TaxTMI 
TaxTMI 
2019 (7) TMI 1023
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....rfeiture and reissue of the shares as bad in law, null, void and invalid and not binding on the company or the petitioners. (b) Set aside the forfeiture and reissue, directing the respondents to remove the names of respondents Nos. 2 and 3 in respect of the said 96,07,843 shares from the register of members and re-enter the name of the petitioner in the register of members in respect of the said 96,07,843 shares and the said 3,92,157 shares. (c) Issue a perpetual injunction restraining the respondents and any one of them whether by themselves or by their servants, agents and/or assigns or otherwise howsoever, from giving effect to the purported for feiture of shares allegedly made on July 9, 2011. (d) Issue a perpetual injunction restraining the respondents and any one of them whether by themselves or by their servants, agents and/or assigns or otherwise howsoever, from giving effect to the purported reissue of the forfeited shares allegedly made on July 19, 2011. (e) 3,92,157 fully paid-up equity shares bearing certificate number 13 and distinctive number 550001-942157 in favour of the petitioner and rec tify the register of members accordingly.....
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....The petitioner too is a company incorporated under the provisions of the Companies Act, 1956 with its registered office at New Delhi (annexure P2). It holds 1,00,00,000 shares of respondent No. 1-company amounting to 51 per cent. of the share capital as projected in the above cited table. It is alleged that the partly paid-up share capital amounting to 49 per cent. shareholding of the petitioner-company has been illegally and fraudulently forfeited by respondents Nos. 2 and 3 and the petitioner has not been reflected even as owner of the 2 per cent. fully paid-up shareholding amounting to 3,92,157 shares. To agitate the aforesaid acts of oppression the petitioner-company duly authorized one Mr. Manprit Singh Chadha to file the instant petition on the strength of its board resolution dated July 7, 2010 (annexure P3). 2.3 The petitioner has also given detailed particulars of the respondents asserting that respondent No. 2 is a director of respondent No. 1-company and holds 51,00,000 equity shares (including partly paid shares), amounting to 26 per cent. of the issued and subscribed share capital. Likewise, respondent No. 3, Mrs. Shashi Bala is also another director of respondent N....
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....on and agreement to infuse the aforesaid sums ; (vi) The balance amount of Rs. 43,12,50,000 would be treated as share application money for the issue of 7,63,27,434 equity shares partly paid-up at Rs. 5.65 per share, immediately upon the company receiving the NOC from the Ministry ; (vii) Immediately upon grant of the NOC the non-scheduled air transport licence would be transferred/hived off into a separate com pany owned and controlled by respondents Nos. 2 and 3 ; (viii) Immediately upon grant of the NOC, Shri Ajay Singh would be appointed as a director and would act as chairman of the board, with a casting vote and at the same time respondent No. 3 would forthwith resign upon grant of such NOC." 2.6 The claim of the petitioner is that in pursuance of agreement as set out above the respondent-company applied for grant of NOC for operating a Scheduled Passenger Airline. The parties also took steps in terms of the agreement which are as follows : "(i) The authorized capital of the company was increased by the respondents from Rs. 7 crores to Rs. 50 crores ; (ii) The petitioner infused a sum of Rs. 43,22,10,784 into the desi gnated acc....
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....rust reposed by the petitioner in the respondents. The petitioner was to become 51 per cent. shareholder with the expectations to be holding 90 per cent. of the paid-up equity who is not being sold even as a shareholder. 2.9 The petitioner came to know about the aforesaid forfeiture by a letter dated July 11, 2011 written by the respondents to one Ms. Renu Data and a copy thereof was endorsed to the petitioner. Adversely commenting upon the aforesaid letter and claiming that it contained false statement (annexure P8) the petitioner has asserted as under : "(i) The agreement inter se the petitioner and the respondents was only valid and subject to an NOC being issued to the respondent- company within six months ; (ii) As six months had allegedly expired and no NOC issued, it has resulted into unpaid calls on the aforementioned 96,07,843 partly paid-up equity shares issued to the subscriber and all such shares stand forfeited ; (iii) An escrow agreement had been entered into between the petitioner and the respondents wherein one Ms. Renu Data was designated as the escrow agent and as such was holding some pro perty in escrow which was to be returned to t....
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....e company and, the ouster of the petitioner in this manner is gravely detrimental to respondent No. 1-company because in the absence of the petitioner, respondent No. 1-company would be unable to meet its goal and objective of operating a Scheduled Passenger Airline. It is the petitioner and its man agement which has the capacity to finance and to provide expertise to run, operate and manage a Scheduled Passenger Airline. These acts are also oppressive as the petitioner is deprived of its share and has also been denied their rights and legitimate expectations of owning 90 per cent. of the shareholding of the company. The petitioner has always been ready and willing to pay the balance amount of dues towards the shares, as and when called upon to do so. It is alleged that the aforesaid approach has been adopted by the respondents with the sole intent to oust the petitioner from respondent No. 1-company which is guided by greed. Respondents Nos. 2 and 3 are using the company as a vehicle of their personal enrich ment and they are using their position to the detriment of respondent No. 1-company beside breaching their fiduciary duties and committing fraud. 3. On the basis of the afo....
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....fter obtaining the NOC respondent No. 1-company has been focusing on Non-Scheduled Charter operations. The averments have been made that in November, 2010 Mr. Ajay Singh of petitioner No. 1-company approached the respondent for operating a project of Scheduled Passenger Airline in the name of respondent No. 1-company. It is claimed that Alok Singh-respondent No. 2 is an experienced and a pioneer with experience of more than 16 years and a well known figure in the Aviation Industry. He is accomplished Aviation Professional and Former President and CEO of Air Sahara. He has longer experience than Mr. Ajay Singh belonging to petitioner No. 1 and was also holding a planner in Air Sahara. After discussion between respondent No. 1-Mr. Alok Singh and Mr. Ajay Singh the petitioner expressed its willingness to join as strategic investor in respondent No. 1-company for Scheduled Passenger Airline Business and the NOC was to be obtained by respondent No. 1-company keeping in view the extensive experience of respondent No. 2 in Aviation Industry. It has been clarified that the petitioner did not have any interest in Non-Scheduled Air Transport Service or other business run by respondent No. 1-....
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....ons are not fulfilled, then the said agreement will lapse. (e) It was also agreed that the escrow agent will keep the blank signed transfer deed and share certificates in relation to the shares pledged as per the terms and conditions of the share subscription agreement and the escrow agreement. (f) In addition to the share subscription agreement, an escrow agreement has been executed between the parties wherein Ms. Renu Data R/o. 1A-801, Bharat Apartment, Plot No. 8, Sector 18, Dwarka, New Delhi-75 was appointed as an escrow agent and it was agreed that all the documents in relation to the agreement referred as escrow property will be kept by the escrow agent. Copy of the final draft of the share subscription agreement and escrow agreement dated December 6, 2010 are annexed and marked as annexure 'a' (Colly)." 3.8 In the reply respondents have repeatedly asserted that both the agreements dated December 6, 2010 namely SSA and escrow agreement are in power and possession of the petitioner and respondents do not have even xerox copy of the same. However, a reference has been invited to various e-mails exchanged between the parties prior to and pos....
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....It is further claimed by the respondents that the SSA in clause 6.3 further provided that if NOC was not received within six months, i. e., on or before June 6, 2011 then the entire transaction is not unwinded included escrow agent's obligation to ensure the refund of the share application money. If it was not performed then it was to be con sidered as a breach of the SSA. According to the stipulation it would auto matically result into and stand as unpaid as on 96,07,843 partly paid-up equity shares issued to the petitioner and all such shares were to stand for feited without any recourse to the subscriber. On account of suppression of documents at the instance of the petitioner the confusion has been created and if it produces the original share certificate then it would establish the aforesaid terms of the understanding. 3.10 On June 23, 2011 respondent No. 1-company addressed a letter to escrow agent, Ms. Renu Data with a copy to the petitioner for implemen tation of the terms and conditions of the agreements, which was success fully delivered to both. Again a letter dated August 11, 2011 was written to escrow agent informing her that in terms of SSA/escrow agreement on ....
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.... lying with the escrow agent and a bare perusal of these forms would show that the same was never transferred or claimed to be transferred by the petitioner in the books of account of respondent No. 1- company nor it was ever lodged with respondent No. 1-company there fore, there is no question that it could be the shares owned by the peti tioner duly transferred and purchased by it in respondent No. 1-company and the same could have never been lodged with the company as the nec essary terms and conditions of the agreement were never fulfilled. The aforesaid facts have been admitted by the petitioner also. There is no trans fer stamp affixed on the said transfer form which suffers from various other infirmities as well. The petitioner cannot claim any title in respect of the above shares and the same have been misused by the petitioner in con nivance with the escrow agent who is nominee of the petitioner group. In good faith and trust she was entrusted with the duty to act as such. Ms. Renu Data is in fact a wife of an employee working for Mr. Ajay Singh and shared an employer-employee relationship and accordingly Mr. Ajay Singh has been able to exert undue pressure and influence o....
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....any. A bank statement of the bank account has been placed on record to assert that the investment never came into the company and it was only shown as a circular invest ment without actual money coming into the account of the company. The aforesaid routed money was also taken out within hour from the said des ignated account without even the project of scheduled airline being started and only a small sum of Rs. 10,654 was left in the said designated account. It clearly shows that the petitioner did not have any intention to invest in the scheduled business of the company and their entire case falls to the ground on that score alone. A copy of the bank statement of Syndicate Bank Account No. 90361010013334, Barakhamba Branch, New Delhi has been placed on record (annexure H). The amount brought in by the peti tioner was just Rs. 9,60,784 towards partly paid-up shares and the same was to be forfeited as per clause 6.3 of the SSA in case the NOC was not received within a period of six months. 3.15 The respondents have also filed paragraph-wise reply by reiterating the stand already taken in the preliminary objections/submissions. Addi tionally, the stand of the respondents is that p....
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....st of respondent No. 1-company and was trying to play fraud by indulging in malicious and false intention. The NOC was granted to respondent No. 1-company only on June 28, 2011 for operating non- scheduled air transport service which was obviously after a period of six months allegedly stipulated in the SSA and escrow agreement. 4. The petitioner has filed rejoinder and has reiterated the averments made in the petition. It has been vehemently denied that there exists any SSA or escrow agreement between the parties and the respondents have failed to demonstrate the existence of the same. The respondents have not acted on any document like SSA or escrow agreement in any of the purported board meeting. The petition is maintainable as the petitioner has legitimate expectations to capture 90 per cent. shareholding in respondent No. 1- company. The respondents transferred 3,92,157 fully paid-up shares and issued partly paid-up shares amounting to 9,67,784 at 0.01 per share. It entitled the petitioner to a total holding of 51 per cent. shares of respondent No. 1-company. All other averments have been reiterated and it is asserted that on the receipt of NOC the petitioner was to receive....
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....rly addressed and stamped letter of allotment. An allotment must be absolute and in accordance with the terms and conditions of the application, if any. An allottee of share is entitled to have a document, called share certificate unless by precedent of the company shares are kept in its safe custody. Thus, every company making an allotment of shares is obliged to deliver to an allottee a certificate of shares within three months after the allotment. In the case of a transfer, the certificate has to be delivered within two months unless extended by the Tribunal. 7. In so far as transfer of share is concerned the provisions of section 108 of the Act 1956 have to be complied with. There are numerous conditions laid down which are required to be fulfilled before a company can lawfully register a transfer. 8. In the present case the petitioner has placed reliance on some oral understanding and the VIII point concerning the aforesaid agreement have been detailed in paragraphs 3.1 and 3.2 of the petition. In paragraph 3.5 clauses of the alleged agreement as asserted by the petitioner have been set out verbatim. We proceed to test and examine the case of the petitioner in the light ....