TMI Blog2020 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... the members (apart from the three Petitioners) have authorized (which authorization itself is not proper) the Petitioners to file the instant Petition under proviso to Section 244. It is seen that the consents submitted by the Petitioners clearly read as Consent Under Section 241 of the Companies Act, 2013 to make a Petition under Section 241 of the Companies Act, 2013 .Hence, this Tribunal cannot agree with the submissions made by the Petitioners in this regard. Whether (proposed) application under Section 241 pertains to oppression and mismanagement ? - HELD THAT:- In my view the allegation made against the Respondent Company in the instant petition will not amount to Oppression and Mismanagement. As shareholders of the respondent company, the petitioners were entitled to highlight the alleged acts. The petitioners have not produced any documents to prove that they raised/highlighted the issues and demanded explanation from the Board. In the letter dated 07.02.2020, the Petitioners have stated that a large number of shareholders have sentiments and apprehension of gross mismanagement of the 1st Respondent Company - this Tribunal cannot agree with the submissions made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst M/s Sea Blue Shipyard Limited Others (hereinafter called as Respondents).The Petitioners are shareholders of the 1st Respondent company and the Petitioners have paid all calls and other sums due on their respective shares. The Petition has been filed against the Respondents on account of severe acts of oppression and mismanagement being conducted by them which are detrimental to the 1st Respondent Company as well as its shareholders 2. The Petitioners along with the other shareholders who have given consent in writing to make the application on their behalf under Section 244(2) of the Companies Act, 2013 constitute 68 numbers i.e. 7.2% of the total shareholders of the 1st Respondent company being 951 as per the latest Annual Return of the company filed with the Registrar of Companies, Kerala as on the date of signing the application, i.e. the Annual Return of the 1st Respondent Company for the financial year 2017-2018. 3. Respondent No. 1 company viz M/s Sea Blue Shipyard Limited (hereinafter referred to as the Respondent Company) was incorporated on 08.12.2003 under the provisions of the Companies Act, 1956 as a Company limited by shares. 4. The registered office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts may compel the financial creditors of the company invoking the provisions of the IBC, 2016 which will be against the best interest of the shareholders who are the investors of the company. The 1st Respondent Company is seen not complying with many of the legal provisions of the Companies Act, 2013, in scant disregard to the principles of proper company management and administration. 9. It is their further contention that the applicants along with other shareholders do not have the threshold number or percentage as mandated by Section 244 of the Companies Act, 2013 to prefer application under Section 241. (The applicants along with the other shareholders constitute 93 numbers which is only 9.8% of the total shareholders of the respondent company. The required threshold is 10%). Hence their submission in such a situation is that under the provisions of Section 244 of the Companies Act,2013, this Tribunal has the power to waive the requirements enabling the aggrieved shareholder/members to prefer an application under Section 241. 10. Section 244 of the Companies Act, 2013 is reproduced hereunder; 244. Right to Apply under Section 241 244.(1) The following members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alances under Sundry Creditors, sundry Debtors, Debtors for loans and advances and other liabilities are subject to confirmation of balances 2). ******** 3). The details of suppliers regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 are not available and hence the details of amount unpaid if any have not been given 4). Inventories have been taken as valued and certified by the management. 2014-2015 1). Confirmation of balances under Trade payables has been obtained in some cases. No confirmation of balances has been obtained in respect of Trade Receivables and Loans Advances. There are long outstanding balances under Trade Receivables mostly of which are from Government Departments. Adequate provision may be made for Bad and Doubtful Debts, if there is any irrecoverable portion. 2). ********* 3). The details of Suppliers regarding their status under Micro, Small and Medium Enterprises Development Act 2006 are not available and hence the details of amount unpaid, if any, have not been given. 4). Inventories have been taken as Valued and Certified by the management. 5). There is much delay in remittin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts. 6) We are not able to quantify the effect of qualifications No.1 and No.5 on the Financial Statements, if any, at present. 2017-2018 7) Trade Receivables ₹ 11,35,86,619.00 includes the receivables in respect of the income recognized on Percentage completion basis as at the end of the year amounting to ₹ 4,30,51,267.38 of which ₹ 2,19,41,221.00 is recognized in the reporting year balance ₹ 2,11,10,046.00 Pertaining to periods prior to 2017-2018 financial, year for which progress invoices are not submitted by the company till 31.3. 2018.Confirmation of Balances has not been received in respect of Trade Receivables. There are long outstanding balances under trade receivable and we are not able to ascertain the recoverability of debts or whether any provision is required in this regard Management has clarified that they do not expect any bad debts and therefore no Provision is required in this regard. 8) ************* 9) ************* 10) Advance to suppliers for materials and services include an amount of ₹ 83,19,390/ due for more than one year paid to various suppliers against which expenses are not booked by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Qualification No.2 to No7 on the Financial Statements, if any, at present. The downward change in shareholders fund in figures are as under: - Year Share Capital Rs. Reserves and Surplus Rs. Total shareholder s funds Rs. 2014 35,00,00,000 55,26,773.68 35,55,26,773.68 2015 35,00,00,000 96,69,022.10 35,96,69,022.10 2016 35,00,00,000 50,07,003.30 35,50,07,003.30 2017 35,00,00,000 4,31,909.07 35,04,31,909 2018 35,00,00,000 -2,12,81,370.00 32,87,18,630 2019 35,69,89,470 -8,58,81,079.00 27,11,08,391 13. The 1st Respondent Company is seen not complying with many of the legal provisions of the Companies Act, 2013, in scant disregard to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Adul Gafoor whose Folio No. is 717, whose consent as provided has been executed at Al Khobar, Saudi Arabia without appropriate attestation. Therefore, there is double count with respect to Mr. Abdul Gafoor C. Similar to above, Folio No. 382 appears twice in the names of two different members Mr. Philip K. K. (at Serial No. 20) and Mr. Jacob Zacharia (at Serial No. 33), whereas, Folio No. 382 relates to Mr. Philip K. K., the consent of whom is reproduced at Page 301 of the Company Petition. Therefore, based on Paragraphs 5 and 6, the number of double counts is 2. Hence, the total number of consents is reduced to 66. 18. It is further submitted that the place of execution of authorizations provided by the members were outside India and were not authenticated by a notary public of the respective country or by the Indian consulate. Hence, they are not valid authorizations in accordance with the Indian Evidence Act and established judicial pronouncements. Therefore, the 35 consents, which are either defective or invalid. In view of the above, the total number of consents which may be accepted is 55 and not 90 as contended by the Petitioners. 19. It is their further contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners along with other shareholders constitute 9.8% of the total shareholding of the 1st Respondent Company. In this regard the learned counsel submitted that the respondents are not privy to the consent to all the members which the Petitioners are claiming. Further, even the authorizations of 65 members is not proper and the Petitioners seem to have been suggesting that they have nearly achieved the figure of 10% and that the waiver may be granted to them. The Respondents submitted that the waiver should not be granted, as the Petitioners have clearly established that there are no exceptional circumstances which may prevent them from achieving the threshold of 10%. Therefore, the Respondents prayed for dismissal of the Company Petition. Supplementary submissions made by the Petitioners 23. The Petitioners submitted that the Respondents are relying solely on the technicalities of the Petition. If the leave application filed under Section 244 is disallowed on technical grounds, the Petitioners grievances will remain unaddressed forever. The consent letters are the consent as prescribed by Section 244(2) to make a Petition under Section 241 of the Companies Act, 2013. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial No. 45 and 46 at Page 38 of the Company Petition. It is also seen that there is only one Mr.Abdul Gafoor whose Folio No. 717, whose consent is annexed in Page No. 325 of the Company Petition. Further, the consent given is executed at Al Khobar, Saudi Arabia without appropriate attestation. Therefore, there is a double count with respect to Mr. Abdul Gafoor. The Folio No. 382 appears twice in the names of two different members Mr. Philip K. K. (at Serial No. 20 of Page No.37 of the Company Petition) and Mr. Jacob Zacharia (at Serial No. 33 of Page No. 38 of the Company Petition, whereas, Folio.382 relates to Mr. Philip K. K., the consent of whom is reproduced at Page No. 301 of the Company Petition. Therefore, based on paragraphs 5 and 6, it is seen that the number of double counts is 2 thereby the total number of consents is reduced to 66. The place of execution of authorizations provided by the members were outside India and were not authenticated by a notary public of the respective country or by the Indian consulate, hence they are not valid authorizations. This Tribunal therefore, cannot accept the argument advanced by the Petitioners in this regard. Point no (ii). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erit of (proposed) application under Section 241, but required to record grounds to suggest that the applicants have made out some exceptional case for waiver of all or of any of the requirements specified in clauses (a) and (b) of Sub-Section (1) of Section 244 as decided by the Hon ble NCLAT in its judgement in Cyrus Investments Ltd. And Anr. Vs. Tata Sons Ltd. Ors. ((2017) SCC OnLine NCLAT 261) in which it was held as under: - 150. The Tribunal is not required to decide merit of (proposed) application under Section 241, but required to record grounds to suggest that the applicants have made out some exceptional case for waiver of all or of any of the requirements specified in clauses (a) and (b) of sub-section (1) of Section 244. Such opinion required to be formed on the basis of the (proposed) application under Section 241 and to form opinion whether allegation pertains to oppression and mismanagement of the company or its members. The merit cannot be decided till the Tribunal waives the requirement and enable the members to file application under Section 241 . 28. Paragraph 150 of the Judgment in Cyrus (supra) clearly lays down that merits of the case cannot be de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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