2018 (3) TMI 359 - AT - Companies Law

Oppression and mismanagement - Syphoning of company money - misused Company Money by petitioner - Held that - There is no evidence to support Petitioner that he was entitle to use Company money of ₹ 75 Lakhs for marriage of his daughter. The Resolution dated 25.04.2013 does not say so. Learned Counsel for Respondents rightly argued that Petitioner was changing stands on this count as, somewhere he claims he was authorized to use the money as advance , somewhere he seeks adjustment towards dues of Jewan Foods while somewhere sought adjustment against dividend and yet somewhere that it was loan he took. The Petitioner clearly misused Company Money giving lame excuses and deposited it only in 2013 when directed by C.L.B. Petitioner is thus not with clean hands and is not entitled to reliefs being claimed. Respondents claim that due to such conduct of Petitioner they were required to ask Bank not to allow withdrawals to Petitioner. It cannot be termed as oppression . We find substance in the submissions made by the learned Counsel for the contesting Respondents. Looking to the manner the Company Petitioner affairs were being conducted and the conduct of the Petitioner in selectively picking up disputes of the affairs of the Company Petition cannot be allowed to be entertained so as to put in difficulties other Respondents dealing with the Company. We have carefully gone through various records referred by NCLT in relation to the claims made by the Petitioner and we find that NCLT has rightly concluded that the Petitioner approached NCLT without clean hands and did not deserve reliefs as claimed by him.

Issues Involved:
1. Alleged clandestine lease agreement.
2. Authenticity of board meetings and documents.
3. Unauthorized office hiring.
4. Validity of board resolution dated 25.04.2013.
5. Alleged siphoning of company funds.
6. Authorization and accounting of ?75 lakhs by the petitioner.
7. Petitioner's bona fides in approaching the tribunal.
8. Relief entitlement for the petitioner.

Detailed Analysis:

1. Alleged Clandestine Lease Agreement:
The petitioner alleged that Respondent Nos. 2 & 3 clandestinely entered into a lease agreement with Respondent No. 6 for a consideration below the prevailing rental value and siphoned off the security deposit. The NCLT found that the lease was registered on 06.08.2011, and the petitioner was aware of it before registration, evidenced by his letter dated 01.08.2011. The tribunal noted that the petitioner had not raised any dispute regarding the lease in his earlier notices, thus accepting its validity by conduct.

2. Authenticity of Board Meetings and Documents:
The petitioner claimed that board meetings were fabricated by Respondent Nos. 2 & 3. NCLT found no substantial evidence to support this claim. The tribunal held that the minutes of the proceedings are to be accepted as recorded until proven otherwise, as per Section 291 of the Companies Act, 1956. The petitioner attended the meeting on 25.04.2013 and thus could not dispute the resolutions passed.

3. Unauthorized Office Hiring:
The petitioner alleged that Respondent No. 3, in collaboration with Respondent No. 2, hired an office without proper board resolution. NCLT did not find sufficient evidence to support this claim and noted that the company had a registered office with a lower monthly rent.

4. Validity of Board Resolution Dated 25.04.2013:
The petitioner disputed the authenticity of the board resolution dated 25.04.2013, claiming it was fabricated. NCLT found the resolution to be genuine and in accordance with the law. The tribunal noted that the petitioner selectively accepted parts of the resolution that favored him while disputing others. The resolution permitted both the petitioner and Respondent No. 3 to sell portions of the company land.

5. Alleged Siphoning of Company Funds:
The petitioner alleged that Respondent Nos. 2 & 3 siphoned off company funds. NCLT found these allegations to be matters of account verification, which the tribunal was not empowered to scrutinize. The tribunal noted that the petitioner failed to provide substantial evidence to support his claims.

6. Authorization and Accounting of ?75 Lakhs by the Petitioner:
The petitioner claimed he was authorized to utilize ?75 lakhs from the sale proceeds for his daughter's wedding. NCLT found no evidence to support this claim in the board resolution dated 25.04.2013. The tribunal noted that the petitioner had given inconsistent explanations regarding the utilization of the funds and had only deposited the money in 2013 when directed by the Company Law Board.

7. Petitioner's Bona Fides in Approaching the Tribunal:
NCLT found that the petitioner had not approached the tribunal with clean hands. The tribunal noted that the petitioner selectively raised disputes and failed to provide substantial evidence to support his claims. The petitioner's conduct was criticized for not being bona fide.

8. Relief Entitlement for the Petitioner:
NCLT concluded that the petitioner was not entitled to the reliefs claimed. The tribunal dismissed the petition, finding all contentions and allegations raised by the petitioner to be untenable. The petitioner was ordered to pay costs to the respondents.

Conclusion:
The appeal was dismissed, and the petitioner was ordered to pay costs of ?1 lakh each to Respondent Nos. 2 & 3 and another ?1 lakh to be divided among Respondent Nos. 7 to 10, to be deposited in NCLT Hyderabad. The tribunal upheld the NCLT's detailed judgment, finding no reason to interfere with the impugned order.

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