C.P. No. 43 of 2014. Case: Cavendish Shipping Limited Vs Portfore Financial Consultants Pvt. Ltd. and Ors.. Company Law Board

Case Number:C.P. No. 43 of 2014
Party Name:Cavendish Shipping Limited Vs Portfore Financial Consultants Pvt. Ltd. and Ors.
Counsel:For Appellant: Zal Andhyarujina, Kunal Dwarkadas and Mahika Parikh, Advocates, i/b., Dave & Girish & Co. and For Respondents: Farhan Dubash, Nafisa Khandeparkar and Malvika Kalra, Advocates, i/b., ALMT Legal
Judges:Ashok Kumar Tripathi, Member (J)
Issue:Companies Act, 1956 - Sections 235, 237, 237(2), 237(b), 237(b)(i), 250
Judgement Date:April 08, 2015
Court:Company Law Board
 
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Judgment:

Ashok Kumar Tripathi, Member (J), (Mumbai Bench)

  1. Being aggrieved by the act of siphoning of and committing fraud of the funds of the Respondent No. 1 Company by the Respondent Nos. 2 and 3 as its Directors and shareholders, the Petitioner has preferred this petition by invoking the provisions contained in Section 237(b) of the Companies Act (hereinafter referred to as "the Act" in short) and has sought various reliefs as set out in the petition.

  2. The brief facts of the case, as set out in the petition, are as under:-

    2.1 The Petitioner is a body corporate organized and existing under the laws of United Kingdom and is engaged in the business of providing finance. The Petitioner claims to be a 50% shareholder and a creditor of the Respondent Nos. 4 and 5 Companies, who in turn are creditors of the Respondent No. 1 Company.

    2.2 The Respondent No. 1 Company is engaged in the business of consulting and advisory services including management consulting, technical consulting, financial consulting, etc. more particularly described in its Memorandum and Articles of Association.

    2.3 The Respondent Nos. 2 and 3 are the Directors, of the Respondent No. 1 Company, and both are 50% each shareholder of it. Both these Respondents are also Directors of the Respondent No. 4 Company, and are also Directors and shareholders of the Respondent No. 5 Company, The Respondent No. 4 is a private limited company incorporated as a 50:50 joint venture under the Act between the Petitioner and the Respondent No. 5. The Respondent No. 5 is a private company incorporated under the Act in which the Petitioner claims to hold 50% shareholding, The Respondent No. 6 is a Director of the Respondent Nos. 4 and 5 Companies. The Respondent No. 7 is the Registrar of Companies and is the administrative authority for the compliance of the provisions of the Companies Act, 1956.

    2.4 It is the petitioner's case that as part of an arrangement between the parties, one Dallah Albaraka (UK) Limited, incorporated the Petitioner Company as its subsidiary so as to implement its equity investment in the Joint Venture between the Petitioner and the Respondent No. 5, a company at the relevant time owned by the Khajotia family, which is resulted in the incorporation of the Respondent No. 4 Company. At all times, the understanding between the parties was that their sole purpose of entering into the Joint Venture with the Respondent No. 5 was to generate funds and facilitate the recovery of the previous loans advanced by Dallah Albaraka Investment Company Limited (DAICO), a sister/associate company of the Petitioner and subsidiary of Dallah Albaraka (UK) Limited to Constellation Shipping (Bahamas) Limited (hereinafter referred to as "Constellation" for short), which was owned by one late Capt. Mehernoosh R. Khajotia, who is father of the Respondent No. 2 and husband of the Respondent No. 3 (hereinafter referred to as the "Khajotia Family").

    2.5 It is stated that in or around 1994, the DAICO financed the acquisition of five marine shipping vessels by "Constellation", a shipping company, owned by late Capt. Mehernoosh R. Khajotia, In order to repay the loans advanced to Constellation by DAICO, in or about early 2000, said late Capt. Mehernoosh Khajotia approached DAICO with a scheme/proposal for the repayment of the outstanding amount of US Dollars 2,595,826.75 due and payable to DAICO. By the said proposal late Capt. Khajotia asked DAICO whether it would be interested in assisting him to acquire further vessels. He further said this would be a profitable venture and would also accelerate the repayment to DAICO of the old pending loans of Constellation from the revenues generated- For purchase of two large vessels late Capt. Khajotia asked DAICO to invest US Dollars 2 Million as equity.

    2.6 It is further stated that DAICO accepted this proposal on the broad terms suggested by late Capt. Khaotia. Thereafter, Dallah Albaraka (UK) Ltd., the holding company of DAICO, incorporated the Petitioner Company as its subsidiary to as to implement its equity investment in the Joint Venture between the Petitioner and the Respondent No. 5, a company at the relevant time owned by the Khajotia Family, which is resulted in the incorporation of the Respondent No. 4 company.

    2.7 To give effect to the aforesaid arrangement, the Petitioner and the Respondent No. 5 executed, amongst others, certain documents, which are at Annexures A2 to A5 to the Petition, on the terms more particularly stated therein.

    2.8 Pursuant to the arrangement arrived at between the parties, the Petitioner made an equity investment of US Dollar 2 Million in the Respondent No. 4 Company, Apart from this, the Petitioner also advanced various loans to the Respondent No. 4, which were partly outstanding even the date of filing of the petition. It is stated that the Petitioner also made equity investments in the Respondent No. 5 and currently owns 50% shares In it, apart from the fact that DAICO had advanced various loans to the Respondent No. 5, which even today remain partly outstanding.

    2.9 It is stated by the Petitioner that as part of the arrangement between the parties and having regard to the circumstances set out in the petition, the entire management and control of the Respondent Nos. 4 and 5 Companies was at all time with the Khajotia Family.

    2.10 It appears that the disputes and differences arose between the parties, which led to filing of certain proceedings between the parties before the Hon'ble High Court of Bombay, more particularly described in para No. 6(vii) of the Petition.

    2.11 The grievance of the Petitioner against the Respondent No. 1 Company and the Respondent Nos. 2 and 3 in the present petition is on account of some facts, which came to his knowledge, that in another independent proceedings before the Hon'ble High Court of Bombay, which pertain to the administration of the estate of Late Cap. Mehernoosh Khajotia against his family members, namely, the Respondent Nos. 2 & 3, Mr. Arish M. Khajotia and Mr. Tamineh M. Khajotia filed by DAICO, when the Advocates of DAICO made an attempt to hand deliver a communication dated May 9, 2014 to the licensee of one of the properties being subject matter of said proceedings, the same came to be accepted by the Respondent No. 3 on behalf of that licensee at a completely different address, namely, 15G, Raheja Centre, 214, Free Press Journal Road, Nariman Point, Mumbai-400 021 (hereinafter referred to as "the said premises" in short). It is stated that the aforesaid conduct of the Respondent No. 3 of accepting the communication on behalf of that licensee and having regard to the past conduct of the Respondent Nos. 2 and 3 of intermeddling with the estate of late Capt. Mehernoosh Khajotia, gave rise to a suspicion and led to...

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