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TMI Blog2019 (7) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... the collections done from the date of its setting up, etc. 2. The company petition was initially filed by late Shri Arun Bhat, who died on August 1, 2016 leaving behind his son, namely, Mr. A. Mayuresh Bhat, who is also director of respondent No. 1-company, as his legal heir. Accordingly, he has filed I. A. No. 19 of 2016 in the petition by, inter alia, seeking to permit to implead himself in the place of his father, and to prosecute the case. Accordingly, the Tribunal vide order dated February 16, 2016 passed in I. A. No. 19 of 2016 permitted him to be impleaded as prayed for. 3. The brief facts of the case, as mentioned the company petition, and discerned from the pleadings of both the parties, which are relevant to the issue in question, are as follows : (1) M/s. Banana County Resort P. Ltd. (hereinafter referred to as respondent No. 1-company) is a private limited company incorporated under the provisions of the Companies Act, 1956 vide Registration No. 08/ 26313 of 2000 on February 1, 2000 having its registered office at Billigadde, Chandguli Village, Yellapur (North Kanara)-581 359, Karnataka. Its authorised share capital is Rs. 50,00,000 divided into 50,000 equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business with effect from April, 2005. (6) The meeting of the board of directors of the company was held on April 15, 2005 wherein, apart from appointment of new staff members of the company, the following issues were agreed upon : (a) It was agreed that Shri Arun Bhat shall provide list of staff mem bers of Anubhav Tours deputed to Banana County Resort ; (b) Shri M. G. Hebbar being the managing director of the company shall be in charge of administration of the company ; (c) Informing Registrar of Companies about appointment of Dr. Mrs. Sheela Arun Bhat as additional director of the company. (7) The petitioner who was the chairman observed various misman agement and negligent acts in relation to the day-to-day administration of respondent No. 1 as follows : (a) Getting KEB permanent connection for the resort as it has only temporary connection ; (b) Obtaining Tourism Approval Certificate for the resort for claim ing luxury tax exemption ; (c) Obtaining Hotel Licence for the resort which is running without licence for last 10 months ; (d) Non-payment of luxury tax of Rs. 2,65,316 and demanding the same to be reimbursed by Anubhav Tours ; (e) Luxury Tax collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, letter that respondent No. 2 and his associate respondents had totally failed in man aging the affairs of the company which resulted in non-compliance and non-payment of term loan. Respondent No. 2 had written a letter dated October 27, 2006 wherein, it was stated that the company has taken steps to remove Shri Arun Bhat from the post of director of the company. There after, the bank issued "final notice" dated November 1, 2006 and another letter dated November 3, 2006 which makes it clear that the affairs of the company have been mismanaged and the irregularities pointed by the bank have neither been complied nor steps have been taken to furnish the required details. In a letter dated June 21, 2008 Saraswat Co-operative Bank has issued notice to the company as "loan defaulters" and the amount pending is more than Rs. 20 lakhs. (11) The company's bank account with Saraswat Bank, Hubli Branch is being operated by respondent No. 2 with his single signature and this account had been irregular and various "cheques" issued had bounced for about 33 times and the bank balance was below the minimum balance requirement for about 12 times. Apart from having account in Saraswat Bank, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of prima facie case, it would be appropriate to restrain respondent No. 2 from exercising the authority as managing director of the company pending the disposal of the suit. How ever, the respondent filed an appeal against the above order before the hon'ble High Court of Karnataka, which granted stay on the basis that the issue involved has to be raised before the Company Law Board under the provisions of the Companies Act, 1956. The High Court specifically ordered that proceedings can be commenced before the Company Law Board. 4. The company petition is opposed by respondents Nos. 1 to 5 by filing statement of objections dated August 11, 2009 by, inter alia, contending as follows : (a) It is stated that while the petitioner himself had agreed to procure the necessary materials required for the construction of the resort, he had instead of personally procuring the said materials had outsourced the said work to third persons and that this resulted in the delay in the execution of the project and also it had resulted in increase in expenditure on respond ent No. 1-company. During the entire period of five years, respondent No. 2 had personally supervised the entire constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the chairman of respondent No. 1-company at the board meeting held on February 3, 2000 in which the petitioner had participated and had appended his signature next to his name. (e) It is stated that as per the memorandum of understanding entered into between the petitioner and respondent No. 2 individually, the peti tioner was supposed to give regular business to respondent No. 1-company. On the contrary, that his intention was not to promote the business of respondent No. 1-company but to make profits for his own organiza tion. It is stated that the petitioner had without obtaining prior approval from the board of directors of respondent No. 1-company has unautho risedly filed Form 32 in respect of appointment of his wife Smt. Sheela Bhat as additional director of respondent No. 1-company with the Registrar of Companies, Bangalore. During the 5th annual general meeting held on September 30, 2005 the members of respondent No. 1-company had taken a decision not to regularize the appointment of Smt. Sheela Arun Bhat as additional director of the company. The petitioner refused to attend the said annual general meeting even though the notice of the said annual general meeting had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the petitioner did not give any business to respondent No. 1 for a period of three months and had siphoned off of the funds of respondent No. 1-com pany to his personal account and also failed to remit the business proceeds into the loan account of the company. (j) It is stated that neither the petitioner nor his son Shri Mayuresh Bhat used to attend the board meeting/annual general meetings/extraor dinary general meeting as and when notice of the same were issued to them, and they used to give flimsy excuse to the effect that they are fre quently travelling and that they are not in a position to attend the meeting. Thus, these acts clearly goes to prove that the petitioner is more concerned about the development and welfare of only his company, viz., Anubhav Holidays and he is not bothered about respondent No. 1-company. Though the petitioner had requested respondent No. 2 to convene an extraordinary general meeting to discuss the issues regarding respondent No. 1-company, he has failed to attend the same. (k) It is stated that till date, neither the petitioner nor his son Shri Mayuresh Bhat has disclosed their interest in other companies as required under section 299 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. Further, it is stated that Shri Venkataramani has been appointed as additional director during 2016 when Shri Arun Bhat was critically ill and had been under continuous treatment and hos pitalisation leading to his death on August 1, 2016. (c) It is also stated that the respondent has created a company by name "Malenadu Holidays" and named his wife the proprietor of the said company in order to create a smoke screen to hide his misdeeds. The peti tioner submits that the said company is a sham and has been created so that the funds can be diverted from the respondent-company. It is stated that the diversion of business through Malenadu Holidays owned by respondent No. 2 clearly shows that the respondents should not be allowed to buy the shares or get the benefit of a share valuation done. On the contrary, giving the shares to the petitioner would ensure that the com pany runs well and is able to clear all its dues on account of his experience in the said field and his standing in the market. (d) He also relied upon the following judgments in support of their case : (i) Sudershan Singh Sethi v. Sakhi Resorts and Farmlands P. Ltd. [2015] 190 Comp Cas 349 (CLB). (ii) Sures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot show any irregularity or misappropriation of funds as alleged by the petitioner in his petition. The original petitioner late Shri Arun Bhat, who had filed the petition, has not come with clean hands and suppressed material facts and is guilty of misappropriation of funds. (d) The legal heir Shri Mayuresh Bhat, who is the son of late Shri Arun Bhat, is not interested in the day-to-day affairs of respondent No. 1- company, and this is proved by the fact that he has not attended any single board meeting since the date of incorporation of the company, and in fact, he is disqualified to continue as director as stipulated in the provisions of Companies Act, 1956 and the Companies Act, 2013. 9. In the light of the above pleadings of both the parties, the main points for consideration, in the instant company petition, especially in the light of original petitioner is no more, are as follows : (1) Whether the alleged acts of oppression and mismanagement made in the petition, are substantiated by the deceased petitioner to grant any relief. (2) Whether those acts of oppression and mismanagement is still maintainable, at the instant of the son of the petitioner, as legal heir since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was disputed by both the parties by pointing out various discrepancies in the report. 12. It is a settled position of law that the acts of oppression and mismanagement should not only be existing at the time of filing company petition, they should also being continuous harsh and burdensome leading to the conclusion that the directors action lack in probity and those grounds should justify winding up of the company under the just and equitable clause. The main company petition is filed by Mr. Arun Bhat, by making various allegations as per his knowledge and sufferings at the hands of directors of the company. However, unfortunately, the original petitioner (Mr. Arun Bhat) died on August 1, 2016. Therefore, Mr. A. Mayuresh Bhat has filed I. A. No. 19 of 2016, under rule 53 of the National Company Law Tribunal Rules, 2016, by, inter alia, prayed to implead him as the legal heir of the deceased petitioner Mr. Arun Bhat. Though the application was opposed by the respondent, that the Mr. A. Mayuresh Bhat (son) was not holding 24 per cent. of the shares in respondent No. 1-company and he holds only 4 per cent. and he never attended any board/annual general meetings convened by the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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