TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 117
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....1st Petitioner (Late) Mr. G.A. Narasimha Raju and his friend Mr. Dasu Ramaswami during the year 1953 in the State of Maharashtra. The Company is mainly engaged in the business of Pharmaceutical products and Vaccines. Majority of the shares were held by the late father of the 1st petitioner. Alter a period often years the late father of the 1st petitioner, due to his personal commitments, decided to migrate to Hyderabad and consequentially the registered office of the Company also got shifted from Mumbai to Hyderabad during the year 1964. After shifting to Hyderabad the father-in-law of 1st Petitioner (Late) Mr. Venkata Krishnam Raju Datla, who was basically from Hyderabad and who was also a family friend of late father, joined the Company. The business relationship later on got convened as family relationship when the son of Mr. Venkata Krishnam Raju Datla viz. Dr. Vijay Kumar Datla, was married to the 1st Petitioner during the year 1967. Later on during the year 1972, late father of the 1st Petitioner handed over the management to the husband of the 1st petitioner by making him Chairman and Managing Director of the first respondent Company. Dr. Vijay Kumar Datla also became shareh....
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....ot be inducted in the board of the first respondent Company and the major shareholding shall be retained by him. It is pertinent to mention that the 2nd. 3rd and 4th Respondents were never inducted into the board of the first respondent Company. Only upon the insistence of the 1st Petitioner nominal shares were issued to the said respondents in the first respondent Company. The 3rd and 4th Respondents were married to Mr. Narendra Dev Mantena and Mr. Sridhar P. Raju respectively. The 2nd respondent joined the Company as an employee and continued to be in employment till the demise of Dr. Datla. 3. As stated supra, it was Dr. Vijay Kumar Datla and the 1st Petitioner who were only at the helm of the affairs of the Company since 1991 when the 1st Petitioner was inducted as Executive Director of the Company, Both of them devoted and dedicated their entire life and career for the growth and development of the Company. Both of them being Doctors applied the nuances of the business and accordingly took the company in the right direction, both business wise and financial wise, by taking wise decisions at the appropriate lime and making investments in the Company as and when required. Dr. V....
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.... Kumar Datla have been transmitted to her under an alleged bequeath in pursuance of the alleged Will dated 14.02.2005 is totally misleading and misconceived. The said alleged Will is neither probated nut produced in Original before the Company or the alleged Board which caused such illegal transmission and which is questioned in various proceedings including this Company Petition, In fact the entire shareholding of (Late) Dr. Vijay Kumar Daila rose from modest 14% to the huge volume of 81% only with the investments and money provided by the 1st Petitioner herein. It was she who had invested all the monies out of her, self earned and ancestral income and had even lent monies to the 1st Respondent Company in hours of its crisis on many occasions. As such the purchase of shares from coparceners, the Private Companies who disinvested their shares and other shareholders to make the IM Respondent Company their Family Business with Dr. Daila and the 1st Petitioner herein as only Director from the Family holding equity in the Company. Thus all the holding in the form of shares was held by the 1st Petitioner and Late Dr. Datla for more than 20 years and they alone managed the affairs of the....
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.... and also the shareholding pattern of the company. It is submitted that the 2nd, 3rd and 4th Respondents realizing the fact that all the properties of Dr. Datla would go to the 1st Petitioner as per their father's Will by virtue of which the 1st Petitioner would become a substantial shareholder in the company. At the time of death of Dr. Datla there were three directors on the board of the first respondent company viz.. Dr. Vijay Kumar Datla, Dr. Renuka Datla, the 1st Petitioner and Mr. CJ.V. Rao. the 5th respondent. After the demise of Dr. Datla there were only two director's viz.. Dr. Renuka Datla. the lst Petitioner and Mr. G.V.Rao, the 5lh respondent. As Mr. G.V. Rao did not want to continue as director after the demise of Dr. Datla he resigned from the board on 06.04.2013 leaving the 1st Petitioner alone as director on the board of the first respondent company. 6. The entire episode commenced on 10.04.2013 when the 1st Petitioner was sitting in the chambers of her late husband. The Company Secretary of the Company came rushing to the T1 Petitioner and informed that the Vice President and the Assistant Vice President of the company are illegally removing all the record....
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....ould have been held nor could any forms have been filed with ROC as the 1st Petitioner did not call for any board meeting on 09.04.2013, 10.04.2013 and 11.04.2013. As the first respondent company is a limited company and the Articles of Association of the company does not provide for a situation where the board has only one director, no appointments could have been made at a board meeting. As there is no provision either under the Companies Act 1956 or under the Articles of Association of the company for withdrawing the resignation letter filed by a director, the question of Mr. G.V. Rao withdrawing his resignation letter does not arise at all. 9. It is submitted that the filing of forms 32 by Mr. G.V. Rao is prima facie an illegal act that has been instigated by the 2nd, 3rd and 4th Respondents along with the sons-in-law of the 1st Petitioner. The 2nd, 3rd and 4th Respondents who decided to take control of the management of the company have adopted illegal means to achieve their object. The said Respondents realizing that they cannot file Form 32 directly as they are not directors of the company, has taken the assistance of Mr. G.V. Rao, the 5th Respondent in filing the said form....
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....be emitted to any of the properties of Dr. Datla, including the shares of the first respondent company, decided to somehow grab the shares from the 1st Petitioner. In the process they first filed bogus forms to show that the board is reconstituted on 09.04.2013 and thereafter transmitted the 4,00,961 shares standing in the name of Dr. Datla to and in favour of the 2n Respondent at a board meeting allegedly held on 10.04.2013. 13. It is stated that the minutes of the board meeting allegedly held on 10.04.2013 shows that the 400961 shares of Dr. Vijay Kumar Datla has been transmitted to the 2nd Respondent based on a will dated 14.12.2005 of Dr. Vijay Kumar Datla. The Petitioner very vehemently denies the existence of any such will executed by her late husband. As submitted above the late husband had executed a Will and all the properties of Dr. Vijay Kumar Datla were bequeathed to the 1st Petitioner and not to any of the daughters. Dr. Datla during his life time executed will only once through which he bequeathed his properties to he 1st Petitioner. Dr. Datla did not execute any Will in favour of any of his daughters. Dr. Vijay Kumar Datla even in his distant dream would not have th....
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....ome Invalid-Therefore it is submitted that the meetings allegedly held on 09.04.2013, 10.04.2013 and 11.04.2013 are prima facie invalid for the reasons that no such meetings actually were conducted on the said dates and the persons who allegedly conducted the meetings are not at all directors of the company. 16. It is stated that the 1st Petitioner during August 2013 received a notice from the 2nd Respondent Claiming herself to be Managing Director, calling for board meeting on 22.08.2013. The 1st Petitioner wrote back to the so called board denying the board meetings that allegedly took place from April 2013. The 1st Petitioner also attended the so called board meeting to find out the real intentions of the Respondents, Once again during September 2013 the 2nd Respondent called for one more board meeting on 25.09.2013, claiming herself as Managing Director of the company. As the objections raised by the 1st Petitioner was not duly recorded at the so called board meeting held on 22.08.2013, the 1st Petitioner decided to attend the so called board meeting on 25.09,20)3. Thereafter the 1st Petitioner wrote to the Respondents on various dates asking for inspection of records of the c....
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....9. It is submitted that the Respondents who illegally took the management and ownership control of the first respondent Company are taking all sorts of steps to ruin the first respondent company by disposing off the undertakings of the company and made the first respondent company a shell company. The Livestock undertaking is proposed to be demerged and transferred to M/s BE Immunology Private Limited (resulting Company 1) and the Vaccine Undertaking to M/s BE Vaxco Private Limited (Resulting Company 2). The Resulting Company 1 was incorporated on 07.02.2014 in Telangana and the Resulting Company 2 on 20.05.2014 in Andhra Pradesh. The 2nd 3rd and 4th respondents are promoters and directors of Resulting Company 1 and Resulting Company 2 is a wholly owned subsidiary of Resulting Company 1. Therefore, the Respondents control both the companies by virtue of the shareholding in Resulting Company 1. The Share entitlement ratio is 1:10 i.e. the members of the 1st Respondent Company would be entitled for 10 shares in the Resulting Companies under the Scheme of Arrangement. The paid up capital of the both the companies are a mere Rs. 1 lakh. It would not be oul of context to mention that th....
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....to why a company that deals with Pharma Products requires a President to handle Real Estate business. This only shows that the Respondents are proposing to dispose of all the properties owned by the Company. As the entire shareholding pattern has been tampered by adopting illegal means by the Respondents, all the resolutions allegedly passed at the AGM on 18.12.2013 shall be set aside as invalid. 23. As a matter of fact the Respondents No.2 to 4 had filed SLPs in the Apex Court challenging the order of the High Court in Company Appeal No. 17 of 2014 which was allowed in favour of the 1st Petitioner herein. Inspite of having filed SLPs the Respondents No.2 to 4 could not obtain any order of suspension from the Apex Court and yet to avoid the conduct of affairs of the Company which would amount to recognizing the position of the 1st Petitioner herein as Managing Director as appointed by the Hon'ble High Court they deliberately failed to attend such meetings. This was in fact clearly disclosing the attitude of the Respondents No.2 to 4 to stall and disturb the conduct of the affairs of the Company. It is also pertinent to mention that the Apex Court during the pendency of the SLP....
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.... of the undertaking given by them consequently amounting to an act contempt liable to be processed for besides a clear act of oppression and mismanagement. 24. It is pertinent to mention herein that this Hon'ble had vide its order dated 06.08.2014 directed me respondents herein not to dispose of any of the immovable properties that were held by the Company. However inspite of the said directions the Respondents have sold the immovable property belonging to the Company situated at Manoharabad to M/s ITC Limited vide Registered Sale Deed bearing Doc.No.425/2015 dated 18.03.2015. It is pertinent to mention herein that the value of the said immovable property was not less than Rs. 85 Crores on the given date and the respondents have apparently sold the same illegally for a trifling sum of Rs. 44 Crore causing huge and unwarranted loss to the Company without having any lawful mandate and misusing the illegally usurped powers. 25. In view of the facts and circumstances as stated above, the petitioners prayed this Bench to gram the following reliefs:- a. To declare that the acts of the Respondents No.2 to 5 are oppressive and prejudicial to the interest of the Company and the Petit....
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.... Board may deem fit and proper. 26. The first respondent filed detailed counter to this petition. Shri P.S. Raman, learned Senior Counsel appeared for the respondent submitted that the company petition is devoid of any merits and hence, liable to be dismissed with exemplary costs on the ground that the instant Company Petition is not maintainable under Sections 397, 398 or 399 of the Companies Act, 1956 (Sections 241, 242 & 244 of the Companies Act, 2013) for the following reasons: A. It is submitted that under Section 399(1)(a) of the Companies Act, in the case of a Company having a share capital, not less than 100 members of the company or not less than 1/10 of the total number of its member, whichever is less, are entitled to maintain a petition under Section 397 or 398 of the Companies Act, 1956 seeking reliefs against oppression and mismanagement. In the instant case, in an ingenious yet misconceived manner, the 1st Petitioner has sought to bypass the statutory restriction contained under Section 399 of the Companies Act, 1956 by incorrectly arraying the 2nd and 3rd Petitioners as the Petitioners in this Company Petition. The 2nd and 3rd Petitioners are Trusts which h....
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....Petitioner is thus unclean and approaching this Hon'ble Tribunal again with the instant Company Petition is a complete abuse of the process of law. D. It is submitted that the first petitioner has again approached this Hon'ble 'Tribunal with unclean hands and is guilty of suppressing material facts in as much as the 1st petitioner is aware of the changes that had taken place in the management and shareholding structure of the 1st Respondent Company, since the 1st Petitioner herself addressed a letter to the 2000 employees of the 1st Respondent on 15th April. 2013 as regards the appointment of the 2nd Respondent as the Managing director of the 1st Respondent company and Respondents 3 and 4 as director of the Company. The 1st Petitioner deliberately suppressed the said letter again on account of the fact that the 1st petitioner is aware that the letter dated 15.04.2013 referred to above would belie her allegation that the Board Meetings of 9th 10th and 11th April, 2013 of the answering Respondent Company were conducted without her knowledge. Furthermore, the very letter dated 15.04.2013 makes the entire case of the petitioner untenable. It is submitted that the fact of 1....
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....dent in her individual capacity holds 83.494% of shares in the issued share capital of the 1st Respondent Company, 0.340% of shares as a beneficiary of ; trust which is a shareholder of the 1st Respondent company and 2.863% of the issued shares jointly along with the 1st Petitioner. The 2nd Respondent, in accordance with the wishes of P1 Petitioner's husband and after his bereavement, with the consent of all the family members including the 1st Petitioner, was appointed as the Managing Director and Director of the R1 Company vide Board Resolution dated 10.4.2013. The averments that the 2nd Respondent only holds 5.13% of the paid up capital of the 1st Respondent Company is incorrect for the reasons stated above. The shares of the 2nd Respondent's father, being 400,961 shares of Rs. 100/- each, were transmitted to the 2nd Respondent in accordance with the Board Resolution dated 10.4.2013 as per the Will of late Vijay Kumar Datla dated 14.2.2005. 29. It is submitted that the Respondents 3 and 4 own 1.112% and 1.112% of the issued share capital in the R1 Company respectively in their individual capacities. As beneficiaries of trusts which are shareholders in the 1st Respondent....
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....e. The original share certificates were, in fact, tabled at the Board Meeting along with copy of the Will. Merely because the Board Resolution dated 10.4.2013 does not make an express reference to this fact, it cannot be said that the transmission is vitiated. 32. The transmission of the shares in favour of the 2nd Respondent has been done in accordance with the provisions of the Act. The averment that the 3rd Respondent, being a Director of the Company, ought not to have participated in the resolution is incorrect and misconceived, inasmuch as, the transmission is sought to be effected in favour of the 2nd Respondent and not in favour of the 3rd Respondent herself. 33. Despite having been fully aware of and having consented to the decisions taken by the Board of the 1st Respondent Company on 9th, 10th and 11th April, 2013 and having openly endorsed the appointments of Respondents 2 to 4 to the Board of the 1st Respondent Company by way of a letter dated 15.04.2013, the 1st Petitioner started subsequently making various untenable allegations against the 1st Respondent company. On account of the sudden change in her attitude and behaviour towards the affairs of the 1st Respondent ....
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.... the Company and its shareholders. 37. It is submitted that the fact that the 1st Respondent Company filed a company petition seeking an arrangement in the year 2011 clearly establishes that the business restructuring proposals were always under active consideration. The then Scheme of Demerger was not pursued further at the relevant time due to business reasons. 38. The 1st Petitioner has miserably failed in citing any single instance of mismanagement. The balance of convenience is only in favour of the Respondents. The 1st Petitioner, being a party to all the resolutions of 9th 10th and 11th April, 2013 Board Meetings, cannot be permitted make bald allegations of oppression or mismanagement. The Is1 Petitioner suppressed her letter dated 15-4-2013 in the earlier Company Petition 1/2013 and in the Civil Suit, O.S.No.184/2014. The 1st Petitioner has again suppressed her letter dated 15-4-2013 in the present Company Petition No.36/2014 also. The 1st Petitioner is not permitted to claim balance of convenience in her favour in the light of such suppression of material facts. The affairs of the 1st Respondent, which is a public company, are conducted in accordance with law and as a r....
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....by relying on a Will allegedly executed by her husband in her favour. In the said suit the 1st Petitioner has among other, sought for a declaration that she is the absolute owner of all the shares of her late husband in the 1st Respondent Company, based on the alleged Will. At the same time, alternatively, the 1st Petitioner is also seeking reliefs in the nature of declaration that she is the owner of ½ shares or 1/4th shares in the shares of her late husband in the 1st Respondent Company. The Respondents 1 to 4 have filed their Written Statements in the said suit questioning the validity of the alleged will relied upon by the 1st Petitioner and the said issue is under consideration by the trial court and therefore, the relief sought by the 1st Petitioner in this Company Petition with respect to the transmission of the shares in favour of the 2nd Respondent, is entirely misconceived as this issue would need to be gone into by the trial court based on the evidence adduced by the 1st Petitioner before it and in accordance with Section 68 of the Evidence Act, 1872. Therefore, the instant company petition filed for similar reliefs as that in the suit is not maintainable and is l....
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....CUTIVE DIRECTOR " It is respectfully submitted that the above letter of the 1st Petitioner was the subject of intense debate before this Hon'ble Tribunal in the Company Petition No. 1/2013. This Hon'bie Tribunal was pleased to note the salient features of the letter and came to a conclusion that the resolutions of 9th. 10th and 11th April 2013 of the 1st Respondent Company were entirely within the 1st Petitioner's knowledge. The 2nd Respondent submits that the 1st Petitioner deliberately suppressed the said letter again on account of the fact that the 1st Petitioner is aware that the letter dated 15.4.2013 referred to above would belie her allegation that the Board Meetings of 9th, 10th and 11th April 2013 of the ls1 Respondent Company were conducted without her knowledge. Furthermore, the very presence of the letter dated 15.4.2013 makes the entire case of the Petitioner untenable. 42. It is respectfully submitted that the letter binds the 1st Petitioner. The Is1 Petitioner's decision to make all the three appointments of 2nd to 4Ih Respondent as the Managing Director and the Directors respectively, has its source in the family meetings held immediately after the....
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....39;s leadership is responsible for securing the World Health Organization - Geneva - Pre qualification accreditation for the first time to the 1st Respondent Company. As a result, the 1st Respondent's product namely Pentavalent is sourced by international institutions. The 2nd respondent, as a member of the founding family, immensely contributed for the 1st Respondent's growth, development and for its sustainable development. The 2nd Respondent was able to accomplish her business responsibilities at a very young age. The 2nd Respondent commands high respect in the family and industry circles. This 2nd Respondent has brought about a total transformation in business of the 1st Respondent Company under the perennial guidance of her late father for about two decades. The 2nd Respondent was deeply involved in all the major projects being undertaken by the 1st Respondent Company along with her late father and has played a significant role in contributing to the 1st Respondent Company and its success. The 1st Petitioner herself took pride in announcing the appointment of the 2nd Respondent as the Managing Director of the 1st Respondent Company through her detailed letter dated 15-....
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....espondent herein, who was officiating as an independent Director since the year 2000, was also present. At such meeting, as it was decided that the three daughters of Dr. Vijay Kumar Datla, i.e., 2nd to 4th Respondents, will be inducted as Directors with the 2nd Respondent being appointed as the Managing Director. Mr. G.V. Rao, to facilitate such future arrangement for the management of the company between the family members Dr. Vijay Kumar Datla. offered to step down from the post of Director and accordingly addressed a letter to the Company on 6.04.2013. 47. When the said resignation was brought to the notice of all the family members it was fell that it would be in the best interests of the 1st Respondent Company that the experience and knowledge of Mr. G.V. Rao be continued to be utilized for the larger benefit of the 1st Respondent Company. 48. Accordingly, all the family members of Dr. Vijay Kumar Datla, including the 1st Petitioner, had personally requested Mr. G.V, Rao agreed to continue as a Director and accordingly withdrew his resignation in a letter handed over to the 1st Petitioner personally. The 1st Petitioner on behalf of the Company personally acknowledges the re....
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....ing the consent of the 1st Petitioner and the other two inducted Directors, being the 2nd and 3rd Respondents herein. In the Board of Directors' meeting conducted on 1lth April 2013 the 2nd Respondent was appointed as the Managing Director of the Company. 53. It is humbly submitted that all the above meetings were conducted in quick succession as consented to, and accepted by, all the Directors including the 1st Petitioner and those appointed for the purpose of achieving the objective of bringing, on the Board of Directors the three daughters of Dr, Vijay Kumar Datla and for appointing the 2nd Respondent as the Managing Director of the company. 54. It is submitted that all the above facts were completely within the knowledge of the 1st Petitioner and the 1st Petitioner, on 15th April, 2013, formally addressed the entire Family of the 1M Respondent Company. 55. It is submitted that the news of the 2nd Respondent being Inducted as the Managing Director of the 1st Respondent Company was widely covered in various national and local newspaper, including The Hindu, Indian Express, Sakshi, Vartha, Business Standard, Financial Express, Economic Times etc. Theses news paper articles ....
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..... This demand was not acceded to by the family members and the shareholders of the 1st Respondent Company immediately for reasons purely attributable to the business of the 1st Respondent Company in as much as the 1st Petitioner was never involved in the business of the 1st Respondent Company. Furthermore, given the 1st Petitioner's age the shareholders, her daughters and well wishers also advised the 1st Petitioner to work towards her spiritual and eternal responsibilities by freely contributing her entire wealth and prosperity to the societal causes. All the family members also assured the 1st Petitioner that her existing position, status and monetary benefits will be protected and that she would continue with the same benefits and stature that was accorded to her during the lifetime of her husband. However, the 1st Petitioner was not satisfied with this position and as a result of the refusal of the shareholders and family members to accede to her request, the 1st Petitioner embarked on tiling various cases to threaten the Respondents. The 1st Petitioner, in furtherance of her design, has also stolen and removed the entire official record from the office premises of 1501, 15....
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....The 1st Petitioner was granted the rights of full participation in the said meeting held on 22nd August 2013 and wherever a dissent was made, the same was duly recorded in the minutes. 63. Having regard to the respect held by all the family members and in tact, the entire Biological R Family, the Directors of the Company viz., 2nd to 4th Respondents, who are also the daughters of the 1st Petitioner, discussed these issues with the 1st Petitioner personally and sought to impress upon the 1st Petitioner that it would not be in the best interests of the 1st Respondent Company to appoint her as Executive Chairman and as the 1st Petitioner appeared to have been convinced with the suggested course of action, nothing further was done. 64. The 1st Petitioner duly attended the said meeting convened on 25th September, 2013 where too the 1st Petitioner was granted the full right of participation. On the said dale, the 1st Petitioner addressed the Board of Directors and submitted a letter making various false, frivolous and untenable allegations. 65. After the said letter dated 25th September, 2013, when the 1st Petitioner continued to reiterate the incorrect and unfounded allegations about....
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.... written statements raising several objections with respect to the validity of the will. It is submitted that the said suit is pending on the file of the 24th Additional Chief Judge Court, City Civil Courts at Hyderabad. 70. While so, after withdrawing Company Petition No.1 of 2013 and pending consideration of suit OS No. 184 of 2014 before the City Civil Court at Hyderabad, the 1st Petitioner, again in a complete abuse of process of the court and by suppressing relevant facts and concealing various materials, has filed the instant Company Petition. The present Company Petition is one such desperate attempt on the pan of the 1st Petitioner to pressurize the Respondents to appoint the 1st Petitioner as Executive Chairman and permit her to continue as Executive Director. This Petition is not maintainable and the 1st Petitioner has no cause to tile the present petition, 71. The 3rd and 4th Respondents also failed Counter to the petition. Shri Arun Katpalia, learned Senior Counsel for the respondents submitted that the Petition is not maintainable and under Sections 397 and 398 a petition only be maintained by a member who satisfies the eligibility criteria as set out in Section 399(....
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....atter in which he or she may be interested. If the Trustees hereby constituted or any of them or any Trustee or Trustees appointed as provided in this Deed shall die or leave India for more than three consecutive years or desire to be discharged or refuse or become unfit or incapable to act, then and in very such case. It shall be lawful for the surviving or continuing Trustees or Trustee for the time being (and for this purpose every refusing or retiring Trustee shall if willing to act in the execution of this power be considered a continuing Trustee) or for the acting executors or executor administrators or administrator of the last surviving or continuing trustee to appoint a new Trustee or new Trustees in the place of the Trustee or Trustees so dying or leaving India or desiring to be discharged or refusing or becoming unfit or incapable to act as aforesaid. " "...PROVIDED HOWEVER: The number of Trustees of these presents will never be less than two.. ". "DURATION OF THE TRUST: The trust shall remain it, force for and upto 31.03.2010 and thereafterwards it shall get duly extinguished. Upon the extinguishment of the trust the trustees shall ascertain the amount dm to each one....
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....g, the Trust required there to be at least two Trustees to validly act for and on behalf of the Trust, and admittedly, in the present case, as per the 1st petitioner, she is the only Trustee. Therefore, on this short ground along the Petition is incompetent; (c) Without prejudice to the foregoing, in any event, a bare perusal of the petition also leaves no manner of doubt that there is a clear conflict of interest between 1st petitioner and 2nd respondent and, therefore, the 1st petitioner is incompetent to act as a Trustee under the General Law of Trusts and specifically under Clause 6(xi) of the Deed of Trust. 76. In view of the aforesaid, it is manifest that the present Petition filed by a single shareholder, namely the 1st petitioner, who admittedly neither holds 10% of the paid up capital, nor does she constitute more than 1/10th of the total number of members of the respondent Company. Therefore, in view of the plain reading of Section 399 of the Act, 1956. the present petition is not maintainable and be dismissed as such. Indeed in the absence of the said Deeds of Trust and valid authorization from the Trusts the Registry ought not to have numbered or entertained the prese....
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....im - Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall nor afterwards sue in respect of the portion so omitted or relinquished." "(3) Omission to sue for one of several reliefs.- A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; hut if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue far any relief so omitted." The 1st petitioner in the previous petition made grievances and impugned the Board meetings held on 9th 10th and 11th April, 2013 and challenged the appointment of Directors and composition of the Board. She made no grievance nor raised any issue in relation to transmission of shares which also took place at the meeting on 10th April, 2013. Therefore, in terms of the provisions of Order 11 of CPC, if the 1st petitioner had any grievance in relation to transmission of shares effected on 10th April, 2013 she should have included that in her purported claim as contained in Company Petition No.1 of 2013, which she admittedly omitted to do. The 1st Petitioner, having omitted to impugn the tran....
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....estions concerning the scheme of arrangement are matters which fall within the exclusive jurisdiction and domain of the Hon'ble High Court and therefore, this Hon'ble Board does not have the jurisdiction to examine these issues. 82. The Petition is another malafide attempt into coercing the Respondents to make the 1st Petitioner Executive Chairman of Respondent No.1. The genesis of the trouble of this Petition and other false cases lies in the 2nd 3rd and 4th Respondents not being agreeable to appoint the 1st Petitioner as the Executive Chairman of the Company. The 1st petitioner was aggressively insisting that she be appointed as the Executive Chairman to which, however, the Respondents were not agreeable as, in their considered opinion this would be detrimental to the interests of the 1st respondent company and as the performance of 2nd respondent as Managing Director was outstanding. It is to state that late Dr. Vijay Kumar Datla was an illustrious personality. His ideals and philosophy are worth emulating. He groomed the 2nd respondent as his natural successor, to the knowledge of one and all for the past two decades. The 1st petitioner, however. was adamant and when s....
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....t is a false case 10 False police complaint filed before Shamshabad Police station September 2014 Police on verification didn't find any merit 11 False Police complaint filed before Kandukur Police Station September 2014 Police on verification didn't find any merit. 83. In support of the contention, the learned Counsel relied upon the following decisions:- (i) Manu/MH/0077/1993 - High, Court of Bombay - In the matter of M/s BSN (UK) Limited and others v. Janardan Mohandas Rajan Pillai and others - Para 14 - On the point of Member (ii) AIR 1938 Madras 982 - In the matter of Vedakannu Nadar and others v. Nanguneri Taluk Singikulam - on the point of Trustee. (iii) Manu/SC/0052/2005 - In the matter of Sangramsinh P. Gaekwad and others v. Shantadevi P. Gaekwad (Dead) - through LRs. -Para 244 (iv) Manu/KA/0101/1991 - High Court of Karnataka - In the matter of Srikanta Datla Narasimha Raja Wadiayar v. Shri Venkateswara Real Estate Enterprises Private Limited. (v) Manu/SC/0192/1994 - In the matter of S.P, Chengalvaraya Naidu v. Jagannath Shri Niranjan Reddy, learned Counsel for the Respondent No.4 relied upon the judgment....
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....13 to induct respondents 2 and 3 as directors and make the 2nd respondent the Managing Director of the 1st respondent company as also to transmit shares in favour of the 2nd respondent belonging to the late Dr. Vijay Kumar Datla in terms of his will dated 14.2.2005 in favour of the 2nd respondent. All these meetings took place with the consent of the 1st petitioner and this respondent had personally notified the 1st petitioner of the conduct of the each of these meetings. Having therefore been fully appraised of and having consented to the conduct of the said Board Meetings on the 9 , 10th and 1lth of April, 2013 the 1st petitioner cannot now deny the factum of the conduct of the said meetings. 1st petitioner is publicly acknowledging the aforementioned appointments vide a letter dated 15.04.2013 addressed to ail the employees of the 1st respondent company also belies the present allegations. In accordance with the succession plan set out by the Late Dr, Vijay Kumar Datia and as per the understanding arrived at between members of the promoter family, respondents nos. 2 to 4 were to be inducted as Directors to the Board of the 1st respondent company and the 2nd respondent was also t....
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....nt in the presence of Dr. Vijay Kumar Datla after he had executed it For various reasons stated in the Will dated 14-2-2005 it is clear that late Dr. Vijay Kumar Datla gave his entire shareholding in the 1st Respondent Company to the 2nd Respondent. In view of the aforesaid, late Chairman and Managing Director started vesting full control of the affairs of the business and management onto the 2nd Respondent. This is known to one and all in the family, the Company and in the entire business community and public. 88. Further, in accordance with the succession plan devised by the Late Dr. Vijay Kumar Datla, the Respondent No. 2 was progressively groomed to take over the management of the Company and the same is also reflected in the Will dated 14-2-2005 executed by the Late Dr, Vijay Kumar Datla in accordance with which shares have been transmitted in favour of the 2nd Respondent. This Respondent, being one of the attestors to the Will dated 14-2-2005, is within the knowledge of the 1st Petitioner from the beginning. In light of the said position, the Will alleged to have been executed by the Late Dr. Vijay Kumar Datla bequeathing properties in favour of the 1st Petitioner is denied ....
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....tor of the company. This very conduct of the Petitioner disentitles the Petitioner from contending otherwise. It is submitted that. I continue to be director of the company and all the meetings on 9th 10th and 11th April, 2013 and thereafter were held in accordance with the established practices as the Respondent Company and with the prior knowledge and consent of the Petitioner. 91. The 1st Petitioner continued to address this respondent as a Director of the company and recognized his position while attending Board meetings conducted in the months of August and September and thereafter. It is to submit that having chosen to voluntarily desist from attending the Board Meeting on 9th, 10th and 11th whereby Respondents 2 to 4 were appointed as Directors of the 1st Respondent Company and having subsequently ratified the said appointments the 1st Petitioner cannot now conveniently plead ignorance of the said happenings. Therefore, once the said meetings took place with the full and active knowledge of the 1st Petitioner, it is unfair to contend that the minutes have been manufactured by the answering Respondent, It is, however, to submit that shares belonging to the Late Dr. Vijay Kum....
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....2nd Respondent. I also stated that the Will was executed in accordance with the wishes of the Petitioner. In fact, I staled that it was the 1st Petitioner who insisted that 1 continue as a director of the company. I also stated that she was betraying the trust of her children and of her late husband and that she should refrain from behaving in a manner which would bring disrepute to the family. In view of the reasons it is stated in the counter that the petition may be dismissed. 94. Heard the 1st petitioner in person, the learned Counsel appeared for the petitioners and the learned Senior Counsel appeared for the respective parties. perused the pleadings, documents and citations relied upon by them. After analyzing the pleadings the following issues are felt for consideration and need to be addressed. (i) Whether the petitioner has requisite qualification as contemplated under Section 399 of the Companies Act, 1956 to invoke the jurisdiction of this Bench under Section 397/398 and other provisions of the Companies Act, 1956 and whether any case has been made out even under Section 111 A of the Companies Act, 1956? (ii) Whether the Board Meetings held on 09.04.2013, 10.04.2013 a....
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.... the matter is posted for hearing on 16.12.2015 at 10.30 AM. (b) On 16.12.2015. the Bench directed to fist the matter for hearing/arguments on 18.01.2016 at 2:30 PM. (c) On 18.01.2016. the Bench again directed to list the matter for hearing/arguments on 16.02.2016 at 2.30 PM along with all pending applications. The reason for adjournment is that the Advocate for the Petitioner had staled that his client (the petitioner) was seriously ill and therefore, the rejoinder could not be filed. For the aforesaid reason the matter has been adjourned to 16.02,2016 and directed the petitioner to file rejoinder within a period of three weeks. (d) On 16.02.2016. the matter has been posted for hearing on 16.03.2016 at 10.30 AM and the Bench has imposed a cost of Rs. 5.000/-for non-filing of rejoinder by the petitioner. (e) On 15.03.2016. the matter has been adjourned and posted on 17.03.2016 at 10.30 AM for hearing, at the request of petitioner (f) On 22.03.2016, the matter has been adjourned again at the request of petitioner and posted on 24.03.2016. (g) On 24.03.2016, after hearing the parties the CP is posted on 06.04,2016 at 10.30 AM for final hearing and the Bench specifically m....
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....cation is called for hearing, the Bench may in its discretion, either dismiss the petition or the application for default or hear and decide the same ex-parte ", 7. Learned Senior Counsel for the respondents submitted that neither the petitioner nor the Counsel present and the CP need to be dismissed for default. He however submitted that they are ready to commence their arguments on the merits of the case and commenced his arguments on maintainability of the petition and on other factual aspects. 8. During the course of arguments of Shri P.S. Raman, the petitioner entered the Court Hall and occupied the seat reserved for the Counsel for the petitioner. On noticing the presence of the petitioner in the court hall, the learned Senior Counsel fairly submitted that the petition cannot be dismissed for default and requested the Bench to hear the arguments of the petitioner in first priority. After completion of the arguments of the learned Senior Counsel for the respondents, the petitioner replied on the issue of maintainability of the petition and submitted that the petition cannot be dismissed on the point of maintainability and argued on other points. 9. After completion of the a....
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....d and concluded his arguments on various points and requested the Bench to reserve the matter for orders. 12. This Bench had given sufficient time to the petitioner, to commence then-arguments and the Bench on several occasions adjourned the matter only at the request of the petitioner and impliedly the Bench accommodated the petitioner to suit her own convenience to commence their arguments, despite strong objections from the respondents not to adjourn and grant time to the petitioner, Even this Bench imposed a cost of Rs, 5,000/-for nonfiling of Rejoinder within the time. I am of the considered opinion that the Petitioner is seeking adjournment for one or the other reason only to protract the litigation. I am in disagreement with the submissions made by the Counsel representing the petitioner for grant of any adjournment and the Bench will abide by its own orders passed on 21.04.2016. It is an admitted fact that there is no stay from any Court of appeal restraining this Bench from hearing the present CP. In absence oj the same, I am not inclined to adjourn the matter. As stated supra, the Bench is abided by the directions of the Hon'ble Supreme Court. It is reiterated that t....
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....ourt, without observing any final opinion on the merit of the contrasting assertions. In our comprehension, having regard to the relief provided by the CLB by its order dated 06.08.2014 to the parties, it ought to be left to decide (he petition on merits after affording them a reasonable opportunity of furnishing their pleadings. As in the course of hearing, some grievance was expressed on behalf of respondent No. 1 that her status as the Executive Director of the company, stands undermined due to uncalled for surveillance imposed at the instance of the existing Hoard of Directors, were make it clear, as has been assured before us, that she ought to be allowed to function in the aforesaid capacity being provided with all facilities and privileges attached to the office as permissible in law, so much as that she does not have any occasion to complain in this regard. This indeed ought to be in accord with the letter and spirit of the undertaking offered by the Board of Directors to the CLB. The respondent No. 1 too would cooperate in the day to day management of the affairs of the company in her said capacity. The existing Board of Directors would also abide by the undertaking as rec....
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...., an opportunity was given to the Petitioner and the Respondents to file their written submissions within a period of 10 days from 03.05.2016 and directed the parties to exchange the copies. It also made clear that failing to file the written submissions by 16.05.2016, the Bench will deem that no written submissions are tiled. In pursuance of the above directions the respondents have filed their written submissions in the registry on 13.05.2016. However, the petitioners have not filed any written submissions in the Registry and the Bench considered the pleadings and oral submissions made by the Counsel for the Petitioner and the 1st petitioner. I spent considerable time to read each and every page of voluminous pleadings filed by the respective parties in order to address all the issues and points more particularly raised by the Petitioner No. l and rebutted by the respondents. 99. Now I deal with the issues. Issue No.(i) (a) The learned Senior Counsel for the respondents submitted that the petition is not maintainable on the ground that the petitioner does not fulfill the requisite qualification as contemplated under Section 399 of the Companies Act, 1956. The company petitio....
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.... of the late husband of the petitioner. Along with the plaint Schedule A which is enclosed, wherein the 400961 shares also mentioned in the said Schedule. It is an admitted fact that the petitioner had filed the above suit before the Hon'ble City Civil Court on 28.02.2014 i.e. prior to filing of the present petition. The Hon'ble Supreme Court vide its judgment dated 06.10.2015 also directed the Hon'ble Civil Court to dispose of the said suit. Thus it is apparent that for the same reliefs as sought in the petition at Para 8.4 of the main reliefs, the petitioner had already Instituted the suit before the Hon'ble Civil Court and the suit being prior in point of time the petitioner cannot seek the said relief in this petition. Accordingly, the said relief is rejected and I hold that the petitioners cannot seek the aid of Section 111A, Section 58 and 59 of the Companies Act. Thus the petitioners cannot take a stand that the petition is a composite petition filed under Section 111A. Section 58/59 and other provisions of the Companies Act. The Bench will treat that the petition is filed under Sections 397/398, 402, 403, 404 and 406 of the Companies Act, 1056. (b) The main....
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....e have been dismissed and the interim injunction is operating against the petitioner from acting as Trustee. Therefore, the 1st petitioner cannot act as a trustee of the petitioner No. 2 and 3 and even otherwise there is no authorization by the said trusts to acts on its behalf. Therefore, the petitioner has no locus standi to file the petition on behalf of the 2nd and 3rd petitioners. Further, the beneficiaries of the trusts are the 2nd to 3rd respondents herein and they have addressed a letters dated 04.12.2013 directing the 1st petitioner to desist from acting as a Trustee in respect of the said Trusts, the 2nd and 3rd respondents in their counter affidavit extracted the said contents of the letter dated 04.12.2014 and the same is extracted hereunder: "Please be informed that you can no longer act as Trustee of any of our Trusts where we three are jointly or severally are the beneficiaries, more particularly after the death of our father Dr. Vijay Kumar Datla who was a Trustee. Additionally, each of the Trusts have completed their vesting dates, and as such ail monies, assets both moveable and immoveable must be passed along to the beneficiaries along with a detailed accounting....
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....aid up capital is also not fulfilled. Accordingly, the petitioner failed to fulfill the required qualification as contemplated under Section 399 of the companies Act, 1956, to file a petition under Sections 397/398, the petition is not maintainable and liable to be dismissed. Hence, the CP is dismissed as not maintainable and accordingly the issue is answered against the petitioner. Even the petition is not maintainable I am inclined to address and deal with the other issues to give a quietus to the lingering litigation. Issue No. (ii) Now I am dealing with the issues (ii) (a) Resignation of R5 as director and withdrawal of the same The main controversy arose after the death of the then Managing Director i.e. Dr. Vijay Kumar Datla, who died on 20.03.2013. The Rl Company is a unlisted public Company and the Company was having three directors on the board of the R1 Company i.e. the P1, (Late) Dr. Vijay Kumar Datla and R5. After the demise of Dr. Vijay Kumar Datla, the Company was having only two directors i.e. the P1 and R5. The respondent No,5 resigned vide his letter dated 06.04.2013 addressed to the Board of Directors of the Rl Company stating the reasons that due to unavoid....
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....senior member of the board did not take any steps even filing of Form 32 showing cessation of R5 as director with the concerned authorities. It appears that the P1 asked the R5 to continue as director of Rl Company. Further the PI has not taken any steps to call for the EOGM for appointment of directors to fulfill the requirement as per the Articles and Law. (b) The Board Meeting dated 09.04.2013 The board meeting of the Rl Company was convened on 09.04.2013 to fill the casual vacancy caused due to the demise of Dr. Datla. The R5 present in the board meeting and took the chair to conduct the proceedings. It is stated that the P1 did not attend the board meeting and leave of absence was granted. It is also stated that the R5 in the capacity as a Chairman of this Board Meeting informed that he was in touch with the other director Mrs. Renuka Datla (P1) for convening a board meeting to take on record the sad and sudden demise of Dr. Vijay Kumar Datla and the necessity of 111 ling up the casual vacancy arose on account of his death. It was resolved that the R4 i.e. Dr. Indira appointed as director in the casual vacancy arisen on the demise of Dr. Vijay Kumar Datla. After the said ap....
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....eting, the R1 Company transmitted 4,00,961 shares standing in the of (Late) Dr. Vijay Kumar Datla in favour of the R2. The board also took a decision to give effect the aforesaid share transmission on the share certificates. The petitioner vehemently contended that the husband of the petitioner (Late) Dr, Vijay Kumar Datla bequeathed all his properties including the shares in her favour. Admittedly, the petitioner filed a suit before the Hon'ble Civil Court being O.S. No. 184/3004 seeking a declaration that she is the absolute owner of the shares to an extent of 4,00,961 shares or in the alternate 1/4th of the shares. As staled in the issue No. (i) supra the said suit is pending before the Hon'ble Civil Court, Therefore, this Bench cannot decide the disputed issues of inherence with regard to shares, since the issue being civil in nature and the same is pending before the Hon'ble Civil Court. I hold that the said board meeting is legal and valid and cannot be interfered with. It is apt to mention herein that this Bench in proceedings relating to rectification of register of members will decide whether the shares have been transferred in due compliance with the provision....
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....estrictions as it may determine. The remuneration of a Managing Director may be by way of monthly payment, fee for each meeting or participation in profits, or by any or all these modes or any other modes not expressly prohibited by the Act". In due compliance of the above clause of the articles, the Rl Company appointed the Managing Director i.e. the R2. 1 hold that the board meeting held on 11.04.2013 is also legal and valid. The petitioner is aware of all the meetings and made no grievance nor raised any issue in relation to either transmission of shares which took place in the second board meeting held on 10.04.2013 and appointment of 2nd respondent as MD till C.P. No.1/2013 is filed. Even the 2nd respondent was working with the Company for the past 16 years prior to appointment as Director and Managing Director. She worked in various capacities including beading the important vaccine division. She was instrumental in executing the modern biotech plant. It is also slated that the R2 executed several international contracts and successfully handled various foreign collaborations. The R2 received several national recognitions for her contributions to the vaccine industry. It is ....
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....XECUTIVE DIRECTOR " It is not out of place to mention that the petitioner earlier filed C.P. No. 1/2013 before this Bench under Section 409 of the Companies Act, 1956 arraying the company and three daughters and the 5th respondent herein also arrayed as 5th Respondent therein. The petitioner also made similar averments in the said CP including the board meetings held on 9th, 10th and 11th April, 2013 and Resignation of R5. The respondents also contended therein that the R1 Company is having 14 shareholders and the meetings were held validly. The Petitioner as an interim relief prayed this Bench to stay the 60th AGM to be held on 28.11.2013. The Bench after hearing elaborate arguments, passed a detailed order rejecting granting of stay of the 60th AGM. The petitioner in her above letter clearly stated and shared the news of the appointment of her three daughters i.e. R2, R3 and R4 to the board of Rl Company and specifically stated that the R2 who has been working alongside the employees and the husband of the petitioner for over 15 years and introduced her in the capacity as MD of R] Company. Further the petitioner No. l seeking the blessing and guidance for R2 on the eve of taking....
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.... attended the board meeting on 22.08.2013 and in the said meeting the previous minutes of the board held on 26.06.2013 were confirmed. The remuneration of the petitioner was revised in this meeting. In view of the participation in the board by the petitioner, I do not see any merit in the submissions made by the petitioner in this regard. Hence the board meeting held on 11.04.2013 is legal and valid. Hence the issue is answered against the petitioner. Issue No. (iii) Transmission of shares to an extent to 4.00,961 equity shares Regarding transmission of above shares, I have dealt extensively on earlier paragraphs. The transmission of shares took place in the board meeting held on 10.04.2013. Further the petitioner already filed a civil suit being O.S. No. 184/2014 on the file of 24th Additional Chief Judge, City Civil Court at Hyderabad against the Rl to R4 respondents and others. The petitioner among other reliefs sought a declaration that she is absolute owner of the above shares as shown in Schedule A by virtue of Will Deed of (Late) Dr. Vijay Kumar Datla. Further the petitioner sought direction to the respondents therein to transmit the same in the name of the petitioner a....
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....and re-appointment of auditors and the R2. R3, R4 were elected as directors pursuant to Section 257 of the Act by the shareholders of the Company and the R2 appointed as Managing Director and the R4 appointed as whole lime director and even the resolutions were passed for fixation of the remuneration of the directors. It is relevant to mention that the petitioner proposed the re-appointment of auditor viz. M/s Brahmayya and Co., The Directors appointed in the board meetings held on 09.04.2013, 10.04.2013 and 11.04.2013 have been ratified by the general body, in the said 60th AGM the remuneration of the petitioner has been increased. The petitioner filed an affidavit dated 21.07.2014 praying this Bench to permit the petitioner to withdraw the CP pending before this Bench. The Memo of withdrawal was taken on record by this Bench and the Bench dismissed the C.P. No. 1/2013 as withdrawn. Pursuant to the withdrawal of CP, the order of this Bench dated 17.12.2013 becomes infructuous. It is most important that the petitioner took part in the said AGM and having acquiesce, the above facts the petitioner is estopped from raising the same issues time and again. Thus the appointment of Respon....
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....uential to the main reliefs. Section 397 which deals with the oppression and any member who complain that the affairs of the company are being conducted in a manner prejudicial to public interest are or in a manner oppressive to any member or members. The intention of the legislature is that majority shareholders, who oppress the minority shareholders and conducted the affairs in a manner prejudicial to public interest, may invoke the jurisdiction of Company Law Board under Section 397 of the Act. In the present ease, admittedly the company is having 14 shareholders and the company is a closely held unlisted public company managed by the family members. Until the death of the then Managing Director i.e. Dr. Vijay Kumar Datla the Company was having only three directors. Among the three the petitioner and the R5 are the directors. Presently the board comprises of only the family members. The petitioner admittedly, holds less than 10% of the paid up share capital of the company and less that 1/10th of the shareholders. The Company is a profitable company and it cannot be said that the affairs of the company are being conducted in a manner prejudicial to the interest of its shareholder....
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.... in the pleadings, she has not produced any documentary evidence to prove that the same is burdensome, harsh and oppressive. The petitioner also raised the similar averments and allegations in her earlier petition in C.P. No. l/2013 and the petitioner herself withdrew the CP and tiled the present petition with the same averments and allegations and with similar reliefs. The averments which are made in the petition have been addressed by me in preceding paras in detail. The Hon'ble Supreme Court in the matter of Hanuman Prasad Bagri v. Bagress Cereals Private Limited reported in (2001) 4 SCC 420 at para 3 held that "before any relief can be granted it must necessarily he shown that the situation otherwise warrants winding up of the company, that any such winding up order would unfairly prejudice the applicants". As stated supra the petitioner attended the board meetings, the annual general meetings and participated therein and proposed the re-appointment of auditors. In the 60th AGM remuneration of the petitioner has been increased and the petitioner is benefited by the same. It is made clear that no grounds have been made warranting this Bench to windup of the Company, when th....
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....he documents that are statutorily required to be provided for inspection as per the provisions of the Companies Act. The company had addressed this letter duly replying to all the letters addressed by the petitioner. 1 am of the view that the company and its management is fair enough to provide all the documents as per law and ready to allow the petitioner No. 1 to take inspection of the books and records of the company during business hours of the working days. This emphasizes the fair opportunity given to the petitioner by the company and its management. The Hon'ble Supreme Court in Re, Sangramsinh P. Gaekwad reported in (2005) 11 SCC 314 at para 180 held that - "the expression oppressive it is now well settled, would mean burdensome, harsh and wrongful. Oppression complained of thus must relate to the manner in which the affairs of the company are being conducted and the conduct complained of must be such as to oppress the minority members. It is held that in para 183 - "the remedy under Section 397 of the companies act is not an ordinary one. The act, of oppression must be harsh and wrongful. An isolated incident may not enough for grant of relief and continuous force of op....
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....me Court is squarely applicable to the facts of the present case. Even the petition needs to be dismissed on this ground itself for the reason that the petitioner has come to this Bench with unclean hands by suppressing the vital information. Accordingly, the issue is answered against the petitioner. Issue No. (vi) (a) A beneficial reference is drawn from the judgment of the Hon'ble Supreme Court in the matter of Shanti Prasad Jain v. Kalinga Tubes - reported in AIR 1965 page 1535. The Hon'ble Supreme Court held that - "an isolated act cannot be a ground filing a petition under Section 397/398 of the Companies Act. There must be continuous acts on the part of the majority shareholders continuing upto the date of the petition. Such acts must be burdensome, harsh, wrongful and mere lack of confidence in the majority shareholders could not amount to oppression". In the present case there is not a single act of oppression and mismanagement made out by the petitioner. (b) Further a beneficial reference is drawn from the judgmenet of Madras High Court in the matter of V.M. Rao v. Rajeswari Ramakrishnan and others reported in 1987 Vol.61 CC 20. The Hon'ble High Court held....