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TMI Blog2018 (3) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... y the National Company Law Tribunal, Hyderabad Bench, Hyderabad (hereinafter referred to as "NCLT") vide judgment dated 27th June, 2017. 2. However, the original Petitioner has filed this appeal selecting 14 of the Respondents as Respondents in the appeal. We will refer to the parties as they were arrayed before NCLT and in Impugned Order. 3. The claim of the Petitioner and the case which was put up by him before the NCLT can be stated to be as under: (a) The dispute relates to Respondent No. 1 M/s. Emjay Industries Private Limited which was incorporated for business of biscuits, is situated at Hyderabad. The Petitioner gave details of the authorised share capital and that there are only 4 shareholders. The Respondent No. 2 is Director holding 19.7% shares, Respondent No. 3 is Director holding 31% shares. The original Respondent No. 21 is holding 18.29% shares. The Respondent No. 2 is the father and Respondent Nos. 3 & 21 are brothers of the Petitioner. The Petitioner gave particulars as to how respondent No. 2 with his brother had established the Company. (b) The Petitioner gave details in the petition raising grievances against Respondent No. 4- M/s. Oriental Bank of Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Against such case put up and arguments made by Petitioner before the NCLT, contesting Respondents Nos. 1 to 3 (hereinafter referred to as "Respondents") filed counter and put up defence as under: (a) The account with Respondent No. 5-Bank was frozen to limited extent to deposit transactions as Petitioner had syphoned of Rs. 75 lakhs. (b) Board Resolution dated 25.04.2013 only authorised the Petitioner to sell the land which was already identified, to M/s. Mahavir Auto Diagnostics Private Limited. The claim of the Petitioner that the Board Resolution was fabricated is denied by these Respondents. According to these Respondents, the land to be sold to M/s. Mahavir Auto Diagnostics Private Limited had been identified and the same resolution authorised Respondents to sell land adjacent to the portion proposed to be sold to M/s. Mahavir Auto Diagnostics Private Limited. (c) The Petitioner was signatory to Annual returns for Financial Years 2002-2003, 2009-2010 and was aware of all transactions. The claim that money had been syphoned is denied by the Respondents. The amount received from Respondent No. 6 towards lease and sale from Respondent Nos. 7 to 10 have been properly utilis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law; (b) to restrain them from removing him from the Board of First Respondent Company as long as he holds shares in the Company; to cancel sale deeds bearing Nos. 2785 and 2786 both dated 17.02.2014 executed by the Respondent No. 1 Company under the hand of the 3rd Respondent on 17.02.2014 and registered on 19.02.2014; (c) to direct the Respondents 2 and 3 not to interfere in the affairs of the 1st Respondent company in view of the oppression and mismanagement of affairs of the 1st Respondent Company and siphoning of the funds of the Respondent No. 1 Company by respondent Nos. 2 and 3 etc." ..... 10. NCLT took note of the various disputes which were raised and framed following points for consideration: "17. In the light of above proposition of law and facts, the following are main points arise for consideration by the Tribunal:- (a) Whether Respondent Nos. 2 & 3 have clandestinely entered into lease dated 6/8/11 with M. Venkateshwara Reddy (Respondent No. 6) by letting out a land of the Company to an extent of 2.66 acres equivalent 12,875 sq. yds. for a consideration Rs. 2,70,000 per month for a period of 7 years and the consideration was much below the prevailing ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 3 was also authorised to sell the land, is fabricated according to the learned Counsel. According to the learned Counsel, only because Petitioner attended the meeting does not mean that the resolution, as drawn later on, were admitted by him. Mere attending the meeting cannot be construed to confirm all the resolutions as passed in the meeting. (c) Learned Counsel for Appellant/Petitioner claimed that NCLT wrongly relied on Memorandum of Understanding (hereinafter referred as 'MOU') dated 07.05.2012. It is argued that the Respondents could not rely on the said MOU as the properties sold by the Respondents fell within his share in the MOU. The Board Meeting dated 25.04.2013 could not be said to be in pursuance to the MOU. According to the learned Counsel, the Sale Deed dated 17.2.2014 executed by Respondents and money received were not in accordance with the provision of law. It is claimed that the Sale Proceeds were diverted to personal account of Respondent No. 2. The sale of land of 5898 Sq. Yards was done between 12.03.2013 to 17.02.2014 when matter was dragging before CLB. According to the learned Counsel, the land could not have been transferred without resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the property to Respondent No. 6 was prudent decision taken after deliberation as the property of the Company was lying idle and there were no business transactions. It is stated that Respondent Nos. 2 & 3 constituted the quorum and could take decisions even if Petitioner opposed and there was no reason for them not to follow the procedures. Learned Counsel claimed that the Petitioner had sent notices dated 02.09.2013 and 25.09.2013 in which he never raised dispute regarding the lease. The learned Counsel stated that the Petitioner sent legal notice dated 19.09.2013 in which he did not dispute the grant of lease but disputed only regarding non-payment and irregular payment of lease rent. Thus by conduct he accepted the validity of lease and cannot now raise disputes. (c) Learned Counsel for contesting Respondents claimed that in view of the Board Resolution dated 25.04.2013, the Respondent No. 3 sold 5898 Sq. Yards of the land and possession was handed over to Respondent Nos. 7 to 10. It being Private Limited Company, permission of shareholders was not required to be taken. (d) Learned Counsel for contesting Respondents referred to affidavit dated 12.08.2014 (Page Nos. 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution dated 25.4.2013, as was recorded, was fabricated except making baseless allegations. It was found that the Petitioner had attended the said meeting and thus he could not dispute resolution passed. The NCLT observed that Petitioner did not dispute the resolution with respect to sale of land by him but the same resolution he is disputing with regard to other aspects. The NCLT found that Respondent Nos. 2 & 3 satisfied quorum necessary for transaction of any business empowered by Articles of Association. For such reason, it did not find the claim of Petitioner sustainable. The NCLT found that the Petitioner had approached the Tribunal not with clean hands. The Company had only four shareholders and there was no business operation since April, 1996. Thus no oblique interest was involved. The NCLT found all the contentions and allegations raised by the Petitioner to be untenable and liable to be rejected. Consequently, NCLT proceeded to dismiss the petition with costs and other directions. 14. We have also gone through Memorandum of Understanding dated 07.05.2012 (Pages 2603-2605 of Appeal). It was a Memorandum of Understanding drafted for the Petitioners and Respondent Nos. 2 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for Appellant criticised the judgment of NCLT in paragraph- 22 where the NCLT observed that it had perused the documents relating to execution of lease in favour of the Respondent No. 6 and that it was properly executed with due authorisation of the Board of Directors as per Resolution dated 25.04.2013. There is an error of observation by NCLT as the lease was executed earlier in 2011. However, the learned Counsel for the contesting Respondents pointed out page 904 of the Appeal Paper Book letter dated 01.08.2011 to say that the Petitioner did not object to the grant of lease and objected only to Respondent No. 3 depositing the amount received in the lease transaction to his personal account. It has been argued that the Security Deposit had been deposited on 22.07.2011 and such letter dated 01.08.2011 never objected to the lease which was being granted. 18. Learned Counsel for Respondents referred to Vol III- Pg. 839 A Bank statement to submit that even earlier between 2006 to 2011 there were cash withdrawals for affairs of the Company but it was not objected as Petitioner admitted in Reply submitted (Convenience Compilation by Respondent - Pg. 6) that serious disputes ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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