TaxTMI 
TaxTMI 
2019 (9) TMI 712
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....inal petitioner) filed Company Petition under Section 397, 398 and 111(4) of the Companies Act, 1956 seeking reliefs against the acts of oppression and mis-management practised by the Respondents by various acts of fraud and fabrication of documents in an effort to remove the appellant from the Membership and Board of the 1st respondent divesting him of his entire investment. a) 1st respondent company was incorporated on 30.6.2008 and the appellant and 2nd respondent are subscribers to the MOA of 1st respondent with each having subscribed to 25000 shares having face value of Rs. 100 per shares. Appellant and 2nd respondent were the promoters and the first directors of the 1st respondent and subscribers to the Memorandum of Association of the 1st respondent. b) Appellant had paid the entire money towards the shares subscribed i.e. a sum of Rs. 25,00,000/-. 1st respondent was functioning in the years between June 2008-December 2010 under the control of appellant and 2nd respondent. c) Certain disputes arose between appellant and 2nd respondent, appellant visited the office of 1st respondent and found that all records of the 1st Respondent had been removed. ....
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.... respondent by virtue of the Board Resolution dated 22.1.2011 is illegal and void. iv) An order directing the 1st respondent to rectify the Register of members to the effect that the Petitioner is holding 25,000 fully paid up equity shares of the company out of the total authorized capital of Rs. 50,00,000/- before the illegal enhancement of the share capital in violation of the provisions of the Companies Act,1956. v) An order declaring that the appointment of 3rd respondent as Director of the 1st respondent made on 12.7.2008 is illegal and invalid. vi) An order declaring that all decisions taken by the Board of the Company reconstituted after removing the petitioner from the office of director and inducting the 3rd and 4th respondent as directors are invalid, null and void as vitiated by fraud. vii) An order setting aside the allotment of 1,00,000 shares of the 1st respondent company in favour of the 2nd and 3rd respondents purported to have been made on 18.2.2011, and any subsequent transfer of shares by them to any other person, as invalid and bad in law. viii) An order restraining the respondents from making any further issue of sha....
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....of the finance and fund raising matters, but he did not open any account of the 1st respondent with the Bank and even not maintained any record, particularly with the regard to the payment, if any, of subscription money for 25,000 shares subscribed. Even, he did not file PAS-3 to intimate the RoC of the allotment of shares being made by the Company. The defence of the Petitioner that the Respondents have fabricated all the record relating to the 1st Respondent Company is hollow and therefore, stands rejected. Thus, the issue raised under Para 34 hereinabove stands decided against the Petitioner, as he is not legally entitled to seek relief under prayer 'D'. Therefore, he cannot invoke the provisions of Sections 397 and 398 of the Companies Act,1956, as he was not a shareholder of 1st respondent company at the time of filing the petition. Accordingly, the Petition stands dismissed. However, these findings will have no bearing on the complaint filed by the Petitioner before the Police. There is no order as to costs." CASE OF THE APPELLANT 4. Being aggrieved by the said impugned order dated 2nd August, 2018 the appellant has preferred the present appeal praying that the appeal f....
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....espondent. 7. Appellant stated that in terms of Section 36(2) of the Companies Act, 1956, sums due in lieu of 'subscribed' shares are required to be reflected in the balance as 'debt due' to the company. Appellant stated that perusal of the balance sheet of 1st respondent would make it evident that no amount has been reflected as being 'debt due' to 1st respondent against any unpaid amount on shares subscribed in terms of Section 36(2) of Companies Act, 1956. 8. Appellant stated that 2nd and 3rd respondent have sought to forfeit the shares held by appellant in 1st respondent company on the strength of notices dated 26.6.2010, 21.8.2010 and 25.9.2010 (Page 281-283 of Appeal). Appellant further stated that the shares were forfeited in the Board Meeting dated 22.11.2010 (Page 280 of Appeal). Appellant stated that such notices were never issued and served upon the appellant by respondents. Appellant further stated that the shares subscribed by the appellant are fully paid and no further sums are payable on the same. Appellant also stated that no calls have been issued to him. 9. Appellant stated that certain disputes arose between appellant and 2nd respondent, appellant visite....
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....il the said findings of NCLT Chennai in the impugned order or even bothered to produce or substantiate his claim that he made the said payments in cash to the company. 13. Respondent stated that the appellant made a police complaint dated 16.5.2001 but has wilfully suppressed the fact that the Crime Branch of the CID investigated into the complaint, interrogated all the parties and values various documents and by a Final Closure Report dated 7.6.2016 (Reply Annexure R7/Page 65-89) concluded that there was no record to prove that the appellant paid any money in respect of the shares. 14. Respondents stated that Income Tax Department, Kochi vide letter dated 24.2.2014 (Page 90, Annexure R-8 of Reply) intimated the deputy Superintendent of Police Kaloor that the Income Tax Return filed by the appellant during the period i.e. Assessment Years 2006-07 to 2010-11 is Rs. 2141860/- (Total 5 years) and a sum of Rs. 152547/- has been paid as Income Tax. Respondents stated that the claim of appellant that he has paid Rs. 1,13,00,000/- in cash grossly disproportion to his known sources of income. 15. Respondent stated that any person holding shares of a company and who has not made an....
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....g it is recorded that the appellant informed that he is making arrangements for the payment of subscription amount of Rs. 25 lakhs. 20. Respondent stated that the appellant was one of the subscribers of the 1st respondent is not denied. 21. Respondent stated that in the Board Meeting dated 16th August, 2008 (Page 275 of Appeal) it was resolved to transfer 5000 shares of 2nd Respondent to 3rd Respondent and the said transfer was in accordance with the provisions of Articles 29 and 33 of the Articles of Association of 1st Respondent (Page No.138-139 of Appeal). Respondent stated that since the appellant had not made any payments in respect of his shares, therefore, the appellant has no voting rights as per Section 87 of the Companies Act, 1956. 22. Respondent stated that appellant had in fact subscribed to 25000 equity shares of Rs. 100/- each, aggregating to Rs. 25,00,000/- of 1st respondent, is not denied. 1st respondent issued Notices dated 26.6.2010, 21.8.2010 and 25.9.2010 (Pages 267-274 of Appeal) on the strength of Board Resolution but the appellant failed to respond to these notices. Respondent stated that, therefore, the shares of the appellant were forfeited after ....
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....nd respondent was not having sufficient funds, therefore, he did not bring in his share of the capital and had, as a matter of fact, borrowed funds from the Appellant. Appellant argued that he being a subscriber to the Memorandum of Association of the 1st respondent company, therefore, the appellant is a subscriber within the meaning of Section 41(1) of the Companies Act, 1956. 28. Learned counsel appearing on behalf of Respondents argued that it is not denied that the appellant is subscriber to the MOA of 1st respondent. Learned counsel also argued that the appellant alongwith 2nd respondent were promoters/directors of the company. Learned counsel for the respondents argued that the appellant has argued that he had made payment of Rs. 1,13,00,000/- towards the subscription of 25000 shares in 1st respondent and towards share application money (Page 338 of Appeal and also para 6.25 at Page 333 of appeal). Learned counsel for the Respondent further argued that the appellant has not produced any share certificate or his bank statement or the acknowledgement receipt issued by 1st respondent or its authorised representative having received the amount in cash towards share application....
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....sued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (Emphasis given) (b) Xxx" In case the person is a defaulter in payment of subscription to capital or any sum due against him, he will be denied the benefit of this Section. It is also not disputed that the appellant and 2nd respondent are promoter and director of 1st respondent. We note that the appellant is a retired Officer of Income Tax Department, he is very well aware of the law of the land in financial matters. The stand taken by the appellant is that 1st respondent was not having any bank account, therefore, he paid the amount in cash to 1st respondent towards shares application money to the tune of Rs. 25,00,000/-. The stand has no legs to stand on. Nothing stops opening of Account in the name Company with "Proposed" added in bracket. Nothing stops showing a trail from Account to Account. The appellant has not produced any evidence before the NCLT or before this Appellate Tribunal to substantiate his claim that the appellant paid the said amount in cash. Tax laws prohibit such huge payments in ca....
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....ed to be authorised by the appellant or 2nd respondent or by both. As such no record has been placed by appellant to substantiate his claim. 30. Learned counsel appearing on behalf of the Appellant argued that the NCLT has failed to appreciate that the appellant had brought in money towards the 25000 shares subscribed by him in the MOA. Learned counsel for the appellant has drawn out attention to his Bank Account maintained with Catholia Syrian Bank at Page No.517 of the Appeal and argued that he had incurred expenses of Rs. 108247/- for issuance a draft in the name of Pay & Accounts Officer MCA and also showed copy of the Challan dated 23.6.2008 (Page 451- 453) and argued that the said amount was incurred by the appellant and not by the 2nd respondent. 31. Learned counsel appearing on behalf of the Respondent argued that the appellant has only shown the payment of Rs. 2,35,500/- and not Rs. 1,13,00,000/-. Learned counsel further argued since he has not paid the payment towards the share application money therefore, he cannot claim the said shares. 32. We have heard the parties on this issue and perused the record. We are satisfied that the appellant has made some payment ....
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.... a director is not valid and is based on forged documents, and as such, the forfeiture of the appellant's shares are invalid for lack of quorum. No notice of the Meeting appointing 3rd respondent as director was ever issued to the appellant. 37. Learned counsel for the Respondent argued that 3rd Respondent was appointed as director in the Board Meeting held on 12th July, 2008 in which the appellant was also present. Learned counsel for the Respondent further argued that this is the only meeting that has been attended by the appellant. Appellant has not attended any other Meeting. Learned counsel for the Respondent further argued that the presence of the appellant in the Meeting itself shows that the appellant has received the notice for the meeting in which 3rd Respondent was appointed as director. 38. We have heard the parties and perused the record. We have noted that the Meeting was held on 12th July, 2008 in which 3rd Respondent was appointed as director and the appellant was present in the said meeting. 39. Learned counsel for the appellant argued that the Respondents removed all documents including sale deeds in respect of properties acquired by the two companies nam....