TMI Blog2017 (6) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... regard it is worth to note that the settled legal position is that the sitting Directors of the Company can take appropriate decision for removal of a Director if his presence in the Board is not suitable for the day to day functioning of the Company. As a result the prayer as raised by the Petitioner is left open, rather leave it upon the sitting Directors, to decide the fate of R-7, so as to take due legal steps, if deem fit. However no specific separate order,as demanded, is lawfully required to be passed. That one of the prayer is to direct to make good the amount siphoned by the Respondents. Inter alia, in this regard, the accounts of the Respondents as appearing in the Books of the Company are the only guiding factor, refer pages 240 to 260 of the Reply of the Respondents, to arrive at the accurate conclusion. It is well known that every Corporate litigation, in one way or the other, ha an economic angle causing dispute. So, the prevalent practice is that the contribution of capital/funds in the business should be in equal proportion by all the groups or the participants. However in this case the admitted position is that the financial contribution by the Respondents was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration so determined and also to complete other legal formalities required to accomplish the exit plan. Second, to complete the process of handing over by the Respondent and taking over by the Petitioners the existing loan accounts of the Directors should be settled after due adjustment of liabilities. - T.C.P. NO. 2/397/398/CLB/MB/2014 - - - Dated:- 20-4-2017 - Mr. M. K. Shrawat, J. For The Petitioner : Mr. R. T. Rajguroo For The Respondents : Mr. Sagar Divekar, Ms. Aparna Suresh ORDER 1. This Petition was filed before the erstwhile CLB on 23rd December, 2013 and thereafter number of Interim and Ad-interim Orders were passed as available in the folder of the Order Sheets and duly perused by me. On completion of the pleadings this CP was listed for final hearing. 2. FACTS BACKGROUND OF DISPUTE : - The factual background and the constitution of the Company is as under:- 2.1 Company in question( R-1) was incorporated on 21-04-1994. The issued, subscribed and paid up Share Capital of the company was ₹ 19,17,500/- having 19,175 Shares of ₹ 100/- each. 2.2 The Petitioner namely Mrs. Archana Gaikwad(P-1) and Mr. Rajesh Kashinath Gaikwad (P- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that R-7 had no professional qualification, even then appointed as Addl. Director and to be treated as Professional Director in the Company. It has also been alleged in the Petition that the impugned Board Meeting was held on 22nd of Aug.2013 but the notice was posted to the Petitioner on 23rd of Aug.2013, one day after the said Board Meeting. The Agenda attached with the said Notice did not contain the matter of Appointment of any Addl. Director. The Petitioner has stated that in a situation when number of Directors, as many as seven, have already been appointed hence there was no requirement to add one more Director that too as Addl. Director. 3.2 The Second allegation is that with malafide intention Respondent No.2 to R- 5 have resigned from the Company on 16th Oct. 2013 without giving notice of the Board Meeting to the Petitioners. The R-No.2,3,4 5 have submitted their resignation which was accepted on the said Board Meeting for which no intimation was given to the Petitioners. 3.3 A technical objection has also been raised by the Petitioner that while submitting the information of resignation on Form No. 32 to RoC, the Digital Signature of R-7 as an Addl. Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/10/2013 Credited to Personal Account No. 33184960443 of Mr. Vijay Hamilapurkar (R-4) 20,00,000/- 4. 11/10/2013 Credited to Personal Account No. 33184960443 of Mr. Vijay Hamilapurkar (R-4) 10,00,000/- 5. 11/10/2013 Credited to Personal Account No. 30076569645 of Mrs. Hemlata Hamilapurkar (R-3) 15,00,000/- 6. 11/10/2013 Credited to Personal Account No.30022472396 of Mr. Manikrao Hamilapurkar (R-2) 25,00,000/- 3.7 There is an allegation of payment of salary of ₹ 20,000 p.m. to Respondent No. 6 as a Director although she is stated to be in employment with M/s. Aramca. Like wise an allegation is that the Additional Director was paid Remuneration although he was not professionally qualified. 3.8 The next allegation is that the liabilities, such as Payment to labour have now been shifted on the Petitioner due to the resignation of the Respondents. By this act of resignation the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers and diverting the business. The Respondent has placed reliance on one e-mail dated 29.02.2012 addressed to BALDUCCI S.P.A ITALY, the important customer of R-1, contents reproduced below:- Dear Margot, Myself 7 my husband, Mr. Rajesh (he had met you In Garda Fair in first year also had visited your office in last June), we are directors in Arviyas. From the first day of business with your company we both were taking care of your sample developments, production, etc. Even the samples of the next summer season are also developed under our supervision. But now, due to some problems with the other directors we will be resigning from this company with effect from 1st April,2012 we are starting our own business under the company named M/s. Archana Corporation. I am writing to you because I thought that as we know your style of working, sampling, quality of goods you require, etc. so I want to introduce ourself as a new manufacturer for your company if you feet suitable comfortable. Also you will be glad to know this, that whatever references Kiran had sent you for the ornaments are manufactured by my husband only. I am attaching some pictures which I am sure you w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Respondents to involve them in the family business of Leather products manufacturing business so as to get financial help. On considering the financial position of the Petitioners, the Respondents have helped the Petitioners by introducing P-2 as a shareholder and appointed P-1 as a Director. Presently P-2 is holding 175 shares ( 0.91% ). At that relevant time side by side inducted R-5 R-6 as Shareholders, respectively holding 375 ( 1.96%) 250 (1.30%) shares and appointed them Directors. The managerial duties claimed to have been assigned to the Directors were as under:- Sr. No. Name of the Director Profile Handled in Respondent No.1 1. Mr. Manikrao Basappa Hamilapurkar, Managing Director (Respondent No2.) Being an experienced leather and footwear technical and designer was giving experience, guidance and making important decisions in the Respondent No.1 2. Mrs.Hemlatha Manikrao Hamilapurkar, Director (Respondent No.3) Giving experience, guidance and making important decisions in the Respondent No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not allowed by the Petitioners. The R-4 was not allowed to shift the machinery, transformer, finished leather stock etc. from Lonad Unit. It was found out that the Petitioners were illegally utilising the electric power connection, transformer, machineries etc. for the use of M/s Archana Corporation. It was an illegal trespass on the Lonad Unit. A board meeting was called on 2/12/2012 for the purpose of taking legal action against the Petitioners and to file a Police complaint. (i) In the Reply another instance of misuse of position by the Petioners have been quoted. In a Board meeting held on 25/06/2013 it was resolved to shift A-3 Unit to a smaller place at Plot No. W-23 MIDC Badlapur East, Thane. One more meeting was held, during that period, on 12/06/2013 to repay the loan and to find out a suitable buyer for the purchase of the Unit. In the month of July 2013 the shifting of A-3 Unit to W-23 Unit was completed. The Petitioner-2 was not attending the work of the Company from April 2012. Thereafter a permission was required from the MIDC to transfer the Unit in the name of one M/s Horizon Industries and vide a letter dated 17th September 2013 MIDC allowed the request of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a Written Submissions and the Rejoinder filed.The salient points are as under:- (i) That the appointment of R-7 was incorrect and unwarranted because he had no professional knowledge. He worked in the Company only as a helper. According to the information he is only 8th Standard pass. His appointment was with malafide intention and ulterior motive so that R-2 to R-4 could escape the liabilities of the Company. His appointment was not even regularised in the AGM dated 5th September 2013. As a result the intimation of resignation of R-2 to R-5 under his digital signature was improper. The impugned resignation deserves to be nullified. (ii) That generally the practice was to intimate the dates of Meetings by oral intimation but for the Meeting to be held in the Month of August 2013, the intimation was through formal notice. That notice was refused by the Petitioner on the ground that the meetings were being conducted to regularise the wrong doings of the Petitioners. (iii) That the transfer of plot A-3 MIDC Badlapur was without proper authorisation. Such type of authorisation can only be granted by holding AGM, however R-2 was authorised by the Board Resolution dated 23rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence of proprietary concern M/s Archana Corporation was not in the knowledge of the Respondents. This concern was doing the job-work of the Company. The M/s Archana Corporation started business activity in the year 2009 hence it is wrong to allege that the business activity was not known to the Respondent. The business of the Company was adversely affected because of negligence of the R-4, hence Petitioner No.1 had started contacting the clients of the Company. A question has been raised that the Respondents were aware about the business of the Petitioner but why they have not objected in the past? Why they have preferred to resign from the R-1? It is alleged by the Ld. A.R. that R-2 to R-4 have made the Company financially bankrupt and thereafter left the Company with the burden of several types of liabilities. (ix) Learned Counsel has concluded that the Majority Shareholders have oppressed the Petitioner being in Minority as well as mismanaged the business of the Company. Hence the relief against the Respondents deserved to be granted. The Directors who have resigned should be reinstated with the direction to take the responsibilities of the liabilities. Further Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us circumstances. Petitioner No.1 got married to P-2 in the year 1996. Facts of the case has revealed that P-2 was running a Crane Hiring business (M/s. Gurudev Hiring). In and around 2005 the financial position of the Petitioners was in crisis and therefore they approached the Respondents to involve them in the Family business of manufacturing of leather products. On considering the financial position of the Petitioners it was decided to induct P-1 in the business of the family by appointing her as a Director. She was allowed to hold 2600 Equity Shares. Likewise her husband, P-2 was granted 175 Shares and given the responsibility to look after the production of the Company. However later on there was misunderstanding among family members which resulted into this Petition. The nature of the dispute as well as the allegation viz. a viz. counter allegation now require adjudication, therefore point wise discussed as under:- 8.1 In respect of the appointment of Addl. Director namely Mr. Rajendra H Kulkarni a serious objection has been raised by the Petitioners on his qualification to become a Director. It has also been questioned that there was no necessity of the Company, then why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- so that the business of the Company should not suffer. There are several instance, placed on record, when father i.e. R-2 has contributed out of his personal funds a sum, such as for the construction of the A-3 unit. Facts of the case have also established that during the year 2011 to 2013 the Company was in requirement funds, hence R-3, mother had again contributed her own funds to financially assist the Company. On pages 240 to 262 of the Reply of the Respondent, the Ledger Accounts of the family members are available in the compilation to demonstrate time to time contribution made by the Respondents A Ledger Account titled as Loan from Directors as appearing on page 244 of the said compilation for the accounting period ended on 31-03-2007 has shown a balance of ₹ 1.30 crore towards credit side of the Directors. Although it was a running account and the closing balance kept on changing but the fact is that the Respondents have contributed out of their personal resources whenever the Company was in need of funds. On the other hand there is no evidence that the Petitioners have as well contributed their own funds, what to say equal to the other directors. Naturally w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een infused by R-3. Not only this, even R-3 had closed down her sole proprietary concern namely M/s. Jey Component in the year 2003 and diverted her customers and Goodwill from Proprietary concern to Respondent No.1 Company. As per a Board of Directors meeting held on 25-06-2013 it was decided to shift A-3 Unit to a smaller unit As a result the A-3 unit was shifted to Plot No. W-23, MIDC, Badlapur, Thane (termed as W-23 Unit). The shifting from A-3 Unit to W-3 unit was concluded in July 2013. The business was continued from a smaller premises. It was a commercial decision to cut the business expenditure. Thereafter one another meeting was held and made a request to R-4 to find out suitable buyer for A-3 unit. The Respondent had again reiterated that the notices of all such meetings have duly been circulated. For the purpose of transfer/ sale of A-3 unit a clearance was required from MIDC. The decision to sale A-3 unit was taken to clear the burden of outstanding borrowed loan. However, evidences on record have demonstrated that the Petitioners have written letters to MIDC independently suggesting not to give clearance. The question which has been raised by the Respondents is that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been examined and thereafter it is noticed by me that there was regular credit and debit entries in those loan accounts of the Directors. From the Closing Balance the figure of outstanding loan of each one of them is can be ascertained which was relevant for the period 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11. Although in the Ledger it was titled as Loan Account but there were regular debit and credit transactions hence also in the nature of a current account; but in the end there was substantial outstanding balance shown as liability of the Company. It was decided to repay the outstanding loan. At one point of time when A-3 unit was sold, the figure of outstanding loan was as high as ₹ 2,29,95,000/- payable to R-2 to R-4. The sale consideration of A-03 Unit was therefore utilised to adjust against the said loan figure. Therefore, it could not be treated as siphoning of funds but it was simply repayment of loan to the Respondents. The case of the Respondents is that since inception of the Company, on number of occasions the personal funds of R2 and R-3 have been infused in R-1 Company to overcome the financial hardship hence there was no question of siphoning of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso not clean. If the ethics are doubtful then such litigant must not demand for parity and impartiality. On due appreciation of the events took place in this case, it transpires that since induction of Petitioners into the Company, the business had suffered adversely. The Petitioners appeared to be more worried and concerned about their proprietorship concern i.e. M/s Archana Corporation. Not only undisputed but admitted fact is that Archana Corporation was established only to perform Job work of the Company, that too with the bona fide intention to help the Petitioners. Therefore in the family it is expected that if a kind gesture Is bestowed then it must be responded in the same manner, rather expected to display more kindness with gratitude. This is necessary to maintain harmony among the family members. 8.9 A vital question is whether the Directors in Majority have acted in Oppressive manner towards the Petitioners. A thumb rule is that the affairs of a Company should be conducted fairly and in good faith. There is no scope of Oppression , means not to be burdensome, harsh and wrongful. So the question is that whether an unwise, inefficient or even a careless decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g direction that Respondent 7 be ordered to vacate the Office of Directorship. In this regard it is worth to note that the settled legal position is that the sitting Directors of the Company can take appropriate decision for removal of a Director if his presence in the Board is not suitable for the day to day functioning of the Company. As a result the prayer as raised by the Petitioner is left open, rather leave it upon the sitting Directors, to decide the fate of R-7, so as to take due legal steps, if deem fit. However no specific separate order,as demanded, is lawfully required to be passed. (c) That one of the prayer is to direct to make good the amount siphoned by the Respondents. Inter alia, in this regard, the accounts of the Respondents as appearing in the Books of the Company are the only guiding factor, refer pages 240 to 260 of the Reply of the Respondents, to arrive at the accurate conclusion. It is well known that every Corporate litigation, in one way or the other, ha an economic angle causing dispute. So, the prevalent practice is that the contribution of capital/funds in the business should be in equal proportion by all the groups or the participants. However in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
