9911796707
TMI Blog2004 (12) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the company lacked probity and was being carried on in a manner oppressive to the members. A reading of the said order would indicate that this Board had upheld each and every contention of the petitioner in regard to oppression and mismanagement in the affairs of the company. During the pendency of the proceeding in that petition, the present petition was filed bringing out subsequent instances of misappropriation of funds by the 2nd respondent. In the Balance Sheet for the year ended 31.3.1998, there was an addition to the fixed assets of a sum of ₹ 190.60 lacs out of which a sum of ₹ 139.96 lacs had been spent on alleged renovation addition to the existing building. Such renovation/addition was inconceivable as the entire hospital building had been completed in the year 1995-96 itself at a cost of ₹ 237.65 lacs with all ultra modern facilities. There was absolutely no need, within 2 years, for making any further addition to or renovation of the building completed only in 1995-96. The company has already capitalized the building account in the year 1995-96 itself and has claimed full depreciation. The completion of the building in 1996 itself with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 91), the Company Law Board has held that cases of dishonesty, lack of probity, malafide for personal gain on the part of the management would warrant investigation into the affairs of the company. In the present case, the petitioner has given ample evidence of siphoning of funds of the company by the respondents and as such investigation is called for. In Alembic Glass Industries Ltd. (42 CC 63), Gujarat High Court has held that if the court is satisfied that there is mal-administration in the affairs of the company, investigation should be ordered. Therefore, since the respondents are guilty of fabrication of documents, financial irregularities, oppression of majority shareholders, criminal breach of trust for personal gains, investigation in terms of Section 235 of the Act should be ordered. 6. Shri Mookherjee, appearing for respondents submitted: There is absolutely no justification for ordering any investigation. All the complaints made in the petition were before this Bench even at the time of hearing CP 86 of 1997 and even though this petition was filed during the pendency of that petition, the petitioner never pressed for disposal of the present petition. The order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Chartered Accountant has given a certificate to the effect that all the liabilities shown are correct. 9. As far as purchase and leasing of equipments is concerned, similar issues were raised in CP 86 of 1997 and this Board did not order any investigation. Complete details of the equipments purchased and taken on lease is annexed at Annexure R-19 together with a certificate from the Chartered Accountant. The equipment taken on leas are on the basis of lease agreements with the lessors as detailed in Annexure R-19. Most of the medical equipments are not chargeable to sales tax and therefore non indication of the sales tax registration number in the invoices does not make the invoices bogus. Since all the equipments bought or taken on lease have been accounted for and certified by the Chartered Accountant, the question of siphoning of funds through purchase of these equipments does not arise. 10. Summing up his arguments, Shri Mookherjee submitted that since the respondents have refuted each and every allegation with proper explanation have proved that all the allegations are baseless, the question of investigation does not arise. Further, the petition filed by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to stand on its own footing as the findings in this petition will have to be based on the allegations contained in this petition. In the present petition, the petitioner has made three allegations - expenditure on building, increase in liabilities and purchase and leasing of equipments. As far as the expenditure on building is concerned, I do not find any merit in the allegation of the petition that by allegedly incurring the expenditure on building, the 2nd respondent has siphoned of funds of the company. A perusal of the annual accounts of the company indicates that there had always been building work in progress account right from 1994-95 onwards. In the balance sheet as on 31st March, 1998, I find that the figure of capital work in progress has come down to ₹ 41.9 lacs from ₹ 127 lacs as on 31st March, 1997. Taking this into consideration and also the certificate by the Chartered Accountant that increase in the building account as on 31st March, 1998 was on account of transfer of work in progress figures to the building account, I do not find any merit in the contention of the petitioner that the 2nd respondent has siphoned of funds in this regard. As far as incr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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