INDIAN BANK Vs. K NARAYANA DAS

JUDGEMENT

(1.) ALL the three Appeals are directed against the same order passed by the Company Law Board dated 4th April, 1997 passed in Company Petition No. 56 of 1993, therefore, these appeals can be conveniently disposed of by a common order.

(2.) COMPANY Petition No. 56 of 1993 was filed by one K. Narayandas, who is Appellant in Appeal No. 7 of 1997, (hereinafter referred to as the Petitioner). To this Appeal, the company Bristol Grill Pvt. Ltd., was joined as Respondent No.1, Shri Balramdas was joined as Respondent No.2, Shri K. Bhagwandas as Respondent No.4 and Shri K. Ramdas as Respondent No.5. They are Appellants in Appeal No. 6 of 1997, (hereinafter referred to as the Respondents). Indian Bank was joined as Respondent No. 3 to the Company Petition, it has filed Appeal No. 5 of 1997, (The Indian Bank is hereinafter referred to as the Bank).

(3.) THE Respondents in their reply submitted that the transaction which the Petitioner seeks to set aside are past transaction with 3rd parties and no relief can be given against such parties. Further, when the petitioner is alleging collusion between the respondents, no particulars have been given of such alleged collusion. It is also wrong, as alleged, that there was any agreement between the shareholder brothers that there will be joint management at all times. No such provision has been incorporated in the articles of association. Respondents have not received any letter purported to have been written by the Petitioner seeking details of the bank operations. The audit of the company could not be proceeded with only because of the intervention of the Petitioner and consequent resignation of the auditor as is evident from Annexure R 9 to the reply. At no time the Petitioner sought for inspection of books of accounts under Section 209 of the Companies Act even though he was allegedly writing various letters to the Chartered Account/ lawyers etc. As far as requisitioning of Board meeting on 7th May, 1991, (Annexure XV of the petition), the Board of Directors could not agree for the presence of outsiders in a Board meeting as was sought in the notice. The company did not organise any Board meeting on that date, but had agreed to held a meeting on 4th September,1991. The meeting on 4-9-1991 could not take place because of the Petitioner's insisting on the presence of outsiders who are not legally entitled to be present in a Board meeting. As far as holding of AGM is concerned, the meeting for 1988-89 was held on 30-9-1990 and for 1990-91 on 30-9-1991, all business except relating to adoption of accounts were transacted in these meetings. For the meetings on 30-9-1991, 30-2-1992 and 29-9-1993 could not be held due to restraint order passed by CLB. It is not correct to say that the minutes of the meetings have been fabricated as if the meetings were held on account of the fact that there was delay in filing of returns with ROC. As far as utilisation of Rs. 32 lacs and Rs. 10 lacs is concerned, it is averred that the entire amount was spent to meet the liability of the company and that too on the basis of resolutions passed by the Board in which the petitioner was present and he has also sighed the minutes. Therefore, it is wrong to allege that there was siphoning of funds. As far as leasing out of the building to Indian Bank is concerned, it was done with the knowledge and consent of the Petitioner and as a matter of fact the company has greatly benefited by the arrangement. In addition to Rs. 3.6 crores granted as loan and Rs.36 lacs as rental advance, the company is receiving Rs. 6 lacs per month by way of rent from Indian Bank and the loan of Rs. 3.6 crores granted by the Bank could be adjusted against the rental payment and the loan could be brought to nil in 10 years time. The entire effort in this direction was undertaken by the Respondent No. 2. Even these amounts of Rs. 3.6 crores and the advance of Rs. 36 lacs were utilised to clear of all the amounts owed by the various firms and trusts in which the Petitioner and Respondents have substantial interest. This has been specifically provided in the loan agreement itself to which the Petitioner was also a party. Accordingly, whatever has been done by the company, particularly the MD, was in the interest of the company and the Petitioner can have no grievance in this regard. The petition has been filed with collateral purpose as the Petitioner has been in the habit of dragging all his family members to various courts and therefore even the grounds adduced by the Petitioner do not call for grant of any relief under Section 397/398 of the Act.