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TMI Blog2011 (9) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... ted:- 5-9-2011 - VIMLA YADAV, J. Peyoosh Kalra and Amul Mittal for the Petitioner. Virender Ganda, Ratish Mittal, Santosh Giri, Gaurav Mishra, Ratish Mohan Mittal, Sandeep Mohan Mittal, Ajit Chhikara, Suman Doval and Sumit Babbar for the Respondent. ORDER 1. In this order I am considering Company Petition Nos. 151 of 2007, 152 of 2007 and 153 of 2007 (these company petitions are being disposed of together, the facts and circumstances and the parties being almost the same, arguments were made in Sangeeta Construction (P.) Ltd. to be adopted in the other two company petitions) filed by Naresh Mohan Mittal and another (petitioners) against Sangeeta Construction (P.) Ltd. and others Nippun Construction (P.) Ltd. and others Aarti Construction (P.) Ltd. and others alleging oppression and mismanagement under section 397/398 of the Companies Act, 1956 ('the Act') seeking a declaration that the appointment of Sandeep Mittal, Nippun Mittal in Sangeeta Construction (P.) Ltd. and Nippun Construction (P.) Ltd. and Sameer Mittal and Naveen Mittal in Aarti Construction (P.) Ltd. as directors is null and void and they be restrained from interfering with the administration of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 the youngest brother of the petitioner Shri Satish Mohan Mittal expired. On his death his son Amul Mohan Mittal was inducted as director in the Board of all three companies in place of his father. It was pointed out that Shri Ratish Mohan Mittal (R3) although being a director since inception of the company, never participated in the affairs of the company in any manner whatsoever, he attended only one Board meeting in last seven years, the petitioners were managing the affairs of the respondent-company. 3. It was pointed out by the counsel for the petitioners that in the year 1983 R-1-company purchased Plot No. 3 in Mohan Bazar Community Centre, Ashok Vihar Phase-1, Delhi-52, from Delhi Development Authority ('DDA') in public auction held on 4th May, 1983 and developed it. Vide agreement to letter dated 25th August, 1987, the R-1-company, leased out a total area of 3247.60 sq. ft. to Mittal Hotels (P.) Ltd., for a period of five years commencing from 1st September, 1987 on a monthly rent of Rs. 6,200. The rent was to be payable in advance on the 7th day of each calendar month. It was pointed out that Mittal Hotels (P.) Ltd. was also promoted by all four brothers and their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes to accounts, the petitioners passed a resolution in the Board meeting held on 7th September, 2007 to the effect that the petitioner No. 1 is authorised to apply to RoC to grant extension of time to hold annual general meeting ('AGM'). He was also authorised to seek explanation from the respondent No. 2 (Ritish Mohan Mittal) and 5 (G K Arora). A careful perusal of the documents showed that these were signed by R-3, Shri Ratish Mohan Mittal an R-4 Shri Sandeep Mittal as director and Shri G K Arora as the auditor of the company. This was the first time that the P-l came to know that the R-3 and two sons of his eldest brother late Shri Mahesh Mohan Mittal have started indulging in fraudulent practices. On 11th September, 2007 the petitioner received an e-mail from MCA about filing of certain documents by the respondent-company. It was also revealed that DIN 3 of Shri Ratish Mohan Mittal was filed on 31st August, 2007 as per resolution dated 27th August, 2007, which never took place. While searching the Website of RoC the petitioner was shocked and surprised to discover that a company secretary Sh. Naresh Kumar vide diary No. 3615 had filed certain documents including Form 32 cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the company and Mr. Ajeet Chhikara (my friend) of Chikrara and secretary came to my office at 6.00 PM and asked me to certify and submit Form 32 of the company, namely, Sangeeta Construction (P.) Ltd. I asked them to show me the related documents and they showed me the consent of directors, which are not necessary in the case of private company and they also showed me the resolution authorising to file Form 32 resolved in the meeting dated 31st August, 2007 and 9th December, 2007 and some other documents. Both the resolution documents were shown in photocopy and I also retained the photocopy of the same for my record. Mr. Chhikara requested me to help him in filing the said documents as he stated that there was some problem in his computer due to which he expressed his inability to submit the forms electronically. Therefore, in the good faith and as a helping gesture, I certified the Form 32 and DIN-3. I also hereby enclosing the certified true photocopy of both resolutions given to me by Mr. Naveen and Chhikara for your reference as Annexure A and Annexure B. I also hereby state that in future, if your goodself want some more information, then I am ready to cooperate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that Sh. Naresh Mohan Mittal's signatures on the resolutions were forged which make Form 32 a false form. Form 32 shown to be based on the Board resolution in meeting dated 9th December, 2006 has been filed almost 9 months later is an afterthought and part of a greater criminal conspiracy. The mention of name of Sh. Naresh Kumar in both the resolutions itself is evidence of criminal conspiracy as Shri Naresh Kumar has never ever been associated with the company in any manner whatsoever. It showed existence of pre-thought, pre-planned criminal operation by several interested people and professionals. It was contended that as Shri Naresh Mohan Mittal did not attend the meeting dated 31st August, 2007 as confirmed by Ratish Mittal how could have he issue a Board resolution referring to a meeting which never took place and he never attended. 7. The petitioners' case is that the respondent Nos. 2 to 6 through their ulterior motive and conduct, tried to gain the control over the affairs of the respondent No. 1 company in violation of various provisions of the Act and have been continuing to defraud the company, petitioners. The R-3 directly with respondents 4, 5 and 6 have vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd November, 2007 did not exclude creation of third party rights "in the normal course of business" ; and the petitioners should have sought permission of the CLB for creating third party right even if it was deemed "as in the normal course of business". 10. Ft was pointed out that minutes book of the Board meetings and also of the meetings of the shareholders are neither serially numbered nor signed and confirmed in accordance with section 193 of the Act. Further, as per item No. 6 of minutes of the Board meeting held on 26th August, 2006 the Board had recommended a dividend of Rs. 350 per share, the said dividend has however, not been declared in AGM held on 23rd September, 2006 nor is there any decision to the effect that the dividend recommended by Board need not be declared and paid. 11. As regards the cessation of petitioner No. 2 as director it was pointed out that consequent upon the demise of Mr. Satish Mohan Mittal on 20th October, 2004, his son the petitioner No. 2 was appointed as additional director of the respondent No. 1-company with effect from 25th October, 2004 to hold office up to the date of next AGM, which was held on 24th September, 2005. As per the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n simultaneously appearing on behalf of the petitioner and also for the respondent No. 1-company. When it was pointed out by the respondents, the petitioners gave an oral explanation as the same being an error through oversight. There is no document whatsoever placed on record to rectify the aforesaid error occurred, if any. It was pointed out that the language, the type and the font style used in the petition is exactly the same as used in the aforesaid reply to the petition. The petitioners/respondent No. 1-company, as represented by the petitioner No. 1, are, therefore, the same person and thereby makes the proceedings as collusive proceedings which should be dismissed forthwith and can under no circumstances be allowed to be proceeded with, much less the equitable proceedings under sections 397 and 398 of the Act, where a person who seeks equity must come with clean hands and the equity is of utmost importance. Further, it was pointed out that in fact, as per the reply filed by petitioner No. 1 to the petition on 13th November, 2007 admitting the allegations in the petition, the respondent No. 1-company becomes the petitioner itself which can not be allowed under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kept as a hostage by another family member (respondent No. 3) in the residence of his brother (petitioner No. 1) where all other members of the family including ladies and children would be present. It is also unbelievable that the drama as reflected in the aforesaid communications could take place at the premises where the petitioner No. 1 himself resides along with others. The petitioner had filed a police complaint about the Board meeting and allegedly keeping the petitioner No. 2 as hostage. The complaint was disposed of without any findings against the respondents. 17. The respondents pointed out that R-6 has been the statutory auditors of the R-1-company since inception. As per the notice dated 22nd August, 2007 issued by the R-6 was proposed to be re-appointed as statutory auditors by the P-2 himself. It later transpired that the respondent No. 6 was ineligible to be appointed as statutory auditor due to temporary removal of his name as a member by the Institute of Chartered Accountants of India for a short period. Respondents had no comments to offer on the eligibility or ineligibility of respondent No. 6 to be appointed as statutory auditor and the same shall have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 4 and 5 as directors was in line with the aforesaid family settlement. It is evident by the conduct of the parties that the family settlement was being acted upon all brothers. When each of them of the opposite side enjoyed the benefit of the family settlement in respect of different properties, now with all mala fide petitioners are trying to attack only a part of the property which fell to the share of Shri Mahesh Mohan Mittal. It was argued that these kinds of disputes cannot form subject-matter of the proceedings under sections 397 and 398, the petition Reserves to be dismissed. 19. Shri Ajeet Kumar Chikkara's (R8's) prayer is that the present petition may be dismissed so far as respondent No. 8 is concerned in the interest of justice or name of the respondent No. 8 be deleted from respondents, no relief has been claimed against answering respondent and he is in no way a necessary party in the present petition. It was pointed out that R-8 has nothing to do and is having no knowledge of the particulars as mentioned in para 1 of the petition except the fact that Shri Ratish Mohan Mittal, director of the company, namely, Sangeeta Construction (P.) Ltd. had engaged respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Mr. Ratish Mohan Mittal was the director of the company or not and the most important document was the annual return filed by the company and signed by Mr. Naresh Mohan Mittal and other director of the company showing him the ministry www.mca.gov.in and can be viewed by anyone. Further that none of the party to the petition had questioned the directorship of Mr. Ratish Mohan Mittal besides the annual return, he had also checked the Form DIN-2 signed by Mr. Ratish Mohan Mittal and all other relevant documents. 21. I have considered the rival submissions and the case laws cited by the parties. There is no dispute with the case laws cited. But each case turns on its own facts. It is noted that in this matter wherein three company petitions have been filed by the petitioners, there is a family settlement which has also been acted upon and properties which are assets of these companies and affairs of these companies are also being managed as provided in the settlement and understanding among the four brothers. In this matter there are allegations and counter-allegations. The petitioners' case is that P-2 was forcibly made to sign the attendance sheet and other blank papers re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorial complaints cannot be agitated under section 397/398 of the Act. An isolated act cannot be made subject-matter of petition under section 397/398 of the Act. P-2 ceased to be a director with effect from 24th September, 2005, and, hence, all meetings held by the petitioners are null and void. Further, the petitioners have withdrawn huge amounts from the Bank account. 22. In the facts and circumstances of this case, it is noted that the respondents have not been able to refute the allegations made by the petitioners regarding the irregularities and illegalities in filing of Forms 32 and DIN-3. The reason given for cessation of directorship of P-2 is that, he was appointed as an additional director with effect from 25th October, 2004 to hold office up to the date of next AGM which was held on 24th September, 2005, and in the AGM he was not appointed as director, P-2 had accordingly ceased to be director with effect from 24th September, 2005. It is not understood as to how P-2 could be invited to the meeting allegedly held properly by the respondents on 31st August, 2007, if he had ceased to be director with effect from 24th September, 2005. It is noted that Naveen Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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