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TMI Blog2019 (8) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... equently the capital of the Company stands reduced by Rs. 2,75,000/-. (4) Consequently the Petitioner is entitled to transfer portion of his shareholding as per the Article of Association of the Company. (5) To declare that the 2nd Respondent is not entitled to be paid any money from the Company. (6) To declare that the Company is not liable to pay any amount to the 3rd Respondent. (7) To hold that the 2nd Respondent is guilty of acts of misfeasance, fraud, cheating, breach of trust, misappropriation of funds and accordingly direct him to make good/ compensate the Company to the extent of Rs. 7,86, 15,434/- and such other amount as may be determined by this Bench along with interest @24%p.a. (8) To hold that the 2nd Respondent is liable to make good all monies/ deposits directly received by from Mandi Agents of the Company; (9) To hold that the 3rd Respondent is also guilty of fraud and of misappropriation of money belonging to the Company and that he is also liable to make good the sum of Rs. 87,00,000/- and such other amount as may be determined by this Bench along with interest @ 24% p.a. (10) To award the costs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered in the subscription column 55% (27500 equity shares) as against his name and only 45% (22500) equity shares as against the name of the Petitioner. The 2nd Respondent did not invest any money towards his shareholding and the entire incorporation expenses were borne by the Petitioner. The project undertaken by the Company is unique in nature started in the private sector. The business activity is that of providing marketing facility of fruits and vegetables and also provide cold storage facility. (5) It is stated that the Company availed financial assistance of Rs. 8.84 Crores from Indian Bank and the Petitioner offered his personal guarantee and also four of his properties as a security for the said loan whereas the 2nd Respondent only provided his personal guarantee and did not provide any of his immovable properties as security despite holding properties in his name. The 2nd Respondent who had a clear intention to cheat the Company and also the Petitioner has siphoned of more than Rs. 8 Crores by drawing amounts from the Bank account of the Company and also by getting payments made to his nominees without they providing any supplies towards the construction of marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any money into the Company. However, the 2nd Respondent had experienced in sale and marketing of vegetables in the area, the Petitioner agreed to promote the aforesaid Company jointly with him on the assurance of the 2nd Respondent that he will invest money into the Company at a later. The 2nd Respondent who had masterminded to defraud the Petitioner made the Petitioner to sign the subscriber sheet of the Memorandum and Article of Association of the Company and instead of mentioning the shareholding at 50% each, he reduced the shareholding of the Petitioner to 45% and entered his (2nd Respondent's) shareholding at 55%. The Petitioner came to know about the said fraud played by the 2nd Respondent much later. The Company has not issued share certificates in respect of the said shareholding. (9) The oblique motive and mala fide intentions on the part of the 2nd Respondent to deceive the Petitioner and the Company came to the knowledge of the Petitioner only after the inauguration of the Wholesale Market during June, 2013 in as much as the 2nd Respondent failed to provide accounts for the various amounts drawn/ spent by him from out of the Company's funds which exceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons will make various supplies towards construction of market yard. Since neither the 2nd Respondent nor the aforesaid persons came forward to give an account of the amounts received by them, the Company caused the issue of legal notices to all of them. Since the said person failed to account for the amount s received despite receipt of legal notices, the Company has lodged Criminal Complaints against all the aforesaid four persons before the jurisdictional Magistrate Court at Mulbagalu. (13) It is stated that the Petitioner, the Company had its loan transactions with Indian Bank. However, for the sake of convenience, another account was also opened by the Company with the State Bank of India, Mulbagalu, during February, 2013 in the name of the Company. The Petitioner except for signing the account opening form, has neither made any transactions whatsoever from the said Bank Account nor issued any cheques. However to his shock and surprise, in the course of his enquiries, the Petitioner found that the 2nd Respondent had, as a sole signatory, transacted with the said Account of SBI, Mulbaglu and within a span of 9 months made total transaction of Rs. 6,59,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The Chartered Accountants of the Company have expressed their inability to audit the accounts of the Company and also desired to resign as Auditors of the Company. In the circumstances, the Registrar Companies in Karnataka has already issued notices threatening prosecution under the Companies Act for non-filing of statutory returns and reports and failing to hold Annual General Meetings of the Company. The 2nd Respondent has also committed another illegal act by resorting to unauthorised collection of deposits from various Mandi Agents/ shop keepers and also amounts due from Purchasers of vegetables without the knowledge of the Petitioner. The Petitioner states except for five of the Mandi Agents, who have either deposited amount in full or part, remaining 14 - 15 Mandi Agents have not paid any amount whatsoever into the account of the Company but have occupied the shops in the Whole Sale Market. In the circumstances, the Company has issued legal Notices to the shop owners to vacate the respective Shops/ premises. Further the Agricultural Producers' Marketing Committee has also cancelled the licence to run the whole sale market. (17) It is alleged that the 2nd R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrent Account of the Company and also to return the sum of Rs. 3.38 Crores subsidy received from the National Horticultural Mission. Further the 2nd Respondent has also called upon the said Indian Bank to proceed to sell the Company's lease hold property and other securities provided by the Petitioner which are all his personal assets. The Indian Bank issued a Notice dated 24.7.2014 to the 2nd Respondent with a copy marked to the Petitioner specifically warning him that he would not be absolved of his personal guarantee obligations and he would continue to be made liable for the company's dues. After the said Notice dated 24.7.2014 was received by the 2nd Respondent, he immediately took steps to sell his 3 ½ acres of land situated at Siddaghatta Village, Mulbagalu Taluk in favour of his wife, Smt.V.Nagamani under the Sale Deed dated 13.10.2014. (20) It is stated that the Petitioner has already initiated criminal complaints against the said persons before the jurisdictional Magistrate Therefore submission of affidavits by those persons are nothing but clear after thoughts to cover up the fraud played by the 2nd Respondent in misappropriating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent are prejudicial to the 1st Respondent Company and hence, the same is liable to be dismissed in limine. The Petitioner approached this Tribunal with an ulterior motive to oust the 2nd Respondent from the Company and has suppressed the material facts and pleaded false allegations and such vague allegations of fraud and deception which cannot be the subject matter of a Petition under Sections 397 / 398 before this Tribunal. (2) It is stated that the Company A/C maintained at Indian Bank, Benson Town Branch, and Bengaluru is being operated by the Petitioner himself from the date of inception of the Company to till date. The 2nd Respondent has not operated the Company loan A/c or Company's current account No.995327029 in the Indian Bank, Benson Town Branch, Bengaluru. The Company current Account No.32849604024 at SBI, Mulbagal Branch has been operated by the 2nd Respondent in connection with Sale and Purchase of vegetables and settlement of payment to the farmers through Cheques/RTGS/Transfers and cash withdrawals. There is not a single instance of claim/ complaint made by any of the farmers against the Company in so far as the A/c maintained at SBI, Mulbagal Bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioner has launched parallel proceedings against this Respondent. (6) It is stated that since there is no alteration of terms and conditions of the registered Lease Deed, any amount of oral averments is inadmissible in view of Section 90 of the Indian Evidence Act. Though the Company as incorporated in the year 2011, except for one year, annual returns and audited reports of the Company have not been filed to the Registrar of Companies under the provisions of the Companies Act, 2013. In this regard the Registrar of Companies has issued a notice dated 12.12.2013 regarding defaults under Section 159/ 166/ 210/220 of the Companies Act, 1956. (7) It is stated that during the meeting convened on 29.01.2014, it was agreed by both the Directors that the audit report is binding on both the Directors and individually are responsible and accountable for the role if any misappropriation noticed. (8) On the subject of Balaji Interiors represented by Mr. Ramachandre Gowda to clear off their dues, no deliberation took place. Mr.Ramachandre Gowda made a request to clear all the pending bills and no response was given to him. Further, it was decided as follows: "On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to this Respondent from the Petitioner. And interior contract is not between the 2nd Respondent and 3rd Respondent alleged. (3) It is denied that the property acquired by him in the year 2007 has any nexus with the activities of the Company, since the Company was incorporated in year 2011. (4) It stated that the properties situated at K.R.Pura Hobli, were purchased on 10.11.2006 from Smt. K.S.Swarupa and building was constructed in the year 2013. The Petitioner was invited for the house warming ceremony by this Respondent. The friendship between two parties has been misused by the Petitioner. The alleged collusion between the 2nd Respondent and the 3rd Respondent is denied. 5. Heard Shri K.V. Satish, learned Counsel for the Petitioner and Shri Thomas V Peter, and learned Counsel for the Respondent. We have carefully perused the pleadings of both the parties and extant provisions of the law. 6. The case is pending since 2015, and it suffered several adjournments since then and passed miscellaneous orders. Since there are several allegations and counter allegations made by the parties against each other, the Tribunal at the request of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1956 and certificate of incorporation shall be the conclusive evidence that all provisions of the Companies Act have been complied with U/s.35. Partnership arrangement if any, has nothing to do with subscription clause of MOA. In terms of Section 36 of wrest while Companies Act, 1956 it was a binding contract and any money payable by them to the Company shall be a debt from him to the Company. Both the subscribers to the memorandum of association could not substantiate before the Investigating Officer about timely payment of respective contribution to the share capital of the Company. But in the ordinary course, both have deposited some money sufficient for shares, in to the bank a/c before 31.03.2012 but after 21.11.2011 as under:- Cash Contribution deposited in the bank: Sl. No. Name of the Parties Amounting in Rs. 1 Mr M Gopal Rs. 3,71,000/- 2 Mr. Gangareddy Rs. 3,61,000/- Total Rs. 7,32,000/- Share capital as per audited Balance Sheet as at 31.03.2012 filed with ROC:- Sl No. Name of the Parties Amounts in Rs. 1 Mr M Gopal Rs. 2,75,000/- 2 Mr. Gangareddy Rs. 2,25,000/- Total Rs. 5,00,000/- The disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th interest was Rs. 9,45,85,860/-. For the said Bank loan, the Company has provided security in form of companies lease hold land leased by Mr. Ganga Reddy to the Company and also Mr. Gangareddy's personal property as collaterals in addition to guarantee from two Directors. No personal property of Mr. M Gopal was given as security for the bank loan as affirmed by Mr. Ganga Reddy. The Company has also not paid any money from its operation for repayment of bank loan. Mr. Gangareddy confirmed that a subsidy from National Horticulture Mission was received to the extent of 25% of project cost i.e. Rs. 3,38, 17,184/- and was credited to repayment of Bank loan repayment. Out of his personal sources Mr. Ganga Reddy repaid Rs. 2, 87, 42,000/- to the bank loan. Outstanding Bank loan along with interest as on 30.09.2018 is Rs. 8,62,46,128/- 30. Not maintaining books of accounts, vouchers, bills, invoices etc., and statutory registers including minute books, not filing financial statements and Annual returns since 31.03.2012, not holding meetings of Board and general meeting etc., under the Companies Act, 2013: (1) Not maintaining books of accounts, books and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as caused loss ofRs. 1,42,84,389/- to the Company and Petitioner has caused loss of Rs. 47, 12,500/- to the Company. In case Respondent No.2 failed to provide proof on T. V. AD for Rs. 7, 16, 450/- the amount of loss caused by Respondent No.2 would be by Rs. 1,50, 00,839/-. Director(s) who were in charge of the affairs of the Company during the above period failed to maintain the records of the Company and also failed to protect the records of the Company. Respondent No.2 was in charge of business operations. Business was seriously prejudiced because of infighting among the directors. Mr. M. Gopal director during the above period was overall in charge of the affairs of the Company misused his position by issuing self-cheques, cheques for withdrew cash and colluded with his brother-in-law in an arrangement with R-3 to suit his requirements. The constitution of Board and exercise of powers through Board was only in statute but not practiced by the Company. No Board meetings and general meetings were held and not maintained statutory registers including minute books. Directors who were involved in mismanaging the affairs of the Company have been disqualified with effect from 01.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ominate one Director on part to see the affairs of Company being conducted in accordance with law. As per report of the investigating Officer too, the Respondent has contributed very nominal to the Company, though the Petitioner was holding 45% of shareholding, while Respondent No.2 holding 55% as per records. Since Respondent No.2 being Managing Director, was responsible and has mismanaged, misused, misappropriated the funds of Company, it is not just and proper to give him majority say in Board of Directors to be constituted. And these dispensation of nominee Directors would continue till revised Settlement to be made by both parties so as to exit by the Respondent No. 2 from the Company, since early compromise made on 16.03.2014 so to exit the Respondent No. 2 from the Company could not materialise. In the meanwhile, all pending statutory Compliance can be complied under the supervisions of Nominee Directors. Since the differences between the parties has come to a stage, where both the cannot continue in the Company and lead affairs of the Company and the Petitioner alone contributed heavily in comparison with the Respondent No.2, it would be just and proper for the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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