VIJAY VALECHA Vs. NANCO FINANCIAL SERVICES (P.) LTD.

JUDGEMENT

(1.) IN this order I am considering Company Petition No. 82/ND/2008 filed by Sh. Vijay Valecha, the petitioner against Nanco Financial Services (P.) Ltd. and others alleging oppression and mismanagement under sections 397, 398, 399, 402, 403 read with sections 235 and 239 with 539 -545 of the Companies Act, 1956 ('the Act') seeking directions for R2 to immediately cease and desist from doing any act in respect of the business affairs of the R1 -company which are oppressive to the petitioner and as such violating his rights by virtue of the fact that petitioner holds 45 per cent voting shares in R1 -company; suspension of present Board of directors of the R1 -company and appointment of an administrator to take charge of management and affairs of the company and its books of account, statutory books, papers, records, minutes and other documents; to restrain the respondents from giving effect to the increase in the share capital of the company and restore the shareholding of the company as on 28th March, 2007; to appoint an independent auditor of the R1 -company and pass an order for removal of the present auditor of the company; Permanently inject the respondents from operating the bank accounts of the company; to restrain the R1 -company from allotting any further equity shares of the company and if any additional shares have been allotted subsequently then cancel the allotment of shares of the company made on or after 28th March, 2007 and to rectify the register of members immediately; to cancel all the documents, viz., Form 2, Form 5, Form 32 filed after the date of dispute and to restore status quo ante; Investigation or inquiry into acts or conduct and dealings of the R2 and 3 in relation to the assets and properties of the R1 -company and regarding the management of affairs of the company under the provision of section 406 of the Act read with Schedule XI; restore the original shareholding and the original directorship of the company; declaration that all the resolutions passed in the Board meetings/general meetings in the absence of petitioner are void and of no effect; Direct that the petitioner be permitted to actively participate as director of R1 -company and to participate in day -to -day management of the affairs of R1 -company; directing R2 to make full disclosure of all the information relating to the running of business of R1 -company to the petitioner; directing R -2 to provide an access to all the documents, books, account, minutes, etc., of R1 -company to petitioner; constitution of the Board and appointment of an independent managing director/chairman. The R1 -company Nanco Financial Services (P.) Ltd. was incorporated under the provisions of the Act on 29th July, 1994 and is having its registered office situated at 7 BQ Market Local Shopping Center 1st Floor, Shalimar Bagh, New Delhi -110008. The authorised share capital of the respondent is Rs. 100,000 divided into 10,000 shares of Rs. 10 each and paid capital of the R1 -company was Rs. 20,000 divided in to 2,000 shares of Rs. 10 each. The R1 is a finance company engaged in the business to finance, and hire purchase, invest and to assist or subsiding in purchasing of industrial and office plant, equipments, machinery, vehicles, movable assets, land and building real estates and consumer goods of all kind by way of hire purchase, to lend or advance money either with or without security and to arrange and negotiate loan and to carry on the business of financiers, etc.

(2.) THE petitioner's case is that the respondents have not given proper counter affidavits, there is no written statement before the Company Law Board ('CLB'), there is no verification of written statement, which is mandatory requirement, the alleged affidavit in support thereof and that too on one of the respondents, namely, Ms. Sangeeta Jain is also not as per requirement of law, hence, in the eyes of law, there is no written statement, it was contended that the same has been deliberately and motivatively done solely with a view to avoid consequence of making false deposition, it is nothing but to mislead the CLB. Moreover, the written statement was not filed in time as per requirement of law.

(3.) AS regards the respondents' contention that the petitioner had sold his shareholding, it was pointed out that on 1st October, 2003, respondent No. 2 approached the petitioner and requested him to give Rs. 50,000 as he was in urgent need of the said money. The respondent No. 2 further said that it was already late and tomorrow the banks are closed on account of 2nd October. Respondent No. 2 told that the amount of Rs. 50,000 will be adjusted towards the consideration amount of petitioner's 45 per cent shares, i.e., 4,500 shares of Rs. 10 each and balance amount will be adjusted as soon as possible. The petitioner being childhood friend of respondent No. 2 and seeing the urgency of the respondent No. 2, there was no occasion of disbelieving the respondent No. 2, immediately paid Rs. 50,000 in cash to respondent No. 2. It was pointed out by the petitioner that since the date of incorporation no business activity was being carried and the company was a dormant company with no business activities. The promoters of the company were not serious about the business as is evident from the balance sheet of the company from 2000 to 2002. During the year 2003, R2 approached the petitioner and represented that the R1 -company has huge potentials. He further represented that the company needed infusion of funds by way of loans and/or advances, deposits, etc., and he required an investor to buy out 1/2 of his shareholdings. R2 offered to transfer 1/2 of his Shareholding at a premium and also stated that the overall investment of the petitioner in the form and loan will yield huge returns. The R2 also explained the business plan of the R1 -company to the petitioner and painted lucrative picture of the future business prospects. The R2 also offered role in the management of R1 by offering a position of directorship to the petitioner in the respondent No. 1 -company. The petitioner relied upon the representations of R2 in good faith, agreed to become the shareholder and director of the R1 -company, further to which 4,500 shares were transferred from R2 (Mr. Naresh Jain) who was the majority stakeholder at that time, to the petitioner vide Board resolution dated 7th October, 2003 the transfer was confirmed and the name of petitioner was recorded in the register of members. The return of transfer was also filed in respect of such transfer of shares with RoC, NCT of Delhi and Haryana, New Delhi. The petitioner agreed to become majority stakeholder and director with the understanding that the R1 -company will work as a quasi -partnership where petitioner and the R2 are the principal partner(s) and are representing interest of two groups. And by virtue of such quasi -partnership the profit/loss of the respondent -company was to be distributed in the ratio of shareholding. After few days respondent Nos. 2 and 3 transferred the said shares of 45 per cent of the respondent No. 1 in favour of the petitioner on 7th October, 2003. Name of the petitioner was also entered in the register of respondent No. 1. My attention was drawn to the copies of share certificate issued to the petitioner No. 1 and the annul returns as on 30th September, 2004, 30th September, 2005, 30th September, 2006 reflecting the shareholding of the petitioner.