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2022 (11) TMI 1157 - AT - Companies LawOppression and Mismanagement - Validity of purported Development Agreement cum General Power of Attorney entered into between the 1st Respondent Company /Emaar Hills Township Private Limited and Emaar MGF Land Ltd. - right of assignment proper accounting for all the monies realized by sale of properties in the Township Project, either directly or through the said Emaar MGF Land Ltd. or any other entry - grant of order of injunction restraining the 2nd and 3rd Respondents from acting / conducting the affairs of the 1st respondent company and directing them to hand over the assets and records of the 1st Respondent Company including disclosing the details of all assets/properties/monetary transactions and accounts to the petitioner - directing an independent enquiry / investigation into the affairs of the 1st Respondent Company, by appointing an Independent Auditor - whether 1st Respondent is a member of the Proforma Respondent No.2, as defined under Section 2 (55) of the Companies Act, 2013, or not - plea of the Appellants that only a Member can prefer and maintain a Petition under Section 241-242 of the Companies Act, 2013. HELD THAT - It is to be pointed out that Section 244 of the Companies Act, 2013, prescribes the Qualification of Members, who shall have a Right to Apply, as per Section 241 of the Act, 2013, in respect of a Petition for an Oppression or Mismanagement - An Ex-facie evidence pertaining to the Shares, can be (a) the Share Certificate or (b) Even the Register of Members. However, in the absence of a Share Certificate or an Entry in the Register of Members, also if an Individual can prove that certain / particular Shares were allotted to him, for the purpose of this provision, is to be treated as a Member of a Company. A Shareholder can establish the Allotment of Shares, through Statutory Returns and the documents maintained by the Company. Strictly speaking, in a given case, if it is exhibited that although the concerned Persons name is not contained / shown in the Register of Members, but it / he, had been treated as a Member, by the Company, the Tribunal, is to exercise, its Unfettered Equity Jurisdiction and cannot avoid the Petition, by falling back upon the Technicalities, in the considered opinion of this Tribunal. Notwithstanding the fact, an emphatic contention is advanced on the side of the Appellants in both Appeals that there is no iota of evidence to exhibit in the instant case, that the Assets and Liabilities of APIIC were apportioned physically to the 1st Respondent/TSIIC/Petitioner, yet this Tribunal, is of the considered view that in terms of the ingredients of Section 53 of the Andhra Pradesh Reorganisation Act, 2014, every Government Asset Viz. located in the State of Telangana shall by an Operation of Law will become the Assets of the State of Telangana. In the present case, the Minutes of the Meeting of the Board of Directors of the Appellant/Company that took place on 16.06.2016, in which, the Managing Director of the 1st Respondent/TSIIC/Petitioner, based on the invitation of the Appellant/Company - It cannot be brushed aside, that the List of Shareholders as on 31.03.2019, forming part of the Appellant/Company focuses the 1st Respondent/TSIIC/Petitioner, as a Shareholder of the Appellant/Company holding 2,50,32,202 Shares. Even the note, appended to the Accounts of the Company for the year ended 31.03.2019, clearly mentions that the 1st Respondent/TSIIC/Petitioner took over the activities of APIIC, relating to the State of Telangana. These would clinchingly, unerringly and without any simmering doubt, establish that the 1st Respondent/TSIIC/Petitioner was recognised as the Shareholder of the Appellant / Emaar Hills Township Pvt. Ltd. / Company. This Tribunal on a careful consideration of the respective contentions advanced on either side, keeping in mind that by an Operation of Law that the 1st Respondent/TSIIC/Petitioner has become the Shareholder of the Appellant/Company and considering the facts and circumstances of the instant case (especially, according to the 13th Respondent / RoC, Telangana, Hyderabad, an inquiry under Section 206 of the Companies Act, 2013, is under progress and consideration by the Government of India, Ministry of Corporate Affairs against the 1st Respondent/TSIIC/Petitioner/Company and as well as against the Appellant/M/s. Emaar Hills Township Pvt. Ltd/Company in Comp. App. (AT) (CH) No. 84 of 2022, this Tribunal comes to a consequent cock sure conclusion that the main CP/36/2021, filed by the 1st Respondent/TSIIC/Petitioner, before the Tribunal (National Company Law Tribunal, Hyderabad Bench-II, Hyderabad), is exfacie maintainable in Law. Appeal disposed off.
Issues Involved:
1. Maintainability of the petition under Sections 241-242 of the Companies Act, 2013. 2. Transmission of shares from APIIC to TSIIC. 3. Jurisdiction of the Tribunal in light of the Andhra Pradesh Infrastructure Development Enabling Act, 2001. 4. Interim reliefs granted by the Tribunal and their nature. 5. Compensation for financial losses incurred by TSIIC. Issue-wise Detailed Analysis: 1. Maintainability of the Petition: The Tribunal held that the main CP/36/2021 filed by TSIIC under Sections 241-242 of the Companies Act, 2013, was maintainable. The Tribunal noted that TSIIC had become the shareholder of the Appellant by operation of law under the Andhra Pradesh Reorganisation Act, 2014. The Tribunal emphasized that TSIIC was recognized as a shareholder by the Appellant through various correspondences and meetings. The Tribunal also referred to the list of shareholders as of 31.03.2019, which included TSIIC as holding 2,50,32,202 shares. The Tribunal concluded that TSIIC had the locus standi to file the petition. 2. Transmission of Shares: The Tribunal observed that the assets and liabilities of APIIC, located in the State of Telangana, automatically became the properties of TSIIC by operation of law under Section 53 of the Andhra Pradesh Reorganisation Act, 2014. The Tribunal highlighted that the term "transmission by operation of law" covers cases where a person or authority acquires interest in property without any voluntary act on their part. The Tribunal referred to various correspondences and the minutes of meetings to establish that TSIIC was treated as the successor company of APIIC. 3. Jurisdiction of the Tribunal: The Tribunal acknowledged the argument that the disputes arising from the Memorandum of Understanding, Collaboration Agreement, and Supplementary Agreement should be referred to the Conciliation Board under the Andhra Pradesh Infrastructure Development Enabling Act, 2001. However, the Tribunal decided to consider this aspect in the main CP/36/2021 and allowed the parties to raise this issue during the final hearing. 4. Interim Reliefs Granted: The Tribunal granted interim reliefs by restraining the Respondents from dealing with or disposing of the assets and properties of the Appellant. The Tribunal justified this by stating that the contentions raised in the petition were in the public interest and related to the property of the State being sold or alienated deceitfully. The Tribunal emphasized the need to protect the interests of the public exchequer and prevent further damage. 5. Compensation for Financial Losses: The Tribunal initially directed the Respondent Companies to compensate the financial losses incurred by the Government of Telangana/TSIIC due to equity dilution and other consequences. However, upon review, the Tribunal set aside this direction, noting the absence of quantification of financial losses and the need for a proper assessment of liability. The Tribunal emphasized that the determination of liability and quantification of losses should be addressed during the final hearing of the main CP/36/2021. Conclusion: The Tribunal concluded that the main CP/36/2021 filed by TSIIC was maintainable and directed the Respondents to file their counter within four weeks. The Tribunal sustained the interim order restraining the Respondents from dealing with the assets and properties of the Appellant but set aside the direction for compensation of financial losses. The Tribunal directed the National Company Law Tribunal, Hyderabad Bench-II, to take up the main CP/36/2021 for final hearing and pass a reasoned order based on the merits of the case.
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