2017 (9) TMI 1331 - Tri - Companies Law

Alleged acts of forgery - Seeking relief of investigation into the affairs of the Company - Investigation of company s affairs in other cases - unlawfully doing the illegal business in the Company premises - transfer of shares - Held that - The petitioner has challenged the share transfer by Respondent No.2 in favour of his wife as his consent was not taken. But evidence is produced to show that he was a party to the Board resolution. Article 7 of the Articles of Association of the Company provides for transfer of shares to the wife of a member. So, there is no illegality committed by the member- Respondent No.2 in transferring the shares to his wife Minutes book of Board meeting, original attendance Register, statutory registers, minutes book of AGM and after going through the records produced by the respondents, the petitioner could not make out anything. One thing is that the Company is not at all doing any business. So, the question of tampering with the accounts does not arise. It is a mere apprehension of the petitioner that something has happened with reference to the books of account. The expenditure incurred for obtaining power connection was done only with a view to do his unauthorised business in the Company premises. The Respondents cannot be held responsible for the same. Thus, the petitioner had utterly failed to establish any of the clauses of Section 237(b) of Companies Act, 1956 corresponding to Section 213 of Companies Act, 2013 to order for any investigation into the affairs of the Company as no business is carried out by the Company. Thus, the petitioner has also utterly failed to prove any fraud committed by the Respondents towards the creditors and members in the affairs of the Company. Therefore, the petition is liable to be dismissed.

Issues Involved:
1. Allegations of oppression and mismanagement by Respondent No. 2.
2. Legitimacy of the appointment of additional directors.
3. Legitimacy of the transfer of shares by Respondent No. 2 to his wife.
4. Petitioner's access to company records.
5. Validity of the Memorandum of Understanding (MoU).
6. Petitioner's entitlement to an investigation under Section 237 of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Allegations of Oppression and Mismanagement by Respondent No. 2:
The petitioner alleged that Respondent No. 2, as the Managing Director, committed acts of oppression and mismanagement by illegally appointing additional directors and transferring shares without following due process. The petitioner also claimed that Respondent No. 2 forged his signature on board resolutions and denied him access to company records. However, the tribunal found no substantial evidence to support these allegations. The tribunal noted that the petitioner had already filed a criminal case and a civil suit on similar grounds, which were pending.

2. Legitimacy of the Appointment of Additional Directors:
The petitioner contested the appointment of additional directors, including the wife of Respondent No. 2, claiming his signature was forged on the board resolutions. The tribunal observed that the petitioner had not provided sufficient proof of forgery. It was noted that the petitioner had agreed to the appointment of Respondent No. 2's wife as a director, provided his daughter was also appointed. The tribunal found that the petitioner's daughter did not acquire the requisite shares to qualify as a director, while Respondent No. 2's wife did, thus validating her appointment.

3. Legitimacy of the Transfer of Shares by Respondent No. 2 to His Wife:
The petitioner questioned the transfer of 450 shares by Respondent No. 2 to his wife, claiming it was done without his consent. The tribunal referred to Article 7 of the Articles of Association, which allowed such transfers. The tribunal also noted that the petitioner had signed the board resolution approving the transfer, thereby dismissing the petitioner's challenge.

4. Petitioner's Access to Company Records:
The petitioner claimed he was denied access to company records as they were kept at Respondent No. 2's residence. The tribunal noted that the company had not been conducting any business for years and had been filing financial statements showing "Nil" business. The tribunal found no evidence of tampering with the accounts and concluded that the petitioner's apprehensions were unfounded.

5. Validity of the Memorandum of Understanding (MoU):
The petitioner presented an unsigned MoU, claiming it was an agreement with Respondent No. 2 to transfer 49% of the shares to him. The tribunal dismissed the MoU as invalid since it was not signed by Respondent No. 2 and lacked supporting evidence. The tribunal concluded that the MoU had no legal standing.

6. Petitioner's Entitlement to an Investigation Under Section 237 of the Companies Act, 1956:
The petitioner sought an investigation into the affairs of the company under Section 237, alleging fraudulent activities by Respondent No. 2. The tribunal analyzed the grounds under Section 237(b) and found that the petitioner failed to establish any of the required circumstances, such as fraud, misfeasance, or misconduct. The tribunal noted that the company was not conducting any business and that the petitioner had been using the company premises for his own unauthorized business activities. Consequently, the tribunal dismissed the petition, stating that the petitioner had not proven any grounds for ordering an investigation.

Conclusion:
The tribunal dismissed the petition, concluding that the petitioner failed to substantiate his claims of oppression, mismanagement, and forgery. The tribunal found no grounds to order an investigation under Section 237 of the Companies Act, 1956, and noted that the petitioner had already sought similar reliefs in other legal proceedings.

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