MANU/CL/0075/2015

BEFORE THE COMPANY LAW BOARD

NEW DELHI BENCH, NEW DELHI
C.P. No. 82(ND)/2013
Decided On: 12.05.2015
Manish Aggarwal Vs. GSA Enterprises Pvt. Ltd. and Ors.
Hon'ble Judges/Coram:
B.S.V. Prakash Kumar, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Prateek Gupta and Rashneet Kaur, Advocates
For Respondents/Defendant: Anurag Kumar Agarwal, Tushar Parashar and Umesh
Mishra, Advocates
ORDER
B.S.V. Prakash Kumar, Member (J)
1 . The petitioner filed this CP against R1 Company and other Respondents under
sections 397 & 398 of Companies Act 1956 alleging that the answering Respondents in
the management have been acting prejudicial to the interest of the petitioner who has
25% stake in the company, therefore he has sought the reliefs as mentioned in the
company petition.
2 . R1 company was incorporated with an authorized share capital of Rs. 10,00,000/-
(Rs. Ten Lakhs) divided into 1,00,000 equity shares of Rs. 10/- each and paid up capital
of Rs. 1,00,000/- (Rs. One Lakh) divided into 10,000 shares of Rs. 10/- each, to carry
business of developing a group residential housing project called "Shri Ram heights" at
Rajnagar Extension, Ghaziabad (Khasra No. 1174, 1177 Noornagar, Ghaziabad, U.P.
admeasuring 16700 sq. yards).
3. The petitioner and R2-R4 took over this company in the month of August 2011 from
the previous management. The petitioner, since then, has been continuing as director
and shareholder of R1 Company holding 2500 shares of Rs. 10/- each aggregating 25%
of the total paid up capital of the Company. R2 &4 are directors of the company holding
3000 shares of Rs. 10/- each aggregating to 30% each, R3 is also director holding 1500
shares of Rs. 10/- each aggregating to 15%, whereas R5 is only a director.
4 . The petitioner, apart from his shareholding, has inducted large amount of funds in
the company as unsecured loan. For he has vast experience in civil engineering, he was
asked to take part in the company; accordingly, he had started participating in day-to-
day affairs of the company including managing finance of the Company as one of the
signatories to the Bank Account of the company lying with the Punjab National Bank.
The company planned to start a project on the land admeasuring 16,700 square yards
owned by the company at Khasra No. 1174 & 1177, Noornagar, Ghaziabad, and Uttar
Pradesh.
5 . The petitioner submits that he was requested to arrange a Chartered Accountant to
become auditor of the company when erstwhile auditor had resigned on 20th December
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2011, but when the petitioner proposed an auditor's name, R2-5, being majority,
refused the same, ever since the company still continuing without any auditor leading to
gross mismanagement of the affairs of the company.
6. The petitioner submits that R2, taking advantage of being authorized to gel proposed
residential project passed through government, misused crores of rupees of the
company. When the petitioner asked statement of the Accounts, he was not provided
and not even provided notice for AGM held on 29.09.2012.
7 . The petitioner submits that R2-5, in pursuance of Board Meeting dated 2-2-2013,
shifted Registered Office of the company to D-171, Shop No. 1, Dilshad Garden,
Sahara, Delhi from the house of the petitioner to keep the petitioner away from the
affairs of the company. Be says that he received notice on 23-1-2013 stating that a
Board Meeting would be held on 2-2-2013, but there was no agenda with a proposal for
shifting registered office; however, basing on this resolution, the registered office was
shifted to another place that suits to the respondents. No rent was paid to the petitioner
though the registered office continued in the house of the petitioner until 2-2-2013.
8 . The petitioner submits that the answering Respondents held Board Meeting on
12.02.2013 without any notice to the petitioner and passed a resolution to demand me
petitioner for handing over documents of R1 Company. As no notice was served upon
him, he could not attend the meeting.
9 . He says that the Respondents vide letter dated 16.03.2013 made frivolous demand
for documents, to which, the petitioner replied on 23.03.2013, denying possession of
any of the documents of R1 company except title deeds of the asset of me company, as
to title deeds, he staled he would place those documents before Bank or some
authority. The petitioner submits that the entire documents of the company have been
in the custody of the respondents except title deeds of Khasra No. 1174, 1177.
(Observation: But this title deed has come before this Bench from the petitioner, when
this Bench directed him to place title deeds of the fixed asset of the company).
10. Besides this, the petitioner submits that the respondents, to oppress the petitioner,
opened a new Bank Account in Corporation Bank pursuant to a Board Meeting dated 22-
2-2013 without consent of the petitioner. He says he could not attend this meeting
because the petitioner received notice dated 14-2-2013 on 22-2-2013, i.e., the date of
meeting, stating that there would be discussion for opening new bank account.
11. The petitioner further submits that the respondents held EoGM on 5th March, 2013
at 11 am, by the lime he reached to the office at schedule time, no one was present.
Later, he came to know that EoGM was held at the Registered Office before schedule
time to avoid the petitioner attending the EoGM. The petitioner submits that the
respondents have been conducting the affairs of the company detrimental to the interest
of the petitioner by holding meetings behind the back of the petitioner holding 25% in
the company.
12. Apart from the pleadings in the CP, the petitioner further submits in his rejoinder
and written submission that the respondents started taking out money of the company
in the name of rent towards Registered Office shifted from the premise of the petitioner.
When it was in the premise of the petitioner, no rent was paid, nor ever petitioner
demanded, but after it was shifted, the answering respondents started showing money
going out in the name of rent to the Registered Office.
1 3 . The petitioner submits that respondents are guilty of diversion of funds to the
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Rockfort Developers Private Limited because they inflated bills for expenses and entered
the same in Books of accounts of R1 Company covering the works done to their
company, Rockfort Developers (P) Ltd.
14. The petitioner submits that he filed CA 79/2013 stating that he came to know that
Board Meeting was held on 28.06.2013 to show that company has got 10 flats booked,
but the Respondents did not give this information to the petitioner before making any
such bookings this has come to his notice only when R4 sent email to petitioner on
05.07.2013 staling Flat No. A-101 was being sold, therefore he also sought for
information and documentation in relation to these bookings. On seeing this, the
petitioner says, the respondents replied that it is not possible for them to comply with
coon's order dated 18.06.2013 because they could not be in a position to give prior
information when bookings are made. These respondents failed to place quotations,
bookings and agreements they entered with buyers keeping the petitioner in dark. When
he insisted upon the Respondents to place this information before this Bench, they
simply not placed information by saying that they have not entered into any agreement
with anybody for booking plots.
15. The petitioner says that when he moved CA 80/2013, this Bench passed an order
directing the Respondents to provide monthly Bank Statement of Corporation Bank, in
those statement, it is evident that Company spent Rs. 2,63,340/- towards legal
expenses and cash withdrawal amounting to Rs. 4,50,000/-, and more than Rs.
1,00,000/- under miscellaneous head without support of any vouchers.
16. The petitioner submits that the company booked some Flats at underrate in between
Rs. 1900/- per sq. ft. and Rs. 2650/- per sq. ft., while the rate in the market prevailing
in between 2950/- per sq. ft. and Rs. 3150/- per sq. ft. He further says, as per
prevailing Real Estate business, normal discount range is around 7%, but on the
contrary, the respondents are offering 40% of discount, by which the respondents must
be receiving cash, off the record, from the customers to hide real consideration of flats
to siphon the income of R1. He further submits, though this Bench passed an order
directing the petitioner to sign upon each and every cheque up to one lac rupees and to
hold Board meeting for every transaction above one lac rupees, the answering
respondents held Board Meetings and took out more than one lac without consent of the
petitioner. For having the respondents violated the directions of this Bench, the
petitioner filed CA 56/2014.
17. The petitioner submits that the respondents have not passed any minutes to take
out Rs. 60,000/- as rent towards the place accommodated for registered office of the
company, 'though the accounts showing Rs. 1,07,910/- has been shown as paid to one
Mr. Ishwar Chand Tyagi for doing soil excavation, the respondents tailed to place any
invoices showing such work has been done in the company. Likewise, the company
made payment to one Mr. Amit Chouhan for excavation work, to which also no invoice
is placed. He further says that the notices annexed to the reply of the respondents on
page No. 12 are sham and bogus. All this clearly indicate that these Respondents
indulged in siphoning of funds by using forged and sham invoices.
18. The petitioner further submits, the company has not invited any tenders for soil
excavation work. He further submits that the company prepared a cheque in favour of
Vadansh Enterprises for an amount of Rs. 1,12,140/- without any approval from the
Board. As to the work given to Chetna Constructions, the record is showing that the
company issued cheques worth of Rs. 2, 94,000 as payment without any tender and
quotation and whatever invoices filed before this Board in relation to these bills are

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sham and bogus.
19. The petitioner has challenged the company paying Rs. 18,000/- salary to one Mohd.
Sadiq because the appointment letter shown to this Bench has not been shown to him,
he apprehends that Mohd. Sadiq is an employee of Rockfort Developers Pvt. Ltd.
belonging to the answering Respondents. He also disputed making payment of Rs.
17,500/- to one Mayank Singla as Site Supervisor stating that since project has been at
stand still, where is the need for appointment of a Site Supervisor. Though the company
stated that copies of appointments were given to this Bench no such information was
passed to him. When the company project is at halt, the Directors Manish Kumar, Arun
Kumar Aggarwal taking Rs. 30,000/- as monthly remuneration from the company is
dreadful and cause irreparable harm to the company. He further submits that no security
personnel are present at the project but payments are shown as made regularly for the
services yet to have been given. He also submits that till date, only 17 flats have been
booked in R1 Company whereas more than 70 flats have been booked in the project of
Rockfort Developers Pvt. Ltd.
20. Therefore, the petitioner prays this Bench for allowing the reliefs as sought by him
in the company petition.
21. The respondents submit that this petitioner stated that when he was requested to
arrange a Chartered Accountant, he came with a name of a Chartered Accountant, the
respondents refused to take his choice into consideration. To which, the respondents
submits that his allegation is not true because CA appointment being a statutory
requirement, a board meeting was held on 2.2.2013 by giving notice to the petitioner
on 30.1.2013. In that meeting, the petitioner was present, wherein it was resolved to
appoint M/s. T.C. Jindal & Co., until next Annual General Meeting. In the Annual
General Meeting dated 29.8.2013, the remuneration of the Chartered Accountant was
extended to Rs. 40,000/-.
22. As to the allegation of shitting of registered office, the respondents submit that this
company was incorporated in the year 2007, thereafter, when the petitioner and
respondents took over this company, the registered office of the company was shifted to
the house of the petitioner located A-60, First Floor, Anand Vihar, Delhi-110092 through
a Board Resolution dated 21.12.2001. In pursuance thereof, the entire record of the
company that came to the present management was kept at the petitioner's house. But
over a period of time, when the petitioner did not cooperate with the respondents in
holding meetings at his house for carrying the business, when the Respondents could
not take timely decisions, and when the petitioner did not permit them to put any sign
board of R-l company, they held a Board meeting on 02-02-2013 for shifting of the
registered office to D-171, Shop No. 1, Dilshad Garden, Shahdara, Delhi-110095 for
smooth working of the company. The petitioner, in fact, was present in that Board
meeting when a resolution was passed to shift the registered office. Therefore, now it
cannot lie in the mouth of the petitioner to say that registered office was shifted to oust
the petitioner from participating in the affairs of the company.
23. For this registered office of the company was initially shifted to the house of the
petitioner, the entire record of the company and title deeds of the company properties
remained in the custody of the petitioner. To get the record of the company for
finalization of the statement of accounts for the financial year ending 31.3.2012, the
respondents requested the petitioner to deliver records of the company. When the
petitioner refused to deliver the same, a Resolution was passed on 02-02-2013 to
request the petitioner to deliver the documents. The petitioner, instead of delivering the

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documents as sought by the company, sent a reply to the company on 23-03-2013
stating that no record of the company lying with him except original title deeds of the
properly owned by the company. Though he said the title deeds were lying with him, he
had not produced the title deeds of the land stating that he would only produce them
before any authority or Bank official as and when required. The respondents submit,
since it is a Real Estate business, the company has to show original title deeds to
buyers of flats and also to investors and Bankers. As the petitioner had refused to
deliver the documents and held on to the original title deeds, it became difficult for the
company to carry business. These original title deeds have only come to the company
on the order dated 18.6.2013 passed by this Bench against the petitioner. The
respondents further submit it is not the respondents inflicted the petitioner to any
sufferance; in fact it is the petitioner who has been causing all kinds of hindrance in
carrying the business of the company. Since the petitioner had held on to the title
deeds, the company could not show title deeds to the people coming forward to buy
flats.
2 4 . The respondents submit that this petitioner unilaterally wrote a letter to the
company's Bank i.e. Punjab National Bank, to stop payment of cheques bearing Nos.
498518, 498522 and 498523 without bringing it to the notice of the respondents. The
petitioner was one of the signatories of Current Account at Punjab National Bank. The
respondents submit that the petitioner himself signed on all those cheques against
which he wrote a letter to slop payment. When the Bank refused to clear the cheques
unless the petitioner withdrew the letter given by him, the Respondents requested him
to withdraw the stop payment letter sent by him, but he refused to withdraw it, which
had failed the company to operate the financial transactions. On seeing this standstill
position, a notice was sent to all directors of the company through email on 14.2.2013
and also by Speed Post, to hold a Board meeting on 22.2.2013. The respondents submit
that they filed proof showing that they sent notice by email and also by Speed Post on
14.2.2013 informing Board meeting would be held on 22.02.2013, but the petitioner,
despite notice was served upon him, chose not to attend the Board meeting. Then the
Board passed a resolution to open a new account with Corporation Bank situated at F-9,
Dilshad Colony, Delhi with joint signatures of R2, R3 and R4. Thereafter, on
29.03.2013, in a Board meeting when the petitioner was present, the minutes of the last
meeting dated 22.2.2013 were read and confirmed. The respondents passed this
resolution to open a new account because they had to run the company. Later, on
25.4.2013, the Board passed another resolution to write a letter to the Punjab National
Bank for closure of the Current Account and for payment of the balance amount by Pay
Orders in the name of R-I company but the said Bank informed R4 that account could
not be closed until cheque book was surrendered, which is in possession of the
petitioner. When the petitioner was requested to deposit the cheque book, he refused to
deposit the cheque book to the Bank as sought by the Bank. When this cheque book has
not gone to the Bank, the Bonk froze the Current Account. The petitioner admits that he
is in the possession of cheque book.
25. The respondents submit, they were forced to pass this resolution to overcome the
hurdle caused by the petitioner. Here also, the petitioner created such an impasse that
the company could not get its cheques passed when the petitioner, despite being one of
the signatories of the Banking operations, sent stop payment notice to the Bank.
26. The respondents submit that the company held EOGM on 05-03-2013 at 11 am by
sending prior notice to the petitioner. The petitioner's case here is that he received
notice to the EOGM, the EOGM was held before scheduled time, and therefore, he could
not attend the meeting. But the respondents submit that EOGM was held at the
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scheduled lime and scheduled place, therefore, the petitioner could not now say the
meeting was over by the time he reached there.
27. As to the allegation of not sending notice to AGM the respondents submit, when no
AGM was held on 29.9.2012, there was no occasion to give any notice to the petitioner
in respect thereof.
2 8 . Apart from the allegations mentioned above, the respondents submit that this
petitioner filed innumerable applications - one after another - making frivolous
allegations to make a mountain out of molehill, to say that respondents conducted the
affairs of the company prejudicial to the interest of the petitioner and the company.
29. The petitioner filed CA 79/2013 stating that he gained knowledge that 10 flats were
booked in the project of Shri Ram Heights without prior intimation to the petitioner,
therefore, the respondents have acted in violation and willful contempt of order passed
by this Bench. The respondents submit they have not violated any order, much less
order dated 18.6.2013 because respondents had been intimating the petitioner for
booking of flats vide email dated 5.7.2013, 8.7.2013, 28.7.2013, 30.7.2013, 9.8.2013,
1.9.2013, 1.9.2013, 6.10.2013, 12.10.2013, 1.11.2013, 17.1.2014, 19.1.2014,
30.1.2014, 2.2.2014, 7.2.2014, 8.2.2014 and 16.2.2014. The respondents also have
been sending monthly statements from turn-to time the respondents submit that the
petitioner forged and fabricated minutes of meeting dated 29.6.2013. The actual copy of
the minutes of the meeting of Board of Directors held on 29.6.2013, drawn on
13.7.2013 and provided to the petitioner on 18.9.2013.
30. On CA 80/2013 moved by the petitioner, the respondents submit that they have not
been siphoning off the funds of the company and maintaining a separate account. Since
the petitioner was getting statement of account as per orders of this Bench, he raised an
allegation that respondents making some illegal transactions and taking funds out of the
company without any explanation. To which, the respondents submit that an amount of
Rs. 2,63,340 was utilized to pay AMC Law firm and an amount of Rs. 4,50,000/- was
withdrawn in cash, firstly Rs. 50,000/- for miscellaneous and day to day expenses of
the company and Rs. 4/- lacs to deposit with the Treasurer, District Ghaziabad to obtain
Earth Excavation permission. The petitioner's another wild allegation is that R3 kept
their personal business record at the registered office of the company so as to divert the
funds of R-1 Company into their personal businesses. To which, the respondents submit
mat R3 has not kept his records in the registered office of the company.
31. On CA 147/2013 moved by the petitioner with an allegation that respondents have
disobeyed orders of this Bench dated 18.10.2013 for having not called any Board
meeting to add petitioner as fourth signatory to the Bank accounts of R-l Company. The
respondents denied these allegations stating that R-1 Company passed a resolution by
circulation on 16.11.2013 making the petitioner as one of the signatories to the new
Bank account as per the orders of this Bench and, thereafter, on 19.11.2013, the
petitioner was requested to sign five cheques bearing Nos. 716095 to 716099 but he
denied to sign on any of the cheques and they were signed belatedly on the insistence
of this Bench.
32. Likewise, the petitioner, time and again, obstructed the functioning of the company
by not signing upon the cheques forwarded to him. The respondents submit, since the
petitioner asked for inspection, when the company was ready to provide inspection to
him, he said several times that it would not be possible to visit office on the date set by
the company and on the next day he sent an email stating that he would come to

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inspect on 29.11.2013 at 12:15 p.m. The Respondents submit that the problem with the
petitioner is that everything has to happen at the wish of him.
3 3 . On CA 56/2014, the petitioner, vide para 6 of the application, objects to the
cheques which were already signed by the petitioner amounting to Rs. 60,000/-, Rs.
1,00,000/-, Rs. 63,360/-, Rs. 1,12,140/-, Rs. 2,94,000/-, Rs. 1,20,000/-, Rs. 10,692/-.
Rs. 14,817/-, Rs. 18,000/-, Rs. 17,500/-, Rs. 30,000/- and Rs. 30,000/-. Taking
advantage of the order passed by this Bench including the petitioner as joint signatory
to the Banking transaction, he has for many times refused to sign the cheques and kept
the respondents waiting. When he was causing problem in signing cheques, this Bench
passed on order to sign the cheques in presence of Bench Officer on weekly basis, to
which also, the petitioner many rimes refused to sign on the cheques placed before him.
34. Since the petitioner has kept the company record in his possession, the answering
respondents have been unable to proceed with the accounts and audit for the financial
years of 2012 and 2013. Though the petitioner has changed his residential address to P-
68, Street No. 4, Shankar Extension, Delhi, he has not mentioned it to the company
about the change of his residential address. When the petitioner had refused to provide
title deeds of the company, respondents were compelled to take steps to obtain certified
copy of the title deeds from the concerned Sub Registrar office. Since the petitioner did
not submit documents to the Legal Consultant of the company for registration with VAT
authorities the company could not purchase its plant and machinery and now the credit
could not be obtained by the company.
35. The respondents submit, the Building Plan to the company was sanctioned for five
years with effect from 23.12.2011. If the company fails to bring up the building within
the time given by the authorities, the whole money and efforts put in by the
respondents would go waste.
36. On seeing this litigation raised by the petitioner, the customers of the company also
started demanding their money back. Now the company has come to such a pass that it
could not come up with the housing project as envisaged initially and could not even
pay back money to the customers who already advanced. By the conduct of the
petitioner the company as well as the respondents are put to financial crunch and
mental agony. The petitioner wanted to see everything done at the wish of him, if for
any reason anything happens against the wish of him, he would go to any extent
against the others. Likewise here also, the attitude of the petitioner has run down the
company causing the cost of project gone up multi-fold, therefore, the respondents pray
this Bench to relieve the company from the claws of the petitioner.
3 7 . The petitioner counsel and respondents counsel vehemently argued on their
respective stands.
38. On hearing the submissions of either side, the points for consideration are:
a) Whether the respondents in the management conducting the affairs of the
company prejudicial to the interest of the petitioner and
b) To what relief.
39. I must first say that this petitioner is only 25% shareholder. When this company
was taken over from the previous management in the year 2011, the petitioner and the
answering respondents set up R1's registered office at the house of the petitioner. Since
the registered office of the company was initially set up at the house of the petitioner,
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since the petitioner himself says title deeds of the company lying with him, there being
no proof to say records of the company shifted to new registered office, on an
allegation that the petitioner not delivering the records of the company to the
respondents, the only inference that could be drawn is that the records of the company
were kept in the custody of the petitioner.
40. To the allegation of the petitioner that the respondents had refused to appoint a
Chartered Accountant suggested by the petitioner, the respondents explained that a
Board meeting was held on 02-02-2013 by sending a notice dated 23.1.2013 to appoint
M/s. T.C. Jindal & Co. as Chartered Accountant of the company and there being
documentation showing appointment of Jindal & Co. as Chartered Accountant, this
Bench cannot conclude that company did not appoint anybody as Chartered Accountant.
To believe the allegation of the petitioner, he has not even said he proposed such &
such person as Auditor and he has not placed any material showing the respondents
refused to appoint a person suggested by the petitioner. On the top of it, even allowing
the allegation of the petitioner as correct, it could not amount to oppression against the
petitioner unless he made a case before Court of Law stating that the respondents
appointed somebody to make illicit gain out of it. Otherwise also, the Respondents are
admittedly 75% shareholders, therefore they have right of democracy to appoint a
person of their choice.
41. As to the allegation the petitioner stating that registered office of the company was
shifted without consent of the petitioner, the respondents submit, the petitioner did not
give any space to the Directors to convene any meeting in the house of the petitioner
where the registered office of the company was brought in and he did not permit to put
any signboard of R-1 company at his residence, then the respondents were forced to
shift its restored office from the house of the petitioner to a place called D-171, Shop
No. 1, Dilshad Garden, Shahdara, Delhi-110095.
42. The respondents also submit that on 02-02-2013, when a resolution was passed for
shifting registered office, the petitioner was present in the Board meeting, therefore, he
could not say now that the company shifted its registered office keeping the petitioner
in dark, it is trite law that shifting of registered office per se from one place to another
cannot be called as oppression against somebody in the company. Moreover, the
petitioner has only 23% shareholding. The company being constituted with 75%
shareholding from the respondents, the petitioner is not expected to put obstacles to
functioning of the company. When the respondents felt that the space at the petitioner's
house to the registered office is not workable for the reasons aforementioned mere
shifting of registered office cannot be considered as oppression against the petitioner.
43. Another allegation the petitioner raised in the Company Petition is that R-2 to R-5
opened a separate Bank account of the company without any knowledge and consent of
the petitioner, to which, the respondents submit that the respondent, company has an
account with Punjab National Bank, Vaishali, Ghaziabad where the petitioner is one of
the signatories to operate the Bank account. Since the petitioner has cheque book of
PNB Account with him, cheques were usually signed jointly by the petitioner and
respondents to issue cheques for various purposes. In that process, the petitioner wrote
a letter dated 30.7.2012 to the Bank to stop payment of cheques bearing No. 49851,
498522 and 498523, without any reason and without my consent and knowledge of
other directors. On seeing stop payment letter from the petitioner, the bank refused to
clear those cheques. Another surprising thing is the petitioner signed on all those
cheques. On seeing the petitioner put an obstacle in operating the Bank account, the
respondents having found no other way to operate this account, they held a Board
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Meeting on 22-02-2013 by sending a notice dated 14.2.2013 to all the directors of the
Company. Accordingly, a Board meeting was held on 22-02-2013 but the petitioner,
who received notice, chose not to attend the Board meeting then Board passed a
resolution to open a new Current Account in the Corporation Bank situated at F-9.
Dilshad Colony, Delhi. When the minutes of the Board meeting dated 22-02-2013 came
for confirmation before Board meeting dated 29.3.2013, the said minutes were read and
confirmed wherein the petitioner was also present.
4 4 . I have noticed that the company wrote a letter to Punjab National Bank on
25.4.2013 for closure of the Current Account of the company and to pay the balance by
Pay Order in the name of R-l Company. On this letter, the Bank wrote back to the
company stating that account cannot be closed unless is surrendered. When the
petitioner was requested to deposit the cheque book with the Bank, he refused to
deposit the same, in the result; the Bank put Current Account in freeze. It would remain
so till cheque book is not surrendered.
45. As to holding EOGM on 05-03-2013, the petitioner submits that by the time he went
to the place for holding EOGM, nobody had turned up in the meeting, whereas the
respondents submit, meeting was held on the same day, all were present except the
petitioner. In support of the same, the respondents filed copies of the notices to the
petitioners.
4 6 . As to demand of documents and records, the petitioner made an allegation the
company sent a notice on 05-02-2013 demanding documents and records of the
company because they were required for finalization of the Statement of Account for the
financial year ending 31-03-2012. The respondents positively sent email on 05-02-
2013, 10-02-2013 and send notices by Speed Post on 16-03-2013, 31-03-2013 and 28-
04-2013 for surrender of the original title deeds of the properties of the company. Since
the company's business is a Real Estate business, they need to show the title deeds of
the land to the customers as and when they come forward to book flats in this
infrastructure project. On seeing these allegations and counter allegations, the
petitioner had only given title deeds to the respondent on the direction given by the
applicant. The petitioner, instead of providing records as sought by the respondents,
has simply hidden the records to cause problems to the management. Therefore, mere
asking documents by the Board will not amount to oppression. However the petitioner
keeping documents with him putting the company on hold to convey AGM for want of
records and stopping the company from operating bank account, amounts to oppression
and prejudicial to the interest of the shareholders and the company. For there being no
case in any of the allegations made by the petitioner in the Company Petition and
Rejoinder, I believe, the petitioner failed to prove that the respondents indulged in
dealing with the affairs of the company prejudicial to the interest of the petitioner. The
petitioner has to prove his case basing on the pleadings of the petition, because cause
of action for filing petition arose before tiling petition, if there is no case in the
pleadings of the petition, then he cannot extend his case by filing applications showing
cause of action pending litigation. For having the petitioner realised he has no case in
the CP, he filed applications, of course there is no substance in those applications also.
47. The petitioner filed CA 79/2013 subsequent to tiling of the Company Petition stating
that the respondents held a Board meeting on 29-06-2013 for booking 10 flats in Shri
Ram Heights without any prior permission from the company or Board because this
Bench passed an order on 18-06-2013 to intimate every information to the petitioner.
The respondents submit in their reply that they sent several emails about booking of
flats in the project. They submit, when bookings are made, normal practice in small
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companies like this are, parties simply book a flat, thereafter entire process will be done
in the company. The petitioner fabricated minutes of meeting dated 29-06-2013 but the
fact of the matter is the actual copy of the minutes of the meeting of Board of Directors
held on 29-06-2013 was drawn on 13-07-2013 and provided to the petitioner on 18-09-
2013.
48. The petitioner filed another CA 80/2013 stating that the respondents spent huge
money of the company with an ulterior motive to siphon the funds of the company. To
which, the respondents submit, an amount of Rs. 2,63,340/- was utilized to pay AMC
Law firm, another amount of Rs. 4,50,000/- was withdrawn in cash, firstly Rs. 50,000/-
for miscellaneous and day to day expenses and remaining Rs. 4,00,000/- was
withdrawn to deposit the same with Treasurer, District Ghaziabad to obtain excavation
permission. The petitioner raised an allegation that the respondent paying money to R3
in the name of Rent. When any space is taken for exclusive use of office, nothing is
strange in paying rent to the space taken for its use.
49. In CA 147/2013, the petitioner contends that the respondents disobeyed the orders
of this Bench dated 18.10.2013 to which, the respondents submit they passed a
resolution by circulation on 06-11-2013 and made the petitioner as one of the
signatories to the account. On seeing the petitioner not signing the cheques despite
being the signatory in the Bank account, when me petitioner consistently refused to sign
the cheques, this Bench passed an order asking the petitioner and second respondent to
sit in the presence of Bench Officer for signing the cheques by the petitioner as well as
second respondent, with the hope that the petitioner would regularly sign the cheques
that come before the Bench Officer. This has also not worked out because the petitioner
refused to sign on the cheques.
50. For the above reasons, I am of the view that the answering respondents have not
conducted the affairs of the company prejudicial, either to the interest of the company
or to the petitioner. In fact, it is the petitioner who caused several hurdles to the
respondents in running this company. He did it before filing Company Petition, he made
the same even subsequent to filing of the Company Petition by refusing to sign the
cheques presented by the respondents. The trust and belief in between the petitioner
and respondents has broken beyond reconciliation, therefore there is no point in
directing them to carry this business together, three fourth of the time given by the
authorities to complete the project is run out. It need not be said separately that time is
essence in clearing real estate projects, if the project is for any reason delayed or come
to standstill, the cost of the projects sometimes gets so much escalated that parties get
indebted apart from loosing the money already put in. Seeing the business realities, I
believe that the company could come out of this noose, only when the company can
carry its work on jet speed, for which the company has to come under one pull. To
achieve this, the petitioner who failed to prove his case has to go out of the company
for two reasons, one he failed to prove the case and this frivolous litigation run down
the company, two the petitioner is minority in the company. Therefore, this Bench
hereby holds that the petitioner shall take exit from the company on valuation of the
shareholding of the company.
51. As to valuation date, had the grievance of the petitioner been proved, had really the
Respondents mismanaged the affairs of the company and drained out the funds of the
company for their personal gain, then to protect the aggrieved, the courts usually take
valuation date before litigation set in or any date that takes him to better position, but
whereas in the case, the petitioner initiated frivolous litigation, by this litigation, the
company liability has gone up and the business of the company come to stand still, for
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which the petitioner shall swallow the loss the litigation caused. In a case like this the
valuation shall be close to the date of determination of the case, or any date that is
beneficial to the party who suffers by litigation. Since I have noticed the company
business has come to stand still by this litigation, cost of the project has gone up, I
hold 31-3-2015 as cut off date for valuation.
52. Accordingly, this Bench hereby appoints Chartered Accountant, M/s. Seema Naresh
Bansal & Associates (Mobile No. 9810157418), R-13 & 14, LGF, Ansal Chamber-11,
Bhikajj Cama place, New Delhi as Valuer to value the shares of the company taking 31-
3-2015 as cut off date for valuation within 30 days from the date of receipt of this
order, thereafter provide exit to the petitioner from the company by paying
consideration to his shareholding and loan given by the petitioner as per the terms
arrived between the company and the petitioner. The company shall pay remuneration
to the valuer as agreeable to the valuer and the valuer will add this remuneration as
expenditure of the company before valuing the shares of the company, so that this
expenditure will not become additional burden upon anybody.
53. The interlocutory orders, if any pending, stand vacated, the applications pending
stand closed.
Accordingly, this Company Petition is hereby disposed of.
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