TaxTMI 
TaxTMI 
2019 (8) TMI 222
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....him stands cancelled; (3) To Declare that consequently the capital of the Company stands reduced by Rs. 2,75,000/-. (4) Consequently the Petitioner is entitled to transfer portion of his shareholding as per the Article of Association of the Company. (5) To declare that the 2nd Respondent is not entitled to be paid any money from the Company. (6) To declare that the Company is not liable to pay any amount to the 3rd Respondent. (7) To hold that the 2nd Respondent is guilty of acts of misfeasance, fraud, cheating, breach of trust, misappropriation of funds and accordingly direct him to make good/ compensate the Company to the extent of Rs. 7,86, 15,434/- and such other amount as may be determined by this Bench along with interest @24%p.a. (8) To hold that the 2^nd Respondent is liable to make good all monies/ deposits directly received by from Mandi Agents of the Company; (9) To hold that the 3rd Respondent is also guilty of fraud and of misappropriation of money belonging to the Company and that he is also liable to make good the sum of Rs. 87,00,000/- and such other amount....
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....d the 2nd Respondent was that both should have equal shareholding in the Company, the 2nd Respondent masterminded the whole transaction and entered in the subscription column 55% (27500 equity shares) as against his name and only 45% (22500) equity shares as against the name of the Petitioner. The 2nd Respondent did not invest any money towards his shareholding and the entire incorporation expenses were borne by the Petitioner. The project undertaken by the Company is unique in nature started in the private sector. The business activity is that of providing marketing facility of fruits and vegetables and also provide cold storage facility. (5) It is stated that the Company availed financial assistance of Rs. 8.84 Crores from Indian Bank and the Petitioner offered his personal guarantee and also four of his properties as a security for the said loan whereas the 2^nd Respondent only provided his personal guarantee and did not provide any of his immovable properties as security despite holding properties in his name. The 2nd Respondent who had a clear intention to cheat the Company and also the Petitioner has siphoned of more than Rs. 8 Crores by drawing amounts from th....
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.... security for the said loan and only offered his personal guarantee in favour of the said Bank. (8) The Petitioner stated that at the time of incorporation of the Company, the 2nd Respondent expressed his inability to invest any money into the Company. However, the 2nd Respondent had experienced in sale and marketing of vegetables in the area, the Petitioner agreed to promote the aforesaid Company jointly with him on the assurance of the 2nd Respondent that he will invest money into the Company at a later. The 2nd Respondent who had masterminded to defraud the Petitioner made the Petitioner to sign the subscriber sheet of the Memorandum and Article of Association of the Company and instead of mentioning the shareholding at 50% each, he reduced the shareholding of the Petitioner to 45% and entered his (2^nd Respondent's) shareholding at 55%. The Petitioner came to know about the said fraud played by the 2nd Respondent much later. The Company has not issued share certificates in respect of the said shareholding. (9) The oblique motive and mala fide intentions on the part of the 2nd Respondent to deceive the Petitioner and the Company came to the know....
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....; were known to the Petitioner and all of them came to be known to the Petitioner only through the 2^nd Respondent and it was at the instance of the 2^nd Respondent that the aforesaid payments were made to their respective Bank Accounts on the saying of the 2^nd Respondent that the aforesaid four persons will make various supplies towards construction of market yard. Since neither the 2^nd Respondent nor the aforesaid persons came forward to give an account of the amounts received by them, the Company caused the issue of legal notices to all of them. Since the said person failed to account for the amount s received despite receipt of legal notices, the Company has lodged Criminal Complaints against all the aforesaid four persons before the jurisdictional Magistrate Court at Mulbagalu. (13) It is stated that the Petitioner, the Company had its loan transactions with Indian Bank. However, for the sake of convenience, another account was also opened by the Company with the State Bank of India, Mulbagalu, during February, 2013 in the name of the Company. The Petitioner except for signing the account opening form, has neither made any transactions whatso....
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....situated at No.VI, Khatha No.171/1, New CMC Khatha No.257, Survey No. 10/6, 10/7 and 10/8 situated at Sonnathammanahalli alias Thambuchettypalya, K.R. Pura Hobli, Bangalore, East Taluk, Bangalore, which property is more fully described in the schedule hereunder and hereinafter referred to as 'the schedule property'. (16) The Chartered Accountants of the Company have expressed their inability to audit the accounts of the Company and also desired to resign as Auditors of the Company. In the circumstances, the Registrar Companies in Karnataka has already issued notices threatening prosecution under the Companies Act for non-filing of statutory returns and reports and failing to hold Annual General Meetings of the Company. The 2^nd Respondent has also committed another illegal act by resorting to unauthorised collection of deposits from various Mandi Agents/ shop keepers and also amounts due from Purchasers of vegetables without the knowledge of the Petitioner. The Petitioner states except for five of the Mandi Agents, who have either deposited amount in full or part, remaining 14 - 15 Mandi Agents have not paid any amount whatsoever into the account of the Compa....
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....e Company due to the acts of fraud played by the 2^nd Respondent and his non co-operation in finalization of accounts of the Company. (19) The 2^nd Respondent has also acted mala fide by writing to the aforesaid Indian Bank to which more than Rs. 8.0 crores is due to be repaid by the Company, by calling upon the said Bank to freeze the Current Account of the Company and also to return the sum of Rs. 3.38 Crores subsidy received from the National Horticultural Mission. Further the 2^nd Respondent has also called upon the said Indian Bank to proceed to sell the Company's lease hold property and other securities provided by the Petitioner which are all his personal assets. The Indian Bank issued a Notice dated 24.7.2014 to the 2nd Respondent with a copy marked to the Petitioner specifically warning him that he would not be absolved of his personal guarantee obligations and he would continue to be made liable for the company's dues. After the said Notice dated 24.7.2014 was received by the 2^nd Respondent, he immediately took steps to sell his 3 ½ acres of land situated at Siddaghatta Village, Mulbagalu Taluk in favour of his ....
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....the company by exercising its powers under Section 242 of the Companies Act, 2013, which is also suggested by the Investigating Officer. 3. The Company Petition is opposed by the Respondent by filing statement of objections, by inter alia, contending as follows: (1) The Company Petition is not maintainable either in law or in facts. The Petitioner failed to establish that the acts of 2^nd Respondent are prejudicial to the 1^st Respondent Company and hence, the same is liable to be dismissed in limine. The Petitioner approached this Tribunal with an ulterior motive to oust the 2^nd Respondent from the Company and has suppressed the material facts and pleaded false allegations and such vague allegations of fraud and deception which cannot be the subject matter of a Petition under Sections 397 / 398 before this Tribunal. (2) It is stated that the Company A/C maintained at Indian Bank, Benson Town Branch, and Bengaluru is being operated by the Petitioner himself from the date of inception of the Company to till date. The 2^nd Respondent has not operated the Company loan A/c or Company's current account No.995327029 in the Indian Bank, Benson Town Branch, ....
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....) Shri T.V Shiva Reddy. (2) Shri B.M.Chowdappa, (3) Shri M.V.Shankar and (3) Shri Gopal and seeking a relief of eviction. The Petitioner has also approached the Judicial Magistrate First Class, Mulbagal by filing a private complaint in PCR No 54/2015 which is further numbered as C.C No.561/2016 after the learned Magistrate taking cognizance of the matter. Therefore, the above proceedings are nothing but abuse of process of law, as the Petitioner has launched parallel proceedings against this Respondent. (6) It is stated that since there is no alteration of terms and conditions of the registered Lease Deed, any amount of oral averments is inadmissible in view of Section 90 of the Indian Evidence Act. Though the Company as incorporated in the year 2011, except for one year, annual returns and audited reports of the Company have not been filed to the Registrar of Companies under the provisions of the Companies Act, 2013. In this regard the Registrar of Companies has issued a notice dated 12.12.2013 regarding defaults under Section 159/ 166/ 210/220 of the Companies Act, 1956. (7) It is stated that during the meeting convened on 29.01.2014, it was agreed b....
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....s:- (1) He is not a necessary party to the above proceedings and the petitioner may be directed to delete him. The Petitioner cannot prosecute as against the 1^st Respondent, which cannot be treated as a legal entity as per the description made in the petition. (2) He had completed the interior works of the Company. The entire payment of 138 lakhs of rupees has been made from the Indian Bank Account, Frazer Town Branch, Bengaluru and still a sum of Rs. 65,98,218/- is due to this Respondent from the Petitioner. And interior contract is not between the 2^nd Respondent and 3^rd Respondent alleged. (3) It is denied that the property acquired by him in the year 2007 has any nexus with the activities of the Company, since the Company was incorporated in year 2011. (4) It stated that the properties situated at K.R.Pura Hobli, were purchased on 10.11.2006 from Smt. K.S.Swarupa and building was constructed in the year 2013. The Petitioner was invited for the house warming ceremony by this Respondent. The friendship between two parties has been misused by the Petitioner. The alleged collusion between the 2^nd Respondent and th....
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.... Act. As such allegation on Subscription sheet at this stage has no ground. No further allotment of shares since inception. In the MOA theses subscribers agreed to take those shares in the capital of the Company and they are the members of the Company by virtue of sections 34(2)/41 of wrest while Companies Act, 1956. ROC has registered the MOA on 18.06.2011 under Section 33(3) of the wrest while Companies Act, 1956. On registration of MOA on ROC has issued certificate of incorporation on 18.11.2011 under Section 34 of the Companies act, 1956 and certificate of incorporation shall be the conclusive evidence that all provisions of the Companies Act have been complied with U/s.35. Partnership arrangement if any, has nothing to do with subscription clause of MOA. In terms of Section 36 of wrest while Companies Act, 1956 it was a binding contract and any money payable by them to the Company shall be a debt from him to the Company. Both the subscribers to the memorandum of association could not substantiate before the Investigating Officer about timely payment of respective contribution to the share capital of the Company. But in the ordinary course, both have deposited some ....
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.... Name of the Parties Amounts in Rs. 1 Mr M Gopal Rs. 65,29,954/- 2 Mr. Gangareddy Rs. 29,42,450/- Total Rs. 94,72,404/- (7) Amounts contributed by the Shareholders for repayment of Bank loan:- Sl. No. Name of the parties Amounts in Rs. 1 Out of business operation (in charge of Operation Mr. M.Gopal) Nil 2 Out of Personal sources of Mr. M. Gopal Nil 3 Out of Personal sources of Mr. Gang Reddy Rs. 2,87,42,000/- Total Rs. 2,87,42,000/- The Company was set up from the term loan obtained from Indian Bank and subsidy received from National Horticulture Mission. The Company initially availed loan of Rs. 8,84,42,000/- for setting up project. Just before the commencement of oppression, Bank loan along with interest was Rs. 9,45,85,860/-. For the said Bank loan, the Company has provided security in form of companies lease hold land leased by Mr. Ganga Reddy to the Company and also Mr. Gangareddy's personal property as collaterals in addition to guarantee from two Directors. No personal property of Mr. M Gopal was given as security for the bank loan as affirmed b....
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.... undertaking agreed upon in the letter were not complied by the parties. Mr. M. Gopal during investigation claimed that records are in the computer but password is not known. 8. Therefore, the Investigator held that the 2nd Respondent is solely and mainly responsible for not maintaining books of accounts and he was liable for all illegalities conducted in the Company. Therefore, he concluded in the report, at para No. 32 are as follows:- 32.1 The affairs of the Company have been conducted in a manner prejudicial to the interest of the Company under Section 398 of the Companies Act, 1956/ U/ s. 241 of the Companies Act, 2013. Directors during the period from 08.06.2011 to 30.11.2013 have mismanaged, misused, misappropriated and siphoned of the funds of the Company thereby caused loss to the Company. Respondent No.2 has caused loss ofRs. 1,42,84,389/- to the Company and Petitioner has caused loss of Rs. 47, 12,500/- to the Company. In case Respondent No.2 failed to provide proof on T. V. AD for Rs. 7, 16, 450/- the amount of loss caused by Respondent No.2 would be by Rs. 1,50, 00,839/-. Director(s) who were in charge of the affairs of the Company during ....
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....)(a) of the Companies Act, 2013 so as to put an end to the affairs of Company by passing suitable directions. 11. As per Articles of Association of the Company, only Petitioner and the Respondent No.2 are the only Directors, who are disqualified because of their own default for non-filing of Financial Statements and Annual Returns since 2012. Therefore, in order to revive the Company, it is just and proper to permit the Petitioner as well as the Respondent No.2 to nominate their Directors on the Board of Directors of the Respondent No. 1 Company. Since the Second Respondent was primarily responsible for the present state of affairs of the Company and he did not contribute much for the benefit of Company, it would be just and proper to permit the Petitioner to nominate two Directors on his behalf, while the Second Respondent can nominate one Director on part to see the affairs of Company being conducted in accordance with law. As per report of the investigating Officer too, the Respondent has contributed very nominal to the Company, though the Petitioner was holding 45% of shareholding, while Respondent No.2 holding 55% as per records. Since Respondent No.2 bein....