9911796707
TMI Blog2014 (4) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... resent Original Side Appeal, as it is devoid of merits. - O.S.A.No.359 of 2013 and M.P.Nos.1 and 2 of 2013 - - - Dated:- 4-4-2014 - THE HONOURABLE MR.JUSTICE M.JAICHANDREN AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL For the Appellant : Mr.S.N.S.Johny Basha For the Respondent : Mr.R.Murari, Senior Advocate for Mr.S.Jawahar, Mr.Thriyambak J.Kannan J U D G M E N T (Judgment of the Court was made by M.Jaichandren,J.) M.JAICHANDREN,J. This Original Side Appeal has been filed against the order of the learned single Judge, dated 24.10.2013, made in Company Application No.258 of 2012, in C.P.No.153 of 2010. 2. The facts in brief are as follows: 2.1) The second respondent and his four brothers are holding the entire shares of the first respondent company. The second respondent, being the elder brother, was the managing director. The other four brothers are directors of the first respondent company. While so, disputes had arisen between the second respondent and his brothers, relating to the management of the affairs of the first respondent company, which is carrying on the business of manufacturing and trading in textiles and in the export of fab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2011, seeking a direction from this court to direct the second respondent to pay certain amounts of money to the resultant company and to the Union Bank of India. However, the said application had been withdrawn. 2.7) Thereafter, the brothers of the second respondent had moved a petition, in C.P.No.18 of 2012, on the file of the Company Law Board, under Sections 397, 398, 402 and 403, seeking a declaration declaring that the second respondent had ceased to be a director of the first respondent company. The Company Law Board had passed an interim order, on 29.2.2012, restraining the second respondent in the present appeal from making any representation, as the director of the first respondent company and restraining the second respondent from dealing with the movable and immovable properties in question. However, the said interim order had been set aside by this court, in Company Appeal No.6 of 2012, on the ground of violation of principles of natural justice. Thereafter, the matter had been remitted to the Company Law Board for fresh consideration. 2.8) While so, the respondents herein had filed a company application, in Company Application No.258 of 2012, seeking the reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusions reached by the Chartered Accountants, the applicants deserve to succeed. I must also point out here that by removing the second applicant from the post of Managing Director and later from the very Directorship of the company, the respondent and the other brothers have virtually taken control of the company. Today, they cannot talk about the inventories or about packing credit. This is one more reason as to why the objections to the audit report cannot be sustained. 28. In view of the above, the application is allowed as prayed for. The respondent is given a time limit of four weeks to effect allotment of shares. Till it is done, the resolutions removing the second applicant from the Directorship and Managing Directorship cannot be given effect to. The Chartered Accountants appointed by this court shall be paid a remuneration of ₹ 1,00,000/- (Rupees one lakh only) by the first applicant. 5. The main contentions raised on behalf of the learned counsel appearing on behalf of the appellant is that the learned single Judge had erred in granting the reliefs which had not been prayed for by the respondents. The learned single Judge had erred in holding that the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge of the appellant and without obtaining the permission of the court. The learned single Judge ought to have noted that the report submitted by the chartered accountants cannot be relied upon without giving an opportunity of hearing to the appellant. 9. The learned single Judge had also failed to note that, as per the approved Scheme of Demerger and as per the family arrangement, the entire assets and liabilities of the first respondent company and also the various properties existing in the name of the shareholders of the first respondent company should be sold and the sale proceeds should be deposited in the Union Bank of India. However, the said condition had not been complied with by the second respondent. 10. Per contra the learned counsel appearing on behalf of the respondents had submitted that the conditions of the approved Scheme of Demerger had been given effect to the extent possible. However, the appellant has been acting in a manner contrary to the letter and spirit of the sanctioned Scheme of Demerger. It could not be possible for the second respondent to fulfill all his obligations, unless he is permitted to continue in the post of managing director of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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