Shri Ramesh Chander Goel & Ors vs M/S Dinesh International Ltd. & Ors

28.03,201 7- This appeal has been preferred by appellant/respondent Campany Law Appellant Tribunal New Delhi (hereinafter referred ta ag the 'Tribunal in Company Petition No. 29 (ND) 2008,

2. Brief fact of the case is that the Ist Respondent Company was incorporated in the year 1990 with its share capital of 1Q crores divided into i crore equity shares of Rs. 10/- each to carry out the business of export and import of various items. The Company is closely held farily Carmpany.

3, Pursuant to a Notification dated @ January 2006 issued by the Indian Railways, Ist Respondent Company along with another company, namely M/s ETA Engineering Prt. Ltd. entered into collaboration to bid for a ceartract. For the said purpase, the consorthim so formed by both the companies were required to deposit a registration fee of Rs. 50 Crores for the project.

4, As per internal decision the Ist Respondent Company paid share of Rs.

20 Crores towards its 40% of the equity.

3, The respondent, Mr. Daya Kishan Goel & Gra. approached the erstwhile Company Law Board wher the appellants intended to increase the 'authorized share capital' of the Company for a new project.

&, Such a decision was taken at an Extra Ordinary General Meeting held on 288 Apri, 2010, The respondent, Mr. Daya Kisherm Goel & Ors. {petitioners alleged that they were not served with any native or the explanatory statement and became aware of the sarne when they received the notice of Extra Ordinary General Meeting fixed on 256 April 2006. They alleged that the meeting of 25 April 2006, was egal and void and amounts fo oppression on shareholders. They also alleged that at the hands of the appellants, the lucrative business of the Company formed in the 1990s was

reduced to a raught.

# The Tribunal by bnpugned fudgement and order dated ge February

2017 having noticed the relevant facts and arguments advanced by the parties

observed and held as follows: -

"13. The acts of the respondents were urndoubtectty aporessive and prejudicial of the interest of the petifioners' group which held 40% equity. I appears that the lucrative business formed in the 1980's was reduced to a naught, clearly giving strength te allegation of mismanagement. Linfortunately, due to the pussage of ime, the cornprriuy's business has come to a standstill and is assets have dissipated and therefore ne substantial relief win be granted to the petitioner. The only usset of Rs. 20 crores

which was returned te M/s ETA/ Railways is fpng ut

custody with Hor'ble High Court of Delhi. This amount is required to reduce the huge Hability an account af various Government dues. Increase of the stutulery Uabuity te such a high prapertion im uself speaks of gross mismanagement of the affairs of the company which vested in the hands of Respondents 3, 4 & & The petitioner had sought release of this amount in the Civil Suits which are still pending adjudication but the same was not permitted.

15, Hewever, having come to the conclusion that the petitioners suffered unfairly at the hands af the respandents on account of ron-compliances of statutory requirements, being prejudicial to the wilernests of the petifioners, H is basic to purisprudence that the night to rehef must be judged to exist as on the date of the petitioners wistituting the proceedings. xi. Couriael therefore prays that Status quo ante be restored. Accordingly, the two resolutions dated I' April 2006 and 85% April 2006 are set aside with the consequential effect af setting aside any decision taken therein being declared void, Hegal and non-est.

ié The petitioners 1 & 3 are entitled to be signatories to the Respondent Company's Bank account. However, to

safeguard the interests of both the parties, the said

account shall be operated jointly by a member of the petitioner group ane of the respondent group. if Inthe unlikely everitt of release of the sum of Rs. 20 erares, ar any part thereof, lying uuth the Registrar General of the Delhi High Court, the same would be deposited in the account of the respondent Company. The residual amount, if any, after meeting the Company's abilities shall be shared equally between the tua groups as per their onginal agreement, IS. Petition disposed offin terms af the aboue."

8, Learned counsel appearing on behalf of the appellants while accepted that the company is not running since April 2006 anc is in loss, subrrits that the appellants have no grievance against the impugned judgement, except the observation as made by the tribunal against the appellant at paragraph 12 of the impugned judgement, as noticed and quoted above.

2. At paragraph 1S of the impugned judgement, the Tribunal observed that the hicrative business formed in the year 19906 was reduced to a naught, clearly giving strength of allegation af mismanagement,

The Tribunal further observed that unfortunately, due ta passage of time, the company's business came to standstill and its assets have dissipated and therefore no substantial relief can be granted to the petitioners. While observing so, the Tribunal further observed that increase of the statutory lability to high proportion in itself spoaks of gross mismanagement of the affairs of the company which was vested in the hands of 3°, 4% and 8m

Respondents (Appellants herein}.

LO. Learned counsel for the appellants submitted that during the said period, 25° and 38 appellants whe were 3" and 4% respondents in the Company Petition were out of India.

Li, Having heard learned counsel for the appellants and on perusal of the judgement and record, we are of the view that the mismanagement as observed by the Tribunal with regard te the management of the affairs of the company does not relate to any individual but mismanagement by the directors who were looking into the affairs. If one or other respondents were also the director{s) of the company and dealing with the affairs of the company, the observation of the Tribunal will be equally applicable to all such directors. However, observation against one or the ether party will mot render the impugned fudgement Wlegal or wrong.

12. For the reasons aforesaid, we are mot inclined to interfere with the impugned judgement dated 2" Pebruary 2017 and dismiss the appeal.

However, in the facts and circumstances there shall be no arder as to cost,

(lustice S.J. Mukhopadhaya} Chairperson

(Mr. Balvinder Singh) MemberfTechnical} sm