TaxTMI 
TaxTMI 
2020 (10) TMI 446
X X X X Extracts X X X X
X X X X Extracts X X X X
....ple of modifications and became the present company on May 24, 2002 as a private limited company. It became a public limited company with effect from May 27, 2005 the present name (CIN : U92490TG1994PLC018659). The company was established, inter alia, with the main object of manufacturing, producing, distilling and generally dealing in alcohol based chemicals, rectified spirits, denatured spirits, etc., for industrial use. The manufacturing unit set up in an area spread over about 70 acres of land owned by the company in village Elkatur in the District of Chittoor. Its authorised capital was Rs. 21,00,00,000 divided into 2,10,00,000 equity shares of Rs. 10 each. The issued, subscribed and paidup share capital was Rs. 10,85,00,000 comprising of 1,08,50,000 equity shares of Rs. 10 each. The company was being managed by respondents Nos. 2 (holding 22,75,480 shares) and 3 (holding 12,00,000 shares). Between themselves and another entity owned by them namely, Ammana Equity Fund P. Ltd. (53,96,520 equity shares) they held 82 per cent. of the shareholding of the company. In the year 2003 the company availed a loan of Rs. 11,67,00,000 from State Bank of India. The 70 acres of land at villa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....abilities were settled. Upon payment of the other amounts by July 18, 2014 as indicated earlier, the bank on September 4, 2014 issued a "no dues certificate" of closure of all the loan accounts and release of charge on the securities as well as the corporate guarantee offered by Ammana Equity Funds P. Ltd., for the loan the same day. On March 7, 2014 pursuant to the agreement, respondents Nos. 2 and 3 transferred the entire shares (53,69,520) of Ammana Equity Fund P. Ltd. in favour of the petitioner. The shares bore distinctive numbers 0000001 to 5369520 vide share certificate Nos. 63 and 82 to 91. Respondent No. 2 transferred his 22,75,480 equity shares bearing distinctive numbers 53695217 to 6179520 vide share certificate No. 18 to 21 ; distinctive numbers 6429521 to 6455520 vide share certificate Nos. 24 and 25 ; distinctive numbers 6485521 to 6730520 vide share certificate Nos. 28 to 35 ; distinctive numbers 6785521 to 7300520 vide share certificate Nos. 38 to 56 ; distinctive numbers 7300521 to 7380000 vide share certificate No. 76 ; distinctive numbers 8610001 to 8620000 vide share certificate No. 70 and distinctive numbers 9000001 to 9590000 (not pleaded. This belonged to KM....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alance-sheets were thus fraught with misleading and false statements, with the intention of defrauding the petitioner and depriving him of his legitimate position in the company. 5. Similarly, the transfer of shares (on March 7, 2014) had not been reflected in the annual returns of the company for the year ending March 31, 2014. After taking over physical and operational control of the company and its assets the petitioner got his name entered as authorised representative of the company in the revenue records. He also took other steps in the nature of obtaining licences and clearance from the Forest, Pollution and Excise authorities on payment of requisite fees. He also made substantial investments for protection and development of the company's lands. The statutory auditors in cohort with respondents Nos. 2 and 3 withheld information as to the status of the petitioner and his son in the records. Only on March 10, 2015 the petitioner on engaging the services of the professional company secretary came to know that misleading and fraudulent forms were uploaded into the Ministry of Corporate Affairs (MCA) portal and meeting had been conducted without taking him into confidence.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....strar of Companies to delete the said annual return from the MCA Portal. (v) To direct respondent No. 9, i. e,. Regional Director, Ministry of Corporate Affairs, South Eastern Region, Hyderabad to submit the inspection report made by his office consequent to the inspection of the records of respondent No. 1-company. (vi) Pass an order directing the Central Government to initiate prosecution against respondents Nos. 2, 3 and 8 under sections 447 and 448 of the Companies Act, 2013. (vii) Pass an order appointing an independent chartered accountant to audit the accounts of respondent No. 1-company and prepare and finalize the balance-sheet and profit and loss account reflecting the true and fair view of the financial position of respondent No. 1-company after taking into the account the repayment of the loan to State Bank of India by the petitioner. (viii) Pass an order directing the Institute of Chartered Accountants of India to initiate appropriate disciplinary proceedings against respondent No. 8 for professional misconduct. (ix) Pass an order appointing an independent chairperson to convene, call and hold the annual general meeting for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... promoters of the company roped in the petitioner as an investor to resuscitate the faltering company. Respondents Nos. 2 and 3 entered into separate memorandum of understanding with the petitioner on March 7, 2014. The petitioner agreed therein to repay the dues of the State Bank of India in lieu of transfer, in his favour, of shares of respondents Nos. 2 and 3. Respondents Nos. 2 and 3 handed over blank share certificates to the petitioner and the petitioner took possession of the factory and the associated equipment. He, however, did not repay the whole of the dues of the State Bank of India. Under continuous pressure from the bank. Respondents Nos. 2 and 3 had to repay the loan amount by selling their personal assets including their residential houses. Respondents Nos. 2 and 3, from the conduct of the petitioner, realised that the latter did not intend to run the factory and revive it but had an evil eye to usurp the 70 acres of land over which the company and its factory spread. The petitioner failed to honour his obligations under the memorandum of understanding dated March 7, 2014. Despite taking charge as an additional director, he did not conduct a single board meeting wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ma Ltd. (hereinafter referred to as company) holding 22,75,480 shares of Rs. 10 each in my name and 53,69,520 share of Rs. 10 each in the name of Ammana Equity Funds P. Ltd., another 12,00,000 shares of Rs. 10 each are held by Mr. K. Sreedhar Reddy. Whereas the company has outstanding loan amounts payable to State Bank of India to the extent of approximately Rs. 10 crores. Whereas the company has been incurring losses and is experiencing severe financial and liquidity crunch and hence has been unable to raise further funds required by the company. I have approached the acquirer/investor with a request to infuse funds into the company for repayment of the bank loans and in consideration of the acquirer/ investor doing so I hereby declare and agree to transfer my entire shareholding held in my name, Ammana Equity Fund P. Ltd., and facilitate the transfer of 12,00,000 shares held by Mr. K. Sreedhar Reddy which in total represent 82 per cent. of the total paid-up share capital of the company. Whereas in view of the acquire/investor accepting my proposal and agreed to acquire my shareholding and that of my associates and friends subject to furnishing certain assurance,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her amount of Rs. 2,00,00,000 (rupees two crores only) into the company as additional infusion of funds on or before 15 days from this date either by mortgage of his residential property or by any other means. The first party also assures the second party that he shall ensure that the RS licence of the factory shall be renewed by him within a period of 3 months from this date. However the costs of the same shall be borne by the second party." 10. And that of between respondent No. 3 and the petitioner is as follows : "Whereas the first party was a shareholder of the company titled M/s. Ammana Bio Pharma Ltd., Hyderabad, and has sold his share holding to the second party by execution of transfer deed on this date. Whereas the first party is desirous of further assisting and continuing in the project and proposes to purchases the shares of the other shareholders in the company. Whereas the second party has infused fresh capital into the company with such assurances from the first party. Now the memorandum of understanding agreed to as follows : The second party agrees to clear the loan liabilities of the company M/s. Ammana Bio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pany, notwithstanding the approval of transfer of 12,00,000 shares by the board. It is not in dispute that Ammana Equity Fund P. Ltd., held 53,69,520 shares of the company. These were duly transferred to the petitioner in pursuance to the declaration dated November 6, 2011 and the board resolution dated March 7, 2014. The other share certificates stated to have been in the name of respondent No. 2 actually stood in the name of KML Data Pro as already indicated. The petitioner has not been able to establish the nexus between respondent No. 2 and Data Pro. Though memorandum of transfer in respect of those shares indicate that they have been transferred to the petitioner, the petitioner has not been able to prove satisfactorily that the shares of the company were held by respondent No. 2 and they were duly transferred under section 56 of the Act to him. The board resolution dated March 7, 2014 does not speak of transfer of any shares by respondent No. 2 in favour of the petitioner. Therefore, the transfer of 53,69,520 + 11,50,000 (65,19,520) can only be approved. The contention of the respondent that the petitioner did not clear the whole of the loan amount would not have any conseque....