CP No. 8/2008. Case: Balaji Oil Industries (P.) Ltd. Vs Bhadravati Balaji Oil Palms Ltd. and Others. Company Law Board

Case Number:CP No. 8/2008
Party Name:Balaji Oil Industries (P.) Ltd. Vs Bhadravati Balaji Oil Palms Ltd. and Others
Judges:Smt. Lizamma Augustine, Member
Issue:Companies Act, 1956 - Sections 138, 141, 141(b), 237(b), 301
Citation:2012 (107) CLA 589, 2012 (4) CompLJ 189 (CLB)
Judgement Date:August 26, 2011
Court:Company Law Board
 
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Order:

Smt. Lizamma Augustine, Member, (Chennai Bench)

  1. This is a petition filed under sections 141 and 237(b) of the Companies Act, 1956 ('the Act') read with regulation 44 of the Company Law Board Regulations, 1991. The petitioner-company Balaji Oil Industries (P.) Ltd. incorporated on 19th November, 1975 represented by its managing director Mr. M Senthilathiban is engaged in the business of edible oils. The first respondent is a company incorporated on 26th December, 1991 and engaged in the business of Palm Oil. The third respondent is the managing director, second respondent is a director, the fourth respondent is a practising company secretary, fifth and sixth respondents are practising chartered accountants and seventh respondent is a public financial institution holding 49 per cent shares in R1-company. The eighth respondent is the Registrar of Companies ('RoC'), Karnataka. The averments in the company petition can be briefly extracted as below:

    R1-company borrowed from the petitioner-company an inter-corporate loan of Rs. s2 crore, secured by mortgage of immovable properties and hypothecation of movable properties of R1-company and the charge was created on 7th September, 2004. The Form 8 return, duly signed by the petitioner was filed with RoC on 10th August, 2004 and duly entered in the register of charges and available in the website of R8. On 5th September, 2007, petitioner issued a letter to R1-company demanding the repayment of loan, to which R1-company sent a reply on 27th September, 2007 raising untenable contentions. The petitioner recently noticed that the charge had been struck off from the register of charges without the knowledge of the petitioner, based on a return in Form 17 filed by R1-company. To the knowledge of the petitioner, no return in Form 17 was ever signed or any no due certificate was issued. No notice calling for objection was received from the RoC. It is alleged that R1-company has filed the impugned return fraudulently by stating that the loan was repaid and discharged. The third respondent has signed the impugned return purportedly as the director of the petitioner even though he ceased to be a director long back and Form 32 had been filed by the petitioner with RoC. In the impugned return, the fourth respondent has falsely certified the loan as fully discharged. There is collusion between respondents 2, 3 and 4. Along with the return, the R1-company filed a letter purportedly issued by the petitioner stating that the loan of Rs. 2 crore was fully discharged. The letter has been fabricated by forging the signature of the managing director of the petitioner-company. The petitioner reserves its right to complain to the Institute of Company Secretaries of India as well as to initiate criminal prosecution against R1 to R4. As statutory auditor of R1, the 5th respondent has audited the accounts and certified the balance sheet as on 30th March, 2006 as per which the loan of Rs. 2 crore due to the company has been wrongly shown as the loan due to Mr. M Murugavel (R3). Similarly, the sixth respondent the statutory auditor of R1 audited the accounts and certified the balance sheet as on 31st March, 2007 in which the loan of Rs. 2 crore is wrongly shown as due to Mr. M Murugavel. Petitioner reserves its right to complain against the fifth respondent and sixth respondent for professional misconduct. By lawyer notice dated 10th October, 2007, the petitioner specifically raised the allegation that the entry in the register of charges recording the satisfaction of charge as if the loan was cleared on 28th March, 2007 is false. The first respondent issued a reply notice on 11th November, 2007 denying the allegations made by the petitioner. A letter was also sent to the RoC complaining about the false entry on the basis of the impugned return. The eighth respondent (RoC) sent a reply on 20th November, 2007 asking the petitioner to seek appropriate remedy before a court of law. Thus, the valuable right of the petitioner as a creditor has been infringed. The petitioner issued a letter to the fourth respondent on 5th December, 2007 pointing out the above facts but there was no response. The sixth respondent who is a major shareholder of the company is morally responsible for the misfeasance committed by the company. Entry...

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