Smt. Lizamma Augustine - (1.) THE dispute in the CP revolves around the affairs of Marudhur Power Limited currently known as VS Lignite Power Private Limited ('VSLP'). The company petition has been filed by petitioners 1 to 4 under section 397, 398, 235, 237, 402, 403 and 406 read with section 111 of the Companies Act ('the Act') seeking the following reliefs: (i) To direct respondent No. 1 and 8 to transfer 40 lakh shares of the respondent No. 1 company to petitioner No. 1 in terms of the MoU dated 3.4.2002. (ii) To direct the respondents to restore 24% of the shares (24% of 2,60,000 shares) to the petitioners; (Respondents say that the prayer does not state to whom the 24% of the shares of petitioner No. 4 should be restored and also the numbers do not match). (iii) To restore directorship of petitioner No. 1 in the respondent No. 1 company. (iv) To annul the increase in authorized share capital from Rs. 50 lakh. (v) To annul the further allotment of shares beyond 5 lakh shares. However, since cancellation of shares of value Rs. 171.86 crore could be oppressive to the company, as an alternative prayer. The petitioners should be given the option to subscribe for 24% of the present capital of the company to petitioners. (vi) To declare the appointment of respondents 4 to 6 as directors as invalid and to debar them from acting as directors of VSLP.
(2.) IT all started on 11.10.1999 when Anitha Impex Limited (P4), a UK based company (incorporated on 5.10.1993 in London), entered into an agreement with Rajasthan State Electricity Board ('RSEB') to establish and maintain a generating station with 150 MW capacity in Sirohi or Jodhpur District in the State of Rajasthan, after incorporating a company in India under the Companies Act. The power generated was agreed to be purchased by Rajasthan State Electricity Board (RSEB). The copy of the agreement is available as annexure -P14 (page No. 153 -180 of the petition). As per the above agreement Anita Impex Ltd (P4) was given approval by the Government of Rajasthan (GOR) to set -up a 100 to 150 MW captive power plant which resulted in the execution of annexure P.17 MoU, signed by R1 with Rajasthan State Mineral Corporation for supply and sale of lignite from Raneri Lignite deposits Bikaner District. Pursuant to the above R1 was incorporated on 10.10.2001 by petitioners 1 and 2 by subscribing 5000 shares each. The authorised share capital as per the memorandum of association is 50 lakhs, with registered office at Shastri Nagar, jodhpur. On the date of incorporation, the paid -up and subscribed capital of the company was Rs. 1,00,000 of Rs. 10 each, P1 and P2 subscribing 5,000 shares each. P2 is the wife of P1 P3 is the father of P1 and the power of attorney holder of P1, P2 and P4. P4 is Anitha Impex Ltd, a U.K. based company. The object of the company was to generate and supply electricity by setting thermal, hydro, gas and diesel oil power plant. On 8.4.2002 a MoU for supply of fuel was entered into between R1 company and Rajasthan State Mineral Development Corporation (Annexure P.17, pages 186 -191). The board resolution of R1 company dated 3.4.2002, authorised P3 to enter into a memorandum of understanding (MoU) with KSK Energy Ventures (R8). Annexure -P11 is the copy of the minutes of that board resolution. P3 claims to hold 100 equity shares of the company. According to the petitioners, Anita Impex (P4) holds 2,50,000 equity shares in the company as reflected in the Annual Return as on 25.09.2004 (Annexure -P10, page Nos. 116 -128). 2.1 The respondents say that the petitioners 3 and 4 have no locus standi to maintain the petition since there could never have been an allotment of 100 shares to P3 and 2,50,000 shares of Rs. 10 each to P4, since the board resolution of the company dated 3.4.2002 (Annexure -P11) states that the paid up capital of the company as on 2.4.2002 was Rs. 1 Lac and the same was fully subscribed by P1 and P2. They would point out that being a foreign entity shares could never have been held by Anita Impex (P4) without compliance of the law on foreign exchange. Form 2 is seen filed only on 3.12.2002 showing an allotment of 2,50,000 equity shares on 10.10.2001 for cash (vide Annexure R5, Vol. A1). (Respondents say there was no bank account for the company on 10.10.2001 since the account was opened only on 21.12.2001. They also say the alleged allotment of 2,50,000 shares on 10.10.2001 is in direct conflict with Annexure P11 resolution which specifically mentions that the paid -up and subscribed capital even on 3.4.2002 is Rs. 1,00,000 of Rs. 10 each. The fulcrum of the case is a memorandum of understanding dated 3.4.2002 entered into between R1 and R8 (Annexure -P19). The main reliefs claimed in the company petition are solely based on the above MoU. The petitioners claim that they had entered into the MoU on 3.4.2002, with KSK Energy (R8), whereby they agreed to transfer 76% of their shareholding in R1 -company to KSK Energy (RS) who had, in turn, agreed to give them 40 lac shares as consideration in R1, besides retaining P1 as a permanent director. The petitioners are seeking to enforce this clause in the MoU. The respondents say, in so far as performance of MOU is being sought, it is a relief by nature of specific performance or a suit for payment of consideration over which the Company Law Board is having no jurisdiction. The respondents would admit the clause referred to above, but they say that the agreement was to give 40 lakh shares during the construction of the project, and the construction has never taken place, since the project has been frustrated due to the Rajasthan State Electricity Board (RSEB) withdrawing the permission granted as per the agreement of 1999, and, hence, they are not bound by the above clause. They say the construction of the project proposed in the MoU became impossible subsequently and had to be abandoned in 2004 mainly due to the failure of the petitioners in getting the required permission from the different departments under the State Government. It is their specific case that R2 and R3 directly and, at their instance, several persons, had invested huge sums before the project was abandoned as against the meagre investment of Rs. 1 lakh by the petitioners. The respondents say that R2 and R3, after realising the fact that the original project had to be abandoned, chose an alternate project and implemented the same, and the total amount invested in the power project is approximately Rs. 700 crore; the respondents and power consumers providing equity/preference capital to the tune of Rs. 174 crore and the balance was sourced from lenders, and that the petitioners have no role - -either financially, managerially, technically or administratively in the implementation of this new project. The respondents point out that the petitioners cannot seek 40 lakh shares in terms of the MoU since the MoU cannot be enforced. Even under the MoU, they are entitled to the shares only during the construction of the project which was never commenced, or rather the commencement and completion of the project is the condition precedent for the payment of consideration. They further point out that petitioners have taken a contradictory stand as to the company in which they are entitled to 40 lac shares. In any event, these reliefs based on private agreements cannot be granted in a summary proceeding by this Board, respondents say.
(3.) THE petitioners admit that they have transferred 76% of the shareholding in R1 to KSKE (R8). But the particulars are not forthcoming. Contrary to the above they argue that respondents have no documents to prove the transfer of shares by the petitioner; it is the case of the petitioners that R2, R3 and R4 had illegally transferred the balance 24% shares held by them and removed P1 from the post of director, increased the authorised capital and paid up capital, and allotted shares to others. Petitioners allegedly came to know about this fact during December, 2006, through an advertisement related to the initial public offer proposed by KSK Energies (R8), in which petitioners are not shown as shareholders of R1. But the respondents say petitioners have voluntarily transferred their entire shareholding, and they were fully aware of the subsequent developments. By letters dated 8.12.2006 and 21.12.2006, petitioners sought clarifications from respondents. Petitioner wrote another letter to R8 on 18.6.2008 asking them to immediately settle the issues and allot 40 lakh equity shares as per the MoU dated 3.4.2002 (Annexure -P24). By letter dated 20.06.2008 a similar complaint was send to SEBI, Bombay Stock Exchange, National Stock Exchange, etc., seeking appropriate reliefs in the matter (Annexure -P25). Thereafter, KSK Energies (R8) published a notice in the newspaper and cautioned the public about the complaint filed by the petitioners, and intimated the public that IPO shall be subject to the dispute raised by them.;