Rajeswara Rao Vittanala, Member (J):— The Company Petition bearing C.P. No. 9/241/HDB/2016 is filed by Mr. M. Venkat Rao, under Sections 397, 398 of Companies Act, 1956 R/w 402 and 403, and Sections 241 to 244 and other applicable provisions of the Companies Act, 2013, by inter-alia seeking the following directions;

a) to restrain the Respondents No. 2 & 3 or their men or agents etc., in transferring/transmitting/alienating/encumbering assets of the 1stRespondent 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 3rdRespondent 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 1stRespondent Company in view of the oppression and mismanagement of affairs of the 1stRespondent Company and siphoning of the funds of the Respondent No. 1 Company by Respondent No. 2 and 3 etc.

2.Before adverting to various disputes raised in the Company petition, it is necessary to mention briefly, history of case leading to filing of earlier and present Company petitions;

a) Emjay Industries Private Limited (hereinafter referred to as the “1stRespondent Company”) was incorporated under the provisions of the Companies Act, 1956, on 11thJanuary 1974 with the Registrar of Companies, Andhra Pradesh, Hyderabad in the name and style of Ampro Food Products Private Limited, and subsequently the name was changed to Ampro Industries & Real Estates private Limited vide fresh certificate of incorporation dated 04.10.1991. The 1stRespondent Company had purchased land to an extent of 20 acres and buildings together with Biscuit manufacturing machinery as one unit in UPPAL Industrial Development Area bearing Plot No. A1 & A2, IDA, UPPAL, R.R. District, from the High Court of Bombay as per orders dated 23-04-1980 Company Application No. 196 of 1980 in Company Petition No. 355 of 1973 with an intention to carry on the business of manufacturing of biscuits. Initially, the main object of Company was to manufacture biscuits, it was later amended to include Real Estate activities including lease of properties in the year 1991.

The 1stRespondent Company was initially incorporated by Mr. M. Janardhana Rao, the second Respondent herein and his brother Mr. Kishan Rao and they are signatories to the Memorandum, each holding 10 equity shares of Rs. 100/- each. Subsequently, by way of family settlement, the second respondent was given 1stRespondent Company, and thus, he came to hold and control over the affairs of the Company. Subsequently, the second respondent has allotted shares to his three sons namely, Mr. M. Venkat Rao (petitioner herein) Mr. M. Rajasekhar (third respondent) and Mr. M. Srinivasa Rao (Respondent No. 21), who is not a party to this petition. The petitioner was only 13 years old boy, when the Company was incorporated. There is no dispute with regard to share holding of father and three sons (i.e. 19.7%, 31%, 18.29% and 31 % respectively. However, the petitioner is bent upon raising several disputes, and never agreed to settle the issues amicably, though the then Company Law Board (CLB) in earlier petition i.e. CP No. 84 of 13, and also this Tribunal made several efforts to resolve the issue amicably, since it is purely a family dispute that too with regard to sharing of remaining properties. Hence, this Tribunal is called upon to adjudicate the issues raised in the petition. It is to be mentioned herein, that founder of 1stRespondent Company, and the second respondent, who is now aged about 85 years, has advised the petitioner to withdraw the present petition and leave this issue to him to settle disputes among his sons, since he alone established and developed the Company. The father of petitioner has conveyed the said wish to the Tribunal through his counsel. This Bench, in order to resolve issue amicably has made several efforts by adjourning the case several times and in fact ascertained details of remaining properties, immovable and movable and liabilities of the Company from both the parties. However, the petitioner did not agree for the said proposal of his father. We have also perused all proceedings of CLB in earlier case filed by the petitioner. The petitioner is selectively choosing the litigation against his family members, and in the long history of more than 4 decades of the Company, he is raising issues since last five years or so, even though so many financial transactions have taken place in the Company.

(b) Thereafter, the main business of manufacturing biscuits was never recommenced. In the interregnum, the 1stRespondent Company had sold land to an extent of 7 acres situated at Plot No. A1 & A2, IDA, UPPAL, R.R. District, and settled its labour dues and some of its creditors. So ultimately, only balance land to an extent of 13/10.56 acres, buildings and some machinery situated at Plot No. A1 & A2, IDA, UPPAL, R.R. District remains, which is a prime dispute here. Apart from this land, there is an admitted liability of Company to an extent of more than Rs. 22 crores.

(c) Earlier, the petitioner has filed a case bearing C.P. No. 84 of 2013 before the then Honble Company Law Board, Chennai. The same was transferred to this Bench on its constitution, and it was re-numbered as T.P. No. 105/HDB/2016. In the course of hearings, Mr. D. Krishana Rao was also appointed as a mediator by CLB to make an effort for the settlement of the dispute, with consent of all parties involved. However, the issue could not reach finality, and thus it was kept pending before the CLB and finally transferred to this Bench. Since, several developments took place in the case after its institution, it required amendment and then replies by other side which would consume lot of time, the Petitioner ultimately had withdrawn the said petition with a liberty to file a fresh comprehensive Petition on the same cause of action. Since the request of withdrawal was not opposed by the Respondents, the Tribunal permitted the Petitioner to withdraw CP No. 84 of 13 by an order dated 1stSeptember, 2016 by granting liberty to the petitioner to file a comprehensive fresh petition for the same cause of action. Accordingly, the present Company Petition is filed and the same was listed before this Bench on various dates viz. 6/10/2016, 24/10/2016, 23.11.2016, 05.01.2017, 24.01.2017, 25.01.2017, 06.02.2017, 7.02.2017, 8.02.2017, 16.02.2017, 02.06.2017, 12.06.2017.

3.Now, brief contents/allegations/assertions, as raised in the Company petition, are as follows:

(a) As stated supra, Emjay Industries Private Limited (hereinafter referred to as the “1stRespondent Company”) was incorporated under the provisions of the Companies Act, 1956, on 11thJanuary 1974 with the Registrar of Companies, Andhra Pradesh, Hyderabad in the name and style of Ampro Food Products Private Limited and subsequently changed the name to Ampro Industries & Real Estates private Limited, vide fresh certificate of incorporation consequent upon change of name dated 04.10.1991. The Company had immediately changed the name of the company to Ampro Industries Private Limited vide fresh certificate of incorporation consequent upon change of name dated 20.12.1991 and finally changed its name to the present name Emjay Industries Private Limited vide fresh certificate of incorporation. Its Registered Office is situated at 2ndFloor Unit # 210, Amrutha Villa, Raj Bhavan Road, Somajiguda, Hyderabad - 500082.

(b) The Authorized Share Capital of the 1stRespondent Company is Rs. 1,00,00,000/- (Rupees One Crore) divided into 1,00,000 (One Lakh only) Equity Shares of Rs. 100/- each. The present paid up Capital is Rs. 45,37,000/- (Rupees Forty Five Lakh and Thirty Seven Thousand only) divided into 45,370 (Forty Five Thousand Three Hundred and Seventy only) Equity Shares of Rs. 100/- each.

(c) The main object of the Company, at the beginning was to acquire and take over the business, now being carried on by Ampro Food Products, Hyderabad etc.

(d) The 2ndRespondent is a Director and holds 8,940 equity shares (i.e.) 19.7%, the 3rdRespondent is also a Director and member who holds 14,065 equity shares (i.e.) 31% shareholding in the 1stRespondent Company. Both the 2ndand 3rdRespondent are holding 23,005 equity shares (i.e.) 50.7% of the shares

(e) The 4thRespondent is Oriental Bank of Commerce, one of the two bankers of 1stRespondent Company. The 5thRespondent is City Union Bank, the other banker of 1stRespondent Company. The 6thRespondent is Venkateshwara Ready Mix Concrete, a partnership firm to which the 2ndand 3rdRespondents entered into lease agreement (registered) and negotiated to sell the assets of the 1stRespondent Company without the approval of the Board of Directors of the 1stRespondent Company.

(f) Respondents 7 to 10 are the purchasers of the impugned sale of land to the extent of 5898 sq. yrds. on 17.02.2014. They conspired with Respondents 2 & 3 while acquiring the property of 1stRespondent Company without proper authority. Respondent No. 11 is Telangana State Industrial Investment Corp. Ltd. (TSIIC) formerly known as Andhra Pradesh Industrial Investment Corp. Ltd. (APIIC). The impugned land being industrial land is under the purview of TSIIC, who is responsible for sub-division, mutation and responsible for collection of statutory dues in respect the land belonging to 1stRespondent company.

(g) Respondents No. 12 to 20 are the entities to whom Respondents 2 & 3 claims to have paid money out of the proceeds of impugned sale of land on 17.02.2014. Respondents 2 & 3 filed an affidavit on 12.08.2014 and mentioned these Respondents and claimed they have received crores of rupees from the company.

(h) Respondent No. 21 is the other shareholder and brother of the Petitioner holding 8300 shares (i.e. 18.29%). Respondents No. 22, 23 & 24 are the officers of Respondent No. 4 bank who are instrumental and responsible for willful disobedience of the order dated 20.03.2014 of Honble Company Law Board. Respondent No. 25 is the illegal occupant of the lease premises, earlier occupied by Respondent No. 6. Respondent No. 26 is the statutory auditor, who without being properly appointed, certified and gave the audit report for the years 2008–2009, 2009–2010, 2010–2011 and 2011–2012.

(i) The 1stRespondent Company was incorporated with the 2ndRespondent and his brother Mr. Kishan Rao, being the signatories to the Memorandum, each holding 10 Equity shares of Rs. 100/- each. Thereafter, by way of family partition between the 2ndRespondent and his brother Mr. M. Kishan Rao, the 1stRespondent Company was given to the 2ndRespondent. Pursuant, to the said partition, the 2ndRespondent came to have a hold and control over the affairs of the 1stRespondent Company. Thereafter, the 2ndRespondent had allotted shares to his family members as the 1stRespondent Company is a closely held family company. The shareholding pattern of the 1stRespondent Company as on date is as follows:—

Sl. No.

Name

No. of Shares

1.

Mr. Janardhan Rao — 2ndRespondent

8940 (19.7%)

2.

Mr. Venkat Rao — Petitioner

14065 (31%)

3.

Mr. M. Rajasekhar — son of 2ndRespondent and brother of the Petitioner and 3rdRespondent

14065 (31%)

4.

Mr. M. Srinivas Rao - Son of 2ndRespondent and brother of the Petitioner and not a party to this company petition.

8300 (18.29%)

(j) The Petitioner states that, the 1stRespondent Company had purchased land to an extent of 20 acres and buildings together with biscuit manufacturing machinery as one unit in UPPAL Industrial Development Area bearing Plot No. A1 & A2, IDA, UPPAL, R.R. District, from the High Court of Bombay as per orders dated 23-04-1980, Company Application No. 196 of 1980 in Company Petition No. 355 of 1973, with an intent to carry on the business of manufacturing of biscuits. The 1stRespondent Company carried it only till 31.03.1996. Thereafter, the factory was shut down due to unforeseen labour unrest and labour problems. In the interregnum, the 1stRespondent Company had sold land to an extent of 7 acres situated at Plot No. A1 & A2, IDA, UPPAL, R.R. District, and settled its labour dues and some of its creditors.

(k) It is alleged that the 1stRespondent Companys Plot No. A1 & A2, at IDA, UPPAL, R.R. District, was illegally given on lease to Venkateshwara Ready Mix Concrete, by way of a lease deed dated 06.08.2011, letting out land to an extent of 2.66 acres equivalent to 12,875 square yards out of the remaining 13 acres for a consideration of Rs. 2,70,000/- as rent per month, the lease was for a period of 7 years much below the then prevailing rental value. The 2nd& 3rdRespondents had clandestinely let out the property of the 1stRespondent Company without a valid Board Meeting and had received a security deposit of Rs. 16,20,000/- during month of July 2011. The said deposit was appropriated by the 3rdRespondent, who had transferred the same to his personal account without the knowledge of the Petitioner on 22.07.2011. Thus, the 3rdRespondent with connivance with the 2ndRespondent had siphoned off the lease deposit in deprivation of the monies to the 1stRespondent Company. The illegal lease of 2.66 acres of the 1stRespondent Companys land for lesser rental value has diminished the share value of the company and the siphoning off the security deposit of Rs. 16,20,000/- by the 3rdRespondent has deprived the 1stRespondent Company its revenue.

(l) The Petitioner further alleges that, the 2nd& 3rdRespondents in order to siphon off the security deposit of Rs. 16,20,000/-, clandestinely deposited the said money in the current account bearing No. 10411010007420 with the 4thRespondent without the proper authorization from the Board. The 2ndRespondent is responsible for convening the Board Meetings and that no Board Meetings were convened and no notices of Board Meetings were sent and that fabricated resolutions were being circulated to the bank and that a sum of Rs. 20,00,000/- has been siphoned off to the account of the 3rdRespondent which resulted in misappropriation of the monies due to the 1stRespondent company. The Petitioner being a Director, is entitled to inspect the books of the 1stRespondent Company under section 209(4) and sought the 2ndand 3rdRespondents to produce the records and accounts sought for by the Petitioner for inspection on 01.08.2011.

(m) The Petitioner further states that he had approached the 2ndRespondent seeking financial support from the 2ndRespondent for his daughters wedding. Accordingly the board of the 1stRespondent Company authorized the Petitioner to negotiate, sell and to execute the sale documents for an extent of 5900 sq. yards of property situated in Survey No. 1, in Plot No. A1, IDA Uppal. The board also authorized the Petitioner to utilize Rs. 75 Lakhs as advance to be used for the Petitioners daughters marriage. Accordingly the Petitioner had executed two separate sale deeds one for 4861 sq. yards and the other 1039 sq. yards for the total consideration of Rs. 7,43,18,500/- by way of two-sale deeds both dated 04-07-2013 bearing Documents Nos.: 12527/13 and 12147/13 respectively, for which the Petitioner had received the advance of Rs. 75 Lakhs by way of two cheques bearing Nos.: 000101 and 000104 dated 02/05/2013 of Rs. 50,00,000/- and Rs. 25,00,000/- respectively. After execution of sale, possession was handed over to the purchaser. The sale consideration received is tabulated below;

Date

Pay Order No

Drawn On

Amount (Rs.)

03.07.2013

497002

BNP Paribus, Panjagutta Branch, Hyd

2,00,00,000

03.07.2013

497003

BNP Paribus, Panjagutta Branch, Hyd

2,00,00,000

03.07.2013

497004

BNP Paribus, Panjagutta Branch, Hyd

2,00,00,000

04.07.2013

000732

HDFC Bank, Rajbhavan Branch, Hyd

58,43,500

04.07.2013

000671

HDFC Bank, Rajbhavan Branch, Hyd

84,75,000

(n) The Petitioner states that, on 05.07.2013, the Petitioner had been to the 5thRespondent Bank to deposit the pay orders in the 1stRespondent Companys account. The Petitioner states that, on the Petitioner depositing a pay order for Rs. 2,00,00,000/- (Two Crores), the Manager of the 5thRespondent bank called on the Petitioner and informed the Petitioner that the account of the 1stRespondent has been frozen and returned the pay order to the Petitioner after collecting the deposit slip. After several correspondence, the 5thRespondent by a letter dated 19.07.2013 had informed the Petitioner, that they had received a board resolution from the 1stRespondent company to freeze the debit transactions. Based on the above, the 5thRespondent had frozen the debit transactions and had enclosed letters dated 05.07.2013 and 18.07.2013 addressed by the 2ndRespondent to the 5thRespondent along with the circular of resolution dated 18.07.2013.

(o) The Petitioner states he had requested the 2ndRespondent to call for the board meeting immediately to discuss about the utilization of the sale proceeds and to deposit in the bank and further pointed out that the failure of the 2ndand 3rdRespondents would compel the Petitioner to call for the board meeting inviting all the Directors. The Petitioners request to call for the board meeting was neither acceded nor refused but the 2ndand 3rdRespondent shied away from replying to the said request.

(p) The Petitioner alleged that the Respondents 2ndand 3rdhave not only conducted the affairs of Company, in a manner prejudicial to the interests of the 1stRespondent Company, but also towards the other members including the Petitioner. The Petitioner therefore states that, circumstances exist justifying the winding-up of the Company under Sec. 433(f) of the Companies Act. However it unfairly prejudices the interest of Petitioner and other shareholders of the Company. Therefore, the Petitioner has filed the present petition by seeking the relief as sought for. The petitioner alleges many acts of oppression and mismanagement on the part of the Respondents, which are serious, continuous and are completely against the interests of the 1stRespondent Company and its shareholders. If the Respondents are permitted to usurp control in the manner they are purporting to do, the Petitioner would suffer immense loss and injury.

(q) It is alleged that by continuing their oppressive acts, Respondents No. 2 & 3 on one hand not only diverted crores of rupees to their personal accounts and group entities, but deliberately not discharged the direct creditors of the company, obviously with an ulterior motive. He has given the following list of Creditors:

1. Mrs. B. Neerajana Reddy

2. Mrs. K. Anita

3. Sri K. Sree Rama Reddy

4. Mr. K. Vijay

5. Mrs. K. Puspha Leela

6. Mrs. D. Harsha Reddy

(r) Hence, it is just and proper for Respondents No. 1, 2 & 3, should on priority discharge their duty as genuine creditor of the company without further waste of time. In addition to the above, petitioner himself has brought Rs. 1,77,45,000/- by way of loan to the company on different dates. All these loans are deposited with the companys bank account by the petitioner with the approval of the company during the year 2009 to 2011 and were utilized by the company. These credits are duly reflected in the companys bank account. Respondents No. 2 & 3 are refusing to return this loan along with interest to the petitioner.

(s) It is contended that the Petitioner, Respondents No. 2, 3 and 21 are the shareholders of the Company. The Petitioner; Respondents No. 3 & 21 are the sons of Mr. M. Janardhan Rao (2ndRespondent). However, Petitioner, Respondents No. 2 & 3 are only Directors of the Company. Therefore, it is a family Company and that too a private Company. Hence, principle of partnership shall be applicable in the affairs of the Company. It is asserted that the above facts would reveal Respondents No. 2 & 3 are conducting the affairs without “at most good faith”. The conduct of Respondents 2 & 3, as explained supra shows that they have not acted in the true spirit of partnership and in the interest of justice. Hence, the petition may be allowed as prayed for, as winding up of Company, though it is justifiable, would unfairly prejudice the petitioner and therefore, continuation of company is in the best interest of all the members.

4.Shri Niranjan Reddy, the Learned Counsel for the Petitioner, after arguing the case, has filed his written brief and the following are his main contentions:

I. Board Meetings were not convened as per law since 25.04.2013; Petitioners repeated attempts to convene Board Meetings were thwarted by Respondents No. 2 and 3; Board Resolutions passed by Respondents No. 2 and 3 without any notice to Petitioner; Board Resolutions are fabricated. Board Meeting held on 25.04.2013 was the last properly convened Meeting, in which only the Petitioner was authorized vide Board Resolution to sell 5900 sq. yds. of 1stRespondent Company land to Mahavir Auto Diagnostics. Thereafter, no Board Meeting has been properly convened, Petitioner being one of the Directors has not been served notice of any Board Meeting though Petitioner informed Respondents No. 2 & 3 that no proper Board Meeting had been convened as far back as on 17.07.2013 and thereafter again on 19.09.2013 and 23.09.2013, and has repeatedly requested convening of Board Meeting but to no avail.

II. Petitioner has repeatedly requested for convening of Board Meeting to discuss issues of funds received by Respondents No. 2 & 3 towards unauthorized sale of 1stRespondent Companys properties, unaccounted withdrawals from 1stRespondent Companys bank accounts by Respondent No. 3, revocation of Petitioners authorization to operate bank accounts, audit, filing of balance sheets of 1stRespondent No. 1 Company etc. All such attempts of the Petitioner have been thwarted by Respondents No. 2 & 3 who have not allowed for Board Meeting to be convened on one pretext or the other.

III. However, Respondent No. 2 replied stating that Petitioner has no authority to convene Board Meetings and such an authority is vested solely with Respondent No. 2, being the Managing Director. It is contended that it is contrary to Companies Act, 1956, as well as Articles of Association.

IV. Respondents No. 2 & 3 have passed Board Resolutions without giving any Notice of the alleged Board Meetings to the Petitioner. Specific instances are detailed hereunder—

(a) Alleged Board Resolution dt. 18.07.2013 passed by Respondents No. 2 and 3 through ‘circulation’ without notice to Petitioner, freezing the debit transactions of 1stRespondent Companys account with Respondent No. 5 Bank [@259].

(b) Alleged Board Resolution dt. 27.07.2013 passed by Respondents No. 2 & 3, authorising them to operate Respondent No. 5 Bank account and thereby excluding the Petitioner from operating 1stRespondent Companys account with Respondent No. 5 Bank.

(c) Alleged Board Resolution dt. 23.09.2013 passed by Respondents No. 2 and 3 without notice to petitioner, authorizing Respondents No. 2 and 3 to operate 1stRespondent Companys bank account with Respondent No. 4 Bank, on the basis of which Respondent No. 4 recommenced operations of the said account.

5.A counter dated 13thDecember, 2016 is filed on behalf of Respondent No. 1 to 3, by inter-alia contending as follows:

(a) 1stRespondent Companys account with Respondent No. 5 Bank was frozen only to the limited extent of debit transactions, since the Petitioner had siphoned off the amount of INR 75 lakhs. Respondent No. 3 being the Chairman & Managing Director was fully entitled to take action to freeze debit transactions of Respondent No. 5 Bank account as Petitioner was harassing bank authorities.

(b) Respondents No. 2 and 3 were constrained to write to Respondent No. 5 Bank to de-recognize the Petitioner as Petitioner had withheld sale consideration received by him and siphoned off monies.

(c) Board Resolution dated 25.04.2013 only authorized the Petitioner to sell 5900 sq. yds. of 1stRespondent Companys land to a purchaser already identified i.e. Mahavir Auto Diagnostics Private Limited. In the said Board Meeting, Respondent No. 3 was not authorized to sell 1stRespondent Companys land.

(d) It is denied that Board resolution dated 25.04.13 was fabricated by Respondent No. 2 and 3. The discrepancies in the Board Resolution authorizing Petitioner to sell land to Mahavir Auto Diagnostics Pvt. Limited and the one allegedly authorizing Respondent No. 3 to sell 1stRespondent Companys land, which establish that the latter is fabricated, are detailed as under:

ØThe party to which land was being sold was identified and mentioned in the Board Resolution authorizing Petitioner to sell 1stRespondent Companys land; not so in the case of Respondent No. 3.

ØThe extent of land to be sold by the Petitioner was specified as 5900 sq. yds. However the portion of the land to be sold was not specifically identified. The fabricated Board Resolution allegedly authorizes Respondent No. 3 to sell 5898 sq. yds. of 1stRespondent Companys land adjacent to the land proposed to be sold to Mahavir Auto Diagnostics Pvt. Ltd. by Petitioner. The portion of land proposed to be sold to Mahavir Auto Diagnostics Pvt. Ltd. had itself not been identified, and this establishes that the alleged Resolution authorizing Respondent No. 3 to sell land adjacent to the portion proposed to be sold to Mahavir Auto Diagnostics Pvt. Ltd. is fabricated.

e) It is contented that Board Resolution dated, 25.04.2013 authorizing Respondent No. 3 to sell 5898 sq. yds. is not fabricated as alleged and submit that it was also submitted by Respondent No. 2 to Inspector of Police, Cyber Crime Branch in 2014 itself.

f) It is asserted that Petitioner has himself signed annual returns for Financial Year 2002–2003 and 2009–2010 and was aware of all transactions.

g) Respondents No. 2 and 3 have not siphoned away any funds of 1stRespondent Company as alleged. The amounts received from the sale of Respondent No. 1s land to Respondents No. 7 to 10 and lease to Respondent No. 6 have been utilized for operations and expenses of 1stRespondent Company and to settle debts of 1stRespondent Company and group companies. And it has been a practice to settle outstanding dues of group companies of Respondent No. 1. On the Contrary, the Petitioner himself has admittedly siphoned off INR 75 lakhs received by him as advance for sale of 1stRespondent Companys land to Mahavir Auto Diagnostics Pvt. Ltd. He has withheld the rest of the sale consideration received by him from Mahavir Auto Diagnostics Pvt. Ltd. to the tune of INR 6.58 Crores and did not deposit the said amount in Respondent No. 1s accounts. The sale consideration received by Petitioner was deposited with CLB on 29.04.2014, after a period of 10 months from the date of receipt of the amount, and only upon orders of the CLB.

h) 1stRespondent Company has settled the dues of Respondent No. 15, of which Petitioner was Managing Director, to the tune of INR 5.41 Crores for the period during 2003–2014. During 2007–2011, an amount of INR 12.55 Crores has been transferred from Respondent No. 1s account with Respondent No. 4 Bank to Respondent No. 15 for operations of Respondent No. 15, 1stRespondent Company has settled dues of Respondent No. 14 to the tune of INR 1.53 Crores. In 2010, Petitioner himself transferred an amount of INR 4 Lakhs from Respondent No. 5 Bank to Respondent No. 15 and attempted to transfer further amounts from Respondent No. 5 Bank to Respondent No. 15.

i) It is further contented that all lease rentals received from Respondent No. 6 have been duly accounted for in the books of account and there are no arrears. Petitioner has not filed any evidence to show that cash withdrawals were not accounted in the books of account. Petitioner was in receipt of Respondent No. 4 account statements in 2011 itself and did not raise any issue with any transactions. It was only in 2013 that Petitioner decided to raise issues regarding cash withdrawals without any basis. Respondent No. 3 has brought in monies into 1stRespondent Company to the tune of INR 1,06,00,000 and an amount of INR 70,00,000 has been repaid to Respondent No. 3 to settle the legal dues.

j) It is asserted the lease in question was properly given and its receipts were duly accounted for. The petitioner is raising frivolous grounds one after the other. On one hand lease in question was not authorized and on the other hand lease was given on much lower prevailing rate. The fact is the Company has utilized idle land for its use by leasing out.

6.A reply dated 23/11/2016 is filed by, Ms. Ayesha Naik Kani and Mrs. Kalpana Ekbote on behalf of Oriental Bank of Commerce (Respondent No. 4). The main contentions mentioned therein, are as follows:—

(a) The Petition filed by the Petitioner is purely an internal dispute among the family members, who are the Directors of a closely held private limited company, and it is not connected with the affairs of 1stRespondent Company. The allegations made against the Respondents 2 & 3 are totally baseless and denied. It is not necessary party to the Petition.

(b) The Respondents No. 2 and 3 are authorized signatories of 1stRespondent Companys current accounts with the Bank, which was formerly known as Global Trust Bank since 1996 by virtue of Board resolution dated 24thJanuary, 1996. In the Year 2004–2005, Global Trust Bank was merged with Oriental Bank of Commerce and since then the Respondents No. 2 & 3 continued to be the authorized signatories of the 1stRespondent Companys current account with the Respondent No. 4 Bank.

(c) The 1stRespondent Company has not availed any financial benefits from the Bank except operation of the current account maintained with the Bank. The Petitioner is fully aware of the Operations of the account with the bank as the Petitioner never questioned or raised objections with the Bank except one letter dated 28thJuly, 2011, in which it is alleged that no board meetings have been held for several years. However, he did not mention any thing about the alleged embezzlement of the accounts except the mere word “EMBEZZLEMENT”. The Petitioner himself has enclosed a copy of the Annual Return for the years 2008–2009 and 2009–2010 which was duly signed by him, along with said letter dated 28/07/2011. He has also filed Annual Returns for the year 2010–2011 along with the CP to substantiate that he is a shareholder of 1stRespondent Company.

(d) It is stated that the bank has verified KYC documents pertaining to the 1stRespondent Company with the Bank and found that the Company is operating the account with proper mandate since 1996.

(e) It is stated that the Petitioner himself informed the bank that the matter between him and other Respondents has been settled out of the court by entering into a memorandum of compromise and the same was filed on 14/11/2014 before CLB.

(f) Therefore, the Company Petition may be dismissed so far as Respondent No. 4 is concerned as the Bank is permitting the R. 1 Company to operate its accounts with extent rules and regulations of the Bank.

7.A reply dated 06/02/2017, was filed by Mr. P.C. Bhaskaran, Chief Manager, on behalf of City Union Bank Ltd., (Respondent No. 5) by inter-alia, contending as follows:—

(a) That the first Respondent Company is operating a current account with the bank for several years. The Petitioner was informed that the account of 1stRespondent Company was frozen and returned the pay order to the Petitioner. They have denied any conspiracy as alleged by the Petitioner and all the transactions of 1stRespondent Company are normal in nature.

(b) The 1stRespondent Company having three Directors on its Board, has opened a current account with the Bank. It has received a letter dated 05/07/2013 from Chairman/Managing Director and Mr. Rajsekhar, Director, (Respondent No. 3), requesting the bank to freeze its current account. Accordingly, it has acted upon.

(c) Since the Petitioner is repeatedly asking authority for the above act of freezing of current account of the Company, the Bank after getting a copy of Board Resolution from the Company was furnished to the Petitioner. The above Chairman and Managing Director and another director have also requested to change the authorized signatories but the Bank insisted to submit a Board Resolution for the same. However, the same was not complied with so far and thus, the current account of the 1stRespondent Company stood frozen since then.

(d) It is contented that the Bank is unnecessarily dragged into the litigation and it has nothing to do with the disputes of the parties and further stated that it is ready to abide by any instructions given by all the three Directors of the Company jointly or any directions/orders to be passed by this Tribunal.

(e) Hence, they sought to dismiss the Company Petition under reply against the Respondent Bank with exemplary costs.

8.Dr. S.V. Ramakrishna, representing Respondents No. 7 & 8 has filed a counter dated 26/11/2016, and after arguing the case on several occasions, has filed a memorandum of written arguments dated 16/02/2017. The following are brief contentions made by him:—

(a)Respondent Nos. 7 to 10 are total strangers, they are neither shareholders nor directors of 1stRespondent Company and they cannot come under the purview of provisions contained in Section 241-244 of the Companies Act, 2013. There is no provision as envisaged under the law against bonafide purchase of land from 1stRespondent Company.

(b)The 1stRespondent Company by its Board Resolution dated 25/04/2013 authorised the transaction and thus, an agreement of sale on 12/09/2013 was executed between the Respondent No. 7 to 10 and Mr. M. Rajashekar (Authorised Director) for a valuable consideration of Rs. 7,96,23,000/- for a piece of land admeasuring approximately 5898 sq. yds. equivalent to 4931.32 sq. mtr., situated in A1, A2, Industrial Development Area at Block No. 3 Sy. No. 1, IDA, Uppal Kalan Village, Uppal Mandal, Ranga Reddy District, Hyderabad.

(c)Another piece of land admeasuring 2949 sq. yds. was also duly registered as mentioned by 1stRespondent Company.

(d)The Respondents No. 7 to 10 became absolute legal owners of the piece of land under the above two sale deeds and they have exercised their due diligence and made enquiries with the Registrar Office concerned and satisfied that the property is free from any encumbrances and the title is clear and marketable. He relied upon Section 41 of Transfer of Proper Act, 1882.

(e)It is contended that family dispute converted into corporate dispute and none of the 25 Respondents, except Respondents No. 2 and 3 were involved in any settlements; no business conducted for past 20 years since 1997 and Respondent No. 7 to 10 paid much higher sale consideration.

(f)It is contended that they are selling off 1stRespondent Companys about half of the 20 acres land in bits and parts at various times to various parties and even the Petitioner sold similar extent of land pursuant to Board Resolution dated 25/04/2013 and on the same date of resolution, the 1stRespondent Company also sold similar extent of land to Respondent No. 7 to 10. The Respondents No. 7 to 10 relied upon the said Board Resolution dated 25.04.2013. The fact is also clear that the Petitioner sold the 5,900 sq. yds. of land for a consideration of Rs. 7,43,18,500/- as admitted at page 18 of the Petition i.e. @ 12,596/- per sq. yd. against the sale consideration paid is Rs. 7,96,23,000/- (ref. page 44 of Petition) for land of 5898 sq. yds. i.e. @ Rs. 13,500/- which is higher by Rs. 904/- per sq. yd. and 5898 sq. yds. the higher consideration paid by Respondents No. 7 to 10 works out to Rs. 53,31,792/- (Rupees fifty three lakhs thirty one thousand seven hundred ninety two only). Thus, the Respondents paid higher sale price than what was paid by Mahavir Auto Diagnostics Pvt. Ltd. by the Petitioner.

(g)It is contented that the Petition is vexatious, mendacious, malicious and with oblique motives to settle personal scores between the Petitioner and his father and brother i.e. 2ndand 3rdRespondents herein. The Petitioner is not entitled for any relief whatsoever in nature against the Respondents No. 7 to 10 and on this ground alone the present petition should be dismissed with exemplary costs in favour of the Respondents No. 7-10 herein.

(h)It is contended that the Respondents. No. 7 to 10 are subjected to severe financial burden by way of interest of about Rs. 30,000/- per day on their total investment of about Rs. 9,00,00,000/- (Rupees nine crores) including the costs of registration fee, stamp duty etc. while registering the above said two sale deeds and they reserve their right to proceed against the Petitioner and Respondents No. 1, 2 and 3 for delaying the mutation in the Records of Industrial Local Authority, Uppal due to the pending litigation since February, 2014 before the CLB and now before this NCLT.

9.Shri S. Ravi, Senior Counsel along with Ms. Divya Datla, representing Respondents No. 9 and 10, after filing a counter dated 3rdJanuary, 2017 and arguing the case on several occasions, has also filed written submissions dated 16thFebruary, 2017. The following are their submissions:—

(i) The Respondent No. 3 representing 1stRespondent Company executed an agreement of sale in favour of Mr. Mallipeddi Kaushik Reddy (Respondent No. 7), Smt. Mallipeddi Sukrutha Devi (Respondent No. 8), Mr. Vaka Prasanna Anji Reddy (Respondent No. 9) and Smt. Vaka Swarna Latha (Respondent No. 10) to an extent of 5898 sq. yds. at A1, A2, Industrial Development Area at Block No. 3 Survey No. 1, IDA Uppal for a total consideration of 7,96,23,000/-. The total sale consideration was paid to the Company. The Board of Directors vide its meeting dated 25/04/2013 passed a Resolution authorizing Respondents No. 1 & 3 to do the above registration. Similar authorization was also given for sale of 5898 sq. yds. to Mahavir Auto Diagnostic Pvt. Ltd.

(ii) As per the orders of CLB, the amount of sale consideration on behalf of Mahavir Auto Diagnostic Pvt. Ltd. was deposited with the bank.

(iii) A sale deed was executed on 17/02/2014 in favour of Respondents No. 9 & 10 to an extent of 2949 sq. yds. for a purchase price of INR 3,98,11,500/- (Rupees Three Crores ninety eight lakhs eleven thousand and five hundred only). Hence Respondent No. 9 and 10 are bonafide purchasers of valuable consideration of the land.

(iv) He relied upon the order of judgement of Honble Supreme Court ofIndia in MRF Ltd.v.Manohar Parrikar. andM.R.F. Ltd.v.The State of Goa.,(2010) 11 SCC 374 ).

10.We have heard Mr. S. Niranjan Reddy, Mr. S. Chidambaram, Mr. Kaustubh Mishra, Ms. Rubaina S. Khatoon, Mr. Virender Ganda, Mr. Tarun Mehta, Ms. Ayesha Naik Kani, Dr. S.V. Ramakrishna, Mr. S. Ravi, Ms. Divya Datla, Mr. A. Venkatesh, Mr. G. Bharath Reddy, and Mr. A.R.C. Shekar Goud on various dates as mentioned supra and carefully perused all the pleadings of all the parties along with material papers filed in their support.

11.The Learned counsels for the parties have volumes of documents in this Tribunal and the petitioner disputed each and every act of the 1stRespondent Company making this Tribunal an investigating Agency/Auditing/Accounting authority and have not pointed out any substantial/tenable dispute(s) so as to consider the same by this Tribunal in the light of limited jurisdiction conferred on it to interfere into the affairs of the Company. All parties have also relied upon several judgments in support of their contentions. Normally, when a prima facie case is made out by a party approaching a court of law seeking equitable relief, then court/Tribunal would devolve upon to find a suitable ratio applicable to facts and circumstances of a particular case. As in the instance case, as discussed hereinafter, the petitioner miserably failed to make out even a prima facie to look into various ratios as laid down by various judicial for a in the cases cited by the petitioner. However, the petitioner is successfully keeping alive the litigation in question against the entire family members including his aged father about 85 years (his DOB is 02.07.1932). Since the Respondent No. 1 Company is purely a private Limited one having no dispute with regarding to share holding pattern among the family members, and father, who have nurtured the Company to amass considerable wealth to share it by his sons, is very much alive and eager to settle the dispute, the then CLB and this Tribunal made several efforts to see the issue settled amicably among themselves. However, the petitioner, for the reasons best known to him, was bent upon to thwart all such efforts and insisted this Tribunal to adjudicate all purely internal matters making this Tribunal a family court/Tribunal. It is relevant to point out here, unable to bear allegations/accusations like embezzlement etc. father of petitioner, (Shri M. Janardhan Rao) has written a letter dated 26.11.2011 to the petitioner. A Copy of this letter is filed as Annexure - 1 page 1 & 2 by the petitioner himself along with Rejoinder to the counter filed by Respondents No. 1 to 3, dated 29thDecember, 2016. This letter is written in vernacular Language Telugu. The father, who is unable to bear with the serious allegations/accusations made by the petitioner in the correspondences made with him, against him by using words like embezzlement etc. has declared to have severed all his relations with his son and also declared/ordered him not to see/touch his body or his wifes body (mother of petitioner) after their deaths and the letter was also communicated to all his family members. The petitioner has forced the age old father to write such letter and even then there is no repentance on the I part of petitioner. The petitioner is successfully keeping litigation alive before various judicial forums by taking normal judicial delays in deciding matters, to his advantage.

12.As stated supra, the 1stRespondent Company has a long history in its life having suffered several ups and downs. By virtue of closing down of Respondent No. 1 Company and its ancillary Companies abruptly, so much litigation, by way of civil and criminal, have been instituted by several persons apart from labour problems, against the Company and also the family members of petitioners. Accordingly, the father and along with his sons including the petitioner has settled several issues by disposing of immovable properties of Respondent No. 1 Company. In the result, now only 10 acres out of total 20 acres remains with the Company apart from debts amounting to Rs. 22 Crores. We have perused all material documents filed with the various pleadings by the parties. The petitioner started making serious, baseless and un-tenable allegations against his father and respondent No. 3 with regard to transactions made by them in respect of a piece of land sold in pursuant to Memo of Understanding dated 7thMay, 2012, which is duly executed by all the family members including petitioner and the subsequent Board resolutions dated 25thApril, 2013. It is to be pointed out here that the petitioner while contending that he was duly authorized to sell a piece of land to Mahavir Auto Diagnostics Pvt. Ltd. and authorized to utilize Rs. 75 lakhs for his daughters wedding etc. is disputing the transactions made by his father and brother in respect of lease, sale etc. on untenable grounds either on facts and on legal or moral.

13.It is basic principle of law that courts/Tribunal, in general, will not intervene, at the instance of shareholders, in matters of internal administration and with the management of a company by its Directors so long as they are acting within the powers conferred on them under Articles of a Company. Leading case on this aspect isFossv.Harbottle, (1843) 2 Hare 461. And this basic ratio of law is more or less being followed in our Country basing facts and circumstances of respective cases. In this regard all decisions rendered by several courts may be not necessary to be referred here especially in view of the facts and circumstances available in the present case, which are primarily family dispute in a closely held Private Limited Company. To cite one judgment of Honble Supreme court on the ratio is Rajahmundry Electricity Supply Corporation Ltd. Nageswara Rao (AIR 1956 SC 213 ). In this case, the Honble Supreme court has observed as under:

“The Court will not, in general, intervene at the instance of shareholders in matters of internal administration and will not interfere with the management of a company by its directors so as long as they are acting within the powers conferred on them under Articles of the Company. Moreover, if the directors are supported by the majority of shareholder in what way they do, the minority shareholders can, in general, do nothing about it.”

In the instant case, as stated supra, the 1stRespondent Company is admittedly a family oriented Private Company and all shares are held by father and three sons and there is no dispute with regard to share holding. And father (Respondent No. 2) is chairman and Managing Director on permanent basis and his two sons, petitioner and third Respondents are other two Directors. Now all the impugned decisions/actions are taken by the Board of Directors, are collectively taken by them and the decisions are also affirmed by the father (CMD) and his other son, the second respondent herein. So the allegations of petitioner, who himself holding a position of a director in the Company possessing 31% share holding is making all sorts of un-tenable personal allegations against his father and brother with regard to bonafide transactions made by them. As stated supra, the transactions made by the petitioner himself are in dispute and the petitioner failed to file a single document to show that he was permitted to utilize INR 75 lakhs for his daughters wedding out of sale proceeds in question. And these things clearly prove that petitioner has not come to this Tribunal with clean hands. And the allegations/accusations made by the petitioner would not fall under the provisions of Companies Act and it is against the principles as enunciated supra.

14.Shri Virander Ganda, Senior Counsel for Respondents 1 and 3, after arguing the case, has filed his written submissions dated 23/2/2017 reiterating various contentions already raised and also relied upon the following judgments:—

•Sangramsinh P. Gaekwadv.Shanta Devi P. Gaekwad,(2005) 11 SCC 314 @ Paras 196 and 197) (Annexure-I page 13-66 of CP) in which it is inter-alia held that the party who is seeking to avail equitable jurisdiction of a Court, must come to the court with clean hands.

•Srikanta Datta Narasinharaja Wadiyarv.Sri Venkateswara Real Estate Enterprises (Pvt.) Ltd., (1991) 72 CompCas 211 (Kar) (Annexure-2 page 67-91 of CP) in which it is inter-alia held that the party who seeks equity must do equity to himself also.

•Hardev Singhv.Gurmail Singh (Dead) by LRs.,AIR 2007 SC 1058 (Annexure-3 page 92-98) in which it is inter-alia held that Section 41 of the Transfer of Property Act, 1882 debars anyone to challenge their title as an ostensible owner.

•D. Srinivasan, Gautham S. Varad, Shruti S. Raju and Daksha Projects Private Limitedv.H.S. Viswanath, Mohan Reddy and Keystone Constructions,(2008) 145 CompCas 563 (CLB)(Annexure-4 page 99-119 of CP) in which it is inter-alia held that cancellation of the sale deed is within the purview of the Civil Court and is beyond the scope of Section 402 of the Companies Act, 1956.

•Oriental Insurance Co. Ltd.v.Premlata Shukla,(2007) 13 SCC 476 ) (Annexure-5 page 120-123 of CP) in which it is inter-alia held that the rule of interpretation of documents and several judgments given by the Apex Court state that all the contents of a document have to be read in consonance with each other and as a whole.

15.The Learned Counsel for the Petitioner also filed his written submissions and relied upon the following judgments:—

• The meaning, scope and ambit of oppression and mismanagement.

1.

(1981) 3 SCC 333 @ paras 43-44, 45-32)

Needle Industries (India) Ltd.v.Needle Industries (Newey) India Holding Ltd.

2.

AIR 1965 SC 1535 @ paras 13-18, 32

S.P. Jainv.Kalinga Tubes Ltd.

3.

(2008) 3 SCC 363 @ Para-14

V.S. Krishnanv.Westfort Hi-Tech Hospital Ltd.

• The scope of powers under S. 402 r/w S. 397 & 398 of CA

4.

(2008) 144 CompCas 326 (AP)@ paras 13-16

D. Ramakishorev.Vijaywada Share Brokers Ltd.

• Siphoning of funds, fabrication of record, non-filing of annual returns, not giving notice of Board Meetings and AGM as per law constitute oppression and mismanagement.

5.

(2012) 2 CompLJ 289 (Del) @ paras 6, 29-37

Ajay Paliwalv.Sanjay Paliwal

6.

(2012) 2 CompLJ 332 (Guj) @ paras 26-28, 30-32, 39, 44, 51, 61

Sugam Construction Pvt. Ltd.v.Ushakant N. Patel.

16.As the petitioner has filed CP No. 84/2013 before the then Company Law Board, Chennai, questioning all transactions made by Respondents No. 2 & 3 on behalf of the Company especially with regard to sale of land admeasuring 5898 sq. yds. of the Company to Mr. Kaushik Reddy and others, transaction landed in dispute. Accordingly, a complaint dated 8/5/2014 was lodged with Hyderabad P.S. Division-E, CCS, DD Hyderabad by Mr. Kaushik Reddy, by making a complaint that he along with Smt. M. Sukrutha Devi, Mr. V. Prasanna Anji Reddy and Smt. V. Swarna Lata (Respondents No. 7-10) were made to believe that Mr. M. Janardhan Rao (Respondent No. 2), Mr. Rajasekhar (Respondent No. 3) and Mr. Venkat Rao (Petitioner) sold a property admeasuring 5898 sq. yds. of vacant land situated at IDA Uppal, Hyderabad belonging to the 1stRespondent Company to meet their pressing financial liabilities towards their creditors etc. They have also paid total consideration of Rs. 7,96,23,000/- for the said land. However, it is alleged that the petitioner, in collusion with Respondents No. 2 & 3 has filed a case before CLB bearing No. 84/2013 to stall the transaction and thus, lodged a case of cheating and misappropriation with a common intention. Accordingly, Police after investigating the case filed a charge sheet dated 26/04/2017 under Sections 406, 420 R/w 34 IPC, before the XII the Addl. Chief Metropolitan Magistrate at Hyderabad by prima facie holding that there is a malafide intention on the part of the Petitioner along with Respondents 2 & 3 in convincing them to purchase the said land and they are not giving the property for peaceful possession.

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,

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 Nagarjuna 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 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-1 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 Companys Accounts of sale proceeds of piece of land sold to 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.

18.It is on record that the memorandum of understanding was executed on 7/5/12 (a copy is placed at pages 109-111 along with replies of R. 1-3, Annexure R-2) between shareholders of Emjay Industries Pvt. Ltd. viz. Mr. Janardhan Rao, Mr. Venkat Rao, Mr. Srinivas Rao and Mr. Rajasekhar. As per this understanding, the immovable property was divided among themselves as mentioned therein. The Petitioner has duly signed this memo. Pursuant to that, a Board meeting was held on 25thApril, 2013 at 11 am at the Registered office of the Company, in which the Petitioner as well as the Respondents No. 2 & 3 were present and the 2ndRespondent being the Chairman and Managing Director, has presided over the meeting and conducted the proceedings. (A copy the minutes of the Board meeting is filed at Annexure-R. 3 page 112 to 114 along with replies of Respondents No. 1-3). In this Board meeting, it is inter-alia given the consent of the board for sale of land admeasuring 5900 sq. yds. of company land situated at Survey No. 1 Plot A-1 Uppal to Mahavir Auto Diagnostic Pvt. Ltd. and the Petitioner was authorized for fixing of sale price, to enter into agreement of sale, sale deed, etc. and also authorized Mr. M. Rajasekhar another Director to negotiate and sell in respect of land admeasuring 5988 sq. yds. of the company, which is adjacent to the land proposed to be sold to Mahavir Auto Diagnostic Pvt. Ltd. and further resolved to give authorization to the M. Janardhan Rao, the Second Respondent to deal profitably and to use the land of the Company which is presently lying idle for development and earn revenue for the company. According to these resolutions, the Petitioner, the Respondents No. 2 & 3 are duly authorized to deal with respective properties.

19.However, the Petitioner alleges that the said minutes were fabricated to suit the interest of Respondent Nos. 2 & 3 and asserted that he was alone permitted to dispose of 5900 sq. yds. of the Company to Mahavir Auto Diagnostic Pvt. Ltd. and to utilize Rs. 75 Lakhs for his daughters wedding out of sale proceeds. And other transactions made by the Respondents No. 2 & 3 are unauthorized and they are liable to be set aside with a direction to them to account for the money they have siphoned off.

20.We have perused the said memorandum of understanding along with the said minutes of the meeting dated 25thApril, 2013. It is not in dispute that a memorandum of understanding was signed by the Petitioner along with Respondents No. 2 & 3, in which it was clearly mentioned with respect to partition of immovable properties of 1stRespondent Company among the family members. In pursuant to this, Board meeting in question was also held. It is not in dispute that the Petitioner has attended the Board Meeting but his allegation is that he has not signed the minutes of the Board meeting which contains the authorization given to Respondents No. 2 & 3.

In this context it is relevant to point out here that there is no provision in the Companies Act requiring other Board members to sign the minutes of the Board meeting and the only requirement is to sign the resolution by chairman of the Board meeting. In this case, the Respondent No. 2, admittedly a permanent Chairman and Managing Director of 1stRespondent Company had signed it. And another Director i.e. Respondent No. 3 has also confirmed that the resolution was duly passed and he has also not signed the minutes. So the petitioner having attended the Board meeting cannot dispute the resolution on untenable grounds. From the documents submitted it is also noted that the Petitioner never raised/objected the above minutes. Hence, we have no doubt in our mind that Board resolution dated 25.04.2013 is in accordance with law and it is binding on all the parties and all the transactions made there under are declared to be valid.

21.As stated supra, Emjay Industries Pvt. Ltd. was established by Mr. M. Janardhan Rao and Mr. Krishna Rao by contributing 10 equity shares each as per the Memorandum of Association 22/12/1973. As per the Article 80 and 81 of the Articles of Association dated 22/12/1973, which is filed by the Petitioner himself states that Mr. M. Janardhan Rao (Respondent No. 2 herein) and Mr. M. Krishna Rao are the first directors and shall be permanent directors of the Company as per Article 95 & 96. All questions arising at any meeting of the Board of Directors shall be decided by the majority of votes and the Quorum necessary for transactions of the business of directors shall be two. In the present case, there are only three directors, the Petitioner as well as Respondent Nos. 2 and 3 and Respondent No. 2 is Chairman and Managing Director. So considering from point of law and the nature of the Company, it is a closely held Private Limited company, it can be safely concluded that the said Board Meetings was duly conducted and passed the Resolution as mentioned above. Moreover, it is not in dispute that Petitioner has not attended the Board Meeting. The contentions/allegations made by the Petitioner in this regard are baseless, and untenable and hereby rejected.

The above resolution did not mention about the daughters marriage and permitting him to utilize Rs. 75 lakhs of money out of the sale proceeds of the land sold to Mahavir Auto Diagnostic Pvt. Ltd. So we are not inclined to accept the contentions that permission was given by the Company to Respondent No. 2 etc. to utilize the money for the above purpose.

22.The other question whether the lease dated 06/08/2011 in question made with Ventakeshwara Ready Mix Concrete was properly executed or not and consideration was being accounted for by the Company or not. We have perused all the documents relating to execution of the said lease and found that the lease was properly executed with due authorization of Board of Directors as per the said resolution dated 25/04/2013. The Board has permitted the Chairman to utilize idle land of Company for the benefit of it.

23.The question whether decision to hire another office at higher rent at Nagarjuna circle, Punjagutta, while a registered office is available at lower rent is purely a question of administrative matter of a closely held Company and it cannot be constituted as acts of oppression and mismanagement.

24.The Petitioner has raised several issues mostly concerning verification of accounts of Respondent No. 1 Company with regard to the payments and receipts of 1stRespondent Company. These allegations are purely a matter for scrutiny of accounts by concerned accountants/professionals. In any case, these things will not come under the purview of acts of oppression and mismanagement. This Tribunal cannot scrutinize accounting of 1stRespondent Company. The Tribunal is supposed to look into the acts of oppression and mismanagement alleged in the light of articles of the association of the Company and its objects basing on Companies Act and relevant law. It is settled position of law that the Tribunal is not empowered to scrutinize the day to day administrative affairs of the Company. As stated supra, the father, Respondent No. 2 with his hard work has established the Company and it was grown under his control as chairman and MD and subsequently, the shares were allotted to his sons as mentioned above. It is to be pointed out here there is no dispute with regard to shareholding pattern of the Company. The Petitioner and M. Rajasekhar were appointed as Directors on 20.3.1977 and 3.1.1995 respectively.

25.As per section 291 of Companies Act, 1956, Board of Directors of the Company are entitled to exercise all such powers and to do all such acts and things as the company is authorized to exercise. As per Section 195 of Companies Act, 1956, minutes of proceedings of General Meeting or meeting of Board of Directors or a committee of a Board shall be deemed to have been called and held until the contrary is proved. In the instant case, the Petitioner failed to show any substantial evidence to show that Board proceedings dated 25.4.13 was fabricated except making baseless allegations. Moreover, it is not in dispute that he has attended the Board meeting in question. Once he attended a Board meeting, he cannot dispute each and every resolution passed therein without any substance. It is quite interesting to note that the Petitioner has not disputed the resolution with respect to sale of land by him in the same Board Meeting dated 25/04/2013 but he has disputed other resolutions. As stated supra, Respondent No. 2 being the Managing Director and Permanent Director along with another namely Respondent No. 3 have affirmed that the Board Resolution dated 25/4/13 was conducted strictly in accordance with law i.e. majority of the directors have confirmed. Moreover, the Quorum is only two (2) as per law. The Second and third respondent satisfy quorum to transact any business as empowered by Articles of Association. Hence, the contentions contrary made by the Petitioner are hereby rejected.

26.As stated supra, the petitioner being one of the Directors and also shareholder holding 31% shares, is having fiduciary duty towards the Company and other share holders and he is not expected to become chronic litigant so as drag the Company especially his old father to courts by raising persistent litigation. It is neither legally nor morally tenable.

27.The facts as enumerated supra and also the reply filed by Oriental Bank of Commerce (Respondent No. 4) prima facie show that the petitioner is well aware of affairs of Company and he himself is signatory to several documents filed on behalf of Company like Annual returns, AGMs etc.

28.It is settled position of law, a person approaching this Tribunal is supposed to come with clean hands. As stated supra, the Petitioner is making all sorts of baseless allegations against his own father and his brother disputing each and every act of the affairs of the company. As stated supra, the father who is about 85 years old now was forced to write a letter to express his deep anguish about the manner of the petitioner. Even then the petitioner was not deterred in his fight against his family members by raising un-tenable contentions/allegations. Respondent No. 1 Company has only 4 shareholders as discussed in pre-paras and the Company does not have any business operations since April 1996 i.e. more than two decades. Therefore, we are of the opinion that no public interest is involved as stated by the Petitioner and dispute is only amongst the family members. Further, many of the Respondents refuted the allegations of the Petitioner, especially Respondent No. 5 i.e. City Union Bank and Respondents No. 7, 8, 9 and 10 who are the purchasers of land duly paying Stamp fee and Registrations charges amounting to Rs. 88 lakhs. Most of the Respondents also pleaded to dismiss the petition/contentions of the Petitioner and requested to levy exemplary costs on the Petitioner, since he has not come with clean hands to this Honble Tribunal. As the Petitioner is causing mental agony and harassment to his father namely Mr. M. Janardhan Rao, who is about 85 years old, his brother and Respondents No. 7, 8, 9 & 10, the Petitioner is to be saddled with costs.

29.In view of the above facts and circumstances of the case, we are of the considered view that the Petitioner miserably failed to make out any case in his favour and all the contentions/allegations raised in the Company petition are found to be baseless, untenable and liable to the rejected. Hence we reject all the contentions, allegations made by the Petitioner in the CP.

30.We, therefore dismissed the Company petition bearing CP No. 9/241/HDB/2016 and also hereby vacated all the interim orders passed in this case and are in force as on date and also dismissed all the CAs pending in this case. We further direct the Registry to hand over the fixed deposits receipts bearing Sl. Nos. 500707030016340, 500707030016335 and 500707030016340 all dated 05/06/2014 of Rs. 2 Crores each (Total Rs. 6 crores), to the 1stRespondent Company.

31.We direct the Petitioner to pay a cost of Rs. One lakh each to Shri M. Janardhan Rao (Respondents No. 2), Shri M. Rajashekar (Respondent No. 3), Shri Mallipeddi Kaushik Reddy (Respondent No. 7), Smt. Mallipeddi Sukrutha Devi (Respondent No. 8), Mr. Vaka Prasanna Anji Reddy (Respondent No. 9) and Smt. Vaja Swarna Latha (Respondent No. 10), within a period of three weeks from the date of receipt of copy of this order.

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