AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1547
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....ion No.72/2016 filed in National Company Law Tribunal, Hyderabad Bench, Hyderabad (NCLT in short) whereby the Company Petition and company application were dismissed on 13th March, 2017. 2. The brief facts of the case are that the 1st respondent was originally promoted by one Mr. Lakshmi Prabaakar and Mrs Ratna Kumari. Both the promoters and one Mr. Sathya Venkata Srinivas Borusu were the first directors of the company. 1st respondent was registered as a private limited company under the name "Vision Heights Private Ltd". The company was subsequently got converted as a Public Limited Company and correspondingly the name was changed as "Vision Heights Limited". The name of the company was again changed on 10.07.2012 and presently the name of the company is "Pragnya Riverbridge Developers Limited". 1st respondent is engaged in the business of construction, development and sale of properties. 3. Mr. Lakshmi Prabaakar was managing the affairs of the 1st respondent right from its incorporation. However, after a particular point of time when the construction work started the company had to mobilize funds to meet the working capital requirements. Mr. Lakshmi Prabakaar was unable to ....
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....s alongwith exclusive rights to the commercial portion of Project. Respondent No.6 confirmed that the commercial portion of the Project would be demerged in favour of the appellants and a new SHA will be signed. In terms of Clause 7 of the SHA (Page 199), a No-Objection Certificate dated 2nd March, 2012 was issued on behalf of 2nd Respondent approving the transfer of share in favour of the appellants. The appellants held 26.60% shares and Respondent No.2 held 73.40 shares in 1st Respondent. 1st Appellant was appointed as the promoter director of 1st respondent as is evident from Form 32 of the 1st Respondent (Page 244). The shareholding pattern post such transfer of shares in 1st respondent company stood as under: S.No. Names of shareholders Number of shares Percentage of shreholding 1 Ram Bhoopal, 1^st Appellant 31,92,792 10.20 2 Vishnu Bhoopal 2nd appellant 51,32,492 16.40 3 Pragnya Capital I Private Ltd 2,29,81,818 73.40 4 Sree Ram reddy, 3^rd Appellant 20 0.00 5 Sarojini Reddy, 4^th Appellant 20 0.00 6 Sarswathi Priya, 5^th Appellant 20 0.00 7 Tripti Reddy, 6^th Appellant 20 0.00 ....
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....ts would honour their commitment and to follow relevant law with reference to the rights of a shareholder, especially the Petitioners herein, who were admittedly holding 26.6% of shareholding of the R1 company. They may also be permitted to participate in the affairs of the R1 company in accordance with law. However, the Petitioner are not entitled to any reliefs as prayed for as they have failed to make out any case in their favour. 23. In the result, the Company Petition bearing C.P. No.109/2012 and C.A. No.72/2016 are hereby dismissed. All the interim orders passed in this case, which are in force as on today, are hereby vacated, and all pending CAs also stands dismissed. However, the first petitioner may be continued as Director till the next Annual General Meeting of R1 company, and he will also be eligible for re-election as Director in accordance with law. No order as to costs." 7. Being aggrieved by the said impugned order dated 13.3.2017 the appellants, original petitioners, have filed the present appeal. 8. The appellants have stated that the Respondent have failed to act upon the conditions and assurances based on which the appellants had invested in 1st r....
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....ndents have sought to remove Appellant No.1, minority shareholder director, from the Board of 1st respondent on several occasions. However, the appellant No.1 continued to be a director of Respondent No.1 by virtue of order dated 2nd December, 2013 of Hon'be Company Law Board, Chennai and order dated 3rd November, 2016 of the NCLT, Hyderabad Bench (Page 406 and Page 518). Subsequently the appellant No.1 was removed from directorship of 1st Respondent on 5th August, 2017. 14. The appellant No.1 submitted that the Respondents have also refused to share information about litigation going against 1st respondent and acquisition of additional land for the Project and other affairs of the 1st Respondent. The appellant No.1 further submitted that the respondents did not allow appellants to access to company related information and kept the books of accounts at 2nd respondent's office instead of Registered Office of 1st respondent. The appellant No.1 submitted that they were deprived of full participation in the affairs of 1st respondent despite having invested Rs. 8.5 crores in it. 15. The appellants submitted that 1st respondent has engaged employees of its affiliate entities for ca....
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....ection 397 and 398 of the Companies Act, 1956. 2nd respondent submitted that the corporate property belongs to the company and members have no direct proprietary rights to it but merely to their 'shares' in the company. 2nd respondent further submitted that the appellants subscribed to the share capital of 1st respondent and not a portion of the property/assets of 1st respondent. 20. 2nd respondent submitted that the appellants are relying upon their rights under the SHA for which they were not even the parties. 2nd respondent further submitted that the appellant No.1 had vide letter dated 28th February, 2012(Page 251) had clearly stated that the SHA has become defunct. 2nd respondent further stated that neither the original promoters nor the appellant have acted in terms of the SHA. 21. 2nd respondent stated that no representation was ever made that commercial portion of land of 1st respondent would be demerged in favour of the appellants. 2nd respondent further stated that the appellants did not invest in 1st respondent but they had acquired shares held by the original promoters. 22. 2nd respondent submitted that no detailed particulars of allegations qua dealings with V....
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....efore, we find the argument of 2nd respondent convincing. 28. The next issue raised by the learned counsel for the appellant is that the Respondent failed to execute a new SHA with them to demerge the commercial portion of the project and incorporate the same in the Article of Association of 1st respondent. Learned counsel for the appellants further argued that they have a legitimate expectation that the commercial portion of the Project will be demerged in appellant's favour, as they have stepped into the shoes of the erstwhile promotors. Learned counsel for the appellants further argued that the appellants have invested on the basis of an understanding between the parties, it was unfair and prejudicial to all by the Respondents to ignore the same. Learned counsel appearing on behalf of the respondent argued that after transfer of shares by the original promoters of 1st respondent to the appellants, the earlier SHA no longer subsists. Learned counsel for the 2nd respondent further argued that the 1st respondent being a public limited company, could not refuse to register transfer of shares from the original promoters to the appellants and that since the transfer was not in acco....
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....to the letter dated 30.11.2012 (Page 278) of 1st appellant to 1st respondent on the subject "Correction in the Minutes before attesting the same". Learned counsel for the respondent argued that in his said letter dated 30.11.2012 the 1st appellant have pinpointed certain Items which were not properly recorded or requires corrections. In this letter dated 30.11.2012, there is no mention of Item No.26 which relates to Review and Approve the Master Collaboration Agreement and Lease Deed with M/s Educomp Infrastructure & School Management Ltd, New Delhi". Learned counsel for the respondent, therefore, reiterated that the 1st appellant has no objection to it otherwise he would have mentioned the same in the letter dated 30.11.2012. 31. We have gone through the arguments and perused the record and we are of the opinion that while 1st appellant was watching his family interest but the interests of 1st respondent should always remain paramount. Therefore, we are not convinced with the argument of 1st appellant. These are business decisions decided as per corporate procedure. We cannot substantiate our opinion in it when no arbitrariness is show. 32. The other issue raised by the Lear....