V.S.R. Avadhani, Member - (1.) Introduction: Both the company petitions are counter to each other and centered on common questions for decision and both are filed under Sections 397, 398 and other relevant provisions of the Companies Act, 1956, swap over allegations and counter allegations of oppression and mis-management. With the consent of both the counsel the matters are heard together and being disposed of by this common order. The parties will be referred to their status in CP 99/2012 for convenience.
(2.) Substance of Pleadings: The Company (1st Respondent) was incorporated on 07.07.2011. The Petitioners' group joined as members by purchasing 50% equity from the promoter-first directors of the company, viz., the Respondents 2 and 3. The company acquired certain land for its commercial venture from the 4th Respondent and all the four directors have shared the consideration equally and paid advance consideration also. However, in course of time, Respondents have acted unilaterally and got the land sold to 3rd parties by two registered sale deeds. The Petitioners have claimed that the Respondents 2 and 3 have resigned to the Board, which is denied by the Respondents. The Respondents further deny the assertion of the petitioners that they are members and directors of the Company and claimed that the signatures of the Respondents are obtained on blank papers and everything including share transfer, resolutions, resignation etc. are manipulated and forged. On the other hand, the Petitioners claim that the sale of property of the Company by the Respondents without holding Board meeting and getting the resolution approved by members is prejudicial to the interests of the Company. It is in these circumstances, both parties, claiming the acts of oppression and mismanagement against each other, approached the Tribunal for various reliefs. The axis for the dispute is the real property of the Company. We discuss henceforth the material documents in the light of relevant pleadings in the forthcoming paragraphs in detail. Points for consideration and our answers
(3.) Point No. 1: Whether the Petitioners 1 and 2 are having shares in the Company and whether they are appointed as Directors? 3.1. Answer: The admitted fact is that the Company was incorporated on 7.7.2011 with authorised capital of Rs. 1,00,000/- equity shares of Rs. 10/- each and the Respondents 2 and 3 were holding 50% each in the equity. The disputed fact is, the Petitioners have become members having purchased 50% of the equity shares from the Respondents 2 and 3. In this respect, the important dates and events may be summarised for further analysis of the question. 3.2. According to the Petition averments in CP 99/12, the Respondents 2 and 3 approached and impressed upon them to invest in the Company and by acquiring the land, they would earn handsome profits and thus, the Petitioners have issued cheques on 9.7.2011 for Rs. 25000/- each towards the consideration for the 50% shares to be transferred by Respondents 2 and 3 out of their equity holding. Accordingly, the resolution was adopted by the Board and the shares are transferred to the Petitioners. As against this plea of the petitioners, the Respondents 2 and 3 contend that Dr. Pankaj Agarwal and Mohit Agarwal told them that the land of Mr. Alok Goel (Respondent No. 4 in CP 99/12) is available for sale and it has the potential of value appreciation by reason of its location and as the Respondents 2 and 3 expressed their inability to pay one Crore as advance to the vendor of the land, they were taken to a Company Secretary Shri Ankit Agarwal on the pretext of arranging a short term loan and the said Company Secretary had obtained the signatures of respondents 2 and 3 on 'blank papers' informing them that 'those papers were required to form a company'. It is alleged in para 8 of the Reply that using some of those papers, the Company Secretary got the Respondent No. 1 Company incorporated on 7.7.2011. These events are prior to the incorporation of the company, as the pleading of the Respondents No. 2 and 3 suggests. 3.3. So far as sale of equity to the Petitioners is concerned, it is replied in the Counter statement of the Respondents 2 and 3 at para 13 thus: "...It is submitted that the aforesaid alleged transaction is forged, fabricated and manipulated by the petitioners in collusion with other persons as aforesaid in order to oust the answering respondents from the control of Respondent No. 1.....The documents on the basis of which the petitioners claim their right in the respondent No. 1 is forged and therefore, the present petition is not maintainable. The petitioners were shown to be removed by the respondents 2 and 3 from the Board of Directors of the Respondent No. 1 Company on 18.10.2011 by manipulating the documents and by filing form 32 of their resignation with the Registrar of Companies..." In page 5 of the CP 86/13, the respondents (being petitioners therein) made nearly analogous averments regarding obtaining their signatures on Various blank papers, printed forms and blank stamp papers'. In page 6 of the CP 86/13 it is further alleged by the Respondents 2 and 3 that after their receiving notice from the Petitioners on 5.11.2011, they came to know that their blank signed papers were misused by the petitioners with the help of others including Ankit Agarwal, CS. They further assert in the CP 86/13 as follows: "After receiving the said notice it came to the light that the Respondent 2 and 3 (petitioners in CP 99/12) got 50% of the shares of each of the Petitioners No. 1 and 2 transferred in their favour on 9.7.2011 by allegedly depositing two cheques of Rs. 25000/-. Each against the alleged transfer of 50% shares to Sh. Bharat Kumar Agarwal by Sh. Dharmendra Rathore and to Smt. Smita Agarwal by Smt. Nitu Shau. The respondents No. 2 and 3 also forged and fabricated the share certificates to this effect and forged a resolution of Board of directors dated 11.7.2011..." 3.4. Thus, the case put forth by the Respondents is total denunciation and that everything is 'forged' and at the same time pleading that their signatures are obtained by the CS Ankit Agarwal on blank papers, printed forms and stamp papers, even before the incorporation of the company. It is pertinent to note that at the time of incorporation of the Company; admittedly, the Respondents 2 and 3 alone were the subscribers to the Memorandum and Articles of the Association. By purchasing 50% of equity on 9.7.2011 from the Respondents 2 and 3 the Petitioners have became members. Annexure-3 contains copies of two cheques issued by the Petitioners for Rs. 25000/- each in favour of Respondents 2 and 3 on 9.7.2011. There is no material to show whether these cheques are credited to the bank account of the Respondents 2 and 3. To prove that fact, the petitioners ought to have produced the copy of their bank account from Vijaya Bank, on which the cheques are issued. Irrespective of absence of proof of debiting of Rs. 50000/- from the account of Petitioners, however, the other material shows that shares are, in fact, transferred. The copies of share certificates are available at pages 74 and 75 of Petitioners' paper book. Page 73 is copy of resolution relating to 'approval of share transfer applications' contained the signatures of both the Directors, namely Respondents 2 and 3. 3.5. Of course, we are attentive to the plea taken by Respondents that these documents might have been maneuvered by using the blank signed papers available with Ankit Agarwal with whom the Petitioners have conspired to create documents. But, the balance sheet as on 30.06.2012 shows in the attached list of share holders, the names of the Respondents 2, 3, and petitioners 1 and 2. This balance sheet is issued by the Chartered Accountant. We are at loss to comprehend how a Chartered Accountant will sign a balance sheet without the names of petitioners shown as members in the Register of Members. Therefore, in all probabilities, the Chartered Accountant must have satisfied that the names of the Petitioners are borne on the Register of Members and then only must have signed on the balance sheet which is a statutory document of the company and its testimonial value and reliability cannot be ignored by the Tribunal for the simple averment that certain blank papers were signed by the Respondents, as alleged by them. 3.6. The Respondents have lodged First Information Report with Kotwali Police Station alleging offences of forgery etc. The translated copy of that FIR contained at page 232 of the Petitioner CP 86/13 reads, with reference to the registered notice dated 5.11.2011 issued by the Petitioners' group thus: "...through which it come to know that Shri Pankaj Agarwal and Shri Mohit Agarwal in collusion with Ankit Agarwal, got prepared fictitious documents manipulated them and misusing blank papers and stamp got the signatures of the applicant and his wife obtained and showed their resignation from their post factiously from the post of Director of the company on 18.10.2011" In the notice dated 5.11.2011, (vide page 216 of CP 86/13) it is referred that the notice is issued on behalf of the Company represented by its Directors, namely, the Petitioners 2 and 3. In the FIR, the Respondents never allege that the Petitioners have no shares at all in the company so as to become Directors. Normally they must first become members of the Company. That omission of material fact in the FIR, which is much earlier to the filing of Company Petition, is an important fact to weigh the fallacy of the Respondents' case in making a blanket denial of everything. However, because, the case relating to the alleged act of forgery is pending in the criminal court, admittedly, we are not going to make elaborate discussion on that aspect as it is not within our domain to record a finding of fact that may ultimately influence the competent criminal court. When the Respondents have confirmed that their signed papers are misused, they should have immediately issued a reply to the notice dated 5.11.2011 but waited till 19.11.2011. A reading of FIR at page 232 of the paper book indicates that the distance between the complainant's place and the Police Station is only one K.M. The FIR was sent by post. These instances suggest that the Respondents were in the preparation of defence for the notice referred averments. The case of the Respondents shows that they were improvising their defence from time to time. This is evident from the complaint made by them to ROC on 16.02.1012. The material portion of that complaint is extracted for ready reference: "2. That upon inspection of the ROC website in November, 2011, the undersigned was shocked to know that one Mrs. Smita Agarwal and Mr. Bharat Kumar Agarwal had been shown appointed as Directions of the same Company with effect from 18.07.2011 and Form 32 regarding the same had been filed with your office sometime in October/November 2011 in connivance with some practicing professional." "4. That the documents attached and filed with Form 32 by the accused for fraudulent appointment of directors also included two forged share transfer deeds which showed the transfer of 50% of our shareholding in favour of Mrs. Smita Agarwal and Mr. Bharat Kumar Agarwal." 3.7. Thus, long time after the notice dated 5.11.2011 and the FIR dated 19.11.2011, the Respondents for the first time alleged in the Complaint to the ROC that the share transfer is also forged. It is clear that they have verified Form 32 in the website in 'November, 2011' as mentioned in the Complaint to ROC. It must be only after the notice dated 5.11.2011 and before 19.11.2011 if not otherwise pleaded because, from the notice they must have become aware of the fact that there is an impending company dispute. When such was the probability, it is unknown why the Respondents did not whisper anything about the share transfer in the FIR, besides keeping silent without responding to the notice of the Petitioners. Our view is fortified from the averment further appearing in the Complaint to the ROC at para 6 which reads: "6. That upon receiving the above referred information/documents, the undersigned filed an FIR with Thank Kotwali...on 19.11.2011 against the accused..." That means, even before filing the FIR on 19.11.2011, the Petitioners have the knowledge about the share transfer as also, about their removal from the Board of Directors of the Company. Therefore, omission to make a plea about the share transfer in favour of the Petitioners in the FIR makes us to believe that the Respondents are not putting forth their case on a bonafide stand but making denial of everything that comes in their way of resisting the Company Petition by the Petitioners in CP 99/2012. We therefore, on the basis of preponderance of probabilities, place on record our observation that the Petitioners 1 and 2 in CP 99/2012 are the members of the Company having together 50% of the authorised capital. 3.8. The second part of the question will also likewise rest on the above analysis of the events and circumstances. The Petitioners claim to have been appointed as Directors on the basis of resolution of the Board as attached to Form 32, on 18.07.2011. The contention of the Respondents is that the resolution must have been manipulated on the blank signed papers or 'forged' and that the digital signature of the Respondent No. 2 was with the Company Secretary, whose email address as 'agarwalchaman@yahoo.co.in' is filled in the Form 32. Form 32 is a statutory form, to place the affairs of the Company particularly with regard to the changes in the Board and equity holding in the public domain. It is presumed that the form is filled and placed in the public domain in regular course of business of the company. Further, the Respondents have taken plea in one breath that the blank signed papers are used in creating those documents and in the other breath, they are pleading that the documents are forged. Forgery of signature is different from manipulating a document on the blank signed papers. The Respondents did not assertively state in their pleadings in both the Company Petitions whether the minutes of the EOGM 18.7.2011 (page 124 of Paper book in CP 99/12) contain forged signatures or the contents thereof are manipulated on blank signed papers. 3.9. The following decisions are cited at the Bar to contend on behalf of the Petitioners in CP 99/12 that if once the party admits his signature on the document, it is deemed that he is admitting the contents of the document. In Grasim Industries Ltd. &, another v. Agarwal Steel, 2010 1 SCC 83(SC) the Court was dealing with a document which is contended to have been signed without noting the nature and contents thereof by one of the parties thereto. In that context the Supreme Court held that the plea that in lieu of receipt the signatures were made can be taken that the signatory put his signature after knowing the contents of the document. At para 5 of report, the Court recorded the following observation: "In our opinion, when a person signs a document, there is a presumption, unless there is proof of force or fraud, that he has read the document properly and understood it and only then he has affixed his signatures thereon, otherwise no signature on a document can ever be accepted. In particular, businessmen, being careful people (since their money is involved) would have ordinarily read and understood a document before signing it. Hence the presumption would be even stronger in their case..." Regarding burden of proof, the law is well settled by the Apex Court in Vidhyadhar v. Manikrao & Anr, 1999 3 SCC 573 that when a person comes with the plea of fraud of manipulation and misrepresentation, the burden is on him to prove the same beyond all reasonable doubt. The Supreme Court has categorically stated in the aforesaid decision that presumption has to be drawn under Section 114 of the Evidence Act against a party who did not enter into witness box to prove the case set up by him. Even though, the provisions of the Indian Evidence Act as such are not applicable strictly in the enquiry before the Tribunal, the general principles of evidence based on the common law are applicable for appreciation of the circumstances and to weigh the credibility of the pleas advanced by the parties to the proceedings. 3.10. We found, in search of an authority to support our view that this Tribunal being a judicial body, is under obligation to apply the principles of evidence, a comment of the Apex Court in Associated Cement Companies Ltd. v. P.N. Sharma And Another, 1965 AIR(SC) 1595 came to our notice, where the Court has drawn the distinction between a Judicial court and a Tribunal in the following words: "It is really not possible or even expedient to attempt to describe exhaustively the features which are common to the Tribunals and the Courts and features which are distinct and separate. The basic and the fundamental feature which is common to both the Courts and the Tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign State." The National Company Law Tribunal is constituted by an Act of Parliament, namely the Companies Act, 2013. The National Company Law Tribunal Rules are notified under Sec. 469 of the Act by the Central Government and therefore they have the statutory sanction. Rule 39 of the Rules provide for the 'production of evidence by affidavit' and Rule 40 deals with production of additional evidence before the Bench. Rule 39 (2) provides that: "(2) Notwithstanding anything contained in sub-rule (1), where the Tribunal considers it necessary in the interest of natural justice, it may order cross examination of any deponent on the points of conflict either through information and communication technology facilities such as video conferencing or otherwise as may be decided by the tribunal, on an application moved by any party." Thus, the Tribunal has the trappings of a Court for the purpose of receiving of evidence to some extent and the evidence by means of affidavit as provided by sub-rule (1) of Rule 39 is akin to chief examination affidavit as per the Civil Procedure Code as amended in 2002. 3.11. Therefore, if a Tribunal has to exercise judicial power or to discharge judicial functions, it follows logically that it has to observe the fundamental principles of judicial procedure and to observe the principles of natural justice. Keeping the observations of the Apex Court in view, we have looked into the circumstances where under, according the Respondents, they had to sign on 'blank papers' including printed forms and stamp papers. Even as per their own plea, the signatures were obtained for the purpose of incorporation of the company. They would have enquired the Company Secretary Mr. Ankit Agarwal about the necessity of signing on blank papers instead of filled forms and documents. They know pretty well by that time, they are entering into a transaction involving money and purchase of immovable properly. It is not as though, the Respondents are laymen as they came forward to incorporate a Company for the purpose of acquiring the land with the Financial assistance of some third parties, if not the Petitioners. Therefore, there is no reason to disbelieve, prima facie, that the documents attached to Form 32 are either forged or manipulated otherwise. 3.12. In as much as the question whether the documents are forged is pending before criminal court, we are not going to record any final observation about that fact. Our observations that the Petitioners are members and Directors of the Company, are only limited for the purpose of disposal of the Company Petitions in one way or the other, facilitating us to focus on the much controversial issue relating to oppression and mismanagement on account of the sale of the immovable property, which is the subject for discussion in the forthcoming paragraphs of this order. 3.13. The other probability in favour of accepting that the Petitioners were admitted to the Board as Directors is that, they have infused funds for purchasing land which is evidenced by bank pay-in-slips and the bank account of the Company placed at pages 83-84. There is no active and specific denial of this fact in the pleadings of the Respondents. A person who is investing money in a company without taking any security or other document evidencing it as a loan transaction, will not normally invest without expecting some benefit to be derived out of the investment. Therefore, the petitioners' plea that as part of the understanding while infusing funds, they were taken as directors seems acceptable. Thus, Point No. 1 is answered in favour of the Petitioners in CP 99/2012 and against the Respondents 2 and 3 therein who are Petitioners in CP 86/2013.;