9911796707
TMI Blog2017 (10) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 shares out of the total 3,23,860 issued, subscribed and paid up share capital of the Company. The Fourth petitioner is Mr. T. Senthil Kumar, is a legal heirs of Late Mrs. Vandarkuzhali entitled to 1/3 share in the 1000 shares allotted to Late Mrs. Vandarkuzhali and as such he is entitled to file the present application as a shareholder of the Company. The fifth petitioner is Mrs. T. Valli, is the legal heir of Late Mrs. Vandarkuzhali entitled to 1/3rd share in the 1000 shares allotted to Late Mrs. Vandarkuzhali and as such she is entitled to file the present application as a share holder of the Company./ There are totally 11 members in the Company. The Petitioners herein in total constitute 4/11th of the total number of members of the Company and hence they satisfy the requirements of Section 399 of the Companies Act, 1956. Therefore, the petitioners are entitled to file the present Petition. Particulars of the first respondent: The 1st respondent is M/s. Hotel Mass Private Limited, a Company registered under the Companies Act, 1956, having its registered office at No. 152 and 154, Maraimalai Adigal Salai, Orleanpet, Puducherry 605 001. The said Company was incorporated on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Main Road, Kirumampakkam, Puducherry 607 402. The petitioners have submitted that 1. The Respondent Company was incorporated and registered with the Registrar of the Companies, Pondicherry, in the year 30.10.1982, by Late Mr. M.A. Shanmugam, Late Mrs. S. Senganiammal, wife of Late Mr. M.A. Shanmugam, and the second petitioner as the founding members with each subscribing to 10 equity shares of Rs. 100/- each. The Company was founded as a Private Limited Company with the main objects inter-alia to run hotels under the name and style "Hotel Mass Private Limited". Subsequently, the shares of the Company were allotted to the second Respondent, as the son, Mrs. S. Velvizhi, Third Petitioner herein Mrs. R. Manimegalai and Late Mrs. Vandarkuzhali as the daughters, and the Petitioners No. 1 as the son-in-law of Late M.A. Shanmugam. 2. The petitioners have stated that as per Form No. 2 dated 14.03.1983, in total 30000 equity shares were allotted to the family members out of which 17820 was allotted as payable in cash and remaining 12180 equity shares of Rs. 100/- each was allotted for a consideration otherwise than in cash to Late Mr. M.A. Shanmugam in lieu of selling his pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od in her name were allotted to the family members of the Second Respondent, who are Respondent Nos. 3 to 6. 5. The petitioners submitted that they reliably understood that second Respondent in connivance with Respondent Nos. 3 to 6 through meetings held on various dates between the years 1998 to 2003 increased the authorized, issued and paid up capital of the Company without giving notice to any other members of the Company. It is pertinent to the state here that the meetings held to increase the authorized, issued and paid up capital of the Company were attended only by Respondent Nos. 2, 4 and 5. It is further submitted that Respondent Nos. 4 and 5 are the sons of the Second Respondent and the sixth Respondent is the daughter of the second Respondent. The petitioners further submitted that they were kept in dark about the meetings and no notice of AGM was ever served on the petitioners till date. The petitioners submitted that the mala fide intention of the Respondent No. 2 to 6 can be seen from the very fact that no further shares were offered/allotted to the other members apart from those allotted by Late Mr. M.A. Shanmugam but on the other hand all further shares of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and the second Respondent being the eldest in the family, his words were trusted by the other members till then and they did not smell any foul play by the second Respondent and his family on the other family members. Since no satisfactory reply was forthcoming, the petitioners herein started demanding the issuance of statement of accounts by meeting the second Respondent in person or by letters. 9. The petitioners submitted that the Company being a family business is more in the nature of a quasi partnership and therefore the Respondent No. 2 and 3 the Directors of the Company, who are also members of family entrusted with the responsibility of the managing the affairs of the Company, owe a fiduciary duty towards the other members as the business is run for the benefit of the family and their exists an element of trust among the members of the family that they would be kept well informed about the affairs of the company. 10. The petitioners submitted that they met and discussed with the second Respondent over the phone and also in person and sought details but the second Respondent was evasive and did not provide any details. While things stood thus, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the accounts of the Company and their mismanagement of the Company would come to light. The petitioners submitted that the above fact was never made known to the petitioners at any point of time by the Respondent Nos. 2 to 7. The petitioners submitted that the Respondent No. 1 to 6 never informed them on the above sale at any point of time and have completely misled the other members of the family at all points of time. The petitioner submitted that the entire properly over which the hotel was built belong to Late M.A. Shanmugam, who has purchased the same for running a hotel in one portion and while running a theatre in the other. It is for these reason 12180 shares were allotted to him during 1983 for consideration other than cash in lieu of selling his property to the Company. It was also the desire of Late M.A. Shanmugam to expand the hotel and to fulfill the desire of Late M.A. Shanmugam, the other family agreed to relinquish their right either in the joint family properties in favour of Late Mrs. M.A.S. Senganiammal or the Second Respondent herein. 13. The act of selling the shares of 2nd Respondent and his family members along with the assets of the Company pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ienation of property/ies belonging to the Company has to be approved by the General Body by Special Resolution. The petitioners submitted that no notice of the General Body meeting was ever served on them with an agenda to sell the properties of the Company. It is further submitted that the properties of the Company have seen sold by the Respondent Nos. 2 to 6 herein for their personal gain both in detriment to the interest of the Company and other family members. By the said illegal actions of the Respondents 2 to 6, the main and only business of the Company has been sold lock, stock and barrel without the knowledge of petitioning shareholders. 16. The petitioners submitted that by the virtue of the aforesaid illegal sale, the substratum of the Company has been completely lost in as much as the Company was founded for the benefit of the family by the Late Mr. M.A. Shanmugam through joint family properties. It is submitted that the Respondent No. 2 to 7 have indulged in the above illegal activities to deprive the petitioners of their legitimate rights and dues. 17. The petitioners submitted that it is common business prudence to sell the assets of the Company at marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent Company; (c) To set aside the sale of 315860 equity shares of Rs. 100/- each sold by the Respondents No. 2 to 6 to Respondent No. 7; (d) To reconstitute the Board of directors of the first Respondent company; (e) To prepare a scheme of Administration to conduct and regulate the affairs of the 1st Respondent Company on a day to day basis; The respondents 2 to 6 vide their reply have submitted that the company Petition is not maintainable in law or facts and it is barred by limitation. They have stated that the petitioners has not approached this Hon'ble Court with clean hands and that the act of petitioners is an abuse of process of court and law and is hit by res judicata. The Respondents have submitted that the petitioner has not given the exact particulars and equity shareholding of the respective respondent. And the 2nd Respondent has denied the averment that 12180 equity shares of R-1 company were allotted to 2nd Respondent without payment being received and has stated that the shares were allotted to the 2nd Respondent for valuable consideration only. It was submitted by the respondents that the petitioners herein do not have any personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Finance Corporation of India Ltd. was made the nominee director to the 1st Respondent Company and relevant form 29 has been filed before the Registrar of Companies. The said nominee director was controlling the day to day affairs of the Company with full decision making power. The proposal to raise the share capital in aforesaid circumstances was placed in the meeting and the same being beneficial to the Company, the issue of further share capital was approved. The averments in para 6 are matter of records and subject to proof. Hence, not traversed into The respondents have stated that with regard to para 7 of the Petition that there is no violation of Clause 15 of the Articles of Association. Clause 3 is a general proviso regarding share capital and the petitioner be put to strict proof with regard to the averments made in para 8. The Respondents stated that it is necessary to bring to the notice of the Hon'ble Court that the wife of the 1st petitioner Velvizhi and the wife of the 2nd petitioner vandarkuzhali already had filed the suit O.S. No. 3 of 1996 before the Principal District Judge at Pudhucherry, jointly, wherein the issue raised in this petition has been put fort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner being share holders are intact even as on today. It has further been averred by the Respondents that if the movable and immovable of the Respondent 2 to 6 were not sold at the appropriate times and the loans of the creditors were not liquidated, the Company would have seen the adverse phase and ended up in winding up as the 1st Respondent Company did not have any credence or name in the market. The Respondents denied that there is any requirement for investigation as claimed by the petitioners when the affairs of the Company are transparent and when the sale of moveable and immovable are in accordance with law. The respondents 2 to 6 prayed for to dismiss the petition with costs. In the Rejoinder, petitioners have denied that the present Petition is hit by Res Judicata. The petitioners had stated that the Respondents 2 to 6 have to prove the contention of the petitioners that 12180 equity shares were allotted as fully paid up against the value of land mentioned in the balance sheet and the Respondents 2 to 6 have not produced any document to disprove the manner of allotment of the shares. The petitioners are now given to understand that in C.P. No. 144 of 2000 filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in the petition. In the CA, the petitioners have stated that after receipt of the reply statement it conducted a search on the various documents and resolutions filed by the company. The petitioners have stated that the Respondents 1 and 2 did not file the alleged special resolution dated 25.06.2011 with the ROC in terms of Section 192 of the Companies Act 1956. The secured loans of the Company were discharged on 13.06.2011 a date prior to the alleged special resolution dt. 25.06.2011. In addition, the 4th petitioner had filed an application under RTI Act filed by the 2nd Respondent with the election commission during 2006, 2011 and 2016 Assembly Elections to verify the claims made by R2. The 4th petitioner paid the requisite amount and obtained the copies of the affidavits filed by R2 with the Election Commissioner for the three assembly elections referred to above. Based on this, it is seen that there was no disclosures about the unsecured loan given to the Company, the details of assets, it was further revealed that the R2 did not show the Company asset as his personal asset. This according to the petitioners establishes the fact that R2 held the asset as a trustee on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply to quasi judicial proceedings. The lease deed is inadmissible in evidence as it not properly stamped as the stamp papers bought in the names of third parties are used for the execution of the lease deed, which will palpably evidence the fraud played by the 1st applicant/respondent on the Company. It was submitted that the first applicant held it as a trustee who committed breach of trust by selling the assets of the Company by treating it as his personal asset and that the entire sale has taken place in a hurriedly manner for an illegal monetary gain and prayed to dismiss the above application with exemplary cost. The Respondents/petitioners have sought to set aside the sale of 3,15,860 equity share of Rs. 100/- each sold by the applicants/Respondents 2 to 6. In this connection, it is seen that the applicants/Respondents have not adduced any material evidence to prove that the issue of share capital was raised in the Board Meeting and the same was approved as being beneficial to the R1 Company. The applicants/Respondents have stated that there is no violation of Clause 15(3) of the Articles of Association but this has not been proved as could be seen from reading of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res were sold for Rs. 3,93,80,706/- to R7 Company which was much less than the book value of the buildings disclosed in the Balance Sheet for the financial year 2010-11. The respondents have not shown any proof that the valuation was done for the properties of the R1 Company which were sold which due to non execution of the sale deed was held in trust by the R2. The Respondents have also not submitted a Special Resolution with the approval to sell the Company's properties by special resolution approved by AGM/EGM. In view of the fact, that it has been established that the property in question pertains to R1 Company. The sale consideration has not been shown by the Respondents 2 to 6 to have been debited to the books of accounts of R1 Company. In view of this, we make the order as follows:- ORDER In view of the facts discussed above, it is clear that the Respondents 2 to 6 have sold their entire shareholding to the R7 Company. They have also sold the properties shown in the last available balance sheet for the year 31.03.2001 of the 1st Respondent Company. All these points have been, at length, discussed above. Both the petitioners and the Respondents have not produced any do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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