Rajeswara Rao Vittanala, Member - (1.) The present Company Petition bearing No. 66/2006 (hereinafter referred to as Company Petition) was initially filed by Shri T. Nand Kishore Singh & 13 others, before the then Hon'ble Company Law Board, Chennai. The case adjourned several times before the then CLB i.e. on 23.11.2006; 19.12.2006; 06.02.2007; 15.03.2007; 03.05.2007; 04.07.2007; 30.07.2007; 24.08.2007; 28.09.2007; 09.10.2007; 12.12.2007; 18.02.2008; 02.04.2008; 30.04.2008; 30.06.2008; 29.07.2008; 21.10.2008; 18.11.2008; 07.01.2009; 24.02.2009; 20.04.2009; 24.06.2009; 29.07.2009; 21.10.2009; 01.02.2010; 05.03.2010; 26.03.2010; 16.06.2010; 09.08.2010; 13.10.2010; 19.10.2010; 02.11.2010; 10.01.2011; 23.02.2011; 01.06.2011; 11.08.2011; 16.12.2011; 05.01.2012; 24.01.2012; 21.06.2012; 05.09.2012; 17.10.2012; 06.02.2013; 17.04.2013; 26.09.2013; 21.11.2013; 22.01.2014; 11.03.2014; 11.06.2014; 09.07.2014; 09.09.2014; 11.09.2014; 13.10.2014; 09.12.2014; 05.03.2015; 09.07.2015; 20.08.2015; 14.10.2015; 29.10.2015; 07.01.2016; 10.02.2016 and 15.03.2016. On the constitution of NCLT Bench at Hyderabad, the case stands transferred to this Bench in the month of July, 2016. Accordingly, the case was listed before this Bench on various dates viz. on 20.07.2016; 01.08.2016; 09.08.2016; 01.09.2016; 27.09.2016; 07.10.2016; 23.11.2016 and finally on 14.12.2016. The case was adjourned on those dates, due to the adjournments sought by various Counsels representing the case, on one pretext or the other. Ultimately, they have argued their case.
(2.) The Company Petition was filed under Sections 235, 237, 397 and 398 read with Schedule XI of the Companies Act, 1956 by Shri T. Nand Kishore Singh and 13 others against M/s. Aryan Industries Private Limited and 30 others by alleging several acts of oppression and mismanagement and by inter-alia seeking the following directions:- i) To appoint "Inspectors" to investigate into the acts done or continued to be done by persons claimed or claiming to be "Directors" of the 1st Respondent Company, with regard to (a) filing of Form No. 32; (b) filing of Form No. 18; (c) Transfer of 2340 shares in favour of (Late) Shri Dundoo Srinivas; (d) Consequential Transmission of 2340 shares in favour of Shri Dundoo Shirish, the 4th Respondent and (e) Removal of Soap Unit etc. ii) Restoration of "Soap Unit" and electrical installations and re-fixing of machineries by 4th to 8th Respondents enabling 1st Respondent to commence production; iii) To Order "forfeiture" of 2340 shares of 1st Respondent Company as transfer and subsequent transmission was ultra-vires the Articles of Association; and iv) To "lift or pierce" the "corporate veil" of the 1st Respondent Company and declare that, the partnership M/s. Sri Venkateshwara Oil Mills, is the only legal entity, applying the principles laid down in Mr. A. Saloman Vs. M/s. A. Saloman & Co. Ltd., 1897 AllER .
(3.) The brief Contentions/allegations/assertions as set out in the Company petition as well as discerned from the material papers filed by the parties, which are relevant to issue in question, are as follows: a) The predecessors of petitioners formed a partnership firm on 27.08.1943, under the name and style of M/s. Sri Venkateshwara Oil Mills along with predecessors of the respondents 4th to 6th and 9th to 15th Respondents, and the same was reconstituted on 28.07.1952. It went into production of Groundnut oil, soaps etc., and the same is not dissolved as on this date. The partnership firm, with its own funds has purchased land with buildings by virtue of registered deed bearing No. 2273 of 1353 Fasli (1944) Gregorian Era 12th Day of June 1944 (in Urdu). b) The said partnership firm floated Aryan Industries Pvt. Ltd., (Which is referred to as R1 Company herein after) which was incorporated on 29th June, 1951, under the then Indian Companies Act, 1913. The main objects of the Company was to establish oil miss; to manufacture all kinds of ils, insecticides phenyle etc and to do business in those items. Five individuals founded the company, they are M/s. Dundoo Pentaiah, Dundoo Balakrishna Murthy, Faridoon S. Chenoy, E.H. Chinoy and D. Narayana Singh. Each of these promoters were initially allotted one share of the face value of Rs. 100/The permanent Directors of the Company are M/s. Faridoon S. Chenoy, Dundoo Pentaiah, E.H. Chinoy Dundoo Balakrishna Murthy and they shall hold the office until they die or resign. The Articles of Association of the Company specified that the Company is to be a private limited Company and its numbers for the time being should not exceed 50, and rights of transfer of shares were also restricted. c) The R1 Company never went into production, and the factum of creating Corporate Identity was to mobilize loans from the Andhra Pradesh State Financial Corporation Limited and the Company became more or less defunct from 1963. In order to clear SFC loans, the Company leased out its plant and machineries with land and buildings to M/s. Thungabhadra Industries Limited, which was later, went into liquidation, and the said property has been released to the R1 Company, through the Office of the Official Liquidator, Hyderabad. d) The petitioners state that they have a stake of more than 20% in the equity of the 1st Respondent Company. The Petitioners No. 1 to 4 are having interest in 400 shares of their father and predecessor (Late) Shri B. Thakur Singh, under Share Certificates No. 75 to 78 dated 13.09.1952, in pursuance of Will, bearing Document No. 45/1979 dated 04.07.1979. Shri B. Thakur Singh expired on 01.08.1980. Further, another registered Will, bearing Document No. 12 of 1984 dated 28.03.1984 executed by Smt. B. Lakshmi Bai wife of (late) B. Thakur Singh. e) The 5th petitioner got 300 shares of the Company as joint shareholder along with their deceased father (Late) Shri D. Ram Singh and her mother Smt. D. Keasr Bai, under Share Certificates No. 68, 87, 88 and 70, in pursuance of letter of Sub-division Dated 14.04.1977, issued by the 1st Respondent Company. f) The 6th Petitioner got 125 shares as claiming under the adoptive father (Late) Shri D. Ram Singh, under Share Certificates No. 71 to 74, of the 1st Respondent Company, which are changed on 03.01.1994 as Share Certificates No. 91 and 92. g) The 7th Petitioner is having 1/4th shares in undivided 425 shares which stood in the name of his deceased father (Late) Shri D. Narayan Singh as Karta (HUF), registered Partition Deed No. 143 of 1953, dated 19.03.1952. Registered Partition Deed bearing document No. 864 of 1973, dated 23.05.1973 showing partition and speaking about 425 undivided shares. h) The stake of the 1st Petitioner to 7th Petitioner stood at 1037 shares, which is more than 20% of the equity shares of the 1st Respondent Company. i) The petitioner No. 1 to 4 stated to have made an application to the R1 Company for transmission of shares vide their letter dated 09.09.1982 by Registered Post with Ack. due and proof also filed as Annexure A 24. However, it is stated there was no reply from the Company even after submitting the requisite documents death certificates etc. It is alleged that transfer and transmissions of shares takes place for the benefit of R4 and R5. Which is in contravention of Articles of Association of R1 Company. The particulars with regard to the Director and Managing Director also not correct and claiming people as Directors without any authorisation. The 4th and 5th respondents have forged the signature of their deceased father i.e. Shri Dundoo Srinivas and Form No. 32 anti-dated as 07.06.1998 filed with the ROC. j) The R4 to R6 illegally managing the affairs of the Company by taking away all its records to their houses without following any procedure laid down under the Law and they have also changed the Registered Office of the Company. k) During the tenure of (Late) Dundoo Srinivas as Director, there was an illegal transfer of 2,340 shares without exercising the rights of preemption and claimed that the R4 and R5 are not entitled for a transmission of shares. Shri Dundoo Srinivas has obtained the shares without any consideration. l) The R4 has illegally inducted the R6 to R8 as Directors, though they are strangers to the Company. m) It is alleged that there was no single employee and no production activity in the Company for more than half a century and its licensee M/s. Thungabhadra Industries (TIL) (under liquidation) gave rents and the Company is virtually a defunct unit. n) The petitioners alleged that the Respondent No. 4 and 5 have filed O.S. Nos. 64/2002 and 529/2005 on the file of 3rd Civil Senior Civil Judge, Secunderabad to prevent other Directors as acting as Director. The Respondent No. 10 & 13 along with their mother Smt. Dundoo Rajeswari filed an Arbitration O.P. No. 1150/2005 on the file of 3rd Additional Chief Judge, City Civil Court, Hyderabad. There is an injunction order dated 29.12.2005 in I.A. No. 1168/2005 in the said O.P. No. 1150/2005. They also made a complaint to the local Police to handover the possession of the land and buildings of the R1 Company, which were under M/s. Thungabhadra Industries Limited, to receiver and to clear all outstanding arrears and to preserve plant and machinery. o) The petitioners stated that oppression, mis-management, lapses etc. are continuing from the date of incorporation, and are continuing till this date, and they have stated they came to know about institution of several cases about inter se dispute instituted by 4th respondent and others viz., OS No. 64 of 2002; OS No. 529 of 2005 and OP No. 1150 of 2005 only recently. Moreover, they have not been arrayed as respondents in those cases. Hence, they claim that the present petition is within limitation. p) In view of the above circumstances, the petitioners sought the relief as prayed for.;