K.K.Balu, - (1.) THE petitioners in company petition No. 40/2004 and company petition No. 41/2004 filed under Sections 397 and 398 of the Companies Act, 1956 ("the Act") have alleged a series of acts of oppression and mismanagement in the affairs of M/s Somatheeram Ayurvedic Beach Resorts Private Limited ("SABRPL") and M/s Somatheeram Ayurvedic Hospital and Yoga Centre Private Limited ("SAHYCPL") respectively "SABRPL" and "SAHYCPL" are hereinafter referred to as "the Companies".
(2.) The petitioners and respondents 2-12 in both the company petitions are the same. The Companies are associate companies. The issues involved and reliefs claimed in these company petitions are one and the same. Hence, both the company petitions were heard together on the prayer for interim reliefs and are disposed of by this common order. In the light of the alleged acts of siphoning of funds and gross mismanagement in the affairs of the Companies being resorted to by the second respondent, causing irreparable hardship and loss to the Companies and shareholders, the petitioners sought the following interim reliefs:- a) to appoint the first petitioner as a Receiver to manage the entire business of the Companies; b) to restrain the respondents 2, 4, 6 & 7 from interfering with day to day management of affairs of the Companies by the first petitioner. c) to restrain the respondents 2, 4, 6 & 7 from collecting any amount due to the Companies from anyone or operating any bank account of the Companies or filing any further forms or documents before the Registrar of Companies.
(3.) SHRI. Arvind P. Datar, learned Senior Counsel emphasised the urgency for the interim reliefs on the following grounds: The Petitioners and respondents 2-7 are children of late A.J. Mathew Arambankudiyil. The first petitioner, a Non-Resident Indian was working in Germany and supported his parents, brothers as well as sisters and further funded for the establishment of the Companies before the Company Law Board as well as several other companies forming part of "Somatheeram Group". The second respondent had taken appropriate steps for incorporation as well as management of the Companies and for completion of necessary legal formalities. By an agreement dated 23.05.2001, the share allocation ratio in Somatheeram Group of Companies among members of the family was crystallised, according to which the first petitioner became entitled to 42% and the second respondent 40% of the shareholding. The petitioner group as a whole was allotted 52% and respondent group 48% of shares in "Somatheeram Group" of companies. It was also agreed to keep out of the dividend that may be derived by the second respondent, 1% each for the benefit of the respondents 3, 4, 6 & 7. A second settlement came to be reached on 04.06.2004 among the family members dividing the entire business of "Somatheeram Group" in terms of the first family settlement dated 23.05.2001, allotting 42% in favour of the first petitioner and 36% to the second respondent. The petitioners and respondents 2 to 7 signed the second settlement and the respondents 8 &9 are witnesses to the family settlement. The second respondent, however, violated the terms of the family settlement, by concocting certain documents and filing Form No. 2 on 03.06.2004, as if, an extra ordinary general meeting was convened on 24.11.2003 resolving to amend the Articles of Association, enhancing the authorised capital and allotting shares impugned in the company petition, thereby reducing the shareholding of the petitioner to 36.52% and increasing the holding of second respondent to 46.95% so as to take complete control over the Companies and mis-manage their affairs by treating the Companies, as his proprietary concerns. The second respondent falsely filed Form No. 32 on 07.06.2004 claiming that an extra ordinary general meeting took place on 04.06.2004, wherein the second petitioner was purportedly removed from the office of director of the Companies, which stands falsified in the light of the family settlement dated 04.06.2004. Similarly, the first petitioner was removed from the post of Managing Director at the Board meeting said to have been held on 05.08.2004. The first petitioner is still the Managing Director and second petitioner is a director in the Companies. The second respondent siphoned off several crores of rupees out of the funds of Somatheeram Group of companies as borne out by some of his following acts of misdeeds and misfeasance: An aggregate sum of Rs. 46,00,000/- withdrawn from Somatheeram Group of Companies has been utilised to purchase shares of eleventh respondent in the name of the second respondent Collected a huge sum of Rs. 32.31 lakhs from the foreign travel agencies in violation of the Indian foreign exchange regulations. Borrowed a sum of Rs. 9,60,000/- from the twelfth respondent against security of the immovable properties belonging to Somatheeram Group, without any approval of the Board of directors. Issued several blank signed cheques without sanction of the Board of Directors for availing personal loans from various private financial institutions and third parties. Misappropriated a huge sum of Rs. 42.18 lakhs during the period between 01.04.2000 to 31.03.2004 by indiscriminately making use of the credit cards for his personal and immoral purposes. Misappropriated a sum of Rs. 25 lakhs during the period between 01.04.1999 and 31.08.2003 for promoting his publication "Millennium". Settled his personal loan of Rs. 18 lakhs taken from Sree Balaji Investments from and out of the funds of Somatheeram Group of Companies. Withdrew huge amounts from the banks claiming to be the Managing Director, pursuant to the resolution allegedly passed at the Board meeting on 05.08.2004. SHRI Datar, Learned Senior Counsel, while concluding his submissions reiterated that by means of converting the shareholding of the petitioner group into minority and siphoning off the huge funds of Somatheeram Group of companies, the Companies and shareholders are put into huge losses and irreparable hardship, thereby making out a prima facie case and the balance of convenience in their favour for granting by the CLB in exercise of the powers vested in Section 403, the following interim reliefs:- to appoint a Committee of Management for both the Companies separately, comprising of members from the petitioner group and respondent group; and to appoint a Chartered Accountant as an independent Chairman of the Committee of Management to oversee the operations of the Companies.;