Court orders transfer of shares, audit investigation, and payment to Petitioners in company dispute.

The court directed Respondents 2 to 8 to transfer specified shares to Petitioners 1 and 2 within 15 days, rectify the register of members within one month, and undergo an investigation into the company's accounts from 01.04.2015 to 31.03.2019. The Institute of Chartered Accountants of India was tasked with investigating the conduct of the company's auditor. Respondents 2 to 8 were also ordered to pay Rs. 25,000 each to the Petitioners within one month.

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Issues Involved:
1. Transfer of shares and breach of trust.
2. Non-maintenance of statutory records and meetings.
3. Settlement Agreement compliance.
4. Maintainability of the petition under Sections 241 and 244 of the Companies Act, 2013.
5. Beneficial ownership and rectification of the register of members.
6. Investigation into the accounts and affairs of the company.

Detailed Analysis:

1. Transfer of Shares and Breach of Trust:
The main issue revolves around the alleged breach of trust by Respondents 2 to 8, who failed to transfer shares to the Petitioners despite an agreement. The Petitioners had repaid a loan on behalf of these respondents, with the consideration being the transfer of shares. Despite multiple assurances and a conciliatory meeting on 12.09.2015, where the transfer was agreed upon, the shares were not transferred. The respondents handed over share certificates and transfer forms to the auditor but later denied the transfer.

2. Non-Maintenance of Statutory Records and Meetings:
The Petitioners highlighted that no Annual General Meetings or Board Meetings were conducted since 2015, and annual accounts were not finalized, violating the Companies Act. The Respondents were accused of removing the minute book from the registered office without notice to other directors.

3. Settlement Agreement Compliance:
A Settlement Agreement was entered on 09.12.2017, where Respondents 2, 4, 6, and 8 agreed to transfer 4.5% shares to the Petitioners and refund the balance amount by 31.03.2018. Despite this, the shares were not transferred, and the agreement was not honored, leading to further disputes.

4. Maintainability of the Petition under Sections 241 and 244 of the Companies Act, 2013:
The Respondents argued that the petition was not maintainable as the Petitioners did not meet the 10% shareholding threshold required under Section 244(1)(a). However, the Tribunal waived this requirement, considering the Petitioners as beneficial owners of more than 10% shares due to the payments made and the agreements recorded.

5. Beneficial Ownership and Rectification of the Register of Members:
The Tribunal recognized the Petitioners as beneficial owners of the shares, given the documented agreements and payments made. It was held that the Petitioners have the right to protect their beneficial interest in the shares even before their names are entered in the share register. The Tribunal directed the Respondents to transfer the shares and rectify the register of members.

6. Investigation into the Accounts and Affairs of the Company:
The Tribunal ordered an investigation into the accounts and affairs of the Respondent Company from 01.04.2015 to 31.03.2019 by an appointed Chartered Accountant firm. Additionally, the conduct of the Company’s auditor was to be investigated by the Institute of Chartered Accountants of India for possible collusion and falsification of records.

Order:
1. Transfer of Shares: Respondents 2 to 8 are directed to transfer specified shares to Petitioners 1 and 2 within 15 days.
2. Rectification of Register: The Respondent Company must complete the transfer and rectify the register of members within one month.
3. Investigation: An investigation into the company's accounts from 01.04.2015 to 31.03.2019 by K. Venkitachalam Aiyer & Co., Chartered Accountants, with a report due within two months.
4. Auditor Conduct: The Institute of Chartered Accountants of India to investigate the conduct of the company’s auditor for possible collusion.
5. Costs: Respondents 2 to 8 to pay Rs. 25,000 each to the Petitioners within one month.

The order will take effect once the government lifts the lockdown. The petition is disposed of as allowed.

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