TaxTMI 
TaxTMI 
2017 (6) TMI 457
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....hare capital and thus, the authorized share capital was increased to Rs. 1,30,00,000/- comprising of 1,28,000 equity shares of Rs. 100/- each and 2000 preferential shares of the same value. Annexure P-1 (Colly) is the copy of Memorandum of Association along with Articles of Association. The main object of the company was to carry on all or any of the trades, business and manufacturing processes of preparing, spinning, doubling, weaving, combing, scouring, sizing, bleaching, mercerizing, colouring, dyeing, printing and finishing, working or manufacturing in any way whatever cotton, Wool, silk, flax etc, of the textile substances etc, as set out in detail in paragraph 1 (iii) of the petition. 2. Petitioner is the daughter of Late Mr. S.K. Khemka, the promoter of the company. It was alleged that the Khemka family comprised of (i) S.K. Khemka (since deceased); (ii) Uma Devi Khemka wife of S.K. Khemka; (iii) Neel Mani Khemka son; (iv) petitioner the daughter; (v) B.M. Khemka (R-2) son; and (vi) Rakesh Khemka son. According to the petitioner, R-1 was incorporated as a family company as all the shares were held by the family members and as per the objective of the company, it was being....
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....or and the company came out of the liquidation. The copy of the petition filed by R-2 in the Hon'ble High Court is Annexure P-3. 6. According to the petitioner, Late Shri S.K. Khemka suffered a paralytic attack in the year 1990 and active control of affairs of the company was taken over by R-2 in the year 1995. However, Shri S.K. Khernka kept on guiding and controlling the affairs of R-1 company. Shri S.K. Khemka resigned from the Board of Directors on 13.02.1995 because of his ailment. It was averred that intention of R-2 became dishonest and in order to usurp the control and assets of the company he appointed himself as Managing Director and increased authorized share capital from Rs. 10,00,000 to Rs. 1,30,00,000/-. This was done by R-2 without notice of any Board meeting for increasing the authorized share capital and the said act is blatantly illegal. Anyhow, after the increase of share capital in the manner aforesaid, Shri S.K. Khemka was shown to be holding 1,10,325 shares constituting 98.15% of the shareholding in R-1 company, his wife 70 shares, R-2 and his brother Rakesh Khemka 1000 shares and Varindabun Synthetic Pvt. Ltd. 5 shares. This is apparent from the Annual....
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....n favour of R-2. It was further stated in this affidavit that the promoters' unsecured deposit of Rs. 1.08 crores was converted into equity shares as per directions of BIFR. 10. The other ground of oppression and mismanagement is that R-3 a servant of Khemka family was illegally appointed as Director with effect from the year 1994 by an antedated Form 32, which was uploaded in the year 2006. To further strengthen this allegation, it was stated that in the scheme of revival of R-1 company, filed before the Hon'ble High Court, name of R-3 as a Director of R-3 company did not figure. Copy of Form 32 is at Annexure P-6. Learned counsel for the applicant referred to the columns of this form P-6, which contains the declaration statedly signed by Late Shri S.K Khemka. It refers to the resolution of the Board of Directors dated 03.10.1994, but the year 1994 has been interpolated by erasing original figure from 2005. This Form was indisputably filed with the RoC on 31.05.2006. 11. It is thus stated that the acts of R-2 and R-3 are oppressive to the petitioner/other shareholders. The petitioner has thus prayed for equitable relief under Sections 397 and 398 read with Sections 2....
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....efore the High Court. It was stated that in fact shareholding of Rakesh Khemka had already been transferred in favour of R-2, Shri S.K. Khemka was aware of the petition filed by Rakesh Khemka and feeling perturbed by this action of Rakesh Khemka, he executed some more documents in favour of R-2 so that no family member could challenge the shareholding of R-2 in future. Details of some of the documents were also given. This includes a supplementary agreement dated 25.03.2006 (Annexure-3) executed between Late Shri S.K. Khemka, his wife Uma Devi, Neel Mani Khemka, Rakesh Khemka and R-2 for transferring the shareholding of Shri S.K. Khemka in favour of R-2. There is also an affidavit of Late Shri S.K. Khemka dated 29.03.2006 (Annexure-4) about his resignation as Director from R-1 company further declaring that he was no more shareholder in the R-1 company. R-2 is said to have taken immediate control of R-1 company after its revival on 28.11.2002 and transfer of shareholding of Late Shri S.K. Khemka was soon given effect to. 14. The respondent also raised the objections about maintainability of the petition, due to delay and laches, especially, as the petitioner admitted that R-2 to....
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....to file rejoinder and also on the ground of absence of the arguing counsel. The Company Law Board declined the request and again dismissed the petition. That order was again challenged by the petitioner in the Hon'ble High Court in CAPP No. 40 of 2014. The Hon'ble High Court allowed the appeal vide order dated 06.04,2015 observing that the Board has not taken pain to decide the petition considering the same on merits and set aside the order of the Company Law Board and the company petition was restored to its original number. It was directed that opportunity be given to the petitioner to file rejoinder and to decide the petition including objections qua maintainability of the appeal. 18. The petitioner filed rejoinder dated 08.07.2015 before the Company Law Board reiterating the averments contained in the company petition. It is averred that the respondent admits having not filed with the Registrar of Companies, Annual documents subsequent to the year 2006 till the filing of the petition in the year 2012. The respondent in fact has stated in the reply that he would file the same with Registrar of Companies in due course of time after getting the offence compounded for no....
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....-2, S.K. Khemka and his wife Uma Devi Khemka and State Bank of India, which is part of Annexure P-3 at page 81 of the paper book. This compromise was filed before the Hon'ble High Court during pendency of CP No. 85 of 2001. This compromise is signed by R-2, Late Shri S.K. Khemka and Uma Devi, wife of Late Shri S.K. Khemka. It was categorically stated in this compromise document in paragraph 4 that R-2 has filed the petition for revival of the company claiming himself to be holding more than 95% shares of R-1 company. Therefore, the petitioner cannot challenge the increase in the share capital of the company, for which there was a categorical plea in the CP No. 85 of 2001 filed before the Hon'ble High Court, during pendency of which, the aforesaid compromise was entered. 23. R-2 has filed various original documents for establishing valid transfer of shares of Late Shri S.K. Khemka in his favour. He filed an application dated 19.08.2016 for placing on record certain additional documents, which was opposed by the petitioner on the ground that initially the respondent relied upon only on two documents, whereas now more documents cannot be permitted. After hearing learned cou....
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.... no lien account within one month. It is further mentioned in paragraph 3 of this document signed by Late Shri S.K. Khemka and R-2 and witnessed by Uma Devi, that R-2 has offered to take over the charge of the company in the hearing of the BIFR as an alternative proposal stating that he can run the company and bring the necessary funds etc. In paragraph 4 (a) of this MoU, it is further stated that Late Shri S.K. Khemka withdraws from the management and his deposit of approximately Rs. 1,10,00,000/- would be converted into equity shareholding and subsequently transferred in the name of R-2 for a total consideration of Rs. 36,00,000/-, to be paid in three instalments. 26. Learned counsel for the petitioner vehemently contended that there is no evidence or circumstance for suggesting that this amount of Rs. 36,00,000/- was paid by B.M. Khemka to Shri S.K. Khemka. This contention cannot be of any help to the petitioner as Late Shri S.K. Khemka is also the signatory to the compromise document submitted before the Hon'ble High Court in the revival petition of the year 2001, as already observed. 27. There was already a reference to the supplementary agreement dated 25.03.2006 ex....
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...., to challenge the aforesaid record. Rather, R-2 has filed the affidavits of Neel Mani Khemka and Rakesh Khemka duly attested by the Executive Magistrate and Notary Public respectively admitting transfer of shares in favour of R-2. 30. The petitioner has herself relied upon the company petition filed by Rakesh Khemka, her brother bearing CP No. 43 of 2005, which was compromised during the pendency of the appeal before the Hon'ble High Court. It is quite apparent that the petitioner was aware of the litigation initiated by Rakesh Khemka, but she kept silent for so many years in putting forth her claim before the competent authority. 31. In view of the aforesaid discussion, we hold that the petitioner is unsuccessful in challenging the validity of increase of the shareholding of the company in order to pay the debt of the Bank, and also the transfer of the shares of Shri S.K. Khemka in favour of R-2. During his lifetime, Late Shri S.K. Khemka never challenged the transfer of shares in favour of R-2, despite the Annual Returns for the years 2004-2005 and 2005-2006 having been filed in the year 2006. If Shri S.K. Khemka himself did not claim any right over the shares during h....
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.... acts may have continuing or lasting consequences and in such cases, the power may be invoked. The case law on the subject as to what would amount to oppression and mismanagement is rather in a nebulous state. But the Supreme Court has given very substantial guidelines for determining whether an act would amount to oppression within the meaning of Section 397 of the Act" From the above discussion, we hold that the petitioner has not been able to prove the acts of oppression and mismanagement on the part of R-2. 35. We now discuss the issue with regard to the delay and laches on the part of the petitioner. 36. Learned counsel for R-2 relied upon the recent judgment of the Principal Bench of National Company Law Tribunal (New Delhi) in Praveen Shankaralayam Vs. Elan Professional Appliances Pvt. Ltd. & Ors, CP No. 04 (ND) 2016, decided 20.10.2016.. The facts of the said case were narrated as under:- "16. A perusal of various averments made in para 6 under the caption 'Facts of the Case' would reveal that the cause of action to the petitioner had arisen in the year 2009, 2010 or 2011. The present petition was filed first in October, 2015 and then re-filed on 07.09.2....
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....uired knowledge of all the facts as per his own showing by his reply sent to the Assistant Registrar of Companies on 23.02.2011. It was further observed that it would be profitable to refer to the facts disclosed in various paragraphs. It has been stated in para 2 that his shareholding was reduced from 33% to 1.91%. The aforesaid general assertion has been explained in para 6.5 of the petition. According to para 6.5, the allotment of shares by increasing the share capital was made on 06.10,2009, 19.09.2009, 22.01.2010 and 03.02.2012. The allegation is that the allotment of shares was made without his knowledge which he obviously acquired on 23.02.2011 and even that later increase has come to his knowledge. The allegation that the petitioner was not aware of the Board meetings held in 2009, 2010 or 2011 would pale into insignificance because on his own showing, the petitioner had the knowledge in 2011. The petitioner also had the knowledge of his removal as director which is evident from the perusal of the reply at para 10 dated 23.02.2011 (P-3). 38. The Hon'ble Principal Bench held that the cause of action to the petitioner arose from the years 2009 to February, 2012. The pe....
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....judgment cannot be helpful to the petitioner in view of the latest principle of law as discussed above. The acts complained of in the instant petition are very old and those were reflected in the Annual Returns filed in the year 2006, but the instant petition has been filed after more than 5½ years. There is thus a huge delay and the petition would be clearly barred by time. This issue is also held against the petitioner. 42. On issue No. 3, we also find the present petition to be not maintainable in view of Section 399 of the Act, which reads as under:- "Right to apply under Sections 397 and 398.- (1) The following members of a company shall have the right to apply under Section 397 or 398:- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares; (b) in the case of a company not having a share capital, not less than one-fifth of the total nu....