TaxTMI 
TaxTMI 
2019 (11) TMI 318
X X X X Extracts X X X X
X X X X Extracts X X X X
....ai Bench and renumbered it as T.P No. 61 of 2016, against Jain Projects and Realty Developers Private Limited and its Directors (Respondents), by seeking relief: a. declaring that the Petitioner and Respondent No. 2 are the only Shareholders and Directors of the Company; b. declaring that the transfer of 500 shares by Respondent No. 2 to Respondent No. 3 is invalid and void ab initio and consequently rectify the register of shareholders of the 1st Respondent Company to reflect the same; c. directing Respondent No. 2 to transfer the 500 shares transferred by him to Respondent No. 3 to the Petitioner at the same cost at which it was transferred by Respondent No. 2 to Respondent No. 3; d. directing to Respondent No. 2 to transfer the remaining 500 shares with him to the Petitioner at a fair value to be computed by an independent auditor as appointed by this Hon'ble Court; e. declaring that Respondent Nos. 3 and 4 are not Directors of the Company and that any actions taken by them in their capacity as Directors of the Company shall not bind the Petitioner nor the Company; f. declaring that the Form 20B's marked herein as Ann....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7010KA2006PLC038171 was incorporated under the Companies Act, 1956 on 06.01.2006. The main object of the Company is inter alia "carry on the business of buying, selling, dealing, owing, leasing, sub-leasing servicing real estate developers, designing, building, planning, implementing, developing, promoting, managing, contracting, maintaining, developing apartments, shopping complex, houses, recreation parks, buildings, warehouses, malls, industrial/business parks, multiplex, software/biotechnology parks, hotels, resorts, factories, multi storied buildings, schools, colleges, dams, bridges, canals, power projects, turnkey projects, all kinds of infrastructure facilities, hydraulic structures, roads, highways, flyovers, railway lines, satellite towns, airports, runaway's, ports, bridges, traffic management system, sport complexes, golf course, playgrounds, television network, tennis court and other related activities." etc. in accordance with its Memorandum and Articles of Association. b) As per the Company Petition the authorised share capital of the Respondent Company has always been Rs. 25,00,000/- divided into 2,50,000 equity shares at the face value of Rs. 10/- each....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Company since 2006. Further, there have been no appointments of Statutory Auditors of the Company and consequently, no accounts of the Company have been filed since the date of its inception. h) The Petitioner submits that no other Shareholders have been inducted into the Company since its incorporation and that there has been no change to the composition of the Board of Directors of the Company as well. The Petitioner and Respondent No. 2 as the subscribers of the Memorandum of Association and Articles of Association have always been the only Shareholders and Directors of the Company. i) The Petitioner submits that around 10.02.2006, the Company acquired vacant land bearing Khata No's. 1924/569, 1924/A/570, 1925/571 & 1925/A/571, situated at B. H. Road, Tumkur- 572102 measuring 22,294 Sq. Ft. The purchase consideration was Rs. 81,36,000/- plus applicable registration charges and stamp duty. The Property was purchased for the purpose of developing a commercial complex. However, due to the dispute between the parties no action was taken to put up any construction on the said piece of land. It is further submitted that owing to such disputes between the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with the land being the only asset of the Company, Respondent No. 2 has hatched this conspiracy to possibly take over the Company, sell the land and make a quick profit out of the same. m) The Petitioner submits that each of the Forms have been filed using an alleged digital signature of Respondent No. 2 and also contain various documents purportedly signed by Respondent No. 2. That the Board of the Company has not authorised the usage of the purported digital signature of the Respondent No. 2 and as such the filing of the Forms is ex facie void ab initio. n) The Petitioner submits that on a perusal of the Form 20B of the Company filed by Respondent No. 2 for the years ending 31 March, 2008, 31 March, 2009, 31 March, 2010 and 31 March, 2011, it is revealed that: i. The Petitioner holds 92% of the shareholding of the Company. Therefore, there could not have been any Shareholders Meeting without notice to the Petitioner. The Petitioner submits that no notice for a Shareholders Meeting has ever been received by him. Further, the Petitioner in his capacity as the Director has never convened a Board Meeting nor has any resolution been passed at a Board Meeting....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and incorrect Form 23AC's of the Company for the financial years ending 31 March, 2007, 31 March, 2008, 31 March, 2009, 31 March, 2010, 31 March, 2011 and 31 March, 2012. Each of the said Form 23AC indicates that the annual accounts of the Company have been audited by the Auditor firm A.S. Bohra and Company, Bangalore. The Petitioner being a majority Shareholder and also a Director on the Board of the Company has not at any point of time, passed any resolution either in his capacity as a Shareholder or Director to appoint much less re-appoint the said A.S. Bohra and Company, Bangalore as the Statutory Auditor of the Company. p) The Petitioner submits that any notice to convene an Annual General Meeting would have to be made at a duly constituted Board Meeting and no such Board Meeting was held or resolution passed, to convene a Shareholders' meeting of the Company. Therefore, each of these notices purporting to call a Shareholders' Meeting are ex-facie incorrect. q) The Petitioner submits that in spite of the fact that the Company has not carried on any business since its inception; from the perusal of Form 23AC of the Company for the financial years ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds. x) The Petitioner submits that in terms of Article 15(iii) of the Articles of Association of the Company, the Board of Directors may appoint Additional and Alternate Directors. Such appointments are subject to the terms and conditions mentioned in Section 260 and 313 of the Companies Act, 1956. Section 260 required a person appointed as Additional Director to be confirmed as a Director in the forthcoming Annual General Meeting and in the event he is not so confirmed, such Additional Director would automatically vacate office without any further act or deed. y) The Petitioner submits that similar acts of oppression and mismanagement may continue going forward and Respondent No. 2, in collusion with Respondent Nos. 3 to 4, will usurp the control of the Company, remove the Petitioner from management of the Company, reduce the Petitioner to a minority Shareholder and deal with the rights that the Company has over the land situated in Tumkur. z) The Petitioner submits that the present case is a fit case for passing an order of investigation into the actions of Respondent Nos. 2 to 4. 3. The Respondents have countered the submissions of the Petitioner v....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the Petitioner ceases to be a Director of the Company by operation of law. The Respondents were thus forced to appoint two more Directors namely Respondent Nos. 3 and 4 as Additional Directors in order to keep the Company in active legal position. e) The Respondents submit that the Company with its Shareholders' funds and with unsecured loan purchased a high value property in the heart of the city of Tumkur. Huge sums were invested in the said property and the Petitioner did not bother to act in the manner required under law to restore the confidence of the Shareholders and Creditors. The Petitioner to this day holds in his custody the Original Sale Deed of the property which should otherwise be in the custody of the Company. f) The Petitioner being a Shareholder and Managing Director of the Company failed to convene a meeting of the Board of Directors for 6 years and thereby contravened the provisions of the Companies Act. The Petitioner further contravened the provisions of the Act by not appointing a Statutory Auditor. It is submitted that the Petitioner has the time to obtain loan from financial institutions and banks but not for following the requiremen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operty by purchasing a demand draft from the Bank of Maharashtra for payment of stamp duty in favour of "Sub Registrar - Tumkur" for registration of property in the name of the Company. o) Mr. Gauthamchand (Respondent No. 4) had invested Rs. 450,000/-as share money before the registration of the said property vide a demand draft in the favour of Respondent No. 1 after being promised share certificates for the same. 4. The Petitioner, in his rejoinder to the objections raised by the Respondents dated 16.09.2015, has inter alia submitted as follows: a) The Petitioner submits that the Petitioner being a director and majority shareholder of the Respondent Company is unaware as to the basis on which Respondent No. 2 is representing the Company as there was n Board Meeting wherein it was resolved that the Respondent No. 2 would represent the Company. This fact of the Respondent No. 2 is again an instance of usurpation of power and authority by Respondent No. 2 in respect of the Company. b) The Respondents counter ought to be rejected as the same is not in compliance with the rules in as much as it is not accompanied by an affidavit verifying the same. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r has set out the financial juggleries that are being performed in the name of the audit of accounts. As such, it cannot lie for the Respondents to state that they have not made any financial changes to the Company. j) The Petitioner submits that the Petitioner is himself ready and willing to have a Meeting of the Directors of the Respondent Company. k) The Petitioner submits that he is and was always ready and willing to acquire the shares of the Company if the same was offered to him in terms of Article 7 of the Articles of Association of the Company. l) The Respondent Nos. 2, 3 and 4 have claimed that they have paid certain amounts towards stamp duty and registration expenses and also paid certain monies by way of deposit into the bank account of the Respondent No.1. However, none of these alleged amounts find any mention in the bank accounts of the Respondent Company. m) The Petitioner submits that the Company had borrowed a sum of Rs. 70 lakhs from Tumkur Grain Merchants Co-operative Bank on 13.02.2006. The said amount was taken for discharging consideration in respect of the property purchased in the name of the Company. The Petitioner has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....does not have locus standi as a Managing Director and equally he cannot make allegations against the Respondent No. 2 merely because Respondent No. 2 has complied with the requirement of the Act, while the Petitioner continues without complying. h) The Respondents submit that the Petitioner has raised personal loan by showing the property of the Company without any Board Resolution and the same amounts to an act of clear cheating and is punishable under the Indian Penal Code. Further, if the Petitioner has no intention to grab the Company's property, why has the Petitioner not deposited the title deeds till date before this Tribunal. i) The Respondents submit that the Respondent No. 2 has not done anything as against the Petitioner and the Petitioner was never thrown out from the Company by the Respondents. The Petitioner ceased to be a Director for his failure in filing DIN-2. j) The Respondents submit that the Respondent No. 2 has followed the procedure before transferring shares to Respondent Nos. 3 and 4. Further, Respondent No. 2 is entitled to transfer the shares to his family members as there is no bar to transfer of shares in a Private Limited....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that both of them are ready and willing to have a meeting of the Company. 10. It is understandable that the Respondent No. 2 undertook the above mentioned steps in order to keep the Company alive given the fact that the Petitioner did not undertake any of the compliances as mandated under the Companies Act, 1956 and there was a credible threat that the Company would be declared dormant or struck-off by the Registrar of Companies. Also, the fact that the Respondent No. 2 did not take active steps to adversely affect the Petitioner's position as the Managing Director and Chairman of the Board, goes on to show the lack of malafide intent. Further, the Petitioner concedes that the sole asset of the Company is currently in his name along with the Original Deed and also accepts the fact that the assets of the Company are not that of its Shareholder and to save the property from the Respondents the document was in the name of the Petitioner as a Director of the Company. 11. Given the above, we are inclined to hold that the primary reason for the dispute between the parties arise on certain misunderstanding and miscommunications, and hence, we feel that there is a possibility of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r on the application of any director or member of the company who would be entitled to vote at the meeting-- (a) order a meeting of the company to be called, held and conducted in such manner as the Tribunal/thinks fit; and (b) give such ancillary or consequential directions as the Tribunal thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act or articles of the company: Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) Any meeting called, held and conducted in accordance with any order made under sub-section (1) shall, for all purposes, be deemed to be a meeting of the company duly called held and conducted." 13. In Interport Global Logistics Pvt. Ltd. v. Netzland Wireless India Put. Ltd., 2016 SCC OnLine NCLT 408, the National Company Law Tribunal, Mumbai Bench made clear that "while exercising jurisdiction of Section 98 of the Act i.e. "Power of Tribunal to call meetings of members", the statute in unambiguous w....