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2016 (2) TMI 447 - COMPANY LAW BOARD NEW DELHI

2016 (2) TMI 447 - COMPANY LAW BOARD NEW DELHI - TMI - Amalgamation - Scheme for the management and administration of BBPL - injunction - Held that:- The Board of Directors of 'BBPL' is superseded. Hon'ble Mr. Justice Permod Kohli and a former Chief Justice of Sikkim High Court is appointed as an Administrator of 'BBPL' company to look after its day to day affairs. The Administrator shall be provided with the office area in New Delhi befitting his Lordship's status by Respondent Nos. 1 & 2 and w .....

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ed shall assist the Learned Administrator. Further the Administrator may take all necessary steps to preserve and protect the properties of the 'BBPL' He may also depute counsels, if so desired, to defend litigation initiated by Petitioner No. 1 at the Bombay High Court and suit filed by 'BCDP' and Respondent No. 4 in City Civil Courts at Bangalore as well as in the High Court of Karnataka or any other litigation. The aforesaid course has been adopted as Petitioner No. 1 and Respondent No. 2 are .....

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on which may be fixed by his Lordship himself.

The meetings of the Board of Directors dated 22.02.2011 and 09.08.2014 along with resolutions passed therein are suspended at this stage instead of declaring them invalid. Likewise JDA dated 29.03.2011, Rectification Deed dated 15.04.2011 and GPA dated 29.03.2011 are also suspended instead of declaring them invalid.

The Ld. Administrator may at his discretion submit a report with regard to the affairs of the company and progres .....

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giri, Advocate with Mr. Karan Kanwal, Advocate, Ms. Natasha Garg, Advocate, Mr. Azhar Alam, Advocate with Mr. Sanklap Goswami, Advocate, Mr. Didgaj Pathak, Advocate with Ms. Shweta Sharma, Advocates. ORDER 1. The instant petition has been preferred by five persons who are shareholders in Respondent No, 1 company known as Bhandari Builders Pvt Ltd (for brevity BBPL). All the five petitioners together hold 51.04% share in BBPL. The Petitioner No. 1 is a Joint Managing Director of BBPL which was in .....

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d dated 29.03.2011, the Rectification Deed dated 15.04.2011, the General Power of Attorney dated 29.03,2011, and the Board Meetings dated 22.02.2011 and 09.08.2014 alongwith all resolutions passed therein. (c) Declare that Respondents No.2 and 3 are not entitled to continue as Managing Director/Directors of BBPL and an order of injunction restraining Respondent Nos. 2 and 3 from acting and/or holding themselves out as Managing Director/Director of BBPL. (d) An order of injunction restraining the .....

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s of BBPL. (g) Direct Respondent Nos. 2, 3 and 9 to render accounts of all dealings they had in relation to the business of BBPL and upon such accounts being rendered, pass appropriate orders to make good any loss that may have been caused to BBPL. (h) Declare Article 31 of the Articles of Association of the BBPL contrary to s.291 of the Act and declare it to be Null and Void. 3. The Petitioner No. 1 and Respondent Nos. 2 & 3 are the subscribers to the Memorandum of Articles of Association o .....

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r No. 1 & mother of Petitioner No.2 4 Petitioner No.4 Savinder Kaur 3200 1.19 Sister of Petitioner No. l and Respondent No.2 5. Petitioner No. 5 Surjit Duggal 2400 0.89 Sister of Petitioner No. 1 and Respondent No.2 Total shares of Petitioners 135368 50.44% DETAILS OF THE RESPONDENTS SI. No. Name of the shareholder Shares % Relationship 1 Respondent No. 1 B.B.P.L. 5 crores divided into 5 lacs equity shares worth 100 each - 2. Respondent No.2 Amrik Singh Bhandari 27533 10.26 Managing Director .....

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Respondent No.8 Amar Singh Bedi 25 0.009 He is grandson (daughter's son) of Respdt. No.2 & 3. 9. Respondent No.9 B.C.D.P, - Newly incorporated company by Respondent No.2 & 3, Later on shareholding handed over to Respondent No.4 10. Respondent No. 10 Amrit Singh HUP 29070 10.83 Respondent No. 10 HUF Amrit Singh 11. Respondent No. 1 Parcrunder Tripat Singh 1600 0.6 Respdt. No. 11 sister of Petitioner No. 3 and respdt. No.2 Total shares of Respondents 131368 48.94% TOTAL SHARES 266736 .....

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t No. 2 alongwith some other person forming an association (for brevity AOP) for joint development of the same. The land is contiguous in nature. There were others who were involved in the purchase of the land namely M/S. G.S. Lamba and D.S. Lamba. The other persons are M/S. M.S. Puri and H.S. Bedi (then Directors of the company). There was a tacit understanding that the land was to be developed by that group including the BBPL jointly. Payment in respect of the land was made in years ranging fr .....

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f correspondence. According to the averments made in the petition the parties have agreed that BBPL would continue to bear all expenses in relation to maintenance of the land. The BBPL owns 2.93 acres of land out of the total area of 23 acres and 11½ guntas and claims to have spent rupees one crore on the boundary wall covering total land. 5. A serious controversy erupted in the year 2011. The Petitioners have asserted that on 22.02.2011 a meeting of the Board of Directors of BBPL was hel .....

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int Development. Agreement (for brevity 'JDA') with 'BCDP'. The arrangement was made by Respondent No.2 acting on behalf of both the companies namely 'BBPL' and 'BCDP' to oust the Petitioner and causing serious prejudice to the interest of BBPL. For the meeting dated 22.02.2011 Petitioner No.1 who is the only other Director on the Board of BBPL was not issued any notice to attend at Board Meeting. According to the minutes of the meeting the JDA was entered into wh .....

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Respondent No.2 executed a General Power of Attorney (for brevity 'GPA') purportedly on behalf of BBPL in favour of BCDP his grandson Sh. Angad Singh Bedi (Respondent No.4) for development of the said land. Again Respondent No.2 signed the GPA on behalf of both BBPL and BCDP. According to the allegations the Power of Attorney was executed with clear ill-motive to benefit Respondent Nos.2 and 3, their associates and BCDP to the detriment and prejudice of BBPL. The GPA is a one-sided affai .....

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of diverting the construction business of 'BBPL' for earning profits because Respondent Nos. 2 and 3 held 100% shareholding in that company. All this has been done in collusion with Respondent Nos. 3, 4, 6, 7, 8, 9 and 10. There are collusive acts alleged to be done which are completely detrimental to the interest of BBPL. All of them are acting against the mandate of the shareholders of BBPL, with sole and ulterior motive of illegally benefiting BCDP at the cost of BBPL because BCDP dir .....

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er No.1 and other shareholders. They have been patently working against the interest of BBPL. 8. On 02.05.2011 an Extra Ordinary General Meeting (EGM) was held to take approval of BBPL shareholders to the 'JDA'. The shareholders expressed their dissent and it was unanimously resolved by them to keep the JDA on hold. The aforesaid decision was recorded by Respondent No.2 himself. He informed the shareholders in the EGM that BBPL is a family company which was started by two brothers (Petit .....

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nt No.2 were required to agree to any such proposal. 9. After a period of three years in May 2014, Respondent Nos.2 and 3 contrary to the promises made in the EGM an 02.05.2011 started raising construction on the Shettigere land and proceeded with the implementation of the JDA. As a reaction to the aforesaid mala fide activities of Respondent Nos.2 & 3, the shareholders of BBPL decided to correct the wrong done by Respondent Nos.2 & 3 and tried to take the whole matter in their own hands .....

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1 & 3 clarifying that resolutions proposed with the notice dated 21.07.2014 were ordinary resolutions which inadvertently mentioned as special resolution, requiring simple majority. On 22-09.2014 the Petitioner Nos. 1 & 3 and the shareholders realized the mala fide intentions of Respondent Nos.2 & 3 and issued a notice alongwith explanatory statement calling for EGM of BBPL on 15.10.2014. Before the meeting could be called Respondent Nos.2 & 3 resigned from the Board of Directors .....

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represented by Respondent No.2 and his grand son Respondent No.4. On 10.10.2014 the Hon'ble City Civil Court, Bangalore issued an order granting status quo in respect of the subject matter of the petition. It meant that no EGM. was to take place on 15.10.2014. The aforesaid order was secured at the instance of Respondent Nos.2 and 4 with the oblique motive to stall the EGM of the shareholders which was proposed to be held on 15.10.2014. Petitioner No, 1 also filed a suit for specific perform .....

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of the Board was to be effected till the hearing of the matter. 12. On 15.10.2014, 61.52% of the shareholders belonging to BBPL unanimously voted to cancel the impugned JDA, GPA and Rectification Deed. It was further resolved to induct Petitioner Nos.2 and 4 as Director in BBPL and that Petitioner No.1 was authorized to represent BBPL in the proceedings before the City Civil Court, Bangalore and in all other proceedings relating to the said land which was the subject matter of the impugned JDA. .....

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ge monetary claim of ₹ 100 crorcs as compensation has been made. A demand has also been made for appointment of an Arbitrator to enter reference to adjudicate the alleged disputes in the matter concerning JDA as mentioned in the letter. 15. The majority shareholders of BBPL rejected the Balance-sheet/Profit and Loss Statement for the financial year ending 31.03.2014 in respect of BBPL. 16. BCDP - Respondent No.9 through Respondent No.4 initiated proceedings against BBPL under section 11 of .....

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. Despite a clear mandate of die shareholders authorizing Petitioner No.1 to represent BBPL Respondent No.2 continued to represent BBPL in all proceedings concerning the JDA. The resolution to that effect was passed in the EGM on 15.10.2014 authorizing Petitioner no.1 to represent BBPL in relation to JDA. Accordingly Petitioner No. 1 made a representation to the Arbitrator and sought the permission to represent BBPL. On 10.06.2015 the Sole Arbitrator rejected the request of Petitioner No.1 which .....

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t that Petitioner No.1 is the Joint Managing Director. The Petitioner has also written letters to Respondent No.2 with regard to manipulation of BBPL record in order to suit his design and purposes and also to divest the BBPL of its business. SUPPORTING STAND OF RESPONDENT NO.5 - Ms. AVNEET BEDI IN REPLY: 19. Respondent No.5 - Ms. Avneet Bedi who is daughter of Respondent Nos.2 & 3 has filed her reply which support the claims made by the Petitioner. It has been pointed out that "BBPL&qu .....

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and proximity from the road. It shows the primary intention of all the parties to develop the land jointly with 'BBPL'. 20. It has farther been highlighted by Respondent No.5 that Respondent No.2 without obtaining consent of majority shareholders of BBPL signed 'JDA' on 29.03.2011 involving Mr. G.S. Lamba, Mr. D.S. Lamba and Mr. M.S. Puri with 'BCDP' - Respondent No.9 and appointed himself as a Dispute Resolving Authority as per terms of JDA. He signed both on behalf of & .....

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one to benefit Respondent Nos. 2, 3, 4, 5, 6, 7, 8 & 9 and against the interest of 'BBPL' and its shareholders. A reference has also been made to the proceedings of E.G.M and it is asserted that E.G.M. resolved unanimously to keep JDA on hold and consider the same later. Despite the directive of EGM 'BCDP' started raising construction. The development activities in full swing commenced in May 2014. A notice for holding EGM u/s. 100 of the 2013 Act was issued on 21.07.2014 by .....

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olders also took note of the fact that the consideration as provided in the illegal JDA executed by Respondent No.2 is highly inadequate and the same has been executed only to further and promote the selfish interests of Respondent No.2 and his associates and to cause prejudice and loss to the Respondent No. 1 company and its shareholders. (iii) It was also observed how the Respondent No.2 and his associates have clandestinely initiated proceedings before the Hon'ble City Civil Court, Bangal .....

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and which was subject matter of the JDA. It was also noted that the title deeds of the company's property were handed over to 'BCDP' Respondent No.9. 21. A reference to various court cases initiated and pending at Bangalore and Bombay has also been made which have been noticed in preceeding paras. Thus respondent No, 5 fully supports the petition. OPPOSING STAND OF RESPONDENT NOS.1 TO 3 AND RESPONDENT NOS.4 & 9 IN THEIR RESPECTIVE REPLIES: 22. Respondent Nos.1 to 3 have filed ela .....

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1 and all of his sisters by involving them in business activities and granting them dividend of over 42 crores with bonus shares equal to ₹ 2,59,35,100/-. He has asserted that in the evenings of his life how he is sought to be ousted from the management of the company at the instance of Petitioner No.1 who has been helped and brought up from the scratch by Amrik Singh Bhandari R-2. On the other issue respondents have pointed out unnecessary hue and cry for entering into related party tran .....

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ons with a company in June 2011 which is wholly owned and controlled by Petitioner Nos.1 and 3 (R-2). The shareholders' approval was never taken while entering into related party transactions nor approval from the Central Government under section 297 or section 300 of the Act was ever taken. In any case Section 300 of the Act was not even applicable to private limited company. It is alleged that in fact the Respondents are victim of oppression by the majority as they are minority shareholder .....

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erent than the approach in cases of other company. The Petitioner cannot be permitted to arm twist with the Patriarch of the family company on the basis of one isolated transaction. Petitioner No. 1 and his family has taken up the litigation so as to arm twist Respondent No. 2 and other shareholders to accept his illegal demand of grabbing a flat belonging to BBPL. They are trying to get away with 33 crores which is due to BBPL, 17 crores for Bombay flats which Petitioner No.1 wants to grab for .....

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d by him as its Managing Director and other two Directors on the Board were his wife (Respondent No.3) and his brother - Petitioner No. 1. 25. The BBPL had been incorporated as a construction company but presently no such work of construction has been taken up by it after 2003. The land of the company situated at various places was being sold which include the agricultural land at Village Rithoj (Distt Gurgaon) and sold on 26.02.2015; agricultural land at Posari Village Shelarpada, (Distt. Thane .....

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Bangalore measuring 2.9 acres was purchased by BBPL from 1996-1998 and separate sale deeds were executed. The land is non- contiguous and was sandwiched between the lands of the persons like M/s. MS Puri, DS Lamba, GS Lamba and personal land of Respondent No. 2 himself. It did not have any approach road. There was dispute with regard to 1.25 acres of land as a minor was claiming a portion of the land. Another portion of 0.4 acres out of the total land has already been requisitioned for construc .....

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t From To 1. Sy.No, 81/1, 82/1, 84/1 Measuring 1 acre 06 &½ guntas, measuring 12 guntas & measuring 26 guntas in total 2 acre 4 & ¼guntas. Sale Deed Document No3501/95-96 dated 4.11.96 Total Sale Consideration amount 4.22,500 Kempalgh, Munirathnamma, Nagamani. Muniyanjanappa & Others Gurviner Singh Lamba& Devender Singh Lamba 2. Sy.NO. 81/2, 82/1,84/1 Measuring 1 acre 06 & ½ guntas, measuring 12 guntas & measuring 26 guntas in total 2 acre 4& .....

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ale Consideration amount 2.57,000 Krishnamma, S. Prabhu, Narayan swamy & Chandra Shekhar Gurvinder Singh Lamba 5. Sy. No. 83/2 Measuring 0 Acre 25 &½ guntas Sale Deed Document No .4139/96-97 presented on 23/12/96 but registered on 20/1/96 Sale Consideration amount 4,75,000 per acre Krishnanpa & others Bhandari Builders Pvt. Ltd. 6. Sy. No .83/2 Measuring 0 acre 26 guntas Sale Deed Document No.4140/96-97 presented on 23/12/96 but Registered on 20/3/98 Sale Consideration amount .....

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d of 'BEPL' could not have been developed in isolation and it could have been developed by involving the other land owners. The land was proposed to be developed by BCDP as Respondent Nos. 2 and 3 were holding 100% share in that company. In respect of the Board Meeting held on 22.02.2011 the stand of R-1 to 3 is that the Petitioner No. 1 had chosen not to remain present and two remaining Directors R-2 and 3 attended the meeting. The JDA was discussed and it was found in die interest of & .....

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(R-l2). It was thereafter on 25.03.2011 that the BBPL entered into a JDA with MS Puri and Respondent No.2 and Respondent No. 5 on the other side. He also executed GPA in favour of BCDP. Another JDA dated 29,03,2011 was then entered into by BCDP with DS Lamba, GS Lamba involving their portion of the land. The enure land was to be developed by BCDP 16.5 acres comprising the land of BBPL (2.9 acres). 29. The Respondents have projected that the land could not be developed alone by BBPL. It is claim .....

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w that 'JDA' is extremely beneficial to 'BBPL' which constitutes paramount consideration: (a) According to approved Master Plan a 24 Mtr. wide road has been planned to be developed by BIAPPA for Government of Karnataka. However, Government is yet to initiate steps towards acquisition of the land for the same. The road is proposed to pass through land owned by 'BBPL' and Respondent No. 2, Mr. GS Lamba and Mr. D.S. Lamba and Mr. MS Puri and thus till the Government develop .....

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ulations clearly contemplate that 1 hectare of land has to be there as a contiguous piece for Group Housing to be developed as Group Housing which BBPL' does not have as their land is non- contiguous in three parcels. Further an existing road must have a minimum width of 12 m which 'BBPL' does not have leave alone as on date. Copy of the aforementioned BIAPPA Regulation has been annexed as Annexure R/14. (d) Further an area of 0.4 acres is of no commercial value as it will eventually .....

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ces, parking, civic amenities and roads. (f) Three pieces of land belonging to 'BBPL' are non-contiguous and not connected to each other, thus the land cannot be sold any way and there has been no actual proposal to buy by a Buyer or for even JDA partner till date. That the BBPL' benefitted by entering into the JDA with the 'BCDP' company and was able to make good and profitable use of its land which was otherwise useless as it was sandwiched between lands owned by other pers .....

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hin municipal limits. It is on the outskirts of the city and full of shortcomings. (i) The super built up area as given by 'BCDP' to the "BBPL" is of 20,500 sq.ft. It is justified considering the market/circle rate at the time of entering into JDA and the consideration provided by "BCDP' is adequate. The calculation sheet justifying the consideration provided to 'BBPL' has been annexed as Annexure-R/15. 30. The Respondents have also claimed that JDA was never p .....

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ied in action and at best they disputed the monetary terms of the JDA. For the first time in the year 2013-14 the Petitioner raised the issue that the JDA was put on hold. The Petitioner was present in the meeting held on 09.08.2014 where the issue of JDA "was discussed in detail". CONFLICT OF INTEREST OF PETITIONER NO. 1: 31. Respondents have also highlighted that there is a conflict of interest between Petitioner No.1 and his family with the interest of BBPL. In OS 401/2014 the Petit .....

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f Saudi Arabia (KSA) in 2000 and started a local Saudi Company named as Bhandari Engineers and Builders Saudi Arabia Limited (BEBSAL) He had 65% share in his personal name, 25% in the name of one Mr. Mohd Bin Mutlaq Al Gadhi and 10% in the name of Mr. Udaya Bhanu. The Letter of Intent was issued with the consideration of submitting a bank guarantee of approximately ₹ 15 crorcs, as a performance guarantee which was duly provided by BEBPL by mortgaging properties of BBPL. It was issued by Vi .....

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BIPIPL). In June 2009 they took a sub contract from 'BBPL' at almost no profit to 'BBPL' and started operations in the said family company. (b) Further, in 2009 BIPIPL further took contracts from M/s. Skylark Mansions which was one of the employers of 'BBPL' in Bangalore and all the work was taken by the Petitioner's in their personal family company i.e. BIPIPL. A copy of sub-con tract from Bhandari Builders and M/s. Skylark has been placed on record as Annexure -R/21 .....

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n the allegations of forum-shopping which are as under:- (a) LA. No.4 was filed by Petitioner No. 1 on 24.11.2014 in A.A, No. 400/2014 (filed by 'BCDP' under section 9 of the Arbitration & Conciliation Act, 1996) seeking leave of the Hon'ble Court to represent the 'BBPL' herein in the proceedings. The Application is pending before the Civil Court, Bangalore. (b) I.A. No.6 was filed by the Petitioner No.2 on 02.12.2014 in A.A. No.400/2014 (filed by 'BCDP' under sec .....

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Memo was rejected by the Hon'ble Tribunal vide order dated 10.06.2015. The said rejection has not been challenged by the Petitioners and has attained finality. (d) Another objection raised is that there is a delay in filing the petition and that since 24.01.2012 the JDA was in force and construction activities were in progress in pursuance of JDA. (e) The Respondents have further submitted that no petition would be competent as construction on land other than the land of BBPL could not be th .....

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o.1. It is conceded as a fact that BCDP-respondent No.9 was incorporated by Respondent Nos. 2 & 3 who were its directors and its initial promoters. Later on they had sold their entire shareholding and at present there is no relationship between respondent Nos.2, 3 & BCDP. It is claimed that 'BCDP' entered into negotiation with the land owners owning land surrounded by the land of BBPL at Shettigere with the object of developing a group housing complex. The land belonging to BBPL .....

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same terms as were offered to various other land owners. (Annexure A & B ). A reference has been invited to the site plan in order to show that land belonging to BBPL could not be developed on its own or be sold on account of its awkward location. (Annexure C). 34. The respondent has alleged that the present petition has been filed to install the development project undertaken by 'BCDP' on account of personal difference between the petitioners and Respondent No.4. This explain the de .....

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to be initiated against the Govt. of Karnataka for restitution and to get back relinquished portion of the land. It has been highlighted that BCDP has created a number of third party interest over the project and has also incurred huge liabilities. At this belated stage it is a malicious attempt on the part of the petitioner to cause financial harm to respondent No. 4 & BCDP. 35. The respondents have pointed out that after the execution of JDA on 29.3.2011 a number of steps for development o .....

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amalgamation which is duly registered with the appropriate government authorities. The copy of amalgamation Deed dated 7.6.2012 alongwith typed copy is annexed hereto as Annexure D, (ii) Relinquishment Deed: An area of 5.7 acre was relinquished to the Government. As per government requirement, the parks, open spaces, civic amenities and portion of road, including a significant portion of the land of 'BBPL' was relinquished to the Government by a registered relinquishment deed to an exte .....

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and police complaint was filed by Appellant-obtained stay-got possession of land The land of 'BBPL' was not only landlocked but also encroached upon. After the execution of the JDA, the 'BCDP' filed court proceedings and initiated criminal proceedings to get the land evicted for the purpose to get it cleared from encroacher for development. (v) Original Suit No. 506/2006 was pending against 'BBPL' for one portion of the land. It was compromised by the Respondent No. 4 an .....

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and compromise decree recording the settlement between the parties have been placed on record (Annexure G) (Colly), (vi) Received sale consideration towards the sale of Flats. After 'BCDP' settled all disputes over the company's land and completed all the formalities, it has sold around 50 flats in the project to the pubic after receiving the advance sale consideration from the public amounting to approx. ₹ 503 cr out of the total sum of ₹ 23 crores. The 'BCDP' is .....

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re sitting idle on site and are presently suffering due to the uncertainty in employment. A copy of muster roll is on record (Annexure H), (viii) Construction work has commenced on site and it is at an advance Stage. The construction work has already commenced and major ground work for the same has been completed, the same is evidenced from photographs of the construction site which are annexed. The photographs evidencing the constructions at advance stage is evident from Annexure-1. (ix) Expens .....

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e providers 'BCDP' has also entered into various contracts with different service providers for the purpose of the development of the land, which inter alia include contracts for the supply of steel, cement, shuttering materials and other raw materials. Further, it has also entered into contracts with architects, marketing consultants etc. and in case the construction is stopped, the 'BCDP' would be subjected to a plethora of litigation for non-performance of its contractual obli .....

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titioner has no right with regard to other parties of JDA except BBPL. Some of those persons are not even made party. The said matter of JDA is sub-judice as BBPL and BCDP are locked in various litigations. A reference in this regard has been made to the application filed u/s 9 of the Arbitration and Conciliation Act, 1996 before the Civil and District Court Bangalore with a prayer to restrain any EGM or cancelling JDA, GPA and Rectification Deed, A copy of the IA No.6 for impleadment in AA 400/ .....

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oject has virtually come to a standstill (Annexure -Q). The respondents have alleged that petitioners have indulged in forum Shopping and cannot invoke the jurisdiction of this Board. No relief can be granted in view of the pendency of arbitration proceedings. Moreover petitioner No.1 suffered an order dated 10.6.2015 when he sought to intervene in the proceedings before the Arbitrator which has attained finality. Vide order dated 10.6.2015 Arbitrator has refused the application of Petitioner No .....

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or they are treating BBPL as their proprietorship concern. There is no conflict of interest of Respondent No.2 /3 with BCDP or BBPL. The proceedings before City Civil Court Bangalore u/s 9 of the Act were initiated against BBPL for stay of the proposed EGM as well as for stay on cancellation of JDA. The respondents have repeated the facts with regard to JDA, Power of Attorney and rectification deed. 39. The background events leading to the dispute. Respondents have stated that there was no under .....

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ficulties created by the petitioners. At that time there was no owner coming forward for development of the land by 'BBPL'. They have all agreed for development at the hand of 'BDCP' - Respondent No.9. 'BBPL' tried to develop its own land but it failed as it found to be not feasible. Eventually "BBPL' dropped the idea of development of the land at Shettigere village. It was almost three years later (email Annexure P-6) BCDP came into existence and within two year .....

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, Respondent No.5 are afterthought and motivated. As a matter of fact 'BBPL' has stopped business of construction and had entrusted the development of property to BIP1L. The JDA is not a one sided document and does not cause any detriment or prejudice to the interest of BBPL or its shareholding. Similar averment had been made with regard to General Power of Attorney and rectification deed. There is no collusion for execution of the aforesaid document between Respondent Nos.2 and 3 on the .....

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developed only plots/villas since it has three staggered pieces of land. The layout developed could notice formation of parks, open spaces, parking, civic amenities and road and for that reason there is no proposal by a buyer for it. A 'Skylark Mansions Private Limited' conducted a physical test of property of BBPL and reported that it was not feasible to develop. Such like circumstances have been explained by the respondents. It has also been explained that a housing project of such a h .....

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me JDA Land JDA Land (Sq ft.) (a) Super Built up Area (SBA) (b) SBA/ JDA land C=b/a Amiik Singh Bhandari 5 Acre 21 Guntas (5.53 acres) 240.887 38,500 sqft 0.159 M.S. Puri 36 Guntas (0.90 Acres) 39,204 6,250 sqft 0.159 Bhandari Builders Pvt. Ltd. 2 Acre 36 Guntas (2.90 Acres) 126,324 20,500 sqft 0.162 Lambas 6 Acres 36 Guntas (6,90 Acres) 300,564 37,200 sqft + security deposit of ₹ 1.75 crore 0.124 42. The allegations with regard to the prejudice being caused on account of the litigation in .....

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a detailed order and the operative part of the interim order reads as follow; "1 Respondent No.2 or his nominees are restrained from representing Respondent No. 1 company in any proceedings where R-9 is pleaded as a party. In other words proceedings before the City Civil Court, Bangalore and the proceedings before the Sole Arbitrator shall not be prosecuted by Respondent No.2 or Respondent No. 3 till further orders. Respondent No.2 shall seek three months adjournment wherever he is represe .....

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ing an interlocutory order that is passed by the Company Law Board on the matter being mentioned without the reply on merits being available to the Company Law Board, and also in view of the fact that the Company Law Board is actively seized of the matter, the next date of hearing being tomorrow, i.e., 14.10.2015, it would be in the fitness of things to permit the learned Company Law Board to go into the matter, which concerns the land of the company, on merits and to pass appropriate orders the .....

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N BEHALF OF THE PETITIONER: 46. Shri U.K. Chaudhary and Mr. Krishnendu Datta, Ld. Sr. Counsel appearing for the Petitioners have canvassed before me the following propositions:: 46.1 BBPL is wholly mis-managed and the Petitioners have been oppressed because an attempt has been made to deprive the BBPL and 'AOP' to develop more than 23 acres of land which was extremely lucrative project. According to the ld. Counsel there was an understanding between the 'AOP' for development of t .....

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hat there was an understanding between the AOP and BBPL for developing 23+ acres of land which included 2.93 acres of land belonging to BBPL. Reliance has further been placed on a letter dated 26.08.2011 sent by Petitioner No.2 to Respondent No.2 which further fortify that the entire land was purchased with an understanding to develop it jointly. The averment with regard to expenditure of ₹ 1 crore stands virtually admitted. A reference has also been invited to an email dated 13.07.2010 wh .....

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h mala fide intention conceived by Respondent Nos. 2 & 3 which is based on an invalid resolution purported to have been passed in a meeting illegally convened on 22.02.2011. Elaborating his submission, ld. Counsel has argued that Petitioner No.1, Respondent Nos. 2 & 3 are the only Directors of BBPL and no notice of meeting dated 22.02.2011 was sent to him. He has been shown absent from the Board Meeting for the aforesaid reason. The Petitioner No.1 has also expressed his grievance in a l .....

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1.2009. On the basis of the aforesaid fact Mr. U.K. Chaudhary has vehemently argued that Respondent Nos.2 & 3 were obvious beneficiary of the JDA and no such resolution should have been passed as it violates fiduciary relationship and also violates the provisions of sections 299 and 300. Mr. Chaudhary has submitted that there is no categorical denial of service of notice. In the letter dated 23.08.2011 (R-10 with rejoinder) nothing was said about issuance of notice. The aforesaid letter has .....

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ce to Petitioner No.1. In that regard reliance has been placed on the principles emanating from the provisions of Order 8 Rules 3, 4 & 5 C.P.C. It is submitted that evasive reply is no reply in the eyes of law. Such replies are in fact admission of facts. Mr. Chaudhary has placed reliance on two judgments of Hon'ble Supreme Court to show that if a notice of a meeting is not given to any of the Director the resolution passed therein is illegal. In that regard reliance has been placed on p .....

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300 of the Act. Merely because s.300 is inapplicable to the private limited companies it does not absolve the directors to act fairly. In fact there is heavier burden casts on its directors. It has thus been submitted that even if disclosure of interest was made R-2 & 3 should not have participated and voted in the meeting on 22.02.2011 as they were beneficiary Directors, Therefore, the resolution is oppressive to the shareholders like Petitioner No.1 and others. It is no defense that there .....

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reholders never objected to JDA and also the question of absence of Petitioner No.1 as projected in the reply is wholly unsustainable clause. There was no discussion of absence whatsoever. The entire reading of the reply would show that the discussion was relating to the properties of BBPL and the JDA was put on hold. The letter dated 26.08.2011 further clarifies the aforesaid position beyond any iota of doubt (R-7 with the rejoinder). From the minutes of the EGM dated 02,05.2011 Mr. Chaudhary h .....

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family company started by two brothers who have trust and confidence in each other. Since the family have gone grown and second generation is also matured therefore it is essential to safeguard the interest of both the groups whether future interests of each group are protected and not infringed upon by the other group .It was further felt desirable that since the company was not pursuing any business at that time, a scheme of management should be developed under the active control of both the .....

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2. My attention was drawn specifically to item no,9 of die resolution. A reference is also made to the letter dated 25.08.2011 sent by R-2 to P-2 which clearly states that the chapter concerning J DA was closed (P-20). Further, reliance has been placed on the letter dated 13.05.2011 sent by R-4 to the Architect asking him to exclude the land belonging to BBPL from the plan on account of dispute concerning that land. A letter dated 22.05,2014 ( P-21) was also relied upon stating that the JDA was .....

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lding in BCDP. The aforesaid fact is reflected in the Annual Return filed by "BCDP" and form No.32. A reference has been made to subsequent Annual Return of BCDP showing R-2 & 3 continue to hold 45.20% share in that company and the same is now being controlled by R-4 who is the grand-son of R-2 & 3. The present Directors are Ms. Jasmeet Kaur Bedi, Angat singh Bedi and Amar Singh Bedi. Thus the conflict of interest is evident. The subsequent transfer of share and change of Board .....

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between BBPL and BCDP. The chain of events is as under: (i) Resignation of R-2 and R-3 - 01.10.2014 (ii) Appointment of R-4 : 01.03.2011 (iii) Date of transfer of 54.74% shares to R-4 : 07.09.2011 (iv) R-2 was 22.4% shareholder even in September 2015. (v) Change of designation of R-2 from MD to Director : 18.11.2012 (vii) Change of designation of R-4 as MD : 18.12.2012. 46.6 Mr. Chaudhary has then argued that JDA is not in the interest of BBPL (R- 1). There was understanding between the associa .....

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d by BCDP in its brochure have in fact were executed by BBPL. 46.8 It is then argued that the boggies of construction raised by BCDP on the sites is absolutely false. The construction is not at an advanced stage and no harm is likely to be caused to the interest of BBPL if JDA is cancelled and declared illegal. Substantiating their submission Id. Counsel argued that there are total 1650 flats proposed to be constructed and as per the showing of BCDP it has been able to book 52 flats. Even there .....

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period of six months from 02.10.2011 which has come to an end on 01.04.2015. In any case no further construction can be permitted even if it is presumed that the JDA has remained in operation and was valid. Ld. Counsel for Respondent Nos.5 and 11 have stated that they adopt arguments advanced on behalf of the Petitioner and wholly supports the Petitioners 'claim. SUBMISSION MADE ON BEHALF OF RESPONDENT NOS. 1 TO 3: 47.1 Mr. Parag Tripathi, Ld. Senior Counsel representing Respondent Nos. 1 to .....

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clare Joint Development Agreement (JDA) as null and void. The Petitioner No. 1 has filed objection in the suit and despite knowledge of the pending suit the aforesaid fact has been suppressed by Petitioner No.1. There was a duty cast on the Petitioner No, 1 to disclose this fact and failure to do so must prove fatal for the petition. The suit involves the property situated at Shettigere and JDA which are subject matter of this petition. In this regard reliance has been placed on the judgment of .....

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can take place because it will directly affect their rights. Another objection raised is that multiple litigations are pending and it would not be proper and conducive for this Board to adjudicate on the issue which are pending before other forum as there would be a over-lap in respect of the subject matter. My attention has been drawn to the suit bearing No. 881/2014 pending before the Hon'ble High Court of Bombay filed by Petitioner No. 1 against Respondent Nos. 1 to 3 with a prayer for sp .....

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P' in the City Civil Court, Bangalore under section 9 of the Arbitration and Conciliation Act seeking restraint on Respondent No.1 company from holding EGM on 15.10.2014 and also restraining Respondent No.1 from cancelling the JDA. The application filed by Petitioner No.1 seeking permission to represent BBPL is also pending. Likewise arbitration proceedings A.C, 58/2015 before Justice Farooq (Retd. High Court Judge) between 'BBPL' and 'BCDP' are also pending wherein restraint .....

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or review of order dated 19.03.2015 whereby Justice Farooq was appointed as an Arbitrator, An order has been passed on 23.09.2015 that the Arbitrator may consider deferring the arbitration proceedings till the disposal of the review petition. Mr. Tripathi then submitted that are allegations concerning an association of persons (AOP] in respect of the total land of 23 acres at Shettigere which was to be developed. A number of disputed facts are likely to arise before the Company Law Board and it .....

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is 23 acres which involves private interest of petitioners and some of the respondents. This court is only to safeguard and protect the interest of BBPL, not the interest of private persons. In other words, substituted area belongs to private persons like Petitioners and Respondents in addition to their own shareholding in BBPL. Therefore in respect of private land no petition under sections 397 and 398 would be applicable. 47.4 Mr. Tripathi has submitted that during the interregnum period 2011 .....

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of the land. It was compromised by BCD. (vi) The property which was situated between the land of Lamba and Respondent No. 1 was bought, (viii) Sold flats - received sale consideration. (viii)Payments of taxes architects, clearances etc. (ix)Deployed labour - muster roll. (x)Entered into different service providers. (xi)Work has commenced on site - advance stage. (xii) Expenses incurred - CA Certificate. The construction has thus reached an advance stage. 47.5 Another submission made by the Ld. c .....

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etitioner Group - so filing of suit in Devanhalli covers the right of all Petitioners, (iii) That the Petitioner No.1 wants to usurp the flat worth ₹ 17 crore belonging 'BBPL' for an amount of ₹ 12 lakh. In addition, the Company has also raised a demand on behalf of the BBPL for ₹ 12.5 crores from P-1 for illegal occupation of the Bombay flat and ₹ 5 crores towards shuttering material of the Company taken away by the P-2. (iii) Respondent No. 2 at the time of demi .....

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e 33.33% was held by Petitioner No. I. Respondent No. 2 however diluted his personal shareholding in order to bring in the larger family, including their sisters. (iv) Based upon the understanding Respondent No. 2 was appointed as a permanent Managing Director with full powers to manage and exercise the affairs of 'BBPL' Respondent No. 2 invested his life savings, experience of 20 years added to financial resources of BBPL by pledging his personal residential house to Punjab & Sind B .....

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ed and mitigated because in a closely held family company strict procedure envisaged in the Companies Act is not always expected to follow. There is no denial of meeting dated 22.02.2011. Respondents No. 2 & 3 have been informing all concerned with regard to incorporation of BCDP which was floated in the year 2009. Ld. counsel has placed reliance on various documents and their efforts justifying the passing of resolution for JDA and other related things which are enumerated as under; viz, (i .....

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any is generally not given - Both P-1 and R-2 used to share the same office, (vii) The Petitioners have also not alleged that they used to get notices of other board meetings in writing and this is the only one they did not get a notice for. (viii) No reason for R-2 to not give notice considering that the majority of the Board was with R-2. (ix) If the intention of R-2 was to commit a fraud, he would not have informed the shareholders in the EGM of 02.05.2011 even though it did not form a part o .....

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02.05.2011 and no shareholder objected in the EGM with regard to the land at Shettigere was discussed alongwith the issue of expenses incurred . It was expressly recorded that the JDA was in the notice of BBPL. Mr. Tripathi has maintained that there may be some mistake in using the appropriate word while recording the minutes of the meeting by R-2, who was 81 years old at that time. There is adequate proof to show the generosity to build-up the whole family by dolling out own money for the welf .....

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No. 1 Petitioner No. 1 who has constructed a boundary wall on his own land in 2011 after the execution of JDA. Shri H.S. Bedi has his own land in the area and has live connections there. He owns a farm- house opposite to the JDA land and that Bedi is also a part of the Petitioner group. 47.9 Mr. Tripathi has concluded by saying that JDA is in the interest of BBPL because the total area belonging to BBPL is 2.9 acres which was land- locked. It did not have any approach-road which is evident from .....

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safeguard Bhandari family. 48. Mr. Jayant Mehta learned counsel for respondent Nos. 4 and 9 has submitted that he adopts the argument advanced by Mr. Tripathi on behalf of respondent Nos.1 & 3. Ld. counsel submitted that irrevocable steps have been taken under 'JDA' and now the parties would suffer irreparable loss if 'JDA' and related documents are declared invalid. My attention has been drawn to the site plan to highlight that construction is at advance stage and third part .....

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d the ld. counsel at a considerable strength and after perusal of paper books with their able assistance, 1 find that the affairs of the BBPL at the hands of Respondent Nos. 2 & 3 have not been conducted in a manner beneficial to it. It has come on record that Respondent Nos.2 and 3 opened a parallel company BCDP - R-9 where they had 100% shareholding. 'BCDP' has also the business of building construction and land development. The newly floated company BCDP has obvious clash of busin .....

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nto contract with himself wearing the cap of another company. It is well settled that for execution of a valid contract at least two persons are required even when a corporate personality like BBPL and BCDP are involved. In the present case all this was easily avoidable. Petitioner No. 1 has no interest in 'BCDP' and as a Joint Managing Director of BBPL he could be authorized to act and sign on behalf of BBPL. The failure to follow a fair course speaks volumes about the mind and intentio .....

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uction of Township at LA Vigie, Mauritius in 1988, Execution was abandoned by the employer. 3. Construction of 800 houses along with Schools, Commercial complex. Shopping Centres, Day Care Centres all constitutes a neighbourhood along with complete electrification, Water supply, Sewerage disposal, internal & External Roads on turnkey basis. 800 Unit, 102,000 sqm. For State Organization of Housing, Ministry of Housing and Construction, Govt. of Iraq at Najaf (Iraq). 4. Design & Constructi .....

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er Net work for Kathmandu, Nepal (World Bank Added Project). 8. In joint venture with IMPREST (a wholly owned Subsidiary of FIAT Group, Italy) laid the Sewerage System including Treatment Plant for the city of Riyadh, Saudi Arabia. HOUSING PROJECTS 9. Construction of Residential Towers "Century Celeste" (Basement, G + 7 floors) consisting of 125 luxury flats at Jakkur in Bangalore (work is in progress) 10. Construction of Residential buildings [G + 3 floors) consisting of 75 flats at J .....

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mercial Complex, Shopping Centres, Day Care Centres, all constitutes a neighbourhood along with complete electrification, water supply, sewerage disposal, internet & external roads on turnkey basis. 800 unit 102000 sqm. 15. Low and Middle Income Residential Colony 320 units, 17000 sqm with precast slab & 4 storied load bearing buck structure. 16. Middle Income Residential Colony at Mehrauli, New Delhi 156 units, 16000 sqm. 17. Residential Quarters- 40 units, 300U sqm. COMMERCIAL BUILDING .....

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aid on RCC mezzanine raft with total built in area of 23500 sq,m, built to the design and specification of C.P.W.D. 22. Egyptian Embassy, New Delhi during 1972-74. 23. USIS Library Building at Curzon Road, New Delhi during 1971-74, A six storied RCC framed structure having area of 17000 sqm. With one basement built on driven RCC piles, complete civil, electrical, sanitary, mechanical, air-conditioning, and water treatment plant. It has a small auditorium, cafeteria and reading area, built to int .....

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inging Shettigerc project to BBPL handed it over to BCDP and arrogated himself ugly functions of signing papers of vital importance on behalf of both the companies. There might have been some justification for adopting such a course had no other option was available. There were no compelling circumstances to warrant the course adopted which may be justified on the touchstone of principles implicit in the 'doctrine of necessity'. There is no doubt that 'BBPL' lost a lucrative busi .....

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ted all rights of property are vested in Almighty. Some observations made by the Culcutta High Court in the case of Hoosen Kasam Dada v. CIT (1937) 5 ITR 182(Cal) were quoted to support the view that one person cannot enter into a contract with himself assuming two different entities. In para 16 of the judgment in Kandath Motor it was observed as under: "This observation must be confined to the facts of that case where it was found that there was a possibility of conflict of interest betwee .....

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ct Article 204)." From the perusal of the aforesaid para it does not follow that in a case of conflict of interest one and the same person is permitted to enter into contract with himself by wearing two different caps particularly when there was a possibility of avoiding such an ugly situation. On the contrary para 16 helps the petitioner. 51. The act of misconduct of Respondent No. 2 for BBPL further becomes evident from the brochure issued by 'BCDP' which is his related company sh .....

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ndisputed that no notice of the meeting dated 22.02.2011 was given to the Petitioner No. 1. In this meeting Respondent Nos.2 & 3 are stated to have approved the JDA which in fact was entered into on 29.03.2011. It is well settled that the failure to issue notice under section 286 of the Act results into an illegality and any resolution passed in such a meeting is liable to be declared as invalid. In that regard reliance of the Petitioner on the judgment of the Supreme Court in the case of Pa .....

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of the appellant was invalid." 53. The acts of Respondent Nos.2 & 3 have marginalized the interest of BBPL by conceding business of Shettigere Project to 'BCDP'. These actions have tarnished fiduciary relationship. In the meeting dated 22.02.2011 full and complete disclosure was required to be made by Respondent Nos. 2 & 3 about their interests in BCDP. The BCDP has no experience of any construction work whereas BBPL is clothed with rich experience of construction in a larg .....

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share in a meeting of the Board of Directors. This was challenged by invoking sections 397 and 398 of the Act. After examining the facts a reference was made u/s. 81 of the Act which is not applicable to a private limited company. In these facts and circumstances their Lordships of the Supreme Court has observed as under:- "We may also test the alleged act of allotment of equity shares in favour of Ramanujam from a legal angle. Could it be said to be a bona fide act in the interest of the c .....

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tever decisions are taken regarding running the affairs of the company, they are taken by the Board of Directors. The Directors of companies have been variously described as agents, trustees or representatives, but one thing is certain that the Directors act, on behalf of a company in a fiduciary capacity and their acts and deeds have to be exercised for the benefit of the company, They are agents of the company to the extent they have been authorized to perform certain acts on behalf of the com .....

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any with utmost good faith, utmost care and skill and due diligence and in the interest, of the company they represent. They have a duty to make full and honest disclosure to the shareholders regarding all important matters relating to the company. It follows that in the matter of issue of additional share, the directors owe a fiduciary duty to issue shares for a proper purpose. This duty is owed by them to the shareholders of the company. Therefore, even though section 81 of the Companies Act w .....

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tested on a much finer scale in order to rule out any misuse of power for personal gains or ulterior motives. Non-applicability of Section 81 of the Companies Act in case of private limited companies casts a heavier burden on its directors. Private limited companies are normally closely held, i.e. the share capital is held within members of a family or within a close knit group of friends. This brings in considerations akin to those applied in cases, of partnership where the partners owe a duty .....

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of the company that shares are being issued. The requirement is of good faith that they have to make full disclosure to the shareholders regarding the affairs of the company. The observation goes to the extent of requiring that the acts of Directors in a private limited company are required to be tested on a much finer scale in order to rule out any mis-use of power for personal gains or ulterior motive. I do not see reason why these observations would not be attracted while considering the pro .....

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ging Director and Director respectively. Mr. Tripathi has pointed out that in the course of business the practice of issuing notice in accordance with section 286 of the Act has always been avoided and therefore notice under section 286 is deemed to be discontinued. Firstly this argument does not emerge from the pleadings where the stand taken is different namely, that the Petitioner was aware of the meeting and in fact notice was given. Secondly no course of business has been shown or pleaded w .....

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es not end here. On 02.05.2011 an EGM was held by majority shareholders including Respondent No.5. In the EGM Respondent No. 2 made a request to approve the JDA. A perusal of the minutes of that meeting would show that the EGM decided to put the JDA on hold. It would be fruitful to read the minutes of the meeting held on 02.05.2011 which reads as under:- "Minutes of Shareholders meeting held on the 2nd day of May of 2011 at 11. 30 AM at Bhandari House 91-Nehru Place, New Delhi-19. The Chair .....

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ed JDA with Mr. K.S. Lamba and his family. This JDA was in the interest of the company. This issue was also kept on hold. However, the same would be considered after a few months. The Chairman further informed and pointed that one land is 780 sqft × 70 wide (82/3) and second land is 92 × 230 sqft (82/2). As per the law minimum of 22 sqft road is required to be provided for any development and further land must be available on both sides for any movement of fire authorities. The membe .....

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ho was more than 82 years at that time and there could be lack of art in recording the minutes. According to the Id. counsel only financial matters were put on hold. There is not even a whisper in the minutes about any financial matter. The argument is completely devoid of merits and in fact the JDA was kept on hold in the meeting of EGM held on 02.05.2011. The stand to the contrary is hereby rejected. The subsequent event of commencing the construction at Shettigere would show complete disregar .....

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was also issued clarifying that the resolutions proposed for the EGM were not special resolutions but were ordinary resolutions. The conduct of Respondent No. 2 is questionable because he called Board Meeting on 09.08.2014 where he decided not to permit holding of EGM as requisitioned by the shareholders. However, shareholders were determined to hold the EGM and Petitioner Nos. 1 & 2 again issued notice on 22.09.2014 to call EGM on 15.10.2014. 60. Thereafter efforts to stall holding of EGM .....

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ution may not be acted upon. It was clarified that the resolution with regard to cancelling the JDA, GPA and Rectification Deed could proceed. Accordingly, EGM was held on 15.10.2014 where Petitioners along with Respondent No. 5 and other shareholders unanimously decided to cancel the JDA, GPA and Rectification Deed and to appoint Petitioner Nos. 1 and 4 as Additional directors of BBPL and Petitioner No. 1 to represent BBPL in legal proceedings. 61. The whole gamut of litigation initiated before .....

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5.10.2014 the course of event in quick succession unfolds as under: Respondent No. 2 along with his wife Respondent No. 3 tendered resignations from the newly floated company BCDP on 01.10.2014 and transferred their share to his grandson - Respondent No. 4. Respondent No. 4 on behalf of BCDP initiated proceedings in the courts at Bangalore and filed a petition under section 9 of the Arbitration and Conciliation Act about 10 days later. An interim order of status quo was issued by Civil Court, Ba .....

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shareholders have absolute right to call EGM either to alter the Articles of Association, or remove/change Directors. It cannot be interfered with even by the courts. 62. The pertinent observation made by the Constitution Bench reads as under:- "Thus, we see that every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements, to call an extraordinary general meeting in accordance with the provisions of the Company Act. He cannot be rest .....

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f every director, the managing agent if any, the secretaries and treasurers, if any, and the manager, if any. This is a duty cast on the management to disclose, in any explanatory note, all material facts relating to the resolution coming up before the general meeting to enable the shareholders to form a judgment on the business before them. It does not require the shareholders calling a meeting to disclose the reasons for the resolutions which they propose to move at the meeting. The Life Insur .....

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the Respondent No. 2 - the Managing Director was not clothed with any power to restrain Petitioner Nos. 1 & 2 and shareholders from holding of EGM. Again the act and conduct of Respondent No. 2 is prejudicial to the interest of BBPL and its shareholder with an inbuilt bias towards 'BCDP'. 64. Mr. Tripathi, ld. counsel for Respondent Nos. 1 to 3 has projected that Respondent No. 2 Sh. Amrik Singh Bhandari, is a grand old man who has built the Bhandari empire by helping Petitioner No. .....

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o the same family. In a given case it may be possible to follow an approach which may involve principles applicable to partnership. Then such an approach would be relevant to mould the relief and not to condone mismanagement and oppression. In fact these principles have been repeatedly approved by the Hon'ble Supreme Court by following the well known judgment of the House of Lords in the case of Solomon v. Solomon & Co [1897] AC 22, Therefore, the argument lacks substance and I do not fe .....

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ndustries (India) (P.) Ltd. v. Needles Industries Newey (India) Holding Ltd. [1981] 3 SCC 333. But once series of act proves to the satisfaction of the court that the management in a systematic manner is causing financial harm to a company then this court has an obligation to rescue such a company and find a solution to keep it alive. 66. I further find that there was some understanding between the petitioners and 'AOP' to jointly develop the land purchased by them at Shettigere along wi .....

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PL'. The land at Shettigere was purchased by all the persons almost at similar price. It is true that there is no concluded written contract between the petitioners and 'BBPL' and therefore no binding obligations between AOP and 'BBPL' could be inferred. However drifting towards their own company 'BCDP' by Respondent No. 2 and 3 is an act of prejudicial nature. 67. The difficulty posed in the present matter is that Petitioner No. 1 can also not be entrusted with affai .....

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ector (Petitioner No. 1) and the Director - Respondent No. 3. How the interests of 'BBPL' could be protected? The company 'BBPL' and its shareholders have to be rescued from this mismanagement and oppression. 69. It would now be appropriate to deal with the preliminary objections raised by Mr. Tripathi. A suit has been filed by one Mr. H.S. Bedi in the Court of Civil Judge (Senior Division). In para 47 of this judgment preliminary objection has been noticed and it is argued that .....

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dice to the respondents. Moreover there is no pleading raising this preliminary objection as is required by the law laid down in para 14 of the judgment of the Supreme Court in the case of Larsen and Toubro Ltd. v. CCE [2007] 9 SCC 617. It has been held that 'allegations in regard to suppression of facts must be clear and explicit so as to enable the noticee to reply thereto effectively.' Mr. Chaudhary in his rebuttal submission also relied on the provisions of Order VI Rule 4 CPC to str .....

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orum shopping is also not available because the remedies under s. 397, 398 and 402 of the Act are distinct in its nature and scope than any other remedy like the remedy of filing suit by H.S. Bedi. Therefore this argument has failed to impress me and the same is also rejected. 71. Mr. Tripathi argued that M.S. Puri, D.S. Lamba and other who are parties to JDA were necessary parties and should have been impleaded. Mr. Chaudhary rightly countered the argument by submitting that the land of Lambas .....

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ebted to him. He holds Respondent No. 2 in high esteem as is revealed in his affidavit dated 25.08.1995. However he knocked the door of this court when 'BBPL' has been deprived of a legitimate opportunity because of mismanagement and deliberate attempts to oppress the Petitioners (Kishore Kundan Sippy v. Samrat Shipping & Transport Systems Pvt. Ltd. [2004] 118 Comp Cas 472.). 73. As a sequel to the above discussion and in the peculiar facts and circumstances of the case I deem it app .....

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may first explore the possibility of an amicable settlement by holding parleys between all parties and non-parties because they are all closely related. It is needless to say that the Administrator would associate Respondent No. 4 and 'BCDP' also while working out amicable settlement. The Administrator may exercise all powers of Board of Directors or Managing Director of 'BBPL' in conducting affairs of the company. All concerned shall assist the Learned Administrator. Further the .....

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