Rajeswara Rao Vittanala, Member - (1.) The Company Application bearing CP No. 24/2014 (which is herein after referred to as Company Petition) was filed by NVS Naidu (referred to as Petitioner hereinafter) before the then Company Law Board under section 397, 398, 402 r/w section 111 of Companies Act, 1956. On constitution of this Bench in the month of July, 2016, case is transferred to this Bench from CLB, Chennai After taking case on records this Bench, it was posted on following dates: 24.08.2016, 22.09.2016, 07.10.2016, 24.10.2015, 18.11.2016, 21.12.2016, 21.01.2017, 08.02.2017 for hearings. It was adjourned from time to time at the request of parties and ultimately case was argued and reserved on 30.03.2017.
(2.) The Company Petition is filed by seeking following reliefs: "i. to declare that the Resolution passed at the Extra Ordinary General Meeting purported to have been held on 18.07.1998 is invalid, null and void, and that Petitioner shall continue to act as the Managing Director of the Company and to go ahead with completion of the project; ii. declare the Respondents 5 to 9 and 14 are not directors of the Company and to reconstitute the Board of Directors of the Respondent Company so as to ensure Sri NVS Naidu (Petitioner), Sri R. Nageswara Rao (Respondent No. 3 are only the directors on the Board as originally constituted; iii. to rectify the register of members of the Respondent Company so as to ensure status quo of shareholding with respect to Sri NVS Naidu, the Petitioner and his wife; iv. to declare that the affidavit sworn on 31.08.2004 is devoid of merits and it is a false and untrue one declaring that 6000 square yards of land sold to four persons is irregular, illegal and invalid; v. to declare that the Development Agreement dated 19.05.2004 with Respondent No. 13 firm is irregular, illegal and invalid without any relief to the firm etc."
(3.) The brief contentions/assertions/allegations, which are relevant to adjudication of the present issue, are submitted as under:- "(a) The Sri Sruyateja Constructions Private Limited (which is herein after referred to Company) is incorporated under the Companies Act, 1956 on 10.03.1995 having its registered office at Survey No. 151, Royale Avenue Apartments, Gandhinagar, HMT Post, Hyderabad- 500 037.The Authorised Capital of the Company is Rs. 9,00,000/-divided into 90,000 equity shares of Rs. 10/-. The Paid up Capital of the Company is Rs. 7,21,000/- equity shares of Rs. 10/- each fully paid. (b) The Company is engaged mainly in the business of carrying in construction of all types of flats and apartments as set out in its Memorandum and Articles of Association. The company was originally promoted by Shri. GSN Murthy, Shri. NVS Naidu (Petitioner) and Shri. Y. Subba Rayudu (Respondent No. 2). The first Directors of the Company are Shri. GSN Murthy, Shri. NV S Naidu, Shri. Y. Subba Rayudu, Shri. P Ramakrishna Rao and Shri T. Uma Maheswara Rao. The Petitioner was appointed as Managing Director at 1st Annual General Meeting of the Company held on 30.12.1995 on remuneration of Rs. 10,000/- per month for a period of 5 years with effect from the date of the meeting for a period of 5 years. The Petitioner was presented with an award of "Indira Gandhi Priyadarshini Award 1995" for his outstanding services, achievements and contributions on 19.11.1995. (c) It is contended that Petitioner is well known in real estate business in the twin cities of Hyderabad and Secunderabad and has associated with various organizations and associations with more than two decades of his experience, whereas, except the first second Respondents, all other Respondents do not have any relevant experience in the real estate business. The Company has purchased 6 acres of land at an estimated cost of Rs. 35 lakhs, located at Survey No. 151 Qutubullapur Village and Mandal, Qutubullapur Municipality, Ranga Reddy District, Hyderabad. The Company undertook a project for construction of economy flats of "A" type with Double Bed covering plinth area of 600 square feet and "C" type with Single Bed covering plinth area of 300 square feet. In order to locate the office at prime area, the Company has shifted its registered office to Prime Residential Complex of the Petitioner, located at 7-1-451/7, Ground Floor, Ameerpet, Hyderabad w.e.f. 01.08.1995 and opened booking of flats for all communities. (d) The Company increased its paid up capital to Rs. 7.21 lakhs on 31.07.1995 by allotting 71,800 equity shares of Rs. 10/- each, out of which the Petitioner and his wife were allotted shares constituting 20.94% and 8.04% respectively. The Company received an aggregate gross amount of RS.72.75 lacs from the public, who booked 276 flats by making payment of minimum booking amount of Rs. 5000/- per flat and instalment amounts as per the Register of Booking of flats, and the same were credited to the Company's Account. However, the Company showed an amount of 80,65,800/- in the audited accounts for the year 1996-97 filed with the Registrar of Companies, Hyderabad by disputing actual amount of Rs. 72,75,000/- by overstating an amount of Rs. 7,35,800/-. (e) The Petitioner alleges that Respondents started avoiding Petitioner in the management and began to conduct the affairs of the Company in their own interest. Since the Respondents are in possession of books, records of Company had resorted to manipulating them to suit their acts, deeds, claims and interest for the purpose of taking over the control of the company. He has alleged that the second, third, and fourth Respondents had acted illegally by colliding with anti-social elements and asked the Petitioner to visit their place and threatened him to sign a Memorandum of Understanding by force and coercion making him to accept that he had misused Company funds to the tune of an amount of Rs. 33.00 lacs. (f) The Respondents, by misusing their powers, have removed Petitioner from position of the Directorship on the pretext of misuse of Company funds in purported resolution stated to have been passed at an Extra Ordinary General Meeting held on 18.07.1998 that too at a place other than Registered Office of the Company, and they had filed Form 23 and 32 with Registrar of Companies, Hyderabad. It is alleged that Respondents fails to serve him a Special Notice as required U/s 284(2) of the Companies Act, 1956. Hence, it is contented that proceedings conducted at the said EGM is illegal and null and void.";