Judgment:
1. In CP No. 21/2003 on 31.3.2003 the CLB passed the following consent order: Both the counsels agree that the petitioner will go out of the company on receipt of proper valuation. However, there is a dispute regarding the shareholding of the petitioner, which according to him is l/3^rd while according to the respondents is less than 10%.
Therefore, the petitioner to file an amended petition to establish his shareholding. To be done by 20.4.2003.
In the meantime, no action to remove the petitioner as a Director of the company will be taken and I also record the statement of the counsel for the petitioner that his client is not carrying on any business in the premises of the company.
Subsequently, on 21.4.2003 the petitioner sought extension of time to file amended petition on the ground that the petitioner had applied for requisite information from Registrar of Companies and the same, were awaited. Thereafter CA No. 92/03 was filed for withdrawal of the petition with liberty to file fresh petition. Since there was a consent order in this case with a limited question to be decided about the quantum of the petitioner's shares, the respondents opposed the withdrawal of the petition to file a fresh petition. The CLB vide its order dated 26.6.2003 held that it was not appropriate to allow the petition to be withdrawn since there was a consent order. However, it allowed one month's time to file the amended petition. In view of the aforesaid orders, the petitioner filed comprehensive amended petition annexing therewith various documents to establish his shareholding.
Accordingly, the petitioner filed an amended petition claiming his shareholding to be 55005 shares as against the 405 shares admitted by the respondents. In this order I am considering the amended Company Petition to adjudicate on the correct shareholding of the petitioner to facilitate the process of his going out of the company after receiving proper valuation for his shares.
a. Destruction, alteration and falsification of records pertaining to the company in the office of the Registrar of Companies by respondent Nos. 2 and 3 and the manipulation of the shareholding pattern thereof; b. Gross financial irregularities on the part of respondent Nos. 2 and 3 in respect of the company; c. Non-maintenance of the statutory records by respondent Nos. 2 and 3 in respect of the company; d. Denial of information by respondent Nos. 2 and 3 to the petitioner in relation to the affairs of the company; e. Exclusion of the petitioner from the affairs of the company by respondent Nos. 2 and 3 3. Shri Krishan Kumar, counsel for the petitioner argued: That with a view to misleading and diverting the attention of this Hon'ble Board and sidetracking the main issues, respondent No. 2 has raised certain frivolous issues in the reply which are as follows: a. that the petitioner is bound to unconditionally go out of the company by virtue of the Interim Order dated March 31, 2003 passed by this Hon'ble Board and accordingly is not entitled to raise the issues which he has raised in the amended petition; b. that the petitioner has wrongfully taken away an agency from the company being the Florens Agency and is wrongfully running the some from the premises of the company; c. that the petitioner has wrongfully resiled from an MOU dated April 29, 2003 by which he had agreed to go out of the company; d. that the petitioner has filed the present company petition to counter the forfeiture of his rights in the HUF properties of his grandfather; e. that the petitioner has mismanaged the affairs of one Intermodal Transport and Technology Systems (Karnataka) Limited; and f. that the petitioner has wrongfully taken away the statutory records, registers and documents of the company.
The counsel for the petitioner pointed out that at the time of incorporation, shares issued (by way of subscription to the MOA) were as follows: (Return of allotment signed by respondent No. 3 on March 20, 1990 was filed with the Registrar of Companies in the usual course.).
(Return of allotment signed by respondent No. 3 on March 26, 1997 was filed with Registrar of Companies in the usual course).
d. There were no further issues. Accordingly the shareholding position of the company should have been as follows:Petitioner 55,005 shares e. Annual returns, signed by respondent No. 2 and 3, were filed for 1989, 1990 and 1991 in the usual course which showed the correct shareholding position. No annual returns were filed for 1992 to 1999 in the usual course.
f. In 2000, respondent Nos. 2 and 3 pulled out/caused to be pulled out, inter alia, the following documents from the Document -File of the company with the Registrar of Companies: ii. Returns of Allotment in Form No. 2 dated March 20,1990 and March 26, 1997 With such a pulling out, there remained no documents in the Document -File which showed the correct share issues/allotment and the correct shareholding position.
g. Thereafter taking advantage of the Company Law Settlement Scheme 2000 (CLSS), respondent No. 2 and 3 signed and filed false Annual Returns for 8 years i.e. from 1992 to 1999 showing the following manipulated shareholding position:1992-1996 Respondent No. 4 - 45000 shares Petitioner - 5 shares1997-2000 Respondent No. 4 - 45000 shares Petitioner - 405 shares h. No documents were filed showing the manner of acquisition of the aforesaid shares.
i. The fraud was carried forward by filing annual returns for 2000 and 2001 showing the same manipulated shareholding position as shown in Row 2 Column 2 hereinabove. These annual returns were signed by respondent No. 2 and the signature of the petitioner was obtained thereupon by deceit.
j. Respondent No. 2 and 3 are now wrongly holding out the aforesaid manipulated shareholding position as the correct shareholding position.
k. The following documents have been annexed by the petitioner to the Amended Petition in support of his contentions: i. Memorandum of Association (Annexure P1) showing the initial subscription of 5 shares each by the petitioner and respondent Nos.
2 and 3.
ii. Notarized copy of the original form No. 2 dated March, 20, 1990 (Annexure P3A to P3D) showing issue of 15,000 shares each to the petitioner and respondent Nos. 2 and 3.
iii. Notarized copy of the office copy of the aforesaid original form No. 2 dated March 20, 1990 (Annexure P10).
iv. Notarized copy of the original form No. 2 dated March 26,1997 (Annexure P4) showing issue of 40,000 shares each to the petitioner and respondent Nos. 2 and 3.
v. Notaried copy of the original annual return for the year 1989 (Annexure P8) showing shareholding of 5 shares each of the petitioner and respondent Nos. 2 and 3.
vi. Notarised copy of the office copy of the original annual return for the year 1990 (Annexure P5) showing shareholding of 15, 005 shares each of the petitioner and respondent Nos. 2 and 3.
vii. Notarized copy of the office copy of the original annual return for the year 1991 (Annexure P6) showing shareholding of 15,005 shares each of the petitioner and respondent Nos. 2 and 3. This contains an endorsement evidencing the filing of the original with the Registrar of Companies.
viii. Notarized copy of the receipt evidencing the filing of the Original Annual Return for the year 1990 (Annexure P7).
ix. Notarized copy of a false and fabricated return of allotment sought to be substituted for the original one dated March 20,1990 (Annexure P9).
l. In addition, two reports of practicing Company Secretaries who had carried out a search at the office of the Registrar of Companies in respect of the Company at the instance of the petitioner were filed along with the rejoinder: i. The first search report (exhibit A to the rejoinder) contains two tables. The first table shows the documents available in the Document -file with the Registrar of Companies. The second table shows the entries in the Registrar of Companies Diary namely an exhaustive list of all documents filed with the Registrar of Companies from the inception of the company till date with the document numbers allotted by the Registrar of Companies. A comparison of the aforesaid two tables clearly shows, inter-alia, that in respect of documents No. 8 and 15 (namely the return of allotment in Form No. 2 dated March 20, 1990 and the return of allotment in form No. 2 dated March, 26, 1997) although there are entries in the Registrar of Companies Diary, the actual documents are missing from the Document -File. From this it becomes evident that although these two documents were filed with the Registrar of Companies in the usual course of events, they were later pulled out of the Document -File.
ii. In the said second Search report(Exhibit A to the rejoinder), it has been categorically stated that there are no documents in the records of the Registrar of Companies as regards the acquisition of further shares held by the petitioner and respondent Nos. 2 and 3 in addition to the shares subscribed by them to the Memorandum of Association. In particular there are no documents as regards the acquisition of shares by respondent No. 4.
4. Shri Krishan Kumar further argued: That as regards the shareholding position- a. The two main differing contentions of respondent No. 2 in respect of the shareholding of the company are: i. That in 1990, 45,000 shares were issued to respondent No. 4 by the company as a discharge of the loans given by her from her savings to the petitioner and respondent Nos. 2 and 3 to start their business in 1978 and thereafter from time to time in their business ventures.
ii. That in 1997, 400 snares each were issued to the petitioner and respondent Nos. 2 and 3 by the company, b. Several facts and circumstances as set out extensively in the Rejoinder ( paras 30 and 31 refer) make these contentions highly improbable.
However, the mere execution of the aforesaid document by respondent No.2 exposes the hollowness of the contentions of respondent No. 2 on the issue of shareholding and corroborates the fraud played by respondent Nos. 2 and 3. ( paras 72 to 75 in the rejoinder refer).
5. Shri Krishan Kumar further argued: That as regards second issue raised by the petitioner: Gross financial irregularities on the part of Respondent Nos. 2 and 3 in respect of the company - is more particularly set out in the Amended petition. During the financial year 2001-2002 and 2002-03, the company had sold two of its assets namely the ground floor of the ITTS House and the Andheri Office and had leased out the fifth floor of the ITTS House. The petitioner believes that the process generated a sum of Rs. 1.85 crores (hereinafter referred to as the "moneys so generated"). Apart from this the petitioner also believes that the lease generates a monthly lease rental of Rs. 1.25 lakhs per month. The moneys so generated were raised for the purpose of reviving the business of the respondent No. 1 company. Instead of applying the moneys so generated for the aforesaid purposes, respondent Nos. 2 and 3 have given the same as interest free loans to one of their friends namely one Shekhar Mehta and his company namely one Swati Diamonds without the knowledge or concurrence of the petitioner. Neither the said Shekhar Mehta nor the said Swati Diamonds had, at the relevant time, any business connections with the company.
The petitioner believes that respondent Nos. 2 and 3 have over the last few years and are currently privately enjoying the fruits of the said loan to the exclusion of the company. The petitioner submits that the aforesaid is an act of gross mismanagement on the part of respondent Nos. 2 and 3 in respect of the company. Further the petitioner has now learnt that the said Shekhar Mehta has landed himself in a financial mess and accordingly the said Shekhar Mehta and the said Swati Diamonds are not in a position to repay the said loan. Under the circumstances the company is faced with the prospect of losing the entire amount of the moneys so generated. Thus the act of respondent Nos. 2 and 3 in giving the moneys so generated as an interest free loan to the said Shekhar Mehta and the said Swati Diamonds have gravely prejudiced the interests of the Company in terms of the loss of interest as well as the loss of the principal amount. Accordingly, it is the case of the petitioner that respondent Nos. 2 and 3 should be directed to restore the amount of the moneys so generated along with the interest till date to the company.
6. The counsel for the petitioner further argued: That the petitioner believes that respondent Nos. 2 and 3 are using the funds of the company for meeting their personal expenses including the cost of the present litigation. This is also an act of mismanagement on the part of respondent Nos. 2 and 3 in respect of the company. Accordingly, it is also the case of the petitioner that respondent Nos. 2 and 3 should be directed to restore the funds of the company so used for meeting their personal expenses and for the purpose of the present litigation along with interest till date to the company.
7. It was further argued by the counsel for the petitioner that the issues raised by respondent No. 2 in his affidavit in reply have been extensively and comprehensively dealt with and demolished by the petitioner in his rejoinder: Issue of the Interim Order dated March 31, 2003 (paras 115-130, pages 97-107 refer).
Issue of taking away of the Florens Agency (paras 131-140, pages 108-126 refer) Issue of wrongfully resiling from MOU dated April 29, 2003 (paras 141-146, pages 126- 132 refer) Issue of forfeiture of the rights of the petitioner in the HUF properties of his grandfather. (paras 147-152, pages 132-135 Refer) Issue of mismanagement of the affairs of Intermodal Transport and Technology Systems (Karnataka) Limited (paras 153-159, pages 135-138 refer).
Issue of the petitioner wrongfully taking away of the records etc.
of the company (para 160, page 138 refer).
It was reiterated that Respondent Nos. 2 and 3 have been conducting the affairs of the company in a manner which is oppressive to the petitioner and prejudicial to the interests of the company. Hence the petitioners' prayer for allowing the amended petition seeking that the current shareholding position as shown by the records be set aside and it be declared that the petitioner and respondent Nos. 2 and 3 are the only shareholders of the company holding 1/3^rd share each; further respondent No. 4 be restrained from holding herself out as a shareholder of the company; respondent Nos. 2 and 3 be directed to produce the entire accounting records of the company i.e. the books of accounts, supporting vouchers and all other relevant documents for the accounting period 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 and April 2006 till date for a Special Audit to be conducted by any reputed firm of Chartered Accountants, at the cost of the company; the Special Auditor be directed to ascertain the amounts to be debited to the account of Respondent Nos. 2 and 3 for wrongful gains made by them since April 2001 including but not limited to their personal expenses debited to the accounts of the company; respondent Nos. 2 and 3 be directed to restore the wrongful gains made by them from the company as ascertained by the Special Auditor within a period of 8 weeks from the date of approval of the report to that effect by the Company Law Board; the petitioner be allowed to continue to be a director, however, respondent Nos. 2 and 3 be debarred from being a member of the Board with immediate effect till the completion of the valuation exercise and buy out of the petitioner after the ascertainment of the figure of wrongful gains made by Respondent Nos. 2 and 3, the Special Auditor be directed to undertake a total valuation of the Company including its fixed and current assets; the petitioner be allowed to make representations to him; respondent Nos. 2 and 3 be directed to buy out the petitioner at l/3^rd of the final valuation arrived at by the Special Auditor within a period of 8 weeks from the date of approval of the valuation report by the Company Law Board; and in the event of failure of respondent Nos. 2 and 3 to buy out the petitioner as aforesaid, the Company be directed to be wound up and the petitioner be allowed to prefer an application to that effect.
8. Shri Shri Jay Savla. Counsel for the respondents argued that the law of evidence requires that one who asserts must prove his case. The burden is upon the petitioner to prove that he holds 55,005 shares of the respondent company. This Hon'ble Board also vide order of 30.3.2003 permitted the petitioner to amend the petition to "establish his shareholding". It is, therefore, incumbent upon the petitioner to establish his shareholding so that the shares are purchased upon proper valuation. It was emphasised that - In support of the contention for proving shareholding, the petitioner has sought reliance in the petition on the following documents: (i) Photocopy of Return of Allotment dt. 20.3.1990. This fabricated copy or this document not even registered with Registrar of Companies and not having any register mark on this document.
(ii) Photocopy of return of allotment dated 26.3.1997. This document is null, void and defective as this fabricated false document exhibited by petitioner in his amended petition on (page No. P-5) shows shares allotted to each brother is 4,00,000 whereas petitioner claims with this fabricated false documents allotment of shares as 40,000, Actual allotment was 400 shares each only. There is no proof of the payment given by the petitioner of his purported claim for 40,000 shares.
(iii) Photocopy of Annual Return for the financial year ending 1990 and 1991. This fabricated copy of this document is not even registered with Registrar of Companies and not having any register mark on this document.
The entire case of the petitioner is based on the aforesaid copies which are purportedly photocopies of originals, though the originals of the aforesaid documents/ certified copies of the Registrar of Companies has not seen light of the day. Mere photocopies in the absence of original copy are inadmissible in evidence and no reliance can be placed on such documents. It was argued that in contra, the respondents have placed on record voluminous evidence including statutory documents field with the Registrar of Companies prepared and signed by the petitioner which clearly indicate that shareholding of the petitioner is only 405 shares as against his claim of 55,005 shares. The respondents have placed documents along with reply at pages 84 to 163 of the reply. The respondents have annexed certified copy of the (a) annual return for the year ended 2000 at page 87.
(b) Balance Sheet where issued share capital is shown as 46,215, and the shareholding of the individual shareholders is shown (at page 90 internal page 62) as 405 of three brothers each and at page 97 the shareholdings of mother is shown as 45000 shares. (c) Similarly in the annual return for the year ending 2001, also signed by the petition. Similar position is reflected at pages 113 of the reply.
The balance sheet for the year ending 31.3.2001 at page 151 show the issued, subscribed and paid up capital as 46,250 only. Further, if was contended that the application on behalf of Respondent Nos. 1,2 and 4 for placing additional documents on record was allowed.
Alongwith the said application, the Respondents have produced following documents.
Income Tax Return for the assessment year 2001-2002 duly signed by the petitioner (pg. 13 of the application). Particulars of equity shareholding is described and again the petitioner is shown to be holding 1% shareholding, (pg. 23); ii. Notice for Annual General Meeting and Director's Report dated 11.9.2001 to consider and adopt profit and loss account for the year ending 31.3.2001 and the balance sheet was also signed by petitioner (pg. 49).
(i) Balance sheet as on 31.3.2000 and 31.3.2001 duly signed by the petitioner.
(ii) Annual Return dated 31.3.2000 and 31.3.2001 was filed with the Registrar of Companies, it was also signed by the petitioner and it showed petitioner holding 405 shares only.
(iii) Instructions given by petitioner to ABN Amro Bank for issuance of draft for filing fees of Registrar of Companies for the year 31.3.2000 and 31.3.2001 of Rs. 9,000 and Rs. 5,000 respectively.
(iv) Memorandum of Fees of Rs. 5,000/- sent by Pankaj and Associates, Company Secretary to Petitioner for maintaining statutory records for the year 2001-2002. The said payment made by the petitioner from the company's account on 22^nd February, 2002.
(v) The bank voucher payment of the respondent company dated 29.10.2001, 1.11.2001 for miscellaneous expenditure signed by petitioner.
(vi) Statement of petitioner declaring his net worth as on 31.3.2001 wherein he has declared that he is holding only 405 shares of the respondent company i.e. ITTSPL, Mumbai.
It was argued that the aforesaid documents prepared and signed by the petitioner establish shareholding of petitioner at 405 beyond any shadow of doubt.
It is well settled that to establish shareholding in the company, a person must fulfill the following criteria: (i) Share certificate is a primary evidence under Section 84 of the Companies Act;.
(iv) Certified copy of the return of allotment filed with the Registrar of Companies to show the shares allotted.
(v) Any Bank entry/receipt showing the amount paid towards share application money; In the present case, the petitioner has not proved any of the above requirements. The petitioner has not only failed to show his shareholding but on the contrary has categorically admitted to be the shareholder of 405 shares only.
C: Allegations of fraud and manipulation with the registrar of companies records. The petitioner in order to establish his shareholding has conveniently chosen to put bald allegations that return of allotment allegedly filed in the year 1990 and 1997 with the Registrar of Companies have been removed/manipulated by the respondents.
The respondents have vehemently refuted such allegations at page 32, 45 and 46 of the reply and have requested to initiate proceedings against the petitioner for making false statement on oath. It is well settled that allegations of fraud cannot be proved on affidavit and proper evidence must be led to establish alleged fraud. These are serious questions and assuming semblance of truth, the same should be invested by proper trial. The petitioner has not led any evidence whatsoever in support of the said alleged fraud. It was only after repeated adjournments for rejoinder , arguments at the fag end of the matter, an application was filed for seeking permission to lead oral evidence/calling the records from Registrar of Companies. The application has been filed belatedly with a view to further delay the proceedings and was not rightly entertained by this Hon'ble Board. Petitioner filed criminal complaint against respondent No. 2 and 3 and one of the employees in the month of May, 2004. It was pointed out that the police made detailed investigation and found no fraud pertaining to the share pattern of the respondent company and police has filed civil report to the magistrate on 22.10.04. The respondents relied on the decision in the case of Union of India v. Chaturbhai M. Patel and Co.
Radhey Sham Gupta and Anr. v. Kamal Oiland Allied Industries Ltd. and Ors. (1999) 1 Comp. LJ 476 (Delhi); and K.P. Balakrishnan Nair v. Vindhya Tea (1999) 32 CLA 160 AND Shrihari Rao v. Gopal Automotive D: Petitioner being guilty of breach of fiduciary duty not entitled to any relief in the petition since the petitioner has breached the MOU of settlement among family members and has taken away the business of the company.
E: Petitioner's contention of having signed documents in blank through deceit cannot be accepted.
The petitioner has conveniently though admitting his signatures but denied the contents of documents by pleading that Registrar of Companies Annual returns for the year ended 31.3.2000 and 31.3.2001 were signed blank. The respondents have produced several documents in addition to the annul return signed by the petitioner. The petitioner has chosen not to dispute contents of these docuemtns.
The factum of signature is not disputed on these documents which shows the , shareholding of the petitioner as 405. It is well settled that party who is claiming that documents are obtained by blank signatures must prove leading positive and unimpeachable evidence to the effect. Next, it was argued that - F: Petitioner on the principles of estoppel, acquiescence, delay, laches estopped from disputing shareholding of mother.
It is the case of the respondents that initial loan to start the business was granted by the mother in the year 1978 and the loan was converted into equity in the year 1990 with the consent of all three brothers. The petitioner has in fact signed statutory records mentioned above which shows the shareholding of the mother at 45000 shares. Having agreed and acquiesced with this position, it is not now open for the petitioner to dispute mother's shareholding in the company. The petitioner is now estopped from disputing mother's shareholding on the principles of estoppel, acquiescence, delay and laches. Lastly, it was argued that - G: Judgment cited in Rejoinder Reported in 2004(4) CLJ 175 in the matter of Dale and Carrington completely distinguishable The petitioner in rejoinder arguments sought to produce the judgment reported in 2005(2) SCC 135. The said judgment is clearly distinguishable as the issue in the aforesaid judgment was further issue of share capital when the company was not in need of finance.
In the facts of the said case, certain observations of oppression upon minority were made. The Hon'ble Supreme Court in the matter of S. Singh Gaikwad 2005(3) CLJ 385, has held in para 69 that the ratio laid down by Dale and Carrington would cannot have universal application and must be considered as law laid down to the facts of the case.
9. I have considered the pleadings and the documents filed therewith as well as the arguments of the counsels for the petitioner and the respondents. Petitioners' case is that his shareholding in the respondent company is 55005 shares being one third of the total shareholding whereas according to the respondents it is less than 10%, the petitioner holds only 405 shares in the respondent company. The petitioner has placed reliance on the two search reports (exhibit 'A' to the rejoinder affidavit) of the practicing Company Secretaries who had carried out a search at the office of the ROC in respect of the respondent company, The first search report contains two tables. The first table shows the documents available in the D-file with the ROC.The second table shows the entries in the ROC diary containing the list of all the documents filed with the ROC from the inception of the company till date with the document numbers allotted by the ROC. A comparison of these two tables in respect of document Nos. 8 and 15 viz the return of allotment in form No. 2 dated 20.3.1990 and the return of allotment in Form No. 2 dated 26.3.1997 reveals that these allotment returns find mention in the ROC diary but the actual documents are missing from the document file. In the second search report it has been highlighted that there are no documents in the records of the ROC as regards the acquisition of further shares held by the petitioner and respondent Nos. 2 and 3 in addition to the shares subscribed by them to the Memorandum of Association. It is noticed that in particular there are no documents as regards the acquisition of shares by respondent No.4. (It is the respondents' case that in 1990, 45000 shares were issued to R-4). On consideration of the facts and circumstances of the case and considering the arguments and documents filed by the respondents, I find that the respondents have not been able to refute the allegations made by the petitioner in respect of the chronological record filed with the ROC in respect of issue of shares in 1990 and 1997. The respondents have chosen to be silent on these issues. Furthermore, the documents relied upon by the petitioner have not been proved to be false or fabricated. The petitioner in his amended petition has supported his contentions on the basis of Memorandum of Association (Annexure P1) showing the initial subscription of 5 shares each by the petitioner and respondent Nos. 2 and 3;. notarized copy of the original form No. 2 dated March, 20, 1990 (Annexure P3A to P3D) showing issue of 15,000 shares each to the petitioner and respondent Nos. 2 and 3; notarized copy of the office copy of the aforesaid original form No. 2 dated March 20,1990 (Annexure P10); notarized copy of the original form No. 2 dated March 26,1997 (Annexure P4) showing issue of 40,000 shares each to the petitioner and respondent Nos. 2 and 3; notaried copy of the original annual return for the year 1989 (Annexure P8) showing shareholding of 5 shares each of the petitioner and respondent Nos. 2 and 3; notarised copy of the office copy of the original annual return for the year 1990 (Annexure P5) showing shareholding of 15,005 shares each of the petitioner and respondent Nos. 2 and 3; notarized copy of the office copy of the original annual return for the year 1991 (Annexure P6) showing shareholding of 15,005 shares each of the petitioner and respondent Nos. 2 and 3; (This contains an endorsement evidencing the filing of the original with the Registrar of Companies); notarized copy of the receipt evidencing the filing of the Original Annual Return for the year 1990 (Annexure P7); notarized copy of a false and fabricated return of allotment sought to be substituted for the original one dated March 20,1990 (Annexure P9). As against this, the respondents to prove their contentions have relied on Income Tax Return for the assessment year 2001-2002 duly signed by the petitioner (pg. 13 of the application);, particulars of equity shareholding is described and again the petitioner is shown to be holding 1% shareholding, (pg. 23); notice for Annual General Meeting and Director's Report dated 11.9.2001 to consider and adopt profit and loss account for the year ending 31.3.2001 and the balance sheet was also signed by petitioner (pg. 49); Balance sheet as on 31.3.2000 and 31.3.2001 duly signed by the petitioner; Annual Return dated 31.3.2000 and 31.3.2001 was filed with the Registrar of Companies, it was also signed by the petitioner and it showed petitioner holding 405 shares only; instructions given by petitioner to ABN Amro Bank for issuance of draft for filing fees of Registrar of Companies for the year 31.3.2000 and 31.3.2001 of Rs. 9,000 and Rs. 5,000 respectively; Memorandum of Fees of Rs. 5,000/- sent by Pankaj and Associates, Company Secretary to Petitioner for maintaining statutory records for the year 2001-2002; (The said payment made by the petitioner from the company's account on 22^nd February, 2002); the bank voucher payment of the respondent company dated 29.10.2001, 1.11.2001 for miscellaneous expenditure signed by petitioner; Statement of petitioner declaring his net worth as on 31.3.2001 wherein he has declared that he is holding only 405 shares of the respondent company i.e. ITTSPL, Mumbai. When the two sets of documents relied upon by the parties are compared, the balance of convenience is in favour of the petitioner in view of the fact that the documents furnished to the ROC's in the chronological order are contemporaneous record and the true state of affairs though missing from the D-file despite the fact that the ROC diary still has the specific entries in respect of these documents received by the ROC then and these documents have been filed prior to the different sets filed under the Amnesty Scheme which is subsequent record prepared subsequently by the respondents. In these circumstances, credence has to be given to the contemporaneous and chronological record. Therefore, I hold that the petitioner holds 55005 shares in the respondent company. The petitioner is hereby required to go out of the company on receiving proper valuation of these shares as per the consent order.
10. For ensuring proper value of his shares to the petitioner, it is necessary to consider allegations regarding financial mismanagement in the affairs of the company specifically listed in the petition. Once again, the respondents have not been able to refute the specific allegations that out of the sale proceeds of the ground floor of the ITTS House amounting to Rs. 1.85 crores and lease rent of Rs. 1.25 lakh p.m. for the fifth floor the respondents had during the financial year 2001-2002 and 20002-2003 advanced interest free loans to one Shri Shekhar Mehta and his company namely one Swati Diamonds without the consent and concurrence of the petitioner. These loans have not been advanced in the affairs of the company. Shri Shekhar Mehta and Swati Diamonds are allegedly in a financial mess and the respondent company may not be able to recover such loans. Such an act of the respondent Nos. 2 and 3 have caused grave prejudice to the interests of the company in terms of the loss of interest as well as the loss of the principal amount. Besides, the respondents have debited certain personal expenses to the account of the respondent company. The respondents have not been able to meet these allegations. In view of the consent order dated 31.3.2003, I do not find any reason to adjudicate on the issues raised by the respondents alleging taking away of the Florens Agency; issue of wrongfully resiling from MOU dated 29.4.2003; issue of forfeiture of the rights of the petitioner in the HUF properties, etc.
11. In view of the foregoing, I hereby order that the petitioner shall go out of the company within two months of this order on receipt of proper valuation of his 55005 shares of the respondent company after the respondents bring back the amounts in the account of the respondent company given by way of interest free loans not connected with the business of the company and personal expenses debited to the company's accounts to be determined by independent auditors to be appointed by the respondents with the concurrence of the petitioner to conduct audit for the period 2001-2002 to 2005-2006.
12. With the above directions, I hereby allow the petition and vacate all interim orders. No order as to cost.