2015 (11) TMI 263 - Board - Companies Law

Maintainability of petition under sections 397 91 lacs shown as taken out ? - Held that - Since the siphoning of the funds is not proved could not say that R2 has siphoned the funds of the company at this juncture. 1 also cannot say that R2 opened those two Bank accounts with a bona fide intention for the growth of the company. When a Bank account is opened in the name of the company without notice to the other shareholder who has according to him 50% shareholding it only reflects that those accounts are opened to handle financial transactions without notice to the other shareholder or director of the company. The counsel of the Respondents relied upon a case in between Ramesh Bhajanlal Thakur v. Seaside Hotel (P.) Ltd. & Ors 1999 (11) TMI 869 - COMPANY LAW BOARD to say that when no particulars are given in support of allegation siphoning the funds of the company then obviously no relief can be granted as to this principle I on principle agree no relief can be granted when a petition has come without any details and proof over the allegations of siphoning. To what relief ? - Held that - The company is directed to pay remuneration to the Chartered Accountant as agreeable to him because the company is an almost 50 50 company in between the petitioner and R2. For having this Bench decided that the petitioner has not been removed as a director at any point of time he will continue as director in the company whereas the wife of R2 i.e. R3 will not continue as director because her appointment has already been declared invalid. Since the company is a family company in between the two real brothers the company s size also not being big these two real brothers can come together and continue working in the company as before. R1 company is directed to file forms with RoC in compliance of this order within 30 days hereof. This Bench hereby directs the parties to pay to the company if any of them is held as siphoning the funds of the company in the audit report given by the Chartered Accountant. If any objections are there over the Chartered Accountant s audit report they are at liberty to place their objections before CLB.

Issues Involved:
1. Maintainability of the petition under sections 397 & 398 of the Companies Act, 1956.
2. Validity of the petitioner's resignation as director.
3. Validity of R3's appointment as director.
4. Increase of authorized capital.
5. Alleged siphoning of Rs. 91 lakh by R2.
6. Reliefs to be granted.

Issue-wise Detailed Analysis:

Issue 1: Maintainability of the petition under sections 397 & 398 of the Companies Act, 1956
The respondents argued that the petition is not maintainable because the petitioner had previously filed a civil suit (OS 818/2009) seeking similar reliefs, which was dismissed without granting interim relief. The petitioner countered that the reliefs sought under sections 397 & 398 are unique and cannot be granted by any other court. The court observed that the civil suit dismissal did not preclude the petitioner from filing the current petition, as the reliefs under sections 397 & 398 are distinct and equitable in nature. The court also noted that the civil suit was dismissed without a final adjudication on the issues, and thus, the petition is maintainable.

Issue 2: Validity of the petitioner's resignation as director
The petitioner claimed that his alleged resignation letter dated 14.03.2007 was forged by R2. The court found that there was no filing with the Registrar of Companies (RoC) indicating the petitioner's resignation. Additionally, a board resolution dated 10.04.2007, which was submitted by the petitioner, showed him as a director, contradicting the alleged resignation. The court held that the resignation letter was invalid, concluding that the petitioner did not resign from the company.

Issue 3: Validity of R3's appointment as director
The petitioner alleged that R3's appointment as director was never consented to by him and was therefore invalid. The court observed that R3 was not a shareholder and her appointment was filed with the RoC only after a significant delay of two years, which coincided with the petitioner's actions to change the bank account operations. The court found that the appointment of R3 was oppressive and prejudicial to the petitioner's interests and declared it invalid.

Issue 4: Increase of authorized capital
The petitioner contended that the increase in authorized capital from Rs. 5 lakh to Rs. 10 lakh was done without his consent and was fraudulent. The court noted the strained relations between the parties and the significant delay in filing the necessary forms with the RoC. The court held that the increase in authorized capital was invalid and that the shareholding pattern existing before the increase would remain in force.

Issue 5: Alleged siphoning of Rs. 91 lakh by R2
The petitioner alleged that R2 siphoned Rs. 91 lakh from the company by opening new bank accounts without his knowledge. The court found that while there was no concrete proof of siphoning, the opening of new bank accounts without informing the petitioner indicated mala fide intentions. The court ordered an impartial audit of the company's accounts to determine if any funds were siphoned.

Issue 6: Reliefs to be granted
The court directed the appointment of a Chartered Accountant to audit the company's accounts and report within 30 days. It also ordered that the petitioner continues as a director, while R3's appointment as director was declared invalid. The company was instructed to comply with the court's order and file the necessary forms with the RoC. The court also directed that any party found to have siphoned funds must repay the company as per the audit report.

Conclusion:
The petition was disposed of with the court granting the reliefs sought by the petitioner, including the invalidation of his resignation and R3's appointment, the reversal of the unauthorized capital increase, and the ordering of an audit to investigate the alleged siphoning of funds.

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