CP No. 82/ND/2008. Case: Vijay Valecha Vs Nanco Financial Services (P.) Ltd. and Others. Company Law Board

Case NumberCP No. 82/ND/2008
JudgesVimla Yadav, Member
IssueCompanies Act, 1956 - Sections 10E, 235, 239, 283(1)(g), 284, 397, 398, 399, 399(1), 402, 403, 406, 539, 540, 541, 542, 543, 544, 545
Citation2012 (109) CLA 201
Judgement DateSeptember 12, 2011
CourtCompany Law Board


Vimla Yadav, Member, (New Delhi Bench)

  1. In this order I am considering Company Petition No. 82/ND/2008 filed by Sh. Vijay Valecha, the petitioner against Nanco Financial Services (P.) Ltd. and others alleging oppression and mismanagement under sections 397, 398, 399, 402, 403 read with sections 235 and 239 with 539-545 of the Companies Act, 1956 ('the Act') seeking directions for R2 to immediately cease and desist from doing any act in respect of the business affairs of the R1-company which are oppressive to the petitioner and as such violating his rights by virtue of the fact that petitioner holds 45 per cent voting shares in R1-company; suspension of present Board of directors of the R1-company and appointment of an administrator to take charge of management and affairs of the company and its books of account, statutory books, papers, records, minutes and other documents; to restrain the respondents from giving effect to the increase in the share capital of the company and restore the shareholding of the company as on 28th March, 2007; to appoint an independent auditor of the R1-company and pass an order for removal of the present auditor of the company; Permanently inject the respondents from operating the bank accounts of the company; to restrain the R1-company from allotting any further equity shares of the company and if any additional shares have been allotted subsequently then cancel the allotment of shares of the company made on or after 28th March, 2007 and to rectify the register of members immediately; to cancel all the documents, viz., Form 2, Form 5, Form 32 filed after the date of dispute and to restore status quo ante; Investigation or inquiry into acts or conduct and dealings of the R2 and 3 in relation to the assets and properties of the R1-company and regarding the management of affairs of the company under the provision of section 406 of the Act read with Schedule XI; restore the original shareholding and the original directorship of the company; declaration that all the resolutions passed in the Board meetings/general meetings in the absence of petitioner are void and of no effect; Direct that the petitioner be permitted to actively participate as director of R1-company and to participate in day-to-day management of the affairs of R1-company; directing R2 to make full disclosure of all the information relating to the running of business of R1-company to the petitioner; directing R-2 to provide an access to all the documents, books, account, minutes, etc., of R1-company to petitioner; constitution of the Board and appointment of an independent managing director/chairman. The R1-company Nanco Financial Services (P.) Ltd. was incorporated under the provisions of the Act on 29th July, 1994 and is having its registered office situated at 7 BQ Market Local Shopping Center 1st Floor, Shalimar Bagh, New Delhi-110008. The authorised share capital of the respondent is Rs. 100,000 divided into 10,000 shares of Rs. 10 each and paid capital of the R1-company was Rs. 20,000 divided in to 2,000 shares of Rs. 10 each. The R1 is a finance company engaged in the business to finance, and hire purchase, invest and to assist or subsiding in purchasing of industrial and office plant, equipments, machinery, vehicles, movable assets, land and building real estates and consumer goods of all kind by way of hire purchase, to lend or advance money either with or without security and to arrange and negotiate loan and to carry on the business of financiers, etc.

  2. The petitioner's case is that the respondents have not given proper counter affidavits, there is no written statement before the Company Law Board ('CLB'), there is no verification of written statement, which is mandatory requirement, the alleged affidavit in support thereof and that too on one of the respondents, namely, Ms. Sangeeta Jain is also not as per requirement of law, hence, in the eyes of law, there is no written statement, it was contended that the same has been deliberately and motivatively done solely with a view to avoid consequence of making false deposition, it is nothing but to mislead the CLB. Moreover, the written statement was not filed in time as per requirement of law.

  3. The counsel for the petitioner pointed out that it was settled between the petitioner and the respondent No. 1 that whatever investment will be done by the petitioner in respondent No. 1-company, the petitioner would be entitled to have a simple interest at the rate of 18 per cent per annum payable after every 3 months. However, he was removed from directorship and with a motive to grab all the profitability of the respondent No. 1-company and that too at the back of the petitioner without any notice or prior information, respondent Nos. 2 and 3 with greedy intention and with a view of usurp the total control of the company conspired to increase the authorised share capital of the company, respondent No. 3 along with the respondent No. 2 fabricated the records of the company and on 28th March, 2007 unauthorisedly increased the authorised share capital of the respondent No. 1. It was contended that no notice was ever issued to the petitioner by respondent Nos. 2 and 3 intimating about such increase in authorised share capital of the respondent No. 1-company. The share capital of the respondent No. 1-company was increased unauthorisedly and that too without consent and knowledge of petitioner and without following the process of law as the same is evident from the Form 5 filed by the company with the Registrar of Companies ('RoC')...

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