TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 1209
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....under Section 421 of Companies Act, 2013 against the impugned order dated 23.02.2018 passed by the National Company Law Tribunal, Hyderabad Bench, Hyderabad in C.P. No.16 of 2013. 2. The brief facts of the case are that the company petition was filed by the Respondent No.1 and 2 (original petitioners) against Respondent No.3 (original Respondent No.1) and others under Sections 397, 398, 111A read with provisions 402 and 403 of the Companies Act, 1956 for oppression and grave mismanagement to the detriment of Respondent No.3 (original Respondent No.1). 3. Respondent No.3 company was incorporated on 11.5.1994 with the 1st, 2nd, 4th, 5th Respondent and 4 other members as subscribers of the memorandum of association of the Company 1st, 4th and 5th Respondents were the first directors of the company and pre-incorporation and incorporation expenditure was borne solely by 1st Respondent. The original petitioners hold 25% of the outstanding paid up share capital of the Respondent Company and original 1st petitioner is Promoter -Director of the company. The original petitioners acquired 99 Acres of land at Revally and Urukonda villages of Mahaboob Nagar Distt and advance of Rs. 6 lac to l....
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...., falsification of accounts of the company and filing of false balance sheet. 5. It is stated that the Respondent did not file reply, Ministry of Corporate Affairs ordered inspection of the Company under Section 209 of the Companies Act, 1956. It is stated that the original Respondent failed to submit records and appear before the ROC, ROC submitted its report pointing out various violations against company and Respondents and on 9.3.2006 without any approval from the members of the company, original Respondent No.2 and 3 sold away the company property and misappropriated entire sale proceeds by suppressing the fact that above property was already attached by the Hon'ble City Civil Court, Hyderabad. It is stated that the SFIO conducted the inspection and submitted its report on 29.2.2012. In the report it is stated that original Respondent No.2 to 7 falsified the accounts, unsecured loan, contribution to equity etc are false, allotment of equity shares was fraudulently allotted without any payment to the company and report explicitly elaborates on various acts of oppression and mismanagement. 6. Original Respondent No.1, 4-7 filed their counter for the petition filed by the origi....
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....d that before incorporation of the company, 1st respondent negotiated and acquired 99 acres of land and paid Rs. 6 lacs as advance in October, 1991. It is stated that 1st Respondent also acquired 4.20 guntas of land and paid Rs. 1 lac as advance to the land owners. It is stated that 4th Respondent subscribed 10 equity shares each and invested Rs. 1,90,000/- It is stated that Respondent No.5 invested Rs. 1,60,000/- in the company. 1st Respondent invested an amount of Rs. 7 to 8 lakhs in December, 1994 and brought further investment from his friends and relatives an amount of Rs. 15 lacs and paid balance amount to the land owners and got the land registered in the company's name in 1995. It is stated that as the investors could not be repaid in time, 1st respondent was involved in long drawn litigations and the project of the company could not take off and statutory compliances could not be made by the company. It is stated that 1st appellant approached 4th respondent to invest in the company and for reviving of the company. It is stated that in the year 2003, 4th Respondent introduced the appellants to 5th Respondent who assured that all the liabilities of the company would be cle....
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....ment of the appellants as directors as they did not receive any notice of the above meeting. It is stated that it is falsely shown that the Respondent No.4 had given any loan and 1st appellant did not bring any amount. It is stated that the appellant did not bring any amount but they sold the company's land situated at Kadtal Village for the sale consideration of Rs. 32 lakh. It is stated that mediator Mr.D. Narshimha Reddy and others received Rs. 30 lakhs from Chalapathi Estates, the buyers. It is stated that the appellants are responsible for selling the company's land at throw away price by colluding with Mr. D. Narshimha Reddy and thereby causing loss to the company. It is further stated that after receiving the sale consideration these appellants did not pay to the creditors of the company and did not release the court attachments as promised. It is stated that the whole case of the appellants has been based on the MOU dated 29.11.2001(Page 98 of appeal) but the MOU is among the original three directors namely 1st, 4th and 5th Respondent and has nothing to do with the appellants. The MOU is about acceptance of the liabilities of the Respondent Company by these three directors ....
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....d under the principles of estoppel and res judicata as the entire matter was earlier contested by Respondent No.1 before the Hon'ble High Court in Company Petition No.85 of 2006 which was dismissed for default, thus attaining finality. 18. Appellant stated that the SFIO's report categorically stated that Respondent No.1 on his own volition scribed and executed his resignation letter and MOU dated 29.11.2001. Appellant stated that the letter of resignation and MOU was a part of a larger comprehensive understanding whereby the appellants were to eventually take over the entire company, including its liabilities. 19. Appellant stated that the promoter directors are guilty of severe lapses in the management of Respondent No.3 company from 1994 to 2001. Appellant stated that the promotor directors did not maintain any books or complied with the regulatory requirements prior to 2001. 20. Appellant stated that the allotment of shares made on 28.3.1995 and 30.3.1998 were made after the appellants came into the management of Respondent NO.3 company. 21. Appellant stated that the SFIO selectively proceeded against the appellants despite concluding that several lapses are attributable to....
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....espondent No.1,2, 4 and 5 and 4 other members as subscribers of the Memorandum of the company. It is stated that only the Respondent No.1 invested after borrowing from 25 investors to a total extent ofRs. 12,45,000/- as share application money into the company and got the lands to the extent of Acres 4.30 Guntas at Kadthal Village and about 99 Acres of land at Revally and Urukonda Villages of Mahabubnagar Distt and registered in the name of company during the period from January, 1995 to May, 1995. The total cost expended in purchasing the lands of the company is Rs. 16,05,719/-. All this money was repaid by the Respondent No.1 between 9.2.1997 to 11.3.1997 through his personal account as well as by borrowing from friend. The unpaid investors filed civil/criminal suits against the Respondent No.1 and Respondent No.1 paid Rs. 7,20,000/- (in addition to Rs. 4,20,000/- already paid) to various creditors and also settled with creditors of the company to the extent of Rs. 1,30,000/- on 17.7.2014, as the creditors obtained sale order of 14 acres of company property. 31. It is stated that the in 2001 the appellant and Respondent No.4 contacted Respondent No.1 and assured him that they wo....
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.... the Company's properties without approval and misappropriating the funds of the company, therefore, Respondent No.1 approached Company Law Board, Chennai Bench under Sections 397, 398 and 111A read with Section 402 and 403 of the Companies Act, 1956. It is stated that the Respondent No.1 did not approach the Company Law Board solely on the ground that an investigation into the affairs of the company by SFIO has taken place. 34. Respondent No.1 stated there was no reason to implead Mr. Sastry as a party as the petition was filed under Section 397/398 against the appellants. Neither relief was sought against Mr. Sastry nor any relief was granted. 35. Respondent No.9 stated that SFIO is expected to be a multi-disciplinary organisation consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white collar crimes/frauds. Respondent No.9 stated that it carried out investigation under Section 235 to 237 of the Companies Act. 36. We have heard the learned counsel for the parties and perused the record. 37. It is not in dispute ....