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TMI Blog2017 (6) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... mka and there cannot be any challenge on the ground of oppression or mismanagement on the basis of past and concluded acts. Thus we hold that the petitioner has not been able to prove the acts of oppression and mismanagement on the part of R-2. The acts complained of in the instant petition are very old and those were reflected in the Annual Returns filed in the year 2006, but the instant petition has been filed after more than 5½ years. There is thus a huge delay and the petition would be clearly barred by time. This issue is also held against the petitioner. The petitioner is not entered in the record of R-1 company as shareholder/member. The present case also does not involve rectification of the register, but only the oppression and mismanagement. In the absence of the aforesaid relief, the petitioner would not have the locus standi to file the petition, as she is not eligible under Section 399 of the Act. We would also observe that if there is any delay in filing of the Annual Returns or if the transfer statedly made in the year 1995 was not reported to the Registrar of Companies till the year 2006, that will not provide any support to the petitioner's claim. As already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (since deceased); (ii) Uma Devi Khemka wife of S.K. Khemka; (iii) Neel Mani Khemka son; (iv) petitioner the daughter; (v) B.M. Khemka (R-2) son; and (vi) Rakesh Khemka son. According to the petitioner, R-1 was incorporated as a family company as all the shares were held by the family members and as per the objective of the company, it was being run as per joint family traditions for the benefit of entire Khemka family. 3. The shareholding pattern of R-1 company at the time of its incorporation was as under: SI No. Folio No. Name and address Relation No.of Shares Amount (Rs.) % of the total equity share capital 1 Shri Shrawan Kumar Khemka S/o Sh. Murli Dhar Khemka 22, Maqbool Road, Amritsar Husband 2325 2,32,500 52.90 2. Smt. Uma Devi Khemka W/o Sh. S.K. Khemka, 22, Maqbool Road, Amritsar Wife 70 7,000 1.60 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve control of affairs of the company was taken over by R-2 in the year 1995. However, Shri S.K. Khernka kept on guiding and controlling the affairs of R-1 company. Shri S.K. Khemka resigned from the Board of Directors on 13.02.1995 because of his ailment. It was averred that intention of R-2 became dishonest and in order to usurp the control and assets of the company he appointed himself as Managing Director and increased authorized share capital from ₹ 10,00,000 to ₹ 1,30,00,000/-. This was done by R-2 without notice of any Board meeting for increasing the authorized share capital and the said act is blatantly illegal. Anyhow, after the increase of share capital in the manner aforesaid, Shri S.K. Khemka was shown to be holding 1,10,325 shares constituting 98.15% of the shareholding in R-1 company, his wife 70 shares, R-2 and his brother Rakesh Khemka 1000 shares and Varindabun Synthetic Pvt. Ltd. 5 shares. This is apparent from the Annual Return for the financial year ending on 31.03.2005, in respect of which, the Annual General Meeting (AGM) was held on 30.09.2005. As per this Return Annexure P-4, Shri S.K. Khemka was also holding 820 preferential shares of ₹ 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management is that R-3 a servant of Khemka family was illegally appointed as Director with effect from the year 1994 by an antedated Form 32, which was uploaded in the year 2006. To further strengthen this allegation, it was stated that in the scheme of revival of R-1 company, filed before the Hon'ble High Court, name of R-3 as a Director of R-3 company did not figure. Copy of Form 32 is at Annexure P-6. Learned counsel for the applicant referred to the columns of this form P-6, which contains the declaration statedly signed by Late Shri S.K Khemka. It refers to the resolution of the Board of Directors dated 03.10.1994, but the year 1994 has been interpolated by erasing original figure from 2005. This Form was indisputably filed with the RoC on 31.05.2006. 11. It is thus stated that the acts of R-2 and R-3 are oppressive to the petitioner/other shareholders. The petitioner has thus prayed for equitable relief under Sections 397 and 398 read with Sections 237, 402, 403 and 406 of the Act. The petitioner claims declaration that the transfer of shares of S.K. Khemka in favour of R-2 and appointment of R-3 as Director to be illegal, null and void and to restore the valuable plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is action of Rakesh Khemka, he executed some more documents in favour of R-2 so that no family member could challenge the shareholding of R-2 in future. Details of some of the documents were also given. This includes a supplementary agreement dated 25.03.2006 (Annexure-3) executed between Late Shri S.K. Khemka, his wife Uma Devi, Neel Mani Khemka, Rakesh Khemka and R-2 for transferring the shareholding of Shri S.K. Khemka in favour of R-2. There is also an affidavit of Late Shri S.K. Khemka dated 29.03.2006 (Annexure-4) about his resignation as Director from R-1 company further declaring that he was no more shareholder in the R-1 company. R-2 is said to have taken immediate control of R-1 company after its revival on 28.11.2002 and transfer of shareholding of Late Shri S.K. Khemka was soon given effect to. 14. The respondent also raised the objections about maintainability of the petition, due to delay and laches, especially, as the petitioner admitted that R-2 took the charge of the affairs of R-1 company, during the life time of Late Shri S.K. Khemka. It is also stated that the Annual Return for the year ending 31.03.2006 was in the public domain, but the challenge is made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court in CAPP No. 40 of 2014. The Hon'ble High Court allowed the appeal vide order dated 06.04,2015 observing that the Board has not taken pain to decide the petition considering the same on merits and set aside the order of the Company Law Board and the company petition was restored to its original number. It was directed that opportunity be given to the petitioner to file rejoinder and to decide the petition including objections qua maintainability of the appeal. 18. The petitioner filed rejoinder dated 08.07.2015 before the Company Law Board reiterating the averments contained in the company petition. It is averred that the respondent admits having not filed with the Registrar of Companies, Annual documents subsequent to the year 2006 till the filing of the petition in the year 2012. The respondent in fact has stated in the reply that he would file the same with Registrar of Companies in due course of time after getting the offence compounded for not filing the documents on time. It is denied that the petition suffers from delay and laches especially in the light of the fact that the parties are the family members. 19. The issues that arise for discussion can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy of CP No. 85 of 2001. This compromise is signed by R-2, Late Shri S.K. Khemka and Uma Devi, wife of Late Shri S.K. Khemka. It was categorically stated in this compromise document in paragraph 4 that R-2 has filed the petition for revival of the company claiming himself to be holding more than 95% shares of R-1 company. Therefore, the petitioner cannot challenge the increase in the share capital of the company, for which there was a categorical plea in the CP No. 85 of 2001 filed before the Hon'ble High Court, during pendency of which, the aforesaid compromise was entered. 23. R-2 has filed various original documents for establishing valid transfer of shares of Late Shri S.K. Khemka in his favour. He filed an application dated 19.08.2016 for placing on record certain additional documents, which was opposed by the petitioner on the ground that initially the respondent relied upon only on two documents, whereas now more documents cannot be permitted. After hearing learned counsel for the parties, the prayer of R-2 was allowed and original Memorandum of Understanding (MoU), dated 13.02.1995, declaration of gift dated 25.03,2006, two documents of declaration dated 29,03.2006, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge of the company in the hearing of the BIFR as an alternative proposal stating that he can run the company and bring the necessary funds etc. In paragraph 4 (a) of this MoU, it is further stated that Late Shri S.K. Khemka withdraws from the management and his deposit of approximately ₹ 1,10,00,000/- would be converted into equity shareholding and subsequently transferred in the name of R-2 for a total consideration of ₹ 36,00,000/-, to be paid in three instalments. 26. Learned counsel for the petitioner vehemently contended that there is no evidence or circumstance for suggesting that this amount of ₹ 36,00,000/- was paid by B.M. Khemka to Shri S.K. Khemka. This contention cannot be of any help to the petitioner as Late Shri S.K. Khemka is also the signatory to the compromise document submitted before the Hon'ble High Court in the revival petition of the year 2001, as already observed. 27. There was already a reference to the supplementary agreement dated 25.03.2006 executed between Late Shri S.K. Khemka, Uma Devi, Neel Mani Khemka and R-2, in paragraph 1 (iii) (s) of the written reply and copy of this agreement was annexed as Annexure 3. The original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting transfer of shares in favour of R-2. 30. The petitioner has herself relied upon the company petition filed by Rakesh Khemka, her brother bearing CP No. 43 of 2005, which was compromised during the pendency of the appeal before the Hon'ble High Court. It is quite apparent that the petitioner was aware of the litigation initiated by Rakesh Khemka, but she kept silent for so many years in putting forth her claim before the competent authority. 31. In view of the aforesaid discussion, we hold that the petitioner is unsuccessful in challenging the validity of increase of the shareholding of the company in order to pay the debt of the Bank, and also the transfer of the shares of Shri S.K. Khemka in favour of R-2. During his lifetime, Late Shri S.K. Khemka never challenged the transfer of shares in favour of R-2, despite the Annual Returns for the years 2004-2005 and 2005-2006 having been filed in the year 2006. If Shri S.K. Khemka himself did not claim any right over the shares during his lifetime, there is no question of accrual of fresh cause of action to the petitioner after the death of Shri S.K. Khemka 32. In Sangaramisinh P. Gaekwad and Ors. Vs. Shantadevi P.Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in a nebulous state. But the Supreme Court has given very substantial guidelines for determining whether an act would amount to oppression within the meaning of Section 397 of the Act From the above discussion, we hold that the petitioner has not been able to prove the acts of oppression and mismanagement on the part of R-2. 35. We now discuss the issue with regard to the delay and laches on the part of the petitioner. 36. Learned counsel for R-2 relied upon the recent judgment of the Principal Bench of National Company Law Tribunal (New Delhi) in Praveen Shankaralayam Vs. Elan Professional Appliances Pvt. Ltd. Ors, CP No. 04 (ND) 2016, decided 20.10.2016.. The facts of the said case were narrated as under:- 16. A perusal of various averments made in para 6 under the caption 'Facts of the Case' would reveal that the cause of action to the petitioner had arisen in the year 2009, 2010 or 2011. The present petition was filed first in October, 2015 and then re-filed on 07.09.2016. According to the averments made in para 6.2, the petitioner was appointed as one of the first directors of Respondent No. 1 company on 19.05.2009 along with Respondents No. 2 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to refer to the facts disclosed in various paragraphs. It has been stated in para 2 that his shareholding was reduced from 33% to 1.91%. The aforesaid general assertion has been explained in para 6.5 of the petition. According to para 6.5, the allotment of shares by increasing the share capital was made on 06.10,2009, 19.09.2009, 22.01.2010 and 03.02.2012. The allegation is that the allotment of shares was made without his knowledge which he obviously acquired on 23.02.2011 and even that later increase has come to his knowledge. The allegation that the petitioner was not aware of the Board meetings held in 2009, 2010 or 2011 would pale into insignificance because on his own showing, the petitioner had the knowledge in 2011. The petitioner also had the knowledge of his removal as director which is evident from the perusal of the reply at para 10 dated 23.02.2011 (P-3). 38. The Hon'ble Principal Bench held that the cause of action to the petitioner arose from the years 2009 to February, 2012. The petition was filed first on 01.10,2015 before the erstwhile CLB and then re-filed somewhere in 2016. Taking the period of limitation on the date of first filing on 01.10.2015, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the Annual Returns filed in the year 2006, but the instant petition has been filed after more than 5 years. There is thus a huge delay and the petition would be clearly barred by time. This issue is also held against the petitioner. 42. On issue No. 3, we also find the present petition to be not maintainable in view of Section 399 of the Act, which reads as under:- Right to apply under Sections 397 and 398.- (1) The following members of a company shall have the right to apply under Section 397 or 398:- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members. 43. The petitioner is not entered in the record of R-1 company as shareholder/member. The present case also does not involve rectification of the register, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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