M R JINDAL Vs. NANDA DEVI BUILDERS P LTD

JUDGEMENT

(1.) THE petitioner holding 500 shares in Nanda Devi Builders (P) Ltd. (the company) has filed this petition under sections 397/398 of the Companies Act, 1956 (the Act) alleging acts of oppression and mismanagement in the affairs of the company.

(2.) A summary of the petition is : The company was incorporated in July, 1989, and the present paid up capital of the company is Rs. 4,62,000 divided into 4,620 equity shares of Rs. 100 each of which the petitioner holds 510 shares and his wife another 50 shares. In addition, the petitioner has also advanced a sum of Rs. 1 lakh to the company as loan. He has been a director of the company right from its incorporation and the company has proposed to remove him as a director in the EOGM held on 24.2.2001. The company has built a multi-storey complex known as Nanda Devi Tower in Prasant Vihar, Delhi, consisting of 5 floors including a basement. Even though the company has taken advance from prospective buyers, as early as in 1989, possession has not been handed over to many of the allottees. The 2nd respondent had given 3/4th portion of the basement of the Tower to be Shri Gurmeet Chauhan, Managing Director of Surf Side Systems Limited, at the rate of Rs. 12,000 per month some time in September, 1999, and had also received a sum of Rs. 75,000 as security deposit. These monies are not being accounted for in the books of accounts of the company. This is notwithstanding the fact that half portion of the basement had already been booked in the name of Shrimati Neelam Jhulka and Shri Ram Kumar Sahrawalt on payment of Rs. 2.5 lakhs in 1999. Thus, a property which has already been booked for sale has been clandestinely leased out by the 2nd respondent. Likewise, the 2nd respondent had rented out shop Nos. 4 and 5 in the first floor to one Shri Madhur Aggarwal at the meagre rent of Rs. 900 per month, and had also collected security deposit of Rs. 5,000. These amounts have not been accounted for in the books of accounts of the company. This is notwithstanding the fact that these shops had already been sold to one Shri S.P. Jindal in June, 2000, on receipt of advance from him. Even though the petitioner has written to the 2nd respondent and also to the auditors of the company complaining that the rentals and advances had not been accounted for in the books of accounts of the company, no reply had been received from them. In November, 2000, the petitioner also filed a complaint with the police in this regard and also complained to the Registrar of Companies, Delhi, seeking for investigation into the affairs of the company. The 2nd respondent has been disposing of the assets and properties of the company illegally to his own friends and relations as is evident from the fact that some of the properties have been sold to his close relations in February, 1994. Further, no Board meeting or general body meeting of the company had been held right from incorporation. Since the petition has been raising objections on the illegal activities of the 2nd respondent, he has engineered to have the petition removed as a director in an EOGM convened on 24 February, 2001, so that he could carry on the affairs of the company at his own will and pleasure and at the cost of minority shareholders. Accordingly, it has been prayed that investigation into the affairs of the company should be ordered, a receiver be appointed to take over the properties of the company and all the agreements entered into in relation to the sale of the properties should be cancelled and the 2nd respondent should be surcharged.

(3.) THE counsel appearing for the parties reiterated their respective submissions made in the pleadings. Shri Mathur, appearing for the respondents, submitted that none of the allegations against the respondents could be either considered to be an act of oppression or mismanagement. All the allegations in the petition relate to the period during which the petitioner was a director of the company. THE motive of filing the petition is that the respondents have questioned the authority of the petitioner in selling shop No. 5, and in view of the decision of the respondents to remove the petitioner as a director. He prayed that the interim order passed by this Bench on 5.2.2001 restraining the company from giving effect to the resolution of the general body to remove the petitioner as director be vacated as his removal was due to his prejudicial act against the interests of the company.