SANJAY GOEL Vs. MAJESTIC BUILDCON PVT LTD

JUDGEMENT

(1.) The Respondent company was incorporated on 29.5.2007 with issuance of 1,50,000 shares of Face Value Rs. 10/- each, held equally by its 3 initial promoters i.e. the Petitioner, Respondents 2 and 3 respectively. The object of the company was to set up resorts for which they acquired a property measuring 600 sq. meters situated at Porbavaddo in the Village in Calungate in North Goa, for a total consideration of Rs.40 lakhs. To raise finances as capital expenditure for development of the project, further allotment of 90,000 shares of Rs.10/- each was made at a premium to third parties in two tranches. As per the petitioner, the object of increasing the share capital and diluting the shareholding of the promoters was a temporary measure with the understanding that the shares allotted to the respective new shareholders would be acquired back by them to secure their original proportionate equity in the company. With the allotment of additional 90,000 shares, the equity of each of the three promoters fell to 20.83%. This was done with the consent of the Petitioner and Respondents No.2.

(2.) It is stated that Respondent No.2 purchased an adjoining piece of land measuring 300 sq. meters for Rs. 1.2 crores from his personal funds which he proposed to amalgamate with the project of the Respondent No. 1 company. The said project was duly completed in 2014. However, it could not be commercially exploited for lack of offers, till 2016. The Petitioner has alleged that Respondent No.2 was in complete control of the affairs of the Respondent company, moreso, since he was injured in a Bomb-blast which took place at the gates of the Delhi High Court on 07.09.2011. Leasing of the property and handing over of the business by Respondent no. 2 came as a surprise for him as he had never given any consent. He was then informed that his concurrence was not required as his equity at that point of time stood at 2.1% only. To his consternation, the Petitioner submits that upon inspection he learnt that while his equity remained at 20.83%, the stake of Respondent No.2 had increased from 20.83% to 79.17%. This was engineered by his purchasing the 50,000 shares of Respondent No.3 as well as the 90,000 shares allotted to third parties (Respondents 5 - 9) . The acquisition of the shares by Respondent No.2 was purportedly done in 2010, which however according to the petitioner was reflected in the Annual Returns filed on 11.07.2012. Returns for the subsequent year i.e. 2011 were filed on 22.02.2013 reflecting the shareholding pattern of the petitioner as 50,000 shares and those of Respondent no. 2 as 1,90,000. The same was also reflected in Annual Returns of 2012 to 2014 which were also filed belatedly. The Petitioner alleges that this transfer of equity by Respondent No.3 to Respondent No.4, an outsider, without affording him an offer, was in complete disregard of the statutory provisions and in violation of Articles of Association of the Company. Accordingly, being perse void ab initio, the acquisition of these shares by respondent no. 2 was also illegal. He also impugns the purchase of 90,000 shares by respondent no. 2 from respondents 5 to 9. The entire acquisition of 1,40,000/- shares by Respondent no. 2 is alleged to be an illegal transaction as the consideration was paid by the respondent company and tantamounts to a buyback. This should have resulted in reduction of the paid-up capital and could not have been allotted by Respondent no. 2 to himself. Ld. Counsel for the petitioner submits that the said transfer was contrary to the provision of Section 108 of the Company Act 1956, as no Transfer Deed was executed in favour of Respondent no. 2.

(3.) It is further submitted that Respondent No.2 has been carrying out the business of Respondent no. 1 company independently and has never accounted for the revenue generated. The petitioner is also aggrieved by the fact that as per their understanding, Respondent no. 2 has not transferred the plot of 300 sq. meters to the respondent company to augment its business. No Board meetings have been held and no returns have been filed with the ROC after 2014. The Petitioner issued a notice calling for a Board meeting on 20.1.2017 but Respondent No.2 has failed to pay any heed, giving rise to allegations of complete mis-management of the affairs of the company.