Rajeswara Rao Vittanala, Member - (1.) The Present Company Petition bearing CP No. 06/241/HDB/2017 is filed by Gangadhar Madupu U/ss. 241 r/w Sections 164, 167, 213, 447 & 448 of Companies Act, 2013 against the Katta Corp Private Limited, by seeking the following reliefs: a. To order the investigation into the affairs of the Respondent No. 1 Company and iServiceGlobe Private Limited by Serious Fraud Investigation Officer under Sec. 210 and 212 of the Act, 2013 and any other provisions of Indian laws as found fit by the Hon'ble court. b. To set aside the Sale Deed bearing document number: 22588 of 2015 dated 3rd Nov 2015 and doc. No. 29066/2016 dated 04.11.2016 as null and void and not binding on the Respondent No. 1 company, which is a result of corporate fraud played upon by Respondent No. 2, 3, 4, 7 & 8. c. To punish the Respondent No. 2 to civil prison and penalty for willful violation of Sec. 167(1), 447 and 448 of the Companies Act, 2013. d. To punish Respondent No. 2, Respondent No. 3, Respondent No. 4 and Respondent No. 7 for Breach of Trust, cheating, fraud, money laundering, misappropriation of funds, knowingly violating and contravening the Companies Act, 2013 and willfully supporting the above illegal activities etc.
(2.) The Brief facts of the case, which are relevant to the issue in question, are as follows: (a) Katta Corp Pvt. Limited (hereinafter referred to as Company) was initially incorporated under the Companies Act, 1956 on 21st July 2006, by the promoter Directors namely Katta Srinivasa Rao (Respondent No. 3), Katta Jagadeesh (Respondent No. 2) and Sridhar Gopinathan. (b) The Petitioner and Respondent No. 3 are related to each other and both living in the USA. On the request made by the Respondent No. 3 the petitioner invested his hard-earned money of USD 2,40,932/- in Respondent No. 1 Company. The details of investments given below: The Petitioner is a Shareholder of Respondent No. 1 Company and holding 2,39,244 Lakhs Equity Shares of Rs. 10/- each (9.3% of the total paid up capital of the Company). (c) The shareholding pattern of the Respondent No. 1 Company is as follows: (d) Though the petitioner was following up of the issue with the Respondent No. 1 in USA either to issue share certificate for the last 3 investments totaling of USD 1,40,982/- or to return the money immediately, they did not care about it. However, the money paid by the petitioner is shown as share application money in the balance sheet filed with the Registrar of Companies and the Income Tax Department. (e) When petitioner visited India in 2015, he came to know that as per the FDI (Foreign Director Investment) Policy, formulated by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, the Respondent No. 1 Company, should have issued the capital instruments (Equity Shares) within 180 days from the date of receipt of the inward remittance received through normal banking channels. In case, the capital instruments are not issued within 180 days from the date of receipt of the inward remittance, the amount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels. Non-compliance with the above provision would be reckoned as contravention under FEMA and would attract penal provisions. The Respondent No. 1 Company influenced by Respondent No. 3 concealed and gave false information, thereby breached the trust reposed by the Petitioner. (f) The Respondent No. 3 being majority shareholder of Company by holding of 58% of the total paid up capital is remotely controlling it from USA. The Company has purchased agricultural lands in Survey No. 65/8 to the extent 5.00 acres, situated at Ghattupally Village, Maheswaram Mandal, R.R. District under a registered sale deed bearing Doc No. 16292/2006 dated 28-09-2006 and another agricultural land in Survey No. 468/3/B, 468/3/C and 468/3/D, extent Ac. 3.00 situated at Nadergul Village, Saroornagar Mandal, R.R. District, under a registered Sale Deed bearing Doc No: 11103 of 2008, dated 24.10.2008. After the said purchase of agriculture lands, the petitioner was made to understand by the Respondent No. 3 that the agricultural land at Nadargul is embroiled in legal litigation and therefore, no activity could be undertaken. (g) In order to put a quietus to the said un-usual interference by third parties, the Company has filed a Civil suit O.S. No. 633 of 2010 on the file of 1st Additional Junior Civil Judge, Ranga Reddy District, LB Nagar for perpetual injunction, restraining the defendants therein with peaceful possession and enjoyment in respect of agricultural land at Nadargul. The Hon'ble courts vide its Judgment and decree dated 28/04/2014 was pleased to decree the suit. (h) In spite of having possession and title over the said land, the Company did not make any attempts/efforts to develop the said land by constructing affordable row housing for the object for which, the Company was formed and investment taken. The Respondent No. 2, who is Managing Director, under the influence of Respondent No. 3, who is his younger brother, avoided sending any notices for conducting of any meetings, such as AGM, EGM etc. to the Petitioner from the date, the Petitioner became Shareholder and Director of the Company or allowed him to participate in the meetings or Company decisions. The Respondent No. 3, his wife Radha Vudumula along with his Indian born Son Respondent No. 4, who was also Directors in the Company, clandestinely resigned from the Company as Directors, fearing the imminent threat of prosecution, connived, together with a pre-meditated plan to rob the gullible investors such as this petitioner. The clandestine resignation of the Respondent No. 3, his wife Radha Vudumula was accepted on 12th November 2014 by a Board Resolution and this Petitioner was not informed and invited for this Board Meeting. (i) In the first week of August 2015, Respondent No. 3 called from the United States and pleaded the Petitioner for an urgent hand loan of USD 3,000/- to be loaned to Company; for paying the long pending and overdue Auditors Fees. Considering the passionate plea of Respondent 3 and also of Respondent 4, this petitioner gave an Account Payee cheque Vide: 1081 dated 8th September 2015 for USD 3,000/- drawn on First Niagara Bank. As the Petitioner was writing the name of Katta Corp on the cheque, Respondent No. 3 called and pleaded to write the cheque favouring him so that the amount can be quickly realised and paid to the Auditors. Believing the trust and words of Respondent No. 3, the Petitioner gave a modified Account Payee cheque Vide: 1081 dated 8th September 2015 for USD 3,000/- favouring Respondent No. 3, drawn on First Niagara Bank, USA. The cheque was taken from the Petitioner by Respondent No. 4. To the utter shock and dismay the Petitioner found out that Respondent 4 deposited this cheque in the Account of Katta Prasanna Lakshmi in the State Bank of India, Padmarao Nagar Branch, IFSC Code: SBIN0002772, Hyderabad and the cheque was cleared on September 30th, 2015. Katta Prasanna Lakshmi is the first Indian Wife of Respondent No. 3 and the mother of Respondent No. 4. The Petitioner sent multiple mails to Respondent 4 and also sent a letter on 10th May 2016, but there was no response. This clearly proves beyond doubt the criminal intent and connivance of Respondent 2, 3 and 4 to openly breach the trust and rob and cheat this Petitioner using Respondent No. 1 Company. (j) It is stated that as per the ROC, the Respondent No. 2 was appointed as Director on 31st December 2013, who is the elder brother of Respondent No. 3, without any notice to this Petitioner as a Director. The Respondent No. 5(ROC) records also reflected that Respondent No. 4 was also appointed without any notice of the Petitioner. Around the year 2009, the Respondent No. 2 was asked to resign by Respondent No. 3, because of his serious misdeeds in the Respondent No. 1 Company and his resignation was accepted by Respondent No. 3. The back-door entry of Respondent No. 2 again as Managing Director of the Respondent No. 1 Company in December 2013, appointed unilaterally by Respondent No. 3, without the approval of all the Directors and other Shareholders proves the criminal intent of Respondent 2, Respondent 3 and Respondent 4 and is a result of long planning to siphon off money/assets of Company. (k) It is stated that Respondent No. 2 was convicted for a criminal offence under Section 255 of CrPC in a CC No. 68 of 2015, by the Hon'ble IV Special Magistrate, Hyderabad vide his Order dated 4th June 2015 and was directed to undergo 6 months' imprisonment. The Respondent No. 2 who as Director suppressed the said order of his conviction from the Board and continued to act as Director actively discharging the duties assigned by the Board. The continuance of the Respondent No. 2 as Director from 4th June 2015, with the open and outrageous connivance with Respondent 3 and Respondent 4, is in contravention of the Section 164(1)(d) of the Companies Act, 2013 and all acts performed by him misrepresenting the Company after 4th June 2015 are ultra vires, illegal, void and not binding on the Respondent No. 1 company. (l) The Petitioner received a mail Notice from Respondent 4 on 16th June 2015 for an Extra Ordinary General Meeting to be held on 2nd July 2015 at 12.30 PM. The Meeting Agenda was to terminate Respondent No. 2 as Director under Section 169 and such other, applicable provisions, on the following 2 charges: a. Respondent No. 2 is facing charges under Section 138 of the Negotiable Instruments Act in the court of law b. Respondent No. 2 misappropriated Rs. 2,20,000/- of company funds (m) Though the petitioner is in India, he was not intimated about the alleged held at 12.30 PM 1ST on 2nd July 2015 and the Resolution has been adopted to terminate Respondent No. 2. However, he was continued and transacted the business of the Company with sole intention of defrauding and cheating the gullible investors. The Petitioner received another mail Notice from Respondent 4 on 24th July 2015 for a Board of Directors meeting to be held on the same date 24th July 2015 at 10 AM 1ST. The Meeting Agenda was on the following 2 charges: a. To terminate Respondent No. 2 as Director under Section 169 and such other applicable provisions, b. To convene the EGM to pass the resolution to remove the Respondent No. 2 as Director. This Notice of the meeting of the Board of Directors was sent by Respondent 4 to the 3 Directors on record viz. Petitioner, Respondent 4 and Respondent 2. However, the Board meeting was conducted without his presence even though the Respondent No. 4 had knowledge about his presence in India. So Company has resorted to brazen and open acts of Oppression and Mismanagement with a sole intention of defrauding and cheating the gullible investors like the petitioner. (n) The Petitioner further submits that he received a mail on 3rd August 2015 from Respondent No. 4 (referring himself as Director in Katta Corp Private Limited). The Petitioner was never informed of the appointment of Respondent No. 4 as Director. The Respondent No. 4 sent a mail on 3rd August 2015 from: lkatta@iserviceglobe.com and mentioned the subject as - EGM and had a file attachment named: EGMKatta. This was a Notice to Members calling for an Extra Ordinary General Meeting to be held on 26th August 2015 at 9.30AM 1ST. The Agenda of the meeting was to remove Respondent No. 2 from the position of the Director in Katta Corp (P) Limited for misappropriation of Company funds. This meeting was convened upon a special notice sent by Respondent No. 3. Strangely, on 25th August 2015, the Petitioner received a mail from Respondent No. 4. The mail was sent from: lkatta@iserviceglobe.com and mentioned the subject as - EGM Cancellation Notice and had a file attachment named: EGM Cancellation Katta pdf. This was a Notice to Members cancelling the Extra Ordinary General Meeting to be held on 26th August 2015 at 9.30 AM 1ST. The notice mentioned that Respondent No. 2 had resigned from the Company as on 24th August 2015 and hence the EGM is cancelled. It is alleged that Respondent No. 2 has indeed misappropriated the company funds. Even then, if Respondent No. 2 had resigned on 24th August 2015 as mentioned in the Notice to Members, it is shocking that the Form: 32 was not filed with the ROC and he was still continues to be a Director. This act once again clearly exposes the criminal nexus among Respondent Nos. 2, 3 & 4 openly cheat, defraud and siphon away the investor money. (o) The Petitioner vide his letters dated 6th March 2016 and 29th April 2016, brought to the notice of the Respondent No. 5, about conviction of Respondent No. 2 and his void acts of discharging duties as Director/Managing Director are illegal and pre-judicial to the interest of the company and its investors. The Respondent No. 2 despite his disqualification as Director is continuing to function as Director of the Respondent No. 1 Company knowing fully well that the office of the Director held by him has become vacant because his disqualification specified under Section 164(2) of the Companies Act, 2013, continues to act as Director much less Managing Director and should be severely punished under the provisions of Section 167(1) of the Companies Act. The Respondent No. 2 replied to the notice initiated by Respondent No. 5, by filing a reply along with the HDFC Bank Statements for the period 8th January 2014 to 31st March 2016. Upon receipt of the response, this Petitioner personally met the Authorities at the office of Respondent No. 5 and being convinced the Respondent No. 5, sought reply from Respondent No. 3. The Respondent No. 3 replied to Respondent No. 5 with vague and baseless allegations. The Petitioner in spite of holding multiple meetings, sharing letters and emails with clinching supporting documents of the acts of misappropriation, siphoning of company funds using another Software Company iServiceGlobe Private Limited, Hyderabad owned by Respondent 3, illegal Money laundering, Oppression and Mismanagement by the entire Katta Family and the undisputable glaring and open contraventions and non-compliance with the provisions of Companies Act, 2013, no action was taken by the Respondent No. 5. (p) As a law-abiding person, the Petitioner informed the Respondent No. 1 company about the conviction of Respondent No. 2 and his continuance with the open influence and remote directions of Respondent No. 3 and purported acts of discharging of duties as director/managing Director are null and void, illegal and pre-judicial to the interest of the company and its investors, liable for criminal prosecution and penalty. The Respondent No. 1 Company miserably failed to take any steps in that regard. (q) It is stated that the Company has made illegal transfer of the Agricultural land situated at Nadergul by the Respondent Company No. 1, represented by Respondent No. 2, in favour of Respondent No. 7, Smt. Gade Saraswathi Devi, under registered Doc No. 22588/2015 dated 3-11-2015, who is none other than the Mother-in-Law of Respondent No. 3. The Respondent No. 2 in collusion and active connivance with Respondent No. 7 and under direct influence of Respondent No. 3 and Respondent No. 4 sold the said property of the Respondent No. 1 Company, without any notice or meeting or consent or approval of all the Directors and the Shareholders. The Sale Deed Number: 22588/2015 dated 03-11-2015 mentions that the sale consideration of Rs. 1,20,00,000/- was paid by Smt. Gade Saraswathi Devi to the Respondent No. 1 company and the Respondent No. 1 Company confirmed the receipt of the sale consideration. Upon a careful perusal of the HDFC Bank Statements of Himayath Nagar Branch submitted supra, it is clinching clear that the alleged sale proceeds have not been deposited in to the Respondent No. 1 Company Bank Account. This clearly goes to show that the Respondent No. 7 has purchased this property benami for Respondent No. 3, who is the mother-in-law of Respondent No. 3. Also, the said disposition of the Agricultural land was not in accordance with the procedures enumerated under the Companies Act, as no notice or communication for calling of a EGM was made to the Directors and other Shareholders of the Respondent No. 1 company. The Respondent No. 3 sent a mail on 20th February 2016 stating that the Respondent No. 1 company is in dormant stage as there is no business happening. The Respondent No. 1 Company, Respondent No. 2, 3 and 4 never communicated the intent of sale of Nadargul Land to this Petitioner and willfully and intentionally concealed the illegal sale of the Nadargul land in November 2015. Further, it is learnt by the petitioner that Respondent No. 7 has in turn executed a registered sale deed vide Doc No. 29066/2016 dated 04-11-2016 in favour of Respondent No. 8. The said acts of Respondent No. 2, 3, 4 and 7 in collectively disposing the assets of the Company surreptitiously under sham and nominal document without the consent and approval of the Board and Investors, is not only pre-judicial to the interests of the Respondent No. 1 Company and its share-holders, but also null and void and done only to deprive the Petitioner and other shareholders of their legitimate rights. This is further evident from the mail sent by Respondent No. 3 to the Petitioner on 27th November 2016, confirming the removal of Respondent No. 2 as Director of Company from August 2015 and decisions are taken unilaterally without informing and consulting the Board and Shareholders, which is a clinching act of Fraud, Cheating, Misappropriation and Oppression and Mismanagement. (r) As matter stood thus, the petitioner through email dated 29-11-2016 issued by Respondent No. 3 came to know that Respondent No. 2 entered into fraudulent transaction in respect another asset held by the respondent No. 1 Company at Ghattupally Village, Maheshwaram Mandal. The said email reveals that Respondent No. 2 made huge money by entering into illegal transaction with respondent No. 9. (s) In the above circumstances, the Petitioner is left with no other remedy except to approach this Tribunal for redressal of his grievance of Breach of Trust, Cheating, Fraud, Money Laundering, Oppression and Mismanagement by the Respondent No. 1 Company through Respondent No. 2, 3, 4 and 7.
(3.) The Respondents No. 3 and 4 have opposed the Company petition by filing a Common counter dated 14-Feb-2017. The following are their main contentions in the counter: i. The petition itself should not be numbered by the Registry since the Power of Attorney filed along with the petition is defective, and it is neither properly stamped as per the Stamp Act nor legalized/apostillised as per the requirements of Hague Convention. Moreover the Power of Attorney is executed in the USA should bear apostle stamp affixed by U.S. Department of State Authenticated office. ii. The petition is not maintainable under Section 241 of Companies Act, 2013 as he has failed to satisfy even basic ingredients such as oppressive acts and mismanagement so as to warrant taking action by the Tribunal. iii. The petitioner is of unsound mind and the petition is filed by suppressing material facts, which are in the knowledge of the petitioner. One Sridhar Gopinathan is a qualified Chartered Accountant, was the Managing Director of the Respondent No. 1 Company until he resigned on 07th January, 2014. The Majority shareholders including the petitioner, appointed the Respondent No. 2 as the Managing Director immediately to conduct the affairs of the Company. iv. The petitioner has dubious past and he was convicted by the courts in the United States of America. He is not a licensed medical practitioner as claimed by him. The petitioner surrendered his Medical license in 2010 in the state of New York, United states as Medical board found that he breached the doctor and patient relationship and trust. He was convicted in 2012 in a sexual abuse case, in which he touched a patient inappropriately. He has served jail sentence in 2013. v. On 14th September, 2014, a Board's meeting was held at SMR Vinay Acropolis Apartment 101-B in Madhapur, Hyderabad, where the petitioner was living. At the said meeting, the Board discussed the opportunity to buy the 2.75 acres land belonging to Respondent No. 7 as the real estate market in and around Guntur was doing exceptionally well in Andhra Pradesh. The Board decided to offer the 3 acres land in Nadergul belonging to the Respondent No. 1 Company, which was valued at 1.2 crores, to the Respondent No. 7. An agreement between the Respondent No. 1 Company and Respondent No. 7 was signed on October 2nd 2015 as per the Board decision. The Respondent No. 2 was authorized to represent the Respondent No. 1 Company to register the land to the Respondent No. 7. The registration of the land owned by the Respondent No. 1 Company in favour of the Respondent No. 7 was done on 3rd November, 2015. vi. While things stood thus, the petitioner proposed to sell his shares to the Respondent No. 3. However, he demanded that the amount be paid in USD. Subsequent to the investment made by the petitioner, the rupee depreciated substantially against the USD, (exchange rate was 1 USD = Rs. 39 at the time of invest became 1 USD = Rs. 67 when the petitioner offered to sell his shares). As this demand was not accepted, the Petitioner started nurturing a grudge against the Respondent No. 3, and began making a barrage of complaints of mismanagement and fraud against the Respondent No. 1 Company, its directors and the Respondent No. 3. vii. The petitioner was a Director on the Board of Respondent No. 1 Company since 2008. He participated through audio conference in many of the Board Meetings of the Respondent No. 1 Company. He has also attended the Board. Meetings, when he was in India and he even signed the statutory filings for the years 2011-12, 2012-13, 2013-14. The averments made in Para 4 relating to the non-issuance of share certificates by Respondent No. 1 Company acting through Respondent No. 3 are baseless and patently false. It is Mr. Sridhar Gopinathan, who was the Managing Director of the Respondent No. 1 Company and all the matters relating to FEMA compliances were handled by him. However, the Petitioner never raised this issue with the Company or with the then Managing Director. Moreover, being a Director, who was the signatory to the various statutory filings of the Company between 2011 and 20-14, the Petitioner is estopped from making wild accusations without any basis against the Respondent No. 3. viii. Mr. Sridhar Gopinathan, who turned out to be a criminal, and is facing currently various criminal charges, was the Managing Director of Respondent No. 1 Company until July, 2014 and all the records were under his control. At the time of his resignation, he has taken away all the statutory records. ix. The proposed EGM in question was cancelled upon the adequate explanation submitted by the Respondent No. 2 and he tendered his resignation vide letter dated 24th August, 2015 and the same was informed to the Board by Respondent No. 4. Further, the petitioner is fully aware that the Respondent No. 4 was appointed as Director of Respondent No. 1 Company and he has never raised any question about the same till date. The e-mail exchanges between the petitioner and the Respondent No. 4 establishes the fact that the petitioner communicated with the Respondent No. 4 being fully conscious that the respondent No. 4 was acting in the capacity of Director of Respondent No. 1. Further the petitioner himself is a signatory to the Annual return of the Respondent No. 1 Company for the year 2013-14, in which the date of appointment of the Respondent No. 4 as Director is signed by the petitioner himself as 14th February 2014. x. There was no violation of Section 164 and 167 by Respondent No. 2, and in any case, the Respondent No. 2 has resigned as Director of the Respondent No. 1 Company vide resignation letter dated 24th August 2015, thus he was no longer the Director of the Company. Therefore the violation of Sections 164 and 167 of the Act does not arise. The petitioner is forum hunting by filing frivolous complaints before the statutory bodies like ROC, RD and now before this Hon'ble Tribunal with an oblique motive to threaten and coerce the Board of Directors and majority shareholders and impede the attempts by the Board and shareholders to steer the Company into the right direction. Upon the complaint of the petitioner regarding the Respondent No. 1 Company, the Registrar of Companies served a show cause notice on 31-03-2016 and the same was replied with evidence that the petitioner's allegations were baseless and without facts. Further, the Respondent No. 1 also sent a legal notice to Sridhar Gopinathan who served as Managing Director Kattta Corp until 7th January 2014 to come forward and submit the accounts for some of the allegations that the Petitioner made in the complaint. Till date no, response has been received Mr. Sridhar Gopinathan. The petitioner also complained against the Respondent No. 3 to ROC, who issued show cause notice to the Respondent No. 3 to his US address on 29th April 2016. The show cause notice was replied by the Respondent No. 3 and given elaborate evidence showing that the allegations made by the Petitioner were false and baseless. Thereafter, the Registrar of Companies forwarded the responses of both the Respondent No. 1 and Respondent No. 3 to the petitioner along with their evidences and asked the petitioner to provide his explanation. It was learnt that till date the Petitioner has not furnished his explanations to the ROC. The allegations of siphoning of funds, oppression, money laundering etc. are baseless and patently false and hence denied.;