TaxTMI 
TaxTMI 
2016 (2) TMI 447
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.... BBPL which was incorporated on 12.11.1972 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 a....
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....daughters of Respdt. No.2 & 3. 6. Respondent No.6 Jasmeet Bedi 23160 10.49 7. Respondent No.7 Jasjit Singh Bedi 25 0.009 Resp. No. 7 son-in-law of respdt. No.2 & 3 and husband of respt. 8. Respondent No.8 Amar Singh 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 1....
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....eting dated 22.02.2011 Petitioner No.1 who is the only other Director on the Board of BBPL was not issued any notice to attend at Board Meeting. According to the minutes of the meeting the JDA was entered into whereas the JDA was signed only on 29.03.2011 which demonstrates that the minutes were fabricated as an after-thought 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 ....
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....be disposed off and/ or transferred only in consultation with Petitioner No.1. Thus both Petitioner No.1 and Respondent No.2 were required to agree to any such proposal. 9. After a period of three years in May 2014, Respondent Nos.2 and 3 contrary to the promises made in the EGM an 02.05.2011 started raising construction on 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....
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....DA. 13. Respondent No.6 Ms. Jasmeet Bedi filed a Company Petition with the allegation of oppression and mis-management in furtherance of dilatory tactics and mala fide intentions of Respondent Nos.2 and 3. The aforesaid petition has never been pressed on account of the interim order passed by the High Court of Bombay and the same has not 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 ....
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....tly with 'BBPL'. 20. It has farther been highlighted by Respondent No.5 that Respondent No.2 without obtaining consent of majority shareholders of BBPL signed 'JDA' on 29.03.2011 involving Mr. G.S. Lamba, Mr. D.S. Lamba and Mr. M.S. Puri with 'BCDP' - Respondent No.9 and appointed himself as a Dispute Resolving Authority as per 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 ....
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....ompanies with the flag company Bhandari Builders Private Ltd. (BBPL) R-1. It is he who has built up the Bhandari empire during the last 40 years by working day and night taking to Bhandari group to its unprecedented height. In sum and substance it has been pointed out that after the death of his father he raised Petitioner No. 1 and all of his sisters by involving them in business activities 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 o....
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....The land of the company situated at various places was being sold which include the agricultural land at Village Rithoj (Distt Gurgaon) and sold on 26.02.2015; agricultural land at Posari Village Shelarpada, (Distt. Thane) and sold on 14.06.2013; part of land at Village Ganaur (Distt. Sonipat, Haryana) and sold on 21.05.2012. 26, It is claimed that the JDA has been executed in absolute compliance 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 b....
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....ration amount 8,50,000 per acre Jairamalah & Others Bhandari Builders Pvt. Ltd. 28. The land had remained idle and no proposal was moved by the shareholders/Directors to either develop the land or sell the same. The land of 'BEPL' could not have been developed in isolation and it could have been developed by involving the other land owners. The land was proposed to be developed by BCDP as Respondent Nos. 2 and 3 were holding 100% share in that company. In respect of the Board Meeting held on 22.02.2011 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 P....
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.... Copy of the aforementioned BIAPPA Regulation has been annexed as Annexure R/14. (d) Further an area of 0.4 acres is of no commercial value as it will eventually yet acquired by Government and 'BBPL' is effectively left, only with 2.5 acres of land and also The Government of Karnataka is not going to pay any TDR/Compensation/Value for the 0.4 acres under acquisition. (e) Even assuming if 'BBPL' took a call on development of land, then owing to the litigation, physical shortcoming, only Plots/Villa could be developed 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, ....
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..... Petitioner No.1 has always acted against the interest of BBPL. Petitioner No.2 visited Kingdom of Saudi Arabia (KSA) in 2000 and started a local Saudi Company named as Bhandari Engineers and Builders Saudi Arabia Limited (BEBSAL) He had 65% share in his personal name, 25% in the name of one Mr. Mohd Bin Mutlaq Al Gadhi and 10% in the name of Mr. Udaya Bhanu. The Letter of Intent was issued with the consideration of submitting a bank guarantee of approximately Rs. 15 crorcs, as a performance guarantee which was duly provided by BEBPL by mortgaging properties of BBPL. It was issued by 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 'BB....
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....construction on land other than the land of BBPL could not be the subject matter of the C.P. The persons whose land is part of the JDA like Mr. Mahinder Puri, DS Lamba, GS Lamba are not made parties to the proceedings in the present petition. STAND OF 'BCDP' - RESPONDENT NO.9 AND RESPONDENT NO.4: 33. A separate reply by respondent No.4 and BCDP Respondent No.9 has been filed contesting the case of the petitioner and that of Respondent No. 5. It is significant to note that Respondent Nos.4 & 9 have also adopted the reply filed by BBPL-Respondent No.1. It is conceded as a fact that BCDP-respondent No.9 was incorporated by Respondent 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 proj....
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....registered with the appropriate government authorities. The copy of amalgamation Deed dated 7.6.2012 alongwith typed copy is annexed hereto as Annexure D, (ii) Relinquishment Deed: An area of 5.7 acre was relinquished to the Government. As per government requirement, the parks, open spaces, civic amenities and portion of road, including a significant portion of the land of 'BBPL' was relinquished to the Government by a registered relinquishment deed to an extent of 5.7 acres. The copy of the Relinquishment Deed has been placed on record as Annexure E. (iii) Statutory Approvals Pursuant to entering into the JDA in 2011, 'BCDP' initiated the 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....
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....curred by answering Respondent 'BCDP' has incurred expenses on various heads including construction expenses, Architect fee, taxes, government deposits, litigations, salaries, office expenses, site expenses, advertisements, broachers, wages for labourers, material costs etc. to the tune of Rs. 9.30 crores as has been certified by S Whig and Co., Charted Accountants. The certificate of Chartered Accountant has been placed on record as Annexure-J. (x) Contracts with various service providers 'BCDP' has also entered into various contracts with different service providers for the purpose of the development of the land, which inter alia include contracts for the supply of steel, cement, shuttering materials and other raw materials. Further, it 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 ....
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....t of interest of Respondent No.2 /3 with BCDP or BBPL. The proceedings before City Civil Court Bangalore u/s 9 of the Act were initiated against BBPL for stay of the proposed EGM as well as for stay on cancellation of JDA. The respondents have repeated the facts with regard to JDA, Power of Attorney and rectification deed. 39. The background events leading to the dispute. Respondents have stated that there was no understanding between the petitioner and Shri. H.S. Bedi and others to develop the entire part of land in a consolidated manner i.e. the land under JDA land of Shri H.S. Bedi and land of Petitioner No. 1, etc. because they have shown no interest in the said project whenever put forward on account of inter se differences between them and other land owners. The aforesaid fact is 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 faile....
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.... by BCDP with BBPL is on the same terms and conditions as the one entered between BCDP & Shri DS Lamba, GS Lamba and MS Puri. The Lambas were given less super built up area as compared to others and to compensate for the same. They were given security deposit of Rs. 1.75 erores and their detail is as follows:- Name JDA Land JDA Land (Sq ft.) (a) Super Built up Area (SBA) (b) SBA/ JDA land C=b/a Amiik Singh Bhandari 5 Acre 21 Guntas (5.53 acres) 240.887 38,500 sqft 0.159 M.S. Puri 36 Guntas (0.90 Acres) 39,204 6,250 sqft 0.159 Bhandari Builders Pvt. Ltd. 2 Acre 36 Guntas (2.90 Acres) 126,324 20,500 sqft 0.162 Lambas 6 Acres 36 Guntas (6,90 Acres) 300,564 37,200 sqft + security deposit of Rs. 1.75 crore 0.124 42. The allegations with regard to the prejudice being caused 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 fo....
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.... is wholly mis-managed and the Petitioners have been oppressed because an attempt has been made to deprive the BBPL and 'AOP' to develop more than 23 acres of land which was extremely lucrative project. According to the ld. Counsel there was an understanding between the 'AOP' for development of the land jointly by BBPL. In that regard reliance has been placed on a letter dated 01.11.2006 written by R-2 to R-4 asking him to finalize the Architect for plan received for development of the entire 23+ acres of land. My attention has been drawn to para 3 of the letter (P-6). Further reliance has been placed on a letter dated 29.04.2009 [P-7] signed by Respondent No. 2 on behalf of BBPL to Bangalore International Airport Area Planning Authority, Bangalore (BIAAPA) which also support the view that there was an understanding between the AOP and BBPL for developing 23+ 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 expenditur....
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....o assert that Notice was given. There is no grain of truth in the aforesaid stand. The Respondents should have produced on record a copy of the notice and the mode adopted for communicating that notice to Petitioner No.1. In that regard reliance has been placed on the principles emanating from the provisions of Order 8 Rules 3, 4 & 5 C.P.C. It is submitted that evasive reply is no reply in the eyes of law. Such replies are in fact admission of facts. Mr. Chaudhary has placed reliance on two judgments of Hon'ble Supreme Court to show that if a notice of a meeting is not given to any of the Director the resolution passed therein is illegal. In that regard reliance has been placed on para 10 of the judgment of the Supreme Court in Parmeshwari Prasad Gupta v. Union of India AIR 1973 SC 2389(Para 10). Reliance has also been placed on the observation made in para 11 of the judgement 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 th....
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.... a scheme of management should be developed under the active control of both the groups and if one group does not agree to a proposition then the same should not be resolved. The shareholders require the Chairman to put forward a scheme of management which should be adopted and put into operation before it is too late. The Chairman had assured that he will put up his scheme as early as possible. It is further clear from the minutes of the meeting dated 08.08.2011 (P-18) that no assets of BBPL were to be disposed of without the consensus of Petitioner no. 1 and Respondent No.2. My attention was drawn specifically to item no,9 of die resolution. A reference is also made to the letter dated 25.08.2011 sent by R-2 to P-2 which clearly states that the chapter concerning J DA was closed (P-20). Further, reliance has been placed on the letter dated 13.05.2011 sent by R-4 to the Architect asking 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 indic....
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....CDP in its brochure have in fact were executed by BBPL. 46.8 It is then argued that the boggies of construction raised by BCDP on the sites is absolutely false. The construction is not at an advanced stage and no harm is likely to be caused to the interest of BBPL if JDA is cancelled and declared illegal. Substantiating their submission Id. Counsel argued that there are total 1650 flats proposed to be constructed and as per the showing of BCDP it has been able to book 52 flats. Even there is no agreement of allotment placed on record alongwith terms and conditions. Respondents have failed to substantiate the scheme that substantial construction has been undertaken whereas the records show that excavation of foundation of land has been done. The muster-rolls appended with the replies also look to be bogus. Ld. Counsel has also pointed out that the period for completion of construction work under the JDA stand expired and work was 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 val....
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..... The Petitioner No. 1 has challenged the resolution passed in the meeting dated 09.08.2014 and 01.09.2014 as null and void and the resolution dated 09.08.2014 is also the subject matter of challenge in the instant petition. The Petitioner No, 1 has also obtained an order dated 13.10.2014 to stay any change in the composition of the Board. Likewise the petition No. AAS 400/ 14 has been filed by 'BCDP' in the City Civil Court, Bangalore under section 9 of the Arbitration and Conciliation Act seeking restraint on Respondent No.1 company from holding EGM on 15.10.2014 and also restraining Respondent No.1 from cancelling the JDA. The application filed by Petitioner No.1 seeking permission to represent BBPL is also pending. Likewise arbitration proceedings A.C, 58/2015 before Justice Farooq (Retd. High Court Judge) between 'BBPL' and 'BCDP' are also pending wherein restraint order has been sought against BBPL from cancelling 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 th....
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....ii)Payments of taxes architects, clearances etc. (ix)Deployed labour - muster roll. (x)Entered into different service providers. (xi)Work has commenced on site - advance stage. (xii) Expenses incurred - CA Certificate. The construction has thus reached an advance stage. 47.5 Another submission made by the Ld. counsel is that the agenda and resolution dated 25,03.2011 confirmed the minutes of meeting held on 22.02.2011 which has not been challenged. Therefore, the JDA has remained protected and alive. 47.6 Mr. Tripathi has made references to the conduct of the Petitioner and the supporting Respondents, and submitted that (i) H.S. Bedi filed an impleadment application though his wife Ms. Avneet Bedi (R-5) was already a party- R-5 did nut argue but adopted the arguments of P-1 - thus they belong to the Petitioner Group - so filing of suit in Devanhalli covers the right of all Petitioners, (iii) That the Petitioner No.1 wants to usurp the flat 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 toward....
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....ies have been made by Respondent Nos. 2 and 3 since the 2011. (v) Disclosure regarding BCDP was made by R-2 and R-3 in this meeting, (v) Be that as it may, formal notice in writing in a family company is generally not given - Both P-1 and R-2 used to share the same office, (vii) The Petitioners have also not alleged that they used to get notices of other board meetings in writing and this is the only one they did not get a notice for. (viii) No reason for R-2 to not give notice considering that the majority of the Board was with R-2. (ix) If the intention of R-2 was to commit a fraud, he would not have informed the shareholders in the EGM of 02.05.2011 even though it did not form a part of the agenda, (x) Leave of absence granted for the benefit of P-l. It is a standard practice in private companies in order to ensure that none of the directors are disqualified under section 283(i)(g.) (xi) There was no dispute as on that date." 47.8 Mr. Tripathi 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 02.0....
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....has been drawn to the site plan to highlight that construction is at advance stage and third parties' rights have come into being. Some flats have already been sold, labour contracts have been signed and huge amount has been spent on official documents. 49. Respondent No.6 is a shareholder to the extent of 10.49% in BBPL she has also filed her separate written statement and has supported the stand taken by Respondent Nos. 2 & 3. There is a separate petition filed by her namely C.P. 68/2015 wherein the pleadings are incomplete and is pending consideration. CONCLUSION: 50. Having heard the ld. counsel at a considerable strength and after perusal of paper books with their able assistance, 1 find that the affairs of the BBPL at the hands of Respondent Nos. 2 & 3 have not been conducted in a manner beneficial to it. It has come on record that Respondent Nos.2 and 3 opened a parallel company BCDP - R-9 where they had 100% shareholding. 'BCDP' 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 lan....
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....reatment Plant & Laying of Sewer Net work for Kathmandu, Nepal (World Bank Added Project). 8. In joint venture with IMPREST (a wholly owned Subsidiary of FIAT Group, Italy) laid the Sewerage System including Treatment Plant for the city of Riyadh, Saudi Arabia. HOUSING PROJECTS 9. Construction of Residential Towers "Century Celeste" (Basement, G + 7 floors) consisting of 125 luxury flats at Jakkur in Bangalore (work is in progress) 10. Construction of Residential buildings [G + 3 floors) consisting of 75 flats at Jagdish Nagar in Bangalore, completed in Feb. 2000. 11. Construction of Residential Villas, 'Skylark Greens" at Whitefield in Bangalore, completed in October 2006. 12. Construction of 526 SFS Houses for Delhi Development Authority including all electrical, plumbing, sanitary and all external development works, completed in 2005. 13. Residential buildings "Diamond District" at Airport Road in Bangalore (Basement + 7 floors). 14. Construction of 800 houses along with Schools, Commercial Complex, Shopping Centres, Day Care Centres, all constitutes a neighbourhood along with complete electrification, water supply, sewerage dispo....
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....ost a lucrative business opportunity of extreme financial benefits. The arguments advanced by Mr. Tripathi that same person bearing different hats and representing different entities can sign a contractual document has failed to impress me because his reliance on para 16 of the judgment in CIT v. M/s. Kandath Motors (1997) 4 SCC 54 is wholly misplaced, A careful reading of para 15 would show that a wakf represented by a mutawali could not enter into a partnership because under Mohammeden Law the moment wakf is created all rights of property are vested in Almighty. Some observations made by the Culcutta High Court in the case of Hoosen Kasam Dada v. CIT (1937) 5 ITR 182(Cal) were quoted to support the view that one person cannot enter into a contract with himself assuming two different entities. In para 16 of the judgment in Kandath Motor it was observed as under: "This observation must be confined to the facts of that case where it was found that there was a possibility of conflict of interest between Hoosen Kasam Dada as an individual and as a representative of the two wakfs. A partnership has to be brought about by a contract. It has to be seen that there is a valid c....
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.... 3 have marginalized the interest of BBPL by conceding business of Shettigere Project to 'BCDP'. These actions have tarnished fiduciary relationship. In the meeting dated 22.02.2011 full and complete disclosure was required to be made by Respondent Nos. 2 & 3 about their interests in BCDP. The BCDP has no experience of any construction work whereas BBPL is clothed with rich experience of construction in a large number of prestigious projects. The BBPL is one of the leading construction company of the country and Respondent No. 2 could not have surrendered the interest of BBPL to BCDP. Moreover in a case of related party transactions, the provisions of sec. 300 of the Act get attracted. This question crop up for consideration before Hon'ble Supreme Court in the case of Dale & Carrington Investment (P.) Ltd. (supra). In that case the Managing Director of a company had allowed to himself equity share in a meeting of the Board of Directors. This was challenged by invoking sections 397 and 398 of the Act. After examining the facts a reference was made u/s. 81 of the Act which is not applicable to a private limited company. In these facts and circumstances their Lordships ....
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.... limited company are expected to make a disclosure to the shareholders of such as company when further shares are being issued. This requirement flows from their duty to ad in good faith and make full disclosure to the shareholders regarding affairs of a company. 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 misuse of power for personal gains or ulterior motives. Non-applicability of Section 81 of the Companies Act in case of private limited companies casts a heavier burden on its directors. Private limited companies are normally closely held, i.e. the share capital is held within members of a family or within a close knit group of friends. This brings in considerations akin to those applied in cases, of partnership where the partners owe a duty to act with utmost good faith towards each other. Non-applicability of Section 81 of the Act to private companies does not mean that the directors have absolute freedom in the matter of management of affairs of the company." 54. A perusal of the aforesaid observations made by the Hon'ble Supreme Court would show that although section 81 of the Act does not ....
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....ruitful to read the minutes of the meeting held on 02.05.2011 which reads as under:- "Minutes of Shareholders meeting held on the 2nd day of May of 2011 at 11. 30 AM at Bhandari House 91-Nehru Place, New Delhi-19. The Chairman informed members that the land in survey No. 83/2, i.e. 1 acre 11.5 guntas is sandwiched between land owned by Mr. G.S. Lamba and Mr. D.S. Lamha who have already entered into a Joint Development Agreement with M/s. BCDPL which is owned by S. Amrik Singh Bhandari and Mrs. Pushpinder Bhandari. After board is approved, a JDA was signed and registered on behalf of BBPL. The Chairman informed the members present that this JDA was executed on the same terms and conditions as the company has executed JDA with Mr. K.S. Lamba and his family. This JDA was in the interest of the company. This issue was also kept on hold. However, the same would be considered after a few months. The Chairman further informed and pointed that one land is 780 sqft x 70 wide (82/3) and second land is 92 x 230 sqft (82/2). As per the law minimum of 22 sqft road is required to be provided for any development and further land must be available on both sides for any movement o....
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....Suit No. (L) 881/2014 held that BBPL may pass resolution to appoint Addl. Director in the EGM on 15.10.2014 and the resolution may not be acted upon. It was clarified that the resolution with regard to cancelling the JDA, GPA and Rectification Deed could proceed. Accordingly, EGM was held on 15.10.2014 where Petitioners along with Respondent No. 5 and other shareholders unanimously decided to cancel the JDA, GPA and Rectification Deed and to appoint Petitioner Nos. 1 and 4 as Additional directors of BBPL and Petitioner No. 1 to represent BBPL in legal proceedings. 61. The whole gamut of litigation initiated before the Civil Court at Bangalore appears to be the brain child of Respondent No.2. This is what the chain of events indicates. Firstly Respondent No. 4 was appointed as Director in 'BCDP' on 01.03.2011. On 07.09.2011 Respondent No. 4 was given 54.74% share. Then he was made Managing Director of BCDP on 18.12.2012 when Respondent No. 2 was redesignated as a Director. Even in September 2015 Respondent No. 2 had 22.4% shareholding in BCDP. Realizing the mood of the shareholder to hold EGM on 15.10.2014 the course of event in quick succession unfolds as under: Respo....
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....at the meeting. The Life Insurance Corporation of India, as a shareholder of Escorts Limited, has the same right as every shareholder to call in extraordinary general meeting of the company for the purpose of moving a resolution to remove some Directors and appoint others in their place. The Life Insurance Corporation of India cannot be restrained from doing so nor is it bound to disclose its reasons for moving the resolutions." 63. A perusal of the above quoted para from the Constitution Bench judgment would show that the Respondent No. 2 - the Managing Director was not clothed with any power to restrain Petitioner Nos. 1 & 2 and shareholders from holding of EGM. Again the act and conduct of Respondent No. 2 is prejudicial to the interest of BBPL and its shareholder with an inbuilt bias towards 'BCDP'. 64. Mr. Tripathi, ld. counsel for Respondent Nos. 1 to 3 has projected that Respondent No. 2 Sh. Amrik Singh Bhandari, is a grand old man who has built the Bhandari empire by helping Petitioner No. 1 and all his sisters as well as their grand-children. Therefore in matters of this nature where the companies are closely held companies, a different approach following the....
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....similar price. It is true that there is no concluded written contract between the petitioners and 'BBPL' and therefore no binding obligations between AOP and 'BBPL' could be inferred. However drifting towards their own company 'BCDP' by Respondent No. 2 and 3 is an act of prejudicial nature. 67. The difficulty posed in the present matter is that Petitioner No. 1 can also not be entrusted with affairs of 'BBPL' because he has initiated litigation by filing a suit in the Hon'ble Bombay High Court claiming that flat owned by 'BBPL' should be transferred to him on the basis of some old resolution. Moreover, there are numerous allegations against Petitioner No. 1 levelled by Respondent Nos. 1 and 2. Those allegations may be summed up from reading of preceding para 31 of this judgment. 68. There is lack of trust between the Managing Director (Resp. No. 2), Joint Managing Director (Petitioner No. 1) and the Director - Respondent No. 3. How the interests of 'BBPL' could be protected? The company 'BBPL' and its shareholders have to be rescued from this mismanagement and oppression. 69. It would now be appropriate to deal w....
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....d to sell his property at Shettigere for a consideration. Similar arrangements have been made by Resp. No. 2 with Lambas. Therefore they were no longer necessary parties. 72. Mr. Chaudhary in rebuttal submitted that Petitioner No. 1 personally acknowledges contribution made by his elder brother/Respondent No. 2 and would always remain indebted to him. He holds Respondent No. 2 in high esteem as is revealed in his affidavit dated 25.08.1995. However he knocked the door of this court when 'BBPL' has been deprived of a legitimate opportunity because of mismanagement and deliberate attempts to oppress the Petitioners (Kishore Kundan Sippy v. Samrat Shipping & Transport Systems Pvt. Ltd. [2004] 118 Comp Cas 472.). 73. As a sequel to the above discussion and in the peculiar facts and circumstances of the case I deem it appropriate to issue following directions: (a) The Board of Directors of 'BBPL' is superseded. Hon'ble Mr. Justice Permod Kohli and a former Chief Justice of Sikkim High Court is appointed as an Administrator of 'BBPL' company to look after its day to day affairs. The Administrator shall be provided with the office area in New Del....