SURESH KUMAR AGARWAL Vs. R AND R CONSORTIUM P LTD

JUDGEMENT

(1.) THIS Company Petition No. 36 of 2006 has been filed by Shri Suresh Kumar Agarwal under Sections 397, 398, 402 and 403 of the Companies Act, 1956 (hereinafter referred to as "the Act"), against M/s. R and R Consortium P. Ltd. and Others, alleging certain acts of oppression and mismanagement. M/s. R and R Consortium P. Ltd., was incorporated in the year 1996 having its registered office at 9, Bardiya Colony, Museum Road, Jaipur, with authorised share capital of Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10 each (which was increased to Rs. 25,00,000 in June, 1996 and again increased to Rs. 50,00,000 in March, 1997) with the main objects to purchase, acquire, convert, develop, improve, hold with absolute or limited rights or on lease, sub-lease or otherwise and to erect, construct, build, demolish, re-erect, alter, repair, furnish and maintain land, including agricultural land, building, houses, farm houses, residential flats and commercial complexes, etc.

(2.) The petitioner's case is that on respondent No. 2's representation and assurances he invested Rs. 22.5 lakhs out of which 1 lakh shares of Rs. 10 each (being 24.99 per cent, of respondent No. l's shareholding) were only allotted though he was promised 50 : 50 shareholding in respondent No. 1 company besides directorship ; the balance amount of Rs. 12.5 lakhs was retained by respondent No. 1 without any interest, the petitioner agreed to take the same back on July 6, 2005, without any interest; on July 7, 2005, respondent No. 2 brought in 25 lakhs as his share application money as on March 31, 2006 ; the only asset of respondent No. 1 (a plot measuring 1,725 sq. yards) was purchased with defective title out of Rs. 22.5 lakhs invested by the petitioner ; the petitioner was not even allowed to be impleaded in "suit for mutation of Govt. agricultural land"; respondent No. 2 to oust the petitioner and to gain control inducted his son (respondent No. 3) on the board of directors illegally; despite the civil court's order dated April 17, 2006, board meeting was held as per the respondents' notice dated April 12, 2006, for holding board meeting to convene extraordinary general meeting to amend the capital clause of the memorandum of association, for appointment of directors, etc., and despite the Company Law Board's order dated September 21, 2006, share capital was increased; the respondents have attempted to make out a false case that the petitioner's shareholding has been transferred to respondent No. 2's sons, it is with mala fide intentions to oust the petitioner from respondent No. 1-company.

(3.) SHRI Rahul Sharma, counsel for the petitioner argued that the petitioner admittedly holds 25 per cent, of the shareholding of respondent No. 1 company. The petitioner is also a director on board of the company. It was argued that respondent No. 2 approached the petitioner in 1996 and requested him to bring in funds into the company by acquiring equity. Respondent No. 2 also promised directorship to the petitioner. On the representation and assurances held out by respondent No. 2, the petitioner brought in Rs. 22.5 lakhs into the company in 1996. The petitioner was allotted 1,00,000 equity shares of Rs. 10 each of the company against Rs. 10 lakhs being 24.99 per cent, of the shareholding of respondent No. 1. The balance amount of Rs. 12.5 lakhs was retained by the company. Respondent No. 2 assured the petitioner that he would ensure that the petitioners' stake/share in the company would also become 50 per cent, either by allotting him fresh equity or by way of transfer. It was on this assurance and promise held out by respondent No. 2 that the petitioner did not ask for return of Rs. 12.5 lakhs. It was always held out to the petitioner and believed by the petitioner that the company would really be in the nature of a quasi partnership of the petitioner and respondent No. 2. It was pointed out that respondent No. 1 company has not conducted any business since inception. Out of the funds brought into the company by the petitioner, respondent No. 2 negotiated and purchased the only asset of the companya plot of land at C Scheme, Ashoka Road, Jaipur, in the year 1996 measuring 1,725 sq. yards. It was represented and held out to the petitioner that said plot would be jointly developed by respondent No. 2 and the petitioner. But respondent No. 2 kept avoiding transfer/allotment of additional 25 per cent, equity to the petitioner on one pretext or the other. Instead he represented to the petitioner that he would ensure that SHRI Santosh Chand Jain, another shareholder transfers his 25 per cent. holding to the petitioner as it was not possible for the company to issue fresh shares. This was in May, 2005. In August, 2005, respondent No. 2 informed the petitioner that certain corrections were required in the entries in the revenue records in respect of the plot and requested the board to authorise him, i.e., respondent No. 2 to take steps in this regard. Believing the representations of respondent No. 2, the petitioner supported the resolution dated August 23, 2005, to this effect. But enquiries made about the status of the plot revealed that the said plot had not even been mutated in the name of the respondent-company and that the Revenue authorities had refused to mutate the plot in the name of the company.