SURAJ PAUL DIAS Vs. VELOCITY NETWORKS P. LTD.

JUDGEMENT

(1.) THE present application is filed under regulation 44 of the Company Law Board Regulations, 1991, inter alia, praying this Bench to restrain the respondents in any manner dealing with or disposing of any assets, either movable or immovable of the first respondent -company pending disposal of the above petition. Counsel appearing for the applicant submitted that the applicant filed the above company petition alleging certain acts of oppression and mismanagement in the affairs of the company and sought various reliefs as prayed therein. It is submitted that when the company petition was filed, this Bench directed the respondents to file counter to the petition within a period of four weeks. However, the respondents have not filed the counter within the time and sought further time. He submitted that the applicant came to know from reliable sources that respondents Nos. 2 to 5 have begun to sell the assets of respondent No. 1 -company and misappropriating the proceeds without calling for public tenders. He further submitted that the board of directors of the company are intending to close down respondent No. 1 company wherein the applicant holds 28.08 per cent. of shares in the company. It is submitted that the respondents had filed then counter to the petition in the month of March, 2013 in which it is stated the list of articles, me respondents alleged to have recovered from the cabin of the applicant on February 1, 2013, but none of the personal items belonging to the applicant was not mentioned in the inventories, which clearly shows that all those items/things were misappropriated by the respondents. In view of the reasons as stated in the application he requested the Bench to grant the reliefs as prayed for.

(2.) THE respondents have filed their counter to this application. Shri R. Murari, learned senior counsel appearing for the respondents submitted that the allegations as made are false. The company did not own the office premises however the same was taken on lease, therefore the disposing of the same does not arise. He further submitted that respondent No. 1 company has taken premises in fifth floor, Cyber pearl, Madhapur, Hi -tec City, Hyderabad, on lease at a monthly rent of Rs. 4 lakhs. As the company did not require the rented premises and with a view to cut down the expenses the company initiated discussions with the landlord to surrender the lease of the premises. The company has also installed various fixtures and had done up the interiors of the leased premises. As the interiors and fixtures would lose a substantial part of their value if they were to be detached from the premises, it was decided to transfer these fixtures to the incoming tenant who would take up the leased premises. The applicant had left the various vendors and suppliers who had provided the interior work for the premises unpaid. These unpaid vendors and suppliers are yet to be paid by the company which amount was to the tune of Rs. 33 lakhs. The lease was terminated and the premises was handed over on April 18, 2013. The interiors, furniture were sold on "as is where is and whatever there is basis" to the new tenant for a sum of Rs. 25 lakhs. It is submitted that the other promoters of the company woke up to the falsification of accounts and the mismanagement of the affairs of respondent No. 1 company by the applicant. The financial situation of the company had become precarious. The company had negligible cash balance and monthly revenue is approximately Rs. 35,000 against an expenditure of Rs. 25 lakhs per month. The business model promoted by the applicant was unworkable and could not be continued. In view of the reasons the application is devoid of merits and liable to be dismissed and requested the Bench to dismiss the application. Heard learned counsel appearing for the respective parties. The main grievance of the applicant is that the respondents have begun to sell the assets of the company and misappropriating the proceeds thereof without calling for the public tender and have initiated the winding up of the company. In line of those allegations the applicant prayed this Bench to restrain the respondents from dealing with or disposing of any assets either movable or immovable of the company. From the counter it is evident that the company did not own any immovable assets/properties, including the premises. In view of the fact that the company did not own the premises and did not have any property on its own the question of disposing of, alienating does not arise. It is made clear that the lease premises which was taken by the company was terminated and handed over to the landlord on April 18, 2013 and the fixtures, furniture and interiors were sold on an "as is where is and whatever there is basis" to the new tenant for a sum of Rs. 25 lakhs. It appears that the company has taken the said decision to prevent further losses. In the counter it is also stated that the revenue for the company is approximately Rs. 35,000 per month and against an expenditure of Rs. 25 lakhs per month. The respondents have come out with the full facts and figures in the counter in detail in relation to the affairs of the company. I am fully convinced with the submissions of learned senior counsel and the statement made in the counter. During the course of arguments, learned senior counsel submitted that the company owned one machine which is to be sold to prevent depreciation. In case the company is decided to sell the machine to prevent losses and if the applicant is willing to purchase the said machine, he can also participate in the bid process. The company is at liberty to sell the machine to the highest bidder. The applicant has not made out any case to grant the reliefs. The application has miserably failed and liable to be dismissed. Accordingly C.A. No. 1 of 2013 in C.P. No. 99 of 2012 is dismissed. No order as to costs.