TMI Blog2020 (10) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt or bank statement or such other document against the transfer of the shares in favour of the Respondents. Thereby, it is established that the Petitioner still holding 50% of the share capital of the Respondent No. 1 Company and is entitled for his rights as the shareholder of the company. On perusal of the record, it is found that Petitioner annexed Annexure-C i.e. list of shareholders as on 31.03.2018 at page No. 58 of the petition which shows that Petitioner is holding 18,35,500 Nos. of shares and the Petitioner is eligible to file the present petition. For an application under sections 241-242, the act which is contrary to law may not necessarily and by itself support the inference that the law is/was violated with mala fide intention or that such violation was burdensome, harsh and wrongful. There must be continuous act on the part of the members or majority shareholders, continuing upto the date of petition, showing that the affairs of the Company were being conducted in a manner oppressive to some of the members. The conduct must be burdensome, harsh and wrongful. In the instant case, it is found that there is a lack of trust and confidence between the members/shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the Respondent Nos. 2 to 5 as directors of the Respondent No. 1 Company. vii. Pass order of appointment of independent auditor and direction for conducting the special audit of the Respondent No. 1 Company for the F.Y. 2016-17, 2017-18 and 2018-19 and file such audit report before this Hon'ble Tribunal for passing of further appropriate order(s) as this Hon'ble Tribunal deems fit. viii. Pass order directing the Respondents not take any borrowings/facilities (fund based and/or non-fund based) without the prior permission of this Hon'ble Tribunal. ix. Pass order directing the Respondents not to create any third party rights, charge and/or encumbrance on the properties of the Respondent No. 1 without prior permission of this Hon'ble Tribunal. x. Pending admission, hearing and final disposal of the company petition this Hon'ble Tribunal be pleased to: a. Pass order directing the Respondents not to pass any resolutions in relation to agenda item Nos. 1 to 7. b. Pass order directing the Respondents not take any borrowings/facilities (fund based and/or non-fund based) without the prior permission of this Hon'ble Tribunal. c. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the Respondent No. 2 immediately appointed Respondent No. 3 and 4 being relative, as director of the Respondent No. 1 Company on 30.08.2017 and came in control of the board, without compliance of agreement so entered between Petitioner and Respondent No. 2 dated 11.08.2017. 6. It is further submitted/alleged by the Petitioner that dues of the CC facilities (₹ 19,14,57,954.57/- as on August 2017) were required to be paid from the recovery of deposits/advances/WIP or collection received by the Company and lastly from his personal accruals which would be reimbursed from the recovery of deposits/advances/WIP or collection received by the Company. It is further made to understood that since money in relation to the recovery of deposits/advances/WIP or collection had not come in, he used his personal accruals to make payment of the CC and thereby taking steps towards releasing the mortgage property. 7. It is further submitted by the Petitioner that after making the aforesaid payment, had all along been waiting for the Respondent No. 2 to perform his part of the obligations as agreed in the agreement dated 11.08.2017 and reimburse the amount so paid by the Petitioner from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents in support of his contentions denying all the allegations so made by the Petitioner in the Petition. It is submitted by the Respondent that the Petition is nothing but fraud on Respondent and is an attempt on the part of the Petitioner to take some order by the misrepresenting the court about the actual facts. 15. It is further submitted by the Respondent that Section 241-242 of the Companies Act, 2013 can be invoked only by the Members of the Company, if there is any incident of company being managed prejudicial to the interest of the company or members or class of members. 16. It is further submitted by the Respondent that the Petitioner is not a shareholder in view of agreement dated 11.08.2017 which is annexed as Annexure-D at page No. 37-41 of the reply and have also stated that another agreement was executed on the same day between the same parties and witnesses, having certain additional details of cash transactions between the parties which is annexed as Annexure-E at Page No. 42-47 of the reply. The Respondent further stated that the para No. 17 is specific about the receipt of entire consideration for Petitioner's entire shareholding in Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement dated 11.08.2017 (un-notarized) bearing stamp number 206028 was cancelled, as it contained the clauses which were not agreeable to the parties, which said fact is disclosed by filing IA 252/2019, wherein, no reply has been filed by the Respondent No. 2 dealing with the averments made in the IA 252/2019. 23. The Petitioner has alleged that it is the case of the Respondent No. 2 that the agreement dated 11.08.2017 bearing stamp number 206028 purportedly contained those additional clauses which was dealt with purported 'cash' transactions between the Petitioner and Respondent No. 2 and that the payment of the purported share transfer of the shares held by the Petitioner in the Respondent No. 1 Company were transferred on payment of cash. 24. The Petitioner has further alleged that on the other hand, Respondent No. 2 is making a case that the payment of the shares has been made by banking channel to Petitioner amounting to ₹ 5 crores and has produced ledger statement to that effect. It is alleged that Respondent No. 2 is taking two different stands on the purported mode of payment in respect of alleged share transfer, which itself goes to show that the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r F.Y. 2017-18 as Annexure- C at page Nos. 18-28 of the rejoinder. 30. It is further alleged that in any event, the Respondent No. 2 has filed a different resolution of appointment of Respondent No. 5 (brother in law of Respondent No. 2) as director of the Respondent No. 1 Company which is annexed as Annexure D at page No. 29 of the rejoinder which goes on to show that the Respondent No. 2 is running the Respondent No. 1 Company as per his whims and fancies and devoid of the principles of company law. Findings 31. Heard both sides, also seen the pleading and objection along with the documents annexed with the petition, as well as the rejoinder. 32. Before proceeding further, it is necessary to see whether the petition fulfils the test of section 241 and 242 of the Companies Act, 2013. While dealing with the present petition, it must fulfil the following ingredients: Before an order is passed under section 394 (2) of the Companies Act, 1956 (old section) (new-section 241 of the Companies Act, 2013), the following conditions must exist: 1) The facts of the case should justify the making of a winding up order on the ground that it is just and equitable; 2) The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner as well as the Respondent No. 2 have arrived at an understanding to settle and part with on certain terms and conditions. However, dispute arose with regard to non-compliance or deficiency in compliance of the conditions of the said agreement by Respondent No 2. 35. The list of shareholders of the Respondent No. 1 Company at Annexure-A at page no 15 of the petition as well as at Annexure-Q at page No. 141 of the reply clearly reflect that the Petitioner as well as the Respondent No. 2 hold the 50% each of the shares of the Respondent No. 1 Company. There are no documents on record so as to show that the shares of the Petitioner in question have been transferred to the Respondent No. 2 or any other person(s) after following the due procedure relating to the transfer of shares as claimed by Respondent No 2. There are no concrete evidence or proof filed to show that the payments have actually been made to the Petitioner in the form of cash receipt or bank statement or such other document against the transfer of the shares in favour of the Respondents. Thereby, it is established that the Petitioner still holding 50% of the share capital of the Respondent No. 1 Company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the same are signed by the Respondent No. 2 alongwith the Respondent No. 5 showing that the Petitioner had refused to sign the said financial statements. Since, it is an admitted fact that the Petitioner is a shareholder of the Respondent No. 1 Company holding 50% of the share capital of the said company as well as a director of the said company, the Respondent No. 2 is under obligation to send the notices of all the meetings of the Respondent No. 1 Company to the Petitioner wherein the businesses are proposed to be transacted. However, there is no material on record to show that the Respondents including the Respondent No. 2 have sent the notices of the meetings held from time to time in compliance of the Companies Act, 2013. Moreover, the Respondents have failed to entertain the request of the Petitioner for the financial statements for the F.Y. 2018-2019 stating that the Petitioner is not eligible for the same, this itself is the material irregularities with regard to the approval of the financial statements of the Respondent No. 1 Company and is against the interest of the Company. 39. For an application under sections 241-242, the act which is contrary to law may no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressive or not is not based on whether it is legally permissible or not since even if legally permissible, if the action is otherwise against probity, good conduct or is burdensome, harsh to oppression under sections 397 and 398. e. Once conduct is found to be oppressive under sections 397 and 398, the discretionary power given to the Company Law Board under section 402 to set right, remedy or put an end to such oppression is very wide. f. As to what are facts which would give rise to or constitute oppression is basically a question of fact and, therefore, whether an act is oppressive or not is fundamentally/basically a question of fact. Two prominent examples which figure in several cases and held an oppressive conduct are: 1) Issue and/or transfer of shares with the intent to increase shareholding percentage of one or some of the shareholders or reducing shareholding percentage of another one or some of the shareholder; and 2) Appointment and/or removal of director with the intent of increasing or reducing the strength in the board of directors of the company. 42. In Naresh Mohan Mittal V. Sangeeta Construction P. Ltd. [2013] 178 Comp Cas 188, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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