Deepa Krishan, Member - (1.) Company Petition No. 128/2007 titled Hem Raj Singh versus M/s. Naraingarh Distillery Limited and others (hereinafter referred to as R-1 company) under section 397, 398, 399 read with sections 402, 403 and 406 of the Companies Act, 1956 was filed by the Petitioner before the Company Law Board, New Delhi in September, 2007. There is only one Petitioner namely Shri Hem Raj Singh and initially, there were four Respondents namely, M/s. Naraingarh Distillery Ltd. (R-1), Shri Baldev Singh Kang (R-2), Ms. Ravinder Kaur Kang (R-3) and Ms. Deep Kama (R-4). Subsequently, on 11.4.2013, the petition was amended to implead R-5 to 9 namely, Onkar Anand (R-5), Renu Anand (R-6), Jitendra Anand (R-7), Rahul Anand (R-8) and Bhavna Anand (R-9) as Respondents to the petition. This impleadment of additional Respondents was allowed by the CLB vide order dated 26.04.2013. Averments in Petition
(2.) It is averred in the petition that R-1 company was incorporated as a Limited Company on 15.4.2002 under the jurisdiction of ROC Punjab, HP and Chandigarh at Jalandhar. The main objects of the company were to carry on the business of setting up of breweries, distilleries, bottling or other plants for the manufacture of alcoholic or non-alcoholic products. It is further stated that the authorised, subscribed and paid up share capital of R-1 company as on 31.3.2005 was Rs. 5 lakhs only divided into 50000 equity shares of Rs. 10 each. It is stated that the Petitioner holds 9600 equity shares of Rs. 10 each constituting 19.2% of the subscribed and paid up share capital of R-1 company. It is also stated that R-2 and his wife, R-3 subscribed to 20,000 equity shares each and 400 shares were subscribed by 4 employees of Naraingarh Sugar Mills Ltd. (NSML) to meet the requirements of 7 subscribers for a public limited company. The Petitioner has further stated that tine company is also having application money of Rs. 77,12,000/- which has been paid by the promoters in the ratio of 50:50. It is further stated that the company was being managed by the Petitioner in the capacity of Managing Director and R-2 and R-3 as Directors. 2.2 It is further stated in the petition that the Petitioner is the founder, promoter and shareholder of the R-1 company and is the first director appointed under Article 87 of AoA of the company. It is stated that the first directors of the company as per Article 87 of the AoA of the company were 1. Baldev Singh Kang 2. Ravinder Kaur Kang 3. Hem Raj Singh He has further stated that he was appointed as managing director w.e.f. 01.9.2004. 2.3 It is further stated in the petition that the Petitioner and R-2 were jointly running one of their other flagship company namely, Naraingarh Sugar Mills having its registered office at Ambala. It is stated that R-2 and Petitioner decided to start a business venture in the distillery sector and incorporated R-1 company wherein it was agreed to run the R-1 company in equal investment and profit sharing ratio. 2.4 In para 7 of the petition, the following table has been given. 2.5 The Petitioner has stated in para 10 of the petition that it is "specifically clarified that share application money of Rs. 73,12,000/- in R-1 company was introduced by the Petitioner and R-2 in equal sharing." It is stated in the same para that after receiving the share application money, the land situated at Naraingarh was registered in the name of the company through Petitioner as Director of R-1 company. The copy of sale deed has been annexed at P-3 with the petition and it shows that the said sale deed was dated 13.01.2003 and shows sale through R-2 who is also Director of NSML to R-1 company through Petitioner as director. It is further stated that during 2003-04 and in 2006, further application money of Rs. 4 lakhs and Rs. 74 lakhs respectively were contributed in the R-1 company by Petitioner and R-2 in the ratio of 50:50. The Petitioner has also stated mat as there was a profit sharing ratio he agreed not to draw any salary as Managing Director. 2.6 It is further stated in the petition that R-2 resigned from the directorship of R-1 company on 01.9.2004 and the Board appointed his daughter Ms. Deep Kamal (R-4) as Director on 26.07.2004. It is further stated that the Petitioner was looking after the affairs of R-1 company in the capacity of Managing Director and R-3 and R-4 were non-executive ordinary directors having no role in the operations of the company. 2.7 While detailing the acts of oppression and mismanagement in the petition, it is stated that R-1 was promoted by R-2 and Petitioner as a closely held company on the principles of partnership to expand their jointly run businesses and to compensate themselves by profit sharing etc. It is stated that from the date of creation, R-1 company started performing very well as the fixed assets as on 31.3.2003, 31.3.2004 and 31.3.2005 were Rs. 75,55,523, Rs. 1,35,06,127/- and Rs. 1,40,53,386/- respectively as per balance sheets annexed as P-8, P-9 and P-10. 2.8 The Petitioner has alleged that when the licence of distillery was obtained by the company and other group company NSML started performing well R-2 lodged false criminal complaints against the Petitioner and got him arrested in various criminal cases. The Petitioner has further stated that he has got bail in all these cases. While the Petitioner was in police custody, R-2 took in his possession all the books and statutory records of the group companies. The Petitioner has further stated that he has not received any communication of R-1 company including statutory information required under Companies Act, 1956 to be provided to the Director and shareholder of the company. The Petitioner has further stated that he was appointed as Executive Director (whole time director) on 28.7.2004 of NSML, the other group company. The details of gross operating profit/loss for NSML have been given but the same are not repeated here as NSML is not a party to this petition and the Petitioner has filed another petition against NSML titled C.P. 125/2006 for investigations. It has been stated during oral arguments that this petition was dismissed in 2014 and appeal is pending before the Hon'ble Delhi High Court. 2.9 It is stated in the petition that R-2 filed four criminal complaints against the Petitioner in which the main allegation was that the Petitioner has managed his appointment as Managing Director by forging signatures of other directors of the company. Petitioner was arrested and remained behind bars for about 3 months. During this period, R-2 had taken all the statutory records to his home and Petitioner was not allowed any access to the record and operations of R-1 and this is stated to be an act of oppression. 2.10 The Petitioner has further stated that upon search of public documents of R-1 company, he saw that he had been removed from the post of Managing Director under section 284 of Companies Act, 1956 by sending his "requisition" (sic) under section 188 and 190 of the Act in the AGM of R-1 company held and conducted on 31.5.2006. The reason for removal is stated to be that the Petitioner had appointed himself as Managing Director of R-1 company by forging the signature of R-3. The Petitioner has stated that this claim is false as he was appointed as First Director as per para 87 of the Articles of Association (AoA) of the R-1 company. It is further stated that the annual return and balance sheets for the year 2004-05 have been signed by the Petitioner in the capacity of Director and Managing Director along with. R-3 as Director. 2.11 The Petitioner has also objected to the appointment of Mr. Rajesh Bhardwaj as Director when he was Managing Director as no such Board Meeting was held for such appointment. He has also stated that it was oppressive to him that R-2 had appointed other directors of R-1 company namely, Ms. Jugnu Kang and Shri Jai Inder Kang. It is stated that in his search on MOA (appears to be a typographical error as it should be MCA) portal on 10.8.2007 no information was found regarding changes in equity capital. The Petitioner has also stated that he has not received any notice of board meetings and shareholder's meetings since April 2006 and this is oppressive on the Petitioner and mismanagement of affairs of R-1 company. 2.12 The Petitioner has stated that though it would be just and equitable to wind up R-1 company, he is not seeking this remedy as the winding up will not be in the interest of the company and the Petitioner and other shareholders. Thus, he has prayed for an equitable relief which are other than winding up of the company. The Petitioner has sought the following reliefs- a. That the Annual General Meeting of the Respondent No. 1 Company conducted and held on 8th April 2006 and 31st May 2006 by the Respondent may be declared as null and void and all the notices and resolutions circulated for the said meeting and/or passed thereat may also be declared as null and void. b. The Petitioner be reinstated as a Managing Director of the Company and his removal be set aside. c. The Respondents be directed not to sell, lease or otherwise create any third party rights in the moveable and immovable assets of the Company without the consent of Petitioner and if any sale, lease or third party right has been created that be set aside and declared as null and void. d. The Respondents be asked to return all statutory record to the Company and Petitioner be given a certified copy of all the statutory records and books of accounts and in future no decision be taken relating to the affairs of the Company without the consent and participation of the Petitioner. e. To pass such other/further orders/directions which the Hon'ble Board may deem fit and proper in the facts and circumstances of the present case. 2.13 The Petitioner has also asked in the interim prayer for no further Annual General Meeting (AGM) to be held, status quo regarding shareholding and management as on AGM held on 30.9.2005 and to maintain status quo on the movable and immovable assets of the company apart from other reliefs such as appointing a local commissioner to authenticate the records of R-1 company and providing a certified copy to the Petitioner and to allow the Petitioner to function as Managing Director till the final disposal of the petition. STATUS QUO ORDER
(3.) The CLB Principal Bench, New Delhi, on 11.9.2007, passed the following Order: "Petition mentioned and interim reliefs sought ex-parte. In facts of the case, direct the company/Respondents/Petitioners to maintain status quo as of date in regard to the immovable properties of the company as also the shareholding in and of the company. Petitioners to serve a copy of the order along with copies of the petition on the Respondents forthwith. Respondents to file their replies to the petition by 20.10.2007 and rejoinder to be filed by 20.11.2007. The petition will be heard on 11.12.2007 at 10.30 am. Liberty to apply. Sd/-" Reply of Respondents Nos. 1 to 3 to the original Petition;