Dhiren Pratapmal Bhandari vs Db Shapriya Constructions Ltd. & Ors

[Arising out of order dated 27.10.2017 passed by National Company Law Tribunal, Ahmedabad in IA No.32 of 2017 in TP No.119/397-398/ NCLT/AHM/2016 (New) and CP No.23/397-398/CLB/MB/2015 (Old)]

IN THE MATTER OF:

Dhiren Pratapmal Bhandari Flat No.203, Twins Corner, CHS Ltd., Plot No.1, Sector 17, Nerul, Navi Mumbai, 400706 ...Appellant (Original Petitioner) Versus

1. DB Shapriya Construction Ltd. 08, Sakal Homes, Near Simran Bunglow, Chandkheda, Ahmedabad

2. Kishor D Shapriya 27-28 Nyerere Road, PO Box 3221, Dar Es Salaam, Tanzania

3. Amish Kishor Shapriya 9, Linden Lea, Westfield Park, Pinner Middlesex, HA 54 JH, United Kingdom

4. Ashish Laxmiswarup Srivastava 972, Sector A, Pocket P, Vasant Kunj, New Delhi - 110070

5. Dipackumar Chandrakant Kotak Plot No.872, Upanga, Dar Es Salaam, Na, Tanzania

6. Dr. BS Sreekumar 254, Alykhan Road, 2

Dar Es Salaam, 948, Tanzania ...Respondents

(Original Respondents)

7. (Respondent No.7 - Regional Director, MCA, deleted as per Order dated 06.07.2018)

For Appellant: Shri Shivek Trehan and Shri Pranay Govil, Advocates

For Respondents: Shri Rajnish Singh, Shri Nikhil Jain and Ms. Sakshee Sharma, Advocates (Respondent Nos.1, 2, 3, 5 and 6)

Respondent No.4: Served by Public Notice

ORAL JUDGEMENT 28.09.2018

A.I.S. Cheema, J. : This Appeal has been filed by the Appellant -

original Petitioner whose Company Petition has been dismissed at preliminary

stage in view of the IA 32/2017 filed by the Respondent No.1 objecting to the

maintainability of the Company Petition on the basis that the Appellant -

original Petitioner held neither 1/10th of the issued share capital of the

Company, nor was 1/10th of Members as required by Section 399 of the

Companies Act, 1956.

2. The learned counsel for the Appellant has submitted that admittedly

the Appellant was holding only one equity share of Rs.10/- constituting

0.001% of the shareholding at the Company. He filed the Company Petition

raising various disputes relating to oppression and mismanagement and

which included one of the disputes regarding he being removed as a Director.

According to him, the Appellant was Director, shareholder and Chief

Company Appeal (AT) No.89 of 2018 3

Executive Officer (CEO) of the Respondent No.1 Company and due to the

oppression and mismanagement of the Respondents, he was removed illegally

on 31st March, 2015. According to him, he came to know about such removal

only in May, 2015. The Counsel refers to the Company Petition which was

filed. Copy of the Company Petition is at Page - 63 of the paper book. The

Counsel referred to the fact that it was mentioned in the Company Petition

that he held only one equity share but that it was also mentioned in Para - 8

regarding the shareholding pattern of the Company as on 31st March, 2014.

His submission is that in his petition in this paragraph, it was clearly

mentioned by Petitioner that as per his knowledge based on the last Annual

Return submitted for the year 2013 - 2014, there were 5 shareholders as

named (in this paragraph) and 3 others as mentioned in the chart. Thus, there

were only 8 shareholders and the counsel submits that the Petition had

clearly made out a case in favour of the Petitioner to maintain the same.

3. It is submitted on behalf of the Appellant that the Form 20B as

available at Page - 171 shows (at Page - 179) 8 shareholders, which was the

last Annual Return available at the time of filing of the Company Petition on

5th October, 2015. On that date, the new Companies Act of 2013 had not come

into force and thus, the petition was maintainable under the Companies Act,

1956. It is stated, and not challenged, that till the Company Petition was filed,

Annual Return subsequent to 2013 - 2014 was yet not due or filed.

4. According to the Appellant, the Respondent Company filed Annexure

- A2 (Page - 389) IA 32/2017 challenging maintainability of the Company

Petition on the basis that the Appellant held only one share and he was not

Company Appeal (AT) No.89 of 2018 4

qualified due to such holding as it was less than 1/10th of the shareholding

of the share capital. It is stated that when such challenge was raised,

Respondent did not claim that the Appellant did not qualify even on the basis

of being less than 1/10th of the total number of members. According to the

Counsel, in Reply filed to such IA, the Appellant contested the claims of the

Respondents and it was only in the Rejoinder filed to the IA by the

Applicants/Respondents (Annexure - A-4 Page - 406 at Page - 411) that the

Respondents for the first time came up with a case that out of the earlier 8

shareholders, one Dr. B.S. Sreekumar who had 2502 shares earlier had

transferred 50 shares to 5 other persons and thus, the Appellant could not

claim maintainability on the basis of total number of members also. The

learned Counsel submits that although the Respondents claim that the

shares had been transferred by Dr. B.S. Sreekumar on 31st March, 2015 (for

which the Respondents are now showing Board Resolution [true copy of which

Resolution is at Page - 432]), such fact was not in the knowledge of the

Appellant. According to the Counsel, such transfer and accepting of new

members is suspicious as according to the Counsel when Reserve Bank of

India sent letter (Annexure - A-5) dated 10th August, 2015 seeking

compliances from the Company regarding the allotment of shares to such NRI

like Dr. B.S. Sreekumar, the Respondents in Reply dated 23.10.2015 (Page -

448) (which is subsequent to filing of the Company Petition) annexed format

relating to the shares issued to Dr. B.S. Sreekumar without mentioning any

further transfer and he was still shown as holding 2502 shares. The argument

is that in spite of such documents being there before NCLT, the NCLT did not

Company Appeal (AT) No.89 of 2018 5

consider the matter in proper perspective and has wrongly dismissed the

Company Petition as not maintainable.

5. The counsel has relied on the case of "Mrs. Farhat Sheikh versus

Esemen Metalo Chemicals Pvt. Ltd. and Others" reported in 1994 SCC

OnLine CLB 6 where with similar facts, in that matter, CLB had observed:-

"The maintainability of the petition in Esemen has

been questioned, consequent to the issue of additional

5,000 shares by the company in 1990 and the transfer of

some shares by some of the respondents by which the

total number of members has been increased to 11. It is

a fact that the petitioners were not aware of these two

developments one in 1990 and the other in 1993. As

regards the issue of shares, it has become the subject-

matter of the petition by means of a subsequent

application taken out by the petitioner and is being

considered as one of the acts of oppression. In this

background, in our opinion, it is not justified to disqualify

the petitioner under Section 399. Apart from this, the

respondents have not been able to establish that the total

number of shareholders was 11, much before the filing of

the petition. The transfer is of a small quantity of 30

shares which gives the clear indication of the intention of

the respondents to increase the total number in order to

disqualify the petitioner under Section 399 of the

Company Appeal (AT) No.89 of 2018 6 Companies Act, 1956. In view of this, we hold that the

petition as regards Esemen is maintainable."

5.1 It is argued that in the present matter also, the position is similar

and the petition should have been treated as maintainable, and could not

have been dismissed on the basis of increase in number of members from 8

to 13, which Appellant was not aware of and which act Appellant is now

disputing, as the claim is made by Respondents post filing of the Petition.

6. Against this, the learned Counsel for the Respondents 1 to 3, 5 and

6 submitted that the Appellant was required to make out a case of

maintainability in the Company Petition itself and in the Company Petition,

the Appellant clearly mentioned regarding his one share and did not claim

that because of the number of members, he was entitled to maintain the

Company Petition. It is stated that even when such objections were raised in

the IA 32/2017 that the petition was not maintainable, the Appellant did not

raise any specific claim that because of the number of members he was

entitled to maintain the petition. It is stated that if the Respondents wanted

to ante date any transfer, it could have been shown by them at the time of

filing IA itself that in terms of number of members also the Appellant was not

entitled to maintain the petition. It is argued that even if Return after 2013 -

2014 had not been filed, the Appellant could have taken inspection of the

records of the Company but he did not do so and thus the Appellant cannot

maintain the Company Petition. With reference to the letter of the Reserve

Bank of India, the Counsel submitted that the Reserve Bank had asked

specific query to the Company regarding compliances with regard to the

Company Appeal (AT) No.89 of 2018 7

allotment to the NRIs and thus the Company was liable to answer only to that

extent and that is what had been shown in their reply sent by Company and

it cannot be stated that only because the subsequent transfer as pointed out

by the Respondents was not shown, transfer had not occurred.

7. Having heard counsel for both sides and having gone through the

record, it appears to us that the Company Petition which was filed, although

it referred to the Appellant having just one share, did refer to the fact that the

shareholding was of a particular type giving the number of shareholders. The

Company Petition referred to 5 shareholders by name and in front of the 5th

name added "& 3 others". Although it does not appear that specific pleading

was put to show the basis for maintaining the Company Petition, the

averments were there in the Company Petition itself and the Company Petition

would have to be read as a whole. If after filing of the Company Petition, the

Respondents have come up with a case that subsequent to last Annual Return

there has been a subsequent transfer which the Respondents claim is before

filing of the Company Petition, it would have to be established, including that

Appellant had knowledge.

7.1 The Appellant was admittedly a Director till 30th March, 2015 and

the Respondents are claiming that on 30th March 2015, the Appellant had

sent an e-mail, copy of which is at Page - 292 where the Appellant claimed

that because of the state of affairs, he was putting in his resignation from the

post of Director. This e-mail is dated 30th March, 2015 and the time shown is

of 19.11 hours. It is argued for Appellant that on the very next date of 31st

March, 2015, Board Meeting was shown as held at Tanzania where the

Company Appeal (AT) No.89 of 2018 8

transfers of shares from Dr. B.S. Sreekumar were recorded in favour of 5

persons. It is argued that if till the earlier evening, the Appellant was the

Director, it would be a matter to be considered at the time of deciding the

Company Petition whether the necessary notice or other compliances had

been done for the meeting at Tanzania on 31.03.2015. The Company Petition

has pleadings of Appellant not being given opportunity before removing him

from directorship and that he had no Notice of the Board Meeting dated

31.03.2015. It is argued that these factors being under dispute, the Petition

could not at preliminary stage be rejected on the basis that Petitioner was less

than 1/10th of the Members.

8. Going through the material available, we find that Appellant has an

arguable case and the Appellant should have been given opportunity to amend

the Company Petition with regard to the facts which have come on record in

the Rejoinder to application filed by the Respondent Company to IA 32/2017.

Even without the pleadings with regard to shares of Dr. B.S. Sreekumar, the

Petition is maintainable but in interest of both sides, Appellant may be

allowed to make specific submissions.

9. Reading the Company Petition as it is, we find that the Appellant -

original Petitioner must be held to be entitled to maintain the Petition and the

disputed facts between the parties as raised by Respondents can be decided

at the time of deciding the Company Petition on merits.

10. For such reasons, we set aside the Impugned Order as regards its

decision regarding IA 32/2012 and the dismissal of TP 119/2016.

Company Appeal (AT) No.89 of 2018 9

11. We reject I.A. 32/2012 and restore the Company Petition TP

119/397-398/NCLT/AHM/2016 (New) and CP No.23/397-

398/CLB/MB/2015 (Old). We hold that the Company Petition is maintainable

and not hit by Section 399 of the Companies Act, 1956. The Appellant will be

given one opportunity to amend the Company Petition for making specific

averments with regard to the alleged transfer of shares from Dr. B.S.

Sreekumar.

12. Parties to appear before NCLT on 22nd October, 2018. Disposed

accordingly. No Orders as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical) /rs/nn

Company Appeal (AT) No.89 of 2018