C.P. No. 74(ND)/2009. Case: Narottam Singh Vs Notam India Private Limited and Ors.. Company Law Board

Case NumberC.P. No. 74(ND)/2009
CounselFor Appellant: U.P. Mathur, Advocate and For Respondents: Rajath Bhalla, Advocate
JudgesB.S.V. Prakash Kumar, Member (J)
IssueCode of Civil Procedure, 1908 (CPC) - Order XXIII Rule 1, Order XXIII Rule 1(4), Order XXIII Rule 4, Sections 11, 2(2); Code of Criminal Procedure, 1973 (CrPC) - Section 340; Companies Act, 1956 - Sections 253, 397, 398, 402, 628; Constitution Of India - Article 226; Indian Penal Code 1860, (IPC) - Section 195
Judgement DateJune 22, 2015
CourtCompany Law Board

Order:

B.S.V. Prakash Kumar, Member (J), (New Delhi Bench)

  1. The petitioner, elder brother of R2, filed this CP u/s. 397, 398 read with 402 of the Companies Act, 1956 against a Company called M/s. Notam India Private Limited (RI Company) and against R2 and his wife (R3), alleging that R2 & R3 conducting the affairs of the company prejudicial to the interest of the petitioner, therefore, sought reliefs as follows:

    (a) To declare the letter of resignation dated 14.03.2007 fabricated by R2 as invalid;

    (b) To declare appointment of R3 as director on 19.02.2007 and Form 32 dated 21.3.2009 as invalid;

    (c) To direct R2 & R3 to close the new Current Accounts of R1 company with the Branches of Bank of Baroda, situated at Rajendra Nagar, Sec-5, Ghaziabad and at karkardooma, New Delhi by crediting the balance in those accounts to the current account No. 979 of R1 company maintained in Punjab & Sind Bank, Link Road, Sahibabad, Ghaziabad;

    (d) To allow the petitioner and R2 to jointly operate the Current Account No. 979 and FDRs with Punjab & Sind Bank;

    (e) To execute sale deeds for sate of shops/flats at company's behalf jointly by the petitioner and respondents;

    (f) To declare alleged the increase of authorized capital from Rs. 5 lacs to Rs. 10 lacs and Form 5 as null and void;

    (g) To direct RoC, Delhi to file prosecution u/s. 628 of the Companies Act, 1956 against R2 & 3 for making false statements and for filing forged documents with RoC Delhi.

    The case of the petitioner:

  2. The petitioner is an Electrical Engineer, had worked in Gulf countries during 1987 to 1995; after having returned to India from Gulf in the year 1995 with lots of savings under NRI Account, he worked with Flour Daniel, world's No. 1 construction/Engg consulting company until February, 1996. He purchased a commercial office space in December 1995 at 70A-215, Chawla Complex, Shakarpur, Vikas Marg, Delhi, and established a sole proprietary concern on 18.03.1996 in the name and style of "NOTAM" to carry on electrical contract works. While this proprietary concern was making good business, the petitioner initially accommodated his brother (R2) in his sole proprietary concern 'NOTAM'. He looked after the needs of his brother and even spent huge money on his marriage in Nov. 1999. As they were going together well, these brothers incorporated R1 Company on 4th September, 1997 with the petitioner and R2 as shareholders and promoter directors having its Registered Office at Vikas Marg, Delhi, in the property owned by the petitioner, R1 opened a current account with Punjab & Sind Bank, situated Link Road, Sahibabad with cheque signing authority to both the directors to operate on "either or survivor" basis. After 2002-03, day to day activities of the company were carried on from its corporate office situated at Flat No. 1303, Nanda Apartments, Kaushambi, Ghaziabad, U.P. This property was purchased by the petitioner in the year 1998 by including his brother name as power of attorney holder along with him. The business of NOTAM was far higher than R1 Company business before transferring its business into R1 Company. The petitioner, at the cost of his personal business, transferred the assets of NOTAM worth of Rs. 1,81,405.23/- to R1 Company on 31.03.2002. To carry real estate business, R1 purchased two plots of land - Land No. 3/82, Sector 5, Rajendra Nagar, Ghaziabad for Rs. 18,20,000/- in November, 2003 and land No. 9/5, Sector 3, Rajendra Nagar, Ghaziabad for Rs. 32 lacs in February, 2006 for developing and constructing flats/shops for sale. To start with, R1 company took a loan of Rs. 25,73,000/- from ICICI Bank by pledging the petitioner flat KA 14, second floor at Kaushambi, Ghaziabad with the Bank as collateral security.

  3. The petitioner, being skilled person with varied experience in the business, looked after the project execution on the site, whereas R2 used to look after the Accounts and Office management, including maintenance of books, statutory record and as to finalization of accounts. Both the petitioner and R2, being directors, used to take remuneration as salary from the Company. First project was completed in 2005 and the other was completed in March, 2009.

  4. The petitioner submits that R2, without any notice to the petitioner, fraudulently increased the authorized share capital of the company from Rs. 5 lacs to Rs. 10 lacs in the EoGM allegedly held on 28.03.2008. The petitioner being one out of two directors, to pass a Board Resolution, R2 shall take approval of the petitioner, but R2 unilaterally decided EoGM date as 23.8.2008 without any Board Resolution. He went ahead and showed as if EoGM was held on 28.03.2008 for increase of authorized capital from Rs. 5 lacs to Rs. 10 lacs without any notice to the petitioner. Though meeting was shown as held on 28.3.2008, R2 did not file Form 5 immediately, he filed it on 02.04.2009 i.e., after more than one year from the date of alleged increase of share capital.

  5. The petitioner submits that the shareholding pattern in the Annual Return dated 4-9-2002 was - the petitioner holding 6605 shares i.e., 57%, R2 holding 5,000 shares i.e., 43%. However, in the Annual Returns of 2009 & 2004, the shareholding started showing as the petitioner and R2 holding 25,000 shares each amounting to 50:50 in between them in reverse to the shareholding pattern of 57% in the name of the petitioner and 43% in the name of R2 as reflected in the AR of 2002. The petitioner submits that he has never signed over any of those documents which showing 25,000 shares each against the petitioner and R2. Since he was not a party to this change of shareholding in ARs 2003 & 2004, the petitioner says they shall be declared invalid.

  6. When the relations in between petitioner and R2 have been strained, the petitioner asked R2 to deliver the cheque book of the Company Account with Punjab and Sind Bank after completion of second project in the year 2009. To which, R2 refused to deliver the cheque book, above this, he misbehaved with his elder brother, petitioner, indeed asked the petitioner to leave the work site for ever. Then suspecting something wrong happening in the company, the petitioner approached Manager of Punjab & Sind Bank on 4.3.2009 to cancel the instructions of operation of Bank Account "either or survivor" and make it joint operation by both the Directors. Again on 16.4.2009, when the petitioner requested the Bank Authorities for new Cheque Book vide letter dated 16.4.2009, the bank officials placed a letter dated 13.04.2007 written by R2 and other documents before the petitioner saying R2 showed a letter dated 14.3.2007 saying his brother (P) resigned from the Bank by issuing a letter of resignation. He was shocked to see those documents showing as the petitioner resigned from the company, as R3, wife of R2, appointed as director, as if a resolution was passed by R2 & R3 on 19-2-2007 changing the signatory ship for bank account operation with Punjab & Sind Bank, and a board resolution on 14.3.2007 signed by R2 & R3 changing the operation of FDR account with Punjab & Sind Bank.

  7. On seeing the letter dated 14.03.2007 R2 passed on to the Bank, the petitioner for the first time realized that R2 made fraud to shunt him out from the company by falsely manipulating and forging the company records as if the petitioner signed all those papers showing as if the petitioner resigned from the company, showing as R2's wife appointed as director. That the petitioner has never written any letter dated 14.3.2007 to the company that he resigned as director from the company for being preoccupied in his own private concern. That the petitioner has never signed or passed any board resolution appointing R2's wife (R3) as director of the company on 19.2.2007, that the Board resolution shown as passed by R2 & R3 changing the Bank signatories of Account 979 maintained with Punjab & Sind Bank is invalid because R3 has never been appointed as director of the company and she is admittedly not even shareholder of the company.

  8. The petitioner came across a Board Resolution dated 10.4.2007 from one of its customers, namely, Shri Hemraj Singh, which is showing as signed by R2 and the petitioner. He was shocked of seeing it as signed by him, because he never signed upon the said resolution. R2 deployed this to make customers believe that R2 is allowed by the petitioner to execute sale deeds on behalf of the company, to achieve this, R2 fabricated false board resolution dated 10.4.2007 forging the signature of the other director i.e., the petitioner. With this, he held out to the customers he is allowed to sell the flats and receive money from the customers, of course, he did it to his best. It is pertinent to note, the date on this resolution is 10.4.2007, whereas the resignation letter dated 14.3.2007 set up by R2 to show the petitioner resigned from the company as director is ante to the Board Resolution dated 10.4.2007. Summing it the petitioner submits that R2 forged the signatures of the petitioner left, right and center without foreseeing that he would fall into his own snare. R2 simply passed off the Board resolutions and shareholders resolutions one after another as if the petitioner signed all those resolutions set up by R2.

  9. The petitioner filed a Handwriting Expert opinion dated 08.08.2009, indicating that the signature on the letter dated 14.03.2007 is not matching with the signature of the petitioner. The petitioner immediately after noticing false resignation on him, he filed a civil suit No. 818/09 in April, 09 assailing the resignation letter dated 14.03.2007 and other issues. He submits that R2, to suit to his convenience, fabricated a Board Resolution on 10.04.2007 showing as if the petitioner continuing as director in the company, subsequent to the alleged resignation set up by R2. When this contention was taken in the petition, respondents in their reply produced another Board Resolution with the same date...

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