9911796707
TMI Blog2013 (8) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 1 company and respondent No. 8 in respect of fixed assets situated at plot at MIDC, Andheri without the consent of the petitioners to be set aside. (g) Non-sending of notices and non-holding of the board and general meetings are illegal. 2. Shri Sanjay Maria, learned counsel for the petitioners narrated the brief facts. He submitted that respondent No. 1 company was incorporated as a private limited company on April 27, 1976, by late Shri Parmeshwar N. Sadh along with petitioner No. 1, respondent No. 2 and Basudev Sadh. It was registered with the Registrar of Companies, Maharashtra. Petitioner Nos. 1, 2 and 3 hold 25,000 equity shares of Rs. 100 each out of total of 50,000 equity shares of Rs. 10 each representing 50 per cent. of the issued, subscribed and paid-up share capital of respondent No. 1 company. Respondents Nos. 2 to 6 hold 25,000 equity shares of Rs. 100 each out of total of 50,000 equity shares of Rs. 10 each representing 50 per cent. of the issued, subscribed and paid-up share capital of respondent No. 1. It is further submitted that respondent No.1 is a quasi partnership between petitioner No. 1 family and respondent No. 2 family on 50 : 50 basis. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 1 and respondent No. 7. Petitioner No. 1 has come to know from the correspondence exchanged with respondent No. 7 that the said purported lease agreement was approved in the alleged board meeting held on December 15, 2005, while the fact is that petitioner No. 1 never received any notice of the said alleged board meeting of respondent No. 1 company. The respondents are using respondent No. 1 company as a vehicle for their personal enrichment. The petitioners have now also learnt that as a part of their design to deny and deprive the legitimate rights and expectations as shareholders, as also of the fruits of their labour and vision, respondents Nos. 2 to 6 have been siphoning away the valuable assets and rights of respondent No. 1 company. The sole motive of respondents Nos. 2 to 6 is to exclusively take over respondent No. 1 and its management to the exclusion of the petitioners, with the ultimate aim and objective of converting the company into their personal business for their personal benefits and enhancement. It is further submitted that respondents Nos. 2 to 6 are not interested in the welfare and well being of respondent No. 1 but is actively engaged in illega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents have filed a suit in the hon'ble High Court being Suit No. 1937 of 2008. Petitioner No. 1 and respondent No.2 are brothers and sons of late Mr. Parmeshwar Narain Sadh. The Bazzardev Sadh group and the Gyandev Sadh group are parties to the family arrangement/settlement and accordingly the division has taken place in the following manner, M/s. Ananya Fashions P. Ltd., M/s. Arsh Fashions P. Ltd., M/s. Parmeshwar Exports P. Ltd. (hereinafter referred to as "the Bazzardev Sadh group companies") and one M/s. Club-3 Apparels P. Ltd. (hereinafter referred to as "the Gyandev Sadh group company") wherein the Bazzardev Sadh group and the Gyandev Sadh group held more or less 50 per cent. share each. The properties held in the name of the Bazzardev Sadh group companies, by and under the family arrangement/ settlement have been allotted to the Bazzardev Sadh group and the property held in the name of the Gyandev Sadh group company, has been allotted to the Gyandev Sadh group. As per such family arrangement/ settlement, the shares held by the Gyandev Sadh group in the Bazzardev Sadh group companies belong to and have to be formally transferred in favour of the Bazzardev Sadh group a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shareholding held by the concerned members of each group. Most of the documents required to be signed by the Bazzardev Sadh group in respect of the properties coming to the share of the Bazzardev Sadh group, have in fact been executed by them. The Gyandev Sadh group, however with mala fide intention and ulterior motive, have failed and/or neglected and/or avoided to execute such documents and consequently to complete the implementation of the family arrangement/settlement arrived at between the parties and is now appearing to be interested in resiling and/or wriggle out of the family arrangement/settlement already arrived at and not implementing the remaining part of the same. The Bazzardev Sadh group therefore was constrained to file the said suit before the hon'ble High Court. Needless to state that the respondents, i.e., the Bazzardev Sadh group have always been ready and willing to fulfil their part of the obligations under the family arrangement/settlement and to implement the same as agreed including by executing appropriate documents for formally conveying the title in respect of the properties coming to the share of the petitioners, i.e., the Gyandev Sadh group. 6. In or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany or its management and/or its affairs. However, the staff of the company as in a routine manner sent all necessary accounts to all the shareholders including the petitioners as their names continue to be shown as shareholders of the company, save and except in respect of the year 2007-08, as the accounts for the same are not yet audited and finalised. Respondent No. 6 is one of the shareholders of respondent No. 1 company. It is false to state that the respondents are using the property of the company for their personal use and the same is being used for the purpose of the company as set out in the books of account of the company. In any event, it is none of the business of the petitioners as under the said family arrangement/ settlement the said company, the management, control thereof as well as the properties, assets and income solely and exclusively belong to the Bazzardev Sadh group and the Gyandev Sadh group have no right, title or interest of any nature whatsoever in respect of the same. When the property was given on licence to respondent No. 8, the same was appropriately recorded in the minutes of the meeting of the board of directors. 8. Learned senior counsel furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh) [2007] 4 SCC 221, paragraphs 21, 29. 9. While rejoining to the submissions of the respondents, learned counsel for the petitioner submitted that memorandum of understanding cannot be part of the corporate governance and not binding on the shareholders or company and relied upon the following decisions : (1) in the matter of (V.B. Rangaraj v. V.B. Gopalakrishnan) [1992] 73 Comp Cas 201 , paragraphs 7 and 9. (2) in the matter of (Mrs. Bacha F. Guzdar v. CIT) [1955] 25 Comp Cas 1 . (3) in the matter of (Rolta India Ltd. v. Venire Industries Ltd.) [2000] 100 Comp Cas 19 (Bom), page 32. (4) in the matter of (Radhe Shyam Tulsian v. Panchmukhy Investments Ltd.) [2002] 35 SCL 849 (CLB - New Delhi). It is to show : "The Company Law Board will not consider private agreements between parties. The memorandum of understanding between the shareholding groups will not be considered". (5) in the matter of (Reliance Natural Resources Ltd. v. Reliance Industries Ltd.) [2010] 156 Comp Cas 455. 10. Learned counsel for the petitioner relied upon the following citations during the course his arguments : (1) in the matter of (Ajit Kumar Nag v. General Manager (PJ), Indian Oil Corpn. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the reply filed by the defendants to Notice of Motion No. 2487 of 2008 in Suit No. 1937 of 2008 before the hon'ble High Court of Bombay at paragraph 5 wherein it was averred that : "it is also pertinent to note that all the properties/assets reflected in the family settlement have been purchased out of a common pool of funds/assets jointly owned by the Sadh family". Thus the respondents clearly admitted that all the properties/ assets have been purchased out of a common pool of funds jointly owned by the Sadh family. The petitioners have filed search report dated April 10, 2008, it reflects that petitioner No. 1 and respondent No. 2 and other two persons are directors of the company and the first petitioner and respondent No. 2 still continuing as directors. According to the shareholding pattern of the company, the petitioners' group holds 25,000 shares and the respondents' group holds 25,000 shares. There is no denial to this report and it further strengthens the stand that the petitioners' group and the respondents' group hold 50 per cent. each. Moreover the respondents have neither specifically denied nor admitted with respect to the averment made by the petitioners that respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or inspection of documents pertaining to the said company ? After receipt of your response we shall thereafter deal with your request on merits". From the correspondence it is seen that there is no clear intention of the respondents to provide inspection of the documents to the petitioner. It is an admitted fact that the petitioners are 50 per cent. shareholders of the company and they are entitled to inspect the records and registers in the capacity as shareholders and directors. Therefore, it is hereby directed the company to provide the inspection of registers and records to the petitioners in accordance with law. The petitioners are also entitled to the notices for the board and general meetings as per the articles of association and the law. Accordingly the issue is answered. Now I deal with issue No. 3 14. The respondents in their counter dated July 18, 2008, heavily relied upon that under a family arrangement arrived at between the first petitioner and the second respondent on August 30, 2004 and September 11, 2004, according to which the properties were divided between them. The respondents enclosed the said family arrangement along with their reply. The family arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounter affidavit. The letter dated September 15, 2006, addressed by the second respondent to Kuwait Petroleum Corporation, Mumbai wherein it is stated that "we regret to inform you that we have not reached any family agreement with Mr. Gyandev Sadh as yet. If he has informed you so he is misleading you". The petitioners have relying upon this letter and contended that the respondents also have admitted the fact that they have not reached any agreement with the petitioner. Whatever may be the reason, whether this Bench can go into the merits of the family arrangement/settlement in a petition under sections 397 and 398 of the Act when such family arrangement is sub-judice and subject-matter of the hon'ble High Court of Bombay. In this regard the relevant provision is necessary to emphasise. Any member of the company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members, may apply to the Company Law Board by invoking the provisions of section 397 of the Act and in case of mismanagement in the affairs of the company the member can invoke the provisions of section 398 of the Act, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding is not binding on the shareholders. The hon'ble apex court in the matter of V.B. Rangaraj's case (supra) the apex court held that the private agreements which are contrary to the articles are not binding either on the shareholders or on the company. The Company Law Board in the matter of Radhe Shyam Tulsian case (supra), is of the view that the Company Law Board will not consider private agreements between parties. The recent judgment of the apex court in the matter of Reliance Natural Resources Ltd.'s case (supra), at paragraph 329 held that the memorandum of understanding is a private pact between the members of Ambani family which is not binding on RIL. I follow the law laid down by the apex court that the private agreements between the parties, however, will not be considered by the Company Law Board. The private agreements can neither be sought to be enforced nor their breach give any cause of action to file a petition under sections 397 and 398 of the Act. The said provisions are the exclusive domain of the members and shareholders of the company against acts of oppression and mismanagement in the affairs of the company, but cannot seek any specific performance of priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er it is apparent that respondent No. 1 entered into an agreement with respondent No. 7 as an independent entity and not in individual capacity. Therefore, addressing the letters by petitioner No. 1 as shareholder is not correct. Respondent No. 1 company is only competent to take a decision with respondent No. 7 in respect of lease according to the terms and conditions of the lease agreement. Be that as it may, the respondents stated that lease agreement has been terminated with respondent No. 7. In view of the statement I am of the view that it is a closed controversy with respondent No. 7. The petitioners in their prayer prayed this Bench to declare all the board resolutions and shareholders' resolutions passed by respondents Nos. 2 to 6 from September, 2003 are illegal, null and void. It is seen that except the prayer no documents/copies of the resolutions have been produced before this Bench showing that the respondents have taken decisions which prejudiced the petitioners. In the absence of any evidence, the prayer of the petitioners seeking declaration is vague and the same is rejected. The petitioners also sought a declaration that any agreements to sell, transfer, alienate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
