Mr. M. Venkat Rao vs Emjay Industries Pvt. Ltd. & Ors

(Arising out of Order dated 27th June, 2017 passed by the National Company Law Tribunal, Hyderabad Bench, Hyderabad in CP No. 9/241/HDB/2016.)

Company Appeal (AT) No. 238 of 2017

IN THE MATTER OF:

Mr. M. Venkat Rao S/o Mr. Janardhan Rao Flat No. 122, Daisy Block, Serene County, Telecom Nagar, Gachibowli, Hyderabad- 500 046 ...Appellant

Vs

1. M/s Emjay Industries Private Ltd. 2nd Floor Unit # 210, Amrutha Villa Raj Bhavan Road, Somajiguda Hyderabad - 500 082

2. Mr. M. Janardhan Rao, S/o Late Mr. Anjaiah 10-2-4, east Marredpally, Secunderabad-500 026

3. Mr. M. Raj Shekar S/o Mr. Janardhan Rao Flat No. 133, Srila Heights, St. Johns Road, East Marredpally, Secunderabad-500 026

4. Oriental Bank of Commerce 9-1-129/1, Oxford Plaza Building Sarojini Devi Road Branch Secundarabad- 500 003.

5. City Union Bank Limited 3-6-365, Sama Towers, Liberty X Road, Himayatnagar, Hyderabad- 500 029

COMPANY APPEAL NO. 238 OF 2017 1 6. M/s Venkateshwara Ready Mix Concrete, Plot No. A1 and A2 part, IDA, Uppal, R.R. District, Hyderabad- 500 039

7. Mr. Mallipeddi Kaushik Reddy, S/o Mr. M. Madhusudhan Reddy, 2-21118/1/A/1, Tilakanagar X Roads, Hyderabad- 500 044.

8. Mrs. Mallipeddi Sukrutha Devi W/o Mr. M. Rakesh Reddy 2-21118/1/A/1, Tilakanagar X Roads, Hyderabad- 500 044

9. Mr. Vaka Prasanna Anji Reddy S/o Mr. V. Yanadi reddy 2-2-21 to 23, Flat No. 101, Indu Residency, D.D. Colony, Bagh Amberpet, Hyderabad- 500 013

10. Mrs. Vaka Swarna Latha, W/o Mr. V. Prasanna Anji Reddy, 2-2-21 to 23, Flat No. 101, Indu Residency, D.D. Colony, Bagh Amberpet, Hyderabad- 500 004

11. Telangana State Industrial Infrastructure Corp. Lt. (TSIIC) 6TH Floor, Parisrama Bhavan, Fateh Maidan, Basheerbagh, Hyderabad- 500 004.

12. Mr. M. Srinivas Rao S/o Janardhan Rao 10-2-4, East Marredpally, Secunderabad- 500 026

13. Mr. R.K. Reddy (Partner) Pavani RMC, Plot No. A1, A2, IDA Uppal, R.R. District, Hyderabad - 500 039

Also at

Sy. No. 657/1 & 658/1,

COMPANY APPEAL NO. 238 OF 2017 2 Dundigal Village, (Near Gandi Maisamma X Road) Quthbullapur Mdl. R.R. District- 501 505

14. Mr. C.V. Ratna Dhaveji, Ratnam Dhaveji & Co., Chartered Accountants, A-6, 2-2-11/5, DD Colony, O U Road, Hyderabad- 500 007 ...Respondents

Present:

For Appellant:- Shri Alok Dhir, Ms. Varsha Banerjee, Mr. Milan Singh Negi, Mr. Kunal Godhwani, Advocates.

For Respondents:- Shri Virender Ganda, Senior Advocate assisted by Shri Vipul Ganda, Shri Tarun Mehta, Ms. Shelly Khanna and Shri Mayank Srivastava, Advocates for Respondent Nos. 1 to 3.

Mr. S.V. Vanshi Krishna, Dr. S.V. Rama Krishna Advocate for Respondent Nos. 7 to 10

JUDGEMENT

A.I.S. Cheema, J:

This appeal has been filed by the original Petitioner. C.P. No. 9/241

/HDB/2016 was filed by him against 26 respondents. The Company Petition

was dismissed by the National Company Law Tribunal, Hyderabad Bench,

Hyderabad (hereinafter referred to as "NCLT") vide judgment dated 27th June,

2017.

2. However, the original Petitioner has filed this appeal selecting 14 of the

Respondents as Respondents in the appeal. We will refer to the parties as they

were arrayed before NCLT and in Impugned Order.

COMPANY APPEAL NO. 238 OF 2017 3

3. The claim of the Petitioner and the case which was put up by him before

the NCLT can be stated to be as under:

a) The dispute relates to Respondent No. 1 M/s Emjay Industries

Private Limited which was incorporated for business of biscuits,

is situated at Hyderabad. The Petitioner gave details of the

authorised share capital and that there are only 4 shareholders.

The Respondent No. 2 is Director holding 19.7% shares,

Respondent No. 3 is Director holding 31% shares. The original

Respondent No. 21 is holding 18.29% shares. The Respondent

No. 2 is the father and Respondent Nos. 3 & 21 are brothers of

the Petitioner. The Petitioner gave particulars as to how

respondent No. 2 with his brother had established the Company.

b) The Petitioner gave details in the petition raising grievances

against Respondent No. 4- M/s Oriental Bank of Commerce and

claimed that Original Respondents No. 7 to 10 were purchasers

of impugned sale of land to the extent of 5898 Sq. Yards on

17.02.2014. He claimed that Respondent Nos. 2 & 3 conspired

with these Respondents for them to purchase property of the

Company. Respondent Nos. 12 to 20 were arrayed to claim that

they have been paid money out of the proceeds dated 17.02.2014.

Other Respondents, Officers of the Bank-Respondent No. 4 were

added claiming that they had disobeyed the orders of Company

Law Board.

COMPANY APPEAL NO. 238 OF 2017 4

c) According to Petitioner, the Company purchased land to the

extent of 20 Crores at Uppal Industries Development Area from

the Hon'ble High Court of Bombay as per orders dated

23.04.1980. The biscuit factory was, however, shut down due to

unprecedented labour unrest and problems. In the meanwhile,

the Company sold land to the extent of 7 Acres to settle disputes.

d) The Petitioner claimed that part of the land of the Company was

illegally given on lease to M/s Venkateswara Reddy Mix Concrete-

Respondent No. 6 by lease dated 06.08.2011. The Petitioner gave

particulars that consideration was Rs. 2,70,000/-per month rent.

He claimed that this rent was less looking to market rental value.

Security Deposit of Rs 16,20,000/- was received in July 2011.

Petitioner claimed that Respondent Nos. 2 & 3 syphoned money

of the lease deposit and deposed the same in Current Account

with Respondent No. 4 without authorisation of the Board.

e) According to the Petitioner, he had approached Respondent No.

2 for financial support for wedding of his daughter and the Board

authorised him to negotiate sale and execute sale deed to the

extent of 5900 Sq. Yards of Company property. According to him

he was authorised to utilise Rs. 75 lacs as advance. He gave

details of execution of two sale deeds for total consideration of

Rs. 7,43,18,500/-. According to him he received advance of Rs.

75 lacs by two cheques. He executed Sale Deed and possession

was handed over to the Purchaser. The Petitioner claimed that on COMPANY APPEAL NO. 238 OF 2017 5 05.07.2013 he wanted to deposit pay orders in the account of

Company but he was informed that the Respondents have frozen

the accounts.

f) The Petitioner alleged various acts of 'oppression and

mismanagement' and also claimed that the moneys were diverted

by Respondents No. 2 & 3 to personal account and he gave details

of creditors who had not been paid.

4. Against such case put up and arguments made by Petitioner before the

NCLT, contesting Respondents no. 1 to 3 (hereinafter referred to as

"Respondents") filed counter and put up defence as under:

a) The account with Respondent No. 5-Bank was frozen to

limited extent to deposit transactions as Petitioner had

syphoned of Rs. 75 lacs.

b) Board Resolution dated 25.04.2013 only authorised the

Petitioner to sell the land which was already identified, to M/s

Mahavir Auto Diagnostics Private Limited. The claim of the

Petitioner that the Board Resolution was fabricated is denied

by these Respondents. According to these Respondents, the

land to be sold to M/s Mahavir Auto Diagnostics Private

Limited had been identified and the same resolution

authorised Respondents to sell land adjacent to the portion

proposed to be sold to M/s Mahavir Auto Diagnostics Private

Limited.

COMPANY APPEAL NO. 238 OF 2017 6 c) The Petitioner was signatory to Annual returns for Financial

Year 2002-2003, 2009-2010 and was aware of all

transactions. The claim that money had been syphoned is

denied by the Respondents. The amount received from

Respondent No. 6 towards lease and sale from Respondents

No. 7 to 10 have been properly utilised. Rather the Petitioner

has syphoned Rs. 75 lacs from the sale transaction he did and

did not deposit the money till 29.04.2014 after Company Law

Board directed him to deposit.

d) Respondents have given details as to how dues of Respondent

No. 15 were settled. The Petitioner was Managing Director of

Respondent No. 15. During 2007 to 2011, Rs. 12.55 Crores

were transferred from the account of Respondent No. 1 which

was with Respondent No. 4- Bank to Respondent No. 15 for

operations of Respondent No. 15. Particulars are given as to

how the Petitioner also transferred money to Respondent No.

15.

e) Respondents claimed that lease rentals received from

Respondent No. 6 have been accounted for and Petition was

knowing about it but did not raise issues earlier.

5. Original Respondent No. 4 - Bank opposed the petition claiming that it

had acted within the rules. It claimed that the Petitioner more or less claimed

COMPANY APPEAL NO. 238 OF 2017 7 embezzlements without giving particulars. It claimed that it was

unnecessarily dragged in litigation.

6. Respondent Nos. 7 & 8 claimed in NCLT that they were strangers to the

company and that Respondents who were bonafide purchasers could not be

dragged in the litigation. Respondent No. 7 & 8 gave particulars as to how

relying on Board Resolution dated 25.04.2013, transaction took place and

Respondent Nos. 7 to 10 became legal owners of piece of land from the Sale

Deeds. These Respondents claim that the Petitioner with oblique motive to

settle scores which he had with his father and brother has filed the petition.

7. Original Respondent No. 9 & 10 also resisted the petition and claimed

to be bonafide purchasers.

8. It appears that the Petitioner earlier filed Company Petition No.

84/2013 before Company Law Board. Later on, as several further

developments took place, it appears that the Petitioner withdrew the said

petition with liberty to file fresh comprehensive petition and thus the present

petition came to be filed.

9. We have seen the Company Petition and the prayers made by the

Petitioner. NCLT, inter alia, took note of the following prayers which Petitioner

was making:

...

"a) to restrain the Respondents No. 2 & 3 or their men or agents etc.,

in transferring/transmitting/alienating/encumbering assets of the 1st

COMPANY APPEAL NO. 238 OF 2017 8 Respondent Company to any person without the consent of the

Petitioner in writing and after following due process of Law;

b) to restrain them from removing him from the Board of First

Respondent Company as long as he holds shares in the Company; to

cancel sale deeds bearing Nos. 2785 and 2786 both dated 17.02.2014

executed by the Respondent No. 1 Company under the hand of the 3rd

Respondent on 17.02.2014 and registered on 19.02.2014;

c) to direct the Respondents 2 and 3 not to interfere in the affairs of

the 1st Respondent company in view of the oppression and

mismanagement of affairs of the 1st Respondent Company and

siphoning of the funds of the Respondent No. 1 Company by respondent

No. 2 and 3 etc."

...

10. NCLT took note of the various disputes which were raised and framed

following points for consideration:

"17. In the light of above proposition of law and facts, the following are

main points arise for consideration by the Tribunal:-

a) Whether Respondents No. 2 & 3 have clandestinely entered into

lease dated 6/8/11 with M. Venkateshwara Reddy (Respondent No.

6) by letting out a land of the Company to an extent of 2.66 acres

equivalent 12,875 sq. yds. for a consideration Rs. 2,70,000/- per

month for a period of 7 years and the consideration was much below

the prevailing rental value and they have siphoned off a security

deposit of Rs. 16,24,000/- during the month of July 2011,

COMPANY APPEAL NO. 238 OF 2017 9

b) Whether any board meetings were held and documents filed are

fabricated by Respondents No. 2 & 3 as alleged by the petitioner.

c) Whether Respondent No. 3 in collaboration with R.2 had

clandestinely hired an office without a proper board resolution. The

building situated under the guise of Administrative office at

Nagarjuina circle, Punjagutta on a monthly rent of Rs. 60,000/- even

though the company was having a registered office with a monthly

rent of Rs. 13,000/-,

d) Whether Board resolution dated 25.4.2013 is a genuine or fabricated

as alleged by the petitioner and whether petitioner was permitted to

utilize Rs. 75 lakhs out of sale proceeds of a portion of immovable

property to an extent of 5,900 sq. yds survey no. A-I IDA Uppal as

per the said Resolution,

e) Whether funds of Company have been siphoned off by Respondent

No. 2 & 3 as alleged by the petitioner,

f) Whether petitioner is authorized by the Board to utilize Rs. 75 Lakhs

and he has properly accounted for Company's Accounts of sale

proceeds of piece of land sold to M/s Mahavir Diagnostics Pvt. Ltd,

g) Whether petitioner approached this Tribunal with clean hands and

on bonafide grievance(s) to seek equitable relief and

h) If so, what is the relief the petitioner is entitled for. "

By impugned reasoned order the NCLT dismissed the Petition. Hence

the appeal.

COMPANY APPEAL NO. 238 OF 2017 10

11. We have heard learned Counsel for the contesting parties. Learned

Counsel for Petition was heard:

a) Counsel for the Appellant referred to Lease Deed dated 06.08.2011

claiming that the lease was given below the prevailing rental value.

It is argued that deposit/advance was received from 21.07.2011 and

it was siphoned off by Respondent No. 3. The learned counsel found

fault with the observations of the NCLT in paragraph-22 relying on

resolution dated 25.04.2013 for legal sanctity to lease of 2011.

According to him, by subsequent resolution, earlier Act could not be

given sanctity. It was also argued that Respondent No. 6 has sub-let

to Respondent No. 13 illegally. Learned Counsel submitted that the

Petitioner/Appellant had raised objections to the leasing out.

b) Learned Counsel for the Appellant submitted that the Board Meeting

dated 25.04.2013, as is being relied on by Respondents to claim that

Respondent No. 3 was also authorised to sell the land, is fabricated

according to the learned Counsel. According to the learned Counsel,

only because Petitioner attended the meeting does not mean that the

resolution, as drawn later on, were admitted by him. Mere attending

the meeting cannot be construed to confirm all the resolutions as

passed in the meeting.

c) Learned Counsel for Appellant/Petitioner claimed that NCLT

wrongly relied on Memorandum of Understanding (hereinafter

referred as 'MOU') dated 07.05.2012. It is argued that the

Respondents could not rely on the said MOU as the properties sold

COMPANY APPEAL NO. 238 OF 2017 11 by the Respondents fell within his share in the MOU. The Board

Meeting dated 25.04.2013 could not be said to be in pursuance to

the MOU. According to the learned Counsel, the Sale Deed dated

17.2.2014 executed by Respondents and money received were not in

accordance with the provision of law. It is claimed that the Sale

Proceeds were diverted to personal account of Respondent No. 2. The

sale of land of 5898 Sq. Yards was done between 12.03.2013 to

17.02.2014 when matter was dragging before CLB. According to the

learned Counsel, the land could not have been transferred without

resolution of shareholders. Learned Counsel claimed that the

affidavit filed by Respondents in NCLT giving details of expenses

were acknowledged and NCLT could not summarily ignore the same

claiming that it was matter of verification of accounts and not

'oppression and mismanagement'. Balance sheet of various years

was filed only on 30.12.2014. Learned Counsel justified the

utilisation of Rs. 75 lacs by the Petitioner for marriage of his

daughter. According to him, the Appellant had given loan of Rs.

70,45,000/- to the Company and it can be adjusted by the Company

towards Rs. 75 lacs advance utilised by the Petitioner. According to

the learned Counsel, the land sold by Respondent Nos. 2 & 3 was

without special resolution. The Board Meetings produced by

Respondents dated 25.04.2013 were never passed. Thus, according

to the learned Counsel, the appeal should be allowed and contesting

Respondents should be held guilty of 'oppression & mismanagement'

of the Company affairs.

COMPANY APPEAL NO. 238 OF 2017 12

12. Against this, the learned Counsel for the contesting Respondents

submitted as under:

a) The Appellant-Petitioner has selectively filed the appeal against 14

Respondents while the original Company Petition had 26

Respondents. He deliberately did not join original Respondent No.

15 where he was Managing Director and contesting Respondents

settled lot of his liabilities which he had incurred in Respondent No.

15 Company. It is argued that Criminal cases were filed against

Petitioner and to help him out with regard to mess created by

Petitioner in Respondent No. 15 Company contesting Respondents

permitted funds of Respondent No. 1 Company to be used. Petitioner

started raising disputes only after the dues relating to Respondent

No. 15 were settled, selling property of Respondent No. 1 Company

to the extent of 7 Acres of land. Learned Counsel referred the Board

Meeting dated 25.04.2013. According to him, the Appellant had not

shown any evidence that the document, as relied on by the

Respondents, to be Board Meeting Resolution was not true with

regard to the proceeding.

b) The lease with Respondent No. 6 was registered on 06.08.2011 and

the Petitioner was aware of the same even before it was registered.

This can be seen from his letter dated 01.08.2011 (Page no. 904-

906 of the Appeal) and letter dated 24.10.2011 (page 186-188 of the

Appeal). It has been argued that leasing out the property to

Respondent No. 6 was prudent decision taken after deliberation as

COMPANY APPEAL NO. 238 OF 2017 13 the property of the Company was lying idle and there were no

business transactions. It is stated that Respondent Nos. 2 & 3

constituted the quorum and could take decisions even if Petitioner

opposed and there was no reason for them not to follow the

procedures. Learned Counsel claimed that the Petitioner had sent

notices dated 02.09.2013 and 25.09.2013 in which he never raised

dispute regarding the lease. The learned Counsel stated that the

Petitioner sent legal notice dated 19.09.2013 in which he did not

dispute the grant of lease but disputed only regarding non-payment

and irregular payment of lease rent. Thus by conduct he accepted

the validity of lease and cannot now raise disputes.

c) Learned Counsel for contesting Respondents claimed that in view of

the Board Resolution dated 25.04.2013, the Respondent No. 3 sold

5898 Sq. Yards of the land and possession was handed over to

Respondent Nos. 7 to 10. It being Private Limited Company,

permission of shareholders was not required to be taken.

d) Learned Counsel for contesting Respondents referred to affidavit

dated 12.08.2014 (Page No. 2717-2798 of the Appeal) to say as to

how the sale proceeds were utilised. It has been argued that the

audited balance sheet of the Company from 2008 to 2012 was

approved in AGM of respective years were challenged by the

Appellant not regarding their contents but he objected to only

procedural aspects. The same were filed on 30.12.2014 to take

benefit of Company Law Settlement Scheme which offered reduction

in fee and immunity from prosecution. It has been argued that the

COMPANY APPEAL NO. 238 OF 2017 14 Petitioner did not come with clean hands and the petition was

rightly dismissed by NCLT.

13. We find from Record and going through Impugned Order that

grievances being raised by Appellant have been duly considered by NCLT. By

a detailed judgment NCLT considered various points which were raised and

came to right findings. NCLT discussed Memorandum of Understanding dated

07.05.2012 between the contesting parties in which they had decided as to

how immoveable property of the Company would be dealt with. NCLT found

that the Petitioner was signatory to the Memorandum of Understanding. NCLT

also considered the Board Meeting Resolution dated 25.04.2013 and as to

how the Petitioner was referring to Board Resolution claiming it to be correct

only for portion which was in his favour and denying that any further

resolution was there. NCLT, considering the complete Board Resolution, as

pointed out by the Respondents found that the Resolution permitted the

Petitioner to sell a part of the land whereas other part was to be sold by

Respondent No. 3 and the sale proceeds were required to be accounted for.

NCLT found the Board Resolution dated 25.04.2013 to be in accordance with

law. It did not accept the claim of Petitioner that he had been authorised to

utilise Rs. 75 lacs from the sale he was to execute. Other issues being raised

by the Petitioner with regard to money were found to be matters relating to

verification of accounts and the Tribunal held it could not scrutinize the same.

According to NCLT it was not empowered to settle day to day administrative

affairs of the Company. The NCLT held referring to Section 291 of the

Companies Act, 1956 and Section 195 of the Old Act that minutes of the

COMPANY APPEAL NO. 238 OF 2017 15 proceedings are to be accepted and meeting is deemed to have been called

and held as recorded until contrary is proved. NCLT found that Petitioner

failed to show any substantial evidence that Board meeting resolution dated

25.4.2013, as was recorded, was fabricated except making baseless

allegations. It was found that the Petitioner had attended the said meeting

and thus he could not dispute resolution passed. The NCLT observed that

Petitioner did not dispute the resolution with respect to sale of land by him

but the same resolution he is disputing with regard to other aspects. The

NCLT found that Respondent Nos. 2 & 3 satisfied quorum necessary for

transaction of any business empowered by Articles of Association. For such

reason, it did not find the claim of Petitioner sustainable. The NCLT found

that the Petitioner had approached the Tribunal not with clean hands. The

Company had only four shareholders and there was no business operation

since April, 1996. Thus no oblique interest was involved. The NCLT found all

the contentions and allegations raised by the Petitioner to be untenable and

liable to be rejected. Consequently, NCLT proceeded to dismiss the petition

with costs and other directions.

14. We have also gone through Memorandum of Understanding dated

07.05.2012 (Page 2603-2605 of Appeal). It was a Memorandum of

Understanding drafted for the Petitioners and Respondent Nos. 2 & 3. Space

was kept for Respondent No. 21 to sign. However, Respondent No. 21 does

not appear to have signed. The document shows that in this Private Limited

Company where there are only 4 shareholders and all in the family, how these

contesting parties handled property of the Company. It appears to be more

COMPANY APPEAL NO. 238 OF 2017 16 like of family affair. The Petitioner and Respondent Nos. 2 & 3 referred to the

Company properties and how they will use respective portion of the land as

indicated in the Annexure.

15. The Respondents are relying on detailed Minutes of Meeting dated

25.04.2013. One copy of the Minutes as at Page 2606-2609 of the Appeal

Paper Book. It has six items. The Petitioner however wants to rely only on a

portion of the resolution. Copy of the same is at Annexure-A11 of the Appeal

(Page 192). According to the Petitioner the resolutions passed on 25.04.2013

were only as appearing in this document. This relates to the resolution of the

Board permitting the Petitioner to sell 5900 Sq. Yards of the Company land to

M/s Mahavir Auto Diagnostics Private Limited. This is part of Item No. 4 of

the Minutes of Meeting which are being relied on by the contesting

Respondents. We find that the arguments being raised on behalf of the

Petitioner to claim that only the part that he is pointing out was approved in

the meeting, have no substance. On the face of Annexure A-11, the title itself

shows that it is "extract" and not some complete document. It appears that

the Petitioner took such 'extract' from Respondent No. 2 and since then been

trying to make up capital out of it. Such conduct of the Petition has been

rightly criticised by the NCLT as approaching not with clean hand.

16. Going through the minutes of Meeting dated 25.04.2013, as relied on

by the Respondents (Page 2606 of Appeal Paper Book), it is clear that the

Board had further passed Resolution Item No. 5 permitting the Respondent

No. 3 to deal with the company property. It is apparent that the Company,

which is not having business for decades, now was using property which it

COMPANY APPEAL NO. 238 OF 2017 17 had. The act of the Petitioner in raising disputes in spite of such Board

Resolution led to other Respondents even filing Police Complaint against the

Petitioner and contesting Respondents.

17. The Board Resolution dated 25.04.2013 in Item No. 6 authorised

Respondent No. 2 to make profitable use of the land which was lying idle.

Learned Counsel for Appellant criticised the judgment of NCLT in paragraph-

22 where the NCLT observed that it had perused the documents relating to

execution of lease in favour of the Respondent No. 6 and that it was properly

executed with due authorisation of the Board of Directors as per Resolution

dated 25.04.2013. There is an error of observation by NCLT as the lease was

executed earlier in 2011. However, the learned Counsel for the contesting

Respondents pointed out page 904 of the Appeal Paper Book letter dated

01.08.2011 to say that the Petitioner did not object to the grant of lease and

objected only to Respondent No. 3 depositing the amount received in the lease

transaction to his personal account. It has been argued that the Security

Deposit had been deposited on 22.07.2011 and such letter dated 01.08.2011

never objected to the lease which was being granted.

18. Learned Counsel for Respondents referred to Vol III- Pg. 839 A Bank

statement to submit that even earlier between 2006 to 2011 there were cash

withdrawals for affairs of the Company but it was not objected as Petitioner

admitted in Reply submitted (Convenience Compilation by Respondent - Pg.

6) that serious disputes arose only from 2011. Thus it is argued allegations

by Petitioner made of syphoning of money earlier was withdrawn.

COMPANY APPEAL NO. 238 OF 2017 18

19. There is no evidence to support Petitioner that he was entitle to use

Company money of Rs. 75 Lakhs for marriage of his daughter. The Resolution

dated 25.04.2013 does not say so. Learned Counsel for Respondents rightly

argued that Petitioner was changing stands on this count as, somewhere he

claims he was authorized to use the money as 'advance', somewhere he seeks

"adjustment" towards dues of 'Jewan Foods' while somewhere sought

adjustment against dividend and yet somewhere that it was 'loan' he took.

The Petitioner clearly misused Company Money giving lame excuses and

deposited it only in 2013 when directed by C.L.B. Petitioner is thus not with

clean hands and is not entitled to reliefs being claimed. Respondents claim

that due to such conduct of Petitioner they were required to ask Bank not to

allow withdrawals to Petitioner. It cannot be termed as 'oppression'.

20. Considering arguments of both sides and record, we find substance in

the submissions made by the learned Counsel for the contesting

Respondents. Looking to the manner the Company Petitioner affairs were

being conducted and the conduct of the Petitioner in selectively picking up

disputes of the affairs of the Company Petition cannot be allowed to be

entertained so as to put in difficulties other Respondents dealing with the

Company. We have carefully gone through various records referred by NCLT

in relation to the claims made by the Petitioner and we find that NCLT has

rightly concluded that the Petitioner approached NCLT without clean hands

and did not deserve reliefs as claimed by him.

21. Considering various submissions made by learned Counsel for the

Appellant, we do not find substance in them so as to upset well reasoned

COMPANY APPEAL NO. 238 OF 2017 19 Impugned Judgment. We do not find any reason to interfere with the

impugned judgment and order.

22. Consequently, the appeal is dismissed. The Appellant shall pay costs of

Rs. 1 lakh each to Respondent Nos. 2 & 3. Appellant will pay costs of another

Rs. 1 lakh to be divided and paid to Respondent No. 7 to 10. The costs will

be deposited in NCLT Hyderabad.

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

[Balvinder Singh] Member(Technical)

New Delhi Dated: 7th February, 2018

akc

COMPANY APPEAL NO. 238 OF 2017 20