C.P. No. 94 of 2010. Case: Chandrakant Shankar Pathak Vs Indigo Hotels (P.) Ltd. and Ors.. Company Law Board
| Case Number | C.P. No. 94 of 2010 |
| Counsel | For Appellant: Raghavan Sarathy and Dharmesh Shah and For Respondents: Ranjan Nehru |
| Judges | Ashok Kumar Tripathi, Member (J) |
| Issue | Companies Act, 1956 - Sections 173, 193, 195, 235, 284, 286, 301, 397, 398, 402, 53, 53(2), 81; Indian Evidence Act, 1872 - Section 114 |
| Citation | 2014 (123) CLA 530 (CLB), 2015 (189) CompCas 38 (CLB) |
| Judgement Date | April 01, 2014 |
| Court | Company Law Board |
Judgment:
Ashok Kumar Tripathi, Member (J), (Mumbai Bench)
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The petitioner has filed the present company petition under sections 397 and 398 of the Companies Act, 1956 ('the Act'), complaining therein certain acts of oppression and mismanagement purportedly committed by the respondent Nos. 2 to 11 in the affairs of the respondent No. 1-company ('the company'). The petitioner has sought various reliefs as contained in the petition. The facts in brief leading to filing the present petition are as follows:
1.1. That somewhere in or around January 2007, the respondent No. 2 who happens to be his close relative through the wife of the petitioner, approached him and represented that the respondent No. 1-company was available for takeover for a total consideration of Rs. 2,25,00,000. Accordingly, the petitioner along with the respondent No. 2 agreed to jointly acquire by way of purchase of the entire shareholding being 1,00,000 A-class equity shares of Rs. 10 each amounting to Rs. 10,00,000 and 2,50,000 B-class shares of Rs. 10 each totalling to Rs. 25,00,000, respectively both Rs. 35,00,000 in total) in respect of the respondent No. 1-company from the persons controlling its original shareholding, namely, respondent Nos. 8 to 11 respectively for a total consideration of Rs. 2,25,00,000 which included the settlement of certain debts of the respondent No. 1-company including loans from its directors and some repairs and maintenance and renovation of the Hotel premises situated at Panchgani.
1.2. That, it was also decided between the petitioner and the respondent No. 2 that both of them shall hold equal number of shares in the share capital of the respondent No. 1-company at all times.
1.3. That pursuant to such arrangement, the original shareholders of company, i.e., the respondent Nos. 8, 9 and 10 had executed a power of attorney in favour of the petitioner and the respondent No. 2 jointly, to effectively carry out the said transaction and caused the said power of attorney to be registered before the concerned Sub-Registrar.
1.4. That, though it was initially intended to hold the shares of the respondent No. 1-company, between the petitioner and the respondent No. 2 in equal proportion, however, the petitioner was informed by the respondent No. 2 that the B-class shares were to be purchased later on and as such by securing 50 per cent of the A-class shares, the petitioner would have control over 40 per cent of the total equity shares since one "A" Class share has 10 votes. Therefore, by way of good gesture, the petitioner voluntarily offered to reduce his shareholding to the extent of up to 40 per cent and informed the respondent No. 2 that he could hold 60 per cent after the "B" Class shares are also acquired on the condition that none of the shares held by the respondent No. 2 or the petitioner shall be alienated, transferred or otherwise disposed of without first offering the same inter se between the petitioner and the respondent No. 2 and that at no point of time, the percentage of holding as stated herein above, shall be altered or changed.
1.5. That, it was further agreed between the petitioner and the respondent No. 2 who happens to be his close relative that if at all directors were to be inducted on the Board of the respondent No. 1-company, the same shall be within of the family member's of the petitioner and the respondent No. 2 such that every additional appointment of a family member from either side as a director of the respondent No. 1 shall ipso facto result into a corresponding appointment from the other side so as to include the wife and son of the petitioner and the wife and son of the respondent No. 2, respectively. In light of the above facts, it can be held that the respondent No. 1-company was a family run company and was in the nature of a quasi-partnership.
1.6. That in terms of the above understanding between the petitioner and the respondent No. 2, the petitioner invested a sum of Rs. 90,00,000 for purchase of 50,000 A-class shares of Rs. 10 each and balance amount of Rs. 85,00,000 by way of loan to the respondent No. 1 for discharge of its earlier debts and for renovations, etc.
1.7. That after purchase of shares and settling various debts of the respondent No. 1, the respondent No. 2 was appointed as a director on 19th April, 2007 and the petitioner came to be appointed as a director on 1st October, 2007 on the Board of the respondent No. 1-company. Thereafter, the petitioner reorganised the business plans and setting of business afresh for which it was agreed that an amount of Rs. 15,00,000 remains to be paid to the petitioner on that count alone apart from managerial remuneration of Rs. 9,00,000 for a period of years with effect from October 2007 till date.
1.8. That, in spite of the petitioner having deposited the entire amount of Rs. 90,00,000 in the year 2007-08, the respondent No. 2 deliberately delayed the payment to the respondent Nos. 8 to 10 by almost one year. However after receiving the payment, the respondent Nos. 8 to 10 finally on 17th September, 2009, finally resigned from the Board of directors of the respondent No. 1-company.
1.9. That, accordingly the transfer of the shares in the respective names of the petitioner and the respondent No. 2 in equal proportion was to be effected since the transaction of share purchase had attained finality. The respondent No. 2 took upon himself the responsibility to cause and effect the transfer of the shares to the extent of 50 per cent amounting to 50,000 equity shares of Rs. 10 each totalling to Rs. 5,00,000 in a fiduciary capacity as the petitioner had already paid the entire amount of his share as stated hereinabove.
1.10. That, thereafter transfer of shares came to be effected in respect of 6,300 A-class equity shares of Rs. 10 each and the said shares came to be transferred recorded in the name of the petitioner on 2nd May, 2008 in the register of members by way of a resolution passed at the Board meeting of the respondent No. 1-company as is shown in the annual returns filed before the Registrar of Companies ('RoC') for the year 2007-08.
1.11. That, the respondent No. 4 handed over to the petitioner a share certificate bearing certificate No. A-23 for 9,800 A-class equity shares and certificate bearing No. A-26 for 10,000 A-class equity shares both of Rs. 10 each respectively bearing distinctive Nos. A-30201 to A-40000 and A-80001 to A-90,000 totalling 19,800 shares, thereby confirming the transfer of the said shares in favour of the petitioner. However the respondent No. 2 deliberately did not record the same in the register of members with mala fide intention and ulterior motive and curiously enough the said shares are now shown in the name of the respondent No. 6 as per the annual returns filed for the year 2009 (made up to 22nd September, 2009).
1.12. That, it appears that suddenly the conduct and intent of the respondent No. 2 has turned mala fide not only as to transferring the legitimate shares of the petitioner but even in terms of the management of the affairs of the respondent No. 1-company and the respondent No. 2 started committing several irregularities in the conduct of business of company and more particularly in running the business of hotel without disclosing the particulars of business and the financial position of the company to the petitioner and acted against the interest of the respondent No. 1-company.
1.13. The petitioner has then levelled the following charges upon the respondents alleging them as acts of oppression and mismanagement purportedly committed by them in the affairs of the respondent No. 1-company:
(a) Refusal of transfer of 19,800 A-class shares in spite of handing over the share certificates thereof and 29,300 A-class shares held in Trust by the respondent No. 2 on behalf of the petitioner, in his name, as agreed upon, in spite of the petitioner having paid a sum of Rs. 90,00,000 which included an amount of Rs. 5,00,000 towards purchase of shares and Rs. 85,00,000 towards loan towards the advance of the respondent No. 1-company.
(b) Illegal appointment of respondent No. 4 as additional director in the alleged Board meeting purportedly held on 1st January, 2008 and appointment of the respondent No. 3 as director in the alleged Board meeting purportedly held on 15th May, 2008, without following any procedure established by law.
(c) Illegal appointment of respondent Nos. 5 to 7 as additional directors in the alleged Board meeting purportedly held on 9th July, 2009, without serving any notice upon the petitioner as per law.
(d) Illegally increasing the authorised share capital of the respondent No. 1-company and to approve transfer of its shares and alteration of the articles of association in an extraordinary general meeting ('EGM') held between the members purportedly held on 20th July, 2009, without valid and proper notice to the petitioner.
(e) Failure to provide inspection of documents to the petitioner to which he is entitled to as a shareholder and director of the respondent No. 1-company.
(f) Siphoning of funds of the respondent No. 1-company for their own personal use.
(g) Misuse of the funds of the company.
(h) Illegal removal of the petitioner in the course of trial as director in the EGM purportedly held on 22nd September, 2011 without adopting due process of law.
1.14 Based on the aforesaid allegations, the petitioner has filed the aforesaid petition and has sought the following reliefs:
(a) to pass an order thereby directing the respondent No. 1-company to issue share certificates representing 43,700 A-class equity shares in the share capital of the respondent No. 1-company in favour of the petitioner by restoration of 19,800 A-class shares of Rs. 10 each shown in the name of the respondent No. 6 and 23,900 A-class shares shown in the name of respondent No. 2 and the consequent rectification in the register of members to that effect;
(b) to pass an order...
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