9911796707
TMI Blog2018 (9) TMI 1608X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised capital of the Company at the time of incorporation was Rs. 50,00,000 divided into 50,000 equity shares of Rs. 100/- each and the paid up capital is Rs. 25,00,000/-divided into 25,000 equity shares of Rs. 100 each, fully paid up. The main object of the Company is to carry on the business of hotels, restaurants, cafe, tavern, motel, rest houses, tea and coffee houses, bar, lodging and apartment house keeper, bakery products caters, suppliers and dealers of food, refreshment rooms, holiday resort, recreation centres and water sports facilities. 4. It has been submitted by the Petitioner that upon incorporation of the Company, there were two promoters of the 1st Respondent Company. The Petitioner is one of the Promoters and the other promoter being the 2nd Respondent, the Petitioner had taken 25,000 shares in the 1st Respondent Company, representing 50% of the authorised capital of the Company and the remaining 25,000 shares were taken by the 2nd Respondent, both being the subscribers to the Memorandum of Association, and the 1st Directors of the 1st Respondent Company. The Petitioner had fully paid for the entire 25,000 shares taken by him, and 2nd Respondent has not paid a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take appropriate action in the matter due to which the Petitioner has filed a Writ Petition No.4014/2012 before Hon'ble High Court of Kerala seeking a direction to be issued to the Registrar of Companies to take action on the complaint filed by the Petitioner and the said Petition is pending disposal before the said High Court. 9. It has been alleged by the Petitioner that after receipt of his Letter dated 11.01.2011 issued by him, Respondent Nos.2 and 3 filed various false and fabricated returns, reports and forms before the Registrar of Companies during the months of January and February, 2011 in respect of the 1st Respondent Company which include returns/forms pertaining to the appointment of Respondent Nos. 3 and 4 as Directors of 1st Respondent Company, bogus transfer of the shares in respect of the 3rd Respondent, illegal shifting of the Registered Office of the Company, illegal ousting of the Petitioner from the office of the director of the Company by falsely showing that he had vacated office, the unauthorised increase of authorised share capital of the Company, allotment of further shares in the name of Respondent Nos.2 and 3, manipulated and fabricated Annual Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of the 1st Respondent Company which provides a procedure for giving an intimation to the Board for the purpose of ascertaining the willingness or otherwise of the members to purchase the shares and if several members express their willingness to purchase the shares then, the question will be decided by drawing lot and the intending transferors shall be bound to transfer their shares in the name of the person in whose favour his lot is drawn. 13. The Petitioner has also pointed out some other contradictions in the record relating to Folio numbers of shares of Respondent Nos. 2 and 3 and has submitted that the transfer of shares created in favour of the 3rd Respondent is bogus and invalid and 3rd Respondent is not a member of the 1st Respondent Company. The Petitioner has also alleged that the Respondent Nos. 2 and 3 have sought to shift the Registered Office of the 1st Respondent Company unauthorisedly and without the knowledge of the Petitioner, the decision is shown to have been made at the Board Meeting held on 26.06.2010, whereas no such Board Meeting has taken place for shifting of the Registered Office; no Board Resolution or decision was taken to that effect at the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 1st Respondent Company, by trying to remove him from directorship and membership of the company with the devious and mala fide intention to take full control of the Company and full possession of the Company's assets and properties to the detriment of the interests of the Petitioner and the Petitioner is unable to produce the Director's Attendance Register and the share certificates issued to the Petitioner as the records of the 1st Respondent Company has been removed from the Registered Office of the Company unauthorisedly. 16. The Petitioner is also aggrieved for filing Form No. 23 by the 2nd Respondent with the Registrar of Companies which shows purported increase of the authorised capital of 1st Respondent Company from Rs. 50 Lakhs to 125 Lakhs, in an Extraordinary General Meeting held on 05.02.2011 at which the General Body Resolution authorising the increase is purported to have been passed. But, in fact, the proposal to increase the authorised capital was never discussed or decided at any Board Meeting of 1st Respondent Company and even assuming without conceding that there was Extraordinary General Meeting on 05.02.2011, the said meeting is invalid and illegal. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital of Rs. 50,00,000/- before the illegal enhancement of the shares capital in violation of the provisions of the Companies Act, 1956. E. An order declaring that the appointment of the 3rd Respondent as Director of the 1st Respondent made on 12.07.2008 is illegal and invalid. F. An order declaring that all decisions taken by the Board of the Company reconstituted after removing the Petitioner from the office of director and inducting the 3rd and 4th Respondents as directors, are invalid, null and void as vitiated by fraud. G. An order setting aside the allotment of 1,00,000 shares of the 1st Respondent Company in favour of the 2nd and 3rd Respondents purported to have been made on 18.02.2011, and any subsequent transfer of shares by them to any other person, as invalid and bad in law. H. An order restraining the Respondents from making any further issue of shares without rectifying the illegal share allotment made on 18.02.2011. I. An order directing the first Respondent Company to make allotment of shares of the Petitioner against the share application money of Rs. 88,10,000/- paid by him and lying to his credit in the Company's account. J. An order setting aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buted the money to the Company, to the tune of Rs. 25 lakhs towards the money payable by him for the shares as subscribed and share application money of Rs. 88.10 lakhs aggregating to Rs. 1,13,10,000/-. It has been submitted that though the Petitioner claims that the shares have been allotted to him and necessary share certificates were also issued to him. However, he has not produced any paper and when confronted with the above challenges, has cooked up a story stating that in the first week of January 2011, he had come to know that the Respondent No. 2 had taken away the books and records including Title Deeds of the 1st Respondent Company. Thus, the Petitioner sets up this defence in order to surmount the burden of producing any documentary evidence in support of his claim. 23. The answering Respondents have submitted that in or about September 2010, a dispute arose between the Petitioner and the 2nd Respondent in relation to several of the Companies in which both were partners in business and both had made investments, and in relation to the affairs of the Company viz., Trinity Arcade Private Limited, the 2nd Respondent had taken out a Company Petition which resulted in the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts have submitted that it reveals from the minutes of the meeting dated 22.01.2011 that since the Petitioner failed to attend the three consecutive Board Meetings on 22.11.2010, 10.01.2011 and 22.01.2011, he had vacated his office as per law. 27. The answering Respondents have submitted that the appointment of 3rd Respondent as Director as on 12.07.2008 and filing of Form-32 in this regard on 29.01.2011 cannot be considered to be a back dated appointment as late filing of Form-32 is duly filed as per the procedure for delayed filing. The answering Respondents have submitted that 3rd Respondent was validly appointed as one of the Directors of the Company in the Board Meeting held on 12.07.2008, though the Form-32 was filed belatedly. The copy of the minutes of the Board of Directors meeting dated 12.07.2008 pertaining to the appointment of Respondent No.3 as Director of the 1st Respondent Company, is placed on record as Annexure-R6. It has also been submitted by the answering Respondents that the shares were validly transferred to the 3rd Respondent in accordance with the provisions of the Act and the Articles of Association of the 1st Respondent Company. The copy of the minutes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Form-32 filed on 12.03.2007 was filed well in time. So the contention of the Petitioner that the appointment of the 4th Respondent is invalid is baseless and is liable to be rejected. A copy of the minutes of the meeting of the Board of Directors dated 10.01.2011 wherein the decision was taken to appoint Respondent No.4 as one of the Directors of the 1st Respondent Company is placed on record as Annexure-R12. 31. The answering Respondents have submitted that the Petitioner finds fault with the delay in filing the audited balance sheets of the company and the contentions that there have been falsification of records, manipulation of records, there was criminal conspiracy, fraudulent connivance, gross manipulation and collusion with the Auditors, and these allegations cannot be enquired into in the guise of the Company Petition under Section 111(4) r/w Sections 397/398 of the Companies Act, 1956. It has further been submitted that the Petitioner himself says that he was chairing all the meetings and he was in charge of the finance and fund raising matters, but he had not done anything with respect to the company, and not to speak about any statutory compliances even though he cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Companies Act, 1956." If, the answer to the above stated issue is found in negative then the other issues need not to be examined. The Petition is composite one which is filed under Sections 111(4), 397 & 398 of the companies Act 1956. For Section 111(4), Section 59(1) is given in the Companies Act, 2013, which is Pari Materia to the provisions of Section 111 (4) of which the necessary ingredients are as follows :- (i) If the name of any person is, without sufficient cause, entered in the register of members of a company, or (ii) after having been entered in the register, is, without sufficient cause, omitted there from, or (iii) if a default is made, or unnecessary delay takes place in entering in the register, the fact of any person having become, or (iv) ceased to be a member, the person aggrieved, or any member of the company, or the company may appeal to the Tribunal, for rectification of the register. 35. In this case ingredient number (ii) mentioned above is relevant to be considered to grant prayer 'D' to the petitioner, as the contention of the petitioner is that after having been entered his name in the register, is, without sufficient cause, omitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscription money was paid in cash, as the bank account of the company was not opened. He did neither prove to whom the money was given on behalf of the company nor produce any receipt to that effect. The petitioner even did not bother to place on record the share certificates, which he claims to have been issued to him by the 1st Respondent Company. Thus, there is no sherd of evidence to substantiate his claim that he has paid the subscription money. 37. Section 2(55) of the Companies Act, 2013 says that 'member means the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the Company, and on its registration shall be entered as member in its register of members' and as per Section 10(2) of the Companies Act, 2013, 'all monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company'. Even though the subscriber does not bring in subscription money yet his name will be entered in the register of members and share certificate can be issued, but the money will be shown as debt against subscriber on the asset side in the balance sheet of the Company. The Companies Act, does not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the call money due has not been paid shall be forfeited by a resolution of the Board. Whenever it is deemed expedient to forfeit any such share the Board shall duly comply with the provisions of regulations 29, 30, 31, 32, 33 and 34 of Table A and all such provisions shall, verify be deemed to have been incorporated in these articles". (The copy of Articles of Association is placed at page 46 of the typed set filed by the Petitioner). 40. The above stated provisions of ARTICLES of ASSOCIATION clearly provide for lien on the unpaid shares of the company and give powers to the directors to forfeit the same for non-payment of call money, which has not been paid by the petitioner as reflects from, para 13(i) of Compliance Certificate dated 18.08.2010 placed at page 100 of the typed set filed by the Petitioner. The said para is extracted as follows:- "13 (i) The Company has delivered all the certificates on lodgement thereof for transfer in accordance with the provisions of the Act. There was no allotment/transmission of Securities during the period. One of the Subscriber to Memorandum has not paid for the shares subscribed by him and hence the company has not issued the share c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do all such acts, deeds and things as may be necessary for and on behalf of the company to give effect to the said forfeiture. ALSO RESOLVED that Mr. K.J. Paul, Director of the company be authorised to send an intimation letter to Mr. C.J. Mathew regarding forfeiture of shares. There being no other business, the meeting concluded with a vote of thanks to the Chair." 43. In the light of the provisions of the Articles of Association of the company and the decision taken by the Board of Directors to forfeit the shares of the Petitioner, it can safely be concluded that the Petitioner is not a member of the 1st Respondent Company as his shares stand forfeited for non-payment of the subscription money. The Petitioner has miserably failed to support his contention for rectification of the Register of Members for the purpose of entering his name in the Register of members of 1st Respondent Company. Though petitioner claims that he has been chairing all the Board Meetings and was in charge of the finance and fund raising matters, but he did not open any account of the 1st Respondent Company with the Bank and even not maintained any record, particularly with the regard to the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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