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TMI Blog2016 (12) TMI 1820X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts of all description and kinds. It is further averred by the petitioners that the issued and paid-up equity capital of the respondent No. 1 company at the time of filing of the petition is to the extent of Rs. 3,53,99,500 divided into 35,39,950 fully paid up equity shares of Rs. 10 each. Out of the paid-up capital of the company, it is averred that petitioners No. 1 to 3 holds the following number of equity shares, as detailed below:- In all it aggregates to 3,86,500 equity shares of the total paid-up equity capital of the company corresponding to 10.91% and hence entitled to maintain the petition. In relation to the respondents holding, it is stated by the petitioners that respondents No. 2 & 3, who happen to be the real brothers of petitioner No. 1, and along with their wives hold 36.20% of the total paid-up capital of the company and thereby having a majority stake in the company as compared to the petitioners. The petitioners also aver that petitioners No. 1 & 2 along with respondents No. 2 & 3 comprise the Board of Directors and that in furtherance of its objects, respondent No. 1 company is engaged in the manufacture of HDPE/PP woven sacks at its factory located at 66 -6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters to the branch of the HDFC Bank. It is further averred by the petitioner that not only the respondents have engaged in siphoning of funds from the first respondent company, as described above, they have also engaged in the removal of raw materials from the factory premises as well as stocks of the company namely PP fabric rolls, PP woven waste and rejects of scraps lying in the factory premises. It is also alleged that highly priced computers and other electronic equipment including one UPS costing about Rs. 13 lakhs to Rs. 15 lakhs had been removed by respondent No. 2 and 3. The petitioners allege that respondents No. 2 and 3 are engaged in the asset stripping of the company including its plant and machinery, all purchased at great cost and out of credit facilities made available by the SBI and which was required to be repaid by the first respondent company and for which as stated above, collaterals had been offered by the first respondent company. Since it came to the knowledge of the petitioners that respondents No. 2 and 3 were taking suo motto steps to finalize the financial statements of the company for the year 2009-10, the petitioners on 4.12.2010 caused a notice to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of affairs of the respondent No. 1 company to protect the interest of the respondent No. 1 company, its members and creditors; (d) To pass such other order/orders which this Hon'ble Board may deem fit and proper in the facts and circumstances of the present case. In opposition, respondents No. 2 and 3 submit that petitioner No. 1 being a member of the family and despite suffering mentally due to addiction to drugs and in the circumstances as a means of providing livelihood to the family of petitioner No. 1 was made a Director in the first respondent company after its incorporation and since he was not in a position to discharge the duties as a Director, his wife being the second petitioner, was inducted into the Board of the first respondent company as a Director, despite she being a housewife and not qualified to occupy the post of Director. It is further contended by respondents' No. 2 and 3 that based on the repeated requests of the petitioner No. 2, the son of petitioner No. 1 and 2 was provided with certain machinery on loan for the manufacture of lamination sheets again with a view to providing livelihood to the family of the petitioners. Further, from time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structuring was made only with the full participation of the petitioners as is evident from the letter dated 15.06.2010 and resolution of the Board on 30.07.2010 and restructuring of the credit facilities and their repayment was initiated and also exclusively worked out by the petitioners. Respondents No. 2 and 3 it is contended was also taking efforts to transfer the credit facilities offered by SBI to HDFC bank. However, it was effectively scuttled due to the correspondence sent by the second petitioner under her hand. It is also contended that the petitioner along with her son had removed raw materials from the factory premises in July, 2010 which is evident from the documents furnished along with the reply statements and hence the allegation of siphoning off materials by the respondents No. 2 and 3 is absolutely a falsehood and is made only for a self-serving purpose. The above actions of the petitioner, it is further contended, coupled with the correspondence being sent to the bankers be it SBI or HDFC bank, totally made bankers discomfited in relation to the first respondent company and hence extension of financial facilities even if they were inclined to such a course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the respondents' No. 2 and 3 seems to have been filed before the predecessor of this Tribunal, namely, CLB on 5.7.2011. Subsequent to the filing of the reply, as according to the petitioners fresh facts had emerged, they had filed an application for amendments, under the erstwhile Regulation 46 read with Regulation 44 of the Company Law Board Regulations, 1991 and other relevant provisions, seeking an amendment of the petition and also the inclusion of following additional reliefs. (e) Restrain the respondent No. 2 and 3 from removing plant, machinery, equipment, raw materials, stocks, furniture and fixtures and other movable assets belonging to the respondent No. 1 company from the premises of the respondent No. 1 company situated at - 66 - 67 Mile Stone, Patti Kalyana, Samalkha, District Panipat, Haryana during the pendency of the present petition. (f) To appoint a Receiver and/or Court Officer to take over all the statutory records of the respondent No. 1 company including its accounts, cheque books, bill books, inward and outward registers. And to prepare an inventory of all the articles lying in the aforesaid premises of the respondent No. 1 company and to take ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the respondent No. 1 company; (n) That the Hon'ble Company Law Board be pleased to order that present Board of Directors of the respondent No. 1 company stands suspended; (o) Frame a scheme of Management, administration and control of the affairs of the company on such terms and conditions as this Company Law Board may deem fit and proper; (p) Direct that the Board Meetings and General Meetings shall be held in strict compliance of the law and notices in respect of all the Board Meetings and General Meetings shall be served on petitioners through Speed Post A.D.; (q) Declare that all the resolutions passed in the Board Meetings and/or General Meetings in the absence of the petitioners to be void and of no effect; (r) Reconstitute the Board of Directors of the respondent No. 1 and appoint independent Directors/Managing Director/Chairman. 4. It will be seen that from the above reliefs as sought for, petitioners were primarily seeking to render transactions as entered into with the said M/s. Aero Industries being a third party purchaser of the immovable property situated at 66/67 Mile Stone, G.T. Road, Village Patti Kalyana, Samalkha, Distt. Panipat, Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar cases. Another contention which has been taken by the respondents 2 and 3 is that the petitioners have permitted respondent No. 3 to act as a C & F agent in relation to Haldia Petrochem for the regions of Bihar and Jharkhand, as per resolution dated 30.07.2010 in which resolution it is contended by the respondents that the petitioners have also signed, in admission thereof and in relation to which HDFC Bank Account was opened. It is further alleged by the respondent that solely due to the action of the petitioners No. 1 and 2 along with their son, the company has come to this sorry state of affairs and in the best interest of the company, a decision was taken to sell the assets of the company for the purpose of settling the liabilities by private sale failing which the assets of the company would not have received the best available price, as any distress sale could have resulted in the assets being sold at the throw away price and the liabilities still remaining unsettled. In relation to the sale of electronic equipment, it is averred that since the UPS which was found not to meet the requirement of the respondent No. 1 company was returned to the manufacturer and in lieu t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o seek criminal remedy in FIR No. 393/2012 under Section 406 read with Section 420 and 120B of IPC before P.S. Samalkha, Panipat district against the Directors of the first respondent company and that the same is at an advanced stage as the charge-sheet and the supplementary charge-sheet have already been filed in the said FIR. In addition, it is submitted by the 4th respondent that a suit for specific performance has already been filed against the Directors of the company including petitioners 1 and 2, after incurring a Court Fee of Rs. 48,31,300 and that the application filed by the petitioners 1 and 2 for rejection of the plaint as against them has already been dismissed by the learned Additional District Judge, Panipat vide order dated 17.02.2014. The 4th respondent also submits that the transaction of sale was entered into based on valid resolution, copies of which duly affixed by common seal by way of authentication was furnished to it whereby the respondent No. 2 and one Mr. Sunil Poddar nephew of respondent No. 2 vide resolution dated 10.12.2010 were authorized to do all legal formalities for outright sale/lease out/transfer of business assets of branch business situated at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o made them approach the bankers jointly as evident from the letter dated 15.06.2010 sent to SBI wherein the co-operation of the bank had been solicited claiming that the disputes amongst them have been resolved. Subsequent to the above happenings strangely there seems to have been a disconnect between the parties, namely the petitioners and respondents 2 and 3, what with the petitioners 1 and 2 issuing a notice under the hand of their counsel dated 04.12.2010 consequent to the receipt of notice from SBI being a secured creditor on 26.10.10 under Section 13(2) of the SARFESI Act by the 1st respondent company being the principal debtor and the persons who had stood surety for the same including the petitioners 1 and 2 and respondents 2 and 3 and the slapping with the notice seems to have triggered panic button what with the petitioners putting the respondents herein on notice through their counsel on 04.12.2010 as already stated in the earlier portion of this paragraph. 11. However, the reaction of the respondents after the receipt of the SARFESI notice seems to have been drastic what with the following actions being taken as is evident in retrospect: a) 02.11.2010 - Board Meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties for our convenience to understand the events in the correct perspective and as to how the transactions have been perpetrated. Prayers (e) to (k) of the petitioners primarily hinges on the same. It is the specific plea of the petitioners that the respondents had surreptitiously and behind their back had negotiated for the One Time Settlement with SBI and for the sale of the immovable property, particularly when negotiations for the restructuring of the credit facilities had been approved by SBI. It is also the contention of the petitioners that petitioners No. 1 and 2 despite being directors of the company were not given notices about the 2.11.2010 meeting where the executive directors seems to have been appointed, on 10.12.2010 when consent of the board is alleged to have been given authorizing the 2nd respondent to negotiate for the sale of the factory property and that despite the petitioners being shareholders no notice of the EOGM, alleged to have been held on 17.03.2011, had been given as required and hence all these meetings should be declared as null and void. Per contra, it is contended by the respondents 2 and 3 that the board meetings and EOGM were held at the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the answer of the counsel for the respondents was that it was dispatched to the address which was reflected in the register of shareholders and that no change of address had been intimated to the company. This sort of explanation given by the respondents, we find not only curious and evasive but also abominable on the part of the respondents particularly in view of the fact that petitioners and respondents 2 and 3 are blood relations and the stations of the location of each of the parties are given and well known to each other. In view of the notice issued under SARFESI Act by the bankers a Damocles' Sword was hanging over the head of the company as well the sureties is no doubt true, but that does not mean that the majority can take the law into its own hands and illegally quell the dissenting voice of the minority by adopting surreptitious means. A pattern of oppression is evident from the sequence of dates as given above calculated to exclude the minority from the affairs of the company particularly in relation to the sale of immovable property of the company where the factory was located the same being the substratum of the company. What could have been achieved legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al whether any inspection had been carried out and affidavit were filed in relation to the same the counsel for the petitioners submitted that no affidavits on the part of the petitioners have been filed. In the circumstances we are unable to persuade ourselves to grant any reliefs in relation to the accounts, save directing the parties to close the accounts of the company year after year for the year ended 31.03.2011 and thereafter as the proceedings pending before the CLB cannot absolve them from closing the annual accounts as mandatorily required as well as other statutory compliances under the provisions of the Companies Act, 1956 as well as the 2013 Act. 16. Taking into consideration the facts and circumstances of the case we are constrained to hold as follows:- i) that the meeting of the Board of Directors held on 02.11.2010 and the resolutions passed there at appointing two executive directors were bad in law and the same are declared null and void; ii) that the meeting of the Board of Directors held on 10.12.2010 authorizing the second respondent to negotiate with prospective buyers of the immovable property of the company were bad in law and the same are declared null ..... X X X X Extracts X X X X X X X X Extracts X X X X
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