TMI Blog2018 (3) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... Director already performing the duties. Therefore, the Tribunal should not have appointed 1st respondent (petitioner in the company petition) as Director cum Managing Director of the 2nd respondent. As the Tribunal has held that the acts of omission and commission of appellant and the 3rd respondent have caused losses to 2nd respondent and the 1st respondent is not liable for the losses that has been suffered by the respondent company if any loss has been occurred due to non-completion of these projects will be borne by the company and not an individual. The company should have made a thorough investigation that the loss has been occurred due to inactiveness/negligence of the appellant. The company should have also convened a Board Meeting to analysis the difficulty in non-completion of projects. The sub account accounts are consolidated in the name of company. One person cannot be held responsible for the same. The company is liable to the Bank. The Board of Directors of the company should have investigated and have settled the matter internally. Therefore, the interference in the matter on this issue by the Tribunal is unwarranted. - Company Appeal (AT) No.276 of 2017 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om time to time. The accounts with the Bank were operated by the different directors of the 2nd respondent yet the same were still accounts of the company and any deposits or withdrawals from the said accounts were duly accounted in the books of account of 2nd respondent. 5. 1st respondent filed a Company Petition being CP No.23/2013 for operation and mismanagement against 2nd respondent. 2nd respondent filed its reply thereby stating that the 1st respondent was competing with the 2nd respondent. Appellant also filed its reply thereby controverted the allegations. 1st respondent filed its rejoinder and deliberately did not reply to the contention of the appellant and 2nd respondent that 1st respondent was carrying on a competing business. In August, 2013 the 1st respondent filed CA No.1/2013 praying for supersession of the Board of Directors of 2nd respondent and appointment of an Administrator/Receiver to conduct and manage the affairs of 2nd respondent and also to protect the assets and properties of the company and any action of the Bank. Appellant, 2nd, 3rd and 4th respondent filed its reply to the CA No.1/2013. CA No.1/2013 was dismissed by the Tribunal. However, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by 1st respondent on account of mismanagement and overdrawn money to the tune of crores of rupees . Thus, R3 is responsible for the losses suffered by 1st respondent company . The collateral security given by the petitioner to the bank cannot be charged for such losses caused to 1st respondent company . The acts of omission and commission of R2 and R3 have caused losses to 1st respondent company which are against the legitimate expectations of the petitioner . The same may not be oppressive in nature, but constitutes mismanagement of 1st respondent company . In the light of the discussions, issue No . 1 part proved against R2 and R3 . Since we have concluded that issue No . 11 is partly proved against R2 and R3, the petitioner is not liable for the losses that have been suffered by R1 company, due to the acts of omission and commission of R3, and R2 failed to initiate corrective measures . Therefore, it is held that R3 alone shall be liable to pay 1st Respondent company a sum of Rs . 16 . 48 crores with bank interest being the money overdrawn by him through current A / c No . 2233 opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e director with signing power, was executed only with the discretion power of the Bank Manager without the consent of the other directors, or backing of any Board Resolution. Once the money was credited to the individually operated sub account that particular director was solely responsible to bring back that money to the company. The respondent further stated that the appellant herein has undertaken more than ten projects while 1st respondent has executed only four projects alone and sharing one project with the appellant herein in 1:1 ratio. The respondent further stated that appellant herein siphoned out money through his personally operated company account and mismanaged the projects even after getting crores of money as mobilization from the government for contracts, apart from the overdraft taken from the Bank. In fact each project was being handled by the respective director for all purposes. It is stated that the appellant sought to secure the release of personal properties charged with the Bank without the consent and knowledge of the 1st respondent when there was huge outstanding from the appellant s projects centre having 3rd sub-account to the Master Account and consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dismissed with costs. 8. Rejoinder has been filed by the appellant. The appellant in his rejoinder has stated that 1st respondent has entered into an agreement with Kerala State Construction Corpn Ltd and annexed a copy of the articles of agreement which shows that 1st respondent while continuing as a Director of the 2nd respondent was undercutting and competing with the 2nd respondent and the 1st respondent has suppressed this fact. The appellant further states that non-disclosure/suppression of material facts has been deprecated by the Hon ble Supreme Court and it has been held that a party who wilfully suppresses facts is not entitled to relief, interim or final (Ref. S.P. Chengalvaraya Naidu Vs. Jagannath (Dead) by LR s and Ors (1994) 1 SCC 1). The appellant further submitted that there is clear conflict of interest between the role of 1st respondent as Director cum Managing Director and 2nd Respondent and his role as the promoter of Roger Mathew Co . The appellant further submitted that the Tribunal inspite of being aware of the fact that the 1st respondent was carrying on a competing business proceeded to appoint him as the director cum Managing Director of 2nd resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fortable that the 1st respondent can be expected to look after the affairs of the 2nd respondent while also looking after the affairs of his own company which is in a competing business. We cannot think about any mechanism by which it can be ensured that 1st respondent who has now been appointed as Managing Director that he will not take care of his own company in the competing business unless he closes his business. Therefore, we are unable to uphold the Tribunal s order in appointing as Managing Director (he was already director and continues to be). While appointing 1st respondent as Director cum Managing Director, no discussions has been made in respect of the Managing Director already performing the duties. Therefore, the Tribunal should not have appointed 1st respondent (petitioner in the company petition) as Director cum Managing Director of the 2nd respondent. 13. The other point considered in this appeal is that the Tribunal has held that the acts of omission and commission of appellant and the 3rd respondent have caused losses to 2nd respondent and the 1st respondent is not liable for the losses that has been suffered by the respondent company. It has been argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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