, for there being no material on record showing R3 as director for more than two years from the date of alleged appointment of R3 as director, and on seeing the Form 32 filed only on 25-3-2009, that is only after the petitoner requested the Bank to change the mode of operation of the Account, this issue is therefore decided against the respondents holding that appointment of R3 as director is oppressive against the petitioner, hence declared it invalid. Issue 4: Whether increased of authorized capital on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions without notice to the other shareholder or director of the company. 51. The counsel of the Respondents relied upon a case in between Ramesh Bhajanlal Thakur v. Seaside Hotel (P.) Ltd. Ors [(2000) Vol. 100 CLB 117] to say that when no particulars are given in support of allegation siphoning the funds of the company, then obviously no relief can be granted, as to this principle, I, on principle, agree no relief can be granted when a petition has come without any details and proof over the allegations of siphoning. Issue 6: To what relief ? 52. Since R2 has not been dealing with the affairs of the company keeping the petitioner in dark for a long time, I believe that an impartial audit of the accounts of the company will clear whether R2 siphoned the funds of the company or not, for which I hereby appoint M/s Seema Naresh Bansal Associates (Mobile No. 9810157418), R-13 14, LGF, Ansal Chamber-II, Bhikaji Cama Place, New Delhi, as Chartered Accountant to audit the accounts of the company taking all the three Bank accounts into consideration to find out whether any of these two parties siphoned the funds of the company in the light of the allegations made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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