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TMI Blog2024 (4) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... g, pledging, encumbering, alienating or creating third party rights in respect of Astha City Centre i.e. the sole asset of Respondent No. 1 Company (Rancy Construction Pvt. Ltd.), imposing Rs 5 lacs cost penalty upon Respondent No. 2 and 3 therein who were responsible for execution of the illegal lease deed and passing of the board resolution in contravention to the provisions of the Companies Act, 2013 (in short 'Act') and recommending to the Company that it may proceed as per law against Respondent No. 2 and 3 therein in their personal capacity for recovery of any loss sustained by the company due to unlawful exercise of their powers as the directors. 2. In brief, Rancy Construction Pvt. Ltd. (Respondent No. 1) was incorporated on 31.10.2005 and is engaged in the business of real estate development. 3. Ajay Kumar Agrawal (Appellant No. 1) and Sunil Kumar Agrawal (Appellant No. 2) collectively hold 26.34% shares of Respondent No. 1 while Respondent No. 5 to 19 (Pvt. Ltd. Companies) collectively hold 73.66% shares of Respondent No. 1. Respondent No. 1 owns a developed commercial mall in Agra comprising 39,112 sq. meters area called 'Astha City Centre' at a construction cost of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal. Respondent No. 5 to 19 (holding 73.66% of the paid up share capital of R1) felt aggrieved of the illegally executed lease deed, the terms of which are stated to be unconscionable, filed a petition (CP NO. 170/241-242/2019) under Section 241 and 242 of the Act r/w Rule 4 of the NCLT Rules, 2013 (in short 'Rules') before the Tribunal seeking relief against the illegal and oppressive act of the Appellants. 8. In the aforesaid petition, the order of stay was passed on 20.12.2019 which is reproduced as under :- "Ld. Counsel for the Petitioner has drawn attention to this bench to the covenants of the lease deed dated 26.08.2019 which he alleges are harsh. Reliance is placed on certain observations of the civil court at Agra. Keeping in view, the submissions made and the terms and conditions which provide that the during the term of the lease, which is for 29 years, the lessee shall be entitled to sublease, assign or transfer rights in the lease hold property of the respondent company without any written consent of the lessor. We find the said terms are not only harsh and oppressive but also detrimental to the interest of the petitioner. The same being against the general terms an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther deem it just and impose upon the Responsible Directors i.e. R2 and R3 (who are now ex-Directors) who were responsible for the execution of the alleged illegal deed and passing of the Board Resolution in contravention to the provisions of the Act, to a penalty of Rs 5,00,000 each. 12. Hence, we SET ASIDE the Lease deed dated 26.08.2019 and direct the concerned sub-registrar in Agra to cancel the purported registered deed dated 26.08.2019. Also, we restrain the Respondents from transferring, pledging, encumbering, alienating or creating third party rights in respect of the "Astha City Centre" i.e. the Sole Asset of the Respondent 1. " 11. Assailing the validity of the impugned order, Counsel for the Appellant has submitted that the Tribunal has contravened the doctrine of res sub-judice by setting aside the lease deed while the issue of validity of lease deed is pending adjudication before the Civil Court. In this regard, it is submitted that that the Appellant No. 3 (lessee) had filed a Civil Suit in the Court of Civil Judge (Sr. Division) Agra being CS (OS) No. 1338 of 2019 on 03.10.2019 seeking permanent injunction against Respondent No. 1 (lessor). It is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty i.e. R1 is restricted from transferring or disposing off the property without permission of the purported lessee i.e. (R4) for the entire term, i.e. 29 years, the purported lessee i.e. Appellant No. 3 is permitted without any approval from R1, to sub-lease, assign, transfer or dispose off his purported lease hold rights in the property, create tenancy of third party rights, create mortgage, charge, lien or any other encumbrance in favour of any financial institution, Respondent No. 1 cannot terminate the lease deed even if the purported lessee (Appellant No. 3) does not pay rent". It is also submitted that the lease has been executed at a meager amount of Rs. 20 lakh per annum, though it can fetch the rent between Rs. 4 to 5 Cr. per annum as the total cost of construction of the mall is more than Rs. 50 Cr.. It is also submitted that the lease deed is a related party transaction which is inviolation of the provisions of the Act. It is argued that the Appellants have deliberately not made Rohit Agarwal and Shobhit Agarwal as parties to the present appeal even though they were respondents in the main petition in order to mischievously conceal the fact that Shobhit Agarwal who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the members of R1. It is further submitted that the alleged civil suit is only for the purpose of protecting possession as it has been filed for seeking permanent injunction and no declaration of the ownership has been sought whereas in the present case the lease deed which is affecting the ownership rights of R1 has been determined by the Tribunal, therefore, both the cases are not alike. In the end, it is submitted that the Tribunal has rightly decided the main petition i.e. CP No. 170 of 2019 ignoring CP No. 175 of 2019 because CP No. 170 of 2019 is regarding the execution of the illegal lease deed which is against the interest of the company and has been executed in violation of the Act and AoA whereas the CP No. 175 of 2019 has been filed by the Appellants for seeking to set aside certain actions, the board decision and shareholder decision, inter alia, including a minor increase in the share capital of R1, removal of Appellants No. 1 and 2 from the board etc. therefore, the subject matter of the two company petitions were totally different and are dealing with difference causes of action. 13. Counsel for Respondent No. 5 to 19 has supported the case of Respondent No. 1 to 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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