2014 (4) TMI 1192 - Board - Companies Law

Seeking permission to sale the properties - Held that - To meet the urgent liabilities of the Company the Answering Respondents are permitted to sell the property(ies) of the Company i.e. Akola Oil Industry and Akul Plaza. To supervise the same I hereby appoint Hon ble Justice Mr. K. K. Lahoti Former Judge High Court M.P having address at B-23 Sector 14 Noida-201 301 (Mob. No.09425152000 a-mail- j kklahoti a nmail.com) as Observer-Cum-Facilitator. The Parties are directed to render all the assistance and co-operation to the said Observer-Cum- Facilitator. The Answering Respondents shall furnish all informations as desired by him alongwith the relevant record in respect of the properties sought to be sold and after his approval only an agreement for sale and/or sale deed shall be executed by the Answering Respondents in favour of the Prospective Purchaser(s). It is however clarified that in respect of registered agreements for sale of plots of the said properties which the Company has already entered into with the Prospective Buyer(s) this order will not be applicable. The Ld. Observer-Cum-Facilitator is requested to ensure that the properties are sold at the best price. Reasonable time may also be granted to the Petitioners to match the offer and /or to bring a better buyer. However on this ground the Petitioners will not be allowed to delay/derail the process of sale. The Meetings for the purposes of sale of properties may be held at Aurangabad/Jalana/ Akola/ Pune or any other place as the Hon ble Observer-Cum-Facilitator after consultation with the Parties and the prospective purchaser(s) decides.

Summary

Issues Involved:
1. Maintainability of the Petition based on compliance with Section 399(3) of the Companies Act, 1956.
2. Impact of the purported Family Settlement/MOU on the Petition.
3. Vacation or modification of the interim order dated 03/03/2014.
4. Appointment of an Administrator/Special Officer/Independent Committee of Management.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition based on compliance with Section 399(3) of the Companies Act, 1956:
The Petitioners, holding 29.99% shares, alleged oppression and mismanagement by Respondents Nos. 2 to 11. The Respondents challenged the maintainability of the petition on the grounds of non-compliance with Section 399(3) and the principle of estoppel. The Board had previously addressed these objections in its interim order dated 03/03/2014, which was not overturned by the High Court. The Respondents argued that the consent letters lacked details on the allegations and reliefs sought, thus failing to meet Section 399(3) requirements. However, the Petitioners countered that the Power of Attorney executed by them was sufficient, as they were themselves Petitioners and not mere "consenters." The Board reaffirmed its earlier finding, citing P. Punnaiah & Ors. V/s Jeypore Sugar Cp. Ltd. & Ors. [1994] 4 SCC 341, which allows actions through an agent unless explicitly prohibited. The Board rejected the preliminary objections, upholding the petition's maintainability.

2. Impact of the purported Family Settlement/MOU on the Petition:
The Respondents contended that the Family Settlement/MOU barred the Petitioners from filing the petition under the Doctrine of Estoppel, as it had been partly acted upon and a civil suit for specific performance was pending. The Petitioners argued that the MOU had become redundant due to non-performance within the stipulated time. The Board refrained from commenting on the MOU's validity, noting that the Petitioners, as shareholders, were entitled to seek relief under Sections 397/398 of the Act for acts of oppression and mismanagement. The Board held that the petition was maintainable despite the pending civil suit.

3. Vacation or modification of the interim order dated 03/03/2014:
The Respondents sought modification of the interim order to allow the sale of Akola Oil Industry and Akul Plaza to meet urgent liabilities, arguing that the Petitioners had agreed to such sales in the MOU. The Petitioners opposed, alleging mismanagement and siphoning of funds by the current management. The Board found prima facie evidence of oppression and mismanagement and decided to modify the interim order, permitting the sale of the specified properties under the supervision of a retired High Court Judge to ensure transparency and prevent fund leakage.

4. Appointment of an Administrator/Special Officer/Independent Committee of Management:
The Petitioners sought the appointment of an administrator or special committee to manage the company's affairs, citing mismanagement by the current management. The Respondents opposed, claiming such an appointment would effectively dispose of the petition at the interim stage. The Board, while acknowledging the allegations, deemed the appointment of an administrator too harsh at this stage. Instead, it appointed Hon'ble Justice Mr. K. K. Lahoti as Observer-Cum-Facilitator to oversee the sale of Akola Oil Industry and Akul Plaza, ensuring the properties were sold at the best price and the process was transparent.

Conclusion:
The Board rejected the preliminary objections regarding the petition's maintainability, held that the petition was not barred by the Family Settlement/MOU, and modified the interim order to allow the sale of specific properties under judicial supervision. The request for appointing an administrator was denied, but an Observer-Cum-Facilitator was appointed to ensure fair and transparent sale proceedings. The case was renotified for final hearing on July 16, 2014.