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2017 (10) TMI 1132
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.... divided into 10,08,520 equity shares of Rs. 10/- each. The members of the Board of Directors of the Company are Mr. Gopichand Idandas, Petitioner No. l herein, Mr. Sunil Gopichand, Petitioner No.2 herein, Mr. Sushil G. Duseja, Petitioner No.4 herein, Mr. Shyam G. Duseja, Respondent No.2 herein, Mr. Godhardhandas Idandas and Mr. G. Haresh Chand who are not parties to the present proceedings. Thus the Company is comprised of only members of the same family and also the members of the Board of Directors of the Company are also made up only of members of the same family. Therefore, the Company is a family company as per various judicial precedents laid down by this Hon'ble Board and also various other High Courts. The Petitioners, who are 3 in number, amongst 30 shareholders and who collectively hold approximately 70% of the paid-up and subscribed capital of the Company, fulfill the conditions of Section 399(1)( a) of the Act, of being not less than 1/10 of the total number of members of a Company having a share capital and representing not less than 10% of the issued share capital of the Company. The qualifications prescribed under Section 399(1) of the Act, 1956 are therefo....
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....rom the facts stated below, Respondent No.2 has been acting in a manner which is in direct contravention of the Articles of Association of the Company and also the Act and is oppressive and nothing short of mismanagement, for his own private ends. 2. Petitioner No. 1 submitted that, in his capacity as Managing Director of the Company, he was on the lookout for purchasing a piece of property for being developed by the Company keeping in mind the fact that the Company was engaged in the real estate business. 3. During his search, Petitioner No. 1 came across a plot of land admeasuring 11 grounds and 1849 square meters together with residential buildings and superstructures known as "Philroy", situate at Door No. 151, Village Road, Madras 600 034, Tamil Nadu comprised in R.S.No.533/2, Block No.29 Nungambakkam Division (hereinafter referred to as the "Property"). The Petitioner learnt that the name was held by the Phil And Mary Clubwala Jadhav Trust (hereinafter referred to as the "Trust"). 4. Petitioner No. 1 submitted that even though the Trust was the owner of the Property, it was unable to derive any benefit from the same since the following individuals h....
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....and child of the 1st Petitioner as well. It would further necessarily follow that in keeping with the provisions of the Act and the Articles of Association of the Company, any agreement to be entered into by the Company in respect of the terrace area could only be in pursuance of a decision of the Board of Directors of the Company. Further and at the Board level, the petitioners have two nominees and the Respondents and their family members have two nominees. Petitioner No. 1 as Chairman would have a casting vote in the event of a tie. Therefore no agreement can be entered into except with the consent of the petitioners, who are also the majority shareholders of the Company. 8. Respondent No.2 being fully conscious of this position has fraudulently misused the Power of Attorney executed in his favour to unlawfully to give away the terrace rights to a trust, namely the Ankita S. Duseja Trust, being Respondent No.3, formed in the name of his daughter and of which the trustee is his wife, apart from having sold a substantial part of the undivided share of the land to the said trust at a price unrelated to the market value of the land. These actions of the Respondent No.2 in a....
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.... of Attorney alone would not entitle Respondent No.2 to execute the purported deed of sale dated July 2, 2004 according to his whims and fancies. The Petitioners submit that he would be accountable to the Company for his actions. Fourthly, the inadequate consideration which Respondent No.2 has received from Respondent No.3 for the alleged sale of the 6/1100th undivided share of land in the Property has not been accounted for to the Company and has been misappropriated by the Respondent No.2. Fifthly in terms of Clause 2 (c) of the purported deed of sale dated July 2, 2004, Respondent No.2 has given the purchaser therein, Respondent No. 3, the right to use the terrace area of the building for installation of any equipment, or antenna or tower. This is clearly in excess of the authority given to Respondent No.2 and he acted clearly in violation thereof in giving away a valuable right belonging to the Company over the terrace area. 11. The Petitioners have submitted that this purported document, while being void ab initio, non est, amounts to misappropriation of the Company's assets, since it attempts to deal with the Property which belongs to the Company, w....
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....o to the shareholders, has been receiving monies, which monies belong to the Company but has been appropriating the same for his own personal benefit. It was submitted that being a director of a Company, Respondent No.2 has a fiduciary duty to act for the benefit of the Company and also the fiduciary duty not to appropriate monies of the Company which are paid to him in his capacity as a director of the company. However, it is clear from the above that Respondent No.2 has acted in gross violation of his fiduciary duties to the Company and acted only for his own personal benefit in a manner which has caused loss to the Company". 16. The Petitioners were unaware and have been completely in the dark on this issue of the leases or licenses which Respondent No.2 has entered into in this manner. The Petitioners are equally unaware of the revenues that the Company has lost and Respondent No.2 has illegally earned through this process. As a matter of fact, the Petitioners apprehend that Respondent No.2 may have executed many more of such purported sale deeds to various entities for his own personal benefit to the determent of the Company. It is therefore imperative that Respondent....
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.... much as, Respondent No.2 has sought to illegally cause a loss to the Company while at the same time, illegally cause an unlawful gain for himself. It is stated that if Respondent No.2 had properly accounted for the monies that he misappropriated, the Company could have been in a better position to utilize the funds in a manner it deemed fit. However, owing to the acts of Respondent No.2, this has not been possible. The petitioner vide para 8 of the Petition has prayed for the following reliefs: * Pass appropriate orders and directions to the effect that Respondent No.2 is in breach of his fiduciary duties towards the Company and the shareholders for misappropriating the property which belonged to the Company and also for misappropriating the funds that rightfully belonged to the Company; * Pass appropriate orders and directions to the effect that owing to the breach of his fiduciary duties towards the Company, Respondent No.2 is no longer fit to be a director of the Company and forthwith cease to be a director of the Company; * Direct an investigation to be carried out with respect to the revenues which have been siphoned out by Respondent No.2;....
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....y 2, 2004 declared as void ab initio." Vide para 7, the respondents have contended that no complaints involving mismanagement of the Company has been sought to be raised in the Company Petition. Petitioners are in the management of the Company and are completely in charge of the day today affairs of the Company. R2 has also contended that the sale of undivided share of land in favour of the 3rd Respondent has been duly accounted for in the books of the Company. R2 has contended that he still continues in the Board of Directors and the majority shareholders/directors have not initiated any action against him for the alleged misuse of his position as a Director in the R1 Company. The 2nd Respondent has contended that even if the guideline value is on a higher side the sale of undivided share in the land was done at a proportional rate equivalent to the amount paid for the purpose of land from the original owner and stamp duty for registration for the same would be paid by the purchasers as per the guideline value and this practice has been adopted for all the sale agreements executed for the projects of the 1st respondent Company. The R2 has also stated that occupants/owners of....
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....cts of the 1st Respondent Company to M/s. Duseja Developers Pvt. Ltd., a company held by his family members. The petitioners are guilty of underselling a flat in the same building. The 1st petitioner's son, Mr. Sushil, the 3rd petitioner has been carrying on his real estate brokerage business by accounting the expenses to the books of the 1st Respondent Company. Further the 3rd Petitioner uses the office and other infrastructure of the 1st Respondent Company for his business. The 1st Respondent Company had paid huge consideration by entering into a Developer's Agreement for a prime property located on Anna Salai. The 1st petitioner in order to deprive the 1st Respondent Company the benefits of such development and income arising there from, formed a subsidiary by name, M/s. Blue Pearl Developers Pvt. Limited and assigned all the rights to the subsidiary. After achieving this, the 1st petitioner had hived off the subsidiary for a paltry consideration. Since 2006, the petitioners have refused to divulge any details or records of the Company and have not bothered to call for any General meetings. In fact just after the above CP was filed the petitioners had called for a bo....
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....the company pertaining to the matter complained of and the same have not been availed, the Company Petition under Sections 397 and 398 of the Companies Act, 1956 cannot be entertained. It gives rise to the suspicion that what has sought to be raised under Sec.397 and 398 of the Companies Act 1956 is nothing but a dispute among the Board of Directors. Apparently the affairs of the R1 Company has been conducted in an opaque manner. The Petitioners have challenged single/isolated past concluded transaction, that took place on 2nd July, 2004, of which he had the knowledge, as it is admitted fact that during 2009, the Petitioner sold properties in the same building in 10th Floor, so was aware of structure on the terrace, and have filed the Petition after the lapse of around 7 years from the date of the transaction in question. Therefore, a single/isolated past concluded transaction cannot be a base for seeking relief under Sections 397 and 398 of the Companies Act, 1956 as has been held in Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp. Cas. 351 (SC); and Raghunath Swarup Mathur v. Har Swarup Mathur [1970] 40 Comp Cas 282 (All.). 14. The respondent No.2 has prayed for dis....