TMI Blog2013 (12) TMI 1634X X X X Extracts X X X X X X X X Extracts X X X X ..... 995. 2.2 Upon request of Mr. Dindayal Gosain to advance some money in consideration for 50% partnership with the Petitioner, the Petitioner paid money for the acquisition of the property and building with the purpose to commence electronic business. Accordingly, on 3/07/1995 a Plot No.EL-100, Mahape, MIDC, T.T. Industrial Area, Navi Mumbai was acquired in the name of Late Mr. Dindayal Gosain from MIDC in consideration of ₹ 6,75,000/-. 2.3 Thereafter, on 21/01/2000 late Mr. Dindayal Gosain further requested the Petitioner to provide more funds to develop the property in question. 2.4 As per the case of the Petitioner, the Petitioner held 4750 shares of ₹ 100/- each, late Mr. Dindayal Gosain held 4600 shares and R2 held 150 shares of ₹ 100/- each, thus constituting 50%, 49% and 1% shareholding in the Rl Company. Further, late Mr. Dindayal and R2 were appointed as the directors of the Rl Company. The Rl Company was thus in the nature of quasi partnership. 2.5 Pursuant to the request made by late Dindayal the Petitioner remitted the following amounts: (i) On 9/05/2003 - 3000 (Rs. 2,25,150/-), (ii) On 26/08/2003 - 3461 (Rs. 2,44,508/-), (iii) O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court concerned. 2.11 It is alleged that, the Respondents in collusion with each other arbitrarily without following the due procedure of law, increased the share capital of the company and thereby reduced the shareholding of the petitioner from 50% to 8% and the R2 increased her shareholding from 1% to 92% which is a clear case of oppression. 2.12 It is further alleged that, the Respondents have also appointed R3 and R4 as Directors of the Rl Company in contravention of the provisions as laid down in the Companies Act, 1956 without notice to the Petitioner and without holding any valid meeting. According to the case of the Petitioner, no such meetings were held. Further, the Respondents have also failed to comply with the formalities with the ROC. They did not give inspection of statutory record, despite request to which the Petitioner was entitled to as a director and shareholder of Rl Company. Lastly, it is alleged that the Respondents have also siphoned off the amount of the Rl Company for their personal gains. Based on the above allegations the Petitioner in a nutshell has sought for the following reliefs amongst the other as contained in the Petition :- a. To pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramount interest of the company in accordance with law. Further, by the allotment of impugned shares to R2 and R3, the Respondents have never diluted the shareholding of the Petitioner. The allegation of the Petitioner that Respondents failed to comply with the formalities of the ROC and or did not give statutory records of the Rl Company has been denied by them. 5. In reply, it is further pleaded that the Petitioner was never a director of the company and therefore, he does not have any right to inspect the record in the Rl company in the capacity of the director and further all the filing made by the company are available on the website of ROC to which the petitioner can access easily. The Respondents have also denied having siphoned off the funds of Rl Company in any manner. Based on the above, the Respondents have prayed to dismiss the petition. 6. I have heard the ld. Counsel appearing for the Parties and perused the record. Firstly, I propose to deal with the preliminary objections taken by the Respondents challenging the maintainability of the petition and seeking its dismissal on such grounds. 7. The first preliminary point which arises for my consideration is as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his statement has been signed by R2 herself in the capacity as director. It is therefore, contended that the onus lies upon the R2 to prove that the said Annual Return is incorrect and at any point of time, the Petitioner's shareholding was reduced to the extent of 8% by serving a valid notice on the Petitioner calling upon him to attend the EOGM whereat the allotment of additional shares was made. It was further contended that to determine the eligibility of the Petitioner to file a petition under section 397/398 of the Act, by virtue of the provisions contained in Section 399 of the Act, the Board is required to see the last undisputed position as held in the following cases. (i) Decision of the Division Bench of the Karnataka High Court in the case of Vijayan Rajesh v. MSP Plantations (P.) Ltd. [2010] 98 SCL 383 wherein it was held as follows: 32. The reasoning given by the Company Law Board does not appeal to us. If the finding is to be that the persons presenting the petition do not qualify for presenting a petition under Section 399 of the Act, no further question arises and the petition was to be dismissed at the threshold. But the Company Law Board has viewed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of T.N.K. Govindaraju Chetty Co. v. Kadri Mills (CBE) Ltd. [1998] 96 16 SCL 701 (CLB - Chennai), it has been held hereunder: 14...... Allotment of shares to the exclusion of some shareholders has been held, by many High Courts and the Company Law Board itself, as an issue which could be agitated as an act of oppression, in a petition under Section 397/398. Therefore, we are of the view that when the holding of a petitioner is reduced below 10 per cent, due to further allotment of shares and such allotment itself is impugned in a petition under Section 397/398, the petition should be held to be maintainable on the strength of his holding before the further allotment of shares...... [Emphasis Supplied] (iv) The above case of T.N.K. Govindaraju Chetty Co. (supra) has been relied upon in the case of Prabhjit Singh Johar v. Johar Hotels (P.) Ltd. [2010] 2 taxmann.com 7 (CLB - New Delhi) wherein it was held that: 56...... It has been rightly contended by the petitioners that the Company Law Board in the case of T.N.K. Govindaraju Chetty Co. v. Kadri Mills (CBE) Ltd. [1998] 3 Comp. LI 329 : [1999] 96 Comp Cas 871, has held that the transfer and allotment of shares wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajesh (supra), Raajratna Metal Industries Ltd. (supra), T.N.K. Govindaraju Chetty (supra) and Prabhjit Singh Johar (supra). In my view, in this case the last undisputed position is that the Petitioner was holding approx. 50% shareholding in the Rl Company as per own admission made by the R2 and therefore, in my opinion the petition is maintainable in terms of Section 399 of the Act. 14. The ld. Counsel appearing for the Respondents has further challenged the maintainability of the petition interalia on the ground that the Petitioner has not come with the clean hands and therefore, he is not entitled to any equitable reliefs in a petition under Section 397/398 of the Act. 15. In this regard, it was contended by the ld. Counsel for the Respondents that the Petitioner in his petition has heavily banked upon the letter dated 3/11/2006 annexed with the Board resolution dated 2/11/2006 purportedly passed by R2 and her deceased husband Mr. Dindayal thereby appointing the Petitioner as a Director of Rl. According to the ld. Counsel for the Petitioner, it is on basis of this Board Resolution dated 2/11/2006, the Petitioner claims to be the Director of Rl. Apart from above, the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same is pending before the Court at Thane. He submits that the Petitioner has filed objection to the said Will and has also brought on record the last Will dated 6/11/2006 of late Dindayal Gosain. It is contented by the Ld, Counsel that the Will of late Dindayal Gosain at the highest can deal with the shares held by late Dindayal Gosain in the company and cannot deal with the Petitioner's shareholding in the company or his directorship or with the company's property. The Ld. Counsel for the Petitioner contended that the Respondents reliance on the Wills dated 5/04/2006, 6/11/2006 of late Dindayal Gosain is of no relevance whatsoever, with the present matter. The Ld. Counsel therefore, argued that the Petitioner is not guilty of the suppression of the facts and the contention raised by the Ld. Counsel for the Respondents is liable to be rejected. 17. Having considered the submissions of both the sides. I find force in the contention raised by the Ld. Counsel for the Respondents that the Petitioner is guilty of suppression of facts. It is an established law as held in the following cases that if a party approaches the Court with unclean hands, he is not entitled to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with tainted hands, is not entitled to any relief, interim or final. 18. In the light of the aforesaid law, I proceed to examine the facts of the case in hand. From the perusal of the reply filed by the Respondents, it is revealed that Late Dindayal during the period April- June 2006 was suffering from cancer and was being treated in Jaslok Hospital. The record further reveals that on 5/04/2006, Late Dindayal executed purported registered Will in favour of his wife R2 and minor sons. Further, the Respondents have also filed an affidavit dated 29/03/2006 duly executed by late Dindayal Gosain which states that due to ill-heath his right hand is not working properly. Thereafter, in the month of June, 2005, he further executed a Codicil confirming the Will in their favour and authorizing them to sell the bequeathed properties. 19. It is also evident from the perusal of the record that prior to filing the instant petition, the Petitioner filed a special civil suit No. 668/2008 in the court of Senior Division at Thane based on the registered Will dated 6/11/2006 purportedly executed by late Dindayal Gosain in his favour and sought various reliefs claiming to be 50% shareholding i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g transferring parting with the possession or encumbering in any manner to the detriment of the Plaintiff in respect of the said factory premises of the said Defendant No. 1 Company, e. That pending the hearing and final disposal of the present suit, the Court Receiver or some fit person be appointed receiver in respect of the said factory premises belonging to Defendant No. 1 with all powers under Order XL of the Code of Civil Procedure 20. It is further revealed that in the said suit, the Respondents who were Defendants, therein filed their reply on 25/03/2010. It is also pertinent to mention here that the Respondents herein have also challenged the purported will executed in favour of the Petitioner by filing a Special Suit No. 803 of 2007. 21. Therefore, withholding all the above-stated documents, and not disclosing all the material and vital facts in the petition clearly go to show that the Petitioner is guilty of suppression of facts and therefore, on this ground, in my considered view, the Petitioner is not entitled for equitable reliefs and the petition is thus liable to be dismissed on this ground alone. 22. The ld. Counsel for the Respondents has raised next p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition suffers from delay and laches the petition must fail. i. Amrit Lal Seth v. Seth Hotels (P) Ltd. [2009] 95 SCL 161 (CLB - New Delhi) It is correct that this Board has always taken the view, as submitted by learned counsel for the petitioner, that allotments due to which the percentage holding had come down to below 10 per cent could be examined at the threshold. While doing so, this Board has always kept in view whether the allotments are challenged at the earliest without much loss of time. However, in the present case, allotments have been made right from 2000 on various occasions. The petitioner has not adduced any reason as to why he resigned from the Board in 2004, by which time, at least four allotments had been made. Being a closely held family company especially when proceedings were going on in respect of the suit filed by Rishi Bhatia, it is inconceivable that the Petitioner was not aware of the allotments made, at least, till he was a director on the Board. Even otherwise, according to his own averment, he came to know of the allotment in 2006 from the proceeding in CP No. 86 of 2006, but even then he did not approach this Board immediately. This petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the Act or any other law be guided by the principles of natural justice and shall act in its discretion. Of course, latches do apply. The petitioner is guilty of latches in this case. Thus, I find that the petition is not maintainable even on the basis of the preliminary objections raised in this case.' 26. Now coming to the merits of the case, I propose to take up first complaint made by the Petitioner with respect to his alleged non-appointment as a director in the Company. 27. The Ld. Counsel appearing for the Petitioner submits that the Board resolution dated 2/11/2006 thereby appointing the Petitioner as a Director of the Rl Company was passed by all the Directors of the company and was ratified by all the shareholders of the company. To support his contention the Ld. Counsel has relied upon a letter dated 3/11/2006 Exh-G purportedly written by late Dindayal Gosain to him together with a resolution dated 2/11/2006. He has also referred to a letter dated 2/11/2006. I would like to reproduce the contents of the said letters:- 3/11/2006 'To Mr. Rajiv Laxman Attached herewith please find a Resolution on Bobby's letterhead and a letter of you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 23441322 1/5, Haji Habib Building Mumbai Date: 28/04/2006 Mr. Rajiv Laxman Hope you and your family are in best of health 1. Attached please find DIN form for your signature at two places marled (x). You have to sign in the box provided and return. - Do not write anything on form 2. Your PAN Card 1. For obtaining PAN Card at your U.K. address. They will charge ₹ 650/-towards courier charges. 2. If you want it at Mumbai Mr. Jalandas address, please write a letter on your letterhead and send. Draft is enclosed. Mrs. D-D. G is not agreeing for your directorship. Thanking you, Sd/- 29. Thereafter, I would like to reproduce two legal notices one issued by the Petitioner and other issued by R2 in reply to the said notice. Ref No. PB/NOT/09/07 08th Feb, 2007 Mrs. Nirmala Dindayal Gosain, Station View, Plot No. 19, Sector 30, Vashi, New Bombay - 400 705. Madam, I am concerned for my client Mr. Rajeeve Kant Laxman, having address at 25, Grimwade Avenue, Croydon, Surrey - CR05DJ, United Kingdom, who has instructed the undersigned to address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises belonging to the Company, has been given on Leave Licence basis of M/s. Bizerba India Pvt. Ltd., on the terms conditions of the Leave License Agreement executed on 30th April, 06. The period of the License is precisely 55 (fifty five) months with lock-in-period of 6 (six) months with prior notice for earlier termination. M/s. Bobby Electronics Pvt. Ltd. is getting the compensation apart from the deposit paid by M/s. Bizerba India Pvt. Ltd. The License fee per month is ₹ 1,30,608/-(Rupees One lakh thirty thousand six hundred eight only) payable on 10th day/date of each month subject to TDS and the said license fees is increased by 5% by expiry of each 11 (eleven) months. You are also one of the Director of M/s. Bobby Electronics Pvt. Ltd. and by virtue of being the Director it was your bounden duty to accept and to act in accordance with the Resolution passed by the Company, dated 02nd Nov, 2006 and submit the required documents to the Registrar of Companies, after the endorsement upon the same. Since you have refused to endorse the documents and further refused to cooperate with my client, and therefore, my client states as follows: (a) Your refusa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit lying with you as per the directions of the Court of Law. All such proceedings shall entirely be at your cost consequences. Yours, P.S. BAJPAI Advocate SHAILESH KUMAR 3, M.B. Patel Business Centre R. No. 11, 1st floor, 105, Mumbai Samachar Marg, Fort, Mumbai -400 023 Off: 022 30203571/73 E-mail advskmisgra@yahoo.com advmisgra@rediffmail.com THROUGH SPEEDPOST A.D. / THROUGH COURIER 10th April, 2007 To, Shri Pramod Bajpai Advocate, C-6, Big Splash, 1st floor, Sector-17, Vashi, Navi Mumbai- 400 703 Sub: Your letter dated 17th February, 2007 Bearing Ref. No.BP/NOT/09/07 Sir, Under instructions of my client Mrs. Nirmala D. Gosain, resident of 301, Station View, Plot No. 19, Sector 30, Vashi, Navi Mumbai- 400 705, I have to address you as under: - 1. My client denies that her husband in order to reciprocate your client for the assistance provided by your client to my client's husband, wanted to make him the managing director of his company. My client states that to reciprocate your client her husband Mr. Dindayal Gosain had made your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew hereof, I have been instructed to call upon you which I hereby do to advise your client to desist from such illegal activities. It is not out of place to mention that inspite of the above if your client opts or is advised to initiate the legal proceedings the same would be defended by my client needless to mention entirely at your client's risk and costs. Thanking you Yours Truly Sd/- Shaliesh Kumar Advocate High Court, Bombay C.C To, M/s Bizerba India Pvt. Ltd. 301, 27 Acre Basement, Pratap Kuthir Compound No. 3 Tikujiniwadi Manpada, Thane -400610 30. From the critical analysis of the contents of the above-stated documents, it is thus clear that the complaint made by the Petitioner that he was appointed as a Director is without any basis. In my opinion a resolution was passed offering him the post of Director subject to his acceptance and submission of requisite documents. However, in any event, the impugned resolution was never acted upon and /or implemented. No statutory forms were filed at any point of time. I have, therefore, come to the conclusion that the Petitioner has failed to substantiate the alleged act of oppression with respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... His name never existed in the Articles of Association of the Company. Therefore all the necessary elements with respect to the application of principle of quasi-partnership lacks in this case. Therefore, the plea of quasi-partnership taken by the Petitioner is rejected. 32. The second charge alleging to be an act of oppression by the Petitioner against the Respondents is that the Respondents have altered the share capital of the company without following the due process of law. According to him no statutory notice of the so-called EOGM purportedly held on 20/03/2009 was given to the Petitioner nor any agenda was circulated amongst the shareholders. Further, there was no reason for issuing additional shares to R2 and that the shares have been issued to R2 only with a sole motive to dilute the Petitioner's shareholding. 33. It is further contended by the ld. Counsel appearing for the Petitioner that the Respondents have failed to produce any document evidence to prove notice of EOGM dated 20/03/2009 was served upon the Petitioner. Ld, Counsel further submits that the Respondents have also failed to prove their plea that money advanced by the Petitioner was not in his capaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option as the said building was demolished and a fresh new construction of the said building had to be carried out by the Company within the stipulated period to avoid the penal action. 35. Accordingly, the R2 constructed an area of 1011.66 sq. meters of the factory premises. To support her contention the R2 has annexed the occupation certificate, building completion certificate, drainage completion certificate and tree plantation certificate vide Exh. F to the Written statement. According to her, for the construction of the factory premises of the Rl, the R2 had spent a sum of ₹ 70.00 lakhs so that the Rl can fetch good value and with this bonafide intention, the R2 increased the fixed assets of the company to ₹ 1,07,92,150/- thus, the R2 acted promptly in the sole interest of the company and validly and legally in compliance of due process of law, called for Extraordinary General Meeting and altered the share capital of the company with the bonafide intention to save the company. It is, therefore, contended that the R2 in order to dilute the shareholding of the Petitioner altered the share capital without his knowledge. 36. I have considered the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Petitioner demanded back his investment in the Company and therefore, offering the Petitioner for increasing share capital of the company or further shareholding of the company did not arise. Thus, the Petitioner cannot be allowed to take disadvantage of his own wrongs. 38. Lastly, from the perusal of the Articles of Association of the Rl Company, I have noticed that nothing is provided therein that existing shareholders will be offered proportionate shares in case the additional shares are allotted in future. For the reasons stated hereinabove, I conclude that the allotment of shares in question is not an oppressive act as contended by the ld. Counsel for the Petitioner. 39. The next charge levelled by the Petitioner against the Respondents as an act of oppression is that R3 and R4 have been appointed by the R2 as Directors of the company in contravention of the mandatory provisions of the Companies, Act without holding any EOGM for this purpose. Further, no notice was served upon the Petitioner intimating him any proposal for appointing R3 and R4 as Directors and the same was done without obtaining his consent and without his knowledge. It was, therefore, contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts is that the Respondents did not provide the inspection of the statutory records which amounts to a gross act of oppression. This allegation has been categorically denied by the Respondents saying that they never hide any of the statutory records nor refused the Petitioner to make inspection thereof. According to the ld. Counsel, the Rl Company had filed the statutory records with the ROC regularly and the same was /is also available on its website. Therefore, the Petitioner could have seen the same on the portal of the ROC. Furthermore, the Petitioner did not seek any inspection in the course of the trial of this petition. According to the ld. Counsel had he asked for inspection, the Respondents would have provided the same, despite the fact that the Petitioner being not a Director on the Board of the Company, is not entitled to have access to such statutory records of the Company. I, therefore hold that the Petitioner had failed to substantiate the aforesaid charge by any cogent and reliable evidence. Therefore, this complaint is also found untenable being devoid of merits. 43. The last allegation made by the Petitioner against the Respondent is that R2 to R4 are involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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