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TMI Blog2025 (5) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Pune-16. 4. The Respondent No. 1, Winterpark Developers Private Limited is a company was incorporated on 11.11.1987 having registered office at 5, KrishnaKunj 64/3, Erandwana, Pune which, in fact, is office of the Petitioner since 1981. 5. The Respondent No. 2, Shri Surendra Pal Jaswant Lal Barara is the legal heir of Shri Y J Barara, the First Director of the Respondent No. 1 Company. 6. The Respondent No.3, Shri Rajkumar Navalmal Gandhi, Respondent No. 7, 8 & 10 are legal heirs of Shri N S Gandhi, the First Director of the Respondent No. 1 Company. 7. The Respondent No. 4, Shri Bhagwan V Pedawar, Respondent No. 2 and Respondent No. 3 were appointed as additional director on 10.09.2003, and Respondent No. 5 Shri. Pritam Sagane was appointed as additional director on 06.07.2004. Submissions by the Petitioner: 8. The Petitioner submits that Mr. N.S. Gandhi along with the Petitioners were the subscribers to the Memorandum and Articles of Association of the Respondent No.1 company, each holding one share of Rs. 100/-. The initial directors of Respondent No.1 Company were Mr. N.S. Gandhi and Mr. Y.J. Barara (First Directors). At the time of incorporation and until 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to file a new petition. 11. It is further submitted by the Petitioner that following the issuance of the abovesaid order, the Petitioner conducted a search of Respondent No.1's records at the Registrar of Companies, Pune (ROC) through Mr. Govind Krishnarao Patil, Company Secretary (ACS 10408 and CP 5934). As a result of the search conducted on 02.03.2009, Mr. Patil issued two Search Reports. On the basis of above Search Reports and after assessing the information supplied therein certain acts and omissions of the Respondents emerged. Consequent to it, the following averments are submitted without prejudice and, wherever the context so requires, in the alternative one another: a. Re: Registered office: Form No.18 was filed at the office of ROC on behalf of the Respondent No.1 Company on 04.11.1987 wherein the Registered office of the Respondent No. I Company continues till date to be shown as "5 Krishnakunj, Erandawane, Pune" ("Premises"), however the premises is till date exclusively owned and in possession of the Petitioner ever since the incorporation of the Respondent No.1 Company. It is submitted that the Petitioner has neither leased the premises to Respondent No.1 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors at the time they signed or submitted the forms as on the date on such Form was signed or submitted at the office of the concerned ROC. Therefore, the appointment of Respondent Nos. 2 and 3 is void ab initio. Even assuming, without admitting, that the appointments of Respondent Nos. 2 & 3 as additional directors were legally valid, the AGM on 29.09.2003, conducted under the notice issued by Respondent No. 2 on 02.09.2003, should have confirmed their appointment as regular directors. However, neither of them was appointed as a regular director in any subsequent AGM, and no Form No. 32 was filed with the ROC regarding such appointments. After the death of the First Directors, Respondent No.1 Company has not had a duly constituted Board of Directors, and as a result, all actions taken by Respondent Nos. 1, 2, and 3 including the appointment of directors, holding of board meetings and AGMs, appointment of auditors, and filing of annual returns and balance sheets are void and ineffective in law. The Petitioner draws attention of the Tribunal to the notice issued by Respondent No. 2 on 02.09.2003, on behalf of the Board of Directors. According to the search conducted at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From 31.03.1992 to 31.03.2001, the Balance Sheet and Annual Returns continued to show the same paid-up capital, shareholding, and share application money. The Balance Sheets and Annual Returns for the years ending 31.03.1992 to 31.03.1999 were filed at the office of the ROC on 21.08.2000. Additional filings for 31.03.2000 were made on 17.06.2002, and for 31.03.2001, they were filed on 20.06.2002. These filings continued to show the same share capital and shareholding as in previous years. On 05.04.2002, Form No.2 was filed (which was signed on 13.11.2002 and filed with the ROC on 03.12.2002 by Mr. Y.J. Barara), showing the issuance of 598 additional equity shares to various shareholders, valued at Rs. 100/- each. These shares were allegedly allotted to various shareholders, including 89 shares to the Petitioner. The Balance Sheet for the year 31.03.2002, filed on 18.11.2002, continued to show the company's paid-up capital as Rs. 200/- but indicated an increase in Share Application Money to Rs. 59,800/- (from Rs. 60,000/- in previous years). The Annual Return for 2002 (upto 29.09.2002) did not disclose the date of issuance of the newly allotted shares nevertheless, however, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the Rathi family. Some receipts and sale deeds are provided as evidence of this misuse. The purchasers, rather than entering into agreements with the Respondent No.1 Company, entered into Agreements for Sale with the First Directors or their nominees, despite the funds being provided by the company. These actions clearly violated the intended purpose of the investments and reflected misfeasance by the First Directors. Additionally, these transactions were not recorded in the company's financial statements from 1988 to 2002, including balance sheets filed between 1991 and 2005. The First Directors misused the investors' funds for personal transactions, violating the intended purpose of the investment. Furthermore, the paramount question is that how the First Directors could have utilized the investment of the investors for giving loans and that too on an interest free basis. On this basis alone, the loans, the sale deeds and agreements for sale of the said Lands/Plots are liable to be declared void, illegal and not binding on the Respondent No.1 company. Moreover, these transactions were never reflected in the company's financial statements from 1988 to 2002, including balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertheless been executed, inter alia, by the Respondent No.1 company to and in favour of the Respondent No.6) were not executed in the interest of the Company and/or its shareholders. 22. The petitioner further submits that since the appointment of the Respondent Nos.2, 3, 4 & 6 is ex-facie vitiated and illegal, that by itself is one single wrongful act which is leading to a continuous course of oppression against the shareholders. 23. The petitioner further submits that the company was incorporated with the understanding that the Petitioner and Mr. N.S. Gandhi would hold equal shares. However, the issuance of 598 additional shares, without the Petitioner's consent, resulted in the Petitioner becoming a minority shareholder. This was further compounded by the issuance of shares to Mr. Y.J. Barara and other Barara family members, disturbing the initial shareholding pattern of the Gandhi family. The issuance of these shares was done without following proper procedures, such as holding a General Meeting or notifying shareholders, indicating that the issuance was only meant to gain control of the company unlawfully. Moreover, Mr. Y.J. Barara, in connivance with Mr. N.S. Gandhi, furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and all the records of the Company was maintained therein. It is reported by the Respondent that the rent, telephone bill and other charges were diligently paid by Respondent No. 1 to the Agasti Corporation as Agasti Corporation raised debit notes for the same. 29. It is further submitted by the Respondent that several meetings were convened from 1987 to 1988, however the Respondent is not in possession of records but certain handwritten minutes have been placed to evidence the actual understanding amongst the parties. During the meeting held on 08.04.1988, post certain discussions it was decided that the Petitioner doesn't have to take approval from Mr. Barara for executing the work of the Company, which indicates that the Petitioner was the main person instrumental in the organization, setting up, management and functioning of the Company. 30. The Respondent No. 5 further submitted that, during the meeting of August 1987, the Petitioner, being aware of the fact that the Land cannot be purchased in the name of the company, decided that the land will be divided into 1000 sq. mtrs. each small portions of lands, which totaled to 61 plots of lands and the shareholders shall nomina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. These undertaking were all signed by the Petitioners. 34. It is further stated that on 12.08.1989, the Petitioner has addressed a letter to the Directors of the Company claiming reimbursement of certain expenditure stating that some miscellaneous office works has been carried on by him since April 1988 to July 1989. The said letter has been signed by him as a Director of the Company. During 1994, the Company had decided to dispose of the Lands. Accordingly, a meeting of the Company was held on 18.03.1994 (minutes of which were prepared by the Petitioner in his hand-writing and is also signed by him) wherein the Petitioner informed the Company as to how the Lands of the Company can be disposed of and that the same could be used for residential purposes or for building a hotel or resort or electronic industry or any other non-polluting industry. It explicitly records that "6. Mr. N. S. Gandhi and Mr. Yogendra Barara are directors of Company & whole company with its holdings & rights can be sold." 35. During 2003, the partnership firm between the Petitioner and NB Avhad was dissolved. As per the arbitration award passed in the disputes between them, 30 shares of NB Avhad (out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sequence of events to be followed along with the amount of consideration that the nominees would receive at each stage. The Petitioner has also taken the authority from the Company to open bank accounts in his own name with all power relating thereto. It is submitted that vide letter dated 02.12.2005 addressed by the PGCT to Dr. Rajkumar Gandhi ("Respondent No.3"), PGCT had explained the consideration received by Respondent No.3 from the sale of the Plots, and amounts paid to PGCT, income tax payable on the consideration and the amounts now payable by the said Respondent No.3 to PGCT, thus evidencing that the Petitioner has received the consideration and benefit from the sale of the Plots. 39. The Respondent No. 5 stated that the Respondent no.3 had obtained an Indemnity Bond from the Petitioner as a Trustee of the PGCT regarding the Power of Attorney provided by the nominees at the request of the Petitioner about 08.02.2006 which stated that the Petitioner invested all the amounts required to buy the Plots in the names of the nominees for the benefit of the PGCT and at the instance of the "investor" CS Gandhi, ("the Petitioner") the nominees provided their power of attorney in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly shown as the holder of 90 equity shares; (d) That the registered office of the Respondent No. 1 Company since its incorporation is situated at the premises exclusively belonging to him without his knowledge; (e) That from 1988, a sum of Rs. 31,00,000/- was invested in Respondent No.1 Company on an assurance given by the First Directors; (f) That the same would be utilised for procuring development rights of land admeasuring 61,600 sq. mtrs. at Taluka Haveli, Pune, (g) That the said amount was illegally used to provide interest free loans to various individuals to purchase lands from the Rathi family (h) That the First Directors could not have utilised the investments of the investor for giving interest free loans; (i) That the funds of the Respondent No.1 Company have been misappropriated; (j) That Respondent Nos.2 & 3 have illegally usurped the office of the director and have carried out the affairs of the Respondent No. 1 company in a manner which continues to prejudice the interests of the said Company; k) That the amounts invested have been grossly misappropriated as a result of which substantial prejudice is caused to the Petitioner, (1) That Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed to form a company with a paid-up capital of Rupees 60,000/- owned equally by each group, which thereafter came to be formed as Respondent No. 1, wherein Shri Y J Barrara and Shri N S Gandhi were agreed as First directors and the Petitioners was to take up the registration job. The Petitioner and N S Gandhi jointly were forming a group and each of them was to collect 4.5 lakhs to be utilised to acquire the land for development thereof. The Document 05.10.1987 duly signed by the petitioner records the composition of shareholding of each group and of persons in that group. It clearly shows that while NS Gandhi group was to hold shares worth Rs. 20,000/-, out of which the Petitioner was to hold shares worth Rs. 6060/-. Further, the document dated 20.12.1987, states two alternatives for payment of money for purchase of land, one of which suggest that, "..shareholder will deposit money for the purchase of land as loan to Winterpark in Bank account & Winter park will issue Bank Draft to Rathi on behalf of the actual purchaser." Further, the document dated 26.03.1988 states "..(1) All shareholders will deposit Rs. 50,000/- per Rs. 1000/-. Shareholding for purchase of land. (2) Winter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has represented to the developers that while purchasing the said plot, the owner had taken a loan from the Consenting party and as by way of security for the aforesaid loan the owner agreed to sell the said plot to the Consenting party vide an agreement executed in favour of the Consenting party at or for the price and on the terms and conditions therein contained. However, the aforesaid agreement was mutually cancelled by the owner and Consenting party herein orally and the Consenting party restored the vacant possession of the said plot to the owner herein subject to the payment of Rs. 50,000/- (Rupees Fifty Thousand Only) as lumpsum consideration of the loan towards the full and final satisfaction of the loan and interest thereon to the Consenting party and the Consenting party will join to each of such sale and or development agreement with respect to the said plot as Consenting party and accord its consent in consideration of the amount in Rs. 50,000/- to be paid by the prospective developer to the Consenting party as per the request of the owner." 47. The minutes of meeting held on 26.1.2004 clearly acknowledges (i) Shri Barara, (ii) Shri Peddawad, and (iii) Dr. R Gandhi a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party." 50. The jurisdiction of this Tribunal under Section 241/242 of the Companies Act, 2013 is an equitable jurisdiction. It was held in case of Jiwan Mehta v. Emmbros Metals P. Ltd. 2007 SCC Online CLB 71 that "It is a settled proposition of law that the conduct of the parties is a very relevant factor to be considered in the equitable proceedings under Sections 397/398 of Companies Act, 2013. In Sri Kanta Datta Narasimharaja Wadiyar v. Venkateshwar Real Estates Private Ltd. (1991) 3 Co. LJ 336 (Karn) : (1991) 72 Comp Cas. 211 (Karn), it was held that the petitioner seeking equitable relief must come with clean hands and good conduct, failing which the petitioner would constitute a gross abuse of the process of Court, and the petitioner is not entitled for any relief under Sections 397 and 398. Regarding the principle of equity in Shrimati Abnash Kaur v. Lord Krishna Sugar Mills Ltd. 44 CC 390 the Division Bench of Delhi High Court has held that while exercising equity jurisdiction, which clothes the Court with discre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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