TMI Blog2020 (10) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered substantial services to the Respondents and got executed Facilitation Agreement in its favour, the Petitioner could not get any benefit out of the transaction and on the top of it, the Respondents wanted to remove even nominee Directors of Petitioner No. 1 on un-tenable grounds, as detailed supra, in order to deprive them as not to involve in the affairs of the Respondent No. 1 Company. They have succeeded in their attempt to remove them while the Company Petition is pending. The main contentions/allegations raised on behalf of the Respondents, such fraud, forgery, manipulation of records etc., are not at all tenable and not substantiated by the Respondents. It is relevant to point out here, the affairs of R 1 Company is under the control of other Respondents but not under the control of Petitioners, and even the nominee Directors of Petitioner No. 1 were thrown illegally, moreover by examining the signature of Mr. Vikram Prabhakar(MD/Respondent No. 2), appearing on various documents including Facilitation Agreement, Pledge Agreement, with naked eye, there is no doubt in our mind that those signatures are not all forged and those documents binds on the Respondents - In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant Company Petition is maintainable U/s.241 of the Companies Act, 2013, and the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7, and the Petitioner Nos.2 to 4 cannot removed from the position of Directors of R 1 Company, without consent of majority shareholders and it is contrary to law and against the principle of natural justice - petition disposed off. - C.P. No. 143/BB/2019 - - - Dated:- 30-6-2020 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant/Respondent: C.K. Nandakumar, Vivekananda S. and C.S. Naman Joshi, PCS ORDER RAJESWARA RAO VITTANALA, MEMBER (J) 1. CP. No. 143/BB/201S is filed by M/s. Mentor Capital Limited and 3 others (hereinafter referred to as 'Petitioners')Under sections 59, 213, 241, 242, 244 and 341 R/w Chapter XVI of Companies Act, 2013, by interalia seeking to direct the rectification of share register of Respondent No. 1 by entering the name of the Petitioner No. 1 in the Register, in place of the Respondent Nos.3, 7, 8 and 9 and 10, to bring an end to the acts of oppression and mismanagement perpe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner No. 1 agreed and entered into Facilitation Agreement dated 06.10.2016 with the Respondent No. l, through Respondent No. 2. In consideration of the services provided by the Petitioner No. l, the Respondent No. 1 agreed to construct and deliver 5% of the total saleable super built-up area together with proportionate undivided share, right, title and interest in the schedule property and proportionate car parking, terrace area, etc in the mixed development use being developed in the schedule property. To secure due delivery of the consideration, the Respondent has agreed to deposit a sum of ₹ 25,00,00,000 (Rupees Twenty Five Crores only) towards interest free refundable security deposit with Petitioner No. 1 in the manner and on the terms more particularly contained in the Facilitation agreement being ₹ 15,00,00,000/- payable upfront and the remaining balance ₹ 10,00,00,000/- on or before 07.07.2017. The R1 Company handed over three chequesduly signed by the R 1 bearing No. 016110, 016111 and 016112 all dated October 7, 2016 drawn on Axis Bank, New Bell Road Branch, Bengaluru for a sum of ₹ 5,00,00,000/-each in favour of the Petitioner. (4) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in January 2017, the R2 instructed the Petitioners to deposit the said cheques of ₹ 5,00,00,000/- (Rupees Five Crores Only) each to clear their dues, but the same were dishonoured and returned to the Petitioners as Drawer Signature differs . Therefore, the R1 R2 failed to honour their obligations under the Facilitation Agreement which default continues till date. (6) it is stated that the R4 to R6 have been appointed as Additional Directors to the R 1 purportedly on 10.10.2018 without issuing notice or agenda to the Petitioner Nos. 2 to 4 without following any procedure as per the due process of law. The original share certificate Nos. 1, 2, 3, 4 and 5 in respect of 10,000 equity shares of the Respondent No. 1 Company alongwith corresponding share transfer forms (Form SH4) duly signed were placed before the R 1 Company's Board and the said transfers were duly recorded at the meeting held on December 19, 2016. In order to not to disturb the operations of the R 1 Company, Petitioner No. 1 did not cause any change in the Board of Directors of the R 1 Company and allowed the same set of Directors to continue as Directors of the R 1 in good faith and the Petitioner No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved from the agenda that the proposed Board Meeting was scheduled to pass a resolution for removal of Petitioner Nos. 2, 3 and 4 as Directors of Respondent No. 1. The said email dated 19.07.2019 received by the Petitioner Nos. 1,2 and 3 was a forwarded copy of a letter supposed to be issued on 10.07.2019 by R3 for requisitioning a meeting for removal the Petitioner Nos. 2 to 4 from the Board of Directors of Respondent No. 1 u/s. 100 R/w Section 169 of the Companies Act, 2013 and the said email or notice was not served upon the Petitioner No. 4. Petitioners extremely helpless and without any remedy is clearly oppressive and is intended to be harsh and burdensome. The law requires that when a Director is removed or proposed to be removed, sufficient notice is required to be given to such a Director, since he is required to be heard and the Board of Directors are required to act in a fair manner in order to not dilute the interest/affairs of the R1 Company and in the present case, there was no notice or show cause provided to any of the Petitioners. However, in the instant case, neither R2, nor R3 have acted in the interest of the members/shareholders of the R 1 Company, nor have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the petitioners are claiming themselves to be single Shareholder holding 100% of the Company, which is in violation of basic principle of the Company law and very concept of Private Limited Company. No Company can have less than 2 Shareholders. As such the very claim of the petitioners is untenable and not sustainable. Only an aggrieved person, who is either a Member or who has ceased to be a Member unlawfully, can invoke Section 59 of the Companies Act 2013. Since the Petitioners were not Members, the question of seeking rectification of Register does not arise. As such, no relief can be granted even under section 59 of the companies Act 2013. There are only three Shareholders in R1 Company as on date and the shareholding pattern at the time of incorporation of the Respondent No. 1 Company are furnished below:- Sl. Members Shareholding (Equity Shares) 1 Vikram Structures Private Limited 9,999 2 Aishwarya G Byrareddy 1 TOTAL 10,000 Later, as on 08.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to resolve all contentious issues for the purpose of ensuring that the Joint Development Agreement is carried out. The Petitioner No. 1 has failed to perform its part of the contract. Since the Petitioner No. 1 failed to resolve the contentious issues and disputes, the property could not be developed and the JDA is at a threat of termination. Hence, the Petitioner does not get any right under the Facilitation Agreement and on the contrary, the R 1 Company is entitled to claim damages for the loss sustained by it on account of the failure on the part of the Petitioners. (5) Further the Petitioners have failed to resolve issues like Regularisation of Kharab Land, Settling the dispute raised due to the property owned by land lord, E- Khata, Sanction Plan etc., and above all of these, they are issuing public notices, which are harming the reputation of R1 Company. Petitioner 2, 3 and 4 are not abiding by the duties as mentioned in Section 166 of the Companies Act, 2013 on account of which, there is a compulsion to remove the petitioners from the Directorship of the R 1 Company. The Respondents are following proper and legal process to remove the Directors. Further, Petitioners was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and crediting of ₹ 10/- came to her notice only after filing of the present petition by the petitioner. No share transfer deeds have been signed, no consent was given to transfer the shares by the R8. The petitioners have pre-planned everything and transferred the face value of the shares to Respondent No. 8's Bank account and very conveniently forged the share certificate and share transfer deeds of Respondent No. 8. (9) Further, neither the Respondent No. 2 nor the Respondent No. 8 have ever executed any share transfer deeds for transfer of shares. The Petitioners herein are illegally claiming to be a shareholder based on fabricated documents. It is stated that the Petitioners had sought to inspect the records of the Company in their alleged capacity as shareholders and as such the Respondent No. 1 Company was not in a position to oblige. Further, a letter was sent to the Petitioners indicating that it could not grant the request since it was not a Member. The Respondents herein have no other option but to remove the Petitioners No. 2 to 4 from the Company to avoid the bad reputation, which the company would face from continues mischief of the Petitioners No. 2-4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Structures Private Limited 9,999 2 Aishwarya G. Byrareddy 1 TOTAL 10,000 It can be seen that the pledge agreement is franked and stamped on 07.10.2016 at Shivajinagar, Sub Registrar and on the very same day even the share certificate has been franked and it clearly shows the fabrication of share certificate. It is to be appreciated that the Share certificate at 117 ought to have been issued within 60 days from the date of incorporation and not on 07.11.2016. Further the Share Certificate is created for the purpose of creation of pledge agreement to the petition. 3) The share certificates produced by the Petitioner are fabricated as R 1 Company was incorporated on 10.11.2015 with R7 R8 as subscribers to MOA. The table showing the MOA subscription is as below: Sl. Members Shareholding (Equity Shares) Certificate No. 1 Vikram Structures Private Limited 9,999 1 2 Aishwarya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany has filed the Annual Returns after receiving the instructions from Petitioner No. 4 and all other petitioners are aware about the filings. The petitioners were misusing their powers as Directors. They have inappropriately and fraudulently used their position as Director and hampered the business of the Company by giving a public notice and informing the public not to deal with the Respondents.The Petitioners have misused the power and authority given to them by the Company in good faith. (3) Further, as per the provisions of Companies Act 2013, the Petitioners have been served notice of Board Meeting on 19.07.2019 to hold the Board Meeting on 27th July 2019 which is clear 7 days' notice as per the provisions of Companies Act 2013. Further the provisions of sub-rule (2) of Rule 23 of Companies, (Management and Administration) Rules, 2014, reads as follows: The notice referred to in sub-rule (1) shall be sent by members to the company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting. The 14 days' notice shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting held on 19.08.2019, on the other hand, had filed a collusive suit in O. S. No. 1017 / 2019 before the Hon'ble Principal Civil Judge, Bengaluru Rural, simultaneous with the filing of these present proceedings, to fraudulently secure the cancellation of the JDA and GPA to the detriment of the Petitioners and the First Respondent. The suit was disposed of on the first date of hearing i.e. 16.08.2019 pursuant to a compromise petition, the R 1 Company confirmed the cancellation of its JDA and GPA in relation to itsScheduled Property with effect from January 2018. (4) While the Rl, R2 and R8 have not disputed the existence of the Pledge Agreement, the Third and Seventh Respondents in their statement of objections stated that the Second Respondent has 'gone behind their back' and executed the Pledge Agreement without authorization. Such a stand of the R3 and R7 is merely an afterthought, and is completely untenable. The Third and Seventh Respondents have stated that the documents produced by the Petitioners have been fabricated and forged, and that the Pledge Agreement has been executed by R2 'behind their back'. Yet, no action has been taken by any of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the First Respondent Company. (6) The present petition was filed seeking various reliefs, on 26.07.2019. Thereafter, the subsidiary of the First Petitioner i.e. CLN Properties Private Limited was shocked to receive a letter dated 08.10.2019 from the Fourth and Fifth Respondents and their parents, stating that there was a joint development agreement dated 07.10.2016 and that the Fourth and Fifth Respondents and their parents, revoked the said JDA as well as the general power of attorney dated 07.10.2016, by way of their letter dated 22.01.2018. 6. Heard Shri C.K. Nanda Kumar, learned Counsel for the Petitioners. Mr. Vivekananada B.S, Learned Counsel for the Respondents No. 1, 2 8 and Mr. Naman.G.Joshi, Learned PCS for the Respondent Nos. 3 7through Video Conference. We have carefully perused the pleadings of all the Parties and the extant provisions of the Companies Act, 2013, and the Rules made thereunder and the Law on the issue. 7. Shri. C.K. Nandakumar, learned Counsel for the Petitioners, after arguing the case, has also filed Written Submissions dated 05.06.2020 by inter alia stating as follows: (1) Aggrieved by the various acts of oppression and mismana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors of the R 1 Company, are concerned with the opaque and brazenly illegal manner in which the affairs of the Company are being of business on the part of the Respondents. (5) The contention of the Respondents that the Petitioners No. 2 to 4 are not abiding the duties mentioned in Section 166 of the Act on account of which there is a compulsion to remove the petitioners from directorship of the R 1 Company is false and vague. (6) On a perusal of the minutes of the meeting of the Board of directors of Respondent No. 1 held on 27.07.2019, it may be observed that Respondent Nos. 2, 3, 5 and 6 were present at the said meeting. As per Agenda Item No. 7.1, the Company has taken on record the progress report in relation to the Scheduled Property. (7) Article 42(iii) of the Articles of Association of the First Respondent clearly provides that notices to general meetings have to be issued 'either in writing or through electronic mode'. Since the articles do not define 'electronic mode', reference is drawn to Rule 18 of the Companies (Management and Administration) Rules, 2014, which states that electronic mode shall mean any communication sent by a company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a member of the company. Neither the register of members nor any other document evidences or gives ownership/membership to the Petitioner. From the Annual Returns i.e., Form MGT-7 for financial year 2016-17 produced by Respondents, it is clear that no Board meeting whatsoever was held on 19/12/2016. As such its Prima facie indicates that shares were not transferred as is being claimed by the petitioners. When there is no share transfer, there can be no question of petitioner claiming to be member/shareholder of R1 Company. Further, after a gap of more than 2 Va years the petitioners have approached this Hon'ble tribunal acting as if they were not aware of the Annual returns. Further when authenticity of the document is in question, evidence needs to be taken and trial has to be conducted, which is not permissible before the Tribunal. Further, it would fall squarely within the realm of civil court since it involves the question of forgery, fraud, and other connected aspects. (2) As per section 3 (1) (b) of the Companies Act, 2013, the minimum Members required in case of private limited company is two. However, petitioner makes illogical claim of being 100% sole shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of forged documents. 2) Transfer deed attached to rejoinder are not verified by the Company and to misguide the Hon'ble Bench fabricated documents does not have columns required to be verified by the Company as prescribed under SH4 of Companies Act, 2013. Further the initial objection filed on 16.08.2019 by R3 8B R7, they have denied the transfer of shares and share certificate is fabricated and forged because share certificates are not belonging to those persons, who transferred as per Company records and the alleged transfer was never recorded in the registered.The case laws produced by the Petitioner are not relevant to the instant case. 10. By perusal of the pleadings of all the Parties involved, the following broad issues arise for consideration: a) Whether the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company, by virtue of Facilitation Agreement dated 06.10.2016, Pledge Agreement dated 07.10.2016 and Board's Resolution dated 19.12.2016 and other connected proceedings; b) Whether the removal of the Petitioner Nos.2 to 4 from the Directorship of the Respondent No. 1 Company, is in accordance with law or not; c) Whether the main Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 07.10.2016 drawn on Axis Bank, New BEL Road Branch, favoring the Facilitator, the receipt of which the Facilitator hereby admits and acknowledges; and (b) ₹ 10,00,00,000/- (Rupees Ten Crores only) shall be paid on the date of execution of release of finance facilities to Developer vide Cheque No. 016113 and 016114 dated 07.07.2017, drawn on Axis Bank, New BEL Road Branch. 3.2 The refundable Security Deposit will be refunded by the Facilitator to the Developer without any interest thereon within fifteen (1') days of receiving written intimation from the Developer that the 5% of the total saleable super built area allotted to the Facilitator is complete in all respects and its readiness to deliver the same to the Facilitator. However, in case the development in the Schedule Property takes place in phases and the Developer hands over the Facilitator's entitlement in portions, the Facilitator shall be liable to refund the Security Deposit in stages, proportionate to the super built up area and the undivided share, right title and interest in the Schedule Property and car parking area, terrace area etc., that is handed over to it by the Developer. 3.3 If the Ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of TDR. In addition, the Developer shall hear the expenses of putting up construction regarding additional TDR with respect to Facilitator share also. 4.6 The entire cost of construction of the building/s to be built in the Schedule Property shall be borne solely by the Developer. The Facilitator shall not be required to pay any amount for the development and construction in the Schedule Property for its 5% shares. 6. Specific Performance: 6.1 If the Developer fails to perform its part of the contract in spite of the Facilitator complying with and performing the terms of this Agreement, the Facilitator shall be entitled to enforce Specific performance. 12. In pursuant to the above Agreements, the Petitioner No. 1 and Respondent Nos. 1 and 7, represented by Mr. Vikram Prabhakar, as Managing Director, has executed Pledge Agreement dated 07.10.2016, which inter alia states as follows: In order to secure payment of the aforementioned Facilitation Fee, the Company has agreed to pay to the Pledge a refundable deposit of ₹ 25,00,00,000 (Rupees Twenty Five Crores) out of which ₹ 15,00,00,000 (Rupees Fifteen Crores) ( Deposit Amount ) was due and payable on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of part payment of the Deposit Amount the Pledgee agrees declares and confirms that it will do all acts, deeds, matters and things to give effect to the return of proportionate Pledged Shares to the Pledgor. VII. Appointment of Directors: In order to further secure the payment of the Deposit Amount, the Pledgee shall be entitled to nominate three (3) of its nominees to be appointed as additional Directors in the Company. Thereafter the Company shall do all such acts deeds and things required, including filing of necessary forms with the Registrar of Companies to facilitate the appointment of such Directors into the Company. On payment of the Deposit Amount, all three (3) of the Pledgee's nominees shall resign from the directorship of the Company. (PLEDGOR) For Vikratn Structures Private Limited (PLEDGEE) For Mentor Capital Limited (Company) For vs. Infra Private Limited The Total shares of the Respondent No. 7 are 5100 Equity Shares at face value of ₹ 10/- held by the Pledgor in the Company constituting 51% of its Issued Subscribed Share Capital. 13. In pursuant to the above two (2) Agreements, the Board of Directors of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of vs. Infra Private Limited Vikram Prabhakar Deepu Vijaya Nath Sanjay Dangi Amit Dangi Managing Director Director Director Director DIN-02086814 DIN-06679734 DIN-00012833 DIN-06527044 14. In the light of the above Agreements, Mr. Vikram Prabhakar, Managing Director of the Respondent No. 1 Company, has addressed a letter to Mr. Sanjay Dangi (Petitioner No. 2 and Director of the Petitioner No. 1 Company), by inter alia stating as follows: 07th October, 2016 To, Mr. Sanjay Dangi Mentor Capital Limited 713, Raheja Center, Nariman Point, Mumbai - 400021. Subject: Transferring of Equity Stake. This is with reference to facilitation agreement and Joint Development Agreement dated 7th October, 2016 executed between us regarding Development of Property situated at bearing Survey Nos.96, 96/1, and 96/2, measuring 11 acres 37 guntas, situated at Kodathi Village, VarthurHobli, Bengaluru. Since you have facilitated this transaction we are suppose to make you a payment of ₹ 15,000,0000/- (Rupees Fifteen Crores only). This amount we will make you the payment within 30 days. Further in case of default we will transfer the entire holding (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Articles 20, 21 22 of Articles of Association of the R 1 Company deals with the Transfer of Shares, which reads as under: Transfer of Shares 20 (i)The instrument of transfer of any share in the Company shall be executed by or on behalf of both the transferor and transferee. (ii) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof. 21. TheBoard may, subject to the right of appeal conferred by section 58 declines to register- (a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or (b) any transfer of shares on which the Company has a lien. 22. The Board may decline to recognize any instrument of transfer unless- (a) the instrument of transfer is in the form as prescribed in rules made under sub-section (1) of Section 56; (b) the instruments of transfer is accompanies by the certificates of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transfer to make the transfer; and (c) the instrument of transfer is in respect of only one class of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares, in terms of the Article 20, 21 22 and the extant provisions of the Companies Act, as stated supra. So far as allegation of the Respondents that the first Petitioner failed to carry out its obligations under the Facilitation Agreement is concerned, it is for the Respondents to take appropriate legal course of action. 21. For the above said reason and circumstances of the case, we are of the considered opinion that the instant Company Petition is maintainable U/s.241 of the Companies Act, 2013, and the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7, and the Petitioner Nos.2 to 4 cannot removed from the position of Directors of R 1 Company, without consent of majority shareholders and it is contrary to law and against the principle of natural justice. 22. In the result, C.P.Nol43/BB/2019 is hereby disposed of with the following directions: (1) We hereby declared that the Petitioner No. 1 deemed to be shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7; and consequentially, the Respondent No. 1 Company is directed to register the name of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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