TMI Blog2017 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court is necessary so that after getting the report of special audit, appropriate order may be passed for distribution of assets/sale proceeds between parties. On the above basis, it is proved Respondents has committed acts of oppression and mismanagement against petitioners. This petition deserves to be allowed. It also appears that special audit and Investigation into the affairs of the R-1 company is also necessary to find out every detail of sale. - CP NO. 40/2013 - - - Dated:- 1-9-2017 - MR. VIJAI PRATAP SINGH, J. For The Petitioner : Sanjay Gupta, PCS and Rohit Kumar Keshri, PCS For The Respondent : U.P. Singh, Sr. Adv. and Surendra Kumar, Adv. ORDER The Petitioners have filed this CP No. 40/2013 complaining of several causes of oppression and mismanagement perpetrated by the Respondents about affairs of the Company. Prayer has been made to restrain the Respondents No. 2 and three from acting as Directors of the Respondent Company. To declare the sale of movable and immovable assets by the Respondent No. 2 after 28/8/2008 as null and void; to appoint a retired High Court Judge as a liquidator of the Respondent Company and direct him to liquidate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector. The sole object of the Respondent No. 3 Sri Satyabrata Sannigrahi appointment as director was to usurp the management of the Respondent Company. 9. The Respondent Company proposed a revival scheme before the BIFR, but the Respondent No. 2 suppressed this from the Petitioner and, as such, the Respondent No. 1 Company lost the opportunity, and further on account of non-compliance of the order, BIFR vide order dated 28/8/1997 gave the order to wind up. 10. R-1 filed an Appeal before AAIFR on 28/1/1998, but appeal got dismissed. As such, the liquidation proceedings started against the Respondent No. 1 Company before the Hon'ble High Court at Patna in 2004, and the Official Liquidator took over the assets of the Respondent Company. 11. It is contended that whenever the Petitioner No. l enquired about the proceedings, the Respondent No. 2 avoided sharing details of the case and maintained that the Company is in liquidation. 12. The Official Liquidator prayed for the appointment of an auditor and valuer before the Hon'ble High Court at Patna stating that Respondent No. 2 is the Managing Director and Petitioner No. l is the Director. The Respondent No. 2 knew th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee, as a result of which the liability of both of them are co-extensive with the creditors. The Respondent No. 2 approached all the secured creditors for One Time Settlement which got materialized, and the Respondent No. 2 took the burden on himself and discharged the liability of the secured creditors. 16. The Hon'ble High Court vide order dated 28/8/2008 directed the Official Liquidator to return possession of the assets of the Respondent Company to the R-2.Thereafter. The Respondent No. 2 issued notices to the Petitioner to attend the Board Meeting and also informed in person, but the Petitioner never participated in the meeting nor took leave of absence. 17. Respondent No. 2 further contends that the petitioner has questioned the Respondent No. 3's appointment as a Director of the Respondent No. 1 Company, which took place 20 years ago, in September 1995. 18. The Respondent No. 2 further submitted that the Respondent Company has lost its substratum and it has no assets or liability and, as such, prayed to direct the Registrar of the Companies, Patna to expunge the name of the Respondent Company and to pass an order for dissolution of the Company. 19. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Managing Director of the company since its inception and continued till 1994 but during that period the company suffered a huge loss, a fact which has been in the notice of the petitioner No. l. It is also an admitted fact that a report under Sec. 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 [from now on referred to as SICA) submitted before BIFR, which vide its order dated 13/3/1997 declared the R-1 company as the sick industrial company. By order dated 28/8/1997, the company was directed to be wound up, and the report sent to the Patna High Court under Sec. 20 of SICA. AAIFR dismissed an appeal preferred by the R-l company against the order passed by BIFR dated 28/8/2007. By report submitted under Sec. 20 of BIFR, the CP No. 8/1997, registered on 10/9/1997, before the Hon'ble High Court, Patna, which passed an order dated 13/4/2004 and directed the Official Liquidator to take possession of the R-1 company. The Director and Managing Director was directed to cooperate in the matter with the OL. In pursuance of the order of the Hon'ble High Court, OL took charge of the assets, books of account, etc. of the R-l company. 24. It is on record that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed an order on 28/8/2008 and directed OL to give possession of the assets of the company. R-2 stepping in the shoes of secured creditors took charge of the property of the R-l company. 28. Respondents have further alleged that in discharging the R-l company's liability, he took the loan of ₹ 2 crore from the private financier, and got back the valuable assets of the company which was 1.83 acres of land beside the rusted plant and machinery. After that, as he was the Managing Director, issued a notice to petitioner dated 29/8/2008 fixing 6/9/2008 for the board meeting. Respondents have further alleged that notice of the said meeting sent under certificate of posting, and in addition to this, the respondent No. 2 informed the petitioner No. l in person regarding the date of the board meeting. R-2 has alleged that petitioner No. l did not turn up and again notice was issued on 1/12/2008 under a certificate of posting. But the petitioner neither joined the board meeting, nor he sent an application for leave of absence. Respondents also claim that second notice also sent under certificate of posting. Respondents have further alleged that again the board meeting was fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company and petitioner No. 3 has 3950 shares of ₹ 100/- each which is 7.18% of the total issued paid up capital. It is also undisputed that petitioners participated in the management of the R-1 company till 1995 and after that on health and financial grounds withdrew from the day to day management of the company and entrusted the entire working and management of the R-l company to R-2. It is also undisputed fact that R-l Company ran into financial sickness. Petitioner has alleged that the company incurred losses on account of mismanagement of the affairs by the respondents. Undisputedly R-l company borrowed term loan from BICICO and SBI wherein the petitioner is one of the guarantors as promoter/director of the R-l company. On account of massive losses in the company and shortage of working capital R-1 company could not yield profits and consequently the net worth of the company eroded. The accumulated losses were more than its entire net worth ultimately R-l Company was declared sick under the SICA. The petitioners have further alleged that company went into losses on account of mismanagement of the affairs of the R-1 company. But the alleged mismanagement of the R-l compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and further Board Resolution Dt. 28/3/2009. R-2 has claimed that the R-l company had valuable assets of 1.83 acres of land beside the plant and machinery. R-2 has argued that he has issued notices on the petitioner on 29/8/2008 under a certificate of posting and he also personally informed the petitioners regarding the alleged board meeting but petitioner intentionally absented from board meetings. 39. R-2 has further alleged that he sent notice on 1/12/2008 on the under a certificate of posting, regarding board meeting scheduled on 8/12/2008. But in spite of notice, petitioner did not appear in the board meeting, and the Board in its session decided to sell off the property of the R-l company and pay off the loan. Respondent contended that only R2 and R3 participated in the meeting. 40. Now, the question arises whether the board resolution passed on 6/9/2008 and further on 8/12/2008 and 10/6/2009 are valid board resolution and whether the service of notice of the alleged board meeting was sufficient. 41. That Ld. Counsel for the Respondent has relied on the Privy Council Judgment in Part Cargo ex steamship 'Belgia' AIR 1980 PC 338 . In that case, the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under certificate of posting attracts the irrebuttable statutory presumption under Section 53(2)(b) that the notice had been duly served , that it is not open now to project a plea of absence of service of notice and a substantiation thereof by evidence and that even if it were proved that the notice did not reach the addressee, the evidence could not be formally accepted and formally acted upon by the court such contrary evidence being necked (sic) out at the threshold...... This general rule regarding certificates of posting has not been changed under Section 53 of the Companies Act although it does provide that if a document is sent by post in the manner specified, service thereof shall be deemed to be effected. The word deemed literally means thought of or, in legal parlance presumed. There is a distinction between presumption and proof. A presumption has been defined 8765 an inference, affirmative or disaffirmation of the truth or falsehood of a doubtful fact or proposition drawn by process of probable reasoning from something proved or taken for granted (Izhar Ahmad Khan v. Union of India [AIR 1962 SC 1052 : (1962) 2 Cri LJ 215], AIR at p. 1060, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consecutive Board meetings, Office of Director will be deemed as vacant. In such a situation, it's hard to believe that a person who is having an equal share in the company will intentionally absent in board meetings, even after getting information that important decision regarding disposing of company's assets is in agenda. Respondent contends that he sent information about the board meeting by ordinary post under a certificate of posting. Why information about such crucial board meetings was sent by regular post under certificate of posting is itself doubtful, and it appears an intentional act which was done to create a proof of service. So, in such circumstances, such presumption cannot be drawn that notices have been served. In Sec. 27 General Clauses Act, 1897 Meaning of service by post is given as below . Where any [Central Act] or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expression give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected, by properly addressing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the petitioner. 51. Ld. Counsel for the respondent has contended that petitioner has challenged the appointment of R-3 as Director, even though he has been appointed as Director in September 1995 and form 32 has been filed. Ld. Counsel for the respondent has contended that the question of legality and validity of board meeting of the year 1995 cannot be challenged today, even assuming that such resolution is held to be illegal. Respondent further contended that challenge to the sale of immovable and movable assets of the R1 company and appointment of R-3 as a director is barred by limitation. 52. It is important to point out that section 22 Limitation Act, 1963 provides that in case of continuing breach of contract or in the case of continuing tort, a fresh period of limitation begins to run at every moment of the time during which the breach or tort, as the case may be, continues. 53. Hon'ble Supreme Court in M.S. Madhusoodan (supra) has further laid down that in case, where breach continues, the principles enshrined in section 22 of the Limitation Act will apply and the company petition cannot be held to be barred by limitation. 54. In this case, the R1 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent no. 2 got the possession of the assets of the company back from Official Liquidator, but after that respondent disposed of the company's property without any valid board resolution of the company. It is also clear that at the time of disposal of the property, petitioner was Director and was having 50% shareholding of the company. Thus it is clear that no such sale could have been executed without the valid board resolution. It is also pertinent to mention that on the date of sale petitioner was director of the company. So, his signature was also necessary while disposing of the assets of the company. 56. Respondent contends that sale of assets of the R1 company took place in the year 2008-09 and this petition has been filed on 18th January 2013. It has been argued that they are ready to hand over the company to the petitioner as is where is the basis. The said offer is by the respondent finds a place in the written submissions made by the respondents. But it is pertinent to mention that all the movable and immovable assets have been disposed of and handing over the company to the petitioner on as is where is basis amounts to defrauding the petitioner. 57. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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