IDENTIFICATION:

Case name: Bharat Kumar Agarwal s/o Ram Avtar agarwal and another v. Bankhandi
nath developers private limited, through its ex-directors, uttar pradesh and others
Citation : 2017 comp cas 563

FACTS IN ISSUE:
The Company was incorporated on 07.07.2011. The Petitioners' group joined as members
by purchasing 50% equity from the promoter-first directors of the company. The
company acquired certain land for its commercial venture from the 4th Respondent and
all the four directors have shared the consideration equally and paid advance
consideration also. However, in course of time, Respondents have acted unilaterally and
got the land sold to 3rd parties by two registered sale deeds.The Petitioners have claimed
that the Respondents 2 and 3 have resigned to the Board, which is denied by the
Respondents. The Respondents further deny the assertion of the petitioners that they are
members and directors of the Company and claimed that the signatures of the
Respondents are obtained on blank papers and everything including share transfer,
resolutions, resignation etc. are manipulated and forged. On the other hand, the
Petitioners claim that the sale of property of the Company by the Respondents without
holding Board meeting and getting the resolution approved by members is prejudicial to
the interests of the Company. It is in these circumstances, both parties, claiming the acts
of oppression and mismanagement against each other, approached the Tribunal for
various reliefs. The axis for the dispute is the real property of the Company.

PROCEDURAL HISTORY:
The Respondents have lodged First Information Report with Kotwali Police Station
alleging offences of forgery etc. Thus, long time after the notice dated 5.11.2011 and the
FIR dated 19.11.2011, the Respondents for the first time alleged in the Complaint to the
ROC that the share transfer is also forged. It is clear that they have verified Form 32 in
the website in 'November, 2011' as mentioned in the Complaint to ROC.
ISSUES :
1. whether the petitioners are having shares in the companynand whether they are
appointed as directors?
2. According to the Petition averments in CP 99/12, the Respondents 2 and 3
approached and impressed upon them to invest in the Company and by acquiring the
land, they would earn handsome profits and thus, the Petitioners have issued cheques on
9.7.2011 for Rs. 25000/- each towards the consideration for the 50% shares to be
transferred by Respondents 2 and 3 out of their equity holding. Accordingly, the
resolution was adopted by the Board and the shares are transferred to the Petitioners.
3. Whether the Respondents 2 and 3 have resigned to the Board?
4. Whether the sale of disputed land to Mari Gold Infrastructure, and Respondent
No. 9 and Pre Shanker under the registered sale deeds dated 15.11.2011 is binding on the
Company? If not whether this Tribunal is competent to declare that the sale deeds are null
and void?
HOLDING:
The admitted fact is that the Company was incorporated on 7.7.2011 with authorised
capital of Rs. 1,00,000 equity shares of Rs. 10/- each and the Respondents 2 and 3 were
holding 50% each in the equity. The disputed fact is, the Petitioners have become
members having purchased 50% of the equity shares from the Respondents 2 and 3. In
this respect, the important dates and events may be
summarised for further analysis of the question.
As against this plea of the petitioners, the Respondents 2 and 3 contend that Dr. Pankaj
Agarwal and Mohit Agarwal told them that the land of Mr. Alok Goel (Respondent No. 4
in CP 99/12) is available for sale and it has the potential of value appreciation by reason
of its location and as the Respondents 2 and 3 expressed their inability to pay one Crore
as advance to the vendor of the land,
they were taken to a Company Secretary Shri Ankit Agarwal on the pretext of arranging a
short term loan and the said Company Secretary had obtained the signatures of
respondents 2 and 3 on 'blank papers' informing them that 'those papers were required to
form a company'. It is alleged in para 8 of the Reply that using some of those papers, the
Company Secretary got the Respondent No. 1 Company incorporated on 7.7.2011. These
events are prior to the incorporation of the company, as the pleading of the Respondents
No. 2 and 3 suggests. it is pleaded by the petitioners that on18.10.2011 the Respondents
have represented that they would be busy in the elections wherein the parents of
respondent No. 2 would be contesting, they submitted their resignation to the office of
Directors of the Board and after completion of all the 'formalities', Form 32 was
submitted to the ROC for filing. (Vide Annexure A9) Form No. 32 is attached with
relevant documents.
The 4th Respondent is 'bhoomidar' of the land comprising in Gattas No. 324, 325ka, 326
ka, 329, 330, and 536 admeasuring 5.7650 Hect situated in village Bilwa and he agreed to
sell the same for a total consideration of Rs. 3.28 crores to the Respondent No. 1
Company. It was agreed that the Petitioners and Respondents' shall pay equally and shall
pay Rs. one Crore as advance of sale consideration. How the consideration for paying the
advance was raised is not material and the fact
remains that a registered agreement of sale was executed by 4th Respondent which
concludes the transaction in favour of the Company.
The following order has been passed:
"1. It is declared that both the groups, namely the Petitioners in CP 99/2012 and
Petitioners in CP86/2013 are guilty of committing acts of oppression and
mismanagement;
2 . It is declared that both petitioners in CP 99/2012 and Petitioners in CP86/2013 are
Directors of the Board of the Company;
3.(a) Shri Anil Kumar, Practicing Company Secretary is appointed as 5th Director of the
Company to enable the Board to take majority decision on the following issues: (i)
whether any legal action shall be taken by the Company for getting the sale deeds dated
15.11.2011 executed by Mr. Alok Goel
in favour of 3rd parties cancelled and to specifically enforce the agreement of sale dated
12.07.2011 in favour of the Company executed by Mr. Alok Kumar Goel according to
law; (ii) Whether the Registered office of the Company be shifted or not; (iii) Any other
issue relating to the affairs of the Company in order to put the company on track to
continue its business as per the
objectives of its incorporation;
3.(b) Shri Anil Kumar is further empowered to supervise that the Board meeting and the
meeting of members is convened smoothly by following the procedure according to the
Companies Act, 2013 and relevant rules and report to the Tribunal. He shall continue as
Director of the Board till the Board elects another independent director within a period of
6 months from the date of this order or such other period as the Tribunal may direct on
the application of any of the Directors or the members of the Company.
3.(c) Each of parties shall pay Rs. 25,000/- (twenty five thousand only) (total Rs. 50,000)
to Shri Anil Kumar as his honorarium in advance, besides reimbursing his travelling and
other incidental expenses, whenever he claims therefore,
4 . Both parties in both the petitions shall file certified copy of this order before Registrar
of Companies, Kanpur within 30 days from the date of this order;
5. All the other reliefs claimed in both the petitions are refused and merged in this order;
6 . All applications if any pending as on today is hereby disposed of and merged in this
order;
7 . The Company Petitions CP 99/2012 and 86/2013 are disposed off accordingly;
8. Both parties shall bear their respective costs."

REASONING:
The findings recorded above would demonstrate certain situations to accept the
contention of both the parties that there is oppression and mismanagement. They are:
(i) The Respondents have deliberately denied the fact that the Petitioners are members
and Director's of the Company, having gained the monetary benefit from them. This
defence is taken by the Respondents only to preclude
the Petitioners from participating in the affairs of the Company and that is an act of
oppression committed by the Respondents.
(ii)So far as the Petitioners are concerned, they have propounded the theory of resignation
by the Respondents 2 and 3 to preclude them from the administration of the Company
which amounts of oppression.
if a Tribunal has to exercise judicial power or to discharge judicial functions, it follows
logically that it has to observe the fundamental principles of judicial procedure and to
observe the principles of natural justice. Keeping the observations of the Apex Court in
view, we have looked into the circumstances where under, according the Respondents,
they had to sign on 'blank papers' including
printed forms and stamp papers. Even as per their own plea, the signatures were obtained
for the purpose of incorporation of the company. They would have enquired the Company
Secretary Mr. Ankit Agarwal about the necessity of signing on blank papers instead of
filled forms and documents. They know pretty well by that time, they are entering into a
transaction involving money and purchase of immovable properly. It is not as though, the
Respondents are laymen as they came forward to incorporate a Company for the purpose
of acquiring the land with the Financial assistance of some third parties, if not the
Petitioners. Therefore, there is no reason to disbelieve, prima facie, that the documents
attached to Form 32 are either forged or manipulated otherwise.
EVALUTION OF THE CASE WITH THE PRESENT LAW:
Both the company petitions are counter to each other and centered on common questions
for decision and both are filed under Sections 397, 398 and other relevant provisions of
the Companies Act, 1956, swap over allegations and counter allegations of oppression
and mis-management. With the consent of both the counsel the matters are heard together
and being disposed of by this common order Section 402 of the Companies Act
contemplates issue of directions with reference to administration and management of the
affairs of the company. The power of the Tribunal under Section 397 is to make 'such
order as it thinks fit', with a view to bringing an end to the matters complained of. Having
regard to the very wide nature of the power conferred on the tribunal and the object
which is sought to be achieved through the exercise of such power, the only limitation
that could be impliedly read on the exercise of that power would be that a nexus must
exist between the order that may be passed there under and the object sought to be
achieved by Sections 397 and 398. We have noticed from Section 398 read with Section
402 of the Act of 1956, that if the Court is required to provide for the regulation of the
conduct of the company's affairs in future because of oppression or mismanagement that
has taken place in the course of normal corporate management, the Court must have the
power to supplant the entire corporate management or corporate mis-management by
resorting to noncorporate management which may take the form of appointing an
administrator or special officer or a committee of advisors to be in charge of the affairs of
the company. The powers of the tribunal under Section 402 of the Act cannot obviously
have any regard to or be subject to the other provisions dealing with the corporate form of
management.
SYNTHESIS:
1. M.S.D.C. RADHA RAMANAN V. M.S.D CHANDRASEKHARA
AND ANR : The supreme court held that the just and equitable principle embodied in
clause (g) of Section 402 is an equitable supplement to the common law of the company
which is to be found in its Memorandum and Articles of Association. The Court, on
another occasion, made the statement of law that, the Court while exercising its discretion
is not bound by the terms contained in Section 402 of the Companies Act if in a particular
fact situation any further relief or reliefs, as the Court may deem fit and proper, are
warranted
2. GRASIM INDUSTRIES LTD AND ANR V. AGARWAL STEEL:
the Court was dealing with a document which is contended to have been signed without
noting the nature and contents thereof by one of the parties thereto. In that context the
Supreme Court held that the plea that in lieu of receipt the signatures were made can be
taken that the signatory put his after knowing the contents of the document.

3. VIDYADHAR V. MANIKRAO AND ANR: Regarding burden of proof,

the law is well settled by the apex court in this case, that when a person comes with the
plea of fraud of manipulation and misrepresentation, the burden is on him to prove the
same beyond all reasonable doubt. The Supreme Court has categorically stated in the
aforesaid decision that presumption has to be drawn under Section 114 of the Evidence
Act against a party who did not enter into witness box to prove the case set up by him.
Even though, the provisions of the Indian Evidence Act as such are not applicable strictly
in the enquiry before the Tribunal, the general principles of evidence based on the
common law are applicable for appreciation of the circumstances and to weigh the
credibility of the pleas advanced by the parties to the proceedings.