TaxTMI 
TaxTMI 
2019 (1) TMI 194
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....Company (present Appellant) claiming that deposits made by him to the extent of Rs. 1.54 crores in the account of Respondent No.1 Company (hereafter referred as 'Company') was in the nature of loan paid to save mortgaged properties and not for allotment of shares as was done by the Company in purported Resolutions dated 18.12.2014 and 31.03.2015. NCLT accepted the claim of Petitioner and declared the allotment of shares null and void and held that the amount deposited by the Petitioner was loan and deserved to be repaid with interest. 3. Copy of the Petition filed by original Petitioner (Annexure - 14 Page -177) shows that the Petitioner filed the Petition under Sections 59 and 62 of the Act and referred to the objects of Appellant Company (hereafter referred as - 'Company') which were to run and operate schools, colleges, etc. and stated that he was one of the shareholders of the Company who had previously acted as Director from December, 2006 to October, 2011. Petitioner stated that to establish infrastructure for the educational institution, the then Board of Directors (which included him) had decided to avail loan of Rs. 10 Crores from State Bank of India in 2009 and for the p....
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....n filed or proof given of sending offer letter dated 18th December, 2014. He also pleaded that there was no material to show that he had accepted the letter of offer and claimed that the amount deposited by him was to the operating account of the Company and not to any special account opened to receive the amounts relating to purported rights issue. On such basis, the original Petitioner sought to set aside the shares allotted and to direct the Company to repay his amount with interest. 6. The Appellant - original Respondent No.1 Company through the Respondent No.2 - Director - Ms. KVVL Kumari filed counter in NCLT. The Respondent Company claimed that the original Petitioner and one B.V. Babu had established the Company which was closely held by their relatives and friends. The Petitioner was controlling the affairs of the Company since incorporation. It referred to the establishment of the Vizag International School and accepted that the Company had availed term loan of Rs. 10 Crores and that the founder promoter including Petitioner were under obligation to provide personal guarantee and securities in the form of immovable properties towards securities for repayment of the term ....
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....ration thereto, the Company shall Issue further Share Capital to the existing Shareholders in terms of Section 62 of the Companies Act, 2013. 14. It is further submitted on that understanding only, the Petitioner herein in all invested a sum of Rs. 1.54 Crores in First Respondent Company. It is further submitted that the Other Founder Promoters and Shareholders who were guarantors to the loan account and given securities in favour of SBI also brought their respective Amounts aggregating to Rs. 6.88 Crores towards the subscription to right issue amounting to Rs. 8.50 Crores and other allotments into the Company and accordingly paid the entire Amount towards Repayment of Loan to the Lending Bank. It is further submitted that since the existing Shareholders have agreed for Issuance of Additional Share Capital, for the Amounts brought in by the respective Shareholder, the procedure for Issuance of Additional Share Capital does not arise." 7. The counter then referred to the shareholding as on 18th December, 2014 and the subsequent shareholding as on 31st March, 2015 to say that the shareholding of the original Petitioner has risen from 1.64% to 12.14%. In para - 22 of the counter,....
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....became NPA is also not in dispute as well as the fact that one-time settlement was arrived at is also not in dispute. The fact that the original Petitioner deposited Rs. 1.54 Crores in the account of the Company held at the State Bank of India is also not in dispute. The Petitioner acted as Director from December, 2006 till October, 2011 is also undisputed. It appears that after he ceased to be Director in October, 2011, he did not take interest in the affairs of the Company. 10. NCLT in its Impugned Order considered Section 59 as well as Section 62 of the Act and observed in para - 12 of the Judgement as follows:- "The main issue in the instant case, as discussed supra, is not calling upon the shareholders to pay the unpaid share capital. As stated supra, it is the money in question paid by the Petitioner to the Company to re-pay loan to its Banker and its repayment to the petitioner. In fact, whether the Company has given proper notices or not, to petitioner about the impugned allotment of shares cannot be main issue and clubbing together both the issues are not proper. Even if it is accepted issue of notice offering impugned shares, admittedly, the petitioner has not given an....
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.... of Rs. 1,54,00,000/-). We are told by the Counsel for Respondent No.1 that he has moved rectification application before NCLT on this count. Looking to admitted fact regarding the figure, there should not be difficulty on this count. 11. Aggrieved, the present Appeal is raising grounds and it has been argued for the Appellant Company that there was no documentary evidence that Rs. 1.54 Crores was given as a loan. According to the Appellant, NCLT should have considered the purport and intent behind OTS proposal and objections which were to infuse funds towards equity capital. According to the Appellant, it was error on the part of NCLT to hold that the amount was to be treated as a loan. The sale of jointly held mortgaged properties which were sold jointly and the sale proceeds which were deposited into the bank towards equity infusion was a decision taken by promoters which according to the Appellant, included the original Petitioner. According to the Appellant, original Petitioner subscribed to the fund in the Company having knowledge about the terms of the offer and issuance of shares, its ultimate utilization and objective of the funds raised which is to be treated as implied ....
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....ry who had filed the PAS without verifying any documents. According to the Counsel, the letter of offer dated 18.12.2014 (Page - 151) was also a document subsequently created for which there is no proof of offer having been sent to the original Petitioner or any other shareholders and even if it was to be said that such offer was sent, the same could not be accepted in the absence of any document to show acceptance by the Petitioner of such offer. The Counsel submitted that for the subsequent allotment said to have made on 31st March, 2015, even this procedure was not tried to be shown and simply allotments of shares were recorded. The shares are to be allotted in proportion of the existing shareholding and not on the basis of the money deposited by the Petitioner, which according to the Counsel was towards discharging liability of the Company towards the Bank and thus could have been treated only as loan. According to the Counsel, the deposit was not in any special account opened for deposit of monies towards preferential offer made. The learned Counsel for Respondent No.1 - original Petitioner referred to the counter filed (Diary No.3916) to submit that the original Petitioner ha....
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....ioner, were mortgaged and there were personal guarantees given to which the original Petitioner was party. Since 25.10.2011, the original Petitioner was no more Director in the Company. The record shows that the Petitioner was keen that the properties should not go in distress sale in proceedings initiated by the State Bank and agreed to the one-time settlement. While the Petitioner claimed that the amount deposited by him for settlement of the liability of the Company, the Appellant Company and other Respondents of this Appeal claim that in the process to pay back the amounts due to the bank, the Respondents to the Company Petition had resolved that against the amounts to be paid to the Bank, shares would be issued. Looking to such claims made by the rival parties, naturally the burden is on the Respondents to show when the payments made by the original Petitioner, he had agreed that against the said amount, shares be issued to him. Apart from this, it would be necessary for the Appellant Company and the other Respondents to show that the necessary procedures under the Companies Act, especially Section 62 of the Act were complied. The Appeal claims that on 05.12.2013, the founder ....
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....l for Respondent No.1 - original Petitioner has argued that the additional documents tendered also have documents which according to the original Petitioner are fabricated and doctored documents. We will deal with the application for additional documents and rejoinder separately but here we may observe that even if the document at Annexure - C filed with the Rejoinder (at Page - 65) was to be looked into, there is nothing to show that the Petitioner agreed to the writing of such letter by the Company to the Bank for one-time settlement. While making offer to the Bank, the Company may show 10 various sources as to how it would raise money in order to lure the Bank to settle the dispute but that does not mean that the Petitioner agreed to writing such letter or that he agreed that the money he will pay may be converted into equity/shares. 15. In the Appeal, para 7 - xxiv. reads as under:- "xxiv. That in line with agreed intent among the promoters on 05.12.2013 and in line with commitment made in the OTS proposal to the Bank on 06.02.2014 to infuse sale proceed in the appellant company by the promoters, the board of the appellant company and the shareholders in its meeting held on ....
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....nt Company is that on 31.03.2015, as per Board Meeting Resolution (Annexure -12 - Page 165), the Company simply went on to allot further shares to the Petitioner. 17. Learned Counsel for the original Petitioner argued that according to the Appellant Company, on 18.12.2014, the original Petitioner was offered 1,39,541 shares which would be of the value of Rs. 13,95,410/-. The learned Counsel stated that if (Annexure A-10 Page - 158) the ledger maintained by the Appellant Company was to be considered, till 14.01.2015, what the original Petitioner had deposited was Rs. 67,50,000/- and it is surprising to see that till 24.01.2015, the Appellant Company claimed to have allotted shares worth Rs. 13,95,410/- to the original Petitioner. It is rightly argued by the learned Counsel that there is no match between the amounts deposited by the original Petitioner with the shares alleged to have been allotted. 18. It has been argued on behalf of the Appellant Company that the original Petitioner had knowledge about the offer letter dated 18.12.2014. According to the Appellant, the original Petitioner was actively involved in the affairs of the Appellant Company as well as holding Company - M/s....