TaxTMI 
TaxTMI 
2019 (10) TMI 1405
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....facts of the company petition, which are relevant to the issue in question, are as follows : (A) Brief facts mentioned in the main company petition bearing C. P. No. 82/BB/2019 filed by Mr. Chalasani Venkateswara Rao and two others (hereinafter referred to as the petitioners) are as follows : (1) The petition is filed against M/s. United Telecoms Ltd. and 11 others, under sections 241 and 242 of the Companies Act, 2013, by, inter alia, seeking to declare that the actions of respondents Nos. 2 to 5 (hereinafter referred to applicant/respondent No. 2) have been in a manner oppressive to the petitioners and prejudicial to the interests of the petitioners and respondent No. 1-company ; to declare that all the resolutions passed by respondents Nos. 2 to 5 for the period of March, 2017 till April, 2019 are void and that all the decisions to be considered afresh in a board meeting to be held jointly, etc. (2) The petitioners are directors of the first respondent-company, i. e., M/s. United Telecoms Ltd., which was incorporated on March 17, 1984 under the provisions of the Companies Act, 1956 as a private limited company. The first respondent-company was original....
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....n the case of company not having a share capital, not less than one-fifth of the total number of its members : Provided that the Tribunal may, on an application made to it in this behalf, waive all or any or the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241. Explanation.-For the purpose of this sub-section, where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (2) Where any members of a company are entitled to make an application under sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them." (2) It is alleged that the petitioner have not only concealed certain essential facts regarding their shareholding, but hopelessly failed to provide any documentation/evidence to show their shareholding as detailed in their petition at page No. 4 under the heading of particulars of the petitioners. It is the case of petitioners that, certain respondents are acting prejudicial to their interest and hence they are entitled to file this instan....
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....further delay, has filed a revocation of probate petition, under section 263 of the Indian Succession Act challenging the grant of probate of alleged will of Smt. Sarojini Devi on November 25, 2013 vide Prob. C. P. No. 15 of 2017 and a petition challenging alleged will executed by late Basvapurnaiah vide Prob. C. P. No. 16 of 2017. The hon'ble High Court vide its order dated February 7 and February 15, 2019 directed petitioner No. 1 and later petitioner No. 1 and respondent No. 3 to maintain status quo with regard to will dated November 25, 2013 (executed by Smt. Sarojini Devi and March 30, 2015 executed by late Basvapurnaiah). In this manner, there has never been transmission of shares at any point of time. Even till date, the shareholding pattern of the petition remains same as mentioned supra. (5) It is further contended that the petitioners are also estopped from taking any contention that this petition has been filed together and hence they meet the threshold limit as mentioned under section 244. This contention cannot be entertained by this Tribunal as a bare perusal of the petition along with affidavit demonstrates that petitioner No. 1 has signed on behalf of p....
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....g nine (9) and the petitioner being three in number, are more than one-tenth of the total number of members as stipulated under section 244(1) and hence the application challenging the maintainability is not sustainable. The petitioners, who are the shareholders and also the directors of respondent No. 1-company have jointly filed the present company petition, under sections 241 and 242 of the Companies Act, 2013, as members and shareholders of the company. The petitioner have satisfied the conditions as stipulated under the Companies Act, 2013 and have not deviated from it, as alleged by the respondents. (3) As per section 244 of the Companies Act, 2013 contemplates that the persons shown in the Registrar of members, annual returns and share certificates as shareholders or members are prima facie entitled to seek relief under sections 241 and 242 of the said Act. Additionally, section 244(1) permits a member or members holding not less than 10 per cent. of the issued share capital to approach the Company Tribunal for relief under section 241 and 242. In the year 2013, the shareholding pattern ("old shareholding pattern") of the petitioners, prior to the demise of late Bas....
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....ing the power of attorney at the time of filing the present petition. The said application challenging the maintain ability of the petition is on technical grounds and does not involve a pure question of law and therefore cannot be taken up as a preliminary issue. Hence, the said application deserves to be dismissed on this ground alone. (5) It is stated that the said application filed by the applicant/respondent is not maintainable either in law or on facts. The applicants/respondents have filed the said application with a mala fide intention to protract the on-going proceedings and thus, this application deserves to be dis missed. (6) It is stated that the averment that the petitioners have not only concealed certain essential facts regarding their shareholding but hopelessly failed to provide any documentation/evidence to show their shareholding as detailed in their petition at page No. 4 under the head of particulars of the petitioners is denied in toto. It is false to suggest that the petitioners have concealed certain essential facts regarding their share holding. The second respondent, without the knowledge of the petitioners has procured the share certific....
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....of the respondents herein the present company petition pending before this Tribunal is filed under sections 241 and 242 read with section 244 of the Companies Act, 2013 (hereinafter referred to as "the Act"). Section 244 specifies the requirements for maintainability of the petition/application preferred under sections 241 and 242 of the Act. Section 244 of the Act is reproduced hereunder : "244. Right to apply under section 241.-(1) The following members of a company shall have the right to apply under section 241, namely :- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares ; (b) in the case of company not having a share capital, not less than one-fifth of the total number of its members : Provided that the Tribunal may, on an application made to it in this behalf, waive all or any or the r....
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....ated under section 244 and the application filed by the second respondent deserves to be dismissed in limine. (3) It is evident that the percentage of shares held by (late) Mrs. C. Sarojini Devi and (late) Mr. Basavapurnaiah in the first respondent-company for the financial year ending March 31, 2013 stood at 12.96 per cent. and 18 per cent. respectively. The financial year ending March 31, 2014 the percentage of shares held by (late) Mr. Basavapurnaiah stood at 31.75 per cent. and that of (late) Mrs. C. Sarojini Devi is shown as nil. This in itself is an indirect admission on part of the first respondent that the shares of (late) Mrs. C. Sarojini Devi were transmitted to (late) Mr. Basavapurnaiah by virtue of the will dated November 25, 2013 contrary to the claims of the respondents. Furthermore, on perusal of the extracts of the notes to the balance-sheet for the financial year 2014-15, the same clearly indicates that the shares of (late) Mr. Basavapurnaiah stood at 30.98 per cent. of the total issued share capital. (Late) Mrs. C. Sarojini Devi's name does not even appear among the list of shareholders which is again an admission of the said transmission on part of t....
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....officer from effecting the said change in the statutory records of the first respondent-company. (5) It is further stated that the after the physical transmission of shares being concluded, respondent No. 3 belatedly approached (after 3 years of the will being probated) the hon'ble High Court of Karnataka, challenging the probate proceedings of both (late) Mrs. C. Sarojini Devi and (late) Mr. Basavapurnaiah in Probate Civil Petition No. 15 of 2017 and Probate Civil Petition No. 16 of 2017 respectively. Respondent No. 3 did not challenge the probate of (late) Mr. Basavapurnaiah and only challenged thereafter as an afterthought which clearly demonstrates the mala fides of respondent No. 3. Thereafter, the hon'ble High Court vide its order dated February 15, 2019 in Probate Petition No. 15 of 2017 (only), directed the parties to the petition to maintain "status quo" relating to the properties in question until further orders. The respondents have perversely interpreted the said order as to mean that the transmission of shares upon (late) Mr. Basavapurnaiah from (late) Mrs. C. Sarojini Devi stands vitiated. The said order can only be construed to mean that the parties ....
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....res that the consent to be accorded therein should be given by a member personally, as the same can also be given by the power of attorney holder of such a shareholder. Furthermore, the issue of con sent must be decided on the basis of a broad consensus approach, in relation to the avoidance and subsistence of the case. The same must (sic not) be decided on the basis of the form of such consent, rather on the substance of the same. There is no need of written consent or even of the consent being annexed with the company petition (vide P. Punnaiah v. Jeypore Sugar Co. Ltd. [1994] 81 Comp Cas 1 (SC) and J. P. Srivastava and Sons P. Ltd. v. Gwalior Sugar Co. Ltd. [2004] 122 Comp Cas 696 (SC)). In view of the above, the case at hand is required to be considered in light of the aforesaid settled propositions of law which provide that where the company petition is filed with the consent of the other shareholders, the same must be treated in a representative capacity and therefore the making of an application for withdrawal by the original petitioner in the company petition would not render the petition under section 397/398 of the 1956 Act, non-existence or non-maintainable. Fur....
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....t has in Babu Khan v. Nazim Khan [2001] 5 SCC 375, 381 at (paragraph 5) held that : "5. It is true that the courts while construing a provisions of an enactment often follow the decisions by the courts construing similar provisions of an enactment in parimateria." Similarly, the Calcutta High Court in [1930] SCC Online Cal 278 ; ILR 1931 (58) Cal 761 (internal page 767) "I hold that the ordinary rule for the interpretation or expression in a statute are plainly taken from an earlier statute. In parimateria and have received judicial interpretation, it must be assumed that the Legislature was aware of such interpretation and intended it to be followed in later enactments". (10) It is further stated that in Kuttanad Rubber Co. Ltd. v. K. T. Ittiyavirah [1993] SCC Online Ker 161 ; [1997] 88 Comp Cas 438 (Ker), at paragraphs 5 and 6 it has been categorically held that (page 441 of 88 Comp Cas) : "If a particular individual or individuals who purpose to move an application under sections 397 to 399, to hold one-tenth of the shares then there is no question of anybody's consent for such a petition arises." The dictum of the Supreme Court i....
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....this is a document signed and executed by him. The annual returns filed by petitioner No. 1 for the year 2018-19 also clearly indicates that the shareholding of petitioner No. 1 is the same as is indicated in the balance-sheet. Therefore, this makes it evident that the shareholding of petitioner No. 1 is only 8.93 per cent. The shareholding is the only basis on which the present petition has been filed and having so elected, petitioner No. 1's right has to be judged simply on that basis. (2) Therefore, it is beyond doubt that the petitioners have chosen very specific ground to show that, they satisfy the requirements of the law. This is clear from paragraph 1(4) at page 4 of the petition where it is clearly stated as follows : "The petitioners are filing this petition in their capacity as share holders of the first respondent-company. The collective shareholding of the petitioners amounts to 42.76 per cent. of the total issued share capital of the first respondent-company. The petitioners meet the threshold required under section 244 of the Companies Act, 2013 for filing the present company petition." This paragraph makes it very clear that the petiti....
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....CC 537, this court observed that it is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim, quiapprobat nonreprobat (one who approbates cannot reprobate), applies in our laws too. Therefore the conduct of the contesting respondent in view of its inconsistent pleas is far from satisfactory. By taking such pleas, the contesting respondent has succeeded in enjoying the possession of the premises for the last 10 years even after the expiry of its licence on May 26, 2000." (5) A mere reading of the above judgment of the Supreme Court will clearly indicate that when the petitioner has chosen to justify his eligibility on the basis of the shareholding percentage, he cannot be permitted to alter it as and when he chooses by saying that petitioner No. 1 will satisfy this requirement being more than one-tenth of the shareholding. The entire probate of the will of Late C.....
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....n the petition was filed. (c) The statement that the petition is "filed" shows that the power of attorney did not exist on the date of the petition and was created subsequently and it was the pre-dated to make it appear that there was a power of attorney. This is completely illegal and cannot be justified by any standard. (d) Shockingly enough along with the rejoinder to the main statement of objections, the petitioners now file another power of attorney. This power of attorney does not have a date but the date of the notarization appears to be on September 3, 2019. This is also a subsequent document. (e) This is yet another indication of the fact that the power of attorney now executed refers to completely different proceeding to be initiated in future. As a matter of fact, this new power of attorney seeks to ratify some other power of attorney dated March 26, 2019 which is non-existent. (8) All of these facts make it apparent that the petitioners are seeking to cure some defect or the other by providing before this Tribunal contradictory and false documents. Such conduct is completely depreciable. Therefore, there is no power of attorney or aut....
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....d the first petitioner even not mentioned that he was signing for and on behalf of petitioners Nos. 2 and 3. However, when the applicant/respondent No. 2 took the plea of maintainability, then the petitioner came with alleged general power of attorney dated April 4, 2019 filed along with Statement of Objection dated July 24, 2019. By perusal of the above GPA, it is noticed that all the petitioners are residing at same villa 5 and they did not state the reasons for executing such power of attorney. As rightly pointed by learned senior counsel for the applicant, veracity of GPA itself in doubt. 11. As stated supra, as per extant provisions of Companies Act, as mentioned supra, in order to maintain an application/petition, member(s) have to fulfil the requisite condition(s) as prescribed under section 244 of the Companies Act, 2013. Provisions of section 244 of the Act enumerate members, who are eligible to invoke section of 241 of the Act. The Tribunal will decide the question of eligibility in the light of claim/contention(s) made by the members in the company petition and it cannot consider all the provisions of the above section so as to suit petitioners/members basing on subse....
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....d third petitioners are family members, cannot usurp their legal right without their consent and they are not minors. It is not in dispute that the first petitioner has not taken the written consent of other petitioners and they cannot be permitted to plead and file documents in its support. A support document can be permitted to file, as per law, if such is document is not available at the time of filing a case and subsequently obtained it. It is crystal clear that there is no written consent of other petitioners and the second and third petitioners, who are admittedly family members of the first petitioners and staying together in the same house, in normal course, would not arise to execute GPA. Therefore, the execution of GPA itself doubtful which might be executed subsequent to filing of the main company petition to make mockery of provision of law. The petitioner has only filed verifying affidavit dated April 29, 2019 by, inter alia, stating as follows : "I, Chalasani Venkateswara Rao, aged about 58 years, s/o. late Mr. C. Basauapurnaiah, shareholder/director of the respondent-company having residence at Villa 5, Chaitanya Oakville, Hagadur Road, Whitefield Bangalore-....
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....hat the company is having share capital and they all together are holding more than 10 per cent. out of share capital. Therefore, the petitioner cannot be permitted to contend contra to make claim on other provisions of Act. Admittedly, the main company petition is filed on April 29, 2019 simply on verifying affidavit as stated supra, without any power of attorney and the subsequent alleged power of attorney would not fulfil legal requirement and new pleading and supporting document cannot be permitted unless pleadings of the main company petition is permitted by the Tribunal. Admittedly, there is no amendment sought for in the main petition to raise plea and file supported document with regard to alleged consent by way of GPA in question. Admittedly the first petitioner has not obtained written consent of other petitioners. Secondly, the admitted shareholding of the petitioners 8.93 per cent., 8.10 per cent. and 8.52 per cent. respectively. The remaining shareholding claimed by the first petitioner is sub-judice having granted stayed by the hon'ble High Court of Karnataka. Therefore, the disputed shares cannot be claimed by the first petitioner to file the petition on that bas....