TMI Blog2019 (8) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... run from the date of knowledge of fraud. It was pointed out that the Petitioner became aware of the impugned sale of land a month prior to the date of petition when some people started coming and seeing the land and it was upon enquiry and verification that the petitioner and her daughters came to know that the Respondent No.2 in collusion with the Respondent No.3 has transferred the said land to Respondent No.3 by false Board Resolution passed at the meeting which never took place. The Respondents have failed to adduce any evidence relating to the presence of the petitioner at the Board Meeting held on 01.08.2015. No evidence has been produced before this Tribunal relating to the service of notice of the Board Meeting purportedly held on 01.08.2015 by the Respondent No.2 on the Petitioner - The contention of the Petitioner throughout has been that the subject land was sold without her knowledge, upon coming to her knowledge about the same, she approached this Tribunal for appropriate reliefs. Therefore, in terms of the provisions of section 17 of the Limitations Act, 1963, the present petition is well within time and not barred by limitation. Doctrine of Indoor Management - HE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with property in question basing on alleged Board Resolution. The contention of the Respondent No.3, that they have purchased the impugned property for valid consideration and they are not aware of internal affairs of Respondent No. 1 Company, and thus they are protected by Law basing on principle like 'Doctrine of indoor management' and also under theprinciples enunciated in Section 41 of the transfer of the Property Act etc., are not at all tenable - As per the Annual Return Form No. MGT-7 for the financial year 2015-2016, filed with the ROC has inter alia stated that the Petitioner and the Respondent2 are the shareholders by holding 5000 Equity shares, AGM was held on 30.09.2015 whereas four (4) Board meetings were held viz., 12.06.2015, 01. 09.2015, 09.12.2015 and 27.03.2016. Therefore, it is held that MGT 7 in question filed by the R 1 Company correctly depict the state of affairs of the Company. The actions of Respondent No. 2 are acts of oppressive to the interest of petitioner and the Company in general and it being continuous harsh and burdensome as the impugned property is tried to transfer to third party. It is admitted that the Respondent No. 2 received a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter called the Act, 1956) under the name and style of M/S. Envision Agritech Private Limited and subsequently the name of the Company was changed to M/S. J A Avenues India Private Limited. ii. That the Company was acquired by the family of the petitioners on 15.03.2013 with family funds and for the convenience of managing the affairs of the Company the shares were held by the petitioner and the Respondent No. 2 in the ratio of 50% each and both them were appointed as directors of the Company. Since the Company was acquired by the family funds, all the members of the family are having right in the Company. The petitioner and the Respondent No.2 hold shares for themselves and for the benefit of the other family members. Besides, the Respondent No.2, the petitioner is having 6 daughters. iii. That during the year 2013, the Company had purchased land admeasuring Acres 13-18 Guntas vide registered sale deed No. 7337 of 2013 dated 26.03.2013 and on the date of the registration the value of the land was ₹ 4,84,20,000/-. The Company had also purchased another 5 Acres vide registered Sale Deed No. 7336 dated 26.03.2013 and as on the date of registration the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land was more than ₹ 1,00,00,000/- per acre. The Respondent No. 2 in collusion with Respondent No. 3 illegally transferred with an ulterior motive to deprive the petitioner and her daughters who are also equal beneficial owners of the Company. vii. It is stated that the RI Company sold the land during the FY ending on 31.03.2016 and that the revenue recorded in the profit and loss account was NIL. It was further submitted that the Company is in the business of sale and purchase of land and if the Company had sold the land it would have been mentioned under Revenue in the profit and loss account of the Company for the year ended 31.03.2016. However, the revenue from the operations is shown as NIL in the said P L Account. The petitioner is the only other director, unknowingly signed the financial statements and the petitioner and her daughters came to know about the illegal sale only in the month of September, 2018. viii. That the Respondent No. 2 fabricated the non-est board meeting alleged to have been convened on 01.08.2015 and in collusion with the Respondent No. 3 transferred the land of the Company to R3 illegally. ix. That the directors of a Company are h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches. However, on the date of registration, Mr. Naga Satish requested to execute the sale deed in favour of the Respondent No. 3 in which he is a director. iii. Out of the balance consideration, ₹ 7,91,00,000/- was paid to the Respondent No. 2 and ₹ 4,36,50,000/- was paid to the account of the Company. All the cheques except one cheque were issued by Mr. Naga Satish and no single cheque has been issued by the Respondent No. 3. The amount of ₹ 7,91,00,000/- though it was received by the Respondent No.2, the same was utilized for the purpose of the Company and its shareholders. The petitioner is aware of the same and after getting the benefit, now she is questioning the sale. It could be seen from the sale consideration that the Respondent No. 2 has sold the said land for more than ₹ 1,00,00,000/- but not for ₹ 45,00,000/- per acre. IV. The sale deed was registered on 04.09.2015 even before the last payment of ₹ 1,31,50,000/- was made on 05.09.2015. Mr. Naga Satish prepared the sale deed for ₹ 4,36,50,000/- instead of ₹ 12,27,50,000/- and the Respondent could not guess the mind of Mr. Naga Satish in this regard. It is also perti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the said case is pending. ix. The petitioner is aware of all the proceedings, filed in the present petition taking advantage of the fact that by mistake while filing the Form MGT 7, the Company has not shown the Board Meeting in which the sale of land was approved. x. The Company has clearly stated in the note that the said land was sold at para 14 of the balance sheet. The learned Counsel for the Respondent No. 2 while reiterating the above averments prayed for the dismissal of the petition on the ground that there are no circumstances warranting the winding up of the Company. 4. The Respondent No. 3 Company filed its counter and inter-alia made the following averments and that are: (a) The petitioner who is a party to the board resolution passed on 01.08.2015 (wrongly mentioned in the counter as 01.08.2018) authorizing the Respondent No. 2 to negotiate and sell the impugned property, deliberately not chosen to disclose the same before this Tribunal and filed the present petition only to knock away the properties of the Respondent No. 3 Company (b) The Respondent No. 2 provided the board resolution dated 01.08.2015 and it was also duly recorded in the sale deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Respondent No.2 did not have the authority to execute the sale deed. (i) The Respondent No.3 purchased the property legally and the contention of the petitioner that she has not singed the board resolution is made only to defraud the Respondent No.3. (j) The Respondent No. 3 being the lawful owner of the said land executed an agreement of sale on 11.06.2018 with M/S. Anirudh Agro Farms Limited and M/S. VBS Builders and Developers and has received a substantial advance consideration in lieu of the same and executed a general power of attorney in favour of one of the directors of M/S. Anirudh Agro Farms Limited. (k) The petitioner and the Respondent No. 2 in collusion with each other filed the present petition to deprive the right of the Respondent No. 3 over the impugned property. The sale of the property was concluded on 04.09.2015 and the claim is made after three years on 08.10.2018, therefore the said claim is barred by limitation. 5. The Respondent No. 3 Company also filed a reply to the counter of the Respondent No. 2 and inter-alia made the following averments and that are under: i. The total sale consideration was only ₹ 4,36,50,000/- and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dismissal of the petition. 6. The petitioner filed Rejoinder for the Counter of the Respondent No. 3 and inter-alia made the following averments and that are: a) The Respondent No. 3 in collusion with the Respondent No. 2 knocked away the property of the Company for a paltry sum of ₹ 4,36,50,000/- There was no board meeting held on 01.08.2015 and the MGT 7 filed by the Company is proof to that effect. If it is not stated in the MGT filed by the Company, it is deemed that the Company has not convened the board meeting on 01.08.2015. b) The Company is in the business of real estate. If the sale is concluded on 04.09.2015, the amount of sale consideration should have been shown as Revenue from Operations in the credit side of the Profit and Loss Account, whereas the Company recorded no revenue in the balance sheet as at 31.03.2016. the said alleged amount has been shown under the advances received and therefore it is deemed that the sale was not over. c) The Respondent No. 3 alleged that it has received the copy of the board resolution from the Respondent No. 2 and it should have done a due diligence by contacting the petitioner who is only the other director. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the major part of the sale consideration was received by the Respondent No. 2 and it shows his collusion with the Respondent No. 3 Company. (b) No board meeting was convened on 01.08.2015 and the Respondent No. 2 has not produced any copy of the notice and the attendance register before the Tribunal. It is also contended that the sale consideration received by the Respondent No. 2 was utilized for the Company and the shareholders and the Respondent failed to file necessary documents to that effect before the Tribunal. (c) The Respondent No. 2 who was in the helm of affairs of the Company and by misusing the trust reposed in him by the petitioner suppressed the sale of the land of the company to the Respondent No. 3. The other criminal case and other cases are related to the Respondent No. 2 and Mr. Naga Satish and the petitioner has no role in the said proceedings. (d) The learned Counsel for the petitioner relied on the following case laws in support of his submissions: MANU/WB/0388/1999 In the matter of Nupur Mitra Vs Basubani Private Limited and others - wherein it is held that the time began to run only after the applicant came to know of its rights to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to participate and that if a member whom it is reasonably possible to summon is not summoned, the meeting will not be duly convened, even though the omission is accidental or due to the fact that the member has informed the officer whose duty it is to serve notice that he need not serve notice on him. In Volume 6 at p. 315 Article 626, it is stated that a meeting of the directors is not duly convened unless due notice has been given to all the directors, and the business put through at a meeting not duly convened is in valid' G. According to section 433 of the Companies Act, 2013, the provisions of the Limitation Act, 1963 would apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be. H. As per section 17 (1) ( b) of the Limitation Act, 1963 , in case of fraud , the period of limitation would run from the date of knowledge of fraud. In Ramesh B Desai and Ors. Vs Bipin Vadilal Mehta and Ors. (AIR2006SC 3672), the Supreme Court held as under: 27. Mr. Soli Sorabjee has also submitted that the continuance of the name of Bipinbhai in the register of the Company was a continuing wrong and, therefore, the period of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass such orders thereon as it thinks fit'. The Tribunal is also vested with the power ofreview. Under Section 424 of the Companies Act, 2013, the Tribunal also has the same powers and functions as are vested with a Civil Court. In addition to the above, the Tribunal also has the power to punish for contempt which was hitherto not available with the CLB. In various ways, the NCLTis not merely exercising the jurisdiction of a Company Court under the new Act, but is also vested with inherent powers and powers to punish for contempt. It is in this background that the court has to decide the issue ofjurisdiction, which has been raised by the Defendant. 16. Under Section 242(2), the NCLThas the power to pass such order as it thinks fit , including providing for regulation of conduct of affairs of the company in future . These powers are extremely broad and are more than what a Civil Court can do. Even ifin the present case, the Court grants the reliefs sought for by the Plaintiff, after a full trial, the effective orders in respect of regulating the company, and administering the affairs of the company, cannot be passed in these proceedings. Such orders can only be passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers ofa company or corporation against dealings with the outsiders. However suspicion of irregularity has been widely recognized as an exception to the doctrine ofindoor management. The protection of the doctrine is not available where the circumstances surrounding the contract are suspicious and therefore invite inquiry. Hon 'ble NCLA Tin Aero Industries Vs. Shree Shree Radha Swamy Plastics Ltd. And Ors. MANU/NL/0012/2017 held as under: L. Authorization by the Board for execution of the Sale Deed dated 04.09.2015 is sine qua non in the case of RI Company. Section 21 of the Companies Act, 2013 reads as follows: 21. Save as otherwise provided in this Act,- (a) a document or proceeding requiring authentication by a company; or (b) contracts made by or on behalfofa company, may be signed by any key managerial personnel or an officer or employee of the company duly authorised by the Board in this behalf The Articles of Association of the RI Company states as follows: 39. The management and control of the research of the Company shall be vested with the Board ofDirectors, who may exercise all such powers and do all such acts and things as may be exercised or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have passed title to respondent No. 7. Ifrespondent No. 7 did not have legal title, she could not pass it to respondent No. 8. Respondent No. 8 failed to verify ifhis vendor had duly acquired title and thus failed to act reasonably to show bona fides. The learned National Company Law Tribunal rightly set aside both the sale deeds dated November 3, 2015 and November 4, 2016. N. The RI Company is in the business of Real Estate. Any proceeds of sale of land must be reflected in the P L account of the Company as revenue. The Gross income of the company is shown as nil in the P L account as well directors report for the year ended 31.03. 2016. O. R3 while disputing the contents of the financial statements of the RI Company for the year 31st March 2016 relies upon the very same statements to advance its arguments to show that the Petitioner was aware of the sale deed executed on 04.09.2015. The Respondent No.3 cannot approbate and reprobate. Hon'ble Supreme Courtin R. N. Gosain Vs. Yashpal Dhir held as under: 10. La w does notpermit a person to both approbate and reprobate. This principle is based on the doctrine ofelection which postulates that no party can accept and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in reporting its board meetings and in alienating its properties. Respondent No.3 was prima facie satisfied with the board resolution dated 01.08.2015 provided by the Respondent No.2 that Respondent No.2 is authorised to alienate the subject property on behalf of Respondent No. 1 and relying on this board resolution entered into registered sale deed acquiring the subject land. Therefore, only because the Respondent No. 1 company did not enter the board resolution dated 01.08.2015 in its MGT-7 form, Respondent No.3 cannot be deprived of its rightfully acquired property. 2 PETITION IS BARRED BY LIMITATION (a) The Hon'ble Supreme Court in many instances like in the case of Dilboo v. Dhanraji (2000) 7 SCC 702) has expressly stated that: 20... .. Whenever a document is registered the date of registration becomes the date of deemed knowledge would be attributed to the plaintiff because a party cannot be allowed to extend the period of limitation by merely claiming that he had no knowledge. (b) Therefore, when a document is registered validly under the Registration Act, the date on which the document was registered becomes the date of deemed knowledge. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned Board Resolution dated 01.08.2015 in accordance with Articles of Association of R 1 Company and extant provisions of Company law or not and whether the Company adopted procedure as per law in support of above resolution; (3) Whether the Respondent No. 3 is a bonafide purchaser or not? (4) What is the legal validity of impugned Sale Deed dated 04.09.2015 in the absence of any valid Board Resolution? 12. It is not in dispute that the Respondent No. 1 Company is a Private Company registered under the Act, 1956 and its authorized Share Capital is (Rupees One Lakh only) divided into 10,000 Equity Shares of ₹ 10/- each (Rupees Ten only). Both the Petitioner and the Respondent No. 2 are the only the shareholders and Directors of R 1 Company by holding 50% each of the share capital. 13. With regards to the plea of limitation, this Tribunal is of the view that the Limitation is a mixed question of Law and fact. A petition cannot be thrown out on the mere plea. It would be relevant to note that in the instant case, the petitioners have alleged that the Board Resolution dated 01.08.2015, is a fake and fabricated document and that the Respondent No. 2 in collusion w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board of Respondent No. 1 Company and ought to have enquired with the petitioner whether the Petitioner has signed the impugned Board Resolution, dated 01. 08.2015, authorising Respondent No. 2 to alienate the property of the Company. In this context, the judgment of the Hon'ble Supreme Court in the matter of M.R.F. Ltd. and Ors. Vs. Manohar Parikar and Ors., is squarely applicable to the present case, wherein it was held that the suspicion of irregularity has been widely recognized as an exception to the doctrine of indoor management. The protection of the doctrine of indoor management is not available where the circumstances surrounding the contract are suspicious and therefore, invite inquiry. In view of the above, I am inclined to accept the contention of the petitioner that there were certainly circumstances inviting inquiry on the part of the Respondent No.3 on account of the disputes between Respondent No.2 and its Director Sri Y. Naga Satish and the Respondent No.3 and thus no shelter under doctrine of indoor management is available to the Respondent No. 3. 15. Further, Article 29 to 47 of Articles of Association of Respondent No. 1 Company deal with the issues re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased the impugned property for valid consideration and they are not aware of internal affairs of Respondent No. 1 Company, and thus they are protected by Law basing on principle like 'Doctrine of indoor management' and also under theprinciples enunciated in Section 41 of the transfer of the Property Act etc., are not at all tenable. Admittedly there is no evidence placed on record to show that there is a notice of Board meeting going to be held on 01.08.2015. The contention of Respondent that they have erroneously not mentioned about the Board Meeting in question, in Form No. MGT 7 is not tenable. As per the Annual Return Form No. MGT-7 for the financial year 2015-2016, filed with the ROC has inter alia stated that the Petitioner and the Respondent2 are the shareholders by holding 5000 Equity shares, AGM was held on 30.09.2015 whereas four (4) Board meetings were held viz., 12.06.2015, 01. 09.2015, 09.12.2015 and 27.03.2016. Therefore, it is held that MGT 7 in question filed by the R 1 Company correctly depict the state of affairs of the Company. 18. Further, a memo dated 09.05.2019 was filed enclosing the board resolution dated 01.08.2015 stated to be the original by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that no such entry is made in the balance sheet as at 31.03.2016. 20. It is also relevant to note that there are various litigations raised before various judicial forums as detailed supra, and some of cases are still stated to be pending with regard to the impugned proceedings between the parties. It is also relevant to point here that OS No. 16 of 2016 is filed by Y.Naga Satish against VLCVSS Prasad ( Second Respondent) by seeking specific performance of the Agreement of Sale deed dated 16.02.2005. In spite of the Agreement of Sale in dispute, the impugned sale deed date 4.9.2015 was executed. Moreover, Significant Accounting Policies and Notes to the Financial Statements for the Financial year ending 31.03.2016 of RI Company at Note 14 says as follows ' During the year, the Company had executed a Sale Deed for sale of Ac. 9.26 Gts. Agricultural Land. The Purchaser disputed the consideration amount, settling up a false and fabricated agreement and filed a suit vide OS No. 16/2016 with first Additional District Judge, Sangareddy, which is pending. Therefore, the matter is sub-judice. The sale will be completed/cancelled subject to the outcome of the suit. 21. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated with the documents that how it was utilized for the company. The recording that the company received advances is also false and created by the Respondent No. 2. It is proved that the Respondent No.2 is mismanaging the affairs of RI Company by selling the company's property illegally. The Respondent No. 3 had also acted upon a colour Photostat copy/Xerox of the board resolution without taking due diligence and it has made contrary statement with regard to the payments made to the company. It is also not known that how the property of the Company was registered in the name of the Respondent No. 3 when the said company has not paid single rupee towards sale consideration. 24. In the result, by exercising powers conferred on this Tribunal U/s 242 of Companies Act, 2013 and in order bring to an end to the dispute in the affairs of Company the following are ordered: (1) The alleged impugned Board Resolution dated meeting on 01.08.2015 is declared as null and void. (2) Consequently, the impugned registered documents No. 15747/2015 dated 04.09.2015 by land admeasuring Acres 918 Guntas of Respondent No. 1 Company with the Sub-Registrar, Sangareddy TS, is also declared as n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
