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TMI Blog2017 (6) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 397, 398 read with sections 237, 402 and 403 of the Companies Act, 1956 (for short to be described hereinafter as 'the Act') alleging acts of oppression and mismanagement committed by the respondents. These acts commenced by illegal transfer of 1000 equity shares in respect of each of petitioner No.1 (P-1) and petitioner No.2 (P-2) and 3500 equity share of petitioner No.3 (P-3) without their consent and knowledge. The copies of the share certificates held by these petitioners are at Annexure A-2. P-3, who died during the pendency of the instant petition, is the father of P-1 and P-2. Information about death of P-3 was supplied to the Tribunal by P-1, who recorded his statement before the Tribunal on 14.12.2016 to the effect that P-3 died on 01.10.2013. 4. The petitioners filed a complaint to Registrar of Companies, Jalandhar, with a copy to Ministry of Corporate Affairs against R-2 and R- 3 regarding fraudulent transfer of shares. Copy of this complaint is Annexure A-8. A letter dated 07.05.2008 was also sent to ROC Jalandhar stating that 5500 equity shares originally allotted to the petitioners were wrongly shown in the name of R-3 and R-5. Copy of the letter is Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Rs. 3,00,000/-. This lease deed is attacked as ultra vires the objects of R-1 company and was executed without the consent of petitioners, who were on the Board of Directors of R-1 company. This lease deed is Annexure A-6. 8. The fourth allegation of oppression and mismanagement is regarding increase in the share capital from Rs. 70,00,000/- comprising of 70,000 equity shares of Rs. 100/- each to Rs. 80,00,000/- divided into 80,000 equity shares of the same value in Extraordinary General Meeting (EOGM) statedly held on 01.07.2006. No notice of the said EOGM was served upon all the members including the petitioners nor copy of the notice is attached with Form 5 filed in the office of ROC. Copy of that form is Annexure A-7. It is stated that this increase has been done for allotting the shares to respondents group and to gain control over the management of R-1 company. 9. It is further stated that R-1 company has committed defaults in holding Board/EOGM/AGM, as petitioners have not received notices for attending the meetings. There is non-compliance of the provisions of Section 286 of the Act. R-1 company has also not fifed the balance sheets and Annual Returns for the final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2002 are attached as Annexure R-1 (colly). R-2 made complaint to the SSP Ferozepur for offence under Sections 379, 360 and 452 IPC against all the three petitioners for theft of original 5500 share certificates by them from the house of R-2. Copy of the complaint dated 07.03.2007 is at Annexure R-2. 13. There is then the allegation of the petitioners having misappropriated amount of Rs. 23,32,400/- received towards subsidy from Director of Industries, Punjab vide a cheque in the year 2006. The details of the aforesaid allegations would be discussed while dealing with the reply filed by other set of respondents. 14. These respondents have, however, stated categorically that they are no longer the members of the respondent company and have tendered their resignations. R-2 to R-4 are stated to have transferred their entire shareholding in favour of R-5 to R-7, but form No.32 in that regard was not filed with the ROC because of the status-quo issued by the Civil Court. It is further averred that for rectification of register of shares, the remedy available was under Section 111-A of the Act, which has not been invoked in the present case. The instant petition is also stated to be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romoters. R-1 company started a manufacturing unit in the year 1995 after taking loan from SIDBI. It is stated that group 2 joined the company in the year 1997 and in 1998, the company became sick and SIDBI took possession of the factory and locked the unit in the year 2002. As per the understanding between group 1 and group 2, group 1 paid the dues of SIDBI and got the factory released. Group 2 is said to have transferred 5500 shares in favour of group 1 and their nominees, for which the proper documents of transfer of shares were executed and lodged with R-1 company After release of the factory from SIDBI, these groups could not carry on the manufacturing unit, which remained closed till the year 2003. 18. It is further stated that in the year 2003, group 3 consisting of R-8 and R-9 came into picture and they were inducted as Directors of R-1 company by group I and group II. Manufacturing activity of the unit was commenced and each of these respondents were allotted 10,000 equity shares. In August, 2005, R-8 and R-9 transferred their shareholdings in favour of petitioners. However, in 2006, the paid up capital was increased and shares were allotted to R-9 and R-2 and nominees of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each allotting 10,000 shares of increased capital in favour of R-8 and by transferring 5000 shares of R-2 and equal number of 5000 shares from shareholding of Suman Lata in favour of R-9. Suman Lata is not a party to the instant petition. In this way, the petitioner group is stated to be holding 37.45% of the shares, Laxmi Narayan group 36.25% and group 3 i.e. R-8 and R-9 25%. There is little change in the shareholding in the year 2007 without affecting the shareholding of the petitioners group or the group of R-5 to R-9. On 29.05.2008, there is again change in the shareholding suggesting that R-2 group having 29,000 equity shares, transferred their entire equity shares in favour of R-5 and others. 23. It is alleged that in the year 2006, the petitioners committed fraud upon R-1 company and other respondents by receiving a cheque of Rs. 23,32,400/- from Director of Industries, Punjab as subsidy without the knowledge of other respondents. The cheque was deposited in a non-operative current account of R-1 company with Oriental Bank of Commerce, Ferozepur. The petitioners misappropriated the amount by issuing cheques to their sister concerns and had withdrawn cash through self chequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the Rice Seller is reflected in the statement of account of R-1 company as per the profit and loss account and the balance sheet of R-1 company, attached at Annexure R-4 (colly). Though specific reference is not made in the written statement, but it is clear that these are the accounts for the financial year ending 31.03.2008. It is further stated that the lease rent of Rs. 3,00,000/- as mentioned in the document, was in fact never paid. It is also denied that the notice of EOGM held on 01.04.2006 was not served to all the members including the petitioners. It is thus stated that the authorised share capital was rightly increased by following the prescribed procedure. 27. The petitioners have fifed rejoinder to the written statement of R-1 and R-5 to R-9. It is stated that the delay on the part of the petitioners was inadvertent because the petitioners had earlier filed various complaints to the Principal Bench Company Law Board, the office of ROC and Regional Director for redressal of their grievances, but they failed to obtain appropriate relief. They were directed to approach the Principal Bench of the Company Law Board and the instant petition was filed without delay. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir intention to dispose of their shares. 30. It is further stated that Annual General Meeting for the financial year ending 31.03.2008 was held on 29.05.2008 and no Annual Accounts were presented, whereas the date of approval of the Annual Accounts was 11.08.2008. Therefore, the AGM for the financial year ending 31.03.2008 was solely held for transferring the shares by R-2 to R-4 in favour of R-5 to R-7. The petitioners having come to know of the intended transfer, filed a civil suit and obtained the stay order, copy of which is already attached with the petition. 31. The petitioners have further denied that they misappropriated the amount of Rs. 23,32,400/- as the said amount was paid to M/s Suraj Sons, a partnership concern, as a creditor of R-1 company, of which Rs. 14,40,000/- was the principal and Rs. 8,45,000/- was towards the interest. For this, M/s Suraj Sons made acknowledgement vide receipt Annexure A-1 dated 15.06.2006 attached with the rejoinder). These facts were also acknowledged in the order dated 18.11.2006 of Sessions Judge, Ferozepur observing that the dispute was of civil nature and, therefore, pre-arrest bail was granted to the petitioners. The criminal case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erozepur alleging therein that the petitioners sold the shares to their relatives aforesaid for a consideration of Rs. 500/- per share and handed over the share certificates and share transfer forms to them. However, all these share certificates were returned by these persons after ten days, as they were not able to pay the amount of consideration. The transfer was effected in violation of the provisions of Section 108 (1A) (b) (ii) of 1956 Act. The original transfer deeds as well as the share certificates are still in custody of the petitioners. 35. It is averred that the complaint of theft of the original share certificates made to the police, was made by respondents as a counter blast to the complaint of P-1 dated 16.12.2006 to the police. Copy of the complaint dated 16.12.2006 made to the SSP is Annexure P-3 (attached with the rejoinder). 36. It is further alleged that the criminal complaint under Section 138 of Negotiable Instruments Act and 420 of the Indian Penal Code on the allegation of dishonour of the cheque, has been stayed by the Hon'ble High Court vide order dated 28.10.2010 Annexure P-5 (attached with the rejoinder). 37. With regard to the delay in the challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving them opportunity of being heard. This is stated to have been done on the basis of the resignation letters of P-1 and P-2, dated 15.09.2006, whereas the petitioners in fact never resigned from the Board of Directors. 41. In the rejoinder filed by petitioners to the written statements of both the set of respondents, the petitioners have attached certified copy of the order dated 13.05.2010 passed by the Civil Court in Civil Suit No.1503-1 of 13.03.2009 filed by P-1 and P-2 against R-2 and others. Annexure P-2 (attached with the rejoinder) to the written statement of R-1 and R-5 to R-9, is the copy of order dated 13.05.2010 of the Civil Court suggesting that R-2, who was defendant No.1 in the suit, to be ex-parte and the matter was fixed for service of rest of the defendants. The perusal of this order would show that the suit was filed for declaration to challenge the legality of resignation letter dated 15.09.2006 and for a direction to the defendants to make available the copies of the minute book, agenda etc. with regard to the meeting held on 20.09.2006. I am of the view that when the same relief was claimed in the civil suit instituted in March, 2009, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lous persons from all walks of life find the Court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. It was further observed that a litigant who approaches the Court is bound to produce all the documents executed by him, which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side, then he would be guilty of fraud on the Court as well as on the opposite party." 46. In Kishore Samrite v. State of U.P. [2013] 2 SCC 398, the Hon'ble Supreme Court held as under: "No litigant can play hide and seek' with the courts or adopt 'pick and choose'. True facts ought to be disclosed as the Court knows law, but not facts. One, who does not come with candid facts and clean breast cannot hold a writ of the court with soiled hands. Suppression or concealment of material facts is impermissible to a litigant or even as a technique of advocacy. In such cases, the Court is duty bound to discharge rule nisi and such applicant is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the shares of the petitioners earlier entered in the record of R-1 Company were restored to them in the year 2005. The increase in the share capital according to the contesting respondents took place in the year 2006. It is further contended that on the increase of the shareholding, the petitioners should have offered the increased equity shares before these could be allotted to other persons, who are non-members. As per the facts highlighted by the contesting respondents, the petitioners themselves alleged in paragraph 8 of the petition that the increase in the share capital was made in the meeting of EOGM dated 01 07.2006, but notices were not issued to them. The resignation of the petitioners accepted w.e.f. 15.09.2006, has also been challenged in the instant petition, presented on 16.09.2009 in the CLB, but there was refiling on 16.112009. Anyhow, from the date of said EOGM, three years period already elapsed, when this petition was filed. 50. Learned counsel for the petitioners would rely upon the judgment of the Hon'ble Principal Bench of NCLT, New Delhi in Praveen Shankaralayam v. Elan Professional Appliances (P.) Ltd. CP No. 04/ND/2016, decided on 20.10.2016 in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attached and P-1 and P-2 are still shown to be Directors of R-1 Company. The question is whether these discrepancies help the petitioners in any way? The answer seems to be in negative. 54. I say so for the reasons that during arguments, learned counsel for the petitioners did not challenge these letters to be bearing forged signatures of the petitioners, but that digital signatures of P-1 and P-2 have been misused for preparing these resignations. There was even no plea in the petition that these resignation letters bear the forged signatures of the petitioners. It seems that the petitioners had tendered the resignations faced with the allegations of fraud in FIR No. 137, dated 03.08.2006 Annexure R-2 (Colly) with regard to the misappropriation of the funds to the tune of Rs. 23,32,400/- received towards the subsidy, even though the petitioners may be justified in utilising the amount in the manner, they have done. Anyhow, the petitioners have not chosen to attach any authorisation of the Company to issue these cheques of huge amounts on the basis of any Board resolution. This dispute, however, should not detain us anymore because the petitioners availed of the remedy before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.2006 was filed on 11.05.2009 and Form 23AC and 23ACA relating to the financial year ending 31.03.2008 were filed with the Registrar of Companies on 16.03.2013 i.e. during the pendency of the instant petition. However, when there was a specific plea taken by R-5 to R-9 about the name of the persons having been allotted the shares by way of transfer from R-2 to R-4, they should have been impleaded as necessary parties. The petitioners should have been vigilant or even attempted to inspect the record of ROC for seeking appropriate relief. They could apply to the appropriate authority, CLB or by way of writ petition in the Hon'ble High Court, if so advised, seeking a direction for the said purpose and to remove defects, if any, in the case. 58. Otherwise, I would find that when the petitioners have categorically stated that they were not served with any notice regarding the AGM meeting, dated 29.05.2008, it was duty of the respondents to place on record the documents to show that such notices were issued and also to place on record the copies of the minutes book of the said date. In the absence of such a material, the transfer of shaves on the basis of meeting held on 29.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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