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TMI Blog2021 (10) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the Respondent No. 1 Company, being the leasehold rights in a plot bearing No. E-74 adm. 7,800 sq. Mts. Situated in the MIDC Industrial Area in Nashik, together with building constructed thereon adm. 2,578.11 Sq. Mts. On the said plot is , and continues to be, an asset of the Respondent No. 1 Company; c. To declare that the Petitioners continue to be the 100% shareholders of the Respondent No.1 Company and that alleged transfer of the shareholding of the Petitioners in the Respondent No. 1 Company in favour of Respondent Nos. 2 to 4, as illegal, unsustainable, null, void 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 dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 100% shareholding of the petitioners in Respondent no. 1 Company, including the entire management of the Respondent No. 1 Company, to any willing purchaser. 5. Respondent nos. 2 and 3 conveyed their willingness to purchase the entire shareholding of the petitioners in the respondent no. 1 company. Pending the finalization of the terms and condition valuation of the proposed sale of shares, since Respondent Nos. 2 and 3 were in a haste to start with the expansion of their business, it was decided between the petitioners and respondent nos. 2 and 3, as a preliminary 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 Rs. 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 Rs. 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 Rs. 6 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its banking operations, till the time they remained as directors of the Respondent No.1 Company. 9. On account of good relations between the parties and in pursuance of Respondent Nos. 2 and 3's request for funds, the petitioners agreed to grant a loan of Rs. 5 crores to Respondent Nos. 2 and 3 on terms and conditions, as were mutually agreed, which was ultimately disbursed on 20th June, 2014 from the account of Petitioner No.2 to Respondent No. 2 and 3. It is pertinent to note that the grant of the said loan was completely independent 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 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the directors of the company are also residing in Nashik, it is in the interest of the company to shift the registered office of the Company from Mumbai to Nashik for the convenience of carrying on the business activities more effectively. Neither did the petitioners receive the Notice dated 19.10.2017, nor did they attend the purported Extra Ordinary General Meeting of the Company on 04.12.2017 and / or vote in favour of shifting of the registered office of the Respondent No.1 Company to Nashik. It is submitted 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 Rs. 24.5 crores. V. The said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 34 and 120-B of the Indian Penal Code. The Economic Offences Wing has initiated a P.E. No. 138 of 2018 into the matter and the same is under investigation. 13. Being aggrieved by this illegal conduct of Respondent Nos. 2 to 4, Petitioner No. 2 lodged a complaint with the Jodhpur Police Station, Devnagar Branch, and requested them to register an FIR against Respondent Nos. 2 and 3 for commission of offences under Section 406, 417, 418, 420, 468, 471 and 474 read with Section 34 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose that Respondent Nos. 2 and 3 were known to the Petitioners at least since 2007-2008 and admittedly the case is that for purchasing the said plot an amount of Rs. 1,00,00,000/- was taken as an unsecured loan from Respondent Nos. 2 and 3 itself. 20. There are two transactions in this case which have must be viewed together to have a fair idea of what has actually transpired in the matter: a. The first transaction of the sale of 100% shares of the company Respondent 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 Rs. 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 Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the fact that the Petitioners had exited and were not shareholders on and after March 2014, the question of the Petitioners' right to even approach this Hon'ble Tribunal under Section 244 is also an issue and the Petitioners are in fact not able to even in law maintain such a Petition as is presently filed. 27. The Respondents further submit that the decision cited by the Petitioners lay down the proposition that there have 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove Petition in so far as it is directed against the Respondents is liable to be dismissed with costs. FINDINGS 34. The present Company Petition has been filed under Section 59, 241 and 242 of the Companies Act, 2013 seeking two main reliefs namely (i) that the Petitioners continue to be the 100% shareholder of the Respondent No. 1 Company and that alleged transfer of shareholding of the Petitioners in 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. 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. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell settled proposition of law that in the absence of transfer form duly executed there cannot be a valid transfer of Shares. 45. The contention of the Respondents to the effect that the Petitioners have handed over share transfer forms duly signed by them to the Respondents which were lost in their custody cannot be trusted in the absence of any evidence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Article of Association of Respondent no.1 Company. The entire procedure of transfer of shares is provided, which has not been fallowed in the present case. The above factors make it clear to the Bench that there is absolutely no legal basis for claiming that there has been transfer of the said shares. On these grounds, this Bench is inclined 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Bench notes that there is not a single document has been produced to connect the share transfer with Rs. 5 crores loan. The loan has been given by the Petitioner no. 2 to the Respondent nos. 2 and 3 in their individual capacity and has no relationship with the transfer of Shares of the Respondent No. 1 Company. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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