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TMI Blog2015 (5) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Directorate of Enforcement on the validity of the acquisition of shares by AJP pursuant to amalgamation and cancellation of 3,32,440 equity shares held by P-1 in R-1 company and an order is passed by the High Court of Madras (seeking withdrawal of reliefs) at prayer (b), (c), (d) and (e) in para 32 of O.S. No. 139/2012 and a copy of such orders are placed on record, the Company Petition shall be placed before this Board for final adjudication. - C.P. No. 54(CH)/2012 - - - Dated:- 26-5-2015 - D.R. Deshmukh, For the Appellant/Petitioner/Plaintiff: Amit Sibal, Sr. Advocate and J. Sivanandraaj, Advocate For the Respondents/Defendant: S.N. Mookherjee, Sr. Advocate and Pooja M. Saigal, Advocate ORDER D.R. Deshmukh, J. (Chairman) 1. The present petition under sections 111, 397, 398, 402, 403, 404, 406, 408, 237 read with Schedule XI of the Companies Act, 1956 alleges acts of oppression and mismanagement by R-2 to R-4 in Kumudam Publications Pvt. Ltd. 2. The Kumudam business of printing and publishing was started as business of the Hindu Undivided Family [HUF) with SAP Annamalai Chettiar (SAP) as its Karta in the year 1947. In 1963, vide a partition deed exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. The shareholding pattern of the company as it stood on 31.03.2011 was as under:- 5. The very first act of oppression averred by the Petitioner is the amendment to the Articles of Association of the company on 19.03.2003. The amended clauses, being 31(a), 32 and 39(b) provide that Imprint Tech India Ltd. R-4 company shall be entitled to nominate two Directors to the Board of the company and so long as PV is nominated, he shall act as the Chairman of the Board of the company and shall be the Managing Director until he is a Director. Furthermore, he shall be entitled to receive upto 11% of the net profits as remuneration in addition to the monthly remuneration fixed by the Board. In case of equality of votes at a Board Meeting PV shall have a casting vote. The quorum of the Board shall be incomplete without PV. 6. The Petitioners allege such amendments to the Articles of Association of the company as oppressive being only to serve the interest of R-2. It is also asserted that PV has abused the powers conferred upon him under the amended articles. In furtherance of the said amendments, R-2 has been awarding himself, with increased remuneration since 2003. PV's re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 25 crores by way of forged increased remuneration and siphoning off funds of R-1. R-2 was arrested and later let out on bail. It is alleged that using his clout AJP got PV arrested and utterly humiliated by the Police. After investigation the Police reported that no offence for cheating or forgery was made out by an order dated 11.10.2013 passed by the Chief Metropolitan Magistrate, Egmore, Chennai, the protest petition filed by the Petitioner was also dismissed. One can well imagine the indelible scar on the soul of PV having been caused due to such incarceration, humiliation and malafide act of AJP. Wounds caused, to the body heal with the passage of time but an indelible scar to the soul of a person never fades away or heals. As a counterblast to the police complaint, PV wrote a letter to the Police commissioner stating that AJP has violated FERA/FEMA in acquiring shares in the company. Copy of this letter was marked to ED, RBI, MIB. Acting in bad faith, PV did not inform AJP of his letter dated 26.04.2010. Instead, he entered into negotiations for exiting the company. AJP came to know of the letter only after proceedings before the ED commenced in February 2011. As a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ED that the amount refundable is kept in a separate Escrow account. 11. In order to bring the oppressive acts of PV to an end, the Petitioners decided to convene a Board Meeting on 26.09.2011 for which notices were sent to the Respondents. Even though the notices were acknowledged, the Respondents deliberately absented from attending the meeting. In the meanwhile two parallel Board Meetings were convened on 10.10.2011, one by AL and the other by PV. AK wrote to PV on 10.10.2011 not to hold the Board Meeting as being unauthorized in view of the resolution dated 26.09.2011. Yet, PV went ahead with the Board Meeting on 10.10.2011 and counted it for purposes of section 283(i](g) or the Act. The High court of Madras on 23.12.2011 passed a common order in CRP (PD) No. 4138 of 2011 restraining PV from taking any policy decisions for and on behalf of the company. On 28.02.2012 PV wrote to ED stating that AJP has not yet surrendered the share certificates and that an amount or ₹ 2,57,70,495/- is kept in a FD in the name of the company with Indian Bank, Purasawalkam. ED directed Indian bank not to allow any encashment or transfer of the amount of ₹ 2,57,70,495/- without approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its regulations and guidelines issued by the Ministry of Information Broadcasting as resolved in the Board Meeting held on 20.09.2011 as null and void. 17. It is not in dispute that pursuant to the resolution dated 20.09.2011 and pending decision by the Directorate of Enforcement regarding FEMA violation by P-1 and R-2, the amount refundable by the company to P-1 on such shares has been kept by R-2 in a separate escrow account pending decision by the Directorate of Enforcement. An application filed by R-2 for compounding the offence in relation to the above is pending before the RBI under the FEMA Act read with FEMA (Compounding Proceedings) Rules. 18. The Petitioners were well aware and conscious at all times that R-2 and R-3 were in management of the company while instituting civil suit No. 7554/2011 before the City Civil Court, Chennai. There has been a conscious element of lack of probity on the part. of the Petitioners in as much as Respondent Nos. 1 to 3 herein were not impleaded as co-Respondents in the suit which was filed against the sole defendant-Indian Bank-praying for a relief to completely paralyze the drawing power of R-2 and thereby the management of R-1 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines issued by the Ministry of Information Broadcasting being sub-judice before the Directorate of Enforcement, it would be appropriate for this Board to await such adjudication and not to adjudicate upon the validity of the acquisition of shares in R-1 by AJP, a Non-Resident Indian or the cancellation of 3,32,440 equity shares held by P-1 in R-1 company, to avoid conflicting decisions. If the Directorate of Enforcement rules against the validity of the acquisition of 3,32,640 equity shares by P-1 in R-1 company pursuant to the scheme of amalgamation of Kumudam Printers Pvt. Ltd. with Kumudam Publications Pvt. Ltd., the allegation relating to the cancellation of 3,32,440 shares by R-2 being oppressive in nature would automatically fall to the ground and the need to rectify the Register of Members in R-1 company as prayed in the petition shall disappear. As held in L.I.C. vs. Escorts Ltd. (1986) 1 SCC 264 while the task of enforcement rests with the Directorate of Enforcement, no authority other than the R.B.I., has the power to decide whether permission may or may not have been granted by the R.B.I., for such transfer. Neither the company nor any of its shareholders have any spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (b), (c), (d) and (e) claimed in O.S. No. 139/2012. 22. As regards deletion of clause 31(a), 32 and 39(b) of the Articles of Association as being harsh, burdensome and oppressive to the Petitioners suffice it to say that these articles were amended with the consent of the Petitioners.. The question whether the invocation or use of powers contained in these clauses of the Articles of Association was harsh, burdensome and oppressive to the Petitioner shall be considered at the time of final adjudication of the Petition. 23. Therefore, in exercise of the powers conferred upon me under section 402 of the companies Act 1956, I order that final adjudication of this company Petition shall be deferred till: (a) Adjudication by the Enforcement Directorate on the validity of the acquisition by and cancellation of 3,32,440 shares held by P-1 in the company, and (b) Adjudication on the prayer for withdrawal of reliefs claimed in sub-para (b), (c), (d) and (e) of para 32 in O.S. 139 of 2012 by the High Court of Madras. 24. No sooner an order is passed by the Directorate of Enforcement on the validity of the acquisition of shares by AJP pursuant to amalgamation and cancellation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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