TaxTMI 
TaxTMI 
2012 (4) TMI 339
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....pany Petition under Sections 397 and 398 of the Act was filed before the CLB by the respondents No. 1 and 2 namely, Mr. Sanjay Paliwal, son of Mr. B.K. Paliwal and Mr. J.K. Paliwal, father of Mr. Ajay Paliwal. The said petition was registered as Co. Pet. 78/2005. 4. Since the Paliwal family, on the date the petition was filed before the CLB was divided into two groups, the appellants' faction for convenience sake is referred to as Ajay Paliwal faction. The admitted shareholding in the appellant-Paliwal Hotel Company as on 30th September, 2004 was as under:- APPELLANTS (MR. AJAY PALIWAL) GROUP Particulars & Folio in the register of Members Father's/Husband's Name No. of Shares 1. Sh. N.K. Paliwal 205, Adishwa Aptts., 34, Feroz Shah Road Sh. D.S. Paliwal 5100 2. Smt. Kamlesh Paliwal 205, Adishwa Aptts., 34, Feroz Shah Road Sh. N.K. Paliwal 2000 3. Sh. Ram Lal Sharma Village Badkali, Distt. Muzaffarnagar 5 4. Ms. Aditi Paliwal Flat No. 18, North Wing Revera Apartments, Mall Road, New Delhi 8 5. Master Abhishek Paliwal Flat No. 18....
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....1st March, 2005, AGM dated 30th May, 2005, allegation of siphoning off funds of appellant-company, allotment of 4250 shares by the Ajay Paliwal faction on 3rd February, 2005, alleged transfer of 5000 shares by Mr. J.K. Paliwal to his son, Mr. Ajay Paliwal and removal of Mr. Sanjay Paliwal from the Board of the appellant-company. It is pertinent to mention that while it was the Ajay Paliwal faction's case that on 01st December, 2004, 550 shares had been allocated to itself and three additional Directors had been appointed from their faction, the respondents' case was that in the said Board meeting, 4800 shares were allocated to themselves and three additional Directors from their faction had been appointed. 6. The findings rendered by the CLB in the impugned order are reproduced hereinbelow:- "29. Having held that the preliminary objections are not tenable, next I come to the other allegations of the petitioners on merit. I find that the respondents have not been able to refute the same. As regards the petitioners allegation of appointment of R-4,5 and 6 as Directors on 1.12.2004 without complying with the provisions of law and whereby the respondents created a new majority of....
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.... as per provisions of Section 284 of the Act has been given. There is obvious violation of Section 284 of the Act while removing P-1. Moreover, the fact that the reason given for removal, that the P-1 had advanced a loan of Rs. 64.50 lakhs to his relatives does not find place in the notice for the AGM only establishes that it is an afterthought. As regards advancing of loan in the year 2002, as pointed out earlier by the petitioners, the advances were given with the consent of all the directors and the respondents have been consistently signing the annual accounts which reflect these loans year after year till 2003-2004. Furthermore, there is no mention of the removal of P-1 in the Directors' Report. In these circumstances it is difficult to rely on the respondents' version and accept it as true. On the other hand P-1 has established that even subsequent to the date on which he is shown to have been removed, he has issued cheques and signed on other documents as Director. 30. As regards the shareholding of the parties there are serious allegations and counter allegations. The respondents allege that P-2 had transferred 5000 shares to R-3 (his son), the transfer is valid in the e....
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....are capital which stood exhausted as on that date. Besides, the Return in Form No. 2 is patently incorrect as the date of allotment on page 39 is 1.12.2004 whereas at page 40 it is 1.9.2004, further, the number of shares allotted to Mrs. Kamlesh Paliwal as per para 14 (b) of R-3's reply does not match with this certified copy of return of allotment. Besides, the petitioners' contentions in this regard cannot be dismissed as these point out that there are discrepancies in the dates of the AGM, in the number of shares and even in respect of the so called transferees of these shares. 32. Furthermore, I find that the respondents have not been able to meet the petitioners' allegations regarding siphoning off of funds approximately to the extent of Rs. 40 lacs. The allegations have been met with bald denial with a stony silence regarding specific entries. Further, the petitioners' allegations that annual accounts, statements filed with the ROC as on 30.6.2005 do not reflect the true state of affairs are also found to be correct in view of the facts that the final accounts could not be prepared in the absence of complete account books and statutory records. Account books for the part p....
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....nbsp; Resolution given to Respondent Nos. 8,9 and 10 (Bankers) for change in authorised signatories is hereby declared null and void and status quo ante is restored. iv. Allotment of 4250 equity shares to R-3 (3000 equity shares) and R-8 (1250 equity shares) and Form No. 2 filed with the ROC in this regard are declared null and void and status quo ante is restored. v. The Annual Accounts of the R-1 company for the year ended 31st March, 2005 including the notice, Directors' Report, Compliance Certificate filed with the ROC are declared null and void. vi. The Annual Return filed with the ROC dated 30.6.2005 is hereby declared null and void. vii. The respondents are directed to restore the amounts siphoned off from the R-1 company's accounts forthwith. viii. The R-1 company is hereby directed to give consequential effects in implementing the directions contained in (i) to (vii) above forthwith." [Emphasis supplied] 7. Mr. Arun Kathpalia, learned counsel for the appellants contended that the factual findings rendered by CLB in the impugned order were contrary to record. 8. Mr. Kathpalia submitted that though there was no c....
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....ts with the ROC were fabricated. 12. Mr. Kathpalia submitted that without any pleadings, the CLB had held that the appellants had siphoned off Rs. 40.5 lacs. He also submitted that the aforesaid finding of CLB was in violation of principles of natural justice inasmuch as the allegation of siphoning off Rs. 40 lacs approximately was for the first time taken in the written submission filed by the respondents herein before CLB after the conclusion of arguments. 13. Mr. Kathpalia further contended that the CLB had erroneously set aside the allocation of 4250 shares to Mr. Ajay Paliwal and Mrs. Kamlesh Paliwal on 3rd February, 2005 on the sole ground that the authorised share capital of the appellant-company had been exhausted. 14. Though Mr. Kathpalia admitted that the removal of Mr. Sanjay Paliwal was in violation of Sections 190 and 284 of the Act, he stated that Mr. Sanjay Paliwal was removed because the loan of Rs. 64.50 lacs advanced to his in-laws family had not been returned to the appellant-company. He stated that though there was no dispute with regard to advancement of aforesaid loan, yet CLB while holding his removal to be wrongful, had not even considered it approp....
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....eing receipt no. 606762 along with the forms filed by them and the receipt attached by the appellants being no. 606762 on the certified copies of the forms filed by the appellants is the same." 19. Mr. Mehta stated that the Registrar of Companies had clarified vide its letter dated 13th October, 2009 that there was no record of any receipt No. 606762. The letter dated 13th October, 2009 of Registrar of Companies is reproduced hereinbelow:- "No.Misc/2009-10/paliwal/6913 Date 13/10/09 To, Shri Sanjay Paliwal, Paliwal Hotels (P) Ltd. 32, Ahata Aulia ji, Muzaffar Nagar, Uttar Pradesh. Sub: ROC receipt no. 606762 dated 13.12.2004 Sir, I am directed to refer to your letter dated 10.8.2009 vide which you have asked as to in which company name the receipt no. 606762 dated 13.12.2004 was issued. In this connection it is informed that it is not known that in respect of which company, the receipt no. 606762 dated 13.12.2004 was issued. However, as per records of this office relating to Paliwal Hotels (P) Ltd., it has been noticed that on 13.12.2004, two documents i.e. Form-32 and Form-2 were filed in the name of Paliwal Hotels (P) Ltd. for which an amount of R....
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....sion, there was no dispute and difference between the parties at that stage. According to Mr. Mehta, if it were to be a case of siphoning off, it is inconceivable that the appellants would have remained silent for over four years. 25. Mr. Mehta submitted that the transfer of 5000 shares by Mr. J.K. Paliwal to Mr. Ajay Paliwal was fraudulent. He pointed out inconsistencies in the share transfer form, namely, absence of Folio number, visible differences in the signature of Mr. J.K. Paliwal, absence of seal/stamp of appellant-company, overwriting etc. 26. Mr. Mehta stated that the contention of Mr. Ajay Paliwal that 5000 shares had been sold to him as well as to Mrs. Rashmi Paliwal, wife of Mrs. Manish Paliwal by Mr. J.K. Paliwal was contradicted by the transfer form itself. Mr. Mehta referred to the extract of the passbook of Mr. J.K. Paliwal to show that there were number of entries between the father and the son with regard to a sum of Rs. 5 lacs. Therefore, according to him, the CLB rightly concluded that appellants had not been able to relate the entries in the passbook of Mr. J.K. Paliwal with the alleged sale consideration. Mr. Mehta also pointed out that in the annual re....
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.... the number on the certified copy and therefore, they mentioned a wrong receipt number in their pleadings before the CLB and this Court. However, this Court is of the view that as it is the appellants' case that they filed Form Nos.2 and 32 under a joint receipt, the onus is on them to produce the original receipt - which they failed to produce. Moreover, the first page of the certified copy of Form No. 2 produced by the appellants shows that the shares allotment has been made on 01st December, 2004, but the second page of the same certified copy shows allotment of shares on 01st September, 2004! It is pertinent to mention that the Registrar of Companies had produced before this Court the original file maintained by it with regard to the appellant company. The said file contains only the Memorandum and Articles of Association of the appellant company as well as its certificate of incorporation. Consequently, this Court is of the opinion that both the parties have failed to prove the minutes of meeting dated 1st December, 2004. Accordingly, the allocation of additional shares and appointment of three additional Directors by both the appellants and respondents are set aside. 30. T....
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.... inasmuch as appellant nos. 2 and 4 have claimed that oral notice was given (page 285 of Co. A.(SB) 18/2007), whereas appellant no. 3 (in Co. A.(SB) 18/2007) has claimed that notice was sent by ordinary process (pages 361-362 of Co. A.(SB) 18/2007). 34. Quite apart from the inconsistencies pointed out by learned counsel for the respondents, no notice of AGM or resolution passed by the AGM had been placed on record by the appellants despite the fact that admittedly the appellants were in control of all statutory documents and records of the appellant-company by the time said AGM was held. 35. Since learned counsel for the appellants has conceded that the removal of Mr. Sanjay Paliwal from the Board of Directors of appellant-company was illegal, the relief granted by the CLB requires no interference. 36. This Court is also of the opinion that as the loan of Rs. 64.50 lacs advanced by the appellant-company to Mr. Sanjay Paliwal's in-laws are reflected in the balance sheet of the appellant-company duly signed by the appellants, it cannot be said that the said amount has been siphoned off by the respondents. It is pertinent to mention that till date no proceedings have been fil....