2018 (10) TMI 118 - AT - Companies Law

Oppression and mismanagement - Fraud and forgery - Held that - We find that the oral submissions and claims of the Appellants trying to deny the documents, which appear to have come into existence in ordinary course of events, cannot be accepted. There is material to show that the Appellant No.1, who was taking great care of the interest of the Appellants, was MD of the Company till 26.10.2012 and was party to the increase in authorized share capital as well as documents show that list of allottees also was bearing his signature. He appears to have subsequently resigned from the post of MD and continued as Director. The Appellants cannot be heard denying their own documents. Merely denying documents bearing signatures of Appellant No.1 is not enough. Burden of proving an averment is on the party making the averment. Appellants have failed to prove documents adverse to their claims to be false or forged. Appellants through Appellant No.1 were in control of the affairs till 06.03.2012 cannot simply disown documents bearing signatures of Appellant No.1 by merely saying that they trusted Respondent No.2 and had signed blank papers and that the same have been misused. Fraud and forgery when alleged require details and circumstances to be proved to spell out possibilities and actual fraud and forgery. Calling for forensic evidence is supportive evidence in this regard and even that was not resorted to. The Appellants thus failed to prove oppression and mismanagement on the part of Respondents.

Summary

Issues Involved:
1. Allegations of oppression and mismanagement under Sections 397, 398, and 402 of the Companies Act, 1956.
2. Validity of the increase in authorized share capital.
3. Allegations of forgery and fabrication of documents.
4. Resignation of the Managing Director and appointment of a new Managing Director.
5. Procedural lapses and opportunities given by NCLT to substantiate claims.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The appellants claimed oppression and mismanagement by the respondents in the company, alleging that the respondents diluted the shareholding of Appellant No.1 through forged signatures and siphoning of funds. The NCLT dismissed the company petition, leading to the present appeal.

2. Validity of the Increase in Authorized Share Capital:
The appellants argued that the increase in authorized share capital from ?12 lakhs to ?62 lakhs was unnecessary and executed without proper notice. They contended that the EOGM dated 12.03.2012, which approved the increase, was held without proper notice as required by Article 36 of the Articles of Association. The respondents countered that the increase was approved by a Board Resolution dated 06.03.2012 and that the appellant No.1 was aware and signed relevant documents, including the balance sheets reflecting the increased share capital.

3. Allegations of Forgery and Fabrication of Documents:
The appellants alleged that signatures on various documents, including the resignation letter and resolutions, were forged. However, they did not utilize the opportunities given by the NCLT to have these documents examined by a handwriting expert as per Rule 43(3) of the National Company Law Tribunal Rules, 2016. The NCLT noted that the appellants failed to substantiate their claims of forgery and fabrication despite being given multiple chances.

4. Resignation of the Managing Director and Appointment of a New Managing Director:
The appellants claimed that the resignation of Appellant No.1 as Managing Director was forged. However, during arguments, they conceded that the signature on the resignation letter was genuine but claimed that the contents were fabricated. The respondents presented documents showing that the resignation was accepted in a Board Meeting and that the appellant No.1's resignation was genuine and voluntary.

5. Procedural Lapses and Opportunities Given by NCLT:
The NCLT provided multiple opportunities to the appellants to substantiate their claims, including orders dated 04.01.2017, 06.02.2017, and 03.03.2017, allowing them to file evidence and apply for forensic examination of disputed documents. The appellants failed to take advantage of these opportunities, leading the NCLT to dismiss their petition for lack of evidence.

Conclusion:
The NCLAT upheld the NCLT's decision, finding no error in the judgment. The appellants' claims of oppression and mismanagement were not substantiated with sufficient evidence. The appeal was dismissed, and the NCLT's judgment was affirmed. There were no orders as to costs.