Ravikumar Duraisamy, Member - (1.) In the above CP No. 174/2017 filed before the NCLT on 27.04.2017 under section 397/398 of the Companies Act, 1956 and Section 241/242/213 of the Companies Act, 2013, the Respondents have challenged the maintainability of the main Company Petition and a copy of the application was served on the other side. The Registry was directed to list the MA No. 235/2017 before the Bench on 07.07.2017. In response to application filed, the Respondent sought time to file rejoinder. Accordingly, time was granted to file rejoinder on or before 20.07.2017 and the question of maintainability as well as interim relief sought by the Petitioner shall be heard on 24.7.2017. When the matter was listed on 24.07.2017 both the Counsel made their arguments and submitted the judgments relied upon by them.
(2.) Applicants state that the subject Petition is devoid of any material substance, lacks merits & full of concoction. From the perusal of the petition and documents annexed therewith, it becomes clear that the Respondent/Petitioner does not have statutory minimum 10% shareholding in the Applicant Company, which is required to file subject Petition as per the Sections - 241 read with Sec. 244 of the Companies Act, 2013 & regulations framed there under. Thus, the subject petition filed by the Petitioner is not maintainable & liable to be dismissed at very threshold; pleaded before us. 2.1 In this regard, it is worthwhile to refer to sec. 244 of the companies Act, 2013, which reads as under: "Sec. 244: Right to apply under section 241: (1) The following member of a company shall have the right to apply under section 241, namely- a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one tenth of the issued share capital of the company, provided that the applicant or applicants has or have paid all calls and other sums due on his or their shares". Thus, for filing a Petition under Section 241 of the Act, it is mandatory that the Petitioner should have: a) Not less than one tenth of the issued share capital of the company. b) Paid all call and other sums due on his or their shares. 2.2 In the present case, the Respondent/Petitioner neither holds a single share in Applicant/Respondent Company nor has he paid any calls and other sums due nor has he produced any proof to that effect in his petition. Respondent/Petitioner has maintained complete silence to this effect throughout the petition. Thus & therefore, the subject Petition is not maintainable & liable to be dismissed at threshold. Therefore, it is necessary that this Hon'ble Tribunal decides the preliminary issue, viz: whether & if at all the Petitioner has minimum 10% of shareholding in Applicant/Respondent No, 1 company so as to entitle him to file the present Petition. Therefore, the Applicants herein file the present Application to decide the maintainability of the main Company Petition No. 174/2017, as the preliminary issue. 2.3 The Applicant (Original Respondent) company is engaged in the business of supplying colour coated galvanized/galvalume steel profile sheets, Purlins & Roofing sheets, etc. to its customers. Applicant Nos. 2 & 3 are the Directors of Applicant company. Respondent/Petitioner is the younger brother of Applicant No. 2 herein. 2.4 Applicant company is incorporated under the Companies Act, 1956 on 22.10.2002. Petitioner was one of the Directors & shareholders of the Applicant Company, at the time of incorporation of the Applicant Company. 2.5 The Petitioner always gave priority to development of his aforesaid businesses at the cost of Applicant No. 1 Company and the aforesaid instances clearly confirm that Petitioner always acted against the interest of the Respondent Company and thus deliberately failed & neglected to perform his fiduciary duty/liability towards the Applicant Company. Petitioner, however, has not whispered a single word about the same in the Petition & thus, the Petitioner has not come with clean hands before this Hon'ble Tribunal as regards the actual reasons behind his resignation from the Applicant No. 1 Company. The Petitioner, who has approached this Hon'ble Tribunal & is seeking equity through the subject petition, has suppressed these vital facts which have bearing on the subject petition & thus has played fraud with this Hon'ble Tribunal. 2.6 With regard to Jurisdiction of this Bench, it is submitted that Petitioner does not hold even statutory minimum 10% shares in Respondent Company, as required vide Sec. 241 read with Sec. 244 of Companies Act, 2013. Therefore, Petitioner does not have any locus standi to file the present petition and approach this Hon'ble Tribunal. Accordingly, this Hon'ble Tribunal lacks jurisdiction to entertain & try the present petition. The present petition is nothing but sheer abuse of the process of this Hon'ble Tribunal. Therefore, in order to prevent/stop the abuse of the process of this Hon'ble Tribunal, the present petition should be dismissed in limine, with exemplary costs. 2.7 It is noteworthy that the Petitioner has not produced any documents to show that he holds minimum 10% shares in the Applicant No. 1 Company. The entire petition is based on documents downloaded from the website of the Ministry of Corporate Affairs, which are uploaded by the Respondent Company. It is noteworthy that the documents submitted by Petitioner are not attested by the Office of Registrar of Companies. 2.8 I say that the Petitioner had admittedly resigned on 25th June 2013 and the subject Petition is lodged on 26th April 2017. It is noteworthy that Petitioner is not connected with the Respondent Company in any manner whatsoever, since the year 2013. Thus, Petitioner's claim/present petition is more than three years & ten months old, from the date of Petitioner's resignation from Respondent Company and ceasing to be its Shareholder/Director it is also noteworthy that the Petitioner has not offered any explanation for the delay in filing the present petition. Therefore, the present petition is time barred as per the provisions of Limitation Act & hence liable to be dismissed at threshold. 2.9 Applicant company is incorporated under the Companies Act, 1956 on 22.10.2002. Petitioner was one of the Directors & Shareholders of the Applicant company, at the time of incorporation of the Applicant company. 2.10 Applicant/Original Respondent submitted that the Respondent/original Petitioner neither done any work for the applicant/Respondent company nor performed his fiduciary duty towards the Respondent company, neither has the Respondent contributed anything positively for the benefit or improvement of business of the Respondent company during the tenure of his Directorship, he did not bring any business but the orders were received due to the contacts of the Applicant/R2. Therefore, he has no right to file the present Petition.
(3.) The reply of Respondent dated 3rd July 2017 was submitted to NCLT on 4th July 2017 and their major submissions are as under: 3.1 I say that the Applicant/Respondent has relied on Section 244 of the Companies Act, 2013. I say that Section 244 speaks nothing but requirement of 1/10th of the total members or 100 members of the Company being eligible to file the Petition under Section 244. I say that the Petitioner is a subscriber to the Memorandum of Association and has been a shareholder of the Company ever since till this date. He has not signed any Deed of Transfer or Deed of Surrender or Deed of Cancellation or Document for buyback of the shares of the Respondent No. 1 Company. In absence of the same, The Petitioner has every right to file the present Petition. It is in fact the Applicant/Respondent who is asserting that the Petitioner is not a shareholder of the company. Therefore, the burden of proving that the Petitioner is not a shareholder of the Company is on the Applicant/Respondent. 3.2 I say that the Applicant/Respondent has contended that as a result of dispute the Petitioner resigned as a Director of the Respondent No. 1 Company, vide his fetter dated 25/06/2013. However, it is stated that he has also surrendered/relinquished 5000 shares of the Respondent No. 1 Company on 20/05/2013. I say that it is settled legal position and the Respondent Company is aware that there is a procedure under law for issue, transfer, surrender, cancellation, buyback, reduction of capital. Shares of a company cannot merely be cancelled or surrendered without following due procedure of the law. The said Application is nothing but an attempt of the Applicant to delay the procedure of the Hon'ble Tribunal. 3.3 I say that since the Petitioner has indicated discrepancies in the Annual Reports and Balance Sheets as filed for the years ended 31/03/2013 till the year 31/03/2016. From the year 2014, the name of the Petitioner has been omitted in the Annual Report, however, in the Balance Sheets for the corresponding years the name of the Petitioner appeared as a shareholder with 5000 equity shares. The claim of the Petitioner is that the said Audited Balance Sheets are prepared and signed first by the Auditors and thereafter, directors of the company and then, they submitted to the Registrar of the Companies. By merely stating that there was typographical error does not absolve the directors themselves from fraud committed by the Company. 3.4 I say that the Respondents are changing their stands. First they stated that the Petitioner has relinquished its shares of the Company on 20/05/2013. The Respondent Company is unaware of the fact that under the Companies Act, mere statement of relinquishment of shares by the Petitioner without following any legal procedure and any proof is not tenable. I say that the Respondents have themselves have taken various stands that Applicant company has cancelled the shares of the Petitioner and thereafter, claiming that the Petitioner has relinquished its shares of the Company without stating that in whose favour the shares have been relinquished. The whole argument does not have any legal standing considering the provisions of the Companies Act, 2013 and devolves corporate liability. 3.5 I say that the Appellant/Respondents have failed to consider the nature of reliefs sought by the Petitioner and restricted their Application only to the extent of Section 241. I say that the Petitioner has filed the present Petition under Section 59, Section 241 r/w 242, 213(b) of Companies Act, 2013. The first prayer of the Petitioner is seeking rectification of Register under Section 59 of the Companies Act, 2013 and therefore, even otherwise, apart from having right under Section 241, the Petitioner has right under Section 59 of the Companies Act, 2013. 3.6 With the above submissions, the Respondents/Petitioners submitted that MA 235/2017 is without any merits and baseless, vexatious and mala fide and therefore liable to be dismissed with heavy cost.;