C. SINDHULEKHA Vs. LEKHA CORPORATE SECURITIES P. LTD.

JUDGEMENT

(1.) THE present company petition has been filed under sections 397 and 398 of the Companies Act, 1956 (hereinafter called "the Act") praying this Bench, inter alia, to direct - - removal of respondents Nos. 2 to 5 from the board of directors of respondent No. 1 company, enquiry into the affairs of respondent No. 1 company from January 27, 2006 and hold respondents Nos. 2 to 5 responsible for any statutory violation with respect to its affairs, respondents Nos. 2 to 5 to produce all records and accounts pertaining to respondent No. 1 company before this hon'ble Board and issue orders for terminating the agreements made by the aforesaid respondents purporting to act as the directors of respondent No. 1 company and creating liability on it and for recovering damages sustained by respondent No. 1 company on account of wrongful and illegal acts of the aforementioned respondents. Shri Abraham Markos, learned counsel appeared on behalf of the petitioner submitted that respondent No. 1 company was incorporated on February 10, 2003, with two promoters, viz., Mrs. C. Pankajakshi and the petitioner herein. He submitted that the authorised share capital of the company was Rs. 20,00,000 divided into 2,000 equity shares of Rs. 1,000 each and each of the promoters held 1,000 equity shares of the company with its members having limited liability. He further submitted that respondents Nos. 2 to 4 were inducted into the board of directors on November 12, 2004 and the second respondent was later made the managing director of respondent No. 1 company. The fifth respondent was inducted into the board of directors of respondent No. 1 company on January 27, 2006 and respondents Nos. 2 to 5 hold 500 equity shares of Rs. 1,000 each. It is submitted that the second respondent was authorised to take a franchisee of M/s. Patric and Co., Ernakulam vide resolution dated October 12, 2005 of the board of directors of respondent No. 1 company. It was also resolved that the savings account No. 52635 of the second respondent with the Federal Bank, Pavyanur would be used as the franchisee account of respondent No. 1 company with effect from October 24, 2005, till the closing of the franchisee business with M/s. Patric and Co. An amount of Rs. 1,26,000 to be deposited with M/s. Patric and Co., for obtaining the franchisee was also issued by the first respondent -company to respondent No. 2. Respondent No. 1 company soon became a successful venture and was functioning smoothly. However, the second respondent as the managing director of respondent No. 1 company has been running and managing the entire affairs of the company to the exclusion of the petitioner herein. It is pertinent to note that after the board meeting held on January 27, 2006, no board meeting, annual general meeting or extraordinary general meeting has been held. Pursuant to the annual report made up to September 30, 2005, no further reports have been filed by the company. Respondents Nos. 2 to 5 have been acting in collusion to perpetrate their common agenda to keep the petitioner in dark about the current activities of the company. It is also apprehended that respondents Nos. 2 to 5 have not kept proper accounts nor have they been paying statutory levies/taxes pertaining to the company thus incurring huge liability upon the company.

(2.) LEARNED counsel further submitted that the registered office and the business premises of the company, apart from displaying a board of the company does not appear to be used for the attainment of the main object or those that are incidental or ancillary to the attainment of the main object of the company. However, the said business premises is now seen to be used by various other concerns including competing concerns. One such concern by the name "Sushil Finance" with the name of the second respondent shown prominently is seen doing business in the said premises. Respondents Nos. 2 to 5 have misapplied the properties of the company for their personal advantage. The company has not been complying with any of the mandates provided under the Act. The petitioner also bona fide apprehends that respondents Nos. 2 to 5 have destroyed, altered and falsified the register, books of account and other documents belonging to the company with an intention to defraud the petitioner. The petitioner therefore sent a notice dated May 28, 2010, through her counsel to respondents Nos. 2 to 5. However, the respondents have not replied to the notice issued by the petitioner nor have they rendered a complete and true statement of the current shareholding and business affairs of the company. The respondents have also not disclosed the arrangement or the authority under which the company's premises are being utilised by others. The respondents are liable for fraudulent conduct of the business of the company. The second respondent is liable for misfeasance, misapplication and siphoning of the funds of the company. Respondent No. 2, in collusion with the other respondents/directors committed breach of trust in relation to the company.

(3.) IT is further submitted that the second respondent never handled the accounts of the company in a proper manner and also refused to disclose the true accounts and thereby interests of the company including the profits generated by the company out of its business are prejudiced. The funds are being misappropriated without intimation to the petitioner herein. The second respondent never revealed or shared the information regarding the financial condition of the company to the petitioner at any time.