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Mayank Kocher Versus Transport and Handling Equipments Mfg. Co. P. Ltd.

2006 (9) TMI 576 - COMPANY LAW BOARD, NEW DELHI

Dated:- 21-9-2006 - Hon'ble Judges:Vimla Yadav, Member ORDER Vimla Yadav, Member 1. In the order I am considering Company Petition No. 20 of 2003 filed under Section 237 of the Companies Act, 1956, wherein the petitioner namely Shri Mayank Kocher has prayed for appointment of an administrator/special officer to take over charge of the management and affairs and assets and properties of the company and to order investigation into the delays and transactions of the company under Section 237 of .....

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nd Handling Equipments Manufacturing Co. P. Ltd. (hereinafter referred to as "the respondent-company") is a private limited company incorporated on January 15, 1962, under the Companies Act, 1956. It has its registered office at Tower House, 2A, Chowringhee Square, Calcutta, West Bengal. The authorised and the paid-up share capital of the respondent-company was ₹ 5,00,000 (50,000 equity shares of ₹ 10 each) and ₹ 10,000 respectively. As per the annual return for 1999 .....

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ed and invaded into the company's record despite not being a shareholder of the company to procure share transfer deeds and original index register, account books and proof of service of extraordinary general meeting held on March 20, 1986. As the respondent-company was not bound to disclose and/or give copies of the aforesaid documents, the company on the next date of hearing represented to the Company Law Board which passed the following order on November 3, 2004: Learned Counsel for the r .....

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urt, by an order dated December 8, 2004 (ex-parte) held that the petition was premature and left it to the hon'ble Board to decide the matter. The Board, therefore, on December 10, 2004, after perusing the order of the hon'ble Delhi High Court passed the following order: Learned Counsel for the petitioner produced an order of the hon'ble High Court dated December 8, 2004, passed on interim order of November 3, 2004, of this Bench. 4. Accordingly, list the case for final hearing on Ma .....

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fected by the manner in which the affairs of the company have been conducted or accounts maintained and has, therefore, a grievance in the eyes of the law for which he seeks relief from the court. I have considered the pleadings of the parties. The maintainability of the petition is still to be decided which is very vital in this case. Once it is established that the petitioner is a shareholder or had some stakes in the company, the inspection of statutory records for the shareholder may be allo .....

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25, 2005 (ex-parte) was pleased to dismiss the petition with the following observations: I have carefully perused the order dated March 4, 2005. In my view, the only observations made by the Company Law Board appear in paragraph 4 of the order dated March 4, 2005. Paragraph 3 of the order merely records the submissions and contentions made on behalf of the respondents. Therefore, there are no findings whatsoever with regard to the locus standi of the petitioner to bring or maintain the petition .....

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directions for filing of the documents. It is open to the Company Law Board to draw an adverse inference against the respondents in accordance with the settled provisions of law. In this view of the matter, I find no merit in the petition which is accordingly dismissed. 6. Shri Sanjay Karol, counsel for the petitioner argued : That the respondent-company in collusion with its alleged directors, namely, Mr. Rajeev Maheshwari, Mr. Rahul Maheshwari, Mr. Ranjan Maheshwari, Mr. Sanjay Agarwal and Mr .....

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ral requests to the respondent-company by the petitioner thereby causing great injustice and wrongful loss to the beneficial and the legitimate interests of both Mr. M.L. Kocher and the petitioner. Further, the unilateral and secretive exercise of power of allotment of shares with an intention of increasing the shareholding in the respondent-company to the interest of the alleged directors and their friends is a blatantly unfairly prejudicial act. The allotment has been for improper purpose and .....

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uring the continuance of the business under the aegis of the partnership firm, the partners of the firm incorporated a private limited company in the name and style of M/s. Transport and Handling Equipments Manufacturing Co. P. Ltd., at Calcutta. The respondent company was incorporated out of the funds of the partnership funds and with a clear and complete agreement and understanding between the partners that the same is a quasi-partnership company and further the partnership firm carried out it .....

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and properties. There were inter se disputes besides disputes with other creditors. Shri P. N. Dutta, and Mr. Ranjit Mitra, were appointed as joint receivers over the assets and properties of the said firm and receivers were directed to take possession of the rooms at Tower House, Chowringhee Square, Calcutta, where the respondent-company was alleged to carry on its business and was allowed to do so as a licensee until further orders. By the said order the respondent-company was restrained from .....

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and the same reached an advanced stage of settlement. 9. However, before any effective steps could be taken, on or about March 6, 1992, Mr. M. L. Kocher expired. Since the death of the Mr. M. L. Kocher, the heirs of Mr. M. L. Maheshwari put impediments in arriving at the settlement and thereafter no settlement till date could be arrived at. The directors of the respondent-company to the exclusion of the petitioner and his family from the management of the respondent-company and secretive allotme .....

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t, 1956, relating to the service of notice, etc. Mr. M. L. Kocher nor Mr. Mayank Kocher, did ever receive the notice issued for the same, changed the management of the respondent-company to the exclusion of Mr. M. L. Kocher and Mr. Mayank Kocher and others vide the same meeting, by terminating the tenure of the petitioner and others as directors of the respondent-company with effect from March 20, 1986 and appointing in their place Mr. Rahul Maheshwari, Mr. Ranjan Maheshwari and Mr. Mahesh Karma .....

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he notice not effected the change in the management of the respondent and shareholding with the Registrar of Companies. The annual return/balance-sheet/ Form No. 2/Form No. 32 for the year 1986 were filed with the Registrar of Companies after a time lag of almost two years, all this indicates that there had been a deliberate delay on the part of the respondent-company. It is pertinent to mention here that as per the Form No. 32 filed with the Registrar of Companies reflects that Mr. Sanjay Agraw .....

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lding in the respondent-company. As per the requirements of the provisions of Section 111 of the Companies Act, 1956 ("the Act") it is submitted that the respondent-company is mandated to cause the rectification of the register of the company. The respondent-company has failed to do the same. There has been transfer of shares both by Mr. M. L. Kocher and Mr. Mayank Kocher on their own volition then there could have been no hindrance on their part to freely resign. The alleged directors .....

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has made misrepresentation and wrongful entries in the books of member and has led to concealment of the truth and the real vicious conduct of the respondent-company. The true and the rightful members of the respondent-company have been misrepresented and their names have been wrongfully deleted from the register. 10. The respondent-company has indulged into the acts of embezzlement and other misconduct on the part of persons in management, requiring that along with an order of an investigation .....

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iterated the prayers that the board of directors of the company be superseded and an administrator and/or a special officer be appointed to take charge over the management and affairs and books, papers, records and documents of the company as well as its assets and properties ; a scheme be framed for the management and control of the affairs of the company and the running of the operations thereof; an investigation be made with regard to the dealings and transactions of respondents Nos. 2 to 5 i .....

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ent-company ; reverse the wrongful entries made in the register of members of the respondent-company thereby inserting the names of Mr. Mayank Kocher and Mr. Shashank Kocher. 11. Shri Rana Mukherjee, counsel for the respondents argued. That the instant company petition under Section 237 of the Companies Act, 1956, inter alia, seeking an investigation into the affairs of respondent No. 1 company (hereinafter referred to as "the company") and for other reliefs is not maintainable because .....

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on the date of filing of the instant company petition and prayers (vi) and (vii) of the company petition (which prayers in any event fall outside the scope and ambit of Section 237 of the Act 1956) read as under: (vi) The respondent-company be directed to rectify its register of members thereby entering the names of the petitioner and Mr. Shashank Kocher, the legal heir of the petitioner's deceased father, i.e., late Mr. M.L. Kocher, upon transmission of the shares in his name, as the rightf .....

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Since as on date (or as on date of filing of the company petition), he is not a member of the respondent-company, he, therefore, has no locus standi to inspect and take copies of the documents of the respondent-company. Reliance is placed on the judgment of the hon'ble Delhi High Court in the case of V.V. Purie v. E.M.C. Steel Ltd. [1980] 50 Co. Cas 127, wherein it is held that a person having no manner of interest or concern in the company as a shareholder, creditor or otherwise, has no lo .....

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ersonal interest in the matter and unless their rights and interests are in some way affected, is implicit in the interpretation of the section. 13. Hence, Shri Rana Mukherjee, counsel for the respondent emphasised that the petitioner: (a) cannot maintain the petition as he has no locus standi to invoke Section 237 of the Companies Act being a rank outsider; (b) even otherwise from the averments made in the petition itself assuming though not admitting that the petitioner could have maintained t .....

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tation. The petitioner is guilty of laches in having filed the said petition after an inordinate delay thereby disentitling himself to any alleged relief claimed in the petition. It was further argued that the prayers as sought for by the petitioner in the instant petition under Section 237, clearly reveal that the petitioner is, in fact, trying to disguisedly invoke the provisions of Sections 111, 397 and 398 of the Act, 1956 to overcome the provisions of Section 399 of the 1956 Act which the p .....

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to this hon'ble Board to decide on the maintainability of the petition. In any event, as held by the hon'ble Supreme Court in Government (NCT of Delhi) v. Nitika Garg that the observation made by the Hon'ble Delhi High Court cannot have any binding effect since it is well-settled position in law that if a court or Tribunal rejects an application, it would not be proper for the said court or Tribunal to make an observation therein creating rights pursuant to such observations. Further .....

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ich in the respondents humble submissions goes to the very root of the matter. 15. Shri Rana Mukherjee further argued : The directors in a private limited company have wide discretion in the matter of registration of transfer of shares and unless it is proved that they acted mala fidely and illegally the court will not interfere. By Section 82 of the Act shares are expressed to be transferable in the manner provided by the article of the company. That where something is done by operation of law .....

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ntion of increasing the shareholding in the respondent-company in the interest of the directors and their friends. It was denied that the allotment has been for the purpose and/or for improper motive. It was denied that the allotment has been invalid. It was denied particularly that during the continuance of the business under the aegis of the partnership firm, the partners of the firm incorporated a private limited company in the name and style of M/s. Transport and Handling Equipments Manufact .....

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enied that the company was fraudulently taken over by the legal heirs of Mr. M.L. Maheshwari to the exclusion of Mr. M.L. Kocher and his family members. It was denied that by the alleged wrongful and illegal acts and conduct of Mr. Rahul Maheshwari, Mr. Ranjan Maheshwari, Smt. Sharad Maheshwari, Mr. Mahesh Karnani and Mr. Sanjay Agarwal of the company had demonstrated that they will not allow the alleged matters to be effectively resolved in the domestic forum. 16. It was denied that the true an .....

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of the heirs of the other partner. The petitioner was arrested and was put into jail custody in course thereof. A charge sheet dated March 3, 1988, was filed by the police authorities, inter alia, under Sections 120B and 420 of the Indian Penal Code, 1860. It was denied that the respondent-company has indulged in the acts of fraudulent allocation of shares and falsification of minutes books. It was denied that the directors/promoters of the respondent-company have made secret profits and siphone .....

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igation into the illegal ousting of him from directorship mala fidely besides looking into the other allegations of removing the auditors and increasing the share capital without justification. The mere fact that a so-called shareholder is feeling dissatisfied about the way in which the affairs of the company are being conducted is not enough to get an order of investigation. Neither side can seek an order of investigation against the other after they have fallen out against each other, when the .....

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ection 237 of the Act. Though it is settled law that to approach the Company Law Board for an administrative order under Section 237 of the Act, the petitioner need not necessarily be a shareholder for being eligible to file the petition. Only to this extent the respondents' contention that the petitioner does not hold any shares in the company and has no locus standi for seeking investigation under Section 237 of the Act is not tenable. This particular power of the Company Law Board is not .....

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he year 2003 after such inordinate delay. The respondents have rightly raised the preliminary objections on the maintainability of the petition. This petition is not maintainable under Section 237 of the Act. 18. Further, on consideration of this petition on merits, I find that this petition is not maintainable even on merits. The allegations made in the petition have not been substantiated to enable this Board to be able to form a prima facie opinion to satisfy itself that the circumstances of .....

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nt or unlawful purpose ; (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members ; or (iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other dir .....

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