DONAMAN INTERNATIONAL PANAMA, SA Vs. VENION ENTERPRISES LTD.

JUDGEMENT

(1.) THIS is a petition filed under section 111A of the Companies Act, 1956 ('the Act') by Donaman International Panama, SA, a company specifically incorporated in the Republic of Panama in the year 1985 for the purpose of investing in the equity capital of Venion Enterprises Ltd. (R1), having its registered office at Mysore, Karnataka, as its chief promoter. The authorised share capital of R1 is Rs. 11 crore divided into 2.20 crore equity shares of Rs. 5 each. As on 31st March, 2006, the issued, subscribed and paid -up share capital of R1 is Rs. 10,90,50,520 divided into 2,18,19,104 equity shares of Rs. 5 each.

(2.) THE petitioner filed a rejoinder, the brief averments of which are as under. The fact that R3, being the chairman of R1 has not chosen to file his counter puts beyond doubt that all allegations made against him are deemed to have been proved. The respondents in their counter have denied the allegations made against them for the sake of denial without producing any material particulars regarding the alleged merger between the petitioner and R2 and this proves their mala fide intentions. It is reiterated that the petitioner holds the shares as has been stated in the petition. Till the time of filing of this rejoinder the respondents have failed to produce the particulars about the existence of R2. The fax transmission of the petitioner's letter dated 15th January, 2003 to R1 on 15th January, 2003 (Vide Annexure A14, pp. 95 -96, vol. 1) is filed herewith. The issue is not who the president of the petitioner -company at any given point of time is, but how the alleged merger between the petitioner and R2 had taken place as falsely claimed by respondents. No merger can take place without the petitioner's Board and shareholders' approval and the necessary formalities. When the theory of merger is specifically denied by the petitioner it is for the respondents to give material particulars including documentary evidence to prove merger. They have failed to do so, so far. It is argued that the dispute is not in respect of the ownership of the petitioner -company but relates to the fraudulent transfer of shares of R1 -company and, hence, the allegation that the issue ought to be settled in courts outside India has no basis and ought to be rejected. The respondents have failed to produce the documents in their custody which allegedly convinced them to transfer the shares. A fraud of great magnitude has been committed and the respondents have indulged in criminal activities. When fraud has been committed there is no question of invoking the period of limitation. It is a continuing offence and the cause of action also continues. The petitioner -company, which is a running company, has provided the certified shareholdings in its name as supported by the auditor's certificate issued periodically till March 2007. This being the fact it is not known on what basis the certificate of the year 2001 is relied upon by the respondents. The details of the security agreement and the minutes of the meeting, both dated 10th February, 1994 showing that the shares are subject to a lien with Mr. Murli Daulatram Datwani have also be given. The plea taken by R1 that it had acted on the instructions of the authorised signatory of the petitioner does not hold as it has failed to provide details in this regard. The mala fide intentions and the conspiracy hatched by the respondents are proved by their actions as stated above.

(3.) CASE laws cited by respondents: