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TMI Blog2006 (10) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... been audited for the year ended 31.03.2005 and 3 i .03.2006. The respondents 2 3 have not taken any initiative to convene the annual general meeting of the Company. The statutory auditor had resigned one year back, but the Company now only seeks to appoint an auditor belatedly. The Company is bound to discharge its statutory obligations in the interest of the shareholders. During the pendency of the present proceedings, the first petitioner's father namely, Nanjundaiah died and his widow Honnamma Nanjundaiah inherited 280 shares which stood in the name of deceased Nanjundaiah. Though Honnamma Nanjundaiah applied to the Company for transmission of the shares along with copy of the registered will executed by her deceased husband, the Company is deliberately delaying the process of effecting the transmission of shares in her name, with a view not to allow Honnamma Nanjundaiah to participate in the annual general meeting and exercise her rights as a shareholder of the Company. The Company must, therefore, be directed to convene the annual general meeting and must be restrained from interfering with the rights of the consentor, namely Honnamma Najundaiah in exercising her right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners cannot claim any interim relief. In Patel Enterprises v. M.P. Ahuja it has been held that if a suit is not maintainable, the question of issuing any temporary injunction would not arise. 4. Shri Thiruvengadam, learned Counsel in his rejoinder submitted that (late) Nanjundaiah never owed any money to the Company and no demand was ever made during his life time in respect of the purported dues. The Company, on the other hand did not pay the rent, but provided for the same and was shown as outstanding liability. Therefore, there was no outflow of cash on account of the rent payable to the partnership. The Company made the demand illegally in order to stall the transmission of shares of (late) Nanjundaiah in the name of his wife. The Company, but virtue of Article 8, can exercise lien only against the partly paid up shares and therefore, cannot enforce the claim against the fully paid up shares held in the name of (late) Nanjundaiah, 5. Shri B.C. Thiruvengadam, learned Counsel while dealing with C.A. No. 70 of 2006 submitted that the respondents have not conducted the annual general meeting of the Company for the year ended 31.03.2005. The Company has refused to give ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ien over the shares of (late) Nanjundaiah and the petitioners are exploring the possibility of exercising their votes in respect of those shares without making the payment due on such shares in favour of the Company. (Late) Nanjundaiah owed a sum of ₹ 82.47 lakhs to the Company during his life time and even thereafter and therefore the Company exercised its right of lien over the shares and refused to transmit the shares till the dues are cleared. The respondents have made a counter claim, in the civil suit in O.S. No. 10722 of 1993, against (late) Nanjundaiah for the amounts due to the Company. The present application is an attempt to usurp the control of the Company which has been performing well under the management of the respondents. The petitioners are seeking in the main petition removal of respondents 2 3 from the office of director. The same relief is being claimed in the present application without furnishing any new materials. Furthermore, the relief claimed by the petitioners in C.P. No. 32 of 2005 restraining the respondents 2 3 from participating in the affairs of the Company as directors has been rejected by this Bench and therefore they cannot claim the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are allegations, and therefore, the application is liable to be dismissed as held in Devaraj Dhanram v. Firebricks and Potteries Pvt. Ltd. and Ors. (1994) Vol.79 CC 722. This Board held in Pahlaj Dhajandas Bajaj v. Microedge Technologies (P) Limited (2005 )5 CLJ 333 held that any petition is liable to be dismissed, if the allegations are unsubstantiated by evidence. The consenter is not a petitioner in the present proceedings and therefore no reliefs can be claimed by the consenter on her behalf. The consenter has not even sworn to an affidavit in support of the present application. Further the application has been signed by the first petitioner and the consenter is not a party to the proceedings. The applicants have not made out a prima facie case for grant of any prayer claimed in the present application. It is not the case of the applicant that the affairs of the Company will be prejudiced, if the application is not allowed. The present application does not fall within the scope of the company petition and does not entitle the consenter to seek any relief (Late) Nanjundaiah owes an enormous amount to the Company. The signature of (late) Nanjundaiah purportedly contained in his w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout however deducting any amount towards the dues as claimed by the Company. The balance sheet of the Company does not disclose any amount due from (late) Nanjundaiah in favour of the Company. Article 8 can be invoked exercising right of lien only in respect of unpaid shares and not for any outstanding amount due to the Company. There is no document showing any amount due from the estate of (late) Nanjundaiah in favour of the Company. The respondents will manipulate the records showing the arrears and therefore, the affairs of the Company must be investigated by the statutory auditor. The Company was paying rent till the month of March 2006 to the estate of (late) Nanjundaiah, as borne out by the rental receipt produced before the Bench. The respondents never made any claim against the estate of (late) Nanjundaiah at any prior point of time but made for the first time in the present proceedings. The claim is falsely made with a view to prevent the consenter to become a member of the Company and on the apprehension that the second respondent would be further reduced to a minority. In view of the falsification of records, the statutory auditor may be directed to conduct an investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present application for appointing an alternative auditor does not arise, in view of the delaying tactics adopted by the respondents. The petitioners are not therefore interested in settlement at this stage. The application may be dismissed. 13. Sri Udaya Holla learned senior Counsel while arguing the company application (C.A. No. 88 of 2006) submitted that this Bench in the earlier company petition namely C.P. No. 32 of 2005 by an order dated 25.08.2005 directed the Company to defer holding of the annual general meeting which however came to be vacated with the passing of the order in the main petition on 02.03.2006. In the meanwhile, the earlier statutory auditors of the Company by their communication dated 21.09.2005 have indicated their unwillingness to continue as auditors of the Company. The Company has to file its returns for the financial year 2005-06 and the statutory auditors are not willing to undertake any work relating to the Company and therefore, the Company, must be permitted to appoint a statutory auditor to audit the accounts and file the returns for the year 2005-06. 14. Sri B.C. Thiruvengadam, learned senior Counsel, while opposing the company applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no interim relief in the same terms can be granted; (b) Ritona Comultaney Pvt. Ltd. and Ors. v. Lohia Jute Press and Others (supra) that no interlocutory order can be passed beyond the scope of the suit or against parties before the Court; and (c) State of U.P. and Ors. v. Visiteshwar (supra) that granting of final relief in the form of final relief is not warranted It may be observed that even if the reliefs are granted in terms as praved for in the Company by the petitioners, the relief of permitting the consenter to exercise her right as a shareholder would not arise. Hence, the prayer sought in favour of the consenter to exercise her right as a shareholder at the annual general meeting cannot be adjudicated in the interlocutory application. The applicants, pursuant to the requisitions given by certain members belonging to Kincha group and Nanjundaiah group, are proposing to convene an extra ordinary general meeting for removal of the existing directors. The petitioners aggrieved on account of the purported acts of oppression and mismanagement at the instance of the respondents 2 3, being directors, have sought in the company petition to restrain the respondents 2 3 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated Limestone Ltd. and Ors. (supra) that an amendment petition cannot be allowed to make out a fresh case, if the petitioner fails to make out a case in the original petition. In view of this, the prayer for amendment of the company petition is not permissible under law. It may be observed that consent in writing contemplated in Section 399(3) is a consent to the filing of a particular petition with particular allegations for particular reliefs under Section 397 or 398 or under both. The purported consent given by the consenter confines to the particular allegations made in the company petition, which do not include the allegations concerning non transmission of shares of (late) Nanjundaiah in favour of the consenter. The consenter is neither a party to the company petition. When no case has been made out for amendment of the pleadings, there is no scope for incorporation of several allegations arising out of the new cause of action. The prayer of the applicants to order an investigation in the affairs of the Company on account of falsification of the books of accounts of the Company and the disputed claim of ₹ 82,47 lakhs from the estate of (late) Nanjundaiah are beyond t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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