TMI Blog2017 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the EGM and majority shareholders have given consent for the sale of leasehold rights and in the light of the above discussion, petitioners are not entitled for any relief and further they utterly failed to establish any act of oppression or mismanagement on the part of respondents. Therefore, the petition is liable to be dismissed. - T.P. 30/2016 In CP 50/2017 - - - Dated:- 13-4-2017 - MR. RATAKONDA MURALI, AND MR. ASHOK KUMAR MISHRA, JJ. For The Appellant : S.V. Desai, Adv. For The Respondent : Dr. K.S. Ravichandran ORDER Heard on 13.01.2017, 03.02.2017, 15.02.2017 and 20.03.2017. Originally Company Petition No.50/2011 was filed before the Company Law Board, Southern Region, Chennai. Consequent upon the establishment of National Company Law Tribunal, Bengaluru Bench, Bengaluru, and consequent upon abolition of Company Law Board, C.P. No.50/11 was transferred from Company Law Board to this Tribunal and it was renumbered as T.P. No.30/2016. The C.P. was filed under Sections 397 and 398 of Companies Act, 1956, corresponding to Sections 241 and 242 of Companies Act, 2013. Originally, 8 petitioners jointly filed this petition against the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not maintained the fixed assets register. It is further alleged that the affairs of the Company were conducted in a manner prejudicial to the interests of the Company. The person claiming as Secretary was not validly appointed and R.C. Koti, representing himself to be the Chairman is involved in certifying fake copies of resolutions. Thus, the respondents have indulged in gross mismanagement. The petitioners pray that the Tribunal be pleased to: (i) pass an order of setting aside the sale agreement; (ii) order for removal of the Managing Director; (iii) order for revaluation of fixed assets of the Company; (iv) order for constitution of Board of Directors with new members; and (v) order for compensation. The first petitioner died and petitioners No.2, 3 and 7 have voluntarily withdrawn from the petition and the petitioners have filed an amended petition. Thus, there are 4 petitioners who presently maintain this petition. The respondents filed counter statement. It is alleged in the counter that petition is liable to be dismissed on the sole ground that the petitioners are unable to make out a case of oppression and mismanagement in relation to the affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining the property is a liability to the Company. The shareholders have approved that the sale price shall not be less than ₹ 1,000/- per sq. ft. Already, the Company Law Board has passed a detailed order in CA No. 186/2011. The respondents have set out in CA No. 186/2011 about the need to sell the lease hold rights of property. It is stated the minority shareholders cannot dictate terms to the Board of Directors. Already the sale agreement was executed and advance was also received. There is complete transparency in the sale transaction. If the petitioners are ready to exit, the respondents will show the path Hence, the present petition is liable to be dismissed. Heard both sides. Counsel for petitioners submitted written arguments besides oral arguments. The learned counsel for petitioners has referred to certain documents which were enclosed to the written arguments. Similarly, the learned counsel appearing for respondents has filed written arguments besides he has also submitted oral arguments. Some documents are enclosed to the written arguments. Petitioners filed certain documents along with the main petition. Similarly, the respondents have also filed some docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot qualify for filing this application as the minimum qualification for moving this application must be 10% of the paid up capital. The contention of the learned counsel for petitioner that originally this petition was filed by 8 shareholders whose shareholding put together was 256 shares of ₹ 2507 per share and that the petitioners were entitled to file this application under Section 397-398 of Companies Act, 1956. The learned counsel contended that 10% shareholding shall be seen at the time of filing the petition. Subsequently, if some shareholders have withdrawn from the petition, yet, the petition is maintainable. The counsel for petitioner has relied on the decision of the Hon'ble Apex Court in the case of Bhagwati Developers (P.) Ltd. v. Peerless General Finance Investment Co. Ltd. [2013] 33 taxmann.com 268 (SC). The Apex Court has held that it is very clear if a shareholder who has initially given consent to file Company Petition for meeting the 1/10th shareholding approvals, if the shares held by him are sold or ceases to be a shareholder, the same would not affect the maintainability and continuity of the petition . At the time of filing the petition, all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in question was ₹ 14,160/- and the liability towards corporation taxes due on the property was ₹ 7,64,650/-. It is also the contention of the respondents that the first respondent company is having perpetual lease hold rights over this property and there were some occupants from the property and it would be very difficult to get them evicted. It is further contended that the first respondent company wanted to expand its business activities and it requires capital. Therefore, the company decided to sell the perpetual lease hold rights. The contention of the respondents that the company wanted to sell this property on the ground that the income derived from the property is not even sufficient to pay the corporation taxes and the arrears are mounting. This is clear from the Chartered Accountant's statement referred above. Secondly, the company wanted to expand its business activities. A board resolution was passed on 25.01.2010. It was marked as Annexure-A/3 to the counter statement. We have gone through the Board Resolution dated 25.01.2010. It is clearly stated that the Company wanted to relinquish the lease hold rights and the proceeds realised would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her to sell the property without obtaining permission from the Company Law Board. Subsequently, the company moved CA No. 186/2011 for permission to sell the permanent lease hold rights to the purchaser and to execute the sale deed. The company first entered into an agreement of sale with M/s. Habib Hanji Group. The agreement of sale is dated 30.05.2011. CA No. 186/2011 was disposed of on merits. The Company Law Board, permitted the Company to go in execution of sale deed. The respondents have relied on the order of the Company Law Board in CA No. 186/2011 marked as Annexure-A/25 dated 31.10.2011. It is clearly stated in the order that the respondents herein who are petitioners in the main petition virtually have no objection in the sale, but disputed the sale consideration that it was being sold for ₹ 10.00 crores. It was also contended before the Company Law Board that the lease hold rights was being sold for ₹ 1250/- per sq. ft. Some of the petitioners herein have preferred appeal to the Hon'ble High Court of Karnataka at Bangalore against the orders of the Company Law Board in CA No. 186/2011. However, the appeal preferred by some of the petitioners in Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proposed to sell the lease hold rights. The next contention of the learned counsel that the property was sold ignoring the valuation arrived at by the Registered Valuers. Thus the company suffered loss and that it is an act of oppression and mismanagement. The main contention of learned counsel for petitioners that one Mohan S. Hulkoti gave valuation certificate which was filed by the respondents and marked as Annexure-A/6. The counsel contended that the value of the land, according to him, in the area in which the property in question is situated is between ₹ 1,0007- to ₹ 2500/- per sq. ft. The counsel would contend that surprisingly the valuer has adopted a price of ₹ 1250/- per sq. ft. Counsel would contend that even the Sub-Registrar's value as per Annexure-A/6 was between ₹ 650/- to ₹ 1905/- per sq. ft. and the market value was between ₹ 1000/- to ₹ 2500/- per sq. ft. The counsel would contend that the Registered Valuer should have adopted either ₹ 1905/- per sq. ft. as per Sub-Registrar's value or ₹ 2500/- which is prevailing market value, whereas the valuer had adopted ₹ 1250/- per sq. ft. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble High Court of Karnataka, some of the petitioners who were the appellants before the Hon'ble High Court, raised same contention that the property in question would fetch higher value than ₹ 10.00 crores and that there was a purchaser who was prepared to purchase it for ₹ 15.00 crores as against ₹ 10.00 crores. Then the Hon'ble High Court directed the appellants/petitioners to deposit the said amount within two days. But, the petitioners could not deposit the money. Thus, the contention of learned counsel for respondents that the petitioners are falsely contending that the property in question can be sold for higher price than the price at which it was sold. There is absolutely no material to substantiate the same. It is true, the petitioners are merely contending that the property in question was sold at a price below the market price. But, they failed to substantiate the same. So, in the light of these documents, the petitioners have failed to prove that the property in question was sold at a price below the market price thereby, the respondents No.2 and 3 indulged in oppression and mismanagement. The counsel for petitioners has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2000] 6 SCC 69; The facts of the decision cited are totally different to the facts of this case. The learned counsel further relied on the decision of the Hon'ble Apex Court in the case of Valji Khimji Co. v. Official Liquidator of Hindustan Nitro Product [2008] 86 SCL 81 (SC). The facts of the decision cited that the property was sold for ₹ 3.51 crores to the highest bidder in the public auction. The sale was confirmed. Thereafter, some third party offered higher price. The third party has moved an application to recall the order confirming the sale and the application was allowed. The Apex Court held that there is no justification to set aside the sale which was confirmed when there was no fraud or collusion. In the instant case, the burden is on the petitioners to establish that the property was undervalued and that it was sold below the market price. The petitioners have utterly failed to discharge the burden. Hence the decision cited has no application. On the other hand, the contention of the learned counsel for respondents that the leasehold rights were sold basing on the market value of the property. The learned counsel would contend that the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Apex Court in the case of State of Haryana v. Manoj Kumar [2010] 4 SCC 350. This decision is regarding stamp duty which is not applicable to the facts of this case. The learned counsel for petitioners has also relied on the decision in the case of Union Bank of India v. Official Liquidator [2000] 5 SCC 274. This decision is regarding winding up of companies and present petition is not for winding up of the company. Hence, the decision is not applicable. The learned counsel for the petitioners has relied on the decision of the Hon'ble Supreme Court in the case of Jai Narain Parsrampuria v. Pushpa Devi Saraf [2006] 7 SCC 756. This decision is in relation to the purchase of immovable property for Company by its Promoters prior to incorporation of the Company. This decision is not applicable as the facts are different. The next reliance of the learned counsel for the petitioner is on the decision of the Hon'ble Apex Court in the case of Singer India Ltd. v. Chander Mohan Chadha [2004] 7 SCC 1. Decision in the above case relates to Rent Control and Eviction - Parting with possession without landlord's permission. Whereas, the case on hand is entir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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