9911796707
TMI Blog2018 (3) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent herein has been appointed as Director-cum-Managing Director of the 2nd respondent b) the appellant herein is liable to pay Rs. 16.48 Crores with Bank interest. 2. The brief facts the case are that the 2nd respondent is a company incorporated under the Companies Act, 1956 engaged in the business of civil construction of roads, bridges, buildings etc. The 2nd respondent company was incorporated on 15.12.2003 promoted, managed and operated by the appellant herein, 1st respondent, 3rd respondent and the wife of 3rd respondent. The following was the shareholding of 2nd respondent company. S.No. Particulars Shareholding 1. Giju P Mathai 46.5% 2. Rojer Mathew 46.5% 3. P.T. Mathai 3.5% 4. Martha Mathai 3.5% 3. Appellant and 1st respondent were the directors of 2nd respondent and 3rd respondent was Director cum Managing Director of 2nd respondent. 4. For smooth running of the business, 2nd respondent had availed overdraft facilities from the South Indian Bank and for this purpose the security of Directors' immovable properties were provided to Bank. The overdraft facility availed from the Bank was renewed from time to time. The accounts with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time line specified. R3 has also overdrawn from his sub-account to the tune of Rs.16.48 crores as on 31.03.2012, defaulted in completing several projects which has caused losses to the company. The plea of the petitioner is that he performed well and completed the projects allotted to him and brought profit to 1st respondent company whereas huge losses have been incurred by 1st respondent company on account of the projects undertaken by R3. Therefore, the petitioner could not be made liable for the losses suffered by 1st respondent company due to failure of R3 to commission the projects handled by him, within the stipulated time. R2 has also not taken corrective measures in order to overcome the losses suffered by 1st Respondent company. The petitioner has legitimate expectations that he will be benefitted in relation to the business of the company, as he has completed his projects well in time. Therefore, in the facts and circumstances of the case, petitioner cannot be made liable for the losses incurred by 1st respondent on account of mismanagement and overdrawn money to the tune of crores of rupees. Thus, R3 is responsible for the losses suffered by 1st respondent company. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant further averred that the Tribunal has failed to point out any reason or instances where the affairs of the company have been mismanaged. The Tribunal has granted a relief which was not claimed in the Petition by the Petitioner. 7. 1st respondent filed its reply thereby stating that the appeal is wholly misconceived, untenable, is wholly devoid of any merit and liable to be dismissed in limine with costs. It further submitted that 1st respondent is the eldest son and the appellant is youngest son of 3rd respondent and 1st respondent is qualified Civil Engineer. It stated that actually it was a closely held family company. It was an arrangement that the money from the Master Account of the 2nd respondent was transferred to the subaccount of the company, operated only by the respective director with signing power, was executed only with the discretion power of the Bank Manager without the consent of the other directors, or backing of any Board Resolution. Once the money was credited to the individually operated sub account that particular director was solely responsible to bring back that money to the company. The respondent further stated that the appellant herein has un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company to 4th respondent and thereby allowing the 4th respondent (third party) to become a competitor to the 2nd respondent. 1st respondent further alleged that the appellant is liable and responsible for making good the sum of Rs. 16.45 crores plus interest overdrawn in his sub account to the company and consequently to the bank. 1st respondent further submitted that the appellant cannot seek to enforce the liability arising on account of short fall in his sub account and the 2nd respondent or on the 3rd respondent because the 1st and 2nd respondent cannot be mulcted with liability arising due to mismanagement and siphoning off funds resorted to by appellant from his sub account. 1st respondent therefore submitted that the present appeal is wholly devoid of any merit and deserves to be dismissed with costs. 8. Rejoinder has been filed by the appellant. The appellant in his rejoinder has stated that 1st respondent has entered into an agreement with Kerala State Construction Corpn Ltd and annexed a copy of the articles of agreement which shows that 1st respondent while continuing as a Director of the 2nd respondent was undercutting and competing with the 2nd respondent and the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor it has defacto removed 3rd respondent from Managing Directorship. 1st respondent is already director of the company and now being appointed as Director cum Managing Director, it is amounting to removing 3rd respondent from Managing Director. 11. It has been argued that the 1st respondent who is promotor of M/s Roger Mathew & Co and has also been appointed as Managing Director of 2nd Respondent by the Tribunal is tendering for contracts and competing with the 2nd respondent which was in direct competition with the business of the 2nd respondent. However, the Tribunal has in para 12 of the impugned judgement has given his findings that "The petitioner is also forbidden to compete with 1st respondent company in any manner". 12. In the light of these findings we are not comfortable that the 1st respondent can be expected to look after the affairs of the 2nd respondent while also looking after the affairs of his own company which is in a competing business. We cannot think about any mechanism by which it can be ensured that 1st respondent who has now been appointed as Managing Director that he will not take care of his own company in the competing business unless he closes his bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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