BHARAT BHUSHAN AGARWAL Vs. JAI MATA FOODS LTD.

JUDGEMENT

(1.) THE petitioners moved this Company Petition under sections 111A, 397 and 398 of the Companies Act, 1956 ('the Act') against the respondents on the ground that the respondents 2 to 15 got the petitioners' entire 100 per cent shareholding in R -1 -company fraudulently transferred to themselves taking advantage of the blank signed transfer deeds given by the petitioners; that the respondents fraudulently removed the petitioners as directors; that the respondents appointed themselves as directors of the company, that the respondents made an increase in the share capital of the company from Rs. 1 crore to Rs. 2 crore, consequent to the same, allotted shares to themselves, which is oppressive against the interest of the petitioners, therefore sought reliefs :

(2.) R 1 was originally promoted in the year 1996 by one Mr. Yash Pal Garg, Mr. Lajpat Rai Jindal and Mr. Rajinder Pal and their family members, consequent to it, they set up a flour mill by taking loan from Punjab Financial Corporation (PFC) and cash credit limits from Punjab National Bank ('PNB'), Sangrur. However, to the misfortune of them, the company soon thereafter went into losses with liabilities, which the promoters could not clear, then, they struck a deal with the petitioners as they agreed to take over the company with its assets and liabilities. In pursuance thereof, the original promoters transferred their 100 per cent shareholding to the petitioners in the months of November and December 2003. By this take over, the petitioners 1 to 4 came in as directors of the company on 11th November, 2003. There was also another agreement with PFC agreeing to clear loan on or before 28th February, 2004. Nevertheless, the old promoters, viz., Rajinder Pal Singla, Mrs. Pushpa Garg and Mr. Ashok Kumar Singla continued as directors of the company as their personal guarantees for the loans taken by the company remained stuck with PFC and PNB. As the mill was lying closed, Punjab Financial Corporation took over the possession of the mill in exercise of the power under section 29 of the State Financial Corporations Act.

(3.) SINCE there was a proposal to make payment towards OTS, first petitioner, as mentioned in the agreement, gave ten lakh rupees as unsecured loan to the company to pay it to PFC as part payment of OTS amount. Despite R -1 -company made such payment, PFC did not handover the possession of the company. However, PFC sent a letter on 27th February, 2004 intimating that the Corporation was prepared to revive the OTS provided a further amount of 15.50 lakh rupees along with 16 post -dated cheques of Rs. 1,97,400 each for the balance principal amount to be paid. As these petitioners failed in making payments as stated by PFC, these petitioners approached the respondents in the month of March 2004 to sell R1 -company, accordingly a deal was struck to sell the company at 75 lakh including the loans payable to PFC and PNB and 5 lakh to 100 per cent shares held by the petitioners. As per the understanding between the petitioners, original promoters, respondents 1 to 4, the petitioners, over a period in between April to June 2004, executed transfer deeds for 100 per cent shares on consideration, gave resignation letters for directorship of them to R -1 -company. As per understanding, the respondents cleared the OTS amount, other dues and statutory liabilities. Thereafter, to meet the needs of the company, the respondents raised the authorised share capital from one crore to two crore, allotted nine lakh shares to themselves as they have become holders of 100 per cent shareholding in the company. The petitioners and original promoters together finally executed settlement deed dated 19th October, 2004 reiterating that they received the money paid as unsecured loan to the company and dispute regarding consideration to sale of shares as mentioned in letter dated 6th September, 2004 sent by the petitioner to the respondents has now been settled, no claim shall be made against each other.