1. The present Company Petition bearing No. CP/34/KOB/2020 has been filed under Section 241, 242, 244, 246 and 272 of the Companies Act, 2013, by Mr.Tahil Lalchand Chulani(hereinafter called as “Petitioner”) against 1) M/s. Venad Food Processing and Exports Private Limited, 2) Mr.T.V. Karunakaran, 3) Mr. A.K. Sajeev, 4) Mr. Francis Wilson, (hereinafter called as “Respondents”) seeking the following reliefs: -

a) Declare that the management of the company has mismanaged the affairs of the company in a manner prejudicial to the interest of the company, shareholders and the public;

b) Declare that the majority shareholders have acted in a manner oppressive to the minority shareholders of the company;

c) Pass an order restraining the Company from removing the petitioner from the office of director in the company until his entire investment in the Company is repaid with applicable interest;

d) Order winding up of the company on the grounds that it is just and equitable to do so;

e) The Board of directors of the company be superseded and an Administrator or special office be appointed to take charge of the management and affairs of the company and its assets and properties. Or alternatively a committee to be constituted by this Hon'ble Tribunal consisting of representatives of the petitioner to function as Administrator for management and control of the affairs of the company and its assets and properties on such terms and conditions as the Hon'ble Tribunal may deem fit and proper.

f) To restrain the company and respondents 2 to 4 from making further borrowings or encumbering or alienating any of the assets or properties of the Company in any manner whatsoever;

g) To direct an independent audit of the company's affairs and accounts from the financial year 2012 onwards by an independent auditor to be appointed by this Hon'ble Tribunal;

h) To direct an enquiry into the conduct of the majority shareholders and direct them to repay or restore the money or property siphoned off by them to the company and to direct payment of interest on such amounts and compensation;

i) Declare that respondents 2 to 4 are jointly or severally liable for all losses caused to respondent no: 1 by way of diverting or siphoning of funds as determined by the independent auditor to be appointed by this Hon'ble Tribunal;

j) To direct the Respondents to strictly comply with the Memorandum and Articles of Association of the company;

k) To direct the respondents to account the entire investments made by the petitioner in the books of the company;

2. The brief facts of the case are as under: -

The first respondent company was incorporated in the year 2011 with the objective of carrying on the business of manufacture and sale of SRL Curry powder. The original promoters of the company were Respondent 2 & 3 along with one Mr.Rajeev and one Mr. Madhukumar, who were also the first directors of the company. Since the 1st Respondent Company was facing shortage of funds, the company through its directors had approached the Petitioner, who was involved in the business of export of curry powder from India, to invest in the 1st Respondent Company on the assurance that he would be appointed as director of the company and would have a say in the management of the 1st Respondent Company. On the basis of this assurance, the petitioner had initially advanced a sum of Rs. 10 lakh to the Company towards equity share capital and loan and the Petitioner was appointed as director in the company, based on his investment.

3. It is stated that the Petitioner had further extended an unsecured loan of Rs. 50 lakh to the Company on the assurance that the loan would be repaid on demand and he would be a director of the company until his entire investment is repaid, The Petitioner had further advanced a sum of Rs. 4 lakh to the 1st Respondent Company for purchase of machinery from Anakkara another concern engaged in the same line of business and for acquiring the shares of Mr. Madhukumar who wanted to exit from the company.

However, the 1st Respondent Company and Respondents 2 to 4 have neither acquired the machinery nor accounted the loan given to the company neither have they issued shares for the amount to the Petitioner.

4. It is stated that after collecting a sum of Rs. 14 lakh from the Petitioner, the majority shareholders and executive management of the 1st Respondent Company comprising Respondents 2 and 3 did not issue shares for the said value to the Petitioner nor was the amount accounted in the books of the company. The Petitioner has till date been issued shares worth Rs. 1,00,000/-only. Accordingly, the Petitioner now holds 20 % of the fully paid-up equity shares of the company and is a director along with Respondents 2 to 4. It is further stated that the Petitioner was based in Kolkata. The day to day management of the company was being carried on by respondents Nos. 2 & 3 along with Mr.Rajeev. While so Mr.Rajeev, who was a shareholder and director in the company passed away and his 10 % shareholding in the company has devolved on his legal heirs who are also minority shareholders along with the petitioner. In the meantime, the company had inducted one Mr. Francis Wilson, the fourth Respondent as a shareholder and director of the company. The day-to-day affairs of the 1st Respondent Company were being controlled and managed by the majority shareholders comprising Respondents Nos: 2 to 4 who collectively hold 70 % of the paid-up equity share capital of the company now and Respondents Nos. 2 to 4 dominate the composition of the Board Of Directors and they are acting in concert as one block and constitute the majority shareholders of the 1st Respondent Company.

5. It is stated that despite collecting a sum of Rs.10 lakh towards capital, the majority shareholders have not issued the shares to the petitioner and accounted the same under share capital of the company despite a lapse of more than 6 years. Neither has the 1st Respondent Company and Respondents 2 to 4 accounted the amount as a loan to the company in the books of the company. The petitioner has been issued only 1000 share of total face value of Rs.1,00,000 till date. The petitioner apprehends that the said sum has been siphoned off out of the company by Respondents 2 to 4 and erstwhile directors of the 1st Respondent Company. It is stated that due to the serious mismanagement and bad governance practices of the majority shareholders, the company has been continuously making losses from the time of incorporation. In gross violation of the provisions of the articles of the company, the majority shareholders have not been retiring by rotation at the Annual General Meetings of the company.

6. It is stated that in spite of the precarious financial state of the company, the directors of the 1st Respondent Company have been drawing huge sums as remuneration without necessary approvals of the Board or the company in general meeting. Despite the company incurring losses of more than Rs.18 lakh during the year 2018-2019, the directors have drawn more than Rs. 4 lakh from the company during the next financial year. It is stated that the 1st Respondent Company has been closed for more than 7 months and no maintenance is being carried out for machinery and other assets of the 1st Respondent Company. It is further stated that the Directors of the 1st Respondent Company have passed a Resolution at the Board Meeting held on 15.02.2020 to wind up the 1st Respondent Company. It is stated that despite the decision of the Board of the Company to wind up the company and the present precarious financial position of the company, the majority shareholders are now fraudulently and malafidely conspiring to remove the Petitioner from the Board of the Company so that they can further their illegal designs of further raising finance and encumbering the assets of the 1st Respondent Company and siphon off the funds. The majority shareholders have now illegally called for an Extra Ordinary General meeting to be convened on 03-10-2020 with the sole agenda of removing the petitioner from the office of Director. The entire process of convening such an Extra Ordinary General Meeting is tainted with malafides, illegality and is in violation of the provisions of the and Rules. The only purpose of convening the meeting is to stifle the voice of the minority shareholders by removing the petitioner from the board. The Extra-Ordinary General Body Meeting of the 1st Respondent Company is being convened purportedly based on requisition received from Respondent No 4, who is one of the majority shareholders. The notice purportedly received from the 4th Respondent does not requisition an Extra Ordinary General Meeting or indicate any urgency for removal of the petitioner from his office of Director. The directors with undue and unholy haste and without assigning any reasons have convened an Extra- Ordinary General Meeting with the sole agenda of removing the Petitioner from office of director. The explanatory statement under Section 102 of theannexed to the notice of extra ordinary general meeting also does not disclose what the urgency is for convening an Extra Ordinary General Meeting for taking up this item, when an Annual General Meeting of the company was already due. It is stated that the Directors representing the majority shareholders, Respondent Nos. 2 to 4, without vacating office as required by the Articles of Association of the 1st Respondent Company is now seeking to remove the Director from the minority shareholders without any rhyme or reason.

7. It is stated that the notice of Extra- Ordinary General Meeting has not been circulated to all members as mandated under the provisions of the. The 1st Respondent Company has not given 21 clear days’ notice of Extra Ordinary General Meeting as mandated under the. On receipt of the notice of Extra Ordinary General Meeting, the petitioner raised objections to the same. In response the 4th Respondent, who has given notice of the resolution to remove the petitioner has submitted a statement dated 05-08-2020, giving the reasons for proposing the resolution. According to this statement, the 4thRespondent claims that he has proposed the resolution due to the Petitioner's non- cooperation and negative approach. However, the contention of the Petitioner is that he has been attending all meetings of the 1st Respondent Company either personally or through his representative. There is no record made at any proceeding of the Board or of the general meeting recording any such non-cooperation or negative comments by the petitioner. It is the rights of the petitioner to record his dissent to any proposal which is not in the interest of the company and such dissenting opinion cannot be a reason for removal of the director. In case the majority shareholders do not agree with the opinion of the petitioner, they have the liberty to take decisions based on the majority view and cannot remove a director on that ground. The proposal to remove the petitioner from his office as director is also violative of the understanding between the company and its majority directors made at the time of soliciting investment from the petitioner that he will offer the office of director and will continue to be a director as long as his investment in the company continues.

8. It is stated that the financial substratum of the 1st Respondent Company has been wiped off through accumulated losses and is beyond revival. The Board of directors of the 1st Respondent Company have themselves resolved to wind up the company. Hence, the Petitioner prayed for winding up for of the Company in accordance with law. Submissions by the Respondents

9. The Respondents filed counter and stated that the former Managing Director of the company Mr. Sajeev Alat was working in Qatar in a five-star hotel as a purchasing manager, at a high salary. He met Mr.Chulani, Rajeev and Madhu in Dubai food exhibition and Mr. Rajeev Alat his twin brother introduced Sajeev to Mr. Chulani and Mr. Madhu Kumar and after couple of weeks they called the 3rd Respondent to form the newly proposed firm and to manage the whole operations in Kerala. Accepting this offer the 3rd Respondent resigned from his current job from Qatar and started the process of developing the Venad Foods and continue the existing export business of SRL curry powder Anakkara Food Processing for SRL, which is Petitioner's company in Nigeria (Sunlight Resources Limited).Accordingly, Respondents registered a company as Venad Foods in December year 2011.Since that date the 3rd Respondent is working full time without any remuneration of the 1st Respondent Company and the Respondents reach a position of manufacturing curry powder in full capacity with newly built factory in KinfraPark, Kasaragod.

10. It is stated that only on the demand of the Petitioner, the Respondents have built the huge factory around 12000 Square Feet building with all machineries with trained staff in Kinfra Park, Kasaragod to fulfil his export business requirements in the year of 2018. Unfortunately, the demise of one of the directors and mentor Mr. Rajeev Alat in January 2017 the Respondents became upside down and Petitioner has completely changed his mind and totally stopped doing business with Venad, and that it was a very big setback to the Respondents and the Petitioner put the Respondents in a corner. After this unfortunate incident the Petitioner sought return of his full investment of 64 Lakh immediately, when a time the company was struggling to find the working capital. So based on his demand the Respondents decided to go for a bank loan and approached Karur Vysaya Bank in Kasaragod in order to pay back 50 percent of the Petitioner’s investment and rest of the funds to utilize the development of the company. For this purpose, the Petitioner appointed POA advocate Mr. Gopinathan from Chennai who met the bank manager and the bank approved a loan of Rs. 1 Crore, but the Petitioner refused to sign any more documents in any banks and that proposal was dropped.

11. It is further stated that Present Managing Director. Mr Karuna and other director Mr Wilson also were working abroad and invested more money than the Petitioner for the company and both of them resigned and working with Venad Foods for the last three years without any remuneration.

12. It is stated that the Petitioner has not visited the factory and made any investments to the company since 2015. It is stated that there was a Board of Directors meeting held on 5th August 2020 via video conference, in which the Petitioner and other 3 directors were present. It is stated that the company had to stop work due to insufficient funds. At the request of the other directors for further investment in the 1st Respondent company, the petitioner had further extended an unsecured loan of Rs. 50 lakh to the 1st Respondent Company on the assurance that the loan will be repaid on demand and the Petitioner will be a director of the company until his entire investment is repaid. The Petitioner had further advanced a sum of Rs. 4 lakh to the 1st Respondent Company for purchase of machinery from Anakkara another concern engaged in the same line of business and for acquiring the shares of Mr. Madhukumar who wanted to exit from the 1st Respondent Company. However, the Respondent Company and Respondents 2 to 4 have neither acquired the machinery or accounted the loan given to the 1st Respondent Company neither have they issued shares for the amount.

13. It is further stated that the Promoters of the 1st Respondent Company have a revival team by including new investors and this Tribunal has to look into the revival of the company which has a fair chance being in food sector and also generate jobs for many.

Winding up the company will not serve any purpose. It is also stated that the Petitioner is having ulterior motives and suppress vital facts that the decision of the Board was to sell off and not to wind up the 1st Respondent Company.

FINDINGS

14. We have heard Shri. S. Krishnamoorthy, Advocate, the learned counsel for the Petitioner and Shri. Yogindunath, PCS for the Respondents and perused the entire case records/documents. We have also gone through the evidences on record.

15. To arrive at a concrete conclusion in this matter, we have gone through the Independent Audit Report filed by the Auditor, Mr. C. A. Jobin George appointed by this Tribunal vide order dated 27.01.2021. The observations of the Independent Auditor is reproduced below: -

i. The company has not utilized the fund /Loan received from the Director Mr.Thahil Lal Chand Chulani for the purpose for which it was received and also no interest for the loans was provided.

ii. The company's production and turnover deteriorated for last few years and fell into huge loss for the last two years.

iii. The company has not been maintaining proper Books of Account as per the provisions of the Companies Act 2013.

iv. The Company has not been maintaining Proper Fixed Asset register and is also not maintaining supporting documents for the Fixed assets.

v. The company has not been maintaining Statutory Register and Minutes of Board and General Meetings at its registered office as required by the Companies Act 2013.

vi. The company has not been maintaining Proper stock Register as required by the Provision of the.

vii. The management of the Company is carried out by its Board of Directors as specified in the list provided in Annexure I, and the Board was duly constituted.

viii. The shareholding pattern of the Company as on 31st March, 2019 is detailed in Annexure II.

ix. The amount borrowed by the Company from directors, members, public, financial institutions, banks and others during the period under review is/are within the borrowing limits of Section 180 of the Companies Act, 2013. The breakup of the Company's borrowings as on 31sMarch, 2019 is as detailed in Annexure III.

x. During the period under review, the Company has created the charges on its assets as detailed in Annexure IV and has complied with the provisions of the. Further the Company has not modified and satisfied any charge on its assets.

xi. During the period under review, the Company has not declared or paid dividend to its shareholders.

xii. During the financial years under review, the company has not made any inter corporate loans and investments. Hence, the Compliance under section 186 of thewas not required.

xiii. During the period under review, the Company was not required to credit unpaid dividends and other amounts to Investor Education Protection Fund.

xiv. The Company is not a listed Company, therefore the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company.

xv. The company at present is having a fixed asset consisting of factory building.

The building value shown as per the balance sheet as at 31.03.2019 is Rs.57,13,542/-The land belongs to Kinfra, a State Government unit on a lease for a period of 99 years. Against the loan amount of Rs.50 lakh which is for the purpose of building construction invested by Sri. Thahil Lal Chand Chulani in 2013, the building cost as per available bills and invoices produced for verification is totalling to only Rs. 29,39,605/-.

xvi. Bank balance of State Bank of India as per bank statement as on 31.01.2021 is Rs:7,920.24and the Bank account balance of Bank of Baroda as per Bank statement as on 31.01.2021 is Rs. Nil and the Term deposit balance with Bank of Baroda as on 31-01-2021 isRs.94,973. The bank statements maintained and made available to us for verification from financial year2011- 2012 to 2019-2020were not in order and those statements made available for each financial year were not found for the full period.

xvii. The Loan from directors break up showing balances of each director has not given in the audited financial statements for each year. The books of accounts maintained in tally shows the balances of each director but that in turn does not tally with total figure in the audited financial statements from the year 2014-2015.

16. From a reading of the above observations of the Independent Auditor in his report, it is seen that there is increase in liability but the assets are not increasing. Therefore, we feel that operation of the company is becoming detrimental to the interest of its stakeholders. There is a likelihood of the happening of the event of insolvency.

17. In this respect we have also gone through Section 272 of the Companies Act, 2013 which is quoted hereunder: -

Section 272: - Petition for winding up.

(1) Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by—

(a) the company;

(b) any creditor or creditors, including any contingent or prospective creditor or creditors;

(c) any contributory or contributories;

(d) all or any of the persons specified in clauses (a), (b) and (c) together;

(e) the Registrar;

(f) any person authorised by the Central Government in that behalf; or

(g) in a case falling under clause (c) of sub-section (1) of section 271, by the Central Government or a State Government.

(2) A secured creditor, the holder of any debentures, whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures shall be deemed to be creditors within the meaning of clause (b) of sub-section (1).

(3) A contributory shall be entitled to present a petition for the winding up of a company, notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of its liabilities, and shares in respect of which he is a contributory or some of them were either originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up or have devolved on him through the death of a former holder.

(4) The Registrar shall be entitled to present a petition for winding up under subsection (1) on any of the grounds specified in sub-section (1) of section 271, except on the grounds specified in clause (b), clause (d) or clause (g) of that sub-section:

Provided that the Registrar shall not present a petition on the ground that the company is unable to pay its debts unless it appears to him either from the financial condition of the company as disclosed in its balance sheet or from the report of an inspector appointed under section 210 that the company is unable to pay its debts:

Provided further that the Registrar shall obtain the previous sanction of the Central Government to the presentation of a petition:

Provided also that the Central Government shall not accord its sanction unless the company has been given a reasonable opportunity of making representations.

(5) A petition presented by the company for winding up before the Tribunal shall be admitted only if accompanied by a statement of affairs in such form and in such manner as may be prescribed.

(6) Before a petition for winding up of a company presented by a contingent or prospective creditor is admitted, the leave of the Tribunal shall be obtained for the admission of the petition and such leave shall not be granted, unless in the opinion of the Tribunal there is a prima facie case for the winding up of the company and until such security for costs has been given as the Tribunal thinks reasonable.

(7) A copy of the petition made under this section shall also be filed with the Registrar and the Registrar shall, without prejudice to any other provisions, submit his views to the Tribunal within sixty days of receipt of such petition.

18. In order to obtain clarity on this issue, we have also gone through Section 273 of the Companies Act, 2013 which reads as under: -

Section 273: Powers of Tribunal.

(1) The Tribunal may, on receipt of a petition for winding up under section 272 pass any of the following orders, namely: —

(a) dismiss it, with or without costs;

(b) make any interim order as it thinks fit;

(c) appoint a provisional liquidator of the company till the making of a winding up order;

(d) make an order for the winding up of the company with or without costs; or

(e) any other order as it thinks fit:

Provided that an order under this sub-section shall be made within ninety days from the date of presentation of the petition:

Provided further that before appointing a provisional liquidator under clause (c), the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons to be recorded in writing, the Tribunal thinks fit to dispense with such notice:

Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.

(2) Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedy.

19. In the result, by exercising powers conferred on this Tribunal under Section 273 of the Companies Act, 2013 and other extant provisions of Companies Act,2013, we are of the opinion that it is a fit case for winding up of the company as the Auditors Report is very clear on that count.

20. In order to take a decision on the winding up of the 1st Respondent Company M/s Venad Food Processing and Exports Private Limited the following order is passed: -

ORDER

i. This Tribunal as per Section 275(2) decided to take a name from the panel of Insolvency Professional for the Kochi Bench for the period from 01.01.2022 and 30.06.2022 and appoints Mr. Najeeb T.P. having Registration No.IBBI/IPA- 002/IP-N01014/2020-2021/13316,e-mail- najeeb_tp@rediffmail.comresidingat Baithussalam ,Balankinar,K attampally Road ,Near Indus Motors Maruti Service Centre, Kannur, Kerala – 670 011 as the Provisional Liquidator, to carry out the functions as mentioned under Section 290 of the Companies Act,2013. As an initial expenses, an amount of Rs. 1,00,000/- (Rupees one lakh only) will be paid by the petitioner and respondents equally, within three days from the date of receipt of this order.

ii. The Provisional Liquidator is directed to file a declaration before this Tribunal within 7 days from the date of receipt of this order, in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment, if any.

iii. Direct the existing management of the company to extend full co-operation to the Provisional Liquidator to carry out his duties under the extant provisions of the Companies Act,2013.

iv. The Provisional Liquidator is permitted to initiate appropriate action in accordance with extant provisions of Companies Act, to take custody or control of all the properties, effects and actionable claims to which Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the Respondent No.1 Company and to avoid misuse of its property;

v. The Provisional Liquidator is further directed to strictly adhere to the extant provisions of the Companies Act,2013 and submit periodical reports to the Tribunal at the end of each quarter with respect to progress of winding up of the Company in such form as prescribed.

vi. The Provisional Liquidator shall submit the final report with regard to the winding up of the company within two months from the date of receipt of this order, so that this Tribunal can issue the final order of winding up of the company.

21. List the CP/34/KOB/2020 for further orders when the final report received from the Provisional Liquidator

22. Registry is directed to send a copy of this order to the Petitioner and Respondents as also to the Provisional Liquidator immediately.