TaxTMI 
TaxTMI 
2018 (2) TMI 1062
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....ound fit by the Hon'ble court. b. To set aside the Sale Deed bearing document number: 22588 of 2015 dated 3rd Nov 2015 and doc. No. 29066/2016 dated 04-11-2016 as null and void and not binding on the Respondent No.1 company, which is a result of corporate fraud played upon by Respondent Nos. 2,3,4,7&8. c. To punish the Respondent No.2 to civil prison and penalty for wilful violation of Sections 167(1), 447 and 448 of the Companies Act, 2013. d. To punish Respondent No. 2, Respondent No. 3, Respondent No. 4 and Respondent No. 7 for Breach of Trust, cheating, fraud, money laundering, misappropriation of funds, knowingly violating and contravening the Companies Act, 2013 and wilfully supporting the above illegal activities etc. 2. The Brief facts of the case, which are relevant to the issue in question, are as follows: (a) Katta Corp Pvt Limited (hereinafter referred to as Company) was initially incorporated under the Companies Act, 1956 on 21st July 2006, by the promoter Directors namely Katta Srinivasa Rao (Respondent No. 3), Katta Jagadeesh (Respondent No. 2) and Sridhar Gopinathan. (b) The Petitioner and Respondent No. 3 are related ....
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....ount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels. Non-compliance with the above provision would be reckoned as contravention under FEMA and would attract penal provisions. The Respondent No. 1 Company influenced by Respondent No.3 concealed and gave false information, thereby breached the trust reposed by the Petitioner. (f) The Respondent No.3 being majority shareholder of Company by holding of 58% of the total paid up capital is remotely controlling it from USA. The Company has purchased agricultural lands in Survey No. 65/8 to the extent 5.00 acres, situated at Ghattupally Village, Maheswaram Mandal, R.R. District under a registered sale deed bearing Doc No. 16292/2006 dated 28-09-2006 and another agricultural land in Survey No. 468/3/B, 468/3/C and 468/3/D, extent Ac 3.00 situated at Nadergul Village, Saroornagar Mandal, R.R. District, under a registered Sale Deed bearing Doc No: 11103 of 2008, dated 24-10-2008. After the said purchase of agriculture lands, the petitioner was made to understand by the Respondent No. 3 that the agricultural land at Nadargul is embroiled in....
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....the Petitioner gave a modified Account Payee cheque Vide: 1081 dated 8th September 2015 for USD 3,000/- favouring Respondent No. 3, drawn on First Niagara Bank, USA. The cheque was taken from the Petitioner by Respondent No. 4. To the utter shock and dismay the Petitioner found out' that Respondent Rs. 4 deposited this cheque in the Account of Katta Prasanna Lakshmi in the State Bank of India, Padmarao Nagar Branch, IFSC Code: SBIN0002772, Hyderabad and the cheque was cleared on September 30th, 2015. Katta Prasanna Lakshmi is the first Indian Wife of Respondent No. 3 and the mother of Respondent No. 4. The Petitioner sent multiple mails to Respondent No. 4 and also sent a letter on 10th May 2016, but there was no response. This clearly proves beyond doubt the criminal intent and connivance of Respondent Nos. 2, 3 and 4 to openly breach the trust and rob and cheat this Petitioner using Respondent No. 1 Company. (j) It is stated that as per the ROC, the Respondent No. 2 was appointed as Director on 31st December 2013, who is the elder brother of Respondent No. 3, without any notice to this Petitioner as a Director. The Respondent No. 5 (ROC) records also reflected that Respo....
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....No. 4 on 24th July 2015 for a Board of Directors meeting to be held on the same date 24th July 2015 at 10AM IST. The Meeting Agenda was on the following 2 charges: a. To terminate Respondent No. 2 as Director under Section 169 and such other applicable provisions b. To convene the EGM to pass the resolution to remove the Respondent No. 2 as Director. This Notice of the meeting of the Board of Directors was sent by Respondent No. 4 to the 3 Directors on record viz. Petitioner, Respondent No. 4 and Respondent No. 2. However, the Board meeting was conducted without his presence even though the Respondent No. 4 had knowledge about his presence in India. So Company has resorted to brazen and open acts of Oppression and Mismanagement with a sole intention of defrauding and cheating the gullible investors like the petitioner. (n) The Petitioner further submits that he received a . mail on 3rd August 2015from Respondent No. 4 (referring himself as Director in Katta Corp Private Limited). The Petitioner was never informed of the appointment of Respondent No. 4 as Director. The Respondent No. 4 sent a mail on 3rd August 2015 from: [email protected] ....
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.... the office of Respondent No. 5 and being convinced the Respondent No. 5, sought reply from Respondent No. 3. The Respondent No. 3 replied to Respondent No. 5 with vague and baseless allegations. The Petitioner in spite of holding multiple meetings, sharing letters and emails with clinching supporting documents of the acts of misappropriation, siphoning of company funds using another Software Company iServiceGlobe Private Limited, Hyderabad owned by Respondent 3, illegal Money laundering, Oppression and Mismanagement by the entire Katta Family and the undisputable glaring and open contraventions and non-compliance with the provisions of Companies Act, 2013, no action was taken by the Respondent No. 5. (p) As a law-abiding person, the Petitioner informed the Respondent No. 1 company about the conviction of Respondent No. 2 and his continuance with the open influence and remote directions of Respondent No. 3 and purported acts of discharging of duties as director/managing Director are null and void, illegal and pre-judicial to the interest of the company and its investors, liable for criminal prosecution and penalty. The Respondent No. 1 Company miserably failed to take any ....
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.... Company and its shareholders, but also null and void and done only to deprive the Petitioner and other shareholders of their legitimate rights. This is further evident from the mail sent by Respondent No. 3 to the Petitioner on 27th November 2016, confirming the removal of Respondent No. 2 as Director of Company from August 2015 and decisions are taken unilaterally without informing and consulting the Board and Shareholders, which is a clinching act of Fraud, Cheating, Misappropriation and Oppression and Mismanagement. (r) As matter stood thus, the petitioner through email dated 29-11-2016 issued by Respondent No. 3 came to know that Respondent No. 2 entered into fraudulent transaction in respect another asset held by the respondent No. 1 Company at Ghattupally Village, Maheshwaram Mandal. The said email reveals that Respondent No. 2 made huge money by entering into illegal transaction with respondent No. 9. (s) In the above circumstances, the Petitioner is left with no other remedy except to approach this Tribunal for redressal of his grievance of Breach of Trust, Cheating, Fraud, Money Laundering, Oppression and Mismanagement by the Respondent No. 1 Company thr....
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....as signed on October 2nd 2015 as per the Board decision. The Respondent No. 2 was authorized to represent the Respondent No. 1 Company to register the land to the Respondent No. 7. The registration of the land owned by the Respondent No. 1 Company in favour of the Respondent No. 7 was done on 3rd November, 2015. vi. While things stood thus, the petitioner proposed to sell his shares to the Respondent No. 3. However, he demanded that the amount be paid in USD. Subsequent to the investment made by the petitioner, the rupee depreciated substantially against the USD, (exchange rate was 1 USD= Rs. 39 at the time of invest became 1 USD= Rs. 67 when the petitioner offered to sell his shares). As this demand was not accepted, the Petitioner started nurturing a grudge against the Respondent No. 3, and began making a barrage of complaints of mismanagement and fraud against the Respondent No.1 Company, its directors and the Respondent No. 3. vii. The petitioner was a Director on the Board of Respondent No. 1 Company since 2008. He participated through audio conference in many of the Board Meetings of the Respondent No.1 Company. He has also attended the Board Meetings, when ....
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....rivolous complaints before the statutory bodies like ROC, RD and now before this Hon'ble Tribunal with an oblique motive to threaten and coerce the Board of Directors and majority shareholders and impede the attempts by the Board and shareholders to steer the Company into the right direction. Upon the complaint of the petitioner regarding the Respondent No. 1 Company, the Registrar of Companies served a show cause notice on 31-03-2016 and the same was replied with evidence that the petitioner's allegations were baseless and without facts. Further, the Respondent No. 1 also sent a legal notice to Sridhar Gopinathan who served as Managing Director Kattta Corp until 7th January 2014 to come forward and submit the accounts for some of the allegations that the Petitioner made in the complaint. Till date no, response has been received Mr. Sridhar Gopinathan. The petitioner also complained against the Respondent No. 3 to ROC, who issued show cause notice to the Respondent No. 3 to his US address on 29th April 2016. The show cause notice was replied by the Respondent No. 3 and given elaborate evidence showing that the allegations made by the Petitioner were false and baseless. Thereafter, ....
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....y stated supra. 9. Shri. K. Rama Krishna, learned counsel for the petitioner further submit that the Company is having only five members including the petitioner and the petitioner is having 9.3% shareholding. So the petition is very much maintainable under the Companies Act, 2013. Since the inception of Company, it has done real-estate and allied business and during the course of its business, only two agricultural lands at Ghattupally Village, admeasuring an area of Ac.5-00 guntas and at Nadargul admeasuring an area of Ac.3-00 guntas were purchased and there was no other business. It is also not in dispute that the said lands were purchased with the money invested by the petitioner. The property situated at Ghattupally still stands in the name of the Company. The impugned lands at Nadargul was illegally transferred to respondent No. 7 , who is none other than the Mother-in-Law of respondent No. 3 and the sale deed dated 3-11-2015 was executed by the 2nd respondent as Managing Director, even though he has resigned as Director from the Company with effect from 24-08-2015. Though it is an admitted fact that there was no money received by the Company for execution of the above ....
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....cations impacting public interest and society at large is involved. But it is not meant to settle personal scores on private disputes arising out of family feuds. The Petitioner was informed about the appointment of respondent No. 4 as Director on 14-2-2014. He further submit that the Respondent No.3 took steps to initiate Criminal Proceedings against Respondent No. 2 despite the fact that Respondent No. 2 is his own brother with the sole object of protecting land and interest of the Company and its shareholders. Therefore, the Isolated Acts like sale of land in question cannot constitute oppression or mismanagement. 11. In the light of above pleadings of both the parties, the following issues arise for consideration in the present Company petition. 1) Whether the Company Petition is maintainable especially on the grounds that there was no proper GPA and not fulfilling requisite conditions prescribed under u/s. 241 of the Companies Act, 2013. 2) Whether the impugned transactions dated 3-11-2015 and 4-11-2016 is validly executed or not- 3) If so, what is relief a petitioner entitled for. 12. So far as the maintainability is concerned, the petitioner ....
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....ubject to the provisions of the Companies Act, 1956 may, from time to time, secure the payment of the money in such manner and upon such terms and conditions in all respects as they think fit and particularly in the issue of debentures or bonds of the Company and its uncalled capital for the time being. Article-44: The quorum for the transaction of the business of the Directors shall be two or one third of Directors whichever is higher. Article-45: A resolution in writing signed by all the Directors shall be effective for all purposes as a resolution passed at the meeting of the Directors duly called, held and constituted." 15.It is not in dispute that the Company has not done any major business except to purchase the above two lands at Ghattupally Village, Nadergul as contended the petitioner. Therefore, it is the paramount of the responsibility of the Company to take into confidence of all the shareholders of Company, while taking /transacting major business like selling of the Company's land apart from following extant provisions of Companies Act, 2013. It is also not in dispute that the Company is a Private Limited Company and it is bound by all the Provisi....
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....areholders, who has to take a decision. Apart from other affairs of the Company, the impugned sale deeds clearly shows that the affairs of the Company being conducted in a manner prejudicial and oppressive to the petitioner and also against the interest of the Company in general. It is true all routine decision(s) taken by the Company , in its ordinary course of business ,cannot be considered as acts of oppression and mismanagement as defined under sections 241/242 of the Companies Act, 2013. The impugned sale deeds suffer serious legal consequences, which cannot be upheld by the Tribunal. The transactions made by second respondent, who is convicted and resigned is nothing but acts of oppression and mismanagement on the part of respondents as against the petitioners, who is also admittedly a director with substantial shareholding in the Company, as detailed supra. I am of the considered view that above circumstances would justify to order to Company to wind up but it would prejudice the interest(s) of the petitioner and the Company and other respondents and thus it is just and equitable to pass appropriate orders to put an end the affairs complained of by exercising powers under se....