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Dr. Kamal K. Dutta through Constituted Attorney Sh. Arun Saini Versus Ruby General Hospital Ltd. and Ors.

2004 (12) TMI 705 - COMPANY LAW BOARD NEW DELHI

CP No. 75 of 1999 - Dated:- 2-12-2004 - S. Balasubramanian For the Appellant: U.K. Choudhary, Sr. Adv. and Ranjana Roy Gawai, Adv. For the Respondents: S.N. Mookherjee, Sr. Adv. and T. Aich, Adv. ORDER S. Balasubramanian, Chairman 1. The petitioner claiming to hold 52% shares in M/S Ruby General Hospital Limited (the company) has filed this petition under Sections 235/237 of the Companies Act, 1956 (the Act) seeking for an investigation into the affairs of the company on three main allegations t .....

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company lacked probity and was being carried on in a manner oppressive to the members. A reading of the said order would indicate that this Board had upheld each and every contention of the petitioner in regard to oppression and mismanagement in the affairs of the company. During the pendency of the proceeding in that petition, the present petition was filed bringing out subsequent instances of misappropriation of funds by the 2nd respondent. In the Balance Sheet for the year ended 31.3.1998, th .....

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in 1995-96. The company has already capitalized the building account in the year 1995-96 itself and has claimed full depreciation. The completion of the building in 1996 itself with the sanctioned capacity of 115 beds is evident from the fact that the sanctioned bed capacity remains as 115 even in 1998. Therefore, there were no additions in the building during the year 1998 for incurring an expenditure of over a crore of rupees. Even though it is contended that the amount of ₹ 139.96 lacs .....

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5 lacs without any justification. Even though the respondents have tried to substantiate their claims of purchase of equipments by filing copies of invoices etc., a perusal of these invoices/bills would indicate that they are all procured ones. There are no details of the addresses of suppliers, their sales tax registration numbers, excise registration number etc. Therefore, no reliance can be placed on these invoices or bills. By showing exorbitant lease rentals without incurring the same, the .....

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holding any Board Meeting. They have also filed Income Tax Returns etc. without adoption of accounts by the Board and thus have completely withheld all information about the functioning of the company from the petitioner. With the money siphoned of from the company, the 2nd respondent has proposed construction of his own new hospital in competition with the hospital of the company. 5. Summing up his arguments, Shri Choudhary submitted that only an investigation could unearth the misdeeds of the .....

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held that if the court is satisfied that there is mal-administration in the affairs of the company, investigation should be ordered. Therefore, since the respondents are guilty of fabrication of documents, financial irregularities, oppression of majority shareholders, criminal breach of trust for personal gains, investigation in terms of Section 235 of the Act should be ordered. 6. Shri Mookherjee, appearing for respondents submitted: There is absolutely no justification for ordering any investi .....

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ed before this Bench and as such the Calcutta High Court is already seized of the said affidavit. 7. On merits, the learned counsel submitted: The sum of ₹ 139.96 lacs in the building account for the year ended 31st March, 1998 comprises of a sum of about ₹ 111 lacs transferred from the building progress account. This amount of ₹ 111 lacs is the cumulative figure of work in progress from 1994-95 onwards as is evident from the Chartered Accountant's Certificate at Annexure R .....

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on for addition of ₹ 46.64 lacs to the work in progress account during the year 1995-96. The company has claimed depreciation only on the capitalized amount and not on work in progress. Further, the petitioner who had raised some grievances with regard to the balance sheet as on 31st March, 1998 in the earlier proceedings in CP 86 of 1997, never raised any objection on the building account. This is only an after thought for further litigation. Therefore, there is absolutely no justificatio .....

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ion, it can be alleged that by increase in the amount of liabilities, the 2nd respondent has siphoned of the funds of the company. As can be seen from Annexure R-16, the Chartered Accountant has given a certificate to the effect that all the liabilities shown are correct. 9. As far as purchase and leasing of equipments is concerned, similar issues were raised in CP 86 of 1997 and this Board did not order any investigation. Complete details of the equipments purchased and taken on lease is annexe .....

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f siphoning of funds through purchase of these equipments does not arise. 10. Summing up his arguments, Shri Mookherjee submitted that since the respondents have refuted each and every allegation with proper explanation have proved that all the allegations are baseless, the question of investigation does not arise. Further, the petition filed by the petitioner under Sections 397/398 has already been disposed of and in terms of Section 243 of the Act, the ultimate result of an investigation is to .....

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annot be taken cognizance of by this Bench. As far as the allegation that the 2nd respondent is planning to have his own hospital is concerned, the same is incorrect as he has no such involvement in the alleged new hospital. Further, during the pendency of the present proceedings, the petitioner had caused an inspection to be conducted under Section 209 of the Act by the Department of company Affairs. The petitioner cannot rely on various findings given in CP 86 of 1997 as the order in that peti .....

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this Bench to satisfy itself that prima facie the respondents are guilty of siphoning of funds of the company. Therefore, to unearth the misdeeds of the 2nd respondent, investigation should be ordered. 12. I have considered the matter carefully. The admitted position is that this petition was filed during the pendency of CP 86 of 1997 and was not pressed for a long time. Shri Choudhary extensively pointed out to various adverse findings of this Bench in the order on CP 86 of 1997 to urge that th .....

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es and purchase and leasing of equipments. As far as the expenditure on building is concerned, I do not find any merit in the allegation of the petition that by allegedly incurring the expenditure on building, the 2nd respondent has siphoned of funds of the company. A perusal of the annual accounts of the company indicates that there had always been building work in progress account right from 1994-95 onwards. In the balance sheet as on 31st March, 1998, I find that the figure of capital work in .....

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n absolute terms there is increase, but as a percentage of the gross income of the company, it is much lower than the previous years. Even otherwise, increase in the figure of liabilities does not indicate siphoning of funds of the company. As far as purchase/leasing of equipments is concerned, I do agree with the petitioner that the invoices do not contain all the details that an invoice should contain. But the absence of the details cannot lead to a presumption that the purchases are bogus. Al .....

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