BEFORE THE HON’BLE COMPANY LAW BOARD
PRINCIPAL BENCH, NEW DELHI
CP
NO.70 OF 2003 Present:Sh.K.C.Ganjwal,,Member
In the matter of Section 397, 398 and other applicable provisions of the Companies
Act, 1956
And
M/s Anghaila Housing Pvt. Ltd.
And
1.
Mausumi Bhattacharjee, …..petitioner
Versus
1. M/s Anghaila
Housing Pvt. Ltd.
2. Sh. Sudhir Gupta,
3. Sh. Naresh Kumar,
4. Sh. Ram Saran
Singh
5. M/s Kusum Lata ..Respondents
6. Sh. Sanjay Daksha ..Interveners
7. Sh. Sofiur Rehman -do-
8. Sh. Binod Rajhans -do
Present on behalf
of the parties
1. Mr. Sandeep
Kumar, Advocate ..for
respondent/applicant
2. Mr. Atish
Kumar,Advocate -do-
3. Ms. Mausumi
Bhattacharjee, ..
petitioner in person
4. Mr. Vilrender
Ganda, Advocate ..for
petitioner
5. Mr. Santosh
Kumar Giri, Advocate ..for
respondent No.2
6. Mr. Sandeep
Sharma, Advocate ..for
respondent No.1
7. Mr. G.L.
Rawal, advocate ..for
applicant/respondent
8. Mr. S.K. Jha, -do-
9. Mr. Prakash
Kumar -do-
1. This petition has been filed under section 397
and 398 and other applicable provision of the Companies Act, 1956 by Ms Mausumi
Bhattacharjee, Chairperson and Managing Director of M/s Anghalis Housing Pvt.
Ltd., against above mentioned respondents on 7.7.2003. This case is going on
from August, 2003 with number of hearings.
The case was finally heard and reserved for orders after hearing the
arguments of Learned Counsel of both sides on 5.4.2004. The judgment in this case was being written
and had not been pronounced yet. The learned counsel for Respondent No. 3 filed
a copy of order dated 17.4.2004 of the High Court, Uttaranchal at Nainital on
23.4.2004 passed in review petition No.1450 of 2004 in writ petition No.1224 of
2003 (M/B).
The Hon’ble High court has directed
as under: -
“ …………
By our judgement and order dated 31.12.2003 we have disposed of the writ
petition taking note of the fact that the matter is sub-judice before the
Company Law Board and in view of the rival claim of the parties it would be in
the interest of justice that the matter will be heard by the Company Law Board
and after the decision of the Company law Board the appeal No. 78 of 2003 shall
be decided.
-- Mr. U.P.
Singh, Learned Counsel for the review petitioners submits that Ms. Mausumi
Bhattacharjee has resigned and the dispute relating to the genuineness of
resignation of Ms. Bhattacharjee is sub-judice in the company petition before
the Company Law Board. The said company
petition is not maintainable in view of Section 397 and 398 of Companies
Act. He relied on the judgment of
Hon’ble Supreme Court reported in (2001) 4 SCC pg 420 in the case of Hanuman
Prasad Bagri Vs Bagress Cereals Pvt. Ltd. and other.
2. Basically, it is a
question of non-maintainability of the company petition before the Company Law
Board. This is open for the review
petitioners to raise this objection before the Company Law Board and the
company Law Board shall decide the maintainability of the company petition then
shall proceed further;
The review
petition is disposed of accordingly……………………..”
3. The Respondent No.
3 has not filed any application for hearing this matter on the maintainability
of the Company Petition No.70 of 2003.
However, Res. No.1, 3, 4 & 5 as well as intervener at the last stage
of the hearing of this petition had argued on the maintainability of this
petition during the course of their submissions on the main petition. In view of the directions of Hon’ble High
Court, I now proceed to decide the question of maintainability of this petition
under the provision of Companies Act, 1956 on the basis of arguments advanced
by various Respondents during final hearings of the case.
4. The Learned Counsels for the Respondent
No.1 (Anghalia Housing Pvt. Ltd.) has filed written submissions also. He has submitted his arguments in two parts
namely, (1) on the issue of maintainability of the petition and (2) factual
controversy raised by the petitioner.
The learned counsel has submitted that for orders to be passed under
Section 397 of the Companies Act, 1956 and granting relief against oppression,
the petitioner has to satisfactorily make out a case that the affairs of the
company are being conducted in a manner oppressive to her and had also that the
facts of the case justify the making of winding up orders on the ground that it
is just and equitable that the company should be wound up, but invoking of such
an order would unfairly prejudice the members.
In support to the above submission the Respondent No.1 has relied on the
case of Punjab High Court in the matter of Thakur Hotel (Simla Company Pvt.
Ltd.) and the facts relating to judgement read as under:-
“An order under
section 397 of the Companies Act, 1956 granting relief against oppression on
the application of some of the members of the company can be made by the court
only if the court is satisfied, that the company’s affairs are being conducted
in a manner oppressive to any member or members, and, secondly, that the facts
of the case are such that it would be “just and equitable” to make an order for
winding up of the company, but the making of such an order would unfairly
prejudice the members. Unless both
these conditions are satisfied an order under Section 397 should not be
made. The word “oppressive” in this
context means unjust, harsh or tyrannical.”
5. The learned
counsel has further submitted that a past and concluded transactions cannot be
set aside in a petition under Section 397 of the Companies Act, 1956 as the
petitioner has tried to do so in the instant petition because her letter of
resignation dated 1.8.2001 duly considered by the respondent company and
subsequently submitted before the Registrar cannot be set aside as prayed for
by the petitioner.
6. The Respondent
No.2 has filed his evidence by way of Affidavit and was also present in the
Court. He submitted that he stands by
his affidavit and there is no mention regarding maintainability of the petition
in his affidavit.
7. The Respondent
No.3 submitted his reply that the present petition filed for and on behalf of
Ms. Moushmi Bhattacharjee is not maintainable as she has no locus standi to
institute, file and maintain this petition.
The petitioner has resigned from the directorship of the Respondent
Company on 26.9.2001 at her own will/ voluntarily. The petitioner was aware and fully knew on 26.9.2001 itself that
three new directors, Respondent No 3 to 5 have been appointed as Directors of
the company. All theses information
were sent to Registrar of Companies and accepted and are available in the
office of Registrar of Companies. The
petitioner as such by her own act and conduct has estopped/debarred from coming
up with the present petition to
challenge her own voluntary resignation
given by her and also to
challenge various other appointments including that of Respondent No.3 to 5
which were not only initiated/accepted by herself but were facilitated by her
and were done at her behest and with her consent and as such the petitioner is
estopped and has no locus-standi to file the present petition before the
Company Law Board and same is liable to be dismissed summarily on this
ground. He has further submitted that the only reason of filing the present
petition by the petitioner is the greed and desired to grab the company so that
she can usurp the land of the company and appropriate to herself. The petition itself is an abuse of the
process of the Court is an instrument of blackmail and is a manifest attempt to
usurp to legitimate control of the directors/ management of the Respondent
Company. The Respondent No.3 has
further submitted that as director of the Respondent Company alongwith the help
from friends and Respondent No.4&5 made arrangement for engaging Advocates
incurring expenses and fought the case before the Hon’ble High Court of
Uttaranchal at Nainital and it was after considerable expenses, tile and energy
that Hon’ble High Court of Uttaranchal vide order dated 13.6.03 was pleased to
stay the order of recall dated 29.5.2003 and observed that the Respondents (the
state of Uttaranchal/ Chief Conservator of Forest) and other may consider to
file an appeal against the Order dated 21.3.2003 so that the same may not
become time barred. The petitioner was
nowhere to be seen. She had ceased to be the Director of the company of her own
volition in sep. 2001. Later on forest
department of Uttaranchal has filed an appeal against the order 21.32003 before
the learned District Judge, Dehradun wherein the company was impleaded as a
party but since the name of Ms Moushmi Bhattacharjee appeared in the order
dated 21.3.2003, the Forest Department impleaded the company through Ms.
Moushmi Bhattacharjee. The Respondent
No. 3 has further stated that he applied in the Court of District Judge,
Dehradun to be impleaded as a party in the aforesaid appeal in his own right as
a director of the company also on behalf of the company but the said
application was rejected by the District Judge, Dehradun on 6.12.2003 against
this order, Hon’ble High Court of Uttaranchal in C.W.P. No. 1224 of 2003 wherein
the High Court of Uttaranchal at Nainital observed as under:-
“ …………… The
question involved in this writ petition is as to whether the resignation of Ms
Mausumi Bhattacharjee is genuine or not.
It is being a question of fact cannot be resolved by way of the writ
petition under Article 226/227 of the Constitution of India. The matter is already sub-judice before the
Company Law Boar. In view of rival
claims of the parties, it will be in the interest of justice that the matter be
heard by the Company Law Board first.”
Let the matter be
decided by the Company Law Board. If
any decision of Company Law Board is received, the appeal NO.78 of 2003 shall
be decided………..”
8. He further submitted that the present
petition is a malafide act of the petitioner with ulterior objective to grab
the control of the company and also to usurp its asset i.e the land which was
left by the forefathers of the Respondent No. 2 namely Sh. Sudhir Gupta. The
present petition has been filed by the petitioner u/s 397/398/399 of the
Companies Act, 1956, alleging that her resignation dated 26.9.2001 is forged
and that she is having 72% of the shareholding of the company. This is wholly
incorrect. She ceased to be the
directors of the company vide her resignation voluntarily given on
26.9.2001. Sh. Sudhir Gupta continued
to be the director of the company and the answering Respondent has been
appointed as Director by Sh. Sudhir Gupta, who allotted 4604 equity shares to
Respondent No.3 to 5. With her resignation, Ms. Maushmi Bhattacharjee cut off
all her relations with the company and Sh. Sudhir Gupta validity appointed
Respondent No.3 as Director of the company.
It was also submitted by Respondent No.3 that it is incorrect that
petitioner is the director of the company holding 72% of shares of the
company. The petitioner holds 500
equity shares in the name of the associates and the petitioner is not eligible
to file the present petition as she is not a member of the company and has no
locus standi to institute and file the present petition u/s 397 of the
Companies Act, 1956. Respondent No. 3 also alleged that Sh. Sudhir Gupta
Respondent No. 2 never resigned from the directorship of the company on 4.10.99
and there were no question of fulfilling the vacancy of Sh. Sudhir Gupta and appointment
of Sh. Apurba Sharma in his place. The
petitioner is not entitled to any relief u/s 397/ 398 of the Companies Act,
1956 on facts or in law and the petition is liable to be dismissed with special
cost.
9. Regarding Respondent No. 4, the petitioner
had filed copy of the hand written letter of Sh. Ram Saran Singh dated
25.7.2003 alongwith a letter of service under which a copy of petition had been
sent to him by speed post on 1.8.2003 by the petitioner. He did not participate in the proceedings and
as such there are no averments regarding maintainability of the petition by
him.
10. Respondent No. 5 Ms Kusum Lata submitted that
the petition filed by the petitioner
under section 397 & 398 of the Companies Act, 1956 is utterly
misconceived and bad in law and fails to make any case. The petitioner is not entitled to any of
the reliefs claimed in the said petition. It is submitted that sections 397,
398 are invoked only when the affairs of the company are conducted in a manner
oppressive to any member or is prejudicial to public interest. Since the object of the Respondent Company’s
business is only one particular land that is in litigation with the Govt. of
Uttaranchal and the company is not carrying on any business whatsoever, there
are no affairs that are being conducted as such. In the absence of carrying of any business or conduct of any
affairs whatsoever, which is preliminary condition for invoking sections 397
& 398, there cannot be any oppression as envisaged in the said sections.
Therefore, the petition should be rejected on this very ground. Section 397 & 398 of the Companies Act,
1956 under which the relief is sought by the petitioner, is essentially an
action against the management of the company by the prejudiced members of the
company. Respondent No. 5 has submitted
that since as per the petitioner she is the one who is in charge of the
management of the Respondent company and if, there is any oppression or
mismanagement in the conduct of affairs of the company, it is on the part of
the petitioner and not on the part of
Respondents. Therefore, if there
has to be an action under the said section then it has to be against the
petitioner and not by the petitioner. Section 397& 398 of the Companies
Act, 1956 have been enacted to afford protection to the prejudiced members of
the company and does not in any way create provisions to enable the management
of the company to agitate any matter and for furthering their ulterior
objectives. The sole motive of the
petitioner is to grab the assets of the Respondents Company by sidelining the
Respondent including the answering Respondent who is a Director of the Company.
Hence the petition is liable to be rejected.
Petitioner has approached to this Board for setting aside the Form No.
32, form no.2 and Form No. 18 etc. which is not within the ambit of powers
conferred by law on the Company Law Board under section 397 & 398. As per the averments of Respondent
No.5, it is also pointed out that the
petitioner has chosen the option to exclude Mr.. Apurba Sharma from being
impleaded since the petitioner never wanted that any action be taken by this
Board against the Company Law Board
against the management of the company.
The petitioner had alleged that she has chosen not to impleade Sh.
Apruba Sharma who, assuming without admitting is the only director on the Board
of Directors. It is further submitted
none of the allegations made in the petition constitute oppression or
mismanagement as envisaged in section 397 & 398 of the Companies Act 1956.
The petition has been filed by the petitioner with the ulterior motive of
removing validity elected Directors of the Respondent Company from its Board of
Directors on untenable grounds under the garb of alleging oppression or
mismanagement under Section 397 & 398 of the Companies Act, 1956. Oppression of which the petitioner complains
must relate to the manner in which the affairs of the company are being
conducted and the conduct complained of must oppress the right of the
petitioner as a shareholder and not as a Director. It is abundantly clear that
none of the allegation as made out in the petition satisfy the said condition
and petition is liable to be dismissed
on this ground.
11. During the course of hearing, application on
behalf of three applicants namely Sh. Sanjay Daksha, Sh. Safiur Rehman and Sh.
Binod Rajhans had been filed they have also filed their reply with affidavits
stating that the applicants are sole shareholders of the M/s Anghaila Housing
Pvt. Ltd and they are holding the entire equities of the Respondent
Company. Accordingly they were allowed
to make their averment as interveners.
In their averments they have submitted that the present collusive
petition filed by the petitioner is collusive without impleading namely Sh.
Sanjay Daksha, Sh. Safiur Rehman and Sh. Binod Rajhans as Respondents. They
also submitted that they are the sole shareholder of the company having an
authorized capital of the company is Rs. 5 lakh divided into 5000 share of
Rs.100 each which is fully subscribed.
The Respondents have sold their respective number of shares and they
produced the photocopies of the shares certificates.
12. Intervener submitted that the petition itself
has inherent defects to the extent of sufficiency of the pleading of locus or
the documents required to be produced to maintain a proceeding u/s 397 &
398. They have also submitted that the
record of the proceeding produced by the petitioner categorically established
that the petitioner has committed a fraud against this court and the respondents
therefore the present petition is not maintainable. Further the Respondents have produced admissible documents
alongwith the affidavit. The inspection
of the original documents was given to the opposite party as well during the
course of the proceeding. Therefore
respondents are raising dispute just to out the jurisdiction of court are
baseless and malicious contentions. It
was further submit that the petitioner has further attempted to mislead this
board that in view of the order of
Uttaranchal High Court, the matter can be
adjudicated upon. It was
submitted that there is no such order, on the face of it. Accordingly the petition may be dismissed
with exemplary cost in favor of the
interveners.
13. From the above averments, made by Respondents
during the course of final hearing of the petition in question, the Respondents
have submitted that the petition is not maintainable under section 397 &
398 of the Companies Act, 1956. The
provisions of these two sections are as under: -
397
Application to
(Tribunal) for relief in cases of oppression- (1) Any member of a company who
complain that the affairs of the company (are being conducted in a manner
prejudicial to public interest or ) in a manner oppressive to any member or
members (including any one or more of themselves) may apply to the (Tribunal)
for an order under this section, provided such members have a right so to apply
in virtue of section 399.
(2) If, on any
application under sub-section (1), the Court is of opinion-
(a) That the company’s
affairs (are being conducted in a manner prejudicial to public interest or ) in
a manner oppressive to any member or members; and
(b) That to wind up
the company would unfairly prejudice such member or members, but that otherwise
the facts would justify the making of a winding up order on the ground that it
was just and equitable that the company should be wound up,
the (Tribunal)
may, with a view to bringing to an end the matters complained of, make such
order as it thinks fit.
398
(a) that the affairs
of the company ( are being conducted in a manner prejudicial to public interest
or) in a manner prejudicial to the interests of the company ; or
(b) that a material
change not being a change brought about by, or in the interests of, any
creditors including debenture holders, or any class of shareholders, of the
company) has taken place in the management or control of the company, whether
by an alteration in its Board of directors, (or manager ) or in the ownership
of the company’s shares or if it has no shares capital, in its membership, or
in any other manner whatsoever, and that by reason of such change, it is likely
that the affairs of the company (will
be conducted in a manner prejudicial of public interest or ) in a manner
prejudicial to the interest of the company, may apply to the (Tribunal) for an
order under this section, provided such members have a right so to apply in
virtue of section 399.
(2) If, on any application under sub-section
(1), the (Tribunal) is of opinion that
the affairs of the company are being conducted as aforesaid or that by
reason of any material change as aforesaid in the management or control of the
company, it is likely that the affairs of the company will be conducted as
aforesaid, the (Tribunal) may, with a view to bringing to an end or preventing
the matters complained of or apprehended, make such order as it thinks fit.
14. Both the sections provide that a member of a
company who has a right so to apply in virtue of Section 399 of the Companies
Act, 1956 can only be entertained. The
provisions of section 399 are given below:-
399
Right to apply
under sections of 397 and 398- (1) the following members of a company shall
have the right to apply under section 397 or 398-
(a)
in the case of a company having a share capital, not less
than one hundred members of the company or not less than on tenth of the total
number of its members, whichever is less or any members or members holding not
less than one-tenth of the issued share capital of the company, provided that
the applicant or applicants have paid all calls and other sums due on their
shares;
(b)
in the case of a company not having a share capital, not
less than one-fifth of the total number of its members.
In order to
maintain or succeed to the petition filed under section 397/398 of the
Companies Act, 1956, the member has to satisfy the provisions of Section 399
mentioned above. In order to examine as
to whether the applicant is entitled under section 399 or not, the main
reliefs/complaints made by the petitioner in the petition has to be seen. The reliefs sought by the petitioner are
briefly as under: -
15. The other reliefs/complaints are not
significant. The above complaints
alleging removal of directorship and purported issue of 4602 shares to
Respondents No. 3 to 5 are two major issues in the petition. To examine the first issue the petitioner
has stated that she was shocked to learn that Sh. Sudhir Gupta Respondent No.2
has fraudulently forged her signature on the letter of her resignation and
filed the same in the office of Registrar of Companies, NCT of Delhi and
Haryana, New Delhi on 16.5.2002 to show that she ceased to be Director of
company w.e.f. 26.9.2001. She has
submitted that he was not a Director of respondent company on that day since he
ceased to be the director of company on 4.10.1999. The copy of the form No. 32 filed by Sh. Sudhir Gupta with
Registrar of Companies also indicates the appointment of three directors in AGM
w.e.f. 26.9.2001. Sh. Sudhir Gupta,
Respondent No. 2 who was director in the company alongwith the petitioner has
filed an affidavit, a copy of which was taken on record and Sh Sudhir Gupta was
also present in the Court and affirmed that he stands by his affidavit. In the affidavit filed by him he has
declared that he has ceased to be the director of company on 4.10.99. He has no connection whatsoever with the
affairs of the company. He has further submitted in his affidavit that form No.
32 dated 16.5.2002 may be cancelled and declared null and void as he has not
filed any such form with the Registrar of Companies. These averments have to be examined on the basis of the facts but
for the purpose of eligibility u/s 399 of the Companies Act, 1956 the
petitioner has approached the Company Law Board as a shareholder in terms of
under section 397 & 398 of the Companies Act, 1956 and not as a
Director. The petitioner Shareholding
is not disputed by any of Respondent except the intervener-2 i.e Sh. Sanjay
Daksha who has made some complaints of authorizing the share capital on the
basis of allotment of shares during 1993-95 and thereby impacting the issue and
allotment of shares to the petitioner and also to Res. No, 3. It is observed that as early as in the year
2000 when the form no. 2 dated 17.11.2000 was filed with the Registrar of
Companies, she was holding 1680 shares out of total 3226 shares which is more
than 10% in any case even if the subsequently shares purported to allotted to
her in 2001-03 to the tune of 650 & 500 shares respectively are not taken
into account.
16. In the light of the above discussion and the
submission made by the learned counsel for petitioner and respondents, I find
that the petitioner Ms. Masumi Bhattacharjee was holding more than 10% shares
of the company as on 17.11.2000 and this makes her eligible/entitled to make a
petition u/s 397& 398 before this Board.
I accordingly reject the arguments advanced by respondents and hold that
the petition No. 70 of 2003 is maintainable under the provision of section 399
of the Companies Act, 1956. A separate order shall be pronounced in due course
on the basis of the pleadings and arguments advanced by Learned Counsel of both
sides on merit keeping in view of the directions of the Hon’ble High Court of
Uttaranchal and the law and facts of the case.
(K.C. GANJWAL)
New Delhi,
Dated the 20th May, 2004