UPENDRA HOSDRUG SUNDAR KAMATH Vs. K.G. INIAN

JUDGEMENT

(1.) This petition has been filed to quash the private complaint in C.C.No.240 of 2017 in the Court of the Additional Chief Metropolitan Magistrate [Economic Offence - 1] Egmore, Chennai filed under sec. 447 and 448 of the Companies Act and Sec. 463 and 464 of the Indian Penal Code.

(2.) The crux of the allegation contained in the private complaint is that the petitioner is the share holder of the 11th accused Tamilnadu Mercantile Bank Limited, holding 2500 equity shares. The accused 1 to 10 are the Directors of the 11th accused which is a banking company and is regulated under the Companies Act, 2013 as well as Banking Regulation Act and Reserve Bank of India. The affairs of the company was managed by the accused 1 to 10. The 6th petitioner is the lawyer by profession and also one of the Director of the bank. He is also incharge of the affairs and functioning of the bank. The board consists of two Directors nominated by Reserve Bank of India, Mr.K.N.Rajan and Mr.K.V.Rajan and they played their role independently and hence, they have not been arraigned as accused. It is further stated that in the Annual General Meeting held on 29/1/2016, the petitioners were elected as directors. In the same Annual General Meeting, a resolution was passed to issue bonus share to the existing shareholders in a 500 : 1 ratio. In the Annual General Meeting held on 26/5/2016 the petitioners allegedly decided to issue bonus shares to the shareholders who had supported the petitioners to get elected. Consequently bonus shares were issued against 46,862 shares held by Nonresident Indians facing prosecution by the Enforcement Directorate without the approval of the Reserve Bank of India. The above move was opposed by the then Company Secretary Mr.C.S.Deepak as it would lead to violation. However, the accused ignored the objections and proceeded to issue bonus shares to foreign investors. The Board has also decided not to issue bonus shares to the share holders who have voted against them in the Annual General Meeting in order to strengthen their hold in the bank by issuing shares only to the shareholders who are in their favour and eliminate and decimate those who are against them.

(3.) It is further stated that PAS-3 form relating to allotment of bonus shares dtd. 19/9/2016 submitted to the Registrar of Companies is a fraudulent one which was allegedly contrary to the PAS-3 form dtd. 31/5/2016 submitted to the Registrar of Companies. The accused also obtained legal opinion dtd. 11/6/2016 from Mr.A.K.Myilsamy, Advocate and he has opined that bonus shares should be issued to all as per the Register of Members as on the date. However, the accused is not satisfactory with the opinion and took another legal opinion from Mr.T.Poornam on 12/7/2016. After taking the legal opinion, the accused conducted three board meetings and tried to convince Mr.C.S.Deepak to agree to their plans. However, he did not agree, which resulted in Mr.C.S.Deppak to go on compulsory leave. It is also stated that the accused conveyed a Board meeting on 8/9/2016 without informing Mr.C.S.Deepak wherein two nominee Directors were also present. The accused also forced Mr.C.S.Deepak to submit his resignation and obtained resignation against his will. Using his resignation, the accused modified the minutes of the Board Meeting dtd. 8/9/2016 stating that Mr.C.S.Deepak had resigned on 8/9/2016 and the same was recorded in the Board meeting. It is stated that the resignation was not available on 8/9/2016 and the board meeting has been endorsed by the two directors nominated by the Reserve Bank of India. Hence, it is stated that the above acts of commission and omission, fabrication of documents, forging and creating of non-existent documents by the petitioners are offences punishable under Sec. 447 and 448 of the Companies Act 2013 and Sec. 463 and 464 of Indian Penal Code. It is also stated that the accused systematically indulged in creating false documents and sending false statement to the Registrar of Companies. Based on the above private complaint, after recording the sworn statement of the complainant, though the complaint was returned by the Court for certain clarifications, was later taken cognizance by the Special Court for the offences referred above. The same is sought to be quashed.