TaxTMI 
TaxTMI 
2017 (8) TMI 83
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....etition, petitioners No.2.3 and 7 have voluntarily withdrawn from the petition. The first petitioner died on 25.03.2014. Now, there are only four petitioners viz., Petitioners Nos.4, 5, 6 and 8. The averments in the Company Petition are briefly described hereunder: As stated earlier the Company Petition was originally filed by 8 petitioners alleging all of them together were holding 256 fully paid up equity shares of Rs. 250/- per share constituting not less than 1/10th of the issued share capital of the Company. This Company Petition was moved having the requisite shareholding of the 8 petitioners put together. It is averred in the Company Petition that the first respondent Company was an unlisted public Company and the authorised capital of the Company was Rs. 6,60,000/- and the paid up capital was Rs. 6,28,000/-. The first respondent Company owned immovable properties at prime locations in Gadag and Hubli and rented out to many tenants. One of the properties is situated in CTS 2862, Jayachamaraja Nagar, Ward No.1, Hubli. Substantial income of the Company is by way of rents. The Second Respondent is the Managing Director of the Company. While so, the chairman and Secreta....
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....s 122 years old Company which was incorporated in the year 1890. The petitioners have taken recourse to these proceedings only for the purpose of arm twisting and the present petition is moved with an ulterior motive. There is absolutely no substance in the allegations made as they are vague, baseless and false. The property proposed to be sold is not an undertaking of the Company and therefore, compliance of provisions of Section 293(1) (a) of Companies Act, 1956 does not arise. Even otherwise, the respondents have produced voluminous evidence that shareholders of the Company have authorised for the sale of the property. Not less than 60% of the shareholders gave written consent for sale. Public notices were also issued. The action of the Company to sell the lease hold rights does not amount to oppression. An isolated transaction involving sale of property which was getting very negligible income cannot be construed as an act of oppression and mismanagement. The transaction is very transparent and every disclosure was made even more than what the statute requires. The Board of Directors have passed resolution dated 25.01.2010 approving the sale of lease hold rights and a resolutio....
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....ents, oral arguments and the documents relied by both sides will be dealt in the course of the order. The main contention of learned counsel for petitioners that the property of the first respondent company was sold far below the market price by the respondents and thereby caused financial loss to the company. The learned counsel based his arguments mainly on the valuation certificates which were filed by the respondents and would contend that the property would have been sold for higher price than the price at which it was sold. The contention of the learned counsel that the procedure adopted by the respondents for sale of the property in question was not in accordance with the accepted principles. It is the contention of the learned counsel that the property should have been sold by calling sealed tenders after giving wide publicity. The Counsel would contend that there is no transparency in the sale of property and much can be said against the conduct of respondents. He therefore, prayed that the sale may be set aside and the respondents may be directed to conduct auction of the property by inviting sealed tenders. Thus, the petitioners have confined their arguments for th....
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....areholding for moving the petition. Even if some petitioners have subsequently withdrawn from the petition, yet it will not affect the maintainability and continuity of the petition even if the shareholding of present petitioners is less than 1/10th. Admittedly, the first respondent company owned immovable properties in Hubli and Gadag. The first respondent company is a very old company which was registered in the year 1890. The respondents have filed certificate of incorporation of the first respondent company. Originally, the name of first respondent company was Gadag Mahalaxmi Pressing and Ginning Company Limited which changed its name to Gadag Mahalaxmi Enterprises Limited. The respondents have filed a copy of change of name of first respondent company as Annexure- A/1 to the Synopsis of arguments. Now, the first respondent company is called as Gadag Mahalaxmi Enterprises Limited. The fact remains that the company was first incorporated in 1890. The property in question is an immovable property situated in Hubli Municipal limits measuring 65,402 sq. ft. bearing CTS No.2862. The contention of the petitioners that there was absolutely no need for the company to sell this pr....
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....r speciality Hospitals, etc., subject to approval of the Members, the Board decided to sell the property. The respondents have further relied on the EGM held on 25.02.2010 marked as Annexure-A/9. In the EGM, it was decided that the base price for the land is at Rs. 1,000/- per sq. ft. and a committee to be constituted for sale of this property. So, in the EGM, the share- holders present approved the board proposal for sale of this property. The main contention of the petitioners that there was no approval from the EGM. This contention of the petitioners is incorrect as the respondents have filed the Board Resolution copy as well the minutes of the EGM. The respondents have relied on the copy of the notice issued for the convening of the EGM. Annexure-A/7 is the copy of notice dated 01.02.201. They have also relied on the explanatory statement in which Item No.2 deals with sale of perpetual lease hold rights of the property. The respondents have further relied on the copy of the proof of service of notice marked as Annexure-A/8. Further, the respondents have relied on the consent letters received from 32 shareholders who had not attended the EGM. Annexure-A/10 series is the conse....
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....granted to the company for sale of the lease hold rights is not disturbed. But, the sale is, however, subject to the result of the Company Petition. So, the Hon'ble High Court did not disturb the finding of the Company Law Board granting permission to sell the lease hold rights basing on the agreement of sale which was also confirmed by the Hon'ble High Court. However, it is subject to the decision of this petition. In this background the contention of the petitioners is to be looked into. The main contention of the learned counsel that the property sold is far below the valuation report of Mohan S. Hulkoti and G.S. Angadi and even the guidance value. Thus, the property could have been sold for higher value than it was sold and thereby the transaction is not transparent and is surrounded by suspicion and further it is a loss to the company and the respondents No.2 and 3 are involved in oppression and mismanagement. Whereas, the contention of learned counsel for respondents that all steps were taken to get fair price for the property and wide publication was given. Certain photographs were taken by the Government Registered Valuer at the time of personal inspection and va....
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....om Rs. 1000/- to Rs. 2500/-. But, it depends oh various considerations. The Registered Valuer has adopted Rs. 1250/- per sq. ft. which was more than Rs. 1000/- but below Rs. 2500/-. The market value ranges from Rs. 1000/- to Rs. 2500/- per sq. ft. The Registered Valuer gave reasons for adopting Rs. 1250/- per sq. ft. He has not fixed the valuation below the lower limit. He has fixed the-value above the lower limit and gave reasons for the same. The learned counsel further contended that the respondents have relied on one more valuation certificate issued by G.S. Angadi, marked as Annexure-A/20. He is also a Government Registered Valuer. The Counsel would contend that in this valuation certification the Registered Valuer fixed the market price at Rs. 2250/- per sq. ft. So, the contention of learned counsel that the property was sold even below the value given by the Registered Valuer which was filed by the respondents. Counsel would contend the defect in the valuation certificate of G.S. Angadi that he had set apart 40% of the land and valued only for 60% of the land which is not correct. We have seen the valuation report. The Registered Valuer has adopted the method of evalua....
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....spaper marked as Annexure-A1, that the intending purchaser has entered into an agreement for purchase of lease hold rights of the property in question and calling for objections if any. 2. The 2nd document referred as Annexure-A/2 is a legal notice said to have been addressed to the 1st respondent company and its Directors including the Managing Director. This notice is said to have been issued on behalf of the first petitioner seeking some clarification. 3. The document at Annexure-A/3 is a copy of notice issued by the 1st respondent company calling for AGM. The proposed meeting was sought to be convened to appoint Director, etc. 4. Document at Annexure-A/4 is a copy of the Directors report. 5. Document at Annexure-A/5 is the Audotir's report for the year 2009-2010. 6. Document at Annexure-A/6 is the balance sheet as on 31.03.2010. 7. Document at Annexure-A/7 is the Profit and Loss account for the year ending 31.03.2010. 8. Annexure-A/8 is the notice for AGM. 9. Annexure-A/9 is the Director's report for the year 2008-09. 10. Annexure-A/10 is the Audotor's report. 11. Annexure-A/11....
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.... The Counsel would contend that the data sale deeds referred to above are with reference to sale of properties in the same ward and this would disclose the value of square feet in 2005 was Rs. 448/- and in 2008 it was Rs. 625/- per sq. feet. The first sale deed is dated 02.12.2005. The property involved in the said sale deed was 990 sq. yards. The value of the property was Rs. 40.00 lakhs. If the said price is adopted, the value of company property in 2005 would have been Rs. 1.22 crores. The Counsel would contend that if the value is doubled in 2011, it would be less than Rs. 3.00 crores. However, the leasehold rights of property was sold for Rs. 10.00 crores. So, the contention of learned counsel that the corresponding sale deeds in the same ward would throw any amount of doubt on the contention of the petitioners that the property was sold below the market price. Regarding the other sale deed dated 28.03.2008. if the price adopted therein is taken into account, then the value of the Company property will be around Rs. 4.47 crores. However, it was sold for Rs. 10.00 crores. Even if the value is doubled, then the value of property would have been Rs. 8.94 crores. Thus, the l....
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....Court reported in AIR 1965 SC 1535, WHEREIN, THE Apex Court held "mere fact of allotment of shares does not constitute oppression". The learned counsel further relied on the decision of Hon'ble High Court of Gujarat Navjivan Mills Ltd., In re [1986] 59 Comp. Cas. 201 (Guj.), wherein the Hon'ble Gujarat High Court observed as follows: "........ Company court satisfied that particular disposition of property of company necessary in interest of company - interest of every one is to preserve subject-matter of winding-up petition - if transaction not maintained and presentation of petition groundless results into paralysing trade of company - great injury likely to cause to those interested in assets of company - Court has discretion to validate such transaction." 51. The learned counsel for respondents further relied on the decision of Hon'ble High Court of Kerala Cochin Malasar Estates & Industries Ltd. v. P.V. Abdul Khader [2003] 45 SCL 170 (Ker.), and contended that the decision by the Board was examined by the General Body and came to conclusion to sell some properties of the Company to meet the financial obligations and when once the general body gave....