Case: Crystal Island Park P. Ltd. Vs Ashok Chawla. Company Law Board
| Judges | Vimla Yadav, Member |
| Issue | Company |
| Citation | [2010] 156 CompCas 151 (CLB) |
| Judgement Date | July 02, 2009 |
| Court | Company Law Board |
Order:
Vimla Yadav, Member, (Principal Bench)
1. In this Order I am considering Company Applications No. 325 of 2006 and 201 of 2009 in Company Petition No. 61 of 2006 filed by the applicants (respondent No. 1, company M/s. Crystal Island Park Pvt. Ltd. and respondent No. 2, Shri Marc William Rodrigues, respectively) against the respondent (petitioner, Shri Ashok Chawla) under regulation 44 of the Company Law Board Regulations, 1991 in terms of Section 399 of the Companies Act, 1956 challenging the maintainability of Company Petition No. 61 of 2006. Company Petition No. 61 of 2006 was filed by Shri Ashok Chawla (the petitioner) against M/s. Crystal Island Park Pvt. Ltd. and another (the respondents) under Sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as "the Act") alleging oppression and mismanagement.
2. M/s. Crystal Island Park Pvt. Ltd. (respondent No. 1) was incorporated as a private limited company on January 21, 1999, having its registered office at 61, Defence Colony, Alto De Porvorim, Bardej, Goa-403 521. The main objects of the company is to take the Devasthan Lands on freehold or long-term leasehold basis immediately, to take additional land both private, Konkan Railway and Communicate in the area to ensure a minimum of 450 acres of land under the control of the company and to obtain permissions and clearances required for the development of these lands, etc.
3. In Company Petition No. 61 of 2006 the petitioner has sought (i) forfeiture of shares/change of shareholding of the petitioner to be illegal; (ii) direction to respondent No. 2 to transfer so much of the shares of respondent No. 1 company to the petitioner so that the petitioner may hold 50 per cent, of the total shares of the said company; (iii) direction to respondent No. 2 to provide an access to all the documents, books, accounts, etc., qua respondent No. 1 company to the petitioner at all reasonable times and/or in consonance with the terms and conditions of the memorandum of understanding dated September 2, 2006; (iv) declaration that respondent No. 2 is unfit to be appointed as chairman/director/ managing director of respondent No. 1 company till the pendency of the present petition; (v) direction to hold an independent enquiry and investigation into the affairs of respondent No. 1 company; (vi) direction to respondent No. 2 to produce the annual return and balance-sheet of preceding years before the Company Law Board; and (vii) reconstitution of the board and appointment of an independent chairman and permitting holding of the annual general meeting under the supervision of the chairman so appointed by the Company Law Board, etc.
4. In Company Application No. 325 of 2006 on behalf of respondent No. 1 company the applicant has contended that the present company petition is not maintainable as the same has not been filed in accordance with the provisions of Section 397/398 of the Act, and thus, the same is liable to be dismissed with cost as the petitioner is neither a "member" nor a "shareholder" of the company as per statutory and mandatory requirement under Section 397/398 of the Act. My attention was drawn to the provisions of the Act. It was pointed out that respondent No. 1 company is a subsidiary of M/s. Grandeur Real Estates Private Limited (hereinafter "M/s. Grandeur"), having its registered office at Lower Ground Floor, C-4/5, Safarjung Development Area, New Delhi-110 016 and the only other shareholder of respondent No. 1 company is Mr. Prakash Lai Kapur (the applicant) who holds one share of respondent No. 1 company as a nominee of M/s. Grandeur.
5. Without prejudice to respondent No. 1 company's contention that the petition itself is not maintainable, it was contended that the petitioner has suppressed material facts, thereby misleading the Company Law Board. It was pointed out that the petitioner has misled the court by not disclosing the fact that the entire shareholding of respondent No. 1 company has been acquired by M/s. Grandeur. The petitioner has suppressed the fact that he sold all his shares of respondent No. 1 company against receipt of the agreed consideration paid in full and final settlement for the transfer of the said shares and for which the share transfer deeds were duly executed and handed over to Grandeur along with the original share certificates. M/s. Grandeur lodged the transfer forms along with the share certificates with respondent No. 1 company for transfer, which was done and the transfer was approved by the board of respondent No. 1 company. The petitioner, at present has no existence or role in the functioning of respondent No. 1 company. The petitioner has deliberately concealed the true facts in order to mislead the Company Law Board. It was pointed out that respondent No. 1 company reserves the right to initiate appropriate legal proceedings, if necessary, against the petitioner.
6. Without prejudice to the preliminary objections, it was further argued that the petition is also liable to be dismissed for misjoinder of parties. The petition has been filed essentially alleging certain acts of oppression and mismanagement by respondent No. 2. Respondent No. 2 against whom the petitioner has made all allegations in the petition is also not a "member" or a "shareholder" of respondent No. 1 company and thus, the petition and interim relief could not have been filed and sought against respondent No. 1 company and respondent No. 2 as well.
7. Respondent No. 1's case is that M/s. Crystal Island Park Pvt. Ltd., respondent No. 1, was incorporated in January, 1999 under the provisions of the Companies Act, 1956 with (i) Mark Rodrigues (respondent No. 2); (ii) George Varkey and (iii) Christopher Mores as its promoters/shareholders with 100 shares each. On January 22, 2001, a memorandum of understanding (MoU 1) was purportedly entered into between Mr. Ashok Chawla, the petitioner, Gen. Smith Francis Rodrigues (father of respondent No. 2), Mark Rodrigues and M/s. Zuari Tigers Aqua Pvt. Ltd. (name later changed to Zuari River Agrotech Pvt. Ltd. (ZRAPL). Pursuant to the MoU 1, the petitioner/for the first time, was inducted into ZRAPL on certain terms and conditions. It was argued that the MoU has no relevance in so far as the instant proceedings are concerned as respondent No. 1 is not even a party to the MoU. On the date of the MoU, the petitioner was not even a shareholder or member of respondent No. 1. Further, it was contended that the petition is liable to be dismissed also on the ground that the entire petition has been framed on the premise that there has been a breach by respondent No. 2 of terms of an alleged memorandum of understanding dated February 9, 2006, entered into between the Petitioner and respondent No. 2. The petition is liable to be dismissed on the ground that respondent No. 1 company was not a party to the alleged MoU. It appears on a bare perusal of the petition that the disputes, if any, are between the petitioner and respondent No. 2. Respondent No. 1 is in no way connected with such disputes. The petition, it was argued, is an abuse of process of law.
8. Counsel for respondent No. 1 company pointed out that prior to acquisition of the entire shareholding of respondent No. 1 company by M/s. Grandeur, respondent No. l's shareholding was jointly held by respondent No. 2 and the petitioner. Respondent No. 1 company, respondent No. 2 and the petitioner agreed to merge one M/s. Zuari River Agrotech Private Limited (hereinafter as "M/s. Zuari") with respondent No. 1 company to expand the business activity. Pursuant to the order passed by the Hon''ble High Court of Bombay at Goa, sanctioning the scheme of amalgamation for the merger of M/s. Zuari with respondent No. 1 company, M/s. Zuari was duly merged with respondent No. 1 company and thereafter the shareholding of Zuari and respondent No. 1 were accordingly apportioned amongst the shareholders of respondent No. 1 company and M/s. Zuari. The scheme of sanctioning the amalgamation has been taken on record by the Registrar of Companies. In the 42nd meeting of board of directors of respondent No. 1 company, held on February 17, 2006, in which the petitioner and respondent No. 2 were present, the board agreed to transfer the entire shareholding of the company to M/s. Grandeur. The averment that the petitioner was holder/owner of 50 per cent, of shareholding in respondent No. 1 company is completely false and erroneous. On amalgamation, the shares of respondent No. 1 company were apportioned as under:
(a) Respondent No. 2--1,29,030 (86 per cent.) shares of Rs. 100 each.
(b) Petitioner--20,970 (14 per cent.) shares of Rs. 100 each.
It was argued that it is not open for the petitioner to raise a plea with respect to his earlier shareholding in the present proceedings. Further, in the 43rd meeting of the board of directors of respondent No. 1 company, held on February 22, 2006, it was declared that the petitioner and respondent No. 2 have lodged their transfer notices in favour of M/s. Grandeur. It was argued that having issued the transfer notices, the petitioner is estopped from raising any pleas in contradiction thereto.
9. In the 43rd board meeting, Mr. Prakash Lai Kapur, nominee of M/s. Grandeur was also appointed as an additional director in respondent No. 1 company. It. was also categorically declared that the petitioner has tendered his resignation and that the same was accepted. Form No. 32, pursuant to the petitioner's resignation was also filed. In the 43rd board meeting it was also intimated that there would be a transfer of ownership of respondent No. 1 company in favour of M/s. Grandeur. There are no other members or shareholders of respondent No. 1 company. The petitioner's shareholding by M/s. Grandeur was bought out and the entire consideration of Rs. 1.51 crore was duly paid to the petitioner. On March 2, 2006, the petitioner himself issued a receipt of Rs. 1,51,00,000 for the...
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