TMI Blog2006 (8) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... Company; (e) increase of the authorised capital of the Company from ₹ 10 lakhs to 21 lakhs; (f) allotment of shares in favour of the third respondent; (g) manipulation of the books of account and other records; (h) take over of the immovable properties of the Company without any valid authority; (i) denying of entry to the purchasers of flats constructed and sold by the Company; (j) sale of flats promoted by the Company without obtaining authority from the board of directors and misappropriating the sale proceeds thereof. Against this background, the petitioner is claiming the following reliefs; i) to declare that the proceedings of all board meetings and general meetings purportedly held by the respondent Nos. 2 3 are null and void; ii) to declare that the allotments impugned in the company petition are illegal and invalid; and iii) to supersede the board of directors of the Company and appoint the petitioner and the fourth respondent as directors of the Company. Shri A.K. Mylsamy, learned Counsel, while initiating his arguments submitted: The Company incorporated in March 1988 with an authorised capital of ₹ 10 lakhs divided into 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorised capital from ₹ 10 lakhs to ₹ 21 lakhs. No notice was sent to the petitioner as well as the fourth respondent for the alleged extra ordinary general meeting, and they were not present at the meeting approving the increase of the authorised share capital of the Company. The respondents have not followed the prescribed procedure either for the enhancement of the authorised share capital or for the allotment of shares. The respondents have not produced the minutes book of board meeting or the general meeting and no presumption can be drawn in respect of those minutes, copies of which alone have been produced before the Bench. These acts would constitute oppression against the petitioner in his capacity as member. The disputes between the parties arose during 1999 and therefore, reliance may be placed on the statutory returns available prior to the disputed period, which would indicate that the petitioner held 99.8% of the shares and that he was in the management of the Company. The petitioner and the third respondent were initially directors of the Company, till the resignation of the third respondent from the office of director with effect from 28.08.1995. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortion of the premises belonging to the Company; (c) obstructed those persons in whose favour the undivided portions have been sold by the Company from taking possession thereof; and (d) denied the occupants entry to the Hats sold by the Company, thereby preventing the Company from generating revenues from sale of the undivided portion in the aforesaid premises. The second respondent alienated the flats constructed and sold by the Company unlawfully to enrich himself at the cost of third party bonafide purchasers. The conduct of the respondent Nos. 2 and 3 unfairly prejudiced many members of the public who acquired undivided portions of the land from the Company. This conduct of the respondent Nos. 2 and 3 is highly oppressive and prejudicial to the interest of the Company as well as the public. There is justifiable lack of confidence in relation to the affairs of the Company which will be a ground for winding up under just and equitable clause. However, the order of winding up would cause prejudice to the interest of the Company and its shareholders more so when the Company could make substantial profits in its business venture. Though the petitioner and the second respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1991 in O.S.A. No. 62 of 1982 on the file of the High Court of Judicature at Madras) - to show that the requisite procedure for rectification must necessarily be followed without which such rectification will not be valid. Sri A.K. Mylsamy, while arguing the contempt application (CA No. 29 of 2001) submitted that the petitioner has filed, during the pendency of the company petition, an application (C A No. 20 of 2001) for an order of injunction restraining the respondent Nos. 2 3 from interfering with construction and sale of undivided portion of the building situated at No. 4A Stringers Road, Vepery, Chennai-600 007 upon which the respondents were restrained from dealing with or negotiating for sale of the property until 18.04.2001 and, thereafter, by an order dated 20.04.2001 the respondents 2 3 were restrained from entering into any negotiation or deal with any member of the public for sale of any flat, apart from prohibiting them from carrying on any construction of the building. The respondent Nos. 2 3, in violation of the orders dated 18.04.2001 and 20.04.2001, commenced construction activities in respect of the fifth floor and the rear building thereby changing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the petitioner had abandoned the Company and never showed any interest in its affairs in view of his serious financial problems. The petitioner had received advance from the respondent Nos. 5 to 7 aggregating ₹ 91 lakhs and other customers as borne by the balance sheet for the year ended 31.03.1997, which has also been signed by the petitioner. The petitioner had collected an amount ₹ 204 lakhs from the allottees till February 1999 as borne out by the report of the Commissioner appointed by the Bench and thereafter, further collected an amount of ₹ 268 lakhs, petitioner is, therefore, accountable for these amount collected from the allottees. The petitioner though collected monies from the allottees failed to deliver the flats and further indulged in second sales of the flats even after vacating the office of director, thereby causing irreparable loss to the genuine purchasers, particulars of which are reflected in the report of the Commissioner. The petitioner has not chosen to produce any of the original records and therefore, no reliance can be placed on copies of the records produced before the Bench. The original records are not in his custody. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be remedied in the interest of the Company. The balance sheets for the years between 1995-96 and 2000-01 would show construction expenses aggregating ₹ 1.47 crores, whereas the valuers' report would indicate the construction expenses at ₹ 1.23 crores. These expenses towards construction were not personally incurred by the petitioner, but they were met from the funds belonging to the Company. The petitioner has collected monies to the tune of ₹ 204 lakhs prior to 12.02.1999 and thereafter an aggregate amount of ₹ 268 lakhs, out of which a sum of ₹ 45 lakhs have been spent towards construction expenses as could be seen from the statement produced before the Bench. The petitioner failed to account for the balance amount of ₹ 426 lakhs and has not chosen to settle the dues of the respondent Nos. 5 to 7 and other allottees. The second respondent never collected any monies from the allottees, yet he is prepared to meet the obligations of the Company, provided the management of the Company is entrusted to him, the accounts are rendered and the amounts retained by him are refunded by the petitioner. The entire grievances of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the allottees. The balance sheet for the year ended 31.03.2000 shows a loss of ₹ 34.33 lakhs, in which case the expenses of ₹ 31.26 lakhs reportedly incurred by the petitioner for the year ended 31.03.2000 can never be true. These expenses are not reflected in the report of the Commissioner. This establishes the fact that the petitioner could not have constructed the flats, as claimed by him. The petitioner is making such false claim in order to wriggle out of the criminal proceedings pending against him. Shri M. Shreedhar, learned Counsel while opposing the contempt application reiterated that the second respondent was constrained to execute the sale deeds in favour of (i) Savitri Choonilal and Smt. Sarala Sant Kumar (ii) Sant Kumar, on account of the orders passed by the District Consumer Disputes Redressal Forum. Therefore, the respondent has not wilfully violated the order of the CLB, but was compelled to comply with the order of District Consumer Disputes Redressal Forum in terms of its orders. The petitioner has come out with the contempt application exerting pressure on the respondents in order to yield to his requirements. The terrace rights over the thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the circumstances, these respondents are seeking to modify the order dated 20.04.2001, thereby permitting the parties to sell the eleven flats agreed to be purchased, as claimed in the company application (C.A. No. 69 of 2006). I have considered the pleadings and arguments of learned Counsel. The issue before me is whether the petitioner is entitled to the reliefs as claimed in the company petition in order to bring to an end the alleged acts of oppression and mismanagement in the affairs of the Company. The rival claims are dependent on the documentary evidence placed before the Bench. While the petitioner is accusing the respondent Nos. 2 and 3 for stealthily removing away the books of account, statutory and other records of the Company, it is contended by the respondents that the petitioner is in custody of the records but refusing to produce them to substantiate his claim being agitated in the present proceedings. It is needless to point out that the contentious issues in relation to (a) convening of general and board meetings of the Company; (b) increase in the authorised capital of the Company; (c) allotment of shares; (d) appointment and resignation of directors; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rimary documents, yet the same is for the benefit of the Company and therefore, any irregularity, while increasing the capital cannot be oppressive. There is, therefore, no necessity to go into the validity or otherwise of the increase in the authorised capital. Form No. 2 dated 23.01.1998 disclosing the allotment of 97,300 shares made on 03.01.1998 in favour of the petitioner has been filed on 23.10.1998 with the Registrar of Companies. Form No. 2 shows that the petitioner has paid ₹ 9,73,000/- by way of cash towards the allotment of shares. There is no material to show whether an amount of ₹ 9,73,000/- has been brought in by the petitioner towards allotment of the shares, purportedly made on 03.01.1998. The balance sheet of the Company for the years ended 31.03.1998 and 31.03.1999 would show that the paid up capital of the Company was only ₹ 27,000/-. The disputed allotment reportedly made on 03.01.1998 in favour of the petitioner is not reflected in any of these balance sheets. Form No. 2 filed on 24.12.1999 would show that 97,300 shares were allotted on 16.04.1998 in favour of the third respondent. Form No. 2 dated 24.12.1999 would show that 1,10,000 shares we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the office of director. There are reportedly several appointments and resignations in the office of director which are only supported by Form No. 32, copies of which are before the Bench. Form No. 32 dated 25.02.1999 filed with the Registrar of Companies on 26.02.1999 reveals that while among others, the petitioner had resigned from the office of director with effect from 12.12.1999, the respondent Nos. 3 and 4 were appointed as directors of the Company. It is observed from Form No. 32 dated nil that the petitioner once again was appointed as director at the board meeting held on 24.12.1999, but this Form No. 32 was filed nearly after a lapse of two years on 04.01.2001. The delay has not been explained by the petitioner. It may further be observed that Form No. 32 notifying the appointment of the petitioner as director has been signed by the fourth respondent, who is the wife of the petitioner. There is no other primary document to substantiate the appointment of the petitioner as director with effect from 24.02.1999. Form No. 32 filed on 24.12.1999 with the Registrar of Companies would show that the second respondent was appointed as director of the Company at the board meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udice the interest of the Company and such allottees. The main grievances of the respondent Nos. 5 to 7 are that the Company had taken huge amounts by way of loan from Murali Lalchand, since deceased against security of the flats promoted by the Company. In view of the double allotment of the flats by the Company, their interest has been adversely affected and therefore they expressed their preparedness in getting back their monies lent to the Company with interest as undertaken by the Company. It is observed that these respondents have already filed civil suits before the High Court against the petitioner and the respondents herein in respect of their claim, which is being agitated before this Bench. It is further observed that the fifth respondent in the civil. suit namely, C.S.No.557 of 2001 before the High Court of Judicature at Madras has sought for specific performance of the terms of the agreement entered into between the parties namely the Company and the members of Lalchand family, in respect of the very same flats, which are covered under the company application (C.A. No. 69 of 2006). In view of this, if the respondent Nos. 5 to 7 are allowed to deal with the flats ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
