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TMI Blog2021 (1) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1- company, pending adjudication of the present application ; to make interim arrangement qua prayers made in the main petition as well as in IA to ensure managing the affairs of respondent No. 1-company ; to order not to give effect to the decisions taken in board meeting dated November 19, 2019 and give effect to circular resolution dated November 6, 2019 for signature of all four directors in all bank accounts. In the alternative, it is prayed to appoint any independent person as an interim chairman of respondent No. 1-company with powers to approve making payments/withdrawal from account of respondent No. 1-company. 2. In this application the petitioners are primarily alleging that customers of respondent No. 1-company are misled not to deposit the outstanding amounts into the account of respondent No. 1 maintained with the Punjab National Bank (PNB), Wardha, rather the customers are encouraged to deposit the same into the bank account maintained at Hyderabad so that it can be misused. Secondly, the account of respondent No. 1 maintained with Punjab National Bank, Wardha, was sought to be closed and the petitioners have obtained order from the Civil Judge, Junior Division, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 (annexure C) that pending dispute between the parties no payment will be tendered (paragraph 19). Petitioner No. 1 sent a legal notice dated October 20, 2020 (annexure D) not to release outstanding of respondent No. 1 as desired by respondent No. 2. Said notice sent communication dated November 2, 2020 (annexure E) by which he was not ready to cooperate (paragraph 20). 9. Copies of communications sent by the respondent to debtors asking to make payment in Hyderabad account are annexed at annexure F. Despite such communications notices/customers continue to release the outstanding amount into Hyderabad account of the company (paragraph 21). 10. It is alleged that resolution in board meeting dated September 12, 2020 (annexure G) was mischievously placed and the Tribunal stayed the same (paragraph 22). 11. It is submitted that circular resolution dated November 6, 2019 (annexure I) was passed for operating accounts with signatures of four directors of the company for any banking transaction of more than Rs. 1,000. However, on November 19, 2019 the respondents held board meeting where resolution dated November 6, 2019 was reversed authorizing two directors for banking operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make payment (paragraph 9). 16. It is alleged that applicant No. 1 instead of making payment to statutory authorities and royalty to ICAR-IISS, has illegally transferred an amount of Rs. 3.28 crores to his own associates in October, 2019. From April 1, 2019 to October 31, 2019 respondent No. 1 has received around Rs. 14.65 crores into back account of Wardha Branch. Applicant No. 1, operating the bank account solely has diverted huge amounts unto himself and his group. Respondent No. 1/company has received various amounts on various dates, most of which relate to prior to filing of the present petition. The applicants are quoting false dates to make out a cause of action (paragraph 10). 17. It is averred that though applicant No. 1 has filed Regular Civil Suit No. 117 of 2020 before the learned Civil Judge, Senior Division, Wardha, he could not get any interim relief therein. The learned judge however, directed maintenance of status quo. Even before this Tribunal the applicants filed I. A. No. 664 of 2020, but could not get any relief. The present IA is filed with identical reliefs. Thus, the applicants are not only acting against the interest of respondent No. 1/company but are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported sale turnover of the company on the dates mentioned. The company sent e-mail dated July 13, 2020 (annexure 5) to GST authorities to ascertain about GST returns. Up to December, 2019 GST returns were filed from Wardha. From January, 2020 returns are being filed from Hyderabad office by respondents Nos. 2 to 4. The respondents, in Hyderabad office, filed returns without verifying from Wardha Office. As a result it did not contain certain entries. Vide letter dated September 3, 2020 petitioner No. 1 had volunteered that respondent No. 2 may share the working prepared for returns so that the applicant can trace unreported entries and returns can be filed properly. 4. Selling away fixed assets, tools and dyes : Statement attached to e-mail dated October 1, 2020 (annexure 2) discloses the applicant has sold away critical dyes and capital moulds worth Rs. 36,48,000 without approval of board of directors. The company wrote letter dated October 22, 2020 about unreported sales and about legal cost of Rs. 89.32 lakhs incurred without authority. Petitioner No. 1 dismisses the allegations as false. He enclosed letter dated October 24, 2020 (annexure A) addressed by him to the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in paragraphs 3, 4, 5 and 6. 22. It is submitted that this Tribunal vide order dated September 23, 2020 in C. P. No. 203/241/HDB/ 2020 has granted status quo ante as regards composition of the board of directors as existed prior to board meeting dated September 12, 2020. Said order has been upheld by the hon'ble National Company Law Appellate Tribunal in an appeal filed by respondent No. 2 (paragraph 7). 23. It is averred in paragraphs 8 to 10 that having received statement from Karnataka Bank it is learnt that respondents Nos. 2 to 4 were siphoning off large amounts of money from respondent No. 1/company to the tune of Rs. 3,88,07,500 for the periods April 1, 2019 to October 26, 2020. 24. The applicant relied on decision of the hon'ble National Company Law Appellate Tribunal in Company Appeal (AT) No. 55 of 2020, in the matter of Jaideep Halwasiya v. AA Infraproperties P. Ltd. [2020] 223 Comp Cas 96 (NCLAT), to contend that the Tribunal is vested with powers under section 242(4) of the Companies Act, 2013 to grant interim relief as may be necessary for regulating the affairs of the company. Relevant observations are as under : "Existence of a prima facie case be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mail dated October 1, 2020 has admitted that he had indulged in unreported turnover to the tune of Rs. 5.11 crores. It is contended that wrong doer cannot expect any sympathy of the court. Respondent No. 2 relied on decision of the hon'ble Supreme Court in Dale and Carrington Invt. P. Ltd. v. P. K. Prathapan [2004] 122 Comp Cas 161 (SC) ; [2005] 1 SCC 212 (paragraph 10). 32. It is submitted that the transactions alleged relate to the year 2019, whereas the company petition was filed on August 7, 2020. Thus, the cause of action arose prior to filing of the company petition. The applicant cannot raise issues, which relate prior to filing of petition, as per Order 2, rule 2 of the Code of Civil Procedure, 1908. He relied on decision of the hon'ble Supreme Court in the matter of Virgo Industries (Eng.) P. Ltd. v. Venturetech Solutions P. Ltd. [2013] 1 SCC 625 (paragraph 12). 33. It is submitted that the courts will not interfere in the internal affairs of the company as long as the company functions under the articles of association. In this context respondent No. 2 relied on decision of the hon'ble Supreme Court in the matter of Rajamundry Electric Supply Corporation Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts solely and his illegalities of misusing funds led to freezing of bank account of respondent No. 1/company. Respondent No. 4 being sister of the applicant did not file complaint against his misfeasance. (ii) Applicant No. 1 addressed letters to NAFED asking them not to make payment to respondent No. 1/company. (iii) The applicants diverted company funds to their own associates. (iv) The PNB was fully aware of board resolution dated November 19, 2019 that two directors (including applicant No. 1) shall operate bank account, yet allowed applicant No. 1 to operate singly. (v) The company owes huge amounts to respondents Nos. 2 to 4, which was acknowledged by applicant No. 1. (vi) Operating account of the PNB, Wardha Branch singly applicant No. 1 has (a) siphoned off Rs. 56 crores without making royalty and statu tory dues, (b) siphoned off Rs. 3.28 crores meant for payments towards royalty to ICAR-IISS during 2016-17, (c) diverted around Rs. 6.17 crores to himself and his group companies during April 1, 2019 to October 31, 2019 by not paying royalty to ICAR-IISS. 41. Therefore, in order to avoid more diversion of funds by the applicant acting solely with the PNB, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 664 of 2020, respondent No. 3 alleges that (i) the applicants are non-co-operative, (ii) they are not providing information on operations, (iii) applicant No. 1 had operated the bank account singly, (iv) the PNB though fully aware of board resolution dated November 19, 2019 had allowed applicant No. 1 to operate singly. 49. It is stated in paragraph 18 of the written submissions that strangers are arrayed as respondent/parties without leave of the Tribunal. 50. Respondent No. 3 reiterated the fraudulent acts of applicant No. 1 in paragraphs 1 to 7 on pages 13 to 15. The deponent has also reiterated the fact about applicant No. 1 filing suit before the Civil Judge, Senior Division, Wardha, appeal before the District Judge, Wardha as stated in counter of respondent No. 2 in I. A. No. 664 of 2020. 51. In paragraphs 13 to 18, the deponent delved into the counter filed by respondent No. 2 in I. A. No. 664 of 2020 to point out the contradictions found in e-mail communications sent by applicant No. 1 on the issues of non-payment of salary to employees. 52. In paragraphs 19 to 23, pages 18 to 20 of the written submissions again the contents of the counter filed by respondent No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y had borrowed amounts from Kiah Biotech and India Agri Innovative Technologies. Applicant No. 1, being signatory to the financial statements had pleaded ignorance and levelled allegations on repayment of said amounts. Respondent No. 1/company owes huge amounts to respondents Nos. 2 to 4, some of which have been repaid. Details are furnished in paragraph 72. Hence the allegations of applicant No. 1 are false. Observations : 57. We have gone through the case record placed before us and considered the written submissions made by the applicants as well as the respondents in the matter. The applicants claimed that respondent No. 1/company is a closely held family company run by applicant No. 1 and respondents Nos. 2, 3 and 4 as directors and close family members. It is the case of the applicants that respondents Nos. 2 to 4 were siphoning off large amounts of money from respondent No. 1/company to the tune of Rs. 3,88,07,500 during the period April 1, 2019 to October 26, 2020. The applicants further alleged that respondents Nos. 2, 3 and 4 are determined to oust applicant No. 1 by various means as explained in paragraphs 3, 4, 5 and 6 of the petition. The applicants further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since more than a year. Hence it cannot be reversed. Besides, applicant No. 1 is operating the account of PNB even after the said resolution dated November 19, 2019 acting hand in glove with the bank rather than joint signatures of both the directors. He further alleged that applicant No. 1, has diverted huge amounts unto himself and his group of company by solely operating the bank account of PNB, Wardha Branch. 59. Respondents Nos. 4 and 5 have also contended that the prayers made in Regular Civil Suit No. 117 of 2020 before the learned Civil Judge, Senior Division, Wardha, were identical to the prayers made in I. A. No. 664 of 2020 and the prayers made in this IA. It is also averred that applicant No. 1 is solely operating the bank account. It is further averred that the applicants have addressed letter to creditors not to make payment into the account of respondent No. 1/company and have diverted company funds to their relatives. Respondents Nos. 4 and 5 have contended that the PNB was fully aware of the board resolution dated November 19, 2019 that two directors (including applicant No. 1) shall operate bank account, yet allowed applicant No. 1 to operate singly. Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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