Mr. Soumitra Banerjee & Anr vs Mr. Asher Ebrahim Melamed & Anr

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) No. 100 of 2018 [Arising out of Order dated 9th February, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench in CP No.106/397- 398/CLB/MB/MAH/2013]

IN THE MATTER OF: 1. Mr. Soumitra Banerjee, S/o Bansari Banerjee, R/o K-401 Maheshwari Nagar, MIDC, Marol, Andheri (East), Mumbai - 400 093.

2. Mrs. Shampa Banerjee, W/o Soumitra Banerjee, R/o K-401 Maheshwari Nagar, MIDC Marol, Andheri (East), Mumbai - 400 093. .... Appellant

Vs

1. Mr. Asher Ebrahim Melamed, S/o Mr. Ebrahim Melamed R/o 101, Zafranieh Asef, Street Tehran, Iran (Through his Power of Attorney Holder Mr. Jay Prakash Daga), Address for service in India: A-101, Trishul Heights, Akta Nagar Opp., Mahavir Nagar, Kandiwali (W), Mumbai - 400 067.

2. Touranto Company (India) Private Limited (Through its Director) Registered Office: 705, Acme Plaza Andheri Kurla Road, Andheri East, Mumbai - 400 059. ....Respondents

Present:

For Appellants: Mr. Arjun Krishnan, Mr. Ankur Singh and Mr. Sumit Srivastava, Advocates.

For Respondents: Mr. Deepak Kapoor and Ms. Neha Gola, Advocates for Respondent No.1.

Company Appeal (AT) No. 100 of 2018 Page 1 of 10 JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

Mr. Asher E. Melamed (Petitioner) moved an application under Section

397-398 r/w Sections 402 and 403 of the Companies Act, 1956, before the

erstwhile Company Law Board, Mumbai Bench on 30th September, 2013.

The case remained pending and later on transferred and heard by National

Company Law Tribunal, Mumbai Bench (hereinafter referred to as the

'Tribunal').

2. By impugned order dated 9th February, 2018, the Tribunal held that

the dispute between the parties had reached to a stage of deadlock of the

business activity of the Company. Attempts of settlement had exhausted and

the Directors had not reached settlement. They had also not expressed any

intention or desire to work together to run the Company. The Company had

already closed its business activity. The Office premises of the Company had

already been rented out. As a consequence, the only source of income of the

Company was 'rental income'. The Tribunal further held that evidence on

record had indicated that Petitioner - Mr. Asher E. Melamed (Respondent

No.1 herein) once expressed his desire to exit from the Company subject to

recovery of his investment in the Company. The record had established that

he had made investment towards equity as well as towards the capital. The

immovable property of the Company was purchased from the funds

contributed by the Petitioner. The Tribunal further observed that the

Company- Touranto Company (India) Private Limited is a Private Limited

Company, having only three shareholders and all of them, at one pint of time,

Company Appeal (AT) No. 100 of 2018 Page 2 of 10 were the Directors. Therefore, it is just and equitable that the Company

should be allowed to liquidate its assets to be distributed among the

Members of the Company, which would otherwise would not unfairly

prejudice the rights of the Members. Circumstances were so compelling in

this case that closure of the Company was justifiable. In this background,

the Tribunal held as under: -

"a) That this Company has no future to run the business for which it was incorporated. The two parties under litigation in this Petition have almost equal shareholding i.e. 51% with the Petitioner and 49% holding with the Respondents. There is no possibility to resolve the differences. Reconciliation attempts have failed. Parties have not agreed to work together. A vertical split is the only remedy left to direct the parties to be separated from each other by ordering for 'winding up' of the Company.

b) In this critical situation when 'winding up' is the only answer to put an end to the controversy the disposal of the Immovable Property of the Company is a must. To implement the process of 'winding up' it is hereby directed to dispose of the immovable Property and the consideration be divided among the shareholders/directors as per their percentage of shareholding.

c) The steps to be taken for sale of the Immovable Property should transparent by first obtaining a Valuation Report of the Independent Valuer to be informed to both the sides and on their approval the Property in question is to be sold at the best fair market value. Both the parties shall cooperate

Company Appeal (AT) No. 100 of 2018 Page 3 of 10 with each other m the documentation of transfer of the said Property.

d) On completion of the disposal by sale of the assets of the Company, the Directors shall complete the legal formalities of winding up with Registrar of Companies, Mumbai.

3. The Petition was disposed of accordingly by impugned order dated

9th February, 2018.

4. The Appellants were the two shareholders in the Respondent No.2

(M/s. Touranto Company (India) Private limited) before the Tribunal. The

learned Counsel for the Appellants submit that the Tribunal has no

jurisdiction to order for winding-up as the Petition was under Section

241-242 of the Companies Act, 2013. It was further submitted that the cause

of action being in the year 2000-2008, the Company Petition preferred by the

Respondent was fit to be dismissed on the ground for delay and latches. The

learned Counsel for the Appellants further submits that the Respondent-

Mr. Asher E. Melamed failed to make out a case of 'oppression' against him

and, therefore, no relief could have been granted.

5. On merit, it was submitted by the learned Counsel for the Appellants

that from the very beginning, it was the Appellants who were managing the

affairs of the company and bearing all the expenses of the business. The

Respondent No.1 is an Iranian national who did not participate in the day to

day affairs of the company. From 1999 to 2011, the Appellants expended

Rs.2.24 Crores on the expenses of running the company. The only

contribution made by the Respondent No.1 was a contribution of

Company Appeal (AT) No. 100 of 2018 Page 4 of 10 approximately 41 lakhs (USD 95000) for setting up of an office in Mumbai.

The Appellants too made a matching contribution of approximately 38 lakhs

for setting up the office.

6. It was submitted that the business of the company was export of

chemicals and pharmaceuticals. The business arrangement between the

parties were that the Appellant No.1 would use his experience in India to

identify manufacturers in India and obtain export orders for buyers in Iran

as per L/C terms. The Respondent No.1 would in turn liase with the Iranian

buyers in Iran. The Appellants were entitled to charge upto 2% commission,

whereas the Respondent's share was restricted to 5% commission.

7. It was further submitted that from 2000 to 2008, the business was

doing well and the Company showed profits and Respondent No. 1 was also

getting his share of commission from the export transactions (either by

himself or through his agent), which was remitted to his foreign bank

accounts and was never deposited to the Respondent Company's bank

account. It later came to the knowledge of Appellant No.1 that all these years

the Respondent No.1 was cheating the company of its share of revenues by

over invoicing and charging commission beyond the 5% as agreed between

the parties. In addition, the Respondent No.1 and his associates were

communicating directly with the Indian suppliers thereby by-passing the

Appellants and the company entirely.

8. It was submitted that the modus operandi of the Respondent No.1 was

that while the Appellants/Company was charging commission at a lower FOB

Rate (eg. USD 8), the actual transaction was done by the Iranian buyer at a

Company Appeal (AT) No. 100 of 2018 Page 5 of 10 higher rate (eg. USD 9.2), and the difference and commission was going to

the Respondent directly to his European Bank accounts. An illustration of

this is explained as under: -

Invoice Customer Name Invoice Rate Actual Difference:

No. shown to Invoice Rate Unjust Company Taken by Enrichment of (FOB) Respondent Respondent (per (FOB) kg) 3127 Kharazmi USD 8.00/kg USD 9.20/kg USD 1.20/ KG Pharma 3131 Tehran Darou USD 8.00/kg USD 9.20/kg USD 1.20/ KG 3133 Amin Pharma USD 8.00/kg USD 9.20/kg USD 1.20/ KG 3135 Chemie Darou USD 8.00/kg USD 9.20/kg USD 1.20/ KG

9. It was submitted that over and above this malpractice, the Respondent

was also charging excessive commission to the tune of 8 - 40%, as opposed

to the agreed 5%, which fact was discovered subsequently as is clear from

the email dated 5th August, 2009 sent by Unichem Laboratories which shows

the commission paid to one Samuel Gregorian, associate of Respondent No.1.

The above facts regarding the siphoning off of funds and cheating of the

company and the Appellants by Respondent No.1, were not immediately

apparent, and came to light only gradually. The Respondent No. l and his

associates deliberately suppressed information and told the Indian exporters

not to disclose the true picture of the transactions and commissions being

paid to the Respondent No.1, which was evident from the email dated 15th

May, 2008 sent by Mr. Gregorian, associate of Respondent No. l directing the

exporter to ensure that statement be sent only to his email. Similarly, on

3rd June, 2008, the supplier was requested not to send any copies anymore

to the company. Unfortunately, the Ld. NCLT has brushed aside this

Company Appeal (AT) No. 100 of 2018 Page 6 of 10 submission, without appreciating the true nature of the fraud perpetrated by

Respondent No. 1.

10. It was submitted that the entire dispute between the parties began

after the Appellants sent an email dated 24th November, 2008 to Respondent

No.1 requesting him to apply for and provide DIN (Director's Identification

Number), since the same was required for filing of taxes on behalf of the

Company. Instead of complying with the DIN requirements, the Respondent

stated that he was not an active member of the company in daily activities

and decisions and he would like to find a buyer to buy his shares. In other

words, the Respondent was keen to exit the company and had no interest in

its affairs. There was no complaint of "oppression and mismanagement" at

the relevant time.

11. It was submitted that in 29th November, 2008, the Appellants wrote to

the Respondent, stating that it was not fair to say that he had not earned

anything from his association, whereas hefty commissions were being paid

to him. Thereafter from 2008 till 2011 the Respondent did not raise any issue

or grievance regarding management of the company by the Appellants.

Instead, the Respondent all of a sudden stopped placing orders through the

Company by the Iranian buyers from the year 2010-11, thereby depriving the

company of its business. Without any other means of livelihood, the

Appellants were forced to lease out the office premises on rent from

15th February, 2012 to keep the Company running and maintain the

property.

Company Appeal (AT) No. 100 of 2018 Page 7 of 10

12. It was submitted that on 5th May, 2011, the Respondent wrote to the

Appellants seeking a share of profits of the company. The Appellants

responded vide emails and reminders dated 13th May, 2011, 24th May, 2011

and 6th June, 2011 and 14th June, 2011 wherein the Appellants demanded

to be compensated for their efforts in generating business for the

Respondent. The full calculation of the amounts owed to the Appellants from

the Respondent No.1 i.e. USD 2.32 million and total of USD 5.42 million to

the Company. Thereafter on 3rd December, 2011, Appellant No.1 filed a

criminal complaint before the Metropolitan Magistrate, Andheri alleging that

Respondent No.1 had siphoned off funds and cheated the company as well

as the Appellants. Till 2013 there was again no response or reaction from

Respondent No.1. There was no whisper of any alleged 'oppression' or

'mismanagement'. Suddenly, in 2013, the Respondent No. 1 purported to

appoint a Chartered Accountant, Shri JP Daga, as his power of attorney

holder with a view to sell off the only capital asset of the company (office

premises). The company petition, CP No. 106/397-398/CLB/MB/Mah/2013

was filed purely as a counter blast to the aforementioned criminal complaint.

In spite of the impugned winding up order passed by NCLT, Mumbai, the

Respondent No.1 did not cease his efforts to sell off the assets of the

company, and had preferred an application under section 98 of the

Companies Act (being CP/1743/98/MB/2018). It is very important to note

that the Respondent No.1 and his associate, still, as on date, are doing

business directly with the Indian suppliers introduced by the Appellants/

Company which is in contravention to the Agreement between the parties.

Company Appeal (AT) No. 100 of 2018 Page 8 of 10

13. It has not been disputed that Respondent No.1- Mr. Asher E. Melamed

had 51% shareholding and the Appellants had 49% of shareholding in the

Respondent No.2 Company. The Respondent No.1- Mr. Asher E. Melamed

was appointed as Director with effect from 14th March, 2000. He was

removed from the Directorship in the year 2009 by deleting from the Ministry

of Corporate Affairs records. Thereafter, the entire control of business of the

Company was vested with the Appellants. Therefore, it is clear that there is

no delay in preferring the Petition filed by the Respondent.

14. The Respondent No.1- Mr. Asher E. Melamed (Petitioner) transferred

1 lakh US Doller through Deutsche Bank for the purchase of property of the

Company to procure one premises to be utilized for business purposes.

Further, when it was not so utilized, the same was given on rent. The profit

and loss account for the accounting period of 31st March, 2009 to 31st March,

2012 shows that the business was running in a manner, which was

prejudicial to the interest of the Company. The Tribunal noticed the

Accounts Book results and the Financial position of the Company and

observed that for the rest of the Accounting period, apart from the year 2009

to 2012, no Statutory Books of Accounts were maintained. It was also

brought to the notice that no Register was maintained for recording the

Meetings of the Members of the Board.

15. Relying upon the surrounding circumstances, the Tribunal came to

definite conclusion that the 1st Respondent cannot be blamed for losses and

for maintenance of the records etc., which the Appellant failed to do while

holding the post of Director and was required to maintain the records.

Company Appeal (AT) No. 100 of 2018 Page 9 of 10

16. The dispute had reached at a stage of deadlock of business activity.

The Company was non-functional, it had already given its premises on rent

and it was the only income of the Company. Therefore, we find that the

Tribunal came to a definite conclusion of 'oppression and mismanagement'

of the Company and 'oppression' of the Member, i.e., the 1st Respondent-

Mr. Asher E. Melamed. In the aforesaid circumstances, if the Tribunal has

ordered for winding-up of the Company, no interference is called for.

17. The Appeal is dismissed. No order as to costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI

12th March, 2020

Ash

Company Appeal (AT) No. 100 of 2018 Page 10 of 10