TaxTMI 
TaxTMI 
2018 (8) TMI 258
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.... the date of impugned order, the date of presentation of the appeal and reasons stated in the IA, we condone the delay in presentation of this appal. 3. Although the Company Appeal 03/2018 is subsequent to the Appeal No.409 of 2017, we have reproduced the cause title of Company Appeal 03 of 2018 first, as the array of parties in this subsequent appeal is same as it was in the National Company Law Tribunal, Hyderabad Bench, Hyderabad ('NCLT' in short). We will refer to the parties in the manner in which they have been arrayed in CA 03 of 2018 or in the Company Petition. We will refer to the Appellant - Gangadhar Madupu as Petitioner. 4. CA 03 of 2018 has been field by Original Petitioner being aggrieved by part of the Impugned Order in Company Petition 06/241/HDB/2017. NCLT by the Impugned Order dated 5th October, 2017 found that there was oppression and mismanagement on the part of the Respondents in the matter of Respondent No.1 Company - Katta Corp. Pvt. Ltd. and it set aside impugned sale deed dated 03.11.2015 vide which property of the Company had been sold by Respondent No.2 - Katta Jagadeesh to Respondent No.7 -Gade Saraswathi Devi and also set aside the subsequent sale dee....
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....s surprised as to when Respondent No.4 came to be appointed as Director. The Notice claimed that the Agenda of the meeting was to remove Respondent No.2 from the position of Director for misappropriation of funds. Strangely, on 25th August, 2015, the Appellant - Petitioner received mail from Respondent No.4 cancelling the EOGM mentioning that Respondent No.2 had resigned from the Company on 24th August, 2015. Still From - 32 was not submitted by the Respondents to ROC and Respondent No.2 continued to act as Director. Respondent No.2 had misappropriated Company funds. According to the Appellant, the entire Katta family had indulged in oppression and mismanagement of the Company. The Appellant - Petitioner raised such contentions in the petition before NCLT and sought punishment for Respondents 2 to 4 and 7 for breach of trust, cheating, fraud, money laundering, misappropriation of funds and violation of the provisions of Companies Act. He also sought setting aside of the sale deeds. 6. Before the NCLT, Respondents 3 and 4 filed common counter dated 4th February, 2017 which was adopted by Respondents 1, 2 and 7 by their affidavit dated 16th March, 2017. This can be seen from the Imp....
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....eard the parties, keeping in view the pleadings and issues raised, the NCLT considered the question of maintainability as it had been claimed that the General Power of Attorney who had moved the petition for the Original Petitioner did not have the authority. NCLT considered the GPA in favour of G. Santhimathi Devi and found the GPA to be in order. This issue has not been raised before us. The other issue raised was only regarding validity of the sale deeds dated 03.11.2015 and 04.11.2016 and the learned NCLT dealt with this issue and passed the impugned order as stated above. 9. Coming to Company Appeal 409 of 2017 which has been field by the Appellant, Vara Boomi Homes - Original Respondent No.8, the appeal claims that this Respondent had exercised due diligence in the purchase of land from original Respondent No.7 - Gade Saraswathi Devi and had checked local Sub-Registrar's EC, Patta, records of Tahsildar and had even informed Police Station SHO and on execution of the sale deed taken the possession. Subsequently, however, the Company Petition was filed by Original Petitioner. According to this Respondent, the charge of oppression and mismanagement was made by the Original Peti....
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....t shown that it had taken out revenue extracts before purchasing the property or that it had given any newspaper publication to check if there were any claims. The argument is that Respondent No.8 being a partnership dealing with real estate would know as to what are the documents required to be checked and how to verify transferable title and encumbrance and the very fact that such exercise was not conducted shows that this Respondent did not act with due diligence and cannot claim to be bona fide purchaser for value. The vendor of Respondent No.8, i.e. Respondent No.7 - Gade Saraswathi Devi did not have a title as the record shows. The counsel referred to the sale deed whereby Respondent No.2 transferred the property of the company in favour of Respondent No.7 which sale deed is at Page - 90 (CA 409 of 2017) to show that the sale deed purported that the vendor has received consideration of Rs. 1,20,00,000/- which is contrary to the pleadings of these parties before NCLT (Counsel referred to Para - 3(v) of Impugned Order which we have already reproduced) where the Respondents claimed that they entered into exchange of property with Respondent No.7. The argument is that the Company....
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....ever, did not show any document as proof. Counsel then argued that Respondent No.7 could not be said to be near relative of Respondent No.2. 14. Looking to these submissions which have been made before us, we proceed to first deal with the claim of Original Respondent No.8 to be a bona fide purchaser for value. Copy of the sale deed in favour of Respondent No.8 executed by Respondent No.7 is at Page - 105 (CA 409 of 2017). The sale deed is dated 04.11.2016. To support this sale deed, Respondent No.8 claimed that it had verified the title. The documents now relied on by the counsel for Original Respondent No.8 were not before NCLT. However, even if we consider the same, the document at Page - 134 (CA 409 of 2017) shows that its date is 22nd November, 2016. This would be apparently after the sale deed dated 4th November, 2016. On this basis, it cannot be said that before entering into the sale deed, verification had been done. The other document relied on is a proceeding before Tahsildar, copy of which is at Page - 136 (CA 409 of 2017). This is admittedly a proceeding initiated by application dated 10.12.2016 on the basis of the sale deed dated 04.11.2016 and is a subsequent act. Th....
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....nt No.7 (G. Saraswathi Devi) who is admittedly mother-in-law of the respondent No.3. It is not in dispute that the respondent No.2 is a disqualified director by virtue of Section 164(2) R/w Section 167 of Companies Act, 2013. It is also relevant to point out here that the Company has proposed an Extra-ordinary General meeting as early as 2nd July 2015 with proposal to remove the second respondent from the office of Company on the ground that he was facing charges under section 138 of NI Act, in court of law and misappropriated Rs. 2,20,000/- of Company funds. In addition, in the above transaction, as states supra, the respondent No.2, 3 & 7 are inter-related with each other. As per section 184 of Companies Act, 2013 and Articles of Association of the Company, and principles of natural justice, it is paramount duty of the Company especially the respondents to convene a shareholders' meeting and take a decision as per law about the said transaction. Admittedly, the respondents have not taken any such decision and vague contentions have been made stating that the impugned transactions are in accordance with law. So the impugned sale deed dated 03.11.2015 is liable to be set-aside for ....