TaxTMI 
TaxTMI 
2019 (11) TMI 189
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....tion filed by the appellant to be not sustainable and the allegations of oppression and mismanagement made were found to be not proved. NCLT held the other Company Petition No. 1/2016 filed by the respondents to have become redundant. The present appeal arises out of the dismissal of the Company Petition No. 36 of 2014. 2. Briefly stated the appeal is more reproduction of the Company Petition and the reply filed by the respondents with arguments. The appellant claims that the Respondent No. 1 M/s. UBC Engineers Pvt. Ltd. (the Company) was incorporated on 20th April, 2005 and the registered office is situated at Plot No. G-36, Sector 20, Belapur, Navi Mumbai-400614. (Case put up before NCLT appears to be that Respondent No. 2 was having proprietary concern "United Building Company and Appellant and Respondent No. 3 were employees who joined respondent No. 2 and Company was incorporated). In was incorporated to carry on business of undertaking various civil construction contracts. The company is registered as a Government Contractor with the Military Engineer Services (MES) and is undertaking various projects of MES. The projects were being carried out at Kochi and Colaba, Mumbai.....
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....build Engineers and (iv) Hepta Enterprises are functioning in which other than the appellant the other Directors have interest and the company is bearing expenses of those firms by them using the stationery, staff, salary etc; f) Sixthly, Rs. 1.50 crores were siphoned off from the company by Respondent No. 2 towards material and labour of construction of his Bungalow at Plot No. 144, Sector 21, Kharghar, Navi Mumbai; g) Seventhly, Rs. 15 lakhs was siphoned off by Respondent No. 2 for addition and alteration work of a Bungalow at Kochi owned by his wife. Here also, manpower and construction material at the cost of the company was used; h) Eighthly, loan of Rs. 24,10,000/- was given to M/s. Unibuild Engineers, a partnership firm in instalments in which Respondent No. 2 to 4 are partners. Section 185 of the Companies Act, 2013 (Act in short) was violated. Loan was given although the company itself was taking various loans from Banks for its functions. 3. The appellant further claims that on 12th March, 2014 he wrote an e-mail to Accountant, Respondent No. 5, that his particulars had not been shown in Form No. 20B. The appellant met Respondent No. 2 on 18t....
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....k the allegations to any annexures so as to make the appeal clear. As such the allegations made in the appeal are general leaving it for us to search the details from various documents which have been later filed by the appellant and also the respondent. Coming back to the Arguments, Diary No. 8649 compilation of documents was filed by the appellant and the Learned counsel for the appellant referred Page 57 as the letter dated 1st April, 2014 sent by Respondent No. 2, Managing Director, claiming the letter to be on behalf of the Board of Directors. The arguments is that there was no authority given to Respondent No. 2 to send such letter making allegations against the appellant. Reference is then made to (Page 58) Notice dated 7th April, 2014 calling EOGM on 29.4.2014 with Explanatory Statement (Page 59). Although the appellant claims that he did not get sufficient opportunity to respond to the notice proposing to remove him as Director, his letter dated 22.4.2014 (Page 60) shows that he responded with great details including invoking the provisions of the Companies Act making various allegations which are now found in the Company Petition and the appeal. The learned counsel for th....
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....ancellation. Both the Documents are signed by Respondent No. 2 alone in dual capacities. It is argued that after such cancellation of the agreement in favour of the company, Respondent No. 2 started taking rent from the company for the use of the premises by the company. It is also argued that the respondents were part of certain partnerships which were operating from the premises of the company and for which the appellant had filed police complaint. 8. Learned counsel for the appellant referred to his compilation (Page 218) where there is a purchase order from the letterhead of the company to one Nirmal Agency asking for supply of various construction articles at the site of the company with the address shown as 144, Sector 21, Kharghar, Navi Mumbai. The argument is that at Kharghar the company did not have any site and this address was of the house of Respondent No. 2 and this document shows articles being supplied at the site of house of Respondent No. 2 and thus there was siphoning of funds of the company. Learned counsel referred to appeal Page 57 which is part of the copy of the company petition where the allegations were made in sub para (g) that more than Rs. 15 lakhs we....
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....ellation of Agreement. At the time of argument although the Learned Counsel for the appellant tried to say that there was a Sale Deed on 9th June, 2005, we had noticed that the contents were in the nature of Agreement of Sale. Even regarding consideration the contents mentioned say that the Builder agreed to sell and the purchasers agreed to purchase (para 3) at total construction (should be consideration) of Rs. 17,50,000/-. As parties, this document had signatures only of the Respondent No. 2 one in his individual capacity and second as Managing Director of the Company. The reverse document of Deed of Cancellation also has signatures only of the Respondent No. 2 in two capacities. This time, of course, it was mentioned that the purchaser had earlier paid Rs. 17,50,000/- by way of full and final payment in the Agreement for Sale dated 9th June, 2005 which were now being returned as it is and the receipt was recorded for having received said refund of advance payment made to the purchaser. Ordinarily if the Company has received possession even under an Agreement, we would expect the Directors to protect the possession. However, here it would be necessary to refer to the facts of th....
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....e appellant never raised objections till respondents initiated action against him, such stale claims made by the appellant in Company Petition filed on 15th May, 2014 may have to be ignored. Thus we reject the allegations made by the appellant with regard to transfer of registered office of the company; his grievance regarding substitution of the same with MES as well as the allegations regarding agreement to sale and the deed of cancellation. We will not look into such stale claim in the face of conduct of the appellant himself. The appellant earlier never had difficulty when such documents were executed and belated grievances made are rejected. There is no substance in the excuse that he was looking after projects only and did not know what was happening in the Company affairs. 11. It is the grievance of appellant that after Deed of Cancellation, respondent No. 2 started taking rent for the premises of G-36, Belapur, Navi Mumbai from where the company was functioning. Learned counsel for the Respondents referred to this grievance as Allegation No. 5 in the Convenience Compilation and referred to copies of documents filed at Page 59-62 and submitted that the records of the comp....
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....cument at Page 218 of the Compilation filed by the Appellant, pointed out on this count by the Learned Counsel for the appellant. Learned counsel for the respondents referred to this allegation of the appellant as Allegation No. 7(A) which was made before NCLT and regarding which explanation is given in the Convenience Compilation read with pleadings and documents. Learned counsel pointed out the pleadings of respondents in this regard submitted in NCLT (Convenience Compilation Page 84) and submitted that Respondent No. 2 had not siphoned any money for the construction of his Bungalow at Plot No. 144, Sector 21, Kharghar. According to the Respondents there was audit of the accounts of the company in 2011-12 and 2012-13 and no objections on this count were raised. Referring to the invoices being relied on by the appellant the defence is that in 2012 a Company by name Terex Noell, a US based company, proposed respondent company for grant of distributorship and representative agreement. It is stated that negotiations took place in 2012 and 2013 and one of the condition put by the US based company was that the respondent company should have a godown and distributorship office somewhere....
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....The Learned Counsel for the Respondents referred to the documents in this connection given with Explanation of Allegation No. 8 in NCLT, to demonstrate that if the loan was given, it was returned with interest within three weeks. This also happened before the Company Petition was filed. It would not be appropriate for us to given undue weightage to this instance. We do not find substance in the various allegations made by the Appellant to be such so as to treat the same as oppression or mismanagement. 16. Record shows that the Respondents initiated action against the appellant to remove him as Director. The respondents have given various instances of misconduct to claim that the appellant indulged in anti-company activities. When the appellant stood on technicalities regarding time the respondents appear to have sent fresh notice dated 3.5.2014 and EOGM came to be held on 6.6.2014. Before this the appellant had filed the Company Petition on 15.5.2014. The NCLT looked into this aspect and did not find fault with the removal of the appellant from the post of Director. We do not find any reason to disagree with the NCLT. In fact, we have gone through the other finding also which ha....
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.... P has signed the affidavit which was 09/06/2005 required to be filed stating the movable and immovable property. He has also thereafter signed one balance sheet which was filed with Income tax. MOA of UBC-Clause III/A/1-CP/36 Pg. Object is to takeover of 25 proprietary concern of X N Pillai. Affidavit verifying movable and 603 immovable properties. For the purpose of MES registration Mr. K N Pillai submitted his own property. Letter from MBS dated May 223 2005 MES required UBC Engineers to submit proof of immovable property owned by the Company and not by the Director Mr. Pillai as submitted. KN Pillai transferred G-36 at 536 Belapur on the name of UBC 2-4-19-21 1 5 -22 - 7 23 14/03/2008 Purchase of Dighode property $55 on the name of Company at Uran 13 30 6-12-23 03/06/2008 Deed of Cancellation of Such 536 sale deed dated 09/06/2005. (This was an Interim arrangement to show property on the name of Company for MES purpose. Set off of Rs. 17. lakh was done.) 06/03/2009 Letter from MES Requesting 224 Affidavit for such request of UBC for replace....
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....Rent to Pilla" appears as an interim in the notes of a balance sheet in related party transaction in one of the balance sheet signed by P. P has only signed balance sheet and not the rest of the attachments. Balance Sheet signed by Mr. Prasanth. In the attachments to the said at page 46 of Schedule notes it shows rent paid to Anita Pill and Rent paid to K N Pillal. Mr. Prasanth always knew this fect which he is now disputing or 42-46-59 to 62 Pg 24 of Rejoinder of CP 1/245 Document 3 Event EXPLANATION OF ALLEGATION NO. 6 Four Partnership Pirms running out of Building where Registered Office of Company is situated Date Particulars Page No. P No. UBC Balaji Port Cranes 25:03/2002 Service sex replitation 22 Complation showing office address as shop no. 1 G-36, Belapur 47 764 Omni Infrastructure Services 30/08/2010 Service tax registration 229 showing office address as 48 65 Survey no. 3, plot no. 1 Unan (Peracea) property of Mr. Kallash Darde) Unbuild Engineers 22/01/2014 Service tax registration 232 showing office address as 51 -68. shop no. 2....
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.... and Navi Mumbai Airport. 03/11/2010 KN Pillai gets lease hold rights 610-612 73-75 with respect to Plot no. 144 Sector 21 in Kharghar for 90-92 amount of 84 Lecs. Commencement Certificate 619 from CIDCO 77 93 30/06/2011 Assessment of construction by 623 CIDCO. Gross build up area 364 81 97 Sq Mts. Estimated cost of Payments made to various vanders 30/06/2011 as alleged by the Petitioner Is absolutely fraudulent as we have Document 4 (12) E construction is 36 lac 45 been dealing with the same vendors for last several years and thousand 31/12/2013 Certificate Petitioner has deliberately declaring suppressed that fact making it a case of first time vendors 21/06/2014 supplying materials at Kharghar for the purpose of bungalow. of Architect 1065 completion of construction of the sid Bungalow, Beard meeting held wherein one 1053 of the rese lution was to allow the Petitioner to take inspection expenses details of of Bungalow, 82 98 83-891 99 90-91 106 92-94 108 141 Crore. 207 Sq mts constructed art Oct 2010 10 Jan 20....
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....e address - Shree 119 Niket (Emakulum Kochi) converted to office and another as a rest house- 10/01/2014 Emall wherein Prasanth bas 907-912 been a party. In the said email 104 120 Document 5 13) F Prasanth was privy to the information of renovation of regional office at Kochi, Shree. Niket. The developments of the said work was sent to him by emails. All such emails are aanexed at 134 to 181 in Additional documents. At pg no. 152 of the said document it is clearly mentioned at para III (1) 'There has to be a programme for completion of balance work at Shree Niket and KN Pillai emphasis work must be completed by this month. It is further stated that separate electricity connection should be taken for commercial usages. It was also used as director's accommodation. Mr. Prasanth claims that he was MES in charge and used to visit sites frequently. When he was visiting Kochi for Companies work where was he staying? Prasanth claims that he was not aware of any work to be carried outq for renovation at Kochi. All emails were referred to him in his personal ema....
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.... from No general meeting was held as proper stops were taken to bold the same in accordance with the new act. Notice sent to all 259 & 265 directors for convening Board meeting. Requisition for holding EOGM on 12/05/2014 for removal of Petitioner as Director Board meeting held for 17 deciding date of BOGM. Mr. Prasanth present. Notice of EOGM 101to 103 Removing Petitioner to be held on 06/06/2014 Minutes of EOGM 2557 2560 131- 148-154 138-140 155-157 10141-144158-161 Event EXPLANATION OF ALLEGATION NO. 12 - 162 R2 introduced Mr. Pramod Narayan arbitrarily as director Date Particulars Page Pleadings No. P No. Reference Compilation 145 163 146-149 164-167 Pramod was introduced as director in 01/02/2009 2009 and P never raised that issue and has infact signed numerous document wherein Pramod has signed as director. 03/12/2010 MES has to be intimated when composition of directors change. He has signed the same. Mr. Pramod Narayan 773 becomes a Director of UBC Letter written to MES 1128 informing about change in constitut....
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....0 2010-2014 31.06.12- 22.08.13 1.04.13 14.09.2013 9.11.13-April, 2015 April 2013 to March 2014 09.01.14 22.04.14 April 2014 3.05.14 8.05.14 Pg. No Pg. No of at Pleadin gs Petitioner requested UBC to provide Affidavit in 2639 support of SAP Enterprises (A Partnership Firm of Petitioner and his wife to get registered at DGNP Vishakhapatnam) where UBC has no interest. Reference Compilati on 167 185 Through SAP enterprises petitioner barged more thand 2637 174 192,188 15 projects keeping UBC in dark. UBC's Goa Eximala bids were cancelled due to SAP bidding for same behind our back. Para 2 2783- 2789 Petitioner was Director MES in charge of UBC as CP-36 admitted by him. He was supposed to work for UBC but he was working in favour of SAP and against UBC ) Show cause notices were issued by MRS due to negligence of Petitioner towards UBC's Kochi projects wherein SAP's Kochi projects were in progress Petitioner being MES in charge - when P&L account of 2790 UBC/Kochi was drawn out loss of 50 lacs approx. shown. 2223 150 179-18 197-199 159-160-200-20....
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....company. 186-189 204-207 190-191 208-209 Document 9 (17) J 22.11.14 2014-15 02.02.15 10.02.15 12.02.15 17.03.15 30.03.2015 15.05.15 19.05.15 25.05.15 17/12/2015 Board meeting was held wherein the financial 3023 difficulties of company due to short of funds for running kochi projects were transpired among the board and financial help at personal level was demanded. As per aforesaid meeting Pramod Narayan 3031 contributed-10 lacs. Hepta 33 Lac and omni 1. crore. Wherein there was no contribution of R. Prasanth. Mr. K N pillai at the inception of the Company contributed 45 lacs already. Aforesaid is reflected in the petitioners CA page no. Invoice of 1.5 cr was submitted before DGNP Mumbal for CDG projects. Petitioner wrote to DGNP Mumbai to stop payment 2724 against aforesaid invoice. Despite aforesaid order dated 21 Nov, 14 petitioner 2775 misused UBC's letter head to obtain bank statements of UBC to check whether his scheme to put the company in financial trouble succeeded. Against mal practices of petitioner Hon'ble board 2776 advised the Petitioner not to involve in anti-....