TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 223
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....ach. The issued, subscribed and paid up share capital of the company is Rs. 2,50,00,000/- divided into 25,00,000 equity shares of Rs. 10/- each. The petitioner holds 11,62,500 equity share out of 25,00,000 shares of Rs. 10/- each, constituting 47.5% of the paid up share capital of the company. 2. The petitioner is the promoter and Director of 1st Respondent company. The object of the company is to construct and carryout contract works of construction and the matters related thereto. The petitioner, R2, R3 and the mother of the petitioner are shown as the promoters of the company in the Memorandum and Articles of Association and have been named as first Directors of the company to hold office for life. It has been stated by the petitioner that his mother being housewife is not taking any active part in the management of the affairs of the company and she is not made a party to the proceedings. The petitioner and 3rd Respondent each hold 47.5% shares and the 2nd Respondent with his wife (mother of petitioner) holds the balance 5% shares in the company. The petitioner claims that when the company was promoted, it was envisaged that each Director (Petitioner, R2 and R3) and projects u....
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....ith South Indian Bank Limited (R4) as stated under Para 5 of the company petition. 4. At one point of time, the 3rd Respondent sought to secure the release of personal properties charged with the South Indian Bank Limited without the consent and knowledge of the petitioner, when there remained huge outstanding from the 3rd Respondent's projects/cost centre having 3rd sub-account to the Master Account and consequent arrears to the bankers in discharging the Overdraft liability. The petitioner addressed a letter dated 5.8.2010 to South Indian Bank Limited to object the release of the properties without the knowledge of the petitioner. Thereafter some issues arose between the petitioner and 3rd Respondent. It has been averred in the petition that the projects taken by the petitioner and 2nd Respondent substantially completed. However, in respect of projects undertaken by 3rd Respondent, there was gross mismanagement, siphoning off funds leading to projects not being completed and remaining at work-in-progress stage. In respect of time limits stipulated for completion of the projects, having been expired. The petitioner has given details of various projects wherein the projects we....
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....on account of short fall in his sub-account and the company or on the petitioner, because the petitioner/company cannot be mulcted with liability arising due to mismanagement and siphoning off funds resorted to by 3rd Respondent from his sub account. In the premises, the counsel for petitioner inter alia pressed for the prayers as follows :- (1) declare that Respondents 2 and 3 are not fit and proper persons to be in management of the affairs of 1st Respondent company and consequently direct their removal from the Board of Directors of the company; (2) direct the 3rd Respondent to pay to the company the sum of Rs. 16.45 crores with bank interest being the money overdrawn by the 3rd Respondent through Current Account No. 2233 operated by the 3rd Respondent as a sub-account; (3) direct the 3rd Respondent to indemnify the company and the petitioner against any default in payment by the company to South Indian Bank and to Third parties/creditors of the company including in respect of dishonoured cheques, to the extent of short fall arising from monies overdrawn by the 3rd Respondent through Current Account No.2233; (4) direct an enquiry into the acts of commission and omission ....
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....the management of the company. So, the allegations raised later on are only an afterthought and are baseless, false and vague. It has also been mentioned in the counter that the company is maintaining regular books of account, audited income tax returns, sales tax returns and annual returns that are filed with the ROC without demur and the petitioner signed the balance sheet, etc. In short, the allegations levelled by the petitioner against the answering respondents have been denied by explaining the reasons for delay of the projects and cancellation of contracts undertaken by 3rd Respondent. It is worthwhile to mention that under Para 40 and 41, it has been submitted on behalf of the 1st Respondent company that the petitioner has been tendering for contracts and competing with the 1st Respondent company in the bids and the petitioner was falsely claiming experience on the basis of a certificate issued by the Executive Engineer, PWD, Bridges Division, Ernakulam, purporting to certify that the petitioner has executed the construction of New Venduruthy Bridge which is absolutely incorrect because the said work was executed by the company and the company alone is entitled to obtain ex....
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....stated in the Rejoinder that the work that was awarded to Kerala State Construction Corporation Limited was undertaken by the petitioner as sub-contract from them and the petitioner gained experience as the contractor of the company in bridge construction and it is this fact that was mentioned in the certificate of experience given to him. It has also been admitted by the petitioner in the rejoinder that there is no dispute about the internal arrangement, P&L A/c and balance sheet were signed by the petitioner till 31.03.2011. However, it has been asserted by the petitioner in the rejoinder that in the circumstances, R2 and R3 are to be surcharged and made accountable personally for discharging all the liabilities of the company relating to their sub accounts to the bank and other creditors. Consequently, the petitioner having faithfully executed the projects allotted to him without any mismanagement. Therefore, he claims to be protected from the debts of the creditors and bankers in relation to the losses suffered to the sub account of 3rd Respondent. In short, the petitioner specifically pleaded that from conception stage to final execution, projects within one Director's dom....