Bikki Raveendra Babu, Member - (1.) This application is filed by original petitioner seeking following amendments in the reliefs as well as in the body of the petition. [A] Amendments in the reliefs at para 7(m) to 7(r) (m) to direct Respondent No. 1 to remove respondent No. 3 as Director of the company. (n) not to make any subsequent change in Directorship of the first respondent company without approval of minority shareholders/petitioner (o) to direct respondents to make good all the losses caused to the company due to their oppressive behavior and mismanagement of affairs of the first respondent company. (p) to direct respondents to pay all the statutory liability caused due to oppressive behavior and mismanagement of affairs of the first respondent company. (q) to reprieve the petitioner and his family members from statutory liability (r) to direct respondent No. 3 to repay remuneration received by him from the first respondent company [B] Amendments to add para 8(i) to 8(j) of the petition: (i) restrain respondent No. 3 from discharging functions as Director of the first respondent company (j) to restrain respondent No. 3 from getting any remuneration as Director. [C] Amendments in the body of the petition: - (a) Replace the following at paragraph 2 of the petition "The petitioner is the main promoter and Director of the Company. He is holding 44,200 equity shares of Rs. 10/- each altogether, fully paid up which constitutes about 44% of the issued and subscribed capital of the Company". [D] Add the following at paragraph 5(g)(iii)(a) to 5(g)(iii)(h) of the petition:- (a) "The appointment of respondent No. 3 itself is illegal and the same has been done without the consent of the petitioner. Respondent No. 3 was appointed as a Director of the respondent No. 1 company under section 152 of the Companies Act, with effect from 02.05.2015 and for giving the formal effect to the appointment, the E-Form DIR 12 was filled, signed and filed on 07.05.2015 (copy of the E-Form Resolution for appointment and consent to act as Director is attached herewith and marked as Exhibit - 2A). The petitioner hereby submits that no Board Meeting was convened and held for the alleged appointment and no resolution has been passed by the Board of the Directors of the respondent company for authorizing any such appointment. Thus, the petitioner being one of the Directors of the respondent company has never given any consent for the alleged appointment of respondent No. 3 as a Director of the respondent company. Respondent No. 3 is the son of respondent No. 2 and respondent No. 2, being Director of the company used his authority illegally and appointed his son as a Director of the company so that his control over the company can be increased indirectly. Further, the E-form DIR - 12 is also signed by respondent No. 2 only about which the petitioner pursues no knowledge. The petitioner vide letter dated 22.07.2016 sought clarification regarding the appointment of respondent No. 3 as a Director of the respondent company from respondent No. 2 (copy of the letter dated 22.07.2016 is attached herewith and marked as Exhibit 3A) it is submitted by the petitioner that he has never given his consent for appointment of respondent No. 3 as Director of the respondent company. Since the petitioner was not supporting the respondents for carrying out misappropriation of funds of the company into their personal accounts and in other allied malpractices, respondent No. 2 on his own initiated appointment of respondent No. 3 as director of the respondent company without issuing any notice for convening of Board meeting and without holding any meeting of the Board of Directors. I further submit that no meeting of Board of Directors of the respondent company has been held on 02.05.2015 and no resolution for appointment of respondent No. 3 has been passed on 02.05.2015. No attendance sheet/minutes book justifying appointment of respondent No. 3 is available with the respondent company. (b) Respondent No. 3 has automatically vacated office of the Director of the respondent company as on September 30, 2015 as the company has failed to pass any shareholders' resolution approving his appointment as Director of the company. (c) Respondent No. 3 has been appointed as Director of the respondent company in violation of section 152 and other applicable provisions of the Companies Act, 2013. (d) Hence the appointment of respondent No. 3 as Director in the respondent company is non-est, invalid and illegal ab initio. The petitioner, vide letter dated 22.07.2016 had shown his concern on the appointment of respondent No. 3 as director of the company. The petitioner had also sought documents regarding the alleged appointment vide the same letter. Instead of providing the relevant documents pertaining to the same, respondent No. 2 gave excuses and confirmed that the matter of the appointment of respondent No. 3 is sub-judice. Thereby respondent No. 2 has expressed his inability to provide documents pertaining to appointment of respondent No. 3 (Copy of the letter attached herewith and marked as Exhibit - 4 A). (e) This indicates that the appointment of respondent No. 3 is illegal and fraudulent as no proper procedure was followed for appointment of Director of the respondent company as mandated and enforced by the companies Act, 2013 read with the Secretarial Standards. (f) The petitioner, vide letter dated 03.01.2017, also sought documents related to the appointment of respondent No. 3 from Mr. Kamalkumar Jain, the Chartered Accountant in practice (Auditor of respondent company) who certified the E form DIR - 12 for appointing respondent No. 3 as a Director of the respondent company; since being a professional and certifying authority, he must have obtained the said documents before certifying the form. (Copy of letter is attached herewith and marked as exhibit - 5A) Mr. Jain replied vide letter dated 04.01.2017 stating that the concerned documents were not in his possession. (Copy of the letter is attached herewith and marked as Exhibit-6A). The reply further indicates that he has only those documents which were signed by the respondents. It is evident from the reply that the respondent No. 3 was appointed without consent of the petitioner. The petitioner vide letter dated 05.01.2017 again asked for the mandatory documents such as minutes, attendance register etc. from the Chartered Accountant which is still unanswered and the petitioner has not received these documents till date. (Copy of the letter is attached herewith and marked as Exhibit - 7A). (g) It is submitted that respondent Nos. 2 and 3 are in collusion with each other and used to purchase raw materials from such firms/companies in which the respondents were directly or indirectly interested at the price higher than the market value. Similarly, respondent Nos. 2 and 3 sold products of the company to their interested firms/companies at a price lower than the market value. Evidence of the same is attached herewith and marked as Exhibit-8A. (h) It is submitted that the respondents Nos. 2 and 3 have siphoned off a huge chunk of funds of the respondent company (C.C. Account) to their personal accounts. The latest bank statement of the CC account of the respondent company clearly shows siphoning off of the company's funds from the CC account to the respondents' accounts and to other companies or firms in which respondents are interested in. A copy of the statement of the CC account is attached herewith and marked as Exhibit - 9A".
(2.) According to the applicant he was granted part inspection of statutory records and register of members of the first respondent company on 29.07.2016 and upon such inspection, the applicant found various non-compliance and continuing mismanagement and oppressive acts which are against the interest of the company resulting into huge financial losses and avoidable statutory liabilities resulting into erosion of shareholders' net-worth.
(3.) In this application, respondents No. 1 to 5 filed reply stating that the proposed amendments are not necessary to determine the real controversy between the parties; the amendment introduces new causes of action and changes the entire tenor and nature of the petition. It is stated that the issue of removal of respondent No. 3 as Director has been raised for the first time in the amendment application although petitioner has got knowledge of the same but the applicant chose not to make any claim and he has waived his right to challenge the appointment of respondent No. 3 as director of the first respondent company. Regarding the issue of buying raw materials at higher rates and selling products at lower rates, no such whisper of the issue was made in the main company petition and introduction of such issue will cause the introduction of new cause of action.;