9911796707
TMI Blog2007 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... direct an investigation into the affairs of the Company; and g) to surcharge the second respondent consequent upon the outcome of such investigation. 2. Shri R. Murari, learned Counsel, while arguing in support of the petitioners submitted: 2.1 The main object of incorporating the Company is to operate a scheme, to buy and develop agricultural lands, to be handed over to the subscribers and accordingly a scheme was formulated in March 1997 for a period of 50 months, upon completion of which in April 2001 and on due payment of all instalments, the Company would allot certain area of land to such members. In the event of any member not opting for the land, the Company would repay an amount of ₹ 1,25,000/- by sale of land that was to be allotted to such members. The fourth petitioner one of the subscribers to the Memorandum of Association of the Company was appointed as one among the first directors of the Company and the first petitioner became with effect from 01.03.2001, a director of the Company. The names of the petitioners were appearing as shareholders till the year 2004 in the records of the Company, and later found to be deleted, despite the fact that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of such land at the time of sale so as to divert the profits thereof. The balance sheet as at 31.03.2004 shows as if an amount of ₹ 91.98 lakhs is payable by the Company to the third respondent, which is fictitious, as no transactions have taken place between these two Companies. This is evident from the annexure to the auditors report for the relevant year, according to which the Company has not taken loans from companies in which the directors are interested. 2.3 The second respondent has not been convening any board or general body meetings of the Company or maintaining accounts or other statutory records of the Company, thereby keeping the members of the scheme and of the Company in dark about the affairs of the Company. The petitioners never received notices of any annual general meeting or copies of the balance sheet for any of the years, inspite of repeated requests made by them, compelling the petitioners 2 5 to issue legal notices to the respondents 1 2 calling upon them to execute and register sale deeds in respect of the lands to which they were legitimately entitled as per the scheme. The respondents through their reply notices falsely contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ames as holders of 1025 shares in the Company. 2.5 The petitioners, as sought to be made by the respondents, in their reply notice, surrendered their shares as early as in the year 1991, but contended before the civil court that the petitioners surrendered their shares way back in the year 2001 by receiving their amounts through cheques and cash. Thus, the respondents have been taking different false stands at different points of time, while (i) issuing reply notice dated 14.09.2006; (ii) filing counter to the application (1A No. 1763 of 2006 in O.S. No. 640 of 2006) and (iii) filing counter to the main petition before the CLB and thus the earlier stands taken by the respondents will negate the present contention that the petitioners ceased to be shareholders in the year 2005, which clearly establish the complete falsity of their present case pleaded before the CLB. The petitioners would not have transferred their shares at face value of ₹ 100/- per share in the year 2005, especially when the landed property of the Company will exceed ₹ 10 crores in the year 2005. Hence, the petitioners would not have transferred their shares at face value. The respondents have not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Secretary', after conducting necessary search of the Company's record at the office of Registrar of Companies showing the names of all the directors. Furthermore, the new share certificates contain the changed distinctive numbers of shares. The petitioners never asked for the split share certificates, as they never had the intention of transferring the impugned shares. The share certificates filed by the respondents (page 46 of counter) reveal that Mr. Anil Reddy had signed the share certificates, on 18.01.1997, whereas the second respondent and Mr. Anil Reddy were authorised to signed the new share certificates only by a board resolution dated 31.03.1998. The resolutions for issuing the new share certificates were passed as early as on 31.03.1998, whereas, some of the new certificates, issued in favour of the petitioners are dated 10.06.2005. The respondents have produced a communication dated 25.12.2006 of the Sub-Inspector of Police regarding loss of share certificates, which does not contain details of the share certificates. This communication is in furtherance of the false complaint lodged by the second respondent. If new certificates were required to be issued the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablishing diversion of funds by the second respondent. Though the respondents reported to have incurred an amount of ₹ 99 lakhs by way of development charges as per the balance sheet as at 31.03.2002 in respect of JANWADA properties, no such work is established, in terms of the sale deed executed on 29.05.2001 by the Company, and furthermore the lands in question have already been sold by the Company. The Company operates several accounts and similar transactions have been carried out through all of such accounts. With such amounts, the third respondent company disbursed the maturity amounts to its members, as per the scheme, which directly affects the shareholders of the first respondent Company. The respondents are guilty of producing fabricated documents before the Bench, as evidenced from a series of legal notices said to have been received by the Company in April 2001, from members of the scheme, containing telephone numbers with eight digits, which came into operation only in the year 2003. All the actions of the respondents, which shall include diversion of funds of the Company, are serious and continuous which constitute clear acts of oppression and mis-management in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untarily in the year 2001 never whispered upto 2006 about their directorship and transfer of shares in the first respondent Company. The fourth petitioner was a signatory to all the cheques issued by the first respondent Company till he resigned in the year 2001. After the transfers, some of the share certificates lodged with the Company were lost, which was followed by a complaint made on 30.07.2005 to the police authorities, which was replied on 25.12.2006. Consequently, the petition is not maintainable under Sections 397 and 398 of the Act. 3.2 The petitioners have surrendered their pass books in respect of the scheme floated by the Company in the year 2001 as admitted by them in the Civil Suit in O.S. No. 640 of 2006 before the Additional District Judge, Ranga Reddy District, Hyderabad for a decree of perpetual injunction restraining the Company from selling the immovable property belonging to the Company, wherein the petitioners obtained an exparte interim injunction order against the Company, to maintain status-quo in regard to its immovable property, which came to be vacated, while disposing the interlocutory application, by the Court. The civil suit is pending and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2001 and the same is reflected in the annual returns made as on 30.09.2002 and filed with the Registrar of Companies on 25.11.2002. The signatures appearing in the transfer deeds and the letters of resignation, petitions, affidavits filed by the petitioners are one and the same. The petitioners have differently signed in different places as evident from the petition, counter affidavit and general power of attorney executed by them in order to disclaim their own signatures. The fifth respondent signs differently in different documents and she has never signed with her surname C which is established from her affidavits. 3.6 The first respondent Company in its balance sheet for the year ended 31.03.2004 has disclosed (a) land and land advances under the head current assets since it is not known whether the persons who are entitled as members of the scheme desired to have the plot/land or cash to be refunded to them; and (b) an amount of ₹ 41,20,058.40 under the head current assets loans and advances . Therefore, it cannot be said that the balance sheet is not reflecting the fixed assets of the Company. The balance sheet further reveals that the Company owes to an extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 10 shares and therefore, the first petitioner will only be entitled to 100 shares and not 110 shares as claimed by him. 6. According to the respondents 1 2, the entire shareholding of the petitioners in the Company has been transferred as early as on 01.07.2005 in favour of the respondents 2, 4 5 (second respondent - 100 shares; fourth respondent - 305 shares; fifth respondent - 610 shares). These transfers were reportedly approved on 15.07.2005 at the meeting of board of directors of the Company. The petitioners are challenging, inter-alia, execution of any instruments of transfer and judgement of any such transfer instruments together with original share certificates in compliance with the mandatory requirements of Section 108 of the Act, and are further seriously contending that the transfer deeds produced by the respondents 1 2 are fake ones with forged signatures of the petitioners and are not supported by any valid consideration. In this context, it is absolutely necessary to go into the entire controversies in relation to the issue of (i) original share certificates; (ii) new certificates in lieu of old share certificates; (iii) split certificates; and (iv) tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al return as at 30.09.2002 discloses that the petitioners 1 4 came to be appointed as directors only on 01.03.2001. There is nothing to indicate that the petitioners 1 4 were directors on 31.08.1998. The board resolution dated 31.03.1998 authorises the second respondent and Shri L. Anil Reddy, managing director and director respectively to affix common seal on the new share certificates issued in lieu of the old share certificates. However, it is found that the new share certificates have been signed apart from the second respondent and Shri L. Anil Reddy, by one, K. Shashikanth Reddy, claiming to be an authorised signatory, which is not in tune with the mandate of the board of directors of the Company for issuance of the new share certificates, in support of which the Company has not produced any material at all. 8. The board of directors at the meeting held on 10.06.2005 said to have approved the request of some of the shareholders for splitting of the share certificates. This resolution does not specify the names of shareholders who made any request for splitting of the share certificates. No such request of the petitioners 2 3 has either been placed on record by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in his name with all the defects, the respondents have produced the new certificate No. 24 with distinctive Nos.3496 to 3705 comprising of 210 shares issued in lieu of the original share certificate Nos. 18 21. The respondents have produced the original share certificate No. 18 with endorsement of cancellation, but no such original certificate No. 21 duly cancelled has been produced by them, whereas the petitioners are in possession of the original share certificate No. 21 for 100 shares. Thus, the second petitioner is still in possession of the original share certificate No. 21 for 100 shares, while sixth respondent is in custody of the new share certificate No. 24 for 210 shares which encompass 100 shares covered under the original share certificate No. 21 issued in the name of the second petitioner. The sixth petitioner has produced the original share certificate No. 23 with distinctive numbers 3796 to 3895 comprising of 100 shares in his name, with all the defects, while the respondents have produced the new share certificate No. 26 with distinctive Nos. 3911 to 4010 comprising of 100 shares issued in lieu of the original share certificate No. 23, thereby the original shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the admitted signatures of the petitioners 1 to 3 6 and the signature of the fifth petitioner as contained therein is disputed by the respondents. The admitted signatures of the petitioners 1 to 3 6 are found in three pages of the said power of attorney dated 02.12.2006. A very careful comparison of the admitted signatures of the petitioners 1 to 3 6 as appearing in the power of attorney on record with the purported signatures of these petitioners found in the transfer deeds looks to me that there are certain dissimilarities between those two sets of signatures. The subtle differences in the signatures of the petitioners 1 6 appearing in the transfer deeds dated 01.07.2005 are apparent on their face. While the second petitioner has signed as G Malla Reddy in the power of attorney, the disputed signature in the transfer deed reads as G. Malla Redy , thereby it is found that the name of the second petitioner is differently spelt in the transfer deed, which is under challenge in the present proceedings. The signature of the third petitioner as reflected in the transfer deed having been put in the local vernacular language, namely, Telugu suffers from variation, to some exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it sworn as 07.09.2007 and therefore, does not carry any evidentiary value at all. 12. The impugned shares, as claimed by the respondents have been sold at face value of ₹ 100/- per share, whereas its market value after taking into account the valuable land owned by the Company comprising of over 85 acres, without any doubt, will be far above the face value of ₹ 100/- per share. Furthermore, none of the transferees has chosen to establish the actual payment of consideration for purchase of the impugned shares, which becomes rather necessary, when the very transfers are questioned by the transferors. 13. The Company in its legal notice dated 14.09.2006 sent by way of reply to a legal notice dated 08.09.2006 of, among others, the petitioners 2 5 categorically states that the petitioners who held shares in the Company had withdrawn by receiving the share value by transferring their shares to the company in due process. It is needless to add that your clients are the signatories to all such transfers of shares in lieu of which values were received by your clients in the year 1999 by way of bank cheques. Though, the petitioners 2 5 in their legal notice dealt onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted the transfer deeds together with share certificates to the 1st respondent company on 1/7/2005 and the same was transferred at the board meeting held on 15/7/2005. It is, thus, found that the respondents 1 2 have been taking inconsistent stand from time to time regarding the transfer of impugned shares by the petitioners in favour of the transferees. Against this background shrouded with controversies, it cannot be contended that the petitioners ceased to be the shareholders of the Company merely on the strength of the disputed transfer deeds produced before the Bench and consequently the preliminary objection raised by the respondents 1 2 on the maintainability of the company petition does not survive. 14. While the petitioners 1 4 claim to be part of the board of the Company, they are as sought to be asserted by the respondents 1 2, ceased to be directors, with effect from December 2001, pursuant to the written resignations, which are however disowned by the petitioners 1 4 as fake and fabricated ones. The claim of the petitioners, is found to be belied, as borne out by the general power of attorney dated 02.12.2006 executed by the petitioners 1 to 3, 5 6 in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Company. These events, inspite of the controversial letters of resignations of the petitioners 1 4, would lead to irreversible conclusion that the petitioners 1 4 are no more directors and therefore, they are not entitled for declaration that they continue to be directors of the Company. The grievances of the petitioners on account of non-convening of board or general meetings of the Company or non-sending of notices for any of such meetings or non-maintenance of the statutory records of non-sending of copies of balance sheets of the Company for several years, not having been raised at the appropriate point of time but belatedly for the first time in their legal notice dated 10.09.2006 cannot by themselves constitute oppressive acts, as claimed by them. 16. The petitioners with other members and relatives had reportedly contributed an aggregate sum of ₹ 93.75 lakh under the scheme promoted by the Company in March, 1997, which according to the Company, came to be paid in cash, on maturity of the scheme. The petitioners, however, denying any such cash payment, are demanding the allotment of land in terms of the scheme. The scheme formulated by the Company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanations given to us the company has not granted loans to companies, firms or other parties required to be listed in the register under Section 301 and to the companies under the same management as defined under Section 370(1B) of the Companies Act, 1956 at the terms not prejudicial to the interests of the company. (for the year 2001-2002) 3) a) As informed, the company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act. 1956. b) As the company has not taken loans from/granted to companies, firm or other parties listed in the register maintained under Section 301, the clause relating to rate of interest and other terms and conditions of loans given or taken by the company, is not applicable. c) As the company has not taken loans from/granted to companies, firm or other parties listed in the register maintained under Section 301, the clause relating to the terms of repayment is not applicable. for the year 2003-2004) 18. It is evident from the auditors' reports for the aforesaid period that the Company iias not taken any loans from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph 11 of the sale deed dated 29.05.2001 would indicate there were no mango trees/coconut trees/betel leaf gardens, or no wines or quarries of granites of such other valuable stones, no machinery, or no fish ponds in the lands being transferred by the Company. The sale deed does not throw any light on the development work carried out by the Company in JANWADA lands before effecting the sale, as reflected in the balance sheet as at 31.03.2002, which is not supported by any concrete material produced in this regard. The second respondent being a party to the balance sheet for the year 2001-2002 is accountable to the Company, for the development charges allegedly incurred in respect of JANWADA properties, for which no explanation has forth come from the respondents 1 2. 20. In view of my foregoing conclusions and in exercise of the powers under Sections 111, 397, 398 read with Section 402 of the Act, it is ordered as under: (i) The Company shall rectify the register of members by substituting the names of the petitioners in the place of the respondents 2, 4 5 in respect of 1015 shares, namely, first petitioner - 100 shares; second petitioner - 210 shares; third petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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