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2021 (10) TMI 693 - Tri - Insolvency and BankruptcyOppression and mismanagement - owner of leasehold land property - transfer in the shareholding pattern or not - removal of directors of the company - appropriate statutory filing with the Registrar of Companies / Ministry of Corporate Affairs - rectification in the register of numbers of the Respondent No.1 Company - disclosure of all monetary transactions carried out on behalf of Respondent No.1 Company - release of any claim to, or encumbrance by way of claiming the security on the said property of the Respondent No.1 Company.Section 59, 241 and 242 of the Companies Act. HELD THAT - The petitioners holds the entire shareholding of the Respondent No.1 Company, M/s Vivid Solution Private Limited which owns the leasehold plot in the MIDC Industrial Area in Nashik along with constructed building etc. The Respondent Nos. 2 and 3 are the owners of Respondent No.4 Company which is located at plot adjoining Respondent No.1 Company. The Respondent Nos. 2 to 4 were desirous of expanding their business and therefore petitioners agreed to transfer 100% shareholding in Respondent No.1 to Respondent Nos. 2 to 3 - The Bench notes that a total amount of ₹ 3 Crore was paid by the Respondent Nos. 2 to 4 to the petitioners and MoU was executed between the parties where intention of the parties to sell the entire shareholding of the petitioner in Respondent no.1 Company to Respondent Nos.2 to 4 were agreed. The Respondent Nos. 2 to 4 made a payment in all of ₹ 3 crores as initial amount. The Bench therefore, notes that the property has not been transferred through any agreement/conveyance deed which need to be registered under Section 17 of the Indian Registration Act, 1908 and Section 54 of Transfer of Property Act, 1882. There is no such documents produced before the Bench by the Respondents which would constitute a valid transfer. It is very clear that under no circumstances the said immovable property can be passed to the Respondent No.4 which is the company promoted by Respondent no. 2 and 3 without any conveyance/sale deed - the Bench concludes that the immovable property of Respondent No. 1 Company passing to the Respondent No. 4 namely Ukay Metal Industries Private Limited without any transfer document, under no circumstances can be constituted as a valid transfer and, therefore is illegal, null and void. The petitioner continues to be the 100% shareholder of Respondent no. 1 Company i.e. Vivid Solutions Pvt. Ltd. and alleged transfer of shareholding of the Petitioners in the Respondent no. 1 company in favour of the Respondent Nos. 2 to 4 is illegal, null and void. The ROC is therefore to declare the transfer of shareholding of Respondent no.1 company to Respondent Nos. 2 to 4 as illegal and null and void - The Bench further directs the purported transfer of immovable assets of Respondent No.1 by mere book entries in the filings with ROC without any Registered Conveyance/Agreement under Section 17 of the Indian Registration Act as not a valid transfer. Therefore, the same is declared illegal and null and void. Petition allowed.
Issues Involved:
1. Legality of the transfer of shareholding of the Petitioners in the Respondent No. 1 Company. 2. Legality of the transfer of immovable assets of Respondent No. 1 to Respondent No. 4. 3. Compliance with statutory requirements for share and asset transfer. 4. Validity of the entries made in the financial statements and filings with the Registrar of Companies (RoC). 5. Allegations of fraud and mismanagement by Respondent Nos. 2 to 4. 6. Validity of the purported mortgage of the property in favor of Respondent No. 5. Detailed Analysis: 1. Legality of the Transfer of Shareholding: The Bench examined whether the Petitioners' shareholding in Respondent No. 1 Company was legally transferred to Respondent Nos. 2 to 4. The Petitioners claimed they remained 100% shareholders, while the Respondents argued that the shares were transferred as part of a transaction. The Bench noted that no valid transfer forms were executed under Section 56 of the Companies Act, 2013, and the Petitioners retained original share certificates. The Bench found the purported transfer illegal, null, and void due to the absence of necessary documentation and compliance with statutory procedures. 2. Legality of the Transfer of Immovable Assets: The Bench scrutinized the alleged transfer of the leasehold property of Respondent No. 1 to Respondent No. 4 by mere book entries. It was noted that no registered conveyance or agreement was executed as required under Section 54 of the Transfer of Property Act, 1882, and Section 17 of the Indian Registration Act, 1908. The Bench concluded that the transfer of the immovable property was invalid and declared it illegal, null, and void. 3. Compliance with Statutory Requirements: The Bench emphasized the necessity of adhering to statutory requirements for the transfer of shares and immovable assets. It was highlighted that the absence of duly executed transfer forms and registered conveyance deeds rendered the purported transfers invalid. The Bench cited relevant legal provisions and precedents to reinforce the importance of compliance with statutory procedures. 4. Validity of Financial Statements and RoC Filings: The Bench examined the entries made in the financial statements and filings with the RoC, which showed the transfer of shares and property. It was noted that the entries were made without proper documentation and statutory compliance. The Bench referred to Section 130 of the Companies Act, 2013, which prohibits reopening of accounts without an order from the Tribunal. The Bench found the retrospective corrections in the filings to be erroneous and declared them illegal. 5. Allegations of Fraud and Mismanagement: The Petitioners alleged fraud and mismanagement by Respondent Nos. 2 to 4, including unauthorized transfer of shares and assets. The Bench noted the ongoing criminal proceedings and investigations against the Respondents. It was observed that the actions of Respondent Nos. 2 to 4, including altering financial statements and unauthorized transfers, amounted to mismanagement and were detrimental to the interests of the Petitioners and the company. 6. Validity of the Purported Mortgage: The Bench examined the mortgage of the property in favor of Respondent No. 5, Federal Bank Ltd., and noted that the property was shown as belonging to Respondent No. 1 in the tripartite agreement. The Bench found that the mortgage was executed without proper transfer of the property to Respondent No. 4, rendering it invalid. The Bench directed the RoC to declare the purported mortgage illegal and null and void. Conclusion: The Bench concluded that the Petitioners continued to be 100% shareholders of Respondent No. 1 Company and that the alleged transfer of shareholding and immovable assets to Respondent Nos. 2 to 4 was illegal, null, and void. The Bench directed the RoC to rectify the register and declared the purported transfers and mortgage invalid. Other reliefs sought by the Petitioners were disallowed, and the Petition was allowed only to the extent of the two main reliefs.
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