9911796707
TMI Blog2000 (2) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 crore. This amount was paid in three instalments. As per the agreement, the petitioner was entitled to nominate a director on the Board of the company. Accordingly, one Shri Avinash Gupta was nominated as a director. Later, a memorandum of understanding ('MoU') was entered into by the petitioner with the company for public issue cum offer for sale by which, in addition to the sale of the shares held by the petitioner of 6.75 lakh shares, the petitioner would also act as an issuer for public issue of 5 lakh shares. In the meanwhile, the company issued bonus shares at 7:10 by which the holding by the petitioner's group went up from 6.75 lakh shares to 11.475 lakh shares. In view of this, another MoU was entered into between the petitioner and the company on 21 February, 1996, by which the petitioner was to often for sale 11.475 lakh shares at par and arrange for public issue of 13.8 lakh shares at par. On 23 February, 1996, an agreement was entered into between the company and the petitioner by which the petitioner was to provide consultancy services on various areas on a lumpsum consideration of ₹ 13.5 lakh. It appears that the sale and public offer did not mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years had been destroyed in fire and could not be given for inspection. In our order dated 1.4.1998 [1.4.1999?], in view of the refusal of the 2nd respondent to give inspection in spite of our directions, we directed him to be present in person on the next date of hearing on 22.4.1998 [22.4.1999?] to explain his conduct. He was also directed to produce certain records of the company for our perusal. When he was present on 22.4.1999, even though he tendered his apology for disobeying our earlier orders regarding inspection, we directed him to deposit ₹ 2,000 out of his personal funds to the Legal Aid of Delhi High Court, which he did. The records brought were given for inspection to the petitioner. In the meanwhile, the petitioner had filed a few applications complaining about non-supply of records for inspection and praying for taking action against the 2nd respondent. In the meanwhile, the respondents also filed an application C.A. 197 of 1998 alleging that the petitioner had filed a forged document dated 19.12.1994 termed as 'sponsorship agreement' at pages 136 to 142 of the petition to show as if the petitioner was to invest in 6.75 lakh shares. According to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sponsorship agreement, had obtained Securities and Exchange Board of India ('SEBI') approval for listing the shares and furnished a draft prospectus to the company, yet, due to non-furnishing of the full particulars and the balance sheet, no further action could be taken for listing the shares. Therefore, the responsibility for non-implementation of the sponsorship agreement squarely rests with respondents. 7. Shri Mathur further pointed out that after the petitioner invested in the shares of the company instead of using the funds for implementing the project, these funds were diverted to one Khurana Foam Sales, a proprietorship of the 2nd respondent, by way of loans. Further, a sum of ₹ 60 lakh invested in the shares of one Esteem Capital and Management Services Ltd. This company is controlled by the 2nd respondent. Further, it transpired from the inspection of the account books of the company that substantial cash was withdrawn from the cash account in 1997-98, only for the purpose of meeting the personal use of the 2nd respondent. He further submitted that the 2nd respondent has not disclosed that there was a raid by the Excise Department on the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ege that general body meetings are not being held by the company. In regard to alleged diversion of funds of the company, he submitted that certain trade advances were given to Khurana Sales, and the same stand adjusted. Giving of trade advance, he contended, cannot be said to be in violation of provision of the Act, as well as investment in Esteem Capital and Management Services Ltd. Shri Jain submitted that the same is in accordance with the provisions of the Act, and not by way of diversion of funds of the company. In regard to the allegation that the company had not disclosed the raid by Central Excise Authorities, Shri Jain pointed out that the company had not disclosed the raid by Central Excise Authorities, Shri Jain pointed out that the petitioner was fully aware of the same as the draft prospectus prepared by the petitioner, thus, contained this information. 10. Summing up his arguments, Shri Jain contended that this petition does not disclose any cause of action and as such, should be dismissed. In regard to the prayer for investigation, he submitted that the petitioner has not furnished any material to warrant an order of investigation. According to him, by seeking an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident Funds Act, Central Excises and Salt Act and the Companies Act. We find that certain proceedings have been initiated by the Income-tax Authorities, Central Excise Authorities and the provident fund authorities and as such, further investigation in these matters by the Company Law Board would only result in duplication. As far as investigation on account of siphoning [off] of funds of the company is concerned, the allegations relate to diversion of funds of the company to Khurana Foam Sales and Investment and Esteem Capital and Management Services Ltd. In the rejoinder, the petitioner has furnished the details, of outstandings against Khurana Foam Sales as ₹ 1.23 crore and the company had in [its] possession cheques issued by this firm to the extent of ₹ 1.28 crore as on 31 March, 1996, but these cheques were never deposited. Thus, according to the petitioner, the firm had been advanced substantial amounts of funds detrimental to the interest of the company. We find that, in the same rejoinder, it has been noted that, as on 31 March, 1997, the amount due from this firm was of the order of ₹ 17.63 lakh. Thus, we find that the dues have come down from ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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