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TMI Blog2018 (8) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... to Respondent No.7. If Respondent No.7 did not have legal title, she could not pass it to Respondent No.8. Respondent No.8 failed to verify if his vendor had duly acquired title and thus failed to act reasonably to show bona fides. The learned NCLT rightly set aside both the sale deeds dated 3rd November, 2015 and 4th November, 2016. The arguments on behalf of Respondents 3, 4 and 7 depending action of Respondent No.2 executing sale deed relying on Section 176 of the Companies Act, 2013 cannot be accepted. Section 176 provides that no act done by a person as Director shall be deemed to be invalid, notwithstanding that it is subsequently noticed that the appointment was invalid for reasons stated in the Section. In the present set of facts where it is shown that the Respondent No.2 had incurred disqualification and had also resigned, the act of such Respondent in subsequently going ahead and holding himself out as Director to execute sale deed cannot be protected. Such acts attract criminal liability. Although other allegations were made in the Company Petition but NCLT did not find any merits in the other contentions raised. Even before us, no sufficient material has been po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Original Petitioner were rejected as not having merits. 5. CA 03 of 2018 has been moved by Original Petitioner. He has referred to the facts raised before the NCLT that he is shareholder in the Respondent No.1 Company (hereinafter referred as Company ) holding 9.33% of the subscribed share capital. He has given chart of the other shareholders in Para -1.3 of the appeal. Respondent No.2 - Katta Jagadeesh is brother of Respondent No.3 Katta Srinivasa Rao. Respondent No.4 Katta Lalitha is son of Respondent No.3. Respondent No.7 - Gade Saraswathi Devi is mother-in-law of Respondent No.3. According to the Appellant Original Petitioner, Respondent No.2 - Katta Jagadeesh purporting to act as Managing Director of the Company alienated by registered sale deed dated 03.11.2015, Property Survey No.468/3/B, 468/3/C, 468/3/D, being 3 Acres of land which earlier had been purchased by the Company situated at Nadergul Village, Saroornagar Mandal, RR District (hereinafter referred as disputed property ). The disputed property was transferred in favour of Respondent No.7 on 03.11.2015 who in turn sold off the same in favour of Respondent No.8 on 04.11.2016. The only business Company ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pleadings as under:- v. On 14th September, 2014, a Board s meeting was held at SMR Vinay Acropolis Apartment 101-B in Madhapur, Hyderabad, where the petitioner was living. At the said meeting, the Board discussed the opportunity to buy the 2.75 acres land belonging to Respondent No.7 as the real estate market in and around Guntur was doing exceptionally well in Andhra Pradesh. The Board decided to offer the 3 acres land in Nadergul belonging to the Respondent No.1 Company, which was valued at 1.2 crores, to the Respondent No.7. An agreement between the Respondent No.1 Company and Respondent No.7 was signed on October 2nd 2015 as per the Board decision. The Respondent No.2 was authorized to represent the Respondent No.1 Company to register the land to the Respondent No.7. The registration of the land owned by the Respondent No.1 Company in favour of the Respondent No.7 was done on 3rd November, 2015. 6.1 In the further pleadings, Respondents claimed as to why the Original Petitioner had grudge against Respondent No.2. They claimed that Original Petitioner had attended many of the Board Meetings through video conferencing and was even signatory to filing Statutory Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. 10. At the time of arguments before us in appeal, the counsel for Vara Boomi Homes original Respondent No.8 argued its Appeal CA 409 of 2017, first. It has been claimed by the counsel for Original Respondent No.8 that Vara Boomi Homes is a partnership firm dealing in business of real estate development. The counsel referred to Page - 134 from the record of Appeal No.409 of 2017 to point out that the Respondent No.8 had verified Statement of Encumbrance from the record of Registrar and documents to check whether or not there was encumbrance. He referred to document at Page 136 of CA 409 of 2017 to show that proceedings had been taken up before Tahsildar for amendment in revenue records and as no claims or objections were received, Tahsildar mutated the revenue records and changed the name of Pattedar and Possessor from Respondent No.7 to Respondent No.8. The counsel referred to another document at Page 139 in CA 409 of 2017 to show that even the record of ROC showed when this document was downloaded that Respondent No.2 was Director of the Company. Thus, the argument is that the Original Respondent No.8 had acted with due diligence and was not aware of the internal m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have executed the sale deed on 3rd November, 2015. The counsel claimed that admittedly this Respondent No.2 - Katta Jagadeesh had not only resigned but also was disqualified Director having been convicted. 12. Counsel for Original Petitioner was then asked by us to state as to what are the submissions on aspects other than the challenge to the sale deeds. In this regard, the learned counsel for the Original Petitioner merely added that the Company had only 5 members and the only transaction it had done was purchase of the two properties as mentioned although the Company was established for doing business for real estate. The learned counsel claimed that the Respondents had filed copy of Board Meeting dated 14.09.2014 in NCLT but it had not filed copy in appeal. According to us, if the party wants to rely on a document which was before the Tribunal below to raise a contention, the party, when it is in appeal must file the document and in the absence of document, no proper ground can be said to be raised. The learned counsel for Petitioner again went back to pleadings of the Respondents as referred to by the NCLT in Para 3(v) of the Impugned Order to say that these Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... downloaded, it showed that Respondent No.2 - Katta Jagadeesh was Director. Thus, according to him, Respondent No.8 had acted with due diligence to check that the vendor of Respondent No.7 was authorized person and rightfully transferred. At the time of arguments itself, we have asked the learned counsel for Respondent No.8 that can he show from Page 138 and 139 as to on what date the document was downloaded and is it difficult to seek from computer position of the Company on a given particular date. If you feed command seeking position of a Company on given particular date, the software can give position on date specified. The learned counsel stated that at Page 138, the certificate or the document at Page 139 do not disclose as to the date of downloading and what was the command given seeking what data. Thus we are not able to accept even these documents and to accept the arguments now being raised of bona fide purchaser. 15. Para 15 and 16 of the Impugned Judgement read as under: 15. It is not in dispute that the Company has not done any major business except to purchase the above two lands at Ghattupally Village, Nadergul as contended by the petitioner. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.1 Going through the above reasonings of the learned NCLT and the submission now made before us, we do not find that any grounds have been raised or documents shown to find fault with the reasoning so as to interfere with these findings. When major part of property of the Company has been shown as sold off by Respondent No.2 who had tendered resignation as Director but went ahead to execute the sale deed, there was oppression and mismanagement on the part of Respondents 2 to 4. Respondent No.7 was mother-in-law of Respondent No.3 who is brother of the Respondent No.2. Looking to such relationship of these parties and the fact that it is Private Limited Company, keeping in view the contradictory pleadings claiming exchange viz-a-viz the sale deed claiming that money had been paid, the transaction in favour of Respondent No.7 was apparently suspicious and transfer without authority. Respondent No.2 could not have passed title to Respondent No.7. If Respondent No.7 did not have legal title, she could not pass it to Respondent No.8. Respondent No.8 failed to verify if his vendor had duly acquired title and thus failed to act reasonably to show bona fides. The learned NCLT rightly s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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