TaxTMI 
TaxTMI 
2015 (12) TMI 1857
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....s. 5,00,000/- divided into 5000 equity shares of Rs. 10/- each. The paid up share capital of the company is Rs. 1,00,000/- divided into 10,000 equity shares of Rs. 10/- each. M/s. Sri Krishna Tiles & Potteries (Madras) Pvt. Ltd. (R11) is the owner of property to an extent of 34.04 acres in Survey No. 227/3, 229/2, 230/1, 230/2, 230/3, 230/4, 230/5, 230/7A and 230/8, Thirumangalam Village, Anna Nagar West. Chennai is entered into a Memorandum of Understanding dated 02.07.2001 with the petitioner. As per the said MOU the above said company entrusted the total extent of land to the extent of 308 grounds for development with the petitioner. The petitioner took possession of the entire extent of said land of 308 grounds for developing the properties. Thereafter, the petitioner formed a partnership firm namely M/s. Sai Sri Krishna Properties. Due to the expertise in the field to the petitioner the above partnership firm was formed with the ratio of 40:60 by the petitioner and the 2nd respondent respectively. M/s. Sai Sri Krishna Properties, the partnership firm was converted into a private limited company in the name and style of M/s. Sri Sai Krishna Properties & facilitators Pvt. Ltd. (....
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....made by them. The petitioner heard from some of the purchaser that M/s. Sri Krishna Tiles & Potteries (Madras) Pvt. Ltd. Mr. A.R. Santhana Krishnan and Mrs. Rathika Santhanakrishnan are also negotiating with them for refunding the advances, sale consideration received from them by the R1 Company. Under the above circumstances, the owners of the land prepared an agreement dated 02.07.2005 and sent it to the petitioner for his signature so as to cancel the MOU and agreement with the R1 Company by mutual consent. However the petitioner refused to sign the above agreement dated 02.07.2005. The agreement still subsists and the R1 Company has not terminated the agreement till date. Under the above facts and circumstances of the case, the petitioner suspected the attitude of the respondents and immediately the petitioner started asking various records from the company. However, all the records, books of accounts, returns, statutory registers and agreements etc were taken away by the 2nd respondent from the R1 Company. The petitioner was forced to give complaint dated 11.07.2005 before the Additional Chief Metropolitan Magistrate. Egmore, Chennai. The Learned Magistrate has taken the compl....
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....at on 20.02.2005 there was no allotment of shares either at the board meeting or at the shareholders meeting. It is a fabricated documents filed by the 2nd respondent at Registrar of Companies, Chennai. It is pertinent to mention here, that the fabricated return of allotment was filed on 08.07.2005 at Registrar of Companies, Chennai. All the above three fabricated return of allotment was filed at Registrar of Companies, Chennai on 08.07.2005. The petitioner submits that the respondents 2, 5 and 11 were prepared two agreements for cancellation of the above two agreements with the R1 and the MOU. However, the petitioner was refused to sign the cancellation agreement dated 02.07.2005. Therefore to take vengeance and to cheat the petitioner, the 2nd respondent fabricated all the records and filed it in the Registrar of Companies, Chennai on 08.07.2005. (d) The petitioner submits that the 2nd respondent fabricated and filed the Form 32 on 08.07.2005 as there were two directors namely Natarajan and Ramasami were appointed as directors on 27.10.2004. The petitioner submits that there were no meeting of the board or the shareholders on 27.10.2004 for appointment of these persons as direct....
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....he 2nd respondent for her own benefit and for the benefit of her associates. The petitioner reasonably apprehends that above oppressive acts were made against the petitioner with intention to cheat the petitioner and to alienate the 60 grounds of land by violating the agreement dated 24.06.2002 and MOU dated 02.07.2004. In support of the case the PCS relied upon the following citations: 1. Date & Carrington Invt. (P) Ltd. & Another Vs. P.K. Prathapan & Ors. reported in (2005) 1 SCC 212. 2. Jagjit Singh Chawla & Ors. Vs. Tirath Ram Ahuja Ltd. & Ors. reported in (2002) 47 CLA 276 (CLB), Principal Bench, New Delhi. 3. Radhae Shyam Tulsian & Ors. Vs. Panchmukhi Investments Ltd. & Ors. reported in (2002) 46 CLA 187 (CLB) Principal Bench, New Delhi. 4. Rohit Churamani Vs. Disha Research & marketing Services (P.) Ltd. & Ors. reported in (2005) 65 CLA 85 (CLB) Principal Bench, New Delhi. 5. Giridhar Gopal Gupta & Ors. Vs. AAR Gee Board Mills (P) Ltd. & Ors. reported in (2004) 60 CLA 182 (CLB) Principal Bench, New Delhi. 6. S. Varadarajan & Another Vs. Udhayem Leasings & Investments (P) Ltd. & Ors. reported in (2005) 65 CLA 21, Additional Principal Bench, Chennai. 7. Hansraj Gokuldas....
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....entify, locate a person for developing or otherwise acquiring the Schedule B property as a whole or for individual residences or commercial units to be constructed on the property mentioned in Schedule B only. Further the description of Schedule B as given in pg 67 wherein, the extent of 30 grounds out of 17.02 acres lying in the northern side out of total extern of 34.04 acres which only is described as forming pun of Schedule B. Hence the petitioner's statement that there is an agreement for 60 grounds out of 308 grounds is a false statement made to mislead the Hon'ble Bench. The respondents further submit that the memorandum of understanding referred to be the petitioner is the Memorandum of Undemanding dated 02.07.2001 which was entered into between the 11th respondent company and the petitioner in his individual capacity and that has got nothing to do with the R1 Company. It is true that the KM entered into a memorandum of understanding with the petitioner on 02.07.2001 for development of the Schedule B property only. The main condition of the memorandum of understanding of clause 10 was that the petitioner was to bring Rs. 2.50 crores within one month from the date of....
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....akhs was returned at the time of booking itself since the buyers claimed for the refund for their personal reason. No interest was given at that time. The question of interest along with the payment does not arise and the petitioner's decision has no relevance in the context of statement made above since the entire amount was returned at the time of booking itself. The petitioner has stated that a sum of Rs. 2.29 crores has to be refunded to the remaining 99 allottees is a patent falsehood since it was not the company's decision, rather it was the decision by the proposed purchaser AIBOC (All India Bank Employees Confederation) flat allottee who wanted to withdraw from the R1 Company since clearance from the Government was not received and construction could not take place. Since, as already explained earlier, the land owners could not obtain statutory clearances due to various factors proposed AIBOC enclave flat Allottees informed that they could not wait any further and wanted refund. The proposed AIBOC enclave flat Allottees through their representatives and through AIBOC local leadership held several meetings with the 5th respondent and the 2nd respondent and after a ha....
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....ery respectable family in Chennai, who immediately brushed aside the suggestions of the petitioner and had taken over the entire burden of repayment to public. The public who invested their hard earned money in the proposed AIBOC enclave project happily received the refund with interest on 09.07.2005 and 10.07.2005 thanking the 5th respondent and 2nd respondent for their outstanding integrity. The respondents further submit that due to the contacts of the petitioner with antisocial elements and his attitude to bring disrepute to the company and its management, it was decided to remove him from the office of managing director in the company's board meeting dated 07.07.2005. In fact the petitioner himself on earlier occasions expressed his desire (orally) to quit the office of managing director. Necessary actions were taken as provided for in the Companies Act, 1956 and necessary forms have been filed with the Registrar of Companies. A proper notice had been given to him apart from a public notice in leading daily newspaper (Deccan Chronicle). Since the petitioner has failed to do his duty, the directors of the R11 Company (the land owners) were forced to step in and to complete ....
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....The filing of returns with the Registrar of Companies has nothing to do with filing a caveat as it is only for protection so that the petitioner does not take any ex parte order against the respondents. If the statement made by them is true it is always open to him to go to any court of law and prove his contentions but he should do so only with proper notice to the respondent, only for this reason safeguards were taken. The records submitted with the Registrar of Companies are properly signed by 2nd respondent who is the director of the company and there is no fabrication as claimed by the petitioner. In so far as the details reproducing the contents of the returns that are filed with ROC is concerned the respondent humbly submit before the Hon'ble Bench that the dates wherein these events relating to allotment are mentioned in the returns of allotment are those dates where the petitioner was very much present in the office and participated in all the board meetings and he cannot deny that it was done behind his back and unaware of such action. Further the statement relating to appointment of two directors are again not true since these directors were appointed by the petition....
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....o may allot the same to such persons on such terms and conditions and at such terms either at a premium or otherwise, fully or partly paid up, at the discretion of the directors, Plain reading of the above article will clearly reveal that the Board of directors have absolute power to allot the shares to any such persons and accordingly, the board with a view to satisfy the persons who had brought in money for day to day running of the business had to be satisfied and hence issued shares to those persons. It is again surprising to note as to win petitioner is presently posing to be aggrieved after having given full consent for such issues due to his inability to bring in more funds into the company and also, his lack of interest in indulging in the day to day affairs of the company. The petitioner himself has stated that section 81 of the Companies Act, 1956 is not applicable to a private company, which is not denied. Further the petitioner should be put to strict proof for falsely claiming about his investment of Rs. 3 crores in the company also posing as though he did not claim anything in return for his investment over the last two and half years. Surprisingly the petitioner has ....
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.... and there is no just and equitable ground for winding up the company and hence the petition is liable to be dismissed with costs. 5. The 11th respondent filed counter to the petition. It is submitted that there is no scope for the petitioner to file the petition, as the petitioner was not a shareholder nor a director at any point of time in respect of the 11th respondent company. The affairs of the 11th respondent as such, cannot be the subject matter of the petition and the petition is liable to be dismissed in limine us against this respondent. The MOL dated 02.07.2001 was never implemented as the petitioner miserably failed to perform any of the obligations undertaken by the petitioner. The possession of the entire extent of land was retained only by this respondent at all points of time. It is false to state that the petitioner took possession of the entire extent. The petitioner did not bring in any investment nor executed any obligation. The agreement dated 24.06.2002 with facilitator was also for an extent of 30 grounds only and certain agreements were entered into with certain bank officers only owing to the negotiations of this respondent. Eventually, all these amounts w....
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....ld office for life, unless they voluntarily retire or resign. As per clause 33 of the Articles the affairs of the company shall be managed by the Board of directors of the company. As per clause 34 of the articles of association the directors may from time to time appoint one of their bodies to the office of Chairman, Vice Chairman. Managing Director, other than the first Managing Director etc. The main object of the R1 Company is to take over the business, assets and liabilities of the partnership firm namely "Sai Sri Krishna Properties" as a going concern with all its assets and liabilities. One of the grievances of the petitioner is that the 2nd respondent appointed two directors in a purported Board meeting held on 27.10.2004. It is contended that as on 27.10.2004 the petitioner and the 2nd respondent are only two directors in the company and therefore filing of Form 32 by R2 is a fabricated document. It is also contended that the petitioner has not received am notice for the alleged Board meeting wherein the two directors were appointed. The stand of the respondents is that the appointment of two directors on 27.10.2004 was with the consent of the petitioner and the petitioner....
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.... directors. Therefore the petitioner now cannot contend that he has not aware of the above Board meeting which is completely blatant lie. I am not accepting the contention of the petitioner for the aforesaid reasons. I am of the view that the meeting dated 27.10.2004 is legal and valid. Accordingly, the issue is answered. 8. Now I deal with the issue No. 2: The grievance of the petitioner is that the 2nd respondent filed a false return of allotment of shares dated 05.12.2004. 05.01.2005 and 20.02.2005 to the extent of 15,000, 10,000 and 15,000 equity shares. Further the petitioner contended that the return of allotment of the above shares was filed with the Registrar of Companies. Chennai on 08.07.2005. It is also contended that the 2nd respondent fabricated all the records and filed with the ROC on 08.07.2005 to take vengeance against the petitioner for the reason that the petitioner refused to sign two agreements for cancellation of MOI. Further the petitioner contended that no such offer was made to the petitioner at any point of time in all those three alleged allotment of shares made by the R1 Company. It is also submitted that any issue of further shares, it should be first ....
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....on to bring the money into the company and has given his consent to the respondent to act in the best interest of the company. Further from the contents of the letter it is also crystal clear that the board has discussed the requirement of funds into the company. Therefore the petitioner being the managing director is well aware of the requirement of funds for the company. It is also establishes the fact that the petitioner has signed a cheque for Rs. 50,000/- on behalf of the company on the very same date i.e. on 05.12.2004 and also signed a cheque dated 05.01.2005. Therefore, I am of the considered view that the company required the funds and the petitioner has expressed his inability to bring the funds into the company and has given liberty/consent to the respondents to act in the best interest of the company. The company has taken a decision to allot the shares in its best interest. Admittedly as on the date of first allotment i.e. on 05.12.2004 mere were only two shareholders i.e. the petitioner and the 2nd respondent. The petitioner having expressed his inability to bring in more funds into the company and having given his consent to the 2nd respondent to take appropriate dec....
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....ted 04.07.2005 to the flat allottees of AIBOC wherein he stated that "we wish to state that despite our best efforts, we could not get statutory approvals within the time framed simulated by all of you, and hence after discussions with AIBOC leadership and representatives of AIBOC enclave flat allottees and in order to avoid further wait by the persons who all had given advance payments. It was unanimously decided to refund the advance money received in full with interest @ 6% per annum from the date of receipt of advance upto 31.05.2005". The same is evident that the petitioner is in the helm of affairs of the company. Therefore there is no misuse of power for personal gains or ulterior motives. Therefore I am of the view fiat the R1 Company has not deviated any of the laws. The above decision of the Hon'ble Supreme Court is squarely applicable to the facts of the present case and this Bench is bound by the above decision of the Hon'ble Supreme Court. Further the Hon'ble Supreme Court in the above decision held that. "A company is a juristic person and it acts through its directors who are collectively referred to as the Board of directors. An individual director has ....
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.... was allegedly removed from the post of managing director in a Board meeting held on 07.07.2005. The respondents contended that the petitioner was removed due to his contacts with some anti-social elements and his attitude to bring disrepute to the company and its management and therefore the company decided to remove him from the office of managing director in the company's Board meeting dated 07.07.2005. It is also contended that the petitioner himself on earlier occasion expressed his desire (orally) to quit the office of the managing director. I have perused the documents filed by the parties. The petitioner himself filed Form 32 relating to cessation of office of the managing director where from it is evident that he ceased to be a managing director however continued to be a director of the company. The company vide its letter dated 11.07.2005 addressed to the petitioner wherein it is stated that he ceased to be a managing director of the company w.e.f. 07.07.2005 and he continued to be a director of the company. The petitioner strenuously contended that the petitioner and the 2th respondent are only the directors as on 07.07.2005 and in the absence of the petitioner there....
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.... time to time entrust to and confer upon a managing director or whole time director for the time being such of the powers exercisable under these presents by the directors as it may think fit and may confer such powers for such time as to exercisable for such objects and purposes and upon such tenns and conditions and with restrictions as it thinks expedient and may from time to time revoke withdraw, alter or vary all or any of such powers". As held by the Hon'ble Supreme Court in the matter of Dale & Carrington that the articles of a company are its constituent document and are binding on the company and its directors. There tore the above articles are binding on the company, on the directors including the petitioner who was continuing as a director of the company. The petitioner himself produced annual returns for the year ended 31.12.2005 wherefrom it is evident from the list of directors annexed along with the annual returns shows that the company was having four directors i.e. the petitioner, the 2nd respondent who were appointed on 14.06.2002 and Mr. S. Natarajan and Mr. S. Ramasami who were actually appointed on 27.10.2004 in a Board meeting held on 27.10.2004. Therefor....