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Sanjeev Roshanlal Medh v. Om Shree Greens Pvt. Ltd

National Company Law Tribunal

Dec 19, 2023

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The petitioner, Mr. Sanjeev Roshanlal Medh, and respondent No. 2, Mr. Sanjay Sagun Sawant, were directors and shareholders of respondent No. 1 company, M/s Om Shree Greens Private Limited, incorporated on 20.08.2007. The petitioner was induced to invest in agricultural lands in Maharashtra based on respondent No. 2's representation of holding a "Shetkari License" allowing agricultural operations. Since the company was not permitted to hold agricultural land, the lands were purchased in respondent No. 2's name, with funds infused by the petitioner and transferred through the company's accounts.

The lands purchased were recorded as fixed assets of the company in its balance sheets, signed by both directors. However, respondent No. 2 sold part of the land and was negotiating sales for other portions, causing the petitioner to apprehend potential unauthorized sales or encumbrances in breach of fiduciary duties.

The petitioner also challenged the appointment of Mr. Debkumar Banerjee as Additional Director, alleging it was contrary to statutory provisions and the company's Articles of Association.

The respondents disputed the petitioner's claims, alleging false affidavits, that neither petitioner nor respondent No. 2 were current directors, and that the lands were personally owned by respondent No. 2 without company resolutions. They also alleged financial improprieties by the petitioner, including siphoning funds and fraudulent signing of balance sheets after disqualification.

The petitioner had also filed a similar suit in the civil court, indicating overlapping jurisdictional issues.

Legal Issues Presented

Whether the agricultural lands purchased in the name of respondent No. 2 are assets of respondent No. 1 company, considering the absence of company resolutions and the nature of the financial transactions.
Whether respondent No. 2 breached fiduciary duties by selling or negotiating sales of lands held for the company.
Whether the appointment of Mr. Debkumar Banerjee as Additional Director was valid under section 161 of the Companies Act, 2013 and the Articles of Association.
The appropriate remedial measures to clarify the inter-se financial transactions and ownership issues between the parties.

Arguments of the Parties

Petitioner’s Arguments

Respondent No. 2 represented having a Shetkari License and prospects in agricultural land deals.
The petitioner invested funds into respondent No. 1 company to purchase agricultural lands, which were recorded as company assets in balance sheets.
The lands were held in the name of respondent No. 2 on behalf of the company.
Respondent No. 2 sold part of the land and was negotiating further sales, risking loss to the company and breaching fiduciary duties.
The appointment of Mr. Debkumar Banerjee as Additional Director was allegedly contrary to statutory provisions and the Articles of Association.

Respondents’ Arguments

The petitioner filed a false affidavit with backdated notarization.
Neither petitioner nor respondent No. 2 were current directors; respondent No. 2 resigned and petitioner was disqualified since 2016.
The petitioner fraudulently signed balance sheets and was involved with a Chartered Accountant in misrepresenting assets as company property.
No company resolution existed for purchasing or selling the agricultural lands; lands were personally owned by respondent No. 2.
The petitioner siphoned Rs. 32,00,000 from respondent No. 2 under false pretenses and has an outstanding receivable of Rs. 25,00,000 from the company.
The appointment of Mr. Debkumar Banerjee as Additional Director is redundant as he is no longer in that position.
The petitioner has filed a similar suit in civil court, raising jurisdictional concerns.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal noted the complex factual matrix involving inter-se financial transactions between the petitioner, respondent No. 2, and respondent No. 1 company. Given the conflicting claims regarding ownership of agricultural lands, the absence or presence of company resolutions, and allegations of financial impropriety, the Bench found it necessary to appoint an Independent Auditor. The auditor's role is to examine the financial transactions of respondent No. 1 and verify the claims made by both the petitioner and respondent No. 2 regarding the ownership and use of funds. The Tribunal emphasized the need for clarity on these financial matters to arrive at a considered decision.

Holding and Implications

The Tribunal appointed N B Shah & Associates as Independent Auditor to audit the financial transactions of respondent No. 1 company and verify the claims of the petitioner and respondent No. 2. The auditor is to submit the report within six weeks. The audit fee of Rs. 1,50,000 is to be equally borne by the petitioner and respondent No. 2.

This decision directly affects the parties by mandating an independent financial examination to resolve disputes over asset ownership and alleged financial misconduct. No new legal precedent was established by this order.

Show all summary ...

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IN THE NATIONAL COMPANY LAW TRIBUNAL,

MUMBAI BENCH-IV

C.P No. 233/MB/2020

Under section 241-242,59 & 244 of the Companies Act, 2013.

Mr. Sanjeev Roshanlal Medh Flat No. 304, B-Wing, Rameshwar Building Swastik Park, Chembur, Mumbai-400 071. …Petitioner

Versus

M/S Om Shree Greens Private Limited Unit No. 128/129, D-2, Wadala Truck Terminal, Wadala, Mumbai, Maharashtra-400037. … Respondent No.1

Sanjay Sagun Sawant …Respondent No.2 Director of M/S Om Shree Greens Pvt. Ltd. Ground Floor, A-3, Anjana Cooperative Housing Society Limited, Road No. 6, Pestom Sagar, Amar Mahal, Chembur, Mumbai-400089. Registrar of Companies …Respondent No.3 Ministry of Corporate Affairs, Everest Building, 5^th Floor, 100, Marine Drive, Mumbai-400002. Order Pronounced on: 19.12.2023 Coram:

Hon'ble Member (Technical) Hon'ble Member (Judicial) Mr. Anu Jagmohan Singh Mr. Kishore Vemulapalli

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Appearances:

For Petitioner: Mr. Ashok Singh Ld. Counsel for Petitioner present.

For Respondent: Mr.Ashwin Vasista i/b Ms. Dhanashree.

ORDER

Facts leading to the present Petition and Submissions advanced by Petitioner are as follow:

1. The Petitioner submits that the Respondent No. 1 company i.e. M/s Om Shree Greens Pvt. Ltd. was incorporated on 20.08.2007 as Private Limited Company and the Petitioner and Respondent No. 2 are the Directors and Share Holders of the Respondent No. 1 Company.

2. The Respondent No. 2 in and around March, 2007 represented to the Petitioner that he had a "Shetkari License" and they can engage in agricultural produce and animal husbandry business. The Respondent No. 2 further submitted that he had got few good deals in respect to agricultural lands in Kankvali Taluka, Sindhudurg District, Maharashtra and he already had discussions with the Farmers owning the land and are ready to sell the same.

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3. The Respondent No. 2 asked the Petitioner to invest money in the said land, as the agricultural and animal husbandry business would fetch good return and so the Petitioner agreed to invest the money in the said land. The Petitioner and the respondent No. 2 thereafter, consulted the professionals who advised that as the company is not permitted to hold agricultural land in the State of Maharashtra, the land can be purchased in the name of Respondent No. 2 who has got Shetkari Licence in his favour and that the Petitioner agreed to infuse sufficient funds to the company so that the Company could make the payments to the sellers of the land so that the fixed assets can be held by the company.

4. The Petitioner submits that in order to achieve the said goals the petitioner and the respondent No. 2 agreed to incorporate the Respondent No. 1 and accordingly the respondent No. 1 was incorporated on 20.08.2007 with the petitioner and the respondent No. 2 as its shareholders and directors.

5. That thereafter funds were infused into the bank accounts of the Respondent No. 1. The transfer of money from the Petitioner proprietorship concern to the Respondent No. 1 account and further the sellers of the land is evident from the statement of

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account of the Respondent No. 1 with Citi Bank and rest of the fund was transferred from M/s. Om Shri Logix, a partnership firm wherein the Petitioner and the Respondent No. 2 are partners.

6. The Respondent No. 1 purchased the Land in Village: Bordawe, Taluka: Kankavli, Dist: Sindhudurg, Maharashtra and in Osargaon, Taluka: Kankavli, Dist: Sindhudurg, Maharashtra. The Petitioner submits that the price of the lands purchased by the Respondent No. 1 Company in the name of the Respondent No. 2 is fortified by the fact that the entire consideration for payment of the said lands were made from the Respondent No. 1 account maintained either in Saraswat Bank, Antop Hill, Mumbai and/or Citi Bank, Bandra Kurla Complex, Bandra (E), Mumbai.

7. That the total sale consideration of the aforesaid lands was paid by the Respondent No. 1 and this fact is further fortified from the balance sheet of the Respondent No. 1 in the Assessment Year, 2009-10 and similarly in all subsequent balance sheets which were also filed with ROC Mumbai till Assessment 2017-18. The Payments made by the respondent No. 1 to the aforesaid sellers are reflected in the Bank Account. It is further submitted that all balance sheets have been signed by the petitioner and the Respondent No. 2. That the balance

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sheet of Respondent No. 1 as on Assessment Year 2008-2009 clearly records the fact that the company owns fixed assets in the form of land at Kankavli which are held in the name of the director/Respondent No. 2 on behalf of the company. It is further stated that in all balance sheets, subsequent to the said date and in the latest balance sheet as on 31.03.2017, the said land is shown to be owned by company in the name of its director.

8. The Respondent No. 2 has sold the land measuring 551 Guntha being Exhibit E situated at Village Bordwe, Tal: Kankavali, Dist:

Sindhudurg which was held by the Respondent No. 1 in the name of Respondent No. 2 to one M/s. Dilip Buildcon Ltd.

9. The petitioner further came to know that the Respondent No. 2 is negotiating with several prospective buyers for the remaining land bearing Gut No. 2185B, admeasuring 97.50 Guntha, Village:

Osargaon, Taluka: Kanakvali, Dist: Sindhudurg.

10. The Petitioner apprehends that the Respondent No. 2 may also sale /transfer or create third party interest in the said land thereby causing further loss to the respondent No. 1 company and the Petitioner as a 50% shareholder in complete breach of his fiduciary duty as director.

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11. Lastly, it has come to the notice of the Petitioner that Mr. Debkumar Banerjee has been appointed as an Additional Director on 10th February, 2020 contrary to the provision of section 161 of the Companies Act, 2013 read with Clause 33 of the Article of Association.

Submissions advanced by the Respondents are as follow:

12. The Respondent submits that the Petitioner had filed false affidavit as date of stamp paper is different from the date of affirmation and Entry made by the Learned Notary S.C Sawant is backdated.

13. The Respondent submits that presently neither the Petitioner nor the Respondent No. 2 are the directors of the Respondent No. 1 company. The Respondent No. 2 has resigned as director of the company on 16th March, 2020. Though the Petitioner was disqualified in the year 2016 the said fact was never informed by the Petitioner. The Petitioner being disqualified still used to sign balance sheets posing as the director of the Respondent No. 1. Also, Mr. Bindra is a Chartered Accountant of various companies in which the Petitioner is one of the directors. His disqualification was in knowledge of Chartered Accountant. However, Mr. Bindra, fraudulently and with an ill intention, the said fact was kept hidden from the Respondent No. 2. There has been also

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procurement of loans in different companies based on these balance sheets which are signed as a director by the Petitioner. Therefore, the nexus of Mr. Bindra and the Petitioner is established. Mr. Bindra, Chartered Accountant passed this incorrect entry of showing Respondent No. 2's personal assets as the asset of the company is an act of fraud played by the Petitioner and Mr. Bindra.

14. The Respondent No. 1 submits that the claim of the Petitioner that the said agricultural lands were purchased by the Respondent No. 1 company from the funds infused by the Petitioner and thus, the said agricultural lands are the assets of the Respondent No. 1 company is completely false. Till date, there is no resolution on the record to support the Petitioner's contentions. The Respondent submits that a company to own a fixed asset or to purchase an asset, a resolution has to be passed for the same; whereas allegation of the Petitioner is no such resolution has been passed in the Respondent No. 1 company to purchase the said agricultural lands in the name of the Respondent No. 2.

15. The Respondent submits that as agreed by the Petitioner that there is no resolution passed for purchasing those agricultural lands, there is also no resolution for selling those lands. The said

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agricultural properties are purchased by the Respondent No. 2 and are owned by him, hence, the Respondent No. 2 is under no obligation to deposit the consideration received from selling those lands to the Respondent No. 1.

16. The Respondent submits that the petitioner not only hide the said fact but also siphoned away a huge amount of Rs. 32,00,000/- (Rupees Thirty-Two lakhs only) from the Respondent No. 2 on the pretext that he shall resign from the Respondent No. 1 as a director and shall sell all of his shares. Believing in the Petitioner, the Petitioner was paid the said amount of Rs. 32,00,000/- (Rupees Thirty-Two lakhs only) on 20.04.2018, 15.05.2018, and 11.07.2018 from the account of Respondent No. 1.

17. The Respondent No. 2 further submits that as the Petitioner did not fulfil his commitment of resigning from the Respondent No. 1 as a director and also giving up his ownership. The Respondent No. 1 suffered loss at the hands of the Petitioner. The sum of amount of Rs. 7,00,000/- (Rupees Seven lakhs only) which was brought by the Petitioner from his sole proprietary concern has been adjusted against the Rs. 32,00,000/- (Rupees Thirty-Two lakhs only) which was received as mentioned in the earlier paragraphs. Therefore, till date Rs. 25,00,000/- (Rupees Twenty-

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Five lakhs only) stands receivable from the Petitioner.

18. The Respondent No. 1 submits that the person mentioned as Additional Director i.e., Mr. Deb Kumar Banerjee is no more the Additional Director of Respondent No. 1 company. Therefore, the Petitioner's prayers of declaring Mr. Deb Kumar Banerjee's appointment as Additional Director as null and void are redundant.

19. The Respondent also submitted that on 10.07.2023, he was served with a summons along with a copy of the Plaint and Interim Application in relation to a Special Suit No. 1 of 2022 filed by Sanjeev Kumar Medh i.e. the Petitioner herein before Hon'ble Civil Judge Senior Division Court at Oras, Sindhudurg. The Petitioner is seeking identical prayer before Hon'ble Civil Judge Senior Division Court at Oras.

FINDINGS

20. Heard the Ld. Counsel for the Petitioner and the Ld. Counsel for the Respondent and perused the records.

21. In view of the facts & circumstances stated supra and as clarity is required in the inter-se Financial Transaction to arrive at a considered decision, this Bench is of the view, that an Independent Auditor has to be appointed for conducting an Audit of the Financial Transactions of

Respondent No.1 as also to verify the claims of the

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Petitioner and Respondent No.2 regarding their Financial Transactions pertaining to Respondent No.1.

22. This Bench hereby appoint N B Shah & Associates, having registered office at 702, Skyline, Wealth Space, Above KIA Motors, Vidyavihar West, Mumbai-400086 as an Independent Auditor with a fee of Rs.1,50,000/- (Rupees One Lakh Fifty Thousand Only) which is to be equally borne by both the parties i.e the Petitioner & Respondent No. 2 and is directed to submit the report before this Bench within 6 weeks.

Sd/- Sd/-

ANU JAGMOHAN SINGH KISHORE VEMULAPALLI

Member (Technical) Member (Judicial)