Rajeswara Rao Vittanala, Member - (1.) The Company Petition bearing CP No. 20/2016 is filed by Sri Chavali Gayatri Praveen and another under Sections 75, 67 R/w Section 59 of Companies Act 1956, and other applicable provisions by inter-alia, seeking to declare that allotment of shares made to 61 persons on 29.12.2007 to the extent of 2,00,000 shares of Rs. 100/- each fully paid (Petitioner No. 1-4000 shares and Petitioner No. 2 - 3500) shares as illegal and void ab initio; declare that allotment of shares made to the petitioners on 31.3.2008 to the extent of 8400 shares of Rs. 100/- each fully paid up (Petitioner No. 1-4900 shares and Petitioner No. 2 - 3500 shares) are illegal and void; direct the Respondent No. 1 company to refund Rs. 8,40,000/- along with interest of 12.5% per annum from May 2007 calculated at monthly rests till the date of refund to the Petitioners etc.
(2.) The Company Petition was listed before this Bench on 14.12.2016, 10.01.2017, 25.01.2017, 10.02.2017, 23.02.2017 and heard the counsels and also both parties themselves, who are present. However, they could not agree for settlement of issues in question.
(3.) The brief facts, as mentioned in the Company petition, are as follows:- (a) Sri Lakshmi Prasanna Agro Paper Industries Limited, (which is referred to as Company hereinafter) was incorporated under the provisions of the Companies Act 1956 on 19th January, 2007, and its registered office is situated at 3-173/4, Industrial Road, Polamuru Anaparthy Mandal, East Godavari District - 533342. The Authorised share capital of the Company as reflected in company master data at MCA website is Rs. 8,77,72,000/- divided into 8,77,720 equity shares of Rs. 100/- each. The paid up capital of the Company including the impugned allotment of shares is Rs. 8,77,72,000/- divided into 8,77,720 equity shares of Rs. 100/- each. (b) The main objects of the Company is to carry out business of manufacturers and dealers in all kinds of papers such as poster paper, Kraft papers, printing papers, tissue paper and boards etc.; dealers in all varieties of papers and boards in all its varied aspects including that of growers, manufacturers etc. (c) Respondent Nos. 2 & 3 are Managing Director and Director of Company respectively. (d) Shri Venkateswarlu, father of Petitioner No. 1 and husband of Petitioner No. 2, has worked as Manager, Indian Overseas Bank Tapeswaram Branch, East Godavari District for some time. The 2nd Respondent used to visit the Branch to transact of his business. In the course of time, 2nd Respondent and Shri Venkateswarlu became close friends. So the 2nd Respondent requested him to lend some amount for the business of Company, and promised an interest of 12.5% per annum on investment to be made. Accordingly, by believing oral promises and assurances of Respondent No. 2, the Petitioners advanced a loan of Rs. 8,40,000/- as deposit for a period of 3 years with an understanding that it would be renewed periodically for a further period not exceeding three years at a time. Accordingly, the Petitioner No. 1 paid Rs. 3.50. Lakhs on 29.3.2007 and again Rs. 1.40 lakhs in May 2007, and Petitioner No. 2 paid Rs. 3.50 lakhs on 29.03.2007. (e) In pursuant to the above amounts deposited for a period of 3 years commencing from 29.03.2007 to 28.03.2010, Respondent No. 1 issued a receipt No. 22 dated 29.3.2007 to Petitioner No. 1 and receipt No. 21 dated 29.3.2007 to Petitioner No. 2 by acknowledging the receipt of above deposits. (f) When the said deposits were due for maturity, the Respondent No. 2 has again approached the Petitioners requesting them to renew their deposits for a further period of 3 years as the Company was going through financial crunch. Accordingly, the Petitioners, vide their letter dated 15.03.2010, has extended said deposits for a further period of 3 years, and so it stands to mature in the year 2013. (g) As the said deposits is reaching maturity in the year 2013, the petitioners sent a letter dated 20.03.2013 and subsequently several requests were also made to refund the amount along with interest due to them. The Petitioners also made a complaint to Registrar of Companies on 11.9.2014 followed by another letter dated 7.5.2016 regarding non-refund of deposit money from the Company. In pursuant to the above letters, the Company, vide its letter dated 30/10/2014 for the first time informed them that it has allotted shares against the amount received. (h) The Petitioners contended that they have never made any request seeking allotment of shares. Moreover, shares cannot be allotted without written consent from the parties. They have relied upon Section 41 of Companies Act 1956. Section 41(1) says Subscribers of memorandum of a company shall be deemed to be members and Section 41(2) says other person(s) can also become a member(s) of a Company provided they agree in writing etc. Hence, question of allotment of shares does not arise in the instant case.;