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TMI Blog2019 (6) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the increase in authorized share capital of the company from 3,40,000 shares to 7,90,000 shares in 2011-2012 as illegal and void. (ii) Direct the rectification of the register of members of the company to reflect the issued and paid-up capital of the company as 3,40,000 shares of Rs. 10 each as held by the original subscribers to the memorandum of the company. (iii) Declare all annual returns/balance-sheets, forms and records filed on behalf of the company for the financial years 2011 to present, including Form 32 inducting the twelfth respondent as director to be invalid and not binding on the company. (iv) Surcharge respondents Nos. 5, 6 and 12 to the extent of losses caused to the company due to breach of their fiduciary duty and for various acts of misappropriation and fraud as detailed in the petition. (v) Pass such further or other orders as the hon'ble Bench may deem fit and proper in the circumstances of the case and render jus tice." 3. The petitioners state that the first respondent-company bearing Registration No. U28122TN2005PTC055993 was incorporated under the Companies Act, 1956 vide certificate of incorporation dated April 1, 2005 issued by the Deput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other brothers including the petitioner began to conduct the business under his instructions and guidance out of respect. 9. The petitioners would further contend that in or about April 2004, the second respondent convinced the other brothers and family members that it would be beneficial for everybody if the partnership firm is converted into an incorporated company. Believing the representation of the second respondent, the family members agreed and the partnership firm was converted into a private limited company, viz., Thangam Metal Cans P. Ltd., on April 25, 2004. The capital standing to the credit of the partners was converted into shares and they were allotted shares to the extent in the company in proportion. The shareholdings of the different parties at the time of incorporation are as follows : Sl. No. Name, address, description and occupation of the subscribers No. of equity shares taken by each subscriber (1) Mr. L. Balaji, 10,000 S/o. R. Lenin No. 605, T. H. Road, Chennai-81. Business age-39 (2) Mr. R. Kanagavel, 22,500 S/o. A. Rathinasamy Nadar, No. 40 Muthusamy Street, &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Business age-34 (5) Mr. M. Venkatesh Kumar, 8,500 S/o. R. Mahesh Kumar, No. 40 Muthusamy Street, Virudhunagar, Business age-22 (6) Mr. M. Rajesh Kumar, 9,000 S/o. R. Mahesh Kumar, No. 40 Muthusamy Street, Virudhunagar, Business age-20 (7) Mr. R. Krishna Kumar, 12,500 S/o. R. Srinivasan, No. 40 Muthusamy Street, Virudhunagar, Business age-20 (8) M. Ramkumar, 50,000 S/o. L. Balaji (9) Mr. Athithya Kumar, 50,000 S/o. L. Balaji (10) Mr. S. Dakshna Kumar, 50,000 S/o. L. Saravanan (11) Mrs. L. Desigasigamani, 27,500 W/o. R. Lenin Total 3,40,000 11. It is submitted that for three years the petitioners did not get any notice regarding the affairs of the company or any annual general meeting. It is stated that from 2011, no annual general meeting has been convened for the company and no dividend was paid to the petitioners. The petitioners state that after having developed suspic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the petition is not maintainable either in law or on facts. The petitioners complain about increase of authorized capital which happened in 2011 and 2012 and the petition has been filed long after the event. This is an isolated transaction and the petitioners do not make any other allegation of oppression or mismanagement and the petition is therefore not maintainable. 15. The respondents have stated that the issuance of further shares has been done in accordance with law. The company allotted the shares on December 30, 2011 as per the requirement of City Bank and the company needed further equity capital. The petitioners knew and were offered proportionate shares and the petitioners refused to subscribe to the same and therefore, the second relief is not maintainable and in any event it is vague. As regards reliefs Nos. 3 and 4, they are not supported by any evidence whatsoever and are not capable of being granted. The respondents contended that the petitioners have not made out a case for winding up of the company on just and equitable grounds and therefore, the petition is not maintainable. 16. The respondents have stated in their reply that the partners thought it fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-company. On December 27, 2011 another person, viz., B. Ram Kumar, a member of the company agreed to subscribe to the additional shares and issued a cheque No. 761001, dated December 27, 2011 drawn on UCO Bank. The said amount was also duly credited to the account of the first respondent-company. The fifth respondent, viz., L. Balaji, had already brought in Rs. 6,00,000 towards future allotment of shares as required by the bank as early as 2007 and the said amount has been shown as opening balance under the share application account. The fifth respondent brought in a further sum of Rs. 10,00,000 on December 27, 2011 by cheque No. 761865 drawn on UCO Bank and the said amount was duly credited to the account of the first respondent-company. The shares remained unsubscribed and therefore on December 30, 2011 after the banking hours, the shares were allotted to the following four persons, the particulars of whom are as follows : Name of the allottee Name of equity shares Issue price L. Balaji 1,50,000 shares 15,00,000 B. Ramkumar 1,00,000 shares 10,00,000 B. Adithyakumar 1,00,000 shares 10,00,000 B. Inimai 1,00,000 shares 10,00,000 20. The respondents have denied the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter weighing 10 gms, containing notice of the annual general meeting typed on the same, with no agenda with respect to any allotment of shares. No accounts or documents could have been enclosed to the said notice because it was an inland letter to which there can be no enclosures. The averment that the company also forwarded a letter dated August 30, 2011 to the petitioners offering their proportionate shares in the further issue are denied as false and baseless. No such letter was ever received by the petitioners and no acknowledgment for the same has been produced by the respondents. In fact, in letter dated February 6, 2015 respondent No. 5, while replying to a notice from the first petitioner, stated that the letter of offer was sent along with the notice of the sixth annual general meeting. It is stated that the fifth respondent has exposed himself totally by making these false averments and producing false records and it is clear that the alleged allotments made on September 30, 2011 are illegal and liable to be set aside. 24. Before proceeding further, it is worthwhile to mention that respondents Nos. 1 and 2, respondent No. 5 and respondents Nos. 9 to 12 have contested th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he limitation and maintainable. 28. In relation to issue No. (ii), the petitioners would contend that for three years they did not get any notice regarding the affairs of the company or any annual general meeting and no dividend was paid to the petitioners and the shareholdings of the petitioners have been diluted heavily that too without any intimation by increasing the share capital of the company to 7,90,000 shares from the year 2012 and allotting the same without any valid reason to the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively. On the other hand the respondents would contend that the company allotted the shares on December 30, 2011 as per the requirement of City Bank and the company needed further equity capital and the petitioners knew and were offered proportionate shares and the petitioners refused to subscribe to the same and therefore, the second relief is not maintainable and in any event it is vague. During the inquiry, it has been found that the respondents have sent a notice on August 30, 2011 for holding sixth annual general meeting proposed to be held on September 30, 2011 the original notice is placed on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meetings were served to the petitioners do not justify the increase of the authorised capital of the company and allotment of the shares in favour of the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively. However, the acknowledgments placed on file as proof of sending notices cannot be relied upon without corroboration of services of notice, when there is no collateral evidence like dispatch register showing payment of postage stamps and account books. On this issue, the company courts did not even rely upon the "postal certificates". In Marble City Hospital and Research Centre P. Ltd. v. Sarabjeet Singh Mokha reported in [2010] 155 Comp Cas 13 (MP), the hon'ble High Court of Madhya Pradesh held "mere filing of postal certificate did not corroborate services of notice, when there is no collateral evidence like dispatch register showing payment of postage stamps and account books, etc." In M. S. Madhusoodhanan v. Kerala Kaumudi P. Ltd. reported in [2003] 117 Comp Cas 19 (SC) ; [2004] 9 SCC 204, the hon'ble Supreme Court has observed that certificates of posting are notoriously, "easily" available. So is the case of the ackno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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