TMI Blog2023 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Meeting stated to be sent to the Respondent are known to have been received. Even if the Notice of the Meeting was indeed dispatched and served, it is seen from the record that the requisite quorum as maintained under Law and as per the Articles of Association was not available for conduct of the 05/02/1996 Board Meeting, as the Petitioner/Respondent is holding 50% of the shares and is one of the two Directors. Annexure R-2 is the Notice issued by the Registrar of Companies to the 1st Appellant Company on 09/12/1998, which is reproduced as hereunder for better understanding of the case. It is clear that even as on 1998, there was no business conducted by the Company, and hence there was no need to infuse any additional Capital by allotting Shares specifically in the absence of any offer to the Petitioner/Respondent to subscribe to any Rights issue, as no Rights issue was ever offered. Keeping in view these aforenoted reasons, this Tribunal is of the considered view that the Resolution dated 05/02/1996 is null and void. It is not in dispute that the only asset of the Company , is the immovable Property, that is the subject land in question, which the Appellant con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 402 and 406 of the Companies Act, 1956, challenging the transfer of Shares effected; allotment of shares and Appointments made by the Board in the year 1995-96. It was prayed to set aside the allotment of 620 equity shares made in favour of the Appellants No. 2 to 6 as null and void; to remove Appellants No. 2 and 6 from the Directors of the Company and to declare them as unfit to be appointed as Directors in any Company. Mr. V.R.A.R. Ramakrishnan (hereinafter referred to as the Petitioner) and his Late brother were subscribers to the Memorandum of Association of the Company which secured the licence for starting 9.34 1/2 acres of dry land at Palladam, Coimbatore District. 3. It is averred that the Company never commenced its business and that the Registrar of Companies ( ROC ) issued a Show Cause Notice in the year 1989, under Section 433(c) read with Section 439(e) of the Companies Act, 1956. It is submitted by the Petitioner that Late Shri. T.S. Rathnasabapathy had sold the machinery of the Company for a less price, on account of which the Petitioner issued a Legal Notice to him on 02/02/1990. The Petitioner filed a Company Petition, C.P. No. 117/1995 before the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled Affidavits in the High Court of Karnataka in C.P. No. 117/1995 reporting that they had inherited 1/4th of the Shares (620) held by their Late father. It was submitted by the Petitioner that Late Shri. T.S. Rathnasabapathy had never held more than 100 shares in the Company. In the Civil Suit O.S. No. 17254/2009, the Petitioner prayed for a declaration that the Appellants herein are holders of only 100 Equity Shares each, in the Company. 6. It is stated that the Petitioner had come to know about the Sale Deed dated 14/11/2005, only in March 2007, when a Suit O.S. No. 285/2007 was filed before the Sub Judge, Tirupur, by the Alleged Purchaser of Property / M/s. TCS Textiles Private Limited was dismissed. The Petitioner filed a Suit before the City Civil Court at Mayo Hall to restrain M/s TCS Textiles Private Limited from dealing with the said Property and from alienating the same. 7. The NCLT has allowed the Company Petition vide the Impugned Order dated 11/10/2018 with the following directions: a. We hereby set aside the proceedings of the Board of Directors held on 18.03.1996 and the subsequent declarations in Form No. 32 filed by the respondents on 1st December, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant that their Ancestors Late Shri T.S. Rathnasabapathy had advanced Share Application Money of Rs. 42,000/- and this was duly reflected in the Balance Sheets signed by the Petitioner/Respondent as Share Advances and the same was used to purchase the Land at a cost of Rs. 46,500/-, which is the only asset of the Company. The allotment was made only for Share Application Money of Rs. 42,000/-, already received and recognised in the Balance Sheet. It is submitted that the Petitioner/Respondent never contributed any Share Application Money and in fact permitted the purchase of the Property with the contribution of the Ancestor of the Appellants. It is strenuously argued that the Petitioner/Respondent had deliberately failed to attend the Board Meetings, called on several dates in 1995 (except for 19/06/1995). The fourth and the fifth Appellants co-opted as Directors pursuant to Regulation 75, and 200 out of the 400 shares of the Ancestors of the Appellants were transferred to the fourth and fifth Appellants, of 100 each, vide a Resolution dated 25/10/1995. The Appellant s Ancestors held the balance 200 shares. The actual returns from 1995-96 reflects this Share Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Supreme Court in the Case of Union of India and Ors. V. Cipla Ltd. (2017) 5 SCC 262, wherein it was held as follows: The decisions referred to clearly lay down the principle that the Court is required to adopt a functional test vis- -vis the litigation and the litigant. What has to be seen is whether there is any functional similarly in the proceedings between one court and another or whether there is some sort of subterfuge on the part of a litigant. It is this functional test that will determine whether a litigant is indulging in forum shopping or not. 14. There is no other proceedings pending before any other Tribunal and therefore it cannot be said that the Respondent had indulged in Forum Shopping. 15. There was no proper Notice issued to the Petitioner/Respondent for the Board Meetings held on 01/05/1995, 14/06/1995, 19/06/1995 and 20/09/1995, and there was only a mention of them in the Notices dated 17/10/1995. The Appellants had failed to produce any documentary evidence for these Notices which were issued for the said Meeting. The Notices are to be sent by Registered Post with Acknowledgement Due. There is no such evidence on record. It is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction would be taken but that the company would be wound up and the land purchased by and standing in the name of the company would not be sold but divided between the Petitioner and the Second Respondent. This was agreed in view of the fact that such course is permissible under the Memorandum of Association of the Company. The Respondent had agreed to this Para 13 as it would resolve the Rights on the existing assets and liabilities as per Law. The Learned Counsel for the Respondent had strenuously contended that the findings of the National Company Law Tribunal are correct and justified and sought for dismissal of the Appeal. Assessment : 19. At the outset, this Tribunal addresses to whether the Company Petition was barred by Limitation. It is the case of the Appellant that the Respondent did not take steps despite having knowledge in 1995-96 till 2005 when he withdrew the suit from the Hon ble High Court of Karnataka and filed a Civil Suit. The Company Petition was also filed before CLB only in 2008, 12 years after he had knowledge and 10 years after he had filed an Affidavit notifying the events. It is submitted by the Learned Counsel for the Appellant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese can be looked into if they form part of a continuous process continuing up to the date of petition showing that the affairs of a company are being conducted in a manner stipulated in Ss. 397 and 398 of the Act. This, in fact, is the requirement of these provisions. Further, if the acts complained of form part of the same transaction constituting oppression or mismanagement these acts can also be looked into even if they occurred three years prior to the institution of the petition. Same will be the case if the conduct arising from even a single wrongful act in a given case is such that its effect will be a continuous course of oppression or mismanagement though the wrongful act occurred three years earlier to the date of filing of the petition. It is something akin to the terminology continuing cause of action . Whether events complained of form part of continuous acts or not or form part of the same transaction constituting oppression or mismanagement or effect of a particular wrongful act is continuous course of oppression or mismanagement or the wrongful act is stale or is an isolated event, would all be different questions to determine. To this extent, Therefore the prelim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company, and hence there was no need to infuse any additional Capital by allotting Shares specifically in the absence of any offer to the Petitioner/Respondent to subscribe to any Rights issue, as no Rights issue was ever offered. Keeping in view these aforenoted reasons, this Tribunal is of the considered view that the Resolution dated 05/02/1996 is null and void. 27. As regarding the Board Meetings dated 01/05/1995, 14/06/1995, 19/06/1995 and 12/09/1995, it is the case of the Appellant that the Notices were sent by U.C.D., but it is the case of the Respondent that they were never served upon him. The Learned Counsel for the Appellant drew our attention to Diary No. 11423 in support of his statement that the Notices were indeed sent to the Respondent. In the absence of any proof that the Notices were actually 'served on the Respondents, as it is not in dispute that the previous Notices were sent by Late Shri. T.S. Rathnasabapathy by Registered Post Acknowledgement Due , we are of the considered view that the Notices were never served on the Petitioner/Respondent as there are no Proofs of Receipt , filed by the Appellant, herein. To reiterate, these Board Meetings could ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
