TaxTMI 
TaxTMI 
2020 (10) TMI 827
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....or non-prosecution by Petitioners. 1.3 The Petitioners filed memo dated 07.03.2017 seeking permission to withdraw the petition, but subsequently they got to know that the Petition got dismissed by then. 1.4 The Petitioners then filed CA No. 128 of 2017 seeking to set aside the order dated 09.02.2017. The Tribunal dismissed CA No. 128 of 2017, with the observation that there is no question of exercising any inherent power conferred on this Tribunal, albeit there is express provision in the form of Rule 48(2) available, yet. 1.5 Aggrieved by the above order of this Tribunal, the Petitioners preferred an appeal before Hon'ble NCLAT. The order passed by this Tribunal in CA No. 128 of 2017 dated 11.09.2017 and the earlier order dated 09.02.2017 was set aside by Hon'ble NCLAT vide orders passed in Company Appeal (AT) No. 364 of 2017 dated 14.11.2017 and ordered restoration of the Company Petition to its original file subject to payment of Rs. 30,000/- by Petitioners. The Petitioners filed memo dated 28.11.2017 informing the Tribunal that they have complied the directions given by Hon'ble NCLAT. The matter was heard earlier by three different Benches. 1.6 The Petitioners f....
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....eetings as per Section 173 of Companies Act, 2013. The Petitioners who hold 26.64% of shareholding in Respondent No.1 ought to have been served with notices of Annual General Meetings for the financial year ending 31.03.2015 and 31.03.2016 and provided with the audited financials of Respondent No.1 Company as required under Section 102 of the Companies Act, but the same was not done and violated Section 96 of the Companies Act. 2.6. It is averred, due to certain financial constraints the Plant was shut down and the operations was stopped since June 2015. The Petitioners state that they were unware of the financial position of Respondent No.1 Company and the reason for reduction of the stock from Rs. 8 crores as on 31.03.2015 to Rs. 1 crore. 2.7. A notice dated 15.04.2016 signed by Respondent No.3 calling for an Extra-ordinary general meeting (EGM) of the shareholders of Respondent No.1 on 16.04.2016 was received by the Petitioners. It is stated in the EGM, Board was empowered to finalize the draft Sale Agreement for sale of assets of Respondent No.1 to Respondent No.2 as a going concern and a draft of the Asset Transfer Agreement was itemised in the EGM. Respondent No.3 was given....
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....upplementary agreement and resolved to execute supplementary agreement only upon getting clarity on the status and issue of preferential payments before proceeding ahead with the transaction. The same was made clear by Petitioners again vide email dated 04.11.2016 that the consent at the EGM dated 16.04.2016 for the ATA was given only based on the draft sale and purchase agreement and that their approval is necessary for any change in the terms of ATA or execution of any other documents for sale of assets in accordance with SPSHA, AOA and Companies Act, 2013. 2.11. It is alleged that the draft supplementary agreement circulated by Respondent No.3 to Respondents 1 & 2 was also not signed by the Petitioners as well as other shareholders. 2.12. It is alleged, Respondents No. 3 to 6 got executed illegally 3 sale deeds on 01.11.2016 in favour of Respondent No.2 for sale of Ac.1-17 1/2 guntas of land with built up area admeasuring 3520 square feet, Ac.1-00 guntas of land with built up area admeasuring 11424 square feet and Ac. 4-30 guntas of land with built up area admeasuring 28853 square feet and the same were registered on 03.11.026 as document Nos. 7540/2016, 7541/2016 and 7542/201....
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....the ATA was extended by Respondent No.2 and it was done in the best interest of stakeholders at large. 3.4 As regards allegation of the Petitioners that they were unware of the financial position of Respondent No.1, Respondents 1 & 3 stated that Respondent No.1 Company's balance sheet was shared with Shri Nikhil Baheti , GPA Holder of Petitioners vide mail dated 16.09.2016 and at the EGM held on 16.04.2016, the financial details of Respondent No.1 was discussed by the members, following which a resolution was passed for sale and transfer of assets for a minimum consideration of Rs. 16 crores, to which Petitioners acceded. 3.5 It is contended that Petitioners were Directors of the Company on the date i.e. 28.06.2014 on which the Addendum Agreement was executed but failed to make amendment to the Articles of Association within 10 days which was a mandatory as per Clause 3.1 of Addendum Agreement, whereas Respondents No.1 & 3 abided by the clauses. 3.6 Respondents No.1 & 3 submits that Resolution passed at the EGM and Draft Asset Transfer Agreement are in conjunction as averred by the Petitioners but their interpretation that rescission of one would automatically rescind the ot....
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....ing to Respondent No.2 the Petitioners never complained of any irregularities in payment of consideration by Respondent No.2 to Respondent No.1 as agreed under ATA. As such the case of Petitioners is not supported by a valid cause of action under Section 241 of the Companies Act. 3.14 Respondent No.2 claims that "long stop date" contained in ATA is for the benefit of Respondent No.2 Company and liable to be modified and waived at its instance. In this connection, Respondent No.2 relied on Clause 6.3.1, 7 and 7.7 and further relied on clause 7.8 of Asset Transfer Agreement, which provides that Respondent No.1/ Seller and Respondent No.2/purchaser with mutual consent may extend any of the time provided in Clause-7. Respondent No.1 vide letter dated 19.08.2016 requested Respondent No.2 to extend the Long Stop Date in the Agreement from 23.08.2016 to 30.11.2016 so as to enable it to submit no-due certificates by all the creditors of Respondent No.1, which is one of the conditions precedent of the Agreement. The request for extending the Long Stop Date was made only to benefit Respondent No.1. 3.15 Respondent No.2 at para 32 of the Counter, claims that time is not the essence of ATA a....
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....ioners is in the nature of breach of contract and does not fall under the realm of oppression / mismanagement. Respondent No.2 further claims that Petitioners failed in establishing the essential requirements for making out a case of oppression and mismanagement. The alleged non-extension of Long Stop Date envisaged in the Asset Purchase Agreement is only a procedural defect and as such the transfer of asset in favour of Respondent No.2 is in order and prayed this Tribunal not to set aside the sale of the assets. 4. REJOINDER FILED BY PETITIONERS Rejoinder is filed by Petitioners to the contentions raised by Respondent No.1 & 3. The Petitioners filed additional documents (a) email dated 17.09.2016 along with supplemental agreement of Asset Transfer Agreement, (b) email dated 20.08.2016 and 19.08.2016, (c) email dated 31.07.2016, (d) letter dated 19.08.2016 and (e) letter dated 22.08.2016. The Petitioners also filed rejoinder to the counter filed by Respondent No.2 reiterating the averments made in the petition. The averments in the rejoinder, inter-alia, in brief are:- 4.1 Petitioners aver that they have made out the case of oppression and mismanagement. This Tribunal has jurisd....
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....ace email dated 20.09.2016 addressed by Respondent No.6 to Respondent No.5 and the Petitioner's GPA Holder where under it was intimated that the issue of extension of Long Stop date would be discussed with Respondent No.3. 4.6 The Petitioners averred that no notice for AGM of the Company held on 29.09.2016 was served on them which shows mismanagement of majority shareholders. According to the Petitioners, the actions of Respondents 3 & 4 who are the majority shareholders are oppressive and the manner in which the transaction was effected amounts to mismanagement of the affairs of Respondent No.1 Company and that the Petitioners have made out a case under Section 241 & 242 of the Companies Act, 2013. Hence, prayed this Tribunal to allow the petition. 5. OBSERVATION 5.1 We heard the Counsel for Petitioners as well as Counsels for Respondents. This Petition is filed by Petitioners under Section 241 of the Companies Act, seeking following reliefs: (a) To permit the petitioners to lodge the petition. (b) to pass an order to set aside the transfer of Ac 1-17 1/2 guntas of Land with built up are admeasuring 3520 square feet there on etc, Ac 1-00 guntas of land with built up are....
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.... transactions, the rights of the Petitioners as shareholders have been adversely affected and the same constitute an act of oppression as against his clients. 5.3 The Learned Counsel for Respondents on the other hand submits that the Asset Transfer Agreement was duly executed subsequent to Respondent No.1 receiving the consent of the Members in the EGM held on 16.04.2016 and the said EGM was duly attended by both the Petitioners being Shareholders of Respondent No.1 Company. He further submits that in view of this, there was no violation of Clause 5.4 of SPASHA and Clause 5.5 of Addendum Agreement as is alleged by the Petitioners herein. He further submits that the said sale of assets in no way has adversely affected the Petitioners rights as made out by them in the present petition. It is further submitted by them during pendency of the said deal with regard to the sale of assets of Respondent No.1 Company to Respondent No.2 Company, the Petitioners were kept informed about the status of the negotiations. It is further submitted by the Counsel that the present dispute has been raised by the Petitioners only to harass the Respondents and in fact there has been no tangible loss cau....
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....04.2016. In fact, they are well within their right to believe that all the requirements with regard to obtaining necessary approval of the Company by way of Board / Shareholders approval in the EGM have been properly taken by the Respondent No.1 Company. Accordingly, Counsel submitted that Respondent No.2 is unnecessarily being dragged into this controversy by the Petitioners. As regards the Petitioners demand for conducting investigation into the affairs of Respondent No.2 Company is concerned, Counsel states that none of the Directors / promoters of his clients are in any way connected with promoters / Directors of Respondent No.1 Company. The Petitioners have miserably failed to indicate that the matters with regard to which investigation ought to be ordered by this Tribunal. Accordingly, he submits that the Petitioners prayer for ordering investigation quo Respondent No.2 needs to be dismissed. 5.5 The Counsel for Respondents 2, 5 & 6 relied on the following judgements. 01. Bacha F Guzdar Vs Commissioner of Income Tax AIR 1992 SC 453 02 V.B Rangaraj Vs. V.B. Gopalakrishnan and Ors, AIR 1992 SC 453 03 Incable Net (A....
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....f or deal otherwise with any or all of the asset (movable & immovable, Current and non- current) of the Company namely the plant situated at Anantharam (V), Jinnaram (M), Medak District- 502313, Telangana to Clininvent Research Private Limited, a company incorporated under the Companies Act, 1956 having its registered office Block- BN, Plot -7, Sector- V Salt Lake Electronics Complex P.S. Bidhannagar, Kolkata West- Bengal 700091 on such terms and conditions as the Board in its absolute discretion thinks fit for a minimum amount of Rs. 16 Crore (Rupees Sixteen Crore Only) at any point of time.. RESOLVED FURTHER THAT Mr. Sanjeev Chintagunta Baba (DIN: 5310356) Director of the Company be and is hereby authorized to negotiate, settle the terms and conditioners and the most advantageous price subject to a minimum of Rs. 16 Crore (Sixteen Crore Only) for sale of the Company's property bearing S. No. 168, 170A, 170AA, 173/1 and 173/1A situated at Anantharam (V), Jinnaram (M), Medak District- 502313, Telangana having an area of 7.5 Acre and to sign and execute the requisite Sale Agreement, Sale Deed and such other documents as may be found necessary, modify or amend the documents so ....
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....eller shall inform the Purchaser of such fulfilment and shall provide the Purchaser with documentary evidence of such fulfilment. Upon the fulfilment of all the Conditions Precedent, a certificate in a form satisfactory to the Purchaser, indicating compliance with the aforesaid Conditions Precedent ("Conditions Satisfaction Notice") together with the balance documentary evidence thereof shall be given by the Seller to the Purchaser. If the Purchaser is satisfied with the completion of the Conditions Precedent or if the Purchaser has waived/extended/relaxed partially any of the unfulfilled conditions Precedent in writing, then the consummation of sale and purchase of the Assets as contemplated under this Agreement (the "closing") shall take place on such date the Purchaser may indicate in writing ("Closing Date"). Clause 6.3.2: If any of the Conditions Precedent are not fulfilled on or before the Long Stop Date or any such Conditions Precedent shall cease to be capable of being satisfied, the provisions of this Agreement other than Clause 1 (Definitions and Interpretation), clause 11 (Representations and Warranties); Clause 12 (Indemnity); Clause 13 (Non-Compete and Non Solicitati....
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....the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of the company's affairs, and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholder ". 10. We have considered the compilation of case laws given by Respondents, 2 5 & 6. Out of the said compilation, only two case laws were found to be relevant to the facts and circumstances of the present case. Accordingly, the same have been appropriately considered by us while framing out findings on the petition. 11. In the present case, the Petitioners have all along harped on the lapse with regard to non-extension of Long Stop Date in support of their contention to set aside transfer of the following assets in favour of Respondent No.2 Company and sought other reliefs as under:- (i) Ac 1-17 1/2 gun....