TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 447
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....2 under the provisions of Companies Act, 1956 (for brevity The Act"). 2. The Petitioners have prayed for the following reliefs: (a) The Board may pass an appropriate order framing a scheme for the management and administration of BBPL which takes care of interests of both Petitioner No. 1 and Respondent No.2 along with their respective families. They should have a right of equal participation in the business and affairs of BBPL. (b) Set aside the Joint Development Deed dated 29.03.2011, the Rectification Deed dated 15.04.2011, the General Power of Attorney dated 29.03,2011, and the Board Meetings dated 22.02.2011 and 09.08.2014 alongwith all resolutions passed therein. (c) Declare that Respondents No.2 and 3 are not entitled to continue as Managing Director/Directors of BBPL and an order of injunction restraining Respondent Nos. 2 and 3 from acting and/or holding themselves out as Managing Director/Director of BBPL. (d) An order of injunction restraining the Respondents from selling, alienating, transferring or encumbering in any manner and/or from taking any steps in regard thereto in relation to the assets, movable and immovable belonging to BBPL. (e) An order directin....
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.... Bedi 25 0.009 He is grandson (daughter's son) of Respdt. No.2 & 3. 9. Respondent No.9 B.C.D.P, - - Newly incorporated company by Respondent No.2 & 3, Later on shareholding handed over to Respondent No.4 10. Respondent No. 10 Amrit Singh HUP 29070 10.83 Respondent No. 10 HUF Amrit Singh 11. Respondent No. 1 Parcrunder Tripat Singh 1600 0.6 Respdt. No. 11 sister of Petitioner No. 3 and respdt. No.2 Total shares of Respondents 131368 48.94% TOTAL SHARES 266736 The authorized share-capital of the company is Rs. 5 crores divided into 5 lacs equity share of Rs. 100/- share each. The issued, subscribed and paid-up capital of BBPL is Rs. 2,68,33,600/- i.e. divided into 268336 equity shares of Rs. 100/- each. 4. The dispute in the present proceeding emerges from a piece of land situated at Shetigere, Bangalore measuring 23 acres 11 ½guntas. The aforesaid land was jointly purchased by Petitioner No.1, Respondent No.1 BBPL and Respondent No. 2 alongwith some other person forming an association (for brevity AOP) for joint development of the same. The land is contiguous in nature. There were others who were involved in the purchase of the l....
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....hought by Respondent Nos.2 and 3. The Petitioners have highlighted that both 'BBPL' and 'BCDP' were represented by Respondent No. 2 which clearly shows mala fide and conflict of interest of related transaction between Respondent No.2 and 'BBPL', Respondent No.2 has further appointed himself as a Dispute Resolving Authority under the 'JDA'. 6. On 29.03,2011 Respondent No.2 executed a General Power of Attorney (for brevity 'GPA') purportedly on behalf of BBPL in favour of BCDP his grandson Sh. Angad Singh Bedi (Respondent No.4) for development of the said land. Again Respondent No.2 signed the GPA on behalf of both BBPL and BCDP. According to the allegations the Power of Attorney was executed with clear ill-motive to benefit Respondent Nos.2 and 3, their associates and BCDP to the detriment and prejudice of BBPL. The GPA is a one-sided affair. On 15.04.2011 a Rectification Deed to the original JDA was executed rectifying major clauses of JDA granting further benefits to BCDP. The rectification deed has again been signed on behalf of BBPL by Power of Attorney, namely, Sh. Angad Singh Bedi (Respondent No.4) who is grand-son (daughter's son) ....
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....the Shettigere land and proceeded with the implementation of the JDA. As a reaction to the aforesaid mala fide activities of Respondent Nos.2 & 3, the shareholders of BBPL decided to correct the wrong done by Respondent Nos.2 & 3 and tried to take the whole matter in their own hands. Accordingly Petitioner Nos.1 & 3 issued notices alongwith explanation to call EGM for setting aside the illegalities being committed by Respondent No.2 and his associates. 10. On 09.08.2014 Respondent No.2 held a meeting with Respondent No.3 and illegally decided not to hold the EGM as requested by shareholders vide their notice dated 21,07.2014 alongwith explanatory statement. On 19.08.2014 a corrigendum to the notice dated 21.07.2014 was sent to the Board of Directors by Petitioner Nos. 1 & 3 clarifying that resolutions proposed with the notice dated 21.07.2014 were ordinary resolutions which inadvertently mentioned as special resolution, requiring simple majority. On 22-09.2014 the Petitioner Nos. 1 & 3 and the shareholders realized the mala fide intentions of Respondent Nos.2 & 3 and issued a notice alongwith explanatory statement calling for EGM of BBPL on 15.10.2014. Before the meeting could be....
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....t been pursued. 14. The grand-son of Respondent Nos.2 & 3 Sh. Angad Singh Bedi (Respdt. No.4) issued a notice on behalf of BCDC to BBPL on 18.12.2014 in which huge monetary claim of Rs. 100 crorcs as compensation has been made. A demand has also been made for appointment of an Arbitrator to enter reference to adjudicate the alleged disputes in the matter concerning JDA as mentioned in the letter. 15. The majority shareholders of BBPL rejected the Balance-sheet/Profit and Loss Statement for the financial year ending 31.03.2014 in respect of BBPL. 16. BCDP - Respondent No.9 through Respondent No.4 initiated proceedings against BBPL under section 11 of the Arbitration & Conciliation Act, 1996 before Hon'ble High Court of Karnataka and obtained a collusive order appointing a Sole Arbitrator to adjudicate upon the alleged disputes between the BBPL and BCDP. The Respondent No.2 being the Managing Director of BBPL did not inform the Board of Directors about the aforesaid proceedings at any point of time. 17. The aforesaid fact was not recorded in the proceedings under section 9 of the Arbitration Act before the City Civil Court, Bangalore. Despite a clear mandate of die shareholde....
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.... terms of JDA. He signed both on behalf of 'BBPL' and 'BCDP' despite clear conflict of interest. A reference has also been made to an illegal meeting dated 22.02.2011 held by Respondent No.2 and no notice as per requirements of s.286 of the Act was given to Petitioner No. 1. No shareholder has been told about the execution of "JDA'. Likewise the stand of the petitioner with regard to 'GPA' and Rectification Deed (15.04.2011) has been supported by Respondent No. 5 with further allegation that all this was done to benefit Respondent Nos. 2, 3, 4, 5, 6, 7, 8 & 9 and against the interest of 'BBPL' and its shareholders. A reference has also been made to the proceedings of E.G.M and it is asserted that E.G.M. resolved unanimously to keep JDA on hold and consider the same later. Despite the directive of EGM 'BCDP' started raising construction. The development activities in full swing commenced in May 2014. A notice for holding EGM u/s. 100 of the 2013 Act was issued on 21.07.2014 by Petitioner Nos. 1 & 3 alongwith explanatory statement. The EGM was called for 15.10.2014. Eventually EGM was held on 15.10.2014 and following resolutions were passed....
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....ities and granting them dividend of over 42 crores with bonus shares equal to Rs. 2,59,35,100/-. He has asserted that in the evenings of his life how he is sought to be ousted from the management of the company at the instance of Petitioner No.1 who has been helped and brought up from the scratch by Amrik Singh Bhandari R-2. On the other issue respondents have pointed out unnecessary hue and cry for entering into related party transactions in the form of JDA, GPA and Rectification Deed has been created because such like related party transactions have always been entered into. The reason for the complaint in the present proceedings is avaricious and greedy attitude of the Petitioners for not including their land in the JDA. Such like transactions had been entered into with the approval of the Board of Directors and approval of the shareholders has never been taken for the last 43 years. The BBPL has entered into transactions with a company in June 2011 which is wholly owned and controlled by Petitioner Nos.1 and 3 (R-2). The shareholders' approval was never taken while entering into related party transactions nor approval from the Central Government under section 297 or section....
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....iance of sections 297, 299 and 300 of the Companies Act yet assuming without admitting that there is some irregularity but that per-se is not illegal and is in the interest of the shareholders and the company which is the sole consideration in equitable jurisdiction of this Board.. J.D.A. IS VALID: 27. The land at Shettigere, Bangalore measuring 2.9 acres was purchased by BBPL from 1996-1998 and separate sale deeds were executed. The land is non- contiguous and was sandwiched between the lands of the persons like M/s. MS Puri, DS Lamba, GS Lamba and personal land of Respondent No. 2 himself. It did not have any approach road. There was dispute with regard to 1.25 acres of land as a minor was claiming a portion of the land. Another portion of 0.4 acres out of the total land has already been requisitioned for construction of road by Government agencies. The development of scattered land was not possible for the purpose of flats etc. According to the Respondents the entire 23 acres of land was not purchased jointly at a uniform rate. The entire land was purchased over a different period of time and at a different rate. Details of the sale deed and the price list (R-5) read as under....
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....2.02.2011 the stand of R-1 to 3 is that the Petitioner No. 1 had chosen not to remain present and two remaining Directors R-2 and 3 attended the meeting. The JDA was discussed and it was found in die interest of 'BBPL'. It is claimed to be the only option available with BBPL Respondent Nos.2 and 3 have asserted that they disclosed their interest in BCDP. The disclosure about incorporation of BCDP Respondent No.9 was made in the Board Meeting held on 24,03,2009 where Petitioner No. 1 was present. He had Tiled Form No.24 AA (R-8) and (R-9). The minutes of the meeting held on 22.02.2011 were approved by the Board of Directors in the meeting held on 25.03.20) 1. There Petitioner No.1 was also present (R-l2). It was thereafter on 25.03.2011 that the BBPL entered into a JDA with MS Puri and Respondent No.2 and Respondent No. 5 on the other side. He also executed GPA in favour of BCDP. Another JDA dated 29,03,2011 was then entered into by BCDP with DS Lamba, GS Lamba involving their portion of the land. The enure land was to be developed by BCDP 16.5 acres comprising the land of BBPL (2.9 acres). 29. The Respondents have projected that the land could not be developed alone by BBP....
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.... and since there are three staggered pieces and the layout developed could not be economical in formation of parks, open spaces, parking, civic amenities and roads. (f) Three pieces of land belonging to 'BBPL' are non-contiguous and not connected to each other, thus the land cannot be sold any way and there has been no actual proposal to buy by a Buyer or for even JDA partner till date. That the BBPL' benefitted by entering into the JDA with the 'BCDP' company and was able to make good and profitable use of its land which was otherwise useless as it was sandwiched between lands owned by other persons, (g) The Value of Sale transactions done in 2011 in and around the land of 'BBPL' in the vicinity is in the range of Rs. 1 crore per acre and also there were not many transactions happening, (h) Assuming but not admitting if 'BBPL' has to venture into development, then it has prime properties on the highway which it can and would develop, why would it would like to develop the land at Shettigere which is located about 2 kms inside road away from the highway and is not within municipal limits. It is on the outskirts of the city and full of short....
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....y Vijaya Bank and through its associates Saudi Hollandi Bank The Bank guarantee was received by Petitioner No.1 and misused the bank guarantee and used the same for the work of M/s C.W.C. Limited. This Bank guarantee was used as his personal financial contribution to the company BEBSAL and a fraud was committed on BEBPL. The instances are as under:- (a) In January 2009, Petitioner No. 1 and his son, i.e. Petitioner No.2 incorporated a new company Bhandari Infra Projects India Pvt. Ltd. (for brevity BIPIPL). In June 2009 they took a sub contract from 'BBPL' at almost no profit to 'BBPL' and started operations in the said family company. (b) Further, in 2009 BIPIPL further took contracts from M/s. Skylark Mansions which was one of the employers of 'BBPL' in Bangalore and all the work was taken by the Petitioner's in their personal family company i.e. BIPIPL. A copy of sub-con tract from Bhandari Builders and M/s. Skylark has been placed on record as Annexure -R/21. (c) That even today Petitioners have entered into various Joint Development Agreements in Bangalore itself. 32. The Respondents have stated that Petitioner No.1 cannot be permitted to rep....
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....Nos. 2 & 3 who were its directors and its initial promoters. Later on they had sold their entire shareholding and at present there is no relationship between respondent Nos.2, 3 & BCDP. It is claimed that 'BCDP' entered into negotiation with the land owners owning land surrounded by the land of BBPL at Shettigere with the object of developing a group housing complex. The land belonging to BBPL was not contiguous and therefore it was not capable of development as an independent unit. Only possibility of a successful group housing project was to pool the land of the surrounding area. This was made possible by respondent No.2 who has been the Managing Director of BBPL by involving the land of surrounding area in the group Housing project. "BCDP' entered into two joint development agreement dated 29.03.2011 with BBPL and other land owners. Both the agreements were exactly on the same terms as were offered to various other land owners. (Annexure A & B ). A reference has been invited to the site plan in order to show that land belonging to BBPL could not be developed on its own or be sold on account of its awkward location. (Annexure C). 34. The respondent has alleged that ....
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....e procedure to obtain various statutory approvals required for a housing project and it has spent approximately Rs. 5 Crores for obtaining the same. Copies of various statutory sanctions, approved master plan and receipt of deposit have been placed on record as Annexure F. (Colly) (iv) Suit No.OS 849/2012 and police complaint was filed by Appellant-obtained stay-got possession of land The land of 'BBPL' was not only landlocked but also encroached upon. After the execution of the JDA, the 'BCDP' filed court proceedings and initiated criminal proceedings to get the land evicted for the purpose to get it cleared from encroacher for development. (v) Original Suit No. 506/2006 was pending against 'BBPL' for one portion of the land. It was compromised by the Respondent No. 4 and 'BCDP' A minor had filed a suit claiming a portion of the land of the Respondent No.1 company as his land and the said suit was pending at the time of execution of the JDA. The construction on the land could not commence unless the said suit was resolved. The suit was resolved by the answering Respondents on behalf of 'BBPL' by entering into a compromise decree an....
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....t has also entered into contracts with architects, marketing consultants etc. and in case the construction is stopped, the 'BCDP' would be subjected to a plethora of litigation for non-performance of its contractual obligations. The list of service providers is Annexure-K. 36. The respondents have also placed reliance on the letter dated 24.1.2012 sent by petitioner No.2 to Respondent No.4 which shows that petitioners were always aware about the execution of the JDA and the constructions activities being carried on in pursuance of the same. The JDA has been entered into between BCDP, BBPL, Respondent No.2, Shirt Mohinder Puri, Shri G.S. Lamba and Shri D.S. Lamba to develop the land admeasuring 16.5 acre. The petitioner has no right with regard to other parties of JDA except BBPL. Some of those persons are not even made party. The said matter of JDA is sub-judice as BBPL and BCDP are locked in various litigations. A reference in this regard has been made to the application filed u/s 9 of the Arbitration and Conciliation Act, 1996 before the Civil and District Court Bangalore with a prayer to restrain any EGM or cancelling JDA, GPA and Rectification Deed, A copy of the IA No....
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....clear from the email. Moreover the land and other properties could not be purchased by BBPL on account of differences and difficulties created by the petitioners. At that time there was no owner coming forward for development of the land by 'BBPL'. They have all agreed for development at the hand of 'BDCP' - Respondent No.9. 'BBPL' tried to develop its own land but it failed as it found to be not feasible. Eventually "BBPL' dropped the idea of development of the land at Shettigere village. It was almost three years later (email Annexure P-6) BCDP came into existence and within two years thereafter JDA was entered into. 40. The allegations of executing JDA in clandestinely manner are denied. It is claimed that all facts were placed before the EGM on 2.5.2011. The petitioner could have approach this Board u/s 402 (F) of the Act within four months from the date of execution of the JDA. Respondent Nos. 2 & 3 are no longer directors or shareholders in 'BCDP' and have no say whatsoever in its functioning. The letter dated 19.5.2014 and 16.6.2014 sent by Mrs. Avneet Bedi, Respondent No.5 are afterthought and motivated. As a matter of fact 'BBPL'....
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.... on account of the litigation initiated by BCDP against BBPL have been denied. There is no conflict of interest between two companies and nor BCDP is trying to rely on the goodwill and reputation of BBPL. The allegations of misuse of power by Respondent No.2 Managing Director are denied for want of knowledge. 43. When the matter came up for mentioning before this court on 31.08.2015., a detailed hearing took place for interim relief and ld. counsel from all panics were heard. After hearing the ld. Counsel this bench has passed a detailed order and the operative part of the interim order reads as follow; "1 Respondent No.2 or his nominees are restrained from representing Respondent No. 1 company in any proceedings where R-9 is pleaded as a party. In other words proceedings before the City Civil Court, Bangalore and the proceedings before the Sole Arbitrator shall not be prosecuted by Respondent No.2 or Respondent No. 3 till further orders. Respondent No.2 shall seek three months adjournment wherever he is representing respondent No. 1 company in any such proceedings. 2. It is further directed that respondent No.3 and Respondent no. 4 shall maintain status quo with regard to con....
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....acres of land which included 2.93 acres of land belonging to BBPL. Reliance has further been placed on a letter dated 26.08.2011 sent by Petitioner No.2 to Respondent No.2 which further fortify that the entire land was purchased with an understanding to develop it jointly. The averment with regard to expenditure of Rs. 1 crore stands virtually admitted. A reference has also been invited to an email dated 13.07.2010 which was sent by Respondent No.2 on behalf of BBPL to one Mr. Jayant an Architect. The mention of six persons clearly show that the land has been purchased by Petitioner No.1, BBPL, Respondent No.2, Lamba, Puri, Bedi and Amrik Singh Bhandari - R-2. When the whole exercise was half way then the respondent Nos. 2 and 3 in connivance of respondent Nos. 4 and 9 conspired to defeat the interests of BBPL alongwith the interests of petitioner and supporting respondents. 46.2 The JDA was entered into with mala fide intention conceived by Respondent Nos. 2 & 3 which is based on an invalid resolution purported to have been passed in a meeting illegally convened on 22.02.2011. Elaborating his submission, ld. Counsel has argued that Petitioner No.1, Respondent Nos. 2 & 3 are the o....
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....t in the case Dale & Carrington Investments v. P.K. Prathapan AIR 2005 SC 1624 to argue that acts of a Director in a Private Limited company are required to be tested on a much finer scale in order to rule out any misuse of power for personal gains or ulterior motives, as envisaged by sec. 299 and 300 of the Act. Merely because s.300 is inapplicable to the private limited companies it does not absolve the directors to act fairly. In fact there is heavier burden casts on its directors. It has thus been submitted that even if disclosure of interest was made R-2 & 3 should not have participated and voted in the meeting on 22.02.2011 as they were beneficiary Directors, Therefore, the resolution is oppressive to the shareholders like Petitioner No.1 and others. It is no defense that there was a disclosure of interest made in the meeting by Respondent Nos.2 & 3 as sought to be suggested in the reply para-40 filed by R-2 & 3. 46.4 The JDA dated 29.03.2011 which was initially illegal and unauthorizedly entered into by R-2 & 3 was actually put on hold by shareholders in the EGM held on 02.05.2011 and mo action should have been on JDA till final decision was taken as is evident from the pe....
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....king him to exclude the land belonging to BBPL from the plan on account of dispute concerning that land. A letter dated 22.05,2014 ( P-21) was also relied upon stating that the JDA was put on hold in 2011. Mr. Chaudhary has pointed out that there was hardly any denial of the aforesaid facts except indicating that die letters sent by R-2 or R-4 are misconstrued. Therefore, the safe conclusion is that the JDA was abandoned for all times to come. 46.5 Mr. Chaudhary and Mr. Datta, ld. Sr. counsel for the Petitioner have further argued that at the time of entering into JDA there was clear conflict of interest between the BBPL (R-1) and BCDP(R-9) because R-2 & 3 had 100% shareholding in BCDP. The aforesaid fact is reflected in the Annual Return filed by "BCDP" and form No.32. A reference has been made to subsequent Annual Return of BCDP showing R-2 & 3 continue to hold 45.20% share in that company and the same is now being controlled by R-4 who is the grand-son of R-2 & 3. The present Directors are Ms. Jasmeet Kaur Bedi, Angat singh Bedi and Amar Singh Bedi. Thus the conflict of interest is evident. The subsequent transfer of share and change of Board of Directors of BCDP has proved man....
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....liable to be completed within 36 months with grace period of six months from 02.10.2011 which has come to an end on 01.04.2015. In any case no further construction can be permitted even if it is presumed that the JDA has remained in operation and was valid. Ld. Counsel for Respondent Nos.5 and 11 have stated that they adopt arguments advanced on behalf of the Petitioner and wholly supports the Petitioners 'claim. SUBMISSION MADE ON BEHALF OF RESPONDENT NOS. 1 TO 3: 47.1 Mr. Parag Tripathi, Ld. Senior Counsel representing Respondent Nos. 1 to 3 has raised some preliminary objections. According to the Ld. .counsel a suit bearing No. O.S. 401/2014 has been filed before the Civil Judge (Senior Division), Devanhalli by Mr. H.S. Bedi against 'BBPL', R-2, 'BCD', M.S. Puri and D.S. Lamba besides Petitioner No.1. The prayer made in the suit is for permanent injunction against those Respondents from proceeding with any construction over the property measuring 23.5 acres of land situated at Shettigere. It has been sought to declare Joint Development Agreement (JDA) as null and void. The Petitioner No. 1 has filed objection in the suit and despite knowledge of the pendin....
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....elling the JDA and damages have been claimed against BBPL. An application was filed by Petitioner No, 1 seeking permission to produce documents to decide as to who should represent BBPL before the Arbitrator. The application has been dismissed by the Ld, Arbitrator vide order dated 10.06.2015. It has remained unassailed. Even a review petition has been filed before Hon'ble High Court of Karnataka on behalf of BBPL by Petitioner No.1 against BCDP for review of order dated 19.03.2015 whereby Justice Farooq was appointed as an Arbitrator, An order has been passed on 23.09.2015 that the Arbitrator may consider deferring the arbitration proceedings till the disposal of the review petition. Mr. Tripathi then submitted that are allegations concerning an association of persons (AOP] in respect of the total land of 23 acres at Shettigere which was to be developed. A number of disputed facts are likely to arise before the Company Law Board and it would not be advisable to adjudicate the issue as the matter cannot be decided by banking upon the documentary evidence alone. It has also been argued that once a regular civil suit is pending on the same subject matter, a petition under section....
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.... worth Rs. 17 crore belonging 'BBPL' for an amount of Rs. 12 lakh. In addition, the Company has also raised a demand on behalf of the BBPL for Rs. 12.5 crores from P-1 for illegal occupation of the Bombay flat and Rs. 5 crores towards shuttering material of the Company taken away by the P-2. (iii) Respondent No. 2 at the time of demise of his father was 24 years old; Petitioner No. 1 was 11 years old and they had four sisters. The entire responsibility to settle the brother and four sisters' marriage was on the shoulders of Respondent No. 2, who was the oldest earning male member of the family and settled all his siblings including Petitioner No.1. Respondent No. 2 set up the 'BBPL' in 1972 and has been its permanent MD ever since. At the time of incorporation of the BBPL Respondent No., 2 and 3 held 66.66% while 33.33% was held by Petitioner No. I. Respondent No. 2 however diluted his personal shareholding in order to bring in the larger family, including their sisters. (iv) Based upon the understanding Respondent No. 2 was appointed as a permanent Managing Director with full powers to manage and exercise the affairs of 'BBPL' Respondent No. 2 invested ....
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.... has also submitted that provisions of Order II Rule 2 would come into operation once the resolution dated 25.03.2011 has not been challenged. The JDA had been executed and the information was given to the shareholders in the EGM of 02.05.2011 and no shareholder objected in the EGM with regard to the land at Shettigere was discussed alongwith the issue of expenses incurred . It was expressly recorded that the JDA was in the notice of BBPL. Mr. Tripathi has maintained that there may be some mistake in using the appropriate word while recording the minutes of the meeting by R-2, who was 81 years old at that time. There is adequate proof to show the generosity to build-up the whole family by dolling out own money for the welfare of his brothers, sisters, nieces, sons and grand-sons. The JDA was never put on hold and Petitioner No. 1 was present in the meetings of 09.08.2014. This is proved by the fact that from 2011 iill date of filing of the petition they were all along aware of the JDA and the work being carried out at Shettigere. Therefore, there is presumption under section 114 of the Evidence Act because they owned land adjacent to JDA land. There was certain material dumped on t....
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....has also the business of building construction and land development. The newly floated company BCDP has obvious clash of business interest with that of BBPL because both companies are in the same business of construction and land development, BBPL has rich experience backing over 40 years whereas BCDP was born in 2009. The conflict of interest became pronounced when the Respondent No. 2 signed JDA on 29.03.2011, Respondent No. 2 signed JDA and GPA both on behalf of BBPL as well as on behalf of BCDP. It is doubtful whether the same person could act as a Director or a Managing Director of both companies and could enter into contract with himself wearing the cap of another company. It is well settled that for execution of a valid contract at least two persons are required even when a corporate personality like BBPL and BCDP are involved. In the present case all this was easily avoidable. Petitioner No. 1 has no interest in 'BCDP' and as a Joint Managing Director of BBPL he could be authorized to act and sign on behalf of BBPL. The failure to follow a fair course speaks volumes about the mind and intentions or Respondent No.2 & 3 and indicates their secretive design to hand ov....
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....ith Schools, Commercial Complex, Shopping Centres, Day Care Centres, all constitutes a neighbourhood along with complete electrification, water supply, sewerage disposal, internet & external roads on turnkey basis. 800 unit 102000 sqm. 15. Low and Middle Income Residential Colony 320 units, 17000 sqm with precast slab & 4 storied load bearing buck structure. 16. Middle Income Residential Colony at Mehrauli, New Delhi 156 units, 16000 sqm. 17. Residential Quarters- 40 units, 300U sqm. COMMERCIAL BUILDINGS 18. Bhandari House, Nehru Place, New Delhi designed and built a 10 storied RCC framed structure in 1976 with 7500 sqm. Built up area, complete with sanitary installations, Electrification, lifts, fire-fighting systems etc. for commercial use. 19. Construction of 10 storied commercial complex at Vaishali in Ghaziabad District (U.P.), 20. Sagar Apartment Complex at 6 Tilak Marg, New Delhi during 1972-74. 21. High Court Building, New Delhi during 1972-74. A RCC-framed construction with basement laid on RCC mezzanine raft with total built in area of 23500 sq,m, built to the design and specification of C.P.W.D. 22. Egyptian Embassy, New Delhi during 1972-74. 23. USIS ....
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....two wakfs. A partnership has to be brought about by a contract. It has to be seen that there is a valid contract between two persons. A person cannot contract with himself. But where a person has different capacities, he may have power to contract in his representative capacity with himself as an individual, e.g. as an executor, a trustee and administrator or an agent. (Halsbury's Laws of England, 4th Edition, Vol. 9, Contract Article 204)." From the perusal of the aforesaid para it does not follow that in a case of conflict of interest one and the same person is permitted to enter into contract with himself by wearing two different caps particularly when there was a possibility of avoiding such an ugly situation. On the contrary para 16 helps the petitioner. 51. The act of misconduct of Respondent No. 2 for BBPL further becomes evident from the brochure issued by 'BCDP' which is his related company shows that it has undertaken a large number of projects and reference has been made to all the projects undertaken and executed by BBPL, Some of these projects have already been mentioned in the precceding para. It shows extreme misuse of his position by Respondent No. 2 b....
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....plicable to a private limited company. In these facts and circumstances their Lordships of the Supreme Court has observed as under:- "We may also test the alleged act of allotment of equity shares in favour of Ramanujam from a legal angle. Could it be said to be a bona fide act in the interest of the company on the part of Directors of the Company? At this stage it may be appropriate to consider the legal position of Directors of companies registered under the Companies Act. A company is a juristic person and it acts through its Directors who are collectively referred to as the Board of Directors. An individual Director has no power to act on behalf of a company of which he is a Director unless by some resolution of the Board of Directors of the company specific power is given to him/her. Whatever decisions are taken regarding running the affairs of the company, they are taken by the Board of Directors. The Directors of companies have been variously described as agents, trustees or representatives, but one thing is certain that the Directors act, on behalf of a company in a fiduciary capacity and their acts and deeds have to be exercised for the benefit of the company, They are....
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....e Supreme Court would show that although section 81 of the Act does not apply to private limited companies, still a duty is cast on the Director/Managing Director to make a disclosure to the shareholders of the company that shares are being issued. The requirement is of good faith that they have to make full disclosure to the shareholders regarding the affairs of the company. The observation goes to the extent of requiring that the acts of Directors in a private limited company are required to be tested on a much finer scale in order to rule out any mis-use of power for personal gains or ulterior motive. I do not see reason why these observations would not be attracted while considering the provisions of sec. 300 of the Act which also excludes its applicability to private limited company. Therefore a duty was cast on the Respondent Nos. 2 & 3 not only to issue notice to Petitioner No. 1 but also to disclose the intention of executing the JDA on behalf of BBPL with BCDC. 55. The argument of Mr. Tripathi that notice was not issued to Petitioner No. 1 as it is a family company (BBPL) comprising of Petitioner No. 1 & Respondent Nos.2 & 3 who are its Jt. Managing Director, Managing Dir....
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....d must be available on both sides for any movement of fire authorities. The members present made a note of this information. No final decision was taken." 58. A close scrutiny of the aforesaid minutes do not leave any iota of doubt that JDA was kept on hold and the same was to be considered after few months. A plain English used in the minutes of the meeting does not permit any other meaning as is suggested on behalf of Respondent Nos. 1 to 3. Mr. Tripathi has argued that the minutes of meeting have been recorded by hand of Shri Amrik Singh Bhandari - Respondent No. 2 who was more than 82 years at that time and there could be lack of art in recording the minutes. According to the Id. counsel only financial matters were put on hold. There is not even a whisper in the minutes about any financial matter. The argument is completely devoid of merits and in fact the JDA was kept on hold in the meeting of EGM held on 02.05.2011. The stand to the contrary is hereby rejected. The subsequent event of commencing the construction at Shettigere would show complete disregard to the view expressed by the shareholders in the EGM on 02.05.2011 where JDA was put on hold. The decision taken by share....
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.... quick succession unfolds as under: Respondent No. 2 along with his wife Respondent No. 3 tendered resignations from the newly floated company BCDP on 01.10.2014 and transferred their share to his grandson - Respondent No. 4. Respondent No. 4 on behalf of BCDP initiated proceedings in the courts at Bangalore and filed a petition under section 9 of the Arbitration and Conciliation Act about 10 days later. An interim order of status quo was issued by Civil Court, Bangalore on 10.10.2014. A reference was made to the Arbitrator by Hon'ble High Court u/s. 11 of the Arbitration Act to adjudicate the claim of Rs. 100 crores made by BCDP from 'BBPL'. The act of Respondent No. 2 and 3 are patently against the law. A Constitution Bench or the Supreme Court has laid down in categorical terms that the shareholders have absolute right to call EGM. (See Life Insurance Corporation of India v. Escorts Ltd. [1986] 1 SCC 264. It has been observed that the shareholders have absolute right to call EGM either to alter the Articles of Association, or remove/change Directors. It cannot be interfered with even by the courts. 62. The pertinent observation made by the Constitution Bench reads ....
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....fferent approach following the principles akin to partnership, is required to be followed. However, the argument has no roots in the provisions of law. In Praga Tools Corporation v. Imanual [1969] 1 SCC 585 the Supreme Court observed that in law a company is a distinct entity and it is not permissible or relevant to enquire whether the Director belonged to the same family. In a given case it may be possible to follow an approach which may involve principles applicable to partnership. Then such an approach would be relevant to mould the relief and not to condone mismanagement and oppression. In fact these principles have been repeatedly approved by the Hon'ble Supreme Court by following the well known judgment of the House of Lords in the case of Solomon v. Solomon & Co [1897] AC 22, Therefore, the argument lacks substance and I do not feel persuaded to accept the same. 65. In fact in the matters under sec. 397, 398 and 402 the interests of the company and the shareholders are paramount and once it is found that acts of the management are prejudicial and harmful to the company and/or its shareholders then interference in exercise of powers under s. 402 of the Act is imperative ....
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....ppropriate to deal with the preliminary objections raised by Mr. Tripathi. A suit has been filed by one Mr. H.S. Bedi in the Court of Civil Judge (Senior Division). In para 47 of this judgment preliminary objection has been noticed and it is argued that there is suppression of this fact by the Petitioner No. 2 because he has filed objection in that suit. The relief sought in the suit is the same. I am afraid that the preliminary objection is not sustainable. Firstly in the suit no relief could be claimed or granted which may be aimed at rectifying mismanagement and oppression as contemplated by s. 402 of the Act. It is only material facts which need to be disclosed and it is not such a material fact the non-disclosure of which would cause prejudice to the respondents. Moreover there is no pleading raising this preliminary objection as is required by the law laid down in para 14 of the judgment of the Supreme Court in the case of Larsen and Toubro Ltd. v. CCE [2007] 9 SCC 617. It has been held that 'allegations in regard to suppression of facts must be clear and explicit so as to enable the noticee to reply thereto effectively.' Mr. Chaudhary in his rebuttal submission also ....
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....w Delhi befitting his Lordship's status by Respondent Nos. 1 & 2 and whole record of 'BBPL' be placed before him. The Learned Administrator may first explore the possibility of an amicable settlement by holding parleys between all parties and non-parties because they are all closely related. It is needless to say that the Administrator would associate Respondent No. 4 and 'BCDP' also while working out amicable settlement. The Administrator may exercise all powers of Board of Directors or Managing Director of 'BBPL' in conducting affairs of the company. All concerned shall assist the Learned Administrator. Further the Administrator may take all necessary steps to preserve and protect the properties of the 'BBPL' He may also depute counsels, if so desired, to defend litigation initiated by Petitioner No. 1 at the Bombay High Court and suit filed by 'BCDP' and Respondent No. 4 in City Civil Courts at Bangalore as well as in the High Court of Karnataka or any other litigation. The aforesaid course has been adopted as Petitioner No. 1 and Respondent No. 2 are not only real brothers but appears to be very close to each other at least in the pas....