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TMI Blog2019 (5) TMI 1874X X X X Extracts X X X X X X X X Extracts X X X X ..... and R15 have not filed the copy of the transfer deed and share certificates or the copy of the resolution passed in accordance with clause 14 of the AOA before the Tribunal to show that the shares were transferred according to the provisions of the AOA and Act. It is a fact that the original share certificates are with the petitioners and the same was produced before this Tribunal by the petitioners. Therefore, there are no hesitation to say that the petitioners have not executed any transfer deeds to R14 and R15 and Petitioner's remained as shareholders of the R1 Company. The deletion of names of Petitioner's from the Register of members is illegal, null and void - the issue is answered in favour of Petitioners. Appointment of directors - HELD THAT:- It is a fact that the board of the directors can appoint additional directors. However, their directorship should be confirmed in the next AGM. It is held that the petitioners are only the shareholders, in case, the appointment of directors and their confirmation is brought before the AGM that comprise of the Petitioner's, there was likely hood of rejecting the same by the petitioners. It is also on record that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and consequently declare the said allotments null and void. b) Pass on order declaring the appointment of directors on the board on 01.03.2012 and on 23.10.2012 as null and void being oppressive and act of mismanagement. c) Pass an order declaring transfer of equity shares held by petitioners in favor of respondent No. 14 and 15 on 20.11.2011 being contrary to provisions of act, fraudulent, oppressive, manipulative as null and void and consequently directions be issued to rectify the register of members to incorporate names of petitioners by deleting the name of Respondent No. 14 and 15. d) Pass on order to declare null and void all the resolutions passed by board or members of respondent No. 1 company against the interest of petitioners being harsh, burdensome, prejudicial and oppressive. e) Pass on order directing to hold extra ordinary general body meeting to appoint board of directors by superseding the present board members. f) Pass an order directing to hold pending annual general meetings after causing completion of financials and audit thereof. g) Injunction restraining the respondents from altering or changing in any manner the shareholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector on 15.10.2009 and he had continued up to 07.07.2010. Being the director of the company he has filed the Annual Return for the year ended 31.03.2010. Knowing fully well the asset base of the company, the 2nd Respondent approached the petitioner to purchase the entire shareholding and on agreed terms the petitioners agreed to sell their 100% shareholding in the company for a sum or ₹ 24 crores and an amount of ₹ 1,08,98,000/- was paid as Earnest Money Deposit (EMD) through bank. The board of the Company was also reconstituted and R2 and R6 were appointed as directors of the Company on 23.06.2011 and the petitioners vacated the directorship on 22.11.2011. The control of the company was handed over to the R2 and R11, however, the equity shares were continued with the petitioners. In order to get control over the board of directors of the Company, the R2 fraudulently transferred the shares of the petitioners to R14 and R15 on 20.11.2011, appointed the R3 as additional director of the company on 01.03.2012, appointed 12 directors on 23.10.2012 issued 39,800 shares to himself on 25.10.2012 without any justification of requirement of funds to the company, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the 1st defendant company, and (iii) A permanent injunction restraining the defendants 2 to 13 from associating or identifying themselves with the 1st defendant either as shareholders or directors of the 1st defendant company or grant such other relief as it deems fit and proper in the circumstances of the case; (iv) To grant any relief or reliefs' as this Hon'ble Court deems fit and proper, in the circumstances of the case, in the interest of justice. All the Respondents were set ex-parte in the said civil suit and the civil court framed the issues. The petitioners have also filed their evidences by way of affidavit in the said suit. Before the appointment of R2 as director, the property of the Company was charged to Punjab National Bank as collateral security by way of conveyance deed in favour of the Company, however, the same was cancelled by the petitioners. The R1 company is disputing the same before DRT Hyderabad, therefore, the matter is sub-judice. The Companies Act, 2013 was notified with effect from 29.08.2013 and the provisions of section 430 and 434 of the Act, 2013 were notified w.e.f. 01.06.2016. Section 430 envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.V.S. Sarma, Reddi Subrahmanyam and Syed Rafeuddin were accepted and it was duly informed to the ROC. The Company had also issued share certificate No. 007 to the R14 for the 10,100 shares and certificate No. 018 to R15 for 100 shares. The Company has rejected the requisition under section 169 of the Act, 1956 of the petitioners by virtue of transfer of shares in the board meeting held on 22.11.2011 and the entire sale consideration was paid to the petitioners which is evident from the letter dated 17.09.2012 issued by R14 to the petitioners. Subsequently the Company allotted the balance shares of 39,800 to the R2 and thereafter increased the authorized capital from ₹ 5,00,000/- to ₹ 30,00,000/- and allotted 2,50,000 equity shares of ₹ 10/- each amounting to ₹ 25,00,000/- to the R2 on 24.10.2012. The petitioners fraudulently cancelled the Deed of Relinquishment dated 03.12.2011 by way of Deed of Cancellation dated 26.06.2013 by impersonating the Company to mala fidely give the impression that Mr. P.V.S. Sarma is authorized to represent the Company. Upon came to knowledge of cancellation deed, the Company has filed a complaint wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the petitioners. In the absence of any documentary proof for the shareholding it would be only presumed that it is not the case of the petitioner that they were not issued with share certificate. The petitioners failed not only to prove their claim of shareholding but also their locus to file the petition. Their claim of shareholder has not been substantiated by material facts or papers. The petitioners also failed miserably to explain the delay in filing the present petition. It is the case of the petitioner that they have entered into an arrangement for sale of their entire shareholding in the year 2008 and they have received only the EMD of ₹ 1,08,98,000/- in the year 2010, therefore the petitioners are bound to file the present application in the year 2013 as per the provision of section 113 of the Limitation Act, whereas they have filed the present petition in the year 2018 after lapse of 6 years, hence, the petition is barred by limitation. It is not true that they arrangement was for ₹ 24 cores for the entire shares whereas it is only ₹ 1,08,98,000/- for the entire shares which was duly paid through RTGS and it is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (2) of the Act, 2013. The petition is signed by P.V.S. Sarma who is a habitual offender and number of criminal cases are pending against him. He has in collusion with officials of Registration Department indulged into serious frauds creating illegal registrations with respect of government lands and the concerned departments recommended for further necessary action against him and the officials of the registration department. A PIL has also been filed against him and it is being investigated by the Central Bureau of Investigation and the case is pending before the Hon'ble High Court. Shri. P. V. S. Sarma has also filed a WP in 6523 of 2014 against PNB for the action taken under SARFEASI Act in respect of property admeasuring 48 guntas and the Hon'ble High Court directed them to file appeal before DRT. A Securitization Appeal No. 409 of 2014 was also filed before DRT against the action of SARFAESI Act and the same was dismissed for non-prosecution and no appeal is filed against the said order. 5. The learned Counsel for the Respondent 1 and 2 while reiterating the averments made in the counter statement submitted that the petitioners have no locu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivate Limited - wherein it is held that the motive of the first petition was to bring pressure on respondent No. 2 to transfer his building to petitioner no. 1. It is an established legal position that, when a petition under sections 397 and 398 is filed with a view to achieve some ulterior objective/collateral purpose, such a petition should not be encouraged. (2000) 23 SCL 164 (CLB New Delhi) - in the matter of Ramesh Bhajanlal Thakur Vs. Sea Side Hotel Private Limited wherein it is held that the settle principle of law in proceedings under section 397 and 398 of the Act, is that the relief sought should be put an end to the acts of oppression/mismanagement and no for any oblique purpose. (1991) 70 Comp Case 211 (Kar) - In the matter of Srikanta Datta Narasimharaja Wadiyar Vs. Sri Venkateswara Real Estate Enterprises Private Limited - wherein it is held that it is well settled that the relief under section 397 and 398 of the Act is an equitable relief which is entirely left to the discretion of the company court and therefore discretionary character of the court's jurisdiction, the requirement of good faith on the part of the petitioner is necessary. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition. 7. The R3 to R6, R10, R11, R13 to R15 have filed a memo dated 10.12.2018 adopting the counter filed by the R1 and R2. 8. The petitioners filed rejoinder and in the rejoinder inter-alia submitted that: As on date of filing of the petition as per the record available with ROC, the Annual Return for the year 2010 alone was available and according to the said Annual Return the petitioners alone are the shareholders of the Company. After passing the interim directions on 17.05.2018, the R2 has filed forged, fabricated and ante dated annual returns and audited balance sheets for the financial years ending 31.03.2012 to 31.03.2017 with ROC on 18.05.2018 by concealing annual return and audited balance sheet for the year ended 31.03.2011. As per the annual returns the R14 and R15 claimed to be the members of the Company as at 29.09.2012 whereas admittedly as 17.09.2012 no transfer deed was executed by the petitioners and the R14 and R15 only requested the petitioners to execute the transfer deed only vide their letter dated 17.09.2012. As per directions of the Tribunal the original share certificates were produced before the Tribunal on 18.05.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized capital and the allotment of further shares to the R2 per se illegal. The allotment was not made on 24.10.2012, whereas it was made on 24.11.2012, which is evident from Form No. 2 filed with ROC. The issues raised in respect of Deed of Cancellation and issues with regard to the landed property of the Company before the Civil Court and the matter pending before the Hon'ble High Court in respect of batch matters pertaining to the property of the company is non germane to the issue raised in the instant petition. The Respondents by referring non germane issues are attempting to divert attention of the Tribunal from the oppressive and prejudicial acts committed by the Respondents in the management and affairs of the Company. The respondents for their collateral purposes leveled false and frivolous allegations against Mr. P.V.S. Sarma which no connection to the issues raised in the petition. 9. The learned Counsel for the petitioners while reiterating the averments made in the petition as well as in the rejoinder submitted that the petitioner have not executed any share transfer deeds transferring their entire shares to the R14 and R15 and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Mitra Vs. Steam Laundry Private Limited wherein it is held that in light of the discussion above, I come to the. irrefutable conclusion that including in section 434(1)(c) is extensive and expansive and not restrictive in nature. Ergo, Section 434(1)(c) of the 2013 Act that states all proceedings under the companies Act, 2013 including proceedings relating to.... Would include all matters, without any exception, pending before the District Court and High Court and all such matters would have to be transferred to the NCLT. (2202) Vol. 109 CC 732 - In the matter of Deepak C. Shriram Vs. General Sales Limited - wherein it is held that if the effect of the single act has permanent or continuous effect and it is alleged to be an act of oppression then the same can be agitated in a proceeding under section 397. (2015 SCC Online CLB 91) - In the matter of Narrotam Singh Vs. Notam India Private Limited wherein it is held that it is need not to be reiterated here that a civil court adjudicates the validity of an acat on the anvil of legality of an act, but whereas the process of adjudication under section 397 and 398 of the Act is different, it will perceive the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther vs. Fine Core Cables Private Limited and another - wherein it is held that all resolutions passed in suppression of notices are null and void. (2005) (1) SCC 212 - in the matter of Dale Carrington Investment Private Limited vs. P.K. Prathapan wherein it is held that......the test to be applied in such cases, which requires the court to examine as to whether the shares were issued bona fide and for the benefit of the company, would import such consideration in case of private limited companies under the India law, Existence of right to issue shares to one director may technically be there, but the question whether the right has been exercised bona fide and in the interest of the company has to be considered in the fact of each case and it is found that it is not so such allotment is liable to set side. (1974) AC 821 - in the matter of Howard Smith Limited Vas Ampol Petroleum Limited and others (Privy Council) wherein it is held that their Lordships therefore agree entirely with the conclusion of Street J that the power to issue and allot shares was improperly exercised by the issued of shares to Howard Smith. It was not disputed that an action to set aside the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase of capital and allotment of shares alone. 14. With regard to issue of limitation, it is on record that the petitioners have issued the requisition under 169 of the Act, 1956 to the Company on 15.09.2012 and upon the rejection of the requisition of the petitioners by the Company vide its letter dated 28.09.2012, the petitioners have filed a civil suit in OS No. 183 of 2013 before Civil Court and it is on record that the Civil Court returned the plaint stating lack of jurisdiction in view of the amendments to the Companies Act and the final order was passed on 27.11.2017. Since this petition is filed in the year 2018, the petition is not barred by limitation. Therefore, the issue (1) is answered in favour of Petitioners. 15. With regard to the issue of transfer of shares, it is on record that one Mr. Y. V. Prasad (P2) and M/s. Gold Stone Exports Private Limited were the subscribers to the memorandum of association. It is also on record that M/s. Gold Stone Exports Private Limited had transferred its entire share capital including the shares allotted after incorporation to the PI on 13.11.2007 and the copies of share certificates were filed before this Tribunal. (Page N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal to show that the shares were transferred according to the provisions of the AOA and Act. It is a fact that the original share certificates are with the petitioners and the same was produced before this Tribunal by the petitioners. Therefore, I have no hesitation to say that the petitioners have not executed any transfer deeds to R14 and R15 and Petitioner's remained as shareholders of the R1 Company. The deletion of names of Petitioner's from the Register of members is illegal, null and void. Therefore, the issue (2) is answered in favour of Petitioners. 16. With regard to the issue of appointment of directors, it is a fact that the board of the directors can appoint additional directors. However, their directorship should be confirmed in the next AGM. It is held that the petitioners are only the shareholders, in case, the appointment of directors and their confirmation is brought before the AGM that comprise of the Petitioner's, there was likely hood of rejecting the same by the petitioners. It is also on record that the balance sheet and the annual Return except for the year 2011 were filed in the year 2018 and therefore it creates a suspicion as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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