TMI Blog2019 (7) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... nt petition. The respondents are restrained from removing the partners of the petitioner LLP as directors of the first respondent-company and are directed to give them a patient hearing at the next annual general meeting of the first respondent-company. Other reliefs as sought for by the petitioner are not tenable in the facts and circumstances of this case and hence, could not be granted. The first respondent-company, its directors and managerial persons are directed to file for compounding of non-compliance with section 203 of the Companies Act, 2013 with the Registrar of Companies, Karnataka - it is made clear that in case the remedy provided by us hereinabove fails to absolve the dispute or resolve the issues existing between the parties, each of the parties shall have complete liberty to approach this Tribunal seeking for such directions as may be necessary. Petition disposed off. - C. P. No. 74 of 2015 (T. P. No. 80 of 2016 ). - - - Dated:- 22-7-2019 - Rajeswara Rao Vittanala (Judicial Member) And Dr. Ashok Kumar Mishra (Technical Member) For the Petitioner : Guru Prasad For the Respondents : C. K. Nandakumar , Raghuram Cadambi and Varun (S.) ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents of the company by the nominee directors of the second respondent and for shifting the records to the new registered office as ille gal and void ; (g) To set aside the appointment of the sixth, seventh and eighth respondents as additional directors of the respondent as illegal, null and void ; (h) Declare that the resolutions passed at the board meeting held on July 22, 2014 authorising the seventh respondent to take custody of all the registers and documents pertaining to the first respondent as illegal, null and void ; (i) Declare that the resolution passed at the board meeting allegedly held on December 30, 2014 empowering the company secretary to perform statutory, construction, marketing, finance and other operational matters as illegal, null and void ; (j) Declare that the resolutions passed at the board meeting held on April 23, 2015 (i) for the change in authorised signatories to operate the bank accounts of the company with the State Bank of India, Kotak Mahindra Bank and Catholic Syrian Bank, and (ii) for the opening of the new account with the Axis Bank as illegal, null and void ; (k) Declare that the resolution passed at the board meeting held on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or holding about 87.36 per cent. of the paid-up capital of the first respondent-company. It is stated that respondent No. 2 is promoted by Pragnya Fund. (e) The petitioner has further submitted that respondents Nos. 3, 4, 5, 6, 7 and 8 are the directors of the first respondent-company. Respondents Nos. 3, 4, 5, 6, 7 and 8 are also the nominee directors of respondent No. 2. (f) It is stated that the designated partners decided to develop a new project for land admeasuring 12 acres off Bannerghatta Road and the Pragnya Fund expressed interest in the same leading to the formation of the first respondent-company. The first respondent-company and Pragnya group entered into a memorandum of understanding dated August 7, 2012 with a view to develop Villament Project on the 12.05 acres of land located off Bannerghatta Road and a draft shareholders agreement was agreed upon by the parties. The shareholding pattern in the first respondent-company was that 12.64 per cent. was held by the petitioner and 87.36 per cent. was held by respondent No. 2. The petitioner thereafter executed assignment agreement assigning the rights under the memorandum of under standing and the registered agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o convene a board meeting on April 16, 2014 which was due to take up other matters as well. (l) It is stated that at the board meeting dated April 16, 2014 citing paucity of time, several matter not on agenda were discussed and passed through sheer majority of the nominee directors of the first respondent- company. The protests of the petitioner-company were brushed aside and this amounted to breach of trust which had been reposed when entering with joint venture with respondent No. 2. The following resolutions were illegally passed in the board meeting held on April 16, 2014 : (i) shifting of the registered office of the first respondent from the original address to the address preferred by respondent No. 2. (ii) taking custody of the records and documents of the company by the nominee directors of the first respondent-company. (iii) change in the authorised signatories of the first respondent- company to operate the bank accounts, wherein the names of the designated partners have been removed. (m) It is stated that there was no valid reason to shift the registered office as there was no rent payable and all the employees of the first respondent-company could be eas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent. The designated partners have suitably replied for all such false allegations made by respondent No. 3. The petitioner was forced to sell its stake in the first JV to a nominee of respondent No. 2, and the said nominee is run and managed by the directors of Oremus Corporate Ser vices P. Ltd., which offers back-office services to the first respondent. The designated partners received a notice from respondent No. 3 on December 26, 2014 calling for a board meeting on December 30, 2014 at 11 a.m. at Hyderabad for appointing whole-time secretary and to authorise the per son to do certain acts on behalf of the company. The designated partners could not attend the board meeting as they were travelling and sufficient notice as per section 173(3) of the Companies Act, 2013 was not given. (q) In spite of the protests of the designated partners, the meeting was held on December 30, 2014 and the company secretary appointed proceeded to file a civil suit against the petitioner on January 2, 2015. The minutes of the meeting on December 30, 2014 were circulated to the designated partners only by January 27, 2015. On January 9, 2015 the designated partners received a notice dated Janua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of the company, including books of account, bank statements, cash flow statements, etc. In the month of July when a board meeting was convened to approve the audited financial statement of the company for 2014- 15, one of the designated partners sought details including reason for allocating ₹ 1.50 crores to M/s. Guna Developers Ltd., as trade advance. Guna Developers Ltd., is owned and promoted by Oremus Corporate Ser vices P. Ltd., the same company whose directors are the only authorised signatories of the first respondent. While no reply to the said query was given by the nominee directors, the request of the designated partners for attendance of the board meeting by video conference was rejected. (t) Mr. Shivaram Kumar, one of the designated partners attended the board meeting and stated that accounts are not being properly maintained. However, the majority went ahead and approved the accounts and reap pointed Oremus Corporate Services P. Ltd., to provide back office services. It is stated that the petitioner was forced to exit the first JV due to the oppressive actions of respondent No. 2 and that the same facts are repeat ing themselves in the first respondent-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first joint venture was successful, the very same petitioner had filed C. P. No. 33 of 2014 before the Company Law Board making reckless allegations of oppression and mis management. The disputes were settled and the petition was withdrawn. The petition must also fail on the non-joinder of necessary parties. The petitioner has suppressed material facts from this forum and is not entitled to any relief. (iv) The partners of the petitioner-company also being directors of the first respondent-company are in breach of their fiduciary relationship and have acted in a mala fide manner against the interest of the first respondent-company. Out of pure goodwill on part of the respondents and in the interest of the completion of the project, the partners of the petitioner have not been removed from the board of directors. Respondents Nos. 4, 5, and 7 are no longer the directors on board. (v) The partners of the petitioner have misused the position, power and trust conferred upon them as directors of the first respondent-company and have instigated third parties not to co-operate with the first respondent-company and have caused legal proceedings to be initiated against the first res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any had been siphoned off in the first JV and therefore insisted that it be allowed to monitor and verify the timely and efficient execution of the project in order to safeguard its investment. The partners of the petitioner executed a letter of intent dated January 30, 2014 on behalf of the first respondent-company wherein the first respondent-company agreed to buy residentially converted land from a third party for an inflated value of ₹ 2,000 per square feet. The said third party in fact purchased the land in question three months after the execution of the letter of intent, that too for the actual rate of ₹ 710 per square feet. (ix) After differences arose between the partners of the petitioner firm and the respondents in late 2013, and all efforts to resolve it through mutual discussions failed, the first respondent-company tried to contact the land owner, but to no avail. It became clear that the partners of the petitioner in breach of their fiduciary duties, instructed the landowners not to co-operate with the first respondent-company. The first respondent- company has not been able to obtain sanctioned plan and proceed with the construction of the project. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the landowners to the first respondent. The hon'ble High Court of Karnataka disposed W. P. No. 5835 of 2015 in accordance with the joint memo and the matter was remanded back II Additional Senior Civil Judge, Ban galore Rural District. Subsequently, II Additional Senior Civil Judge, Bangalore Rural District passed an injunction order against the partners of the petitioner on March 25, 2015. Against the said order, an appeal has been preferred by partners of the petitioner and are numbered as M. A. Nos. 28 and 29 of 2015. The respondents have appeared in the above appeal and filed their objections. As of yet, no stay has been granted against the order dated March 25, 2015. (xii) On January 20, 2015 the first respondent-company filed a private compliant under section 452 of the Companies Act before the Chief Metropolitan Magistrate, Bangalore against the partners of the petitioner, which has been numbered as P. C. R. No. 1136 of 2015 and is pending on the file of the hon'ble Chief Metropolitan Magistrate, Bangalore. (xiii) It is thus seen that the petitioner has falsely claimed to be in possession of the necessary permits and sanctions, has colluded with the landow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Apaksh Broadband Ltd. [2010] 157 Comp Cas 30 (SC) ; [2010] 6 SCC 719 have been cited in sup port of this argument. It is also stated that in addition to its group company not fulfilling its obligation as per the memorandum of understanding, the petitioner has not signed the memorandum of understanding and hence cannot claim a breach of an agreement on behalf of another entity. (d) There was no shareholders' agreement which was executed between the first respondent-company and respondent No. 2, much less such agreement being incorporated into the articles of association of the company. The petitioner cannot seek to compel the respondents by way of the present petition to execute an agreement that it does not wish to. These being contractual disputes, the petitioner has approached the wrong forum. The following cases have been cited in this regard : (i) Incable Net (Andhra) Ltd. v. Apaksh Broadband Ltd. [2010] 157 Comp Cas 30 (SC) ; [2010] 6 SCC 719, at paragraph 37. (ii) Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 123 Comp Cas 566 (SC) ; [2005] 11 SCC 314 at paragraph 191. (iii) R. Balakrishnan v. Vijay Dairy and Farm Products P. Ltd. [2005] 125 Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-company and respondent No. 2 could supervise and progress the project implementation and thus safeguard the interest of the first respondent-company. For this reason, the address of the registered office was changed in accordance with the procedure established laid down in law. The case of Hanuman Prasad Bagri v. Bagress Cereals P. Ltd. [2001] 105 Comp Cas 493 (SC) ; [2001] 4 SCC 420 (in paragraph 6) has been relied on. The respondents have never denied the petitioner any access to the new registered office, or the records available therein, and as a result, there can be no oppression. (h) The notice for the meeting called on December 30, 2014 was communicated as per article 31(a) of the articles of association. The said meeting was called for the appointment of whole-time company secretary as the petitioner had not appointed any whole-time company secretary, even though the same was a statutory requirement. Further, the meeting on July 27, 2015 was being held to approve the annual financial statements and audited accounts of the company, which is to be conducted in person and cannot be conducted by way of video conference as per rule 4 of the Companies (Meeting of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and the respondent, and it is not exclusive to the parties in the present petition. The hon'ble Company Law Board, Chennai Bench in its order dated September 28, 2015 has observed that the said memorandum of understanding is not finalised and it is only a draft memorandum of understanding. It is further seen that the shareholders agreement sought to be enforced by the petitioner is merely a draft and it has been admitted by both sides that the shareholders agreement was never finalised. 7. The respondents are restrained from removing the partners of the petitioner LLP as directors of the first respondent-company and are directed to give them a patient hearing at the next annual general meeting of the first respondent-company. Other reliefs as sought for by the petitioner are not tenable in the facts and circumstances of this case and hence, could not be granted. 8. The first respondent-company, its directors and managerial persons are directed to file for compounding of non-compliance with section 203 of the Companies Act, 2013 with the Registrar of Companies, Karnataka. 9. At this juncture, we would like to make it clear that in case the remedy provided by us herei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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