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TMI Blog2017 (10) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation in the Board. They could have taken up the issue in the Board Meeting or could have even removed R2 as a Director of the Company. For reasons best known to the petitioners, R2 has continued to be a Director in the Board till date. On these grounds alone the company Petition is liable to be dismissed. The Petitioners have challenged single/isolated past concluded transaction, that took place on 2nd July, 2004, of which he had the knowledge, as it is admitted fact that during 2009, the Petitioner sold properties in the same building in 10th Floor, so was aware of structure on the terrace, and have filed the Petition after the lapse of around 7 years from the date of the transaction in question. Therefore, a single/isolated past concluded transaction cannot be a base for seeking relief under Sections 397 and 398 of the Companies Act, 1956. - TCP NO. 71/2016 - - - Dated:- 19-9-2017 - MR. CH. MOHD. SHARIEF TARIQ AND MR. S. VIJAYARAGHAVAN, JJ. For The Petitioner : R. Murari and Thriyambak J. Kannan For The Respondent : Chandramouli Prabhakar and R. Venkatavaradan ORDER Per S. VIJAYARAGHAVAN, MEMBER (TECHNICAL) The Company is M/s. Heeral Construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approximately 52.40% of the shareholding in the Company. Petitioner No. 2 holds 145,010 equity shares of ₹ 10/- each out of the paid-up and subscribed capital of the Company, which constitutes approximately 14.38% of the shareholding in the Company. Petitioner No.3 holds 40,010 equity shares of ₹ 10/- each out of the paid-up and subscribed capital of the Company, which constitutes approximately 2.98% of the shareholding in the Company. Particulars of the Respondents: Respondent No.2 is Mr. Shyam G. Duseja whose address as on the records of the Company indicate that he is residing at Kasturi Estate , 7, Second Street, Kasturi Ranga Road, Chennai 600 086, Tamil Nadu. However, the Petitioners have stated that they reliably know that Respondent No.2 is presently residing at No. 167, 2nd Street, Luz Church Road, Mylapore, Chennai 600 004 Tamil Nadu. The petitioners have stated that they know that Respondent No.2 has office at Gee Gee Universal, 8 Floor, Mc Nicholas Road, Chetpet, Chennai 600 031 Tamil Nadu. Respondent No.2 is a Director on the Board of the Company and member of the Company holding 110,010 equity shares of ₹ 10/- each out of the paid up and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thirty five thousand only). By way of the execution of the sale deed, the confirming parties had agreed to give up all and any rights that they had in the property save the right to receive sale consideration, which was also duly paid and no monies are due to the confirming parties thereafter. 6. Petitioner No. 1 submitted that at the time of the execution of the Sale Deed, it was also agreed that the Trust and the Confirming Parties would execute a power of attorney in favour of any of the directors of the Company to enable the Company to mortgage and/or sell parts of the divided or undivided shares of the Property. Consequently, the Trust and the Confirming Parties executed a power of attorney dated October 3, 1994 in favour of Petitioner No. 1 and Respondent No. 2. Petitioner No. 1 submits that Respondent No.2 had been appointed a director on the board of the Company with effect from September 20, 1993. 7. The petitioners submitted that it was always the intention of the Company that the property be developed commercially and sold to various interested parties. Accordingly, the company has sold undivided shares of land to various companies/entities and have also constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Petitioners submitted that as stated earlier, the erstwhile owners of the property, the Trust and the Confirming Parties, had executed the Power of Attorney in favour of the Petitioner No. 1 and Respondent No.2. This was primarily done to enable the execution of sale deeds in favour of the prospective buyers of built up space in the Property, whereby sale deeds could be executed in their favour for the sale of undivided shares of the Properly and construction agreements could be entered into with them for the construction of space for them on the property. This was the standard practice that was being adopted by all promoters of similar projects and it is for this reason that the Power of Attorney was executed. 10. Respondent No.2 has however, surreptitiously used the Power of Attorney to execute a purported deed of sale dated July 2, 2004 in favour of Respondent No.3, the trustee of which is Respondent No.2 s wife, whereby a 6/1100 undivided share of land has been conveyed in favour of Respondent No.3. Such a purported sale is clearly unlawful and highly prejudicial to the Company s interests as the following narration would reveal. Firstly, Respondent No.3 never c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which his daughter is the beneficiary; Thereafter use Respondent No.3 to enter into agreements with various mobile phone operators and other companies/entities for permitting them to put up mobile phone towers and generators in the terrace area and/or basement area for which space appears to have been illegally leased/licensed out to them. And thereafter appropriate the lease rentals/license fees collected from such mobile phone operators and companies which have put up such generators. 13. Thus, a valuable right of the Company has been taken away by Respondent No.2 through such devious method. It is submitted that since the Company had the right over the terrace area which no Director, on his own volition could have given away, the Company was entitled to exploit the same by leasing out/licensing out space therein and receiving lease rentals or license fee s there from. However by the undervalued sale as set out above, such revenues have been lost by the Company and misappropriated by Respondent No.2 for his personal gains. 14. The petitioners have submitted that this scheme of Respondent No.2 was made more evident when the Company recently received a Tax Deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Petitioner No. 1 further called upon Respondent No.2 to account for all the monies, which belonged to the Company which he had misappropriated. The letter went on to state that in the event that the same is not responded to, petitioner No. 1 would be constrained to take steps for safeguarding the interests of the Company. Petitioner No. l submits that till date the said letter has not been responded to by Respondent No.2. 18. This being so, Petitioner No. l, in his capacity of Managing Director of the Company addressed a notice to M/s. Apollo Health Street Limited, Hyderabad dated May 6, 2011. In the said notice, Petitioner No. 1 called upon M/s. Apollo Health Street Limited, Hyderabad to inform Petitioner No. 1 of the details with respect to whom M/s. Apollo Health Street Limited, Hyderabad had been dealing with in the Company and any agreements, contracts, memorandums etc. that M/s. Apollo Health Street Limited, Hyderabad may have entered into with the Company. 19. It was submitted that not only M/s. Apollo Health Street Limited, Hyderabad did not even respond to the said letter, they have not even acknowledged the same. Being left with no option, the Company has caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f undivided share of land nor giving a right over the terrace area can be made a subject matter in a petition under sections 397 and 398 of the Companies Act 1956. Even if it is assumed that the allegations are true, the 2nd respondent has submitted that the petitioners had full knowledge about the sale of undivided share of land and the right to use the terrace area in favour of the 3rd respondent. R2 has contended that it is a past concluded transaction which had not been challenged at the relevant point of time by the petitioners and has submitted that the adjudication of the petition is beyond the jurisdiction of the CLB (NCLT) for granting reliefs for oppression or mismanagement. The respondent No.2 has further stated that appropriate forum is only the civil courts and have contended that the petitioners have failed to explain as to how they had been unaware of the sale or the right over the terrace area being transferred. The R2 vide para 4 of the counter has stated that the sale of undivided share and transfer of rights over terrace area cannot be by any stretch up imagination be considered as an oppression of such a nature that it is just and equitable to wind up the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents have submitted that the Company has sold plots/units to the other family members, in the same manner as it has been done in the instant petition and have been accounted for in the books of R1 Company. This arrangement had been done to facilitate the rentals from the structures in the terrace namely Mobile Phone towers be given to the trust in the name of the daughter of the 2nd respondent who is also the grand child of the 1st petitioner as well. It has also been stated that the petitioners have signed the Balance Sheet for that year and have also filed the returns. Further the R2 has stated that even in 2009, P1 has sold a property in the same building in the 10th floor and was well aware of the transfer of the Terrace and the sale to the 3 rd Respondent. Vide para 19, R2 has contended that the disputes came out in open after 2006 due to the autocratic nature of the P1 as P1 took complete control of the R1 Company and had refused to permit any other member of the family from participating in the affairs of the R1 Company. The R2 has stated that apart from operating the Nungambakkam Branch, IOB on account for maintenance he had not been involved in any other affa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt inadequate. In addition they have stated that the bank account at the IOB Nungambakkam Branch is operated by the R2 only and P1 is not in any way involved in the operation of the said account. Heard the arguments and perused the pleadings. It is clear that the R1 Company is a family concern which has been run on informal basis and for the benefit of the shareholders (who are all family members and relatives). The petitioners has stated that the R2 has misused the power of attorney available with him to deprive the R1 Company and the petitioners have stated that the purchase consideration was not credited to the bank account of the R1 Company. However, except for the Profit and Loss account and balance sheet for the financial year 2005-2006 no other statements containing facts like statement of bank accounts, Board Resolutions, Annual Returns for the subsequent periods etc. have been produced neither by the petitioners nor by the respondents. As against the issues raised by the petitioners against R2 a series of allegations against P1 have been made by the R2. The petitioners undoubtedly are the majority shareholders and also have representation in the Board. They co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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