9911796707
TMI Blog2007 (5) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... n handling various contracts relating to furnishing of premises. The company had two showrooms (a) Aya Nagar, Mehrauli (b) M-45, Greater Kailash-I, New Delhi. The factory and godown of the company is at Khasra No. 674, Nai Basti, Extended Abadi, Devli Village, New Delhi. Factory and godown as a single unit built on land owned by petitioner and respondent No. 2. 3. Shri Sandeep Sahay, Counsel for the petitioner argued that the petitioner's matrimonial life was marred with physical abuse and violence. On 17.3.2001, the petitioner and her minor children were thrown out of the matrimonial home by respondent No. 2, in wearing apparels. (Complaint dated 19.3.2003 at Police Station DLF City, Phase II, Gurgaon Annex. 5, page 60, Rejoinder refers). The respondent No. 2's mother and brother and other people are facing criminal prosecution and charge sheet has been filed. Ref. FIR No. 178/2001 under Section 406/498A IPC in the Court of Judicial Magistrate Ruby Alka Gupta, Patiala House. The petitioner procured the documents from the Registrar of Company and Income Tax authorities to file petition under Section 397 and 398 of the Act. 4. It was argued that the stocks and cash of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Director was not renewed after AGM held on 27.9.1999. The notice to the members regarding the Annual General Body Meeting to be held on 27.9.1999 does not have agenda for renewal of the Additional Directorship of the Shubhra Dutt. The respondent No. 2 has falsely alleged that Shubhra Dutt is a Director by referring page 39 of the reply of the respondent No. 2. The name of the Shubhra Dutt as the Director in the Annual Report is incorrect and has been done only for the reason as there is no Column of Additional Director in the said form. The date of appointment shown in these said Annual Report is 1.11.1997. According to respondent No. 2 also on 1.11.1997, Shubhra Dutt was appointed as Additional Director. The respondent No. 2 has alleged that the issue of appointment of Shubhra Dutt as Director was put in the Agenda of AGM to be held on 29.9.1998. No documents have been produced that the Shubhra Dutt was ever appointed as Director of the said company. The documents filed by respondent No. 2 show the date of appointment of Shubhra Dutt as 1.11.1997 i.e. the date on which she was appointed as Additional Director. There are various statutory requirements for appointment of Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % discount from Aya Nagar first and subsequently from A 22/9 DLF City Phase I, Gurgaon, his house at 50% discount in the name of Chavi Interiors.Stocks from the Greater Kailash were also sold from Aya Nagar showroom initially at 30% discount and subsequently at 50% discount, in the name of Chavi Interiors. The Care taker of the showroom and one of the employee of the company who was engaged in the said illegal act under the instructions of the respondent No. 2, it was pointed out, has given the affidavit. But, the respondent has taken completely new grounds in the written submission. These plea were never raised by the respondent earlier. The pleading of the respondent does not contain these alleged submission. As per legal position, it was contended, no fresh grounds can be raised at the time of final argument. Even otherwise the plea taken by the respondent in their submission, it was contended, is completely false, fabricated and concocted. Respondent has no liberty to raise a completely fraudulent plea with dishonestly intention to defeat the legitimate and bonafide claim of the petitioner. The allegation made by the respondent in the written submission is liable to struck down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively. The profit after tax was Rs. 61,000/- and Rs. 87,000 respectively. 12. The counsel for the respondents pointed out that on January, 2001 without giving any notice to the other directors, the petitioner withdrew herself completely from the affairs of the petitioner company and took up employment with a company called Tescon Accessories located at Udyog Vihar, Gurgaon. On 17.3.2001 the petitioner took away all her belongings as well as of the records pertaining to Chavi Design Pvt. Ltd. and left her matrimonial home, and took up residence of her parental house at B/6/6 D.L.F. Phase-1, Gurgaon, Haryana. On 30.7.2001 the petitioner served a legal notice on the respondent No. 2 alleging mismanagement and seeking a declaration that Mrs. Shubra Dutt is not a Director of the company. On 17.11.2001 the respondent No. 2 Shri Sandeep Dutt sent a letter to Heema Handa Dutt asking her to resume her participation in the affairs of Chavi Design Pvt. Ltd. The petitioner, however, refused the said offer. In the year 2002 CP No. 10/2002 was filed before the CLB alleging act of mismanagement and oppression on the part of Sandeep Dutt and Shubra Dutt. The affairs of the company came to a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a bonafide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added. Order-1 Rule 9 provides that a will fail on ground of nonjoinder of a necessary party. The respondent herein had filed an application at the very start of the proceedings under Rule 9 of the Company Court Rules read with Order 1 Rule 10 CPC seeking dismissal of the petition for non-joinder of Mrs. Shubra Dutt as a necessary party. This application has been heard along with the main petition, however, a submission has been made to dispose off the same as a preliminary issue to ensure complete justice between the parties. It was argued, that the petitioner, who has been served the copy of this application, is fully aware that Mrs. Shubra Dutt is a necessary party and has willfully neglected to implead her. In the circumstances, there is no option but to dismiss the petition on this ground alone. 14. It was further argued by the counsel for the respondents that the allegations of mismanagement against the respondent No. 2 are false, frivolous and baseless. The primary function of the present company is to plan, design and exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade against the Respondent by the petitioner. It was only on account of the breakdown of the matrimonial relationship that has given rise to this ill conceded petition. 16. The counsel for the respondents argued that in the matter of R.B. Thakur v. Seaside Hotels Pvt. Ltd. this Hon'ble Board had the occasion to deliberate on the issues of scope of relief that can be granted under Section 397 and 398 of the Companies Act. It was pointed out that in a well reasoned order, it has been held that, "the settled principle of law in the proceedings under Section 397 and 398 of the Companies Act is that the relief sought should be to put an end to acts of oppression/mismanagement and not for any oblique purpose." The judgment has also dealt on the effect of irresponsible allegations as well as non-impleadment. The similar position it was argued has also been taken in the matter of Dhanjandas Bajaj v. Microage Technology Pvt. Ltd. 2000 (27) SCL 473. 17. It was further argued that it has been averred in para 15 of the Rejoinder Affidavit filed on behalf of the petitioner that the petitioner was prevented from conducting business as a Director of Chavi Design Pvt. Ltd. at the show room a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany being the designed content, the stock by way of furniture, etc. was very limited and most of it was damaged during demolition of the Aya Nagar Showroom. From the facts of this case, it was argued, it is evident that the present petition is vitiated purely on account of the on going matrimonial dispute. It was argued that neither the averments made in the petition nor the reliefs sought by way of prayer are within the scope of Section 397 and 398 of the Companies Act which are specifically directed to resolve deadlocks/disputes arising out of Company Matters and cannot be used to resolve any other differences of personal nature between the Directors including that of a matrimonial dispute as is the case herein. 19. In this case the petitioner has sought winding up of the company and appointment of the liquidation officer requiring the respondent No. 2 to restore the amounts siphoned off from the R-1's Account. The petitioner's case is that the R-2 has not been functioning in the interest of the R-1, he has sold stocks at discount and pocketed the sale consideration; he has manipulated the accounts of the R-1 to his advantage; he has not furnished to requisite statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary relationship prejudicial to the interest and health of the R-1 as well. It is true that it is not possible to separate the human aspect of disharmony in the personal relationship between the directors which has led to the deadlock and the ill health of an earlier profit making company. It is a fact that there is a deadlock. Cause is known - matrimonial discord. And may be even spite and negligence which cannot be ruled out. But the preliminary objections raised in the case cannot be sustained. The case of oppression and mismanagement under Sections 397 and 398 of the Act has been made out. Personal cruelty in the relationship has lead to compelling circumstances of the wife director to withdraw from her successfully established business to look for another job to fed for herself and her two children. It is not an easy and painless decision. Driving an almost indispensable director out of the company resulting in the deadlock is itself an act of oppression. For the purposes of Sections 397 and 398 of the Act, oppression may be an act of cruelty, severity, defaulting of will or excessive use of authority. It is unfortunate, but it is true that the personal relationship of the dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holders, without informing them of the fact, cannot retain those benefits and must account for them to the company, so that all the shareholders may participate in them. In the present case the fiduciary duties have been breached by both the parties - by the petitioner as well as by the respondents. Both the parties have indulged in acts in the conduct of the affairs of the company which have been prejudicial to the interests of the R-1. 23. Objects and purpose of Sections 397, 398, 402 and 408 of the Act is two fold - to set right the wrongs and take remedial action to prevent occurrence of wrongs in future. Thus both preventive and curative action can be taken by the Company Law Board to regulate the conduct of the Company's affairs in future and to bring to an end the matters complained of. To do substantial justice between the parties, I hereby direct the R-2 to restore the sale consideration received in respect of the discounted sales and other amounts siphoned off from the R-1 company's accounts forthwith. Since there is a deadlock in the R-1, and since both the parties know the worth of the company, I hereby direct the parties to arrive at an amount to be paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
