Yogesh Kumar Agarwal VS Arpana Iron and Steels Pvt Ltd & 2 others
Ivn. P 4/2023 in CP No.117/241/HDB/2020
Facts:
1.Respondent no.1/ company was founded on 20.02.1990 to engage in the manufacture, dealing, export and import of iron and steel and trading in other mineral and substances and other allied businesses. It was a closely held company managed by family members as described above. Petitioner is the shareholder of the company. Whereas, respondents no.2 and 3 are shareholders and Directors of the company who were involved in managing the day to day affairs.
2.By sale deed land located at Sy. No.261/F, admeasuring acres 1.12 guntas or 0.52 hectares was purchased and got registered vide Document No.1327/ 94 at the office of the Joint Sub-Registrar, Sangareddy. A decision was taken to mortgage the only immovable property of R/1 company and charge was created by R/2 and R/3 as security for a loan taken by said Agarwal Global Steels Limited on 02.01.2007 and 14.10.2009, in favour of City Union Bank Limited.
3.Respondent No 2 & 3 was the shareholder in Agrawal Global Steels Limited. Petitioner contends that there is oppression and mismanagement by the Respondent No 2 & 3.
Issue: Whether the acts amount to O&M?
Arguments:
Petitioner:
1.Counsel contended that Respondents no.2 and 3, by their acts of omissions, have not only failed to run the business of R/1 but have also caused the single major asset of R/1 to be in jeopardy of being appropriated by way of enforcement of security by a lender for a credit facility availed by another entity.
2.Counsel submitted that Respondents no.2 and 3/ Directors failed to lead R/1 company towards success. On the contrary they have prejudiced the prospect of R/1 company by alienating the only major asset of R/1 company and put the only asset at risk of being appropriated by the lender, who loaned to another entity. Respondents no.2 and 3/ Directors are attempting to dispose of the immovable property owned by R/1 company without intimation to the petitioner.
3.Counsel further submitted that Respondents no.2 and 3 failed to exercise their duties with due and reasonable care as required under section 166(3) of the Companies Act, 2013. Respondents no.2 and 3 attempted to gain unduly unto themselves and their relatives, who are shareholders of another entity, viz. Agarwal Global Steels Limited, in contravention of section 166(5) of the Companies Act, 2013, by allowing property of R/1 company to be mortgaged in favour of the aforesaid lender for credit facilities availed by another entity.
Respondent:
1.Counsel submitted that R/1 company is a closely held company of the family of R/2 and the shares are given to the family members including the petitioner by virtue of the fact that R/2 wanted to involve his family members and heirs in the family business concerns.
2.It was submitted that The petitioner is prevailing on arm twisting the factual position by suppressing material information and there is no truth in the allegation of the petitioner that the petitioner is subjected to loss due to alleged mismanagement by respondents no.2 and 3. Properties of the company were mortgaged as collateral security for benefit of other company inasmuch as said other company is also a family company of R/2. In spite of R/2 having suffered huge losses in other companies; the petitioner did not lend any helping hand to R/2 at such time.
Decision: NCLT dismissed the petition.
Rationale:
1.NCLT held that immovable property involved in the present petition is to be termed as an asset of Respondent No.1 and the same can be disposed off without any special resolution provided under Section 180 of the Companies Act, 2013.
2.It held that No proof or acknowledgment or any kind of document was filed by the Petitioner to show that he requested Respondent No.1 for the notices of meetings of the shareholders and that the same were denied, apart from a mere allegation.
3.It held that an act of mortgaging an immovable property of the Respondent No.1 as a security for a loan advanced to another Company, authorized by the Directors of the Respondent No.1, cannot be said to be in contravention of Section 166 (2) and 166 (3), when such act was well within their powers as Directors and the same is not prohibited by Memorandum or Articles of the Company.
Order Copy:
