TMI Blog2000 (1) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... -cooperation amongst the only two directors/shareholders of the company. It is alleged that due to non-cooperation of the respondent, it has become impossible to function in a normal manner resulting in non-finalisation of accounts for the year 1996-97 and 1997-98, non-holding of Board meetings after March, 1998, and non-holding of annual general meeting after the last one held on 30.9.1996. It is further alleged that the company has only two shareholders and directors and since the respondent, the only other shareholder/director of the company, is not co-operating by not attending the Board meetings resulting in the non-holding of Board meetings for want of quorum. 3. In reply to the said petition, Shri Satvinder Singh, respondent, disputed the allegations regarding non-holding of annual general meetings in the years 1997 and 1998. It is further submitted that the accounts for the year 1996-97 have been duly approved in the annual general meeting held on 30.9.1997. In his reply, he further disputed the contention of the petitioner regarding the shareholding pattern claimed by him. It is further submitted that the respondent and Shri Bhushan Ahuja are the directors of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri R.R. Garg (1,000 shares from each of them) and the said shares were transferred in the name of the petitioner as first named shareholder and Shri Satvinder Singh as the second named shareholder. Thus, from 6 October, 1995, the petitioner and respondent No. 2 are the only two shareholders of the company and their shareholding is as under: Name of shareholder Number of shares Ashish Das Gupta 2,000 50% Ashish Das Gupta jointly with Satvinder Singh 2,000 50% 5.1 The above two shareholders are only two directors of the respondent-company. The aforesaid position is also confirmed as per annual return made upto 30.9.1996 filed with the Registrar of Companies duly signed by the petitioner as well as respondent and the contents of the same stands admitted. 6. According to the petitioner, later on forged/fabricated annual return as on 30.9.1997 has been filed with Registrar of Companies, Jalandhar, showing the shareholding pattern as under: Name of shareholder N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment of Shri Bhushan Ahuja as additional director of the company does not arise. It is further submitted that no AGM has been held on 30.9.97 and thereafter. It is also submitted that no meeting of the Board of directors has been held after 28.3.98 ; therefore, the question of petitioner having failed to attend the three consecutive Board meetings does not arise ; hence, there is no question of petitioner ceasing to be director of the company with effect from 28.8.98 under Section 283(1)(g) of the Act 8. Shri K.G. Somani, Chartered Accountant, on behalf of the respondent, invited our attention to the annual return filed for the period 1986 to 1995 and submitted that these are registered documents with RoC and depicts the correct position of the shareholders and directors of the company as under: S. No. Directors Date of appointment 1. Ashish Das Gupta 30.12.1985 2. Satvinder Singh 20.12.1986 3. Praveen Kant 30.12.1985 4. R.K. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh 1,000 3. Satvinder Singh 2,000 4,000 10.1 In view of this, he submitted that respondent holds the majority of shares of the company ; however, taking advantage of the fact that the share certificates and other records of the company were in the possession of the petitioner, he has fabricated the share certificates by endorsing the transfer of shares in his favour jointly with respondent in respect of 2,000 shares acquired in October, 1995, under his own signature which is in violation of the rules. 11. Shri Somani also invited our attention to various acts of embezzlement of huge funds of the company and misappropriation of funds and other misdeeds relating to the company and affairs of Sirmour Sudberg Auto Ltd. referred in the respondent's reply and submitted that such acts are relevant to the present petition under Sections 397/398 of the Act, because this Board has to determine as to who has committed the acts of mismanagement and oppression in this case. According to him, the petitioner has destroyed and fabricated the records of the company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnual return made upto 30.9.1996 which has been signed by respondent and also corroborated by the endorsement appearing on the share certificates. The reliance placed by respondent on the transfer deeds now produced allegedly executed in his favour are fabricated and are not corroborated by the facts admitted by respondent. 15. He further submitted that respondent is claiming the ownership of 2,000 equity, shares transferred from Shri Praveen Kant and Shri R.K. Garg in his favour on the strength of transfer deeds executed on 7.10.95, and so also receipt, dated 7.10.95 of Shri Ashish Das Gupta indicating that after jointly purchasing the shares with Shri Ashish Das Gupta, he purchased his interest in these shares. If one has to go with the submissions of respondent, then aforesaid position should have been reflected in the annual return made upto 30.9.96 ; however, this position is not reflected in the said annual return though duly signed by respondent himself. The change in the shareholding pattern from that claimed by Shri Ashish bas Gupta is reflected for the first time in the annual return made upto 30.9.97. As per the said annual return, the following transfers have taken p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflect the correct position of the shareholding position and directorship of the company when it is disputed by the parties. 17. With regard to affidavit filed by Shri Praveen Kant and relied upon by the respondent, he submitted that the said affidavit contains factual inaccuracies; affirming that he was promoter director of the company during the period 30.12.85 to 6.10.95 whereas the fact of the matter is that the company was incorporated in the year 1977 by Col. B.K. Sharma. Likewise, his affirmation that respondent was also promoter director of Sirmour Sudberg Auto Ltd. is also incorrect. The said company was promoted by petitioner, Shri R.K. Garg and Shri Praveen Kant in the year 1985 and respondent was appointed director of the said company only on 30.9.91. He further submitted that verification of the affidavit does not disclose whether affirmations are on the basis of any records or personal knowledge of the deponent. He further submitted that this is contrary to the well-settled principles of law upheld by various courts and, therefore, has no evidentiary value. 18. With regard to the appointment of Shri Bhushan Ahuja as additional director in the Board meeting hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allegations like siphoning off of the funds, tampering with the records and also allegations relating to the affairs of Sirmour Sudberg Auto Ltd. During these proceedings, the matter relating to withdrawal of funds by the petitioner was duly explained in the pleadings and was not pressed by the respondent during the course of hearing. Further, we are also not concerned about the allegations relating to Sirmour Sudberg Auto Ltd. Thus, in these proceedings, we are required to deal with allegations relating to shareholding of the petitioners and respondent in the company and appointment and cessation of directors and holding of AGM. 22. Shri Khanna has taken the stand that in the sur rejoinder filed by the respondent, contradictory stand from the position earlier admitted has been taken and in view of the various rulings of the court, the same should not be taken on record. In this connection, we note that in the amendment to the reply filed by the respondent in the petition under Section 186, he has claimed that the shareholding pattern from 1986 to 1995 has not been changed as per the record of the company and annual returns filed with Registrar of Companies during the period 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased the 2,000 shares in the year 1986 whereas the respondent has not placed on record as to from whom he has purchased these shares. Further, he has based the reliance on the annual return made upto 30.12.86 only. We have gone through the said annual return and note that at pages 4 and 5 under the heading 'list of past and present members and debenture holders', 1,000 shares are shown in the name of Shri Ashish Das Gupta and another 1,000 shares in the name of Ashish Das Gupta jointly with Shri Satvinder Singh. Whereas at page 11 of the said annual returns under the heading 7-names and addresses and number of equity shares' held under the heading 'directors and their relatives', it is indicated that Shri Ashish Das Gupta is holding 2,000 shares. The respondent's name is not appearing in the said list even though he was appointed as a director on 20.12.86. Thus, the position reflected in the annual return on which respondent is relying is self-contradictory. We further note that Shri Praveen Kant, in his letter, dated 23.8.1986 addressed to Risk Capital Foundation, Annexure A-20, page 25, of the reply to sur rejoinder in connection with the loan being negoti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 2. Ashish Das Gupta 2,000 jointly with Shri Satvinder Singh 4,000 30. The aforesaid position is not only admitted in the reply but has also been admitted in the said annual return which is also signed by him. Now he is taking a contradictory stand that he acquired 2,000 shares in October, 1995, in his individual capacity. Further, in his reply to the petition under Section 186 in Annexure R-1, the certified copy of annual return made upto 30.9.97 has been filed. In para 2 of the said reply the following is submitted : The shareholding pattern upto 30.9.1996 as mentioned by the petitioner is accepted since it is based on the annual return filed upto 30.9.1996. However, the share holding pattern has been changed during the year 1996-97 and the shareholding pattern of the company on the basis of annual return filed with the Registrar of Companies and certified copy obtained (photocopy enclosed as Annexure R-1) as on 30.9.1997 is as under: S. No. Name of shareholder No. of shares %age Type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is so, the shareholding pattern of the company as on 30.9.96 should be reflected as under: S. No. Shareholders Shares 1. Sh. Ashish Das Gupta 1,000 2. Sh. Ashish Das Gupta jointly with Satvinder Singh 1,000 3. Sh. Satvinder Singh 2,000 4,000 33. Then in the annual return made upto 30.9.97, it is indicated that on 31.3.97, he has acquired by transfer 1,000 shares each from Shri Ashish Das Gupta and from Shri Ashish Das Gupta jointly with Shri Satvinder Singh, details given earlier. In that event in his own showing he should be holding entire 4,000 shares (2,000 acquired on 7.10.95 and 2,000 acquired on 31.3.97 by transfer) whereas the shareholding pattern in the annual return upto 30.9.97, Annexure-2, the shareholding pattern is shown as : S. No. Shareholders Shares 1. Sh. Ashish Das Gupta 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36. Another point of dispute is regarding the appointment of Shri Bhushan Ahuja as additional director of the company on 31.3.97 ; the petitioner has emphatically denied of having attended any Board meeting in which Shri Bhushan Ahuja was appointed as additional director as he was travelling, and in his absence, the appointment could not have been made in any Board meetings for want of quorum, there being only two directors of the company at that point of time. No minutes of the Board of directors meeting wherein he was allegedly appointed as additional director have also been filed. We also note that his appointment as additional director has been notified in Form No. 32 to Registrar of Companies on 22.2.99 almost after two years from the date of his appointment on 31.3.97 gives support to petitioner's assertion that no Board meeting was held and he was never appointed as additional director. Further, Shri Bhushan Ahuja whose appointment is under challenge and who has been made one of the parties in the proceeding under Sections 397/398 of the Act has not taken part in these proceedings by filing the submission or appearing before this Board. Under the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet. The petitioners in support of his contention has filed bank certificates of State Bank of India showing balance to the credit of the company as on 31.3.97 at ₹ 1,008 and Punjab National Bank of ₹ 1,659 (Annexures A-26 and 27) pages 39 and 40 attached to petitioner reply to sur rejoinder which do not tally with the figures of bank balance shown for these two banks in the balance sheet as at 31.3.97 filed by the respondent with Registrar of Companies. Further, the number of shares held by the company in Sirmour Sudberg Auto Ltd. are also not correctly reflected. Therefore, the petitioner's contention that the balance sheet as at 31.3.97 does not reflect true and correct position -- appears to be correct. 40. Having held that 2,000 shares are held in the name of Shri Ashish Das Gupta in his individual name and that another 2,000 shares are jointly held in the names of Shri Ashish Das Gupta and Shri Satvinder Singh and that they are the only validly appointed directors, the question is the nature of relief to be granted. There are two petitions before us. One is under Section 186 of the Act and another under Section 397/398 of the Act. As far as the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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