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TMI Blog2014 (7) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Petitioners have filed these applications under Section 403 of the Companies Act, 1956 (herein referred to as the Act ), inter alia, seeking appointment of a receiver/administrator to take over the management of the respondent Company and removal of Mr Gautam Agarwal from the Board of Directors of the Company, and to debar Mr Gautam Agarwal and Mrs Raj Kumari Agarwal from participating in the management of the Company. 2. Respondent no.1 Company was incorporated as a private limited company under the Companies Act, 1913 on 14th December, 1954. The shareholding of the company was distributed between the members of the Modis and the Agarwals family. The Company was deemed to be a public company by virtue of Section 43A of the Companies Act. 1956 (as was in force at the material time). The Board of Directors of the Company approved the deletion of the word private from the name of the Company on 17th March, 1983 and the Registrar of Companies deleted the same on 6th October, 1983. The nominal capital of the Company is ₹ 25,00,000 divided into 25,000 equity shares of ₹ 100 and the paid-up capital is ₹ 20,00,000. Equity capital of ₹ 5,00,000 was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the vouchers of the expenditure incurred by Mr Gautam Agarwal, his wife and Mrs Raj Kumari Agarwal in Bangalore as well as the names, designation and functions of the staff members. The petitioners, in this application, also prayed for Mr Gautam Agarwal who is the managing director of the company to affirm on oath as to where he resided in Bangalore and the means from where his education expenses was derived at that relevant time and also travelling expenses incurred by him and his wife on their trip to the US. 6. Thereafter, the petitioners filed another application i.e. CA No 1002/1997, for appointment of a managing administrator to take over the management of the company. The petitioners by way of this application submit that the company had fraudulently surrendered its property measuring about 2200 sq. ft situated at Connaught Place, New Delhi and property measuring 350 sq. yards situated at Defence Colony, New Delhi had been let out Mrs Raj Kumari Agarwal for a nominal rent of ₹ 500 per month. The petitioners further submitted that the inspection by the Department of Company Affairs had revealed that personal expenses of the majority shareholder has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector of the said Company on 10.10.1987 and his appointment as a Director at the Annual General Meeting held in June 1988. The petitioner has alleged that Mr Gautam Agarwal was only 20 years old the day he was appointed as an Additional Director. The notice of the Annual General Meeting held on 24.06.1988 (Annexure B) carried the following resolution as special business. Resolved that Mr. Gautam Agarwal be and hereby appointed as Director of this Company. And, the Explanatory Note (Annexure C) to the above resolution read as under: Mr. Gautam Agarwal is a business man having vast experience in the line of management, finance and administration. With his valuable advice it will be more advantage to the Company to have Mr. Gautam Agarwal as Director of this Company. None of the other Directors other than Mr. Gautam Agarwal is interested in passing said resolution. 10. The reply filed by the respondent clearly admits that Mr Gautam Agarwal was pursuing his education in Bangalore from July 1986 to June 1990. Apparently, after passing out of a school in Delhi, Mr Gautam Agarwal had proceeded to Bangalore to pursue his undergraduate course. Therefore, the contention tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial acumen and experience as stated in the explanatory note but to ensure that he could draw benefits from the company. The branch office at Bangalore also appears to have been opened only for the purpose to facilitate the education of Mr Gautam Agarwal at Bangalore. 12. After completing his education in Bangalore, Mr Gautam Agarwal had decided to pursue a management course overseas. Concededly, this was also funded by the company. It was submitted that hiring of a qualified manager would entail additional outlay and, therefore, the company had decided to send Mr Gautam Agarwal abroad and support his further education. This in my view is a puerile explanation and is liable to be rejected. This reason coupled with the alleged reason furnished for appointing Mr Gautam Agarwal as Director - his alleged vast experience in the line of management, finance and administration make it prima facie apparent that the respondents have contrived explanations and canvassed contentions to ensure the flow of benefits from the company to Gautam Agarwal. 13. The petitioners filed CA 1002/1997 alleging that the company had fraudulently surrendered 2200 Sq. Ft of commercial space in Scindia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... q. yards situated at Defence Colony, New Delhi. The only explanation afforded to this Court by Mr Gautam Agarwal who had carried out this transaction on behalf of the company as a Director is that he was unaware of the orders of this Court. Mr Gautam Agarwal is stated to be the managing Director of the company and contempt proceedings have also been initiated against Gautam Agarwal in this regard. It is also not disputed that the company had surrendered the tenancy of the premises in Connaught Place, New Delhi as alleged by the petitioner. The explanation for surrender of this valuable tenancy is also prima facie devoid of any substance. 17. It is also not controverted that Smt Raj Kumari Agarwal resided in the property owned by the respondent company at Defence Colony. It is thus apparent that the benefit of the properties of the company have been availed by Smt Raj Kumari Agarwal and her family including her son-Mr Gautam Agarwal. 18. The above facts, prima facie established that the resources of the company have been used for the benefit of Smt Raj Kumari Agarwal and her family. And, the petitioners have apparently been excluded from the affairs of the company. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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