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TMI Blog2017 (4) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to respondents 2 and 6. Value fixed in the MOU is face value of shares. It is not the case of the parties to the MOU that it has been completely acted upon. On the ground that respondent 6 and Mrs. Monika Ruchandani transfer or agree to transfer their shares it cannot be said the petitioner has to follow the same course of action - Finding of the Tribunal is that there are acts of oppression and mismanagement by the respondents 2 to 5 on the petitioner's group who are minority shareholders of the first respondent company and on the petitioner who is director of the company. Section 402 gives power to this Tribunal to pass such orders or directions. In the case on hand, there is finding of oppression and mismanagement. Petitioner himself came forward to sell out his shares for a value determined by the independent valuer. Petitioner's group and respondents are members of the same family and it is their family owned Company. There exists dispute between petitioner's group and respondents' group since death of Bhagwandas Ruchandani and at one point of time it was sought to be resolved by entering into MOU which was not implemented. Therefore, function of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radhakishan B. Ruchandani - HUF and Vandana Radhakishan Ruchandani are holding 500, 500, 500 and 1000 shares respectively which constitute 16.66% of the paid up share capital of the first respondent company also gave consent to the petitioner to file this petition. 4. Respondents 2 to 8 are holding 2125, 500, 500, 500, 2125, 1000 and 500 equity shares each of the first respondent company. Total shareholding of respondents 2 to 8 is 7250 shares. 5. Petitioner along with respondents 2 and 6 jointly incorporated the first respondent company as a family business company. 6. Shri Bhagwandas Ruchandani, father of petitioners 2 and 6 died in the year 2000. After the death of Bhagwandas Ruchandani, difference of opinion arose among the directors and shareholders of the first respondent company. Initially, management of first respondent company was in the hands of petitioner. Thereafter, from the year 2006, petitioner has been thrown out of the first respondent company and denied all benefits as shareholder and even as director. After continuous efforts made by the petitioner for a settlement, in the year 2010, there was an understanding among the petitioner and respondent 2 and 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t implementing memorandum of understanding of the family settlement and shifting the registered office of the first respondent company without following the procedures are acts of oppression and mismanagement. 13. Respondents on 23.04.2012 gave reply to letter dated 19.04.2012 written by the petitioner. It is pleaded by the petitioner that, nowhere in the family understanding it was decided that the petitioner has to resign or go out of the company but the respondents are advising petitioner to resign from the company as per family understanding. Further, respondents falsely stated that records prior to 01.04.2009 are with the petitioner. 14. On 03.04.2012, when petitioner visited the company for verification of records, respondents forcibly threw out the petitioner. According to petitioner, the respondents were not even ready to convene Board Meeting. 15. In reply to letter of the petitioner dated 25.04.2012, respondents wrote letter dated 27.04.2012 stating that DIN-2 filed by the petitioner is not proper. Respondents did not chose to send a single document as requested by the petitioner. 16. On 28.04.2012, at 12.00 noon, Board Meeting of the first respondent company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents who ever offer more price shall be allowed to purchase other's shares. 20. Declare appointment of Respondents 3 and 4 as directors is invalid. 21. Respondent 2 filed reply affidavit on behalf of respondents 1 and 2. It is the case of the respondents that, as per the family arrangement, petitioner group is bound to deposit and transfer their shares held by them in the first respondent company but petitioner has neither resigned from the directorship nor has he transferred shareholding to respondent 2 and thereby committed breach of condition of family arrangement. In terms of family arrangements, respondent 6 transferred 2000 equity shares of ₹ 100/- each of the first respondent company to respondent No. 4, 125 equity shares in favour of respondent 2 for total consideration of ₹ 02,12,500/- on 9th February, 2012 and the same has been registered in the records of the company on 15th March, 2012, vide annexure R-1 to the reply. 22. As per the family arrangement, Mrs. Monika A. Ruchandani, wife of deceased Arjun B. Ruchandani who is a promoter director of first respondent company and, brother of petitioner and respondent 2 vide letter dated 01.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tings, filing of income tax returns etc. of the first respondent company till 2008-09. 29. On 31.12.2001, Mr. Bhagwandas Ruchandani, father of petitioner and respondent No. 2 died. As per will executed by Mr. Bhagwandas Ruchandani his 1000 equity shares were transferred on 24.04.2002 to his four sons including the petitioner, respondent 2, 6 late Mr. Arjun B. Ruchandani. 30. According to respondents, on 03.01.2003 respondent 6 was inducted as director in the company. 31. First respondent company had two business activities viz. saree business and dress material business. Respondent 2 used to look after saree business and petitioner used to look after dress material business. Account of the first respondent company is with Surat Nagarik Sahakari Bank Ltd. and was mainly operated by the petitioner in connection with dress material business. In the year 2005-06 and 2008-09 the petitioner withdrew ₹ 15,31,176/- from the bank accounts with Surat Nagarik Sahakari Bank Ltd. which amount was in respect of dress material business of first respondent company. 32. In 2009-10, respondent 2 took factual control of the first respondent company. There was a family agreement/un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36. On 03.04.2012, petitioner came for inspection of records where all records were placed before the petitioner. Instead of taking inspection, created nuisance in loud noise which resulted in disruption in business activities of the company. 37. On 10.05.2012 first respondent company wrote another letter to the petitioner pointing out various misdeeds, irregularities etc. committed by the petitioner. Respondents have not received any reply from the petitioner. 38. Respondent 2 wrote another letter dated 15.05.2012 asking the petitioner to resign as director and to transfer his shares as per the family arrangement. That letter was served on the petitioner on 15.05.2012. But respondents have not received any reply from the petitioner. Respondents have also stated that the petitioner has approached this Tribunal with uncleaned hands and suppressing material facts. 39. In the rejoinder to the petition, petitioner has stated that no notice of the Board Meetings where transfer of shares was approved, was given to the petitioner. Petitioner was forced to do business at his own cost and he was not allowed to take part in the business of the first respondent company. Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period 2006-07 is attached as annexure G. and Balance sheet of first respondent company as at 31.03.2007 is attached annexure H . Copy of balance sheet as on 31.03.2008 shows no liability towards Mr. Harish R. Ruchandani. (c) Amount transferred from company to Deepak R. Ruchandani - another son of petitioner During financial year 2005-06 and 2006-07 opening balance and closing balance gets tallied. Ledger account of the first respondent company in the books of accounts of Deepak R. Ruchandani is attached as annexure J . (d) Amount transferred from company to Radhakishan Ruchandani (HUF) During financial year 2007-08, a sum of ₹ 3,00,000/- was paid towards repayment of loan as reflected in balance sheet as on 31.03.2008 with previous year's figures. Loan amount reduced by ₹ 3.00 lacs paid during the year. So withdrawal is as per books of accounts signed by respondent 2 and 6. Balance sheet of R-1 company as on 31.03.2008 is annexure I . (c) Amount transferred from company to Radhakishan Ruchandani (Personal account of petitioner) During financial year 2005-06, ledger of first respondent company in the books of accounts of petitioner all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner agree to give his shares to wife of late Bharat B. Ruchandani if all respondents agree and this Tribunal agree. 46. Respondents 1 and 6 filed additional affidavit dated 24th July, 2013 stating that respondents have supplied minutes of general meeting dated 01.04.2009 and minutes of Board Meeting dated 01.04.2009. It is mentioned in the additional affidavit that, Board Meeting was held on 28th April, 2012 but respondents could not give proof of dispatch of the notice to the petitioner by Registered Post A.D. along with reply. 47. Respondent 2 also filed another affidavit by filing original memorandum of understanding and translated copy of it on 18.10.2012. 48. On the basis of pleadings and contentions, the following points emerge for consideration. (a) Whether affairs of the first respondent company have been conducted in a manner prejudicial to public interest or prejudicial to the petitioner group members or in a manner prejudicial to the interest of the company? (b) Whether any material change which is not in the interest of the company or creditors or shareholders or debenture holders have taken place in the management or in the control of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed that direction may be given to respondent 1 to 5 to implement the MOU which they have agreed to implement in their affidavit dated 22.09.2012. In the said application, the petitioner has stated that, he being a senior citizen and not keeping good health, in principle, he is ready to consider their Affidavit dated 22.09.2012 subject to conditions stated in the MOU to be fulfilled by the respondents. 51. Now, it is necessary to refer to the contents of the MOU dated 10.07.2012 to the extent they are relevant and pertinent to the first respondent company before adjudicating the real issues involved in this petition. 52. In the MOU, condition No. 3 reads as follows: Beeceelene Textile Mills Pvt. Ltd. firm will be continued. And cost of share certificates at the rate of ₹ 100/- for each should be paid by Pitambarbhai to other brothers and cash should be received against it. And it will be done as informed by the Bariya Saheb. 53. The facts narrated above clearly discuss that, both the parties were not serious in implementation of the contents of MOU dated 10.07.2012. Petitioner is alleging that, respondents are not coming forward to implement the terms and cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the petition that he has been continuously pursuing the matter with the respondents that resulted into MOU in 2010. In fact, it is also stated by the petitioner that he called the Board Meeting on 28.04.2012 wherein respondents 2 and 6 were present. Therefore, to say that respondents are responsible for non-filing of records with the Registrar of Companies for the years 2005-06 to 2008-09 is not correct. Respondents filing the records for the aforesaid years at a time in the year 2011 is justifiable and it cannot be treated as an act of mismanagement especially when there are disputes between shareholders after the death of Bhagwandas Ruchandani, father of the petitioner and respondents 2 and 6 who died in the year 2000. 57. The second act of oppression alleged by the petitioner is that he was denied access to the statutory records of the first respondent company and no replies were given to the petitioner to his letters. But the material on record clearly goes to show that there are replies from the respondents for all the letters written by petitioner. In fact, material on record disclose that petitioner was allowed to have inspection of the records of the first respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a special meeting of majority group of shareholders was held on 13.12.2011. A perusal of Ex. R-10 attached to reply show that nine members holding total 10,375 shares attended the meeting. Second respondent chaired this meeting. In the said meeting it was resolved that, Oriental Bank of Commerce, Jash Market Branch, Ring Road, Surat be asked to allow operation in the account of the company with the bank bearing account No. 01021010012300. According to the respondents, the said meeting was held to overcome the situation of freezing of the bank account of the first respondent company with Oriental Bank of Commerce on the basis of the false Board Resolution given by the petitioner. According to the petitioner he called a Board Meeting on 09.12.2011 where respondents 2 and 6 were also present and there was a serious dispute amongst themselves regarding business of the first respondent company. Then petitioner wrote a letter dated 09.02.2011 to Oriental Bank of Commerce, Jash Market Branch, Ring Road, Surat asking the said bank to freeze bank account of the first respondent company attaching the resolution passed in the Board meeting dated 09.12.2011. In response to the said letter, Ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermission of Chair. 64. In the said notice there is no mention about the proposed business viz. appointment of Amit Pitamberdas Ruchandani (R-3) and Jitesh Pitamberdas Ruchandani (R-4) as directors of the company. But a perusal of the resolution passed in the Board of Directors meeting dated 28.04.2012 show that the meeting was chaired by the second respondent and petitioner also attended the said meeting. In fact, petitioner admitted that he has attended the said meeting. It is the case of the petitioner that, son of the petitioner was not allowed to attend the said meeting but son of the second respondent who is third respondent, remained present in the meeting. It is also the case of the petitioner that, Smt. Radhaben Ruchandani wife of late Bharat Ruchandani was not allowed to enter into the office. It is also the case of the petitioner that, Mr. Kanaiyalal Ruchandani, respondent 6 was absent in the said meeting. According to the petitioner, meeting was concluded without any conclusion but the second respondent fabricated the resolution and filed form 32 with the Registrar of Companies regarding appointment of respondents 3 and 4 as directors which is not even the subject m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering into MOU regarding its implementation, regarding furnishing information etc. Ultimately, this petition was filed by the petitioners on 30.05.2012. Therefore, it cannot be said that there is any delay or inaction on the part of the petitioner in filing this petition. 67. Respondents alleged that petitioner suppressed material facts. In support of the said contention, respondents relied upon decisions in Bhaskar Laxman Jadhav and Ors v. Karamveer Kakasaheb Wagh Education Society and Ors. Reported in AIR 2013 SC 523 In that decision it is held that, it is not for a litigant to decide what fact is material for adjudicating a case and what is not material and it is not for the court to look into every word of the pleadings, documents and annexures to fish out a fact. In the case on hand no material fact as such has been suppressed by the petitioner. There is no dispute about the finding of Hon'ble Supreme Court in the above decision. Learned counsel for the respondents relied upon decisions in Sunilbhai Rambhai Patel v. Arvind Automobiles P. Ltd. and others reported in 2016 130 CLA 232. In that case it is held that, if a party approaches court for redressal of grievances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a question of fact and, therefore, whether an act is oppressive or not is fundamentally/basically a question of fact. 70. Therefore, aforesaid acts of the respondents, certainly amounts to oppression and mismanagement and it is just and equitable to order winding up of the first respondent company but is not in the interest of the shareholders and the company to pass an order of winding up of the first respondent company. 71. In this context, it is necessary to refer to the main relief prayed by the petitioner in the petition. Main relief prayed by the petitioner is to fix fair market value of the shares of the first respondent company and upon fixing the fair market value of the shares, either the petitioner or the respondents buy or sell their shares to the other party. 72. Even as per the MOU, petitioner has agreed to sell his shares to respondents 2 and 6. Value fixed in the MOU is face value of shares. It is not the case of the parties to the MOU that it has been completely acted upon. On the ground that respondent 6 and Mrs. Monika Ruchandani transfer or agree to transfer their shares it cannot be said the petitioner has to follow the same course of action. 73. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter value is determined by the valuer. 76. Learned counsel for the petitioner also relied upon another decision in Dev Bhushan Nohria v. Kinematics Marketing (P) Ltd. and others, reported in (2012) 111 CLA 285 (CLB), contended that even if no allegation of oppression and mismanagement has been proved, the Company Law Board has power to do substantial justice. 77. Learned counsel for the petitioner relying upon another decision in Namtech Consultants (P) Ltd. and another v. Ge Thermometries India (P) Ltd. and others, reported in (2008) 89 CLA 169 (Kar), contended that when both the groups have ability to manage the company, outgoing group should be adequately compensated by paying a competitive price which will be higher than the price determined by independent Chartered Accountant and also higher than the price at which rival group is prepared to buy the shares. 78. In view of the above said discussion and in view of the fact that the petitioner and respondents belong to same family, instead of straight away appointing an independent valuer to assess the value of shares, it is just and expedient to direct the petitioner and respondents 2 to 5 to come to an understanding re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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