TMI Blog2021 (10) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. The Respondent Nos. 2 to 4 were desirous of expanding their business and therefore petitioners agreed to transfer 100% shareholding in Respondent No.1 to Respondent Nos. 2 to 3 - The Bench notes that a total amount of ₹ 3 Crore was paid by the Respondent Nos. 2 to 4 to the petitioners and MoU was executed between the parties where intention of the parties to sell the entire shareholding of the petitioner in Respondent no.1 Company to Respondent Nos.2 to 4 were agreed. The Respondent Nos. 2 to 4 made a payment in all of ₹ 3 crores as initial amount. The Bench therefore, notes that the property has not been transferred through any agreement/conveyance deed which need to be registered under Section 17 of the Indian Registration Act, 1908 and Section 54 of Transfer of Property Act, 1882. There is no such documents produced before the Bench by the Respondents which would constitute a valid transfer. It is very clear that under no circumstances the said immovable property can be passed to the Respondent No.4 which is the company promoted by Respondent no. 2 and 3 without any conveyance/sale deed - the Bench concludes that the immovable property of Respondent No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab-initio and not binding on the petitioner; d. To declare the altered Form Nos. 20B filed by Respondent Nos. 2 and 3 with the Registrar of Companies retrospectively altering the shareholding of the Respondent No.1 Company and representing Respondent Nos. 2 to 4 as shareholders of the Respondent No.1 Company from 2013-17, as illegal, unsustainable, null, void ab initio and not binding on the petitioners; e. To pass an order removing Respondent Nos. 2 and 3 as Directors of the Company and appointing the Petitioners or such other fit and proper person(s) as Directors in their stead; f. To order and direct Respondent Nos. 2 and 3, or such persons as may be appointed by this Hon ble Tribunal, to file appropriate statutory filing with the Registrar of Companies / Ministry of Corporate Affairs showing the Petitioners shareholding as 100%, which the petitioners originally held in the Respondent No.1 Company and to consequently rectify the register of numbers of the Respondent No.1 Company; g. To pass an order directing Respondent Nos. 2 and 3 to disclose all monetary transactions carried out on behalf of Respondent No.1 Company, and in case of any losses caused to the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliminary measure, to appoint respondent Nos. 2 and 3 as Directors in the Respondent No. 1 Company along with petitioners and permit them to use any occupy the said property of the Respondent No.1 company, at a fee of ₹ 2.4 lakhs per annuum and in exchange, Respondent Nos. 2 to 4 would provide the respondent Company No. 1 an unsecured interest-free loan of ₹ 3 Crores, to repay the loan earlier given by the petitioners herein to the Respondent No.1 company. 6. At around the same, Respondent No.4 was in the process of increasing its credit facilities taken by Respondent No. 4 from the bank of Maharashtra from ₹ 6 crores. As respondent No. 4 was being permitted to use the said property as above, it was also decided that the Respondent no. 1 Company would stand as guarantor for the loan and that the said property would be mortgaged as additional collateral security towards the credit facilities to be sanctioned by Bank of Maharashtra. Accordingly, by Resolution dated 14.12.2012 and 21.12.2012 respectively, passed at meetings of the Board of Directors of the Respondent No. 1 Company, it was resolved that Respondent No. 1 Company would stand as guarantor for the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent of the transaction pertaining to the sale of shares of the respondent no.1 company as mandate under the Memorandum of Understanding. On account of respondent Nos. 2 to 4 s financial difficulties, the transaction for sale of shares was deferred indefinitely. The Petitioners were and remain in possession, at all times, of the Original Share Certificates pertaining to their shares in the Respondent No. 1 Company. 10. From 2014 to 2018, Respondent Nos. 2 and 3 alone were handling the affairs of the Respondent No.1 Company. Till 2018, the petitioners trusted that the position remained as above and had no reason to suspect any mischief by Respondent Nos. 2 to 4. In or about August, 2018, the Petitioners learned through an acquaintance in Nashik that the said property has been used for a mortgage created in favour of Respondent No. 5 herein. The Petitioners, who till then were under the bonafide belief that there was only a mortgage in favour of Bank of Maharashtra grew suspicious of the actions of Respondent Nos. 2 and 3, and therefore caused the Balance Sheet, Annual Returns and other statutory filing of the Company to be obtained from the Registrar of Company. 11. On o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the said Resolution has been passed without the knowledge and consent of the petitioners. IV. On the above illegalities coming to light, the Petitioners caused further enquiries to be undertaken. Upon further scrutiny of the Balance Sheet of Respondent No.4, it was revealed that pursuant to the filing of the Balance Sheet for the Financial year ending 31st March, 2017 with the Registrar od Companies (where under the said property of the Respondent No. 1 Company was purported to be shown as transferred to Respondent No.4), Respondent No. 4 had on 22.09.2017, illegally availed of a credit facility from Respondent No. 5 to the tune of ₹ 24.5 crores. V. The said property of the Respondent No.1 Company had, on 18.10.2017, purportedly been mortgaged in favour of Respondent No. 5, as security for the aforesaid loan from Respondent No. 5. No consent of, or intimation to, the petitioners was ever taken / given. VI. On the date of the alleged mortgage, by Respondent Nos. 2 and 3 own stand set out in the above financial statements filed with the Registrar of Companies, by 31st March 2017, the said property had allegedly been transferred to Respondent No. 4. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 120-B of the IPC. It is pertinent to note that the Jodhpur Police Station has registered an FIR and the matter is being taken up for investigation. An application was filed by Petitioner No. 2 before the Rajasthan High Court under Section 482 of the Code of Criminal Procedure, wherein a factual report of the investigation was submitted and the Hon ble Rajasthan High Court has directed the Police Authorities to conclude the investigation promptly. 14. In a further attempt to wriggle out of the investigation being conducted by EOW, Mumbai and the Jodhpur Police Station and as a counterblast, Respondent No. 2 and lodged a false complaint with the Police Commissioner, Nashik Branch against the Petitioners on grounds of alleged commission of offences under Section 420, 384, 386, 379 read with Section 34 of the IPC and Section 39 of Maharashtra Money Lending Act, 2014. 15. The petitioner submits that in a further attempt to gather information, Petitioner No. 1 addressed a letter dated 13.03.2019 directly to Respondent Nos. 2 and 3 inter alia stating that they have wrongly and illegally sought to transfer the Petition s entire shareholding in Respondent No. 1 Company to themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 1 and its assets; between 2012 to March 2014 under which the shares and transfer forms were handed over to the Respondent Nos. 2 to 4; and b. The second transaction of a loan in June 2014 by the Petitioners to the Respondents No. 2 and 3 for ₹ 5 crores when the shares certificates and transfer forms were returned to the Petitioner as security for this loan. 21. The Respondents submitted that the Petitioners are taking advantage of the fact that the Respondent Nos. 2 to 4 did not maintain copies of the Transfer Deeds. This is how the Petitioners are in possession of the original share certificates but are suppressing the Transfer Forms/Deeds as it would show there is a transfer and a complete exit of the Petitioners. In retrospect the Respondents should have been more careful and should have recorded this subsequent transaction in writing. Any how the receipt of the 5 crores and the repayment is not in dispute. 22. The facts set out hereafter would show the Petitioners exited the Respondent No. 1 Company on 31st March 2014 and have only raised the above dispute much later as an afterthought taking advantage of the fact that the share certificates were returned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be documents of transfer. However, in this case, the documents of transfer being with the Petitioners are being suppressed and taken advantage of. As aforesaid, before the transfer could take place and be effected by uploading relevant details, the second transaction of the 5 Crores loan was entered into and that is how the shares remained with the Petitioners. 28. In respect of the Annual Returns which were filed and retrospectively corrected to show the correct actual position (having regard to the above facts) which prevailed from 2014 it is submitted that the reliance on Section 130 by the Petitioners is completely erroneous. Section 130 falls under Chapter IX of the Companies Act 2013 which is a chapter in relation to Accounts of Companies. Section 130 relates to variation, modification or change of financials of the companies as for example figures of profits, turnover, gross block of assets, sundry creditors etc which are financial aspects which the provision provides cannot be changed once filed without following due procedure. 29. The Respondents further mention that all these factors would therefore have been taken into account by the parties while negotiating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent No.1 Company in their favour by Respondent Nos. 2 to 4 be declared as illegal. (ii) transfer of the immovable assets of Respondent No.1 i.e. Vivid Solutions Private Limited by Respondent Nos. 2 to 4 from Respondent No. 1 to respondent no.4 i.e. Ukay Metal Industries Private Limited by mere book entries and filing with RoC, be declared as illegal. 35. Before dealing with the issues the Bench would like to briefly touch upon the chronology of the events as we feel it would help in tracing genesis of the issues involved. 36. The petitioners holds the entire shareholding of the Respondent No.1 Company, M/s Vivid Solution Private Limited which owns the leasehold plot in the MIDC Industrial Area in Nashik along with constructed building etc. The Respondent Nos. 2 and 3 are the owners of Respondent No.4 Company which is located at plot adjoining Respondent No.1 Company. The Respondent Nos. 2 to 4 were desirous of expanding their business and therefore petitioners agreed to transfer 100% shareholding in Respondent No.1 to Respondent Nos. 2 to 3. 37. The Bench notes that a total amount of ₹ 3 Crore was paid by the Respondent Nos. 2 to 4 to the petitioners and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear that under no circumstances the said immovable property can be passed to the Respondent No.4 which is the company promoted by Respondent no. 2 and 3 without any conveyance/sale deed. It is also very clear to the Bench that even the Respondent no.2 and 3 were knowing that no such transfer has taken place of immovable property to Respondent no.4 from Respondent no.1, Vivid Solution Private Limited. It is for that reason the Respondent no.4 even after purported transfer, as claimed to have taken place before 30.03.2017, continued to pay rent of ₹ 2.40 lakhs per month to the Respondent No.1 Company. This fact of continued payment of rent is duly recorded in the balance sheet as on 31.03.2018. 41. Therefore, it is untenable to contend that the property has been transferred as on 31.03.2017 when the Respondent no.4 is admittedly paying rent to Respondent no.1, thereby recognizing the respondent no.1 as the owner of the said property even after March 31, 2017. This further corroborates the fact that neither legally nor in reality this property was ever transferred from Respondent Nos. 1 to 4 Company. 42. The Bench while on this issue notes that the Respondent No.5 M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before this bench. It is very difficult to believe such statement from the Respondents who are seasoned commercial businessmen who are well aware of the consequences if really those forms were lost in their custody. 46. In this regard, the Petitioners side has referred to several judgements of Hon ble Supreme Court, Company Law Board and NCLAT. The Bench here would refer to one such Judgment of NCLT in the case of Suhash Chakma Vs. South Asia Human rights Documentation Centre Pvt. Ltd. (2016 SCC ONLINE NCLA 93). The relevant paras of the judgment are as under: Para-17: The onus of proving that the shares have been indeed transferred by the petitioner for valuable consideration is on the respondents. We are really appalled by the attitude of respondents in claiming that in the absence of any statutory provisions they are not required to maintain the relevant records when the company is a private limited company like the 1st respondent company. When parties incorporate a company, it is presumed that as signatories to the Memorandum and Articles of Association they have come together to establish a corporate entity and the manner in which they are to conduct themselves i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to declare that the said share of those of the Petitioners which has been purportedly transferred illegally by making mere entries in the balance sheet of the company is illegal and null and void. 48. That purported share transfer is illegal and mischievous is also evident from the fact that for the first time in the year 2017-18 through their Balance Sheet, the Respondent no.2 to 4 have contended that share stands in their name. Strangely, however in the same page of the filing in the Balance Sheet it is also been mention that 0.0 % transfer have been executed in the year 2017-18. The Bench fails to understand as to how Respondent no. 2 to 4 suddenly become 100% shareholder with admittedly 0% change in the shareholder pattern during 2017 and 2018. Here, this Bench would also like to mention that there is a clear breach of section 130 and 131 of Companies Act, 2013. Section 130 of the Companies Act, 2013 read as under: Section 130: A company shall not re-open its books of account and not recast its financial statements, unless an application in this regard is made by the Central Government, the Income-tax authorities, the Securities and Exchange Board, any other st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A mere oral contention by Respondent nos. 2 to 4 cannot have any bearing on the share of Respondent no.2. In any case these loans given in the personal capacity by the petitioner no.2 was repaid back fully by respondent no. 2 and 3. 51. It has been contented by Respondents that a criminal proceeding has been filed by the Petitioner and EOW has filed closure report. However, the Bench notes the letter addressed by the EOW on 05.08.2019 simply notes that there are investigations pending in Jodhpur in relation to the criminal case filed by the Petitioner no. 1, under Section 406, 420 of IPC against the Respondent Nos. 2 and 3. Therefore, the EOW closed its own investigation. It is on record that investigation was carried out by Nashik Police Department and currently Respondent no. 2 to 4 have filed a Petitioner before Hon ble Bombay High Court seeking to quash the said criminal proceedings. However, the petition is still pending. Therefore, the criminal proceedings filed by Petitioners against the Respondent Nos. 2 and 3 is alive and has not been closed. 52. In view of the above, the Bench orders the following: i. The petitioner continues to be the 100% shareholder of Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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