Radeyshyam Mandwani vs Santosh Devcon Pvt. Ltd

1. Radeyshyam Mandwani ...Appellants 175, Palsikar Colony, Indore -452001 Madhya Pradesh

2. Mukesh Matta 64, Palsikar Colony, Indore -452001 Madhya Pradesh

Vs

1. Santosh Devcon Pvt. Ltd. ....Respondents

G-2, Classic House, Scheme No. 101, Manik Bagh Road, Indore (M.P.) 452002 Madhya Pradesh

2. Sunil Tarachand Mandwani H.no.53, Palsir Colony, Ward No. 57, Indore -452001 Madhya Pradesh

3. Ashok Mandwani 53/1, Palsir Colony, Indore -452001 Madhya Pradesh

Present:

For Appellants: Mr. Manoj Munshi and Mr. R. D. Makhija Advocates.

For Respondents: Mr. Vijay Assudani, Advocate for Respondent no. 1 & 2.

Mr. Pradeep Tiwari, Advocate for Respondent no. 3. 2

Judgment

06.12.2017: Heard counsel for the appellants and respondents no. 1 to 3.

Perused Impugned Order dated 29.03.2017 passed in T.P. 113-D/ 2016 (CA

50/16-old) in T.P. 113/16 by learned National Company law Tribunal,

Ahemdabad ('NCLT' in short).

2. The only question that arises for determination in this matter is whether

the learned NCLT was justified in staying the Company Petition till 3 sessions

trials arising between the parties are decided.

3. What appears is that the respondent no. 1 company was incorporated

somewhere in 2011. The shareholding ratio of appellant no. 1 was 34 per cent,

appellant no. 2 was 15 per cent and respondent no. 2 was 51 per cent. The

appellants and respondent no. 2 were the directors. It is the case of the

appellants that respondent no. 2 without calling the meeting of the director

removed the appellant no. 1 on the basis of forged resignations of appellants as

Directors and DIR-12 forms were submitted accordingly. It is stated that,

respondent no. 2 claimed that appellant no. 1 on 17.12.14 & Appellant no. 2

on 15.12.14 resigned as Directors. It is claimed that subsequently in the

meeting dated 26.12.2014 respondent no. 2 illegally allotted 30000 equity

shares to himself and also illegally appointed respondent no. 3, his real brother

as a Director. Thus the petition was filed.

Company Appeal (AT) No. 192 of 2017 3

4. It appears that the appellants also made a complaint regarding forged

resignations to the police and the investigations were held leading to filing of

Criminal cases.

5. The respondent no. 2 sought stay of the company petition till the

Sessions trials are over. The learned NCLT was of the view that the Criminal

Court has to decide whether the resignation letters are forged or not. It

observed that expert reports have been obtained. It observed that it has also to

decide in the main company petition the issue relating to the allotment of

30000 shares to respondent no. 2 and appointment of respondent no. 3 as

Director.

6. Relying on Judgment of "M/s. Shareef Vs. The State of Madras and Ors."

reported in AIR 1954 Supreme Court 397, the NCLT went on to stay the

proceedings.

7. Learned counsel for the respondents are submitting that the NCLT has

rightly stayed the proceeding relying on the observations of the Hon'ble

Supreme Court. The counsel submitted that the NCLT found that there was

scope of conflicting findings and there was no possibility of deciding the

controversies keeping aside the issue of forgery because it has bearing on all

other subsequent affairs of the first respondent company.

8. Learned counsel for the appellant has submitted that there are many

other subsequent judgments of the Hon'ble Supreme Court after the matter of

Company Appeal (AT) No. 192 of 2017 4

"M/s. Shareef" and as per Judgments material is to consider facts of the case

to consider whether or not to stay the matter.

9. Section 422 of the new Companies Act reads as under:

"Expeditious disposal by Tribunal and Appellate Tribunal. (1)

Every application or petition presented before the Tribunal and every

appeal filed before the Appellate Tribunal shall be dealt with and

disposed of by it as expeditiously as possible and every endeavour

shall be made by the Tribunal or the Appellate Tribunal, as the case

may be, for the disposal of such application or petition or appeal

within three months from the date of its presentation before the

Tribunal or the filing of the appeal before the Appellate Tribunal.

(2) Where any application or petition or appeal is not disposed

off within the period specified in sub-section (1), the Tribunal or, as

the case may be, the Appellate Tribunal, shall record the reasons for

not disposing of the application or petition or the appeal, as the case

may be, within the period so specified; and the President or the

Chairperson, as the case may be, may, after taking into account the

reasons so recorded, extend the period referred to in sub-section (1)

by such period not exceeding ninety days as he may consider

necessary."

Company Appeal (AT) No. 192 of 2017 5

10. Thus the Company Petition is required to be disposed off within a

period of 3 months. Counsel for both sides agree that basically the NCLT

would in a Company Petition consider documents filed by either parties

supported by affidavits to decide the matter. In rare case oral evidence

may have to be taken it is stated.

11. We find that relying on the matter of "M/s Shareef" will not be helpful in

the present set of facts as in that matter the observation was that "civil suit

often drags on for years and it is undesirable that a criminal prosecution

should wait till everybody concerned has forgotten all about the crime." In the

present matter looking to the new provision of the Companies Act, 2013

referred above there cannot be such a contingency and the Company Petition

has to be expeditiously decided. There is no question of embarrassment as the

respondents have already filed reply here denying the allegations of appellants

that the resignations are forged documents. In fact the respondent no. 2 has

given reasons as to how and why the resignations came to be filed.

12. While considering the company petition, the learned NCLT would be

required not merely to consider the alleged resignations but interalia it will also

be seeing if the same were in compliance with Section 168 of Companies Act,

2013 and duly placed before the Board of Directors. Contents & effect of

contents of alleged resignations would also be factor. The Company Petition

would have to be decided considering even these aspects and only thereafter

Company Appeal (AT) No. 192 of 2017 6

the subsequent act of allotment of 30,000 shares by respondent no. 2, and

appointment of respondent no. 3 as director would come up. Thus, it would not

be mere reading of the resignation letter but it will also have to be seen that

even if it was accepted that resignation letters were signed, it would be required

to examine, if they were duly executed by Petitioners and if there were due

compliances of Section 168 of the Companies Act, 2013 placing the same

before the Board of Directors after proper notice, agenda & note taking, as well

as placing the same before immediately following general meeting of the

company.

13. If the facts of the present case are seen, the appellants who had

collectively 49 per cent of shares and were directors have pleaded in the

Company petition:

"IX. Since last around one year, the Respondent No. 1 and 2 were

not sending any notice of Board of Directors meeting to the

Petitioners nor any notice for the general Meeting of the shareholders

of the Respondent No.1 Company. The Petitioner No. 1 and 2 were

continuously following up with the Respondent No.1 and 2 so that

proper decorum and discipline be maintained in the Company so

that proper Board of Directors meeting and shareholders meeting is

held in the Respondent No.1 Company as provided under the

Companies Act, 1956.2013. But the Respondent No. 2 had the

Company Appeal (AT) No. 192 of 2017 7

fraudulent intentions and objectives of hijacking and taking over the

entire Respondent No.1 Company.

X. During November, 2014, the Petitioners apprehended that the

Respondent No.2 wants to commit fraud and wants to take over and

hijack the Respondent No. 1 Company to the prejudice and loss of

the Petitioners. Therefore, on 22.11.2014, both the Petitioners visited

the office of the Statutory auditors viz Pankaj Patwa & Associated,

Chartered Accountants, and informed him that Respondent No. 2 is

planning to hijack and to takeover the Company illegally to the

prejudice and loss of the Petitioners. Thereafter the Petitioners

handed over their letters dated 24.11.2014 to the statutory auditors

of the Company viz Pankaj Patwa & Associates bringing out all the

facts. Annexed herewith copy of the said letter marked as Exhibit

"C-1" & "C-2". Thereafter on 29.11.2014 the petitioners filed their

letter with Registrar of Companies, Gwalior stating that no new

forms shall be taken on record and stating that Respondent No. 2,

Mr. Sunil Mandwani is planning to commit the fraud upon the

Company. Annexed herewith the copy of the said letter dated

29.11.2014 and marked as Exhibit "D". On 6th December, 2014, Mr

Nitin H Phadke, Advocate on the instructions of the Petitioner herein

addressed a letter dated 6th December, 2014 to Mr. Sunil Mandwani

stating that it appears that Sunil Mandwani is trying to perpetuate a

Company Appeal (AT) No. 192 of 2017 8

fraud in the Company and wants to illegally take over the Company

and instructed Mr. Sunil Mandwani not to take any illegal stops

detrimental to the Petitioners herein failing which the appropriate

proceeding civil as well as criminal action will be taken against Mr.

Sunil Mandwani by Mr. Radheshyam Mandwani and/or Mr.

Mukesh Matta. Annexed herewith the copy of the said letter dated

06.12.2014 and is marked as Exhibit "E".

XI. On 15th December, 2014 a form No. DIR 12 was filed with the

ROC purporting to accept the resignation letter dated 15 th February,

2014 of Mr. Mukesh Matta, Respondent No. 2, Along with the DIR-

12, the forged resignation letter of Mr. Mukesh Matta was attached.

Also the false letter of acceptance of resignation by Mr. Sunil

Mandwani was attached. This Form DIR-12 was filed with

fabricated documents by the Respondent No. 2 Annexed herewith a

copy of the said DIR-12 and marked as Exhibit "F".

XII. On 16th December, 2014, the Form No. DIR 12 was filed

purporting to appoint Respondent No. 3 as the Director of

Respondent No.1 Company. No Board meeting was held on

16.12.2014. None of the other Directors viz neither Mr. Radheshyam

Mandwani was present in the Board Meeting nor Mr. Mukesh Matta

was present nor the Board Meeting was conveyed at all. So this was

Company Appeal (AT) No. 192 of 2017 9

a false Board Meeting made by Respondent No. 2 with the illegal

objective of Hijacking and taking over of the Respondent No. 1

Company. Annexed herewith a copy of the said Form No. DIR-12

and the same is marked as Exhibit "G"

On 17th December, 2014, the Respondent No. 2 filed the Form DIR

12 purporting to accepting the resignation of Mr. Radheshyam

Mandwani. Along with the DIR-12, the forged resignation letter of

Mr. Radheshyam Mandwani was attached. Also the false letter of

acceptance of resignation by Mr. Sunil Kumar Mandwani was

attached. This Form DIR-12 was filed with fabricated documents by

the Respondent No. 2. Annexed herewith a copy of the said Form

DIR-12 and the same is marked as Exhibit "H" "

14. Thus from before alleged resignations of December, 2014, petitioners had

issued legal notice. All these factors would have to be considered.

15. It is apparent that mere reading of a letters purporting to be resignations

is not the issue. Even if it was to be said to be resignation, it would have to go

through necessary process to be acted upon. The attending circumstances will

also be material.

16. The present scenario is that the respondents have taken over charge of

the company and although they are facing allegations of forgery and hijacking

Company Appeal (AT) No. 192 of 2017 10

of the company, the appellants may have to sit idling till criminal cases are

decided. This does not appear to be in the interest of justice. The Company

being on-going concern, Company Petition should be decided on its own merits

at the earliest. In view of this, we do not find that it is appropriate to keep the

company petition pending endlessly.

17. Considering the provisions of the Companies Act and the aims and

objectives for deciding the company petitions early, we find that the impugned

order is not maintainable. It deserved to be set aside.

18. The impugned order in TP 113-D/2016 (CA No. 50 of 2016-Old) in

Company Petition no. TP 113 of 2016 is quashed and set aside. Learned NCLT

shall decide the Company Petition, as per provisions of the Companies Act,

2013 at the earliest, without being influenced by Impugned Order or our

observations regarding relevant factors made above.

No orders as to costs.

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

(Mr. Balvinder Singh) Member (Technical)

Sh/nn

Company Appeal (AT) No. 192 of 2017