At, Company Law Board Principal Bench New Delhi
By, THE HONOURABLE CHIEF JUSTICE MR. (RETD) M.M. KUMAR
By, PRESIDENT & THE HONOURABLE MR. VARADHARAJAN
By, MEMBER (JUDICIAL)
For the Petitioner: Kundan Kumar Mishra, Advocate. For the Respondents: P.K. Mittal, Advocate.
R. Varadharajan, Member (Judicial)
1. The petitioner above named claiming to hold 46% of the equity share capital of the 1st respondent company has filed the above petition under the provisions of Section 397 and Section 398 and other attendant provisions of the Companies Act, 1956 (hereinafter for brevity ‘1956 Act’). The Petitioner has alleged oppression of his shareholding rights and mismanagement in relation to the affairs of the 1st respondent company, by the other respondents, who are stated to be presently in the management of the 1st respondent company or had been in the past, all being part of the Board. The petitioner further alleges that he was appointed as a director as well as the Managing Director of the 1st respondent company as evidenced from Form 32 filed as Annexure P5 & Annexure P6 to the petition and that his shareholding of 46% is evidenced from Form 2 filed by the 1st respondent company dated 30.03.2010 and in view of the above it is claimed by the petitioner that he is competent to file the petition. The thrust of the allegations against the respondents is that:
a) Trying to dispute his shareholding strength of 46% by deliberately manipulating and filing a prior Form 2 dated 15.03.2010 with the Registrar of Companies;
b) Removal of the petitioner from directorship under Section 284 of the 1956 Act;
c) Illegal Allotment of shares to the extent of 96% of the shareholding of the 1st respondent company thereby effectively excluding the petitioner from holding capital in the 1st respondent company despite advance money being paid towards share capital;
d) Filing of conflicting forms dated 15.03.2010 by the respondents as against those filed by the petitioner in relation to allotment of capital in Form 2 dated 30.03.2010 and having the said Form 2 as filed by the respondents being registered but however, having those filed by petitioner kept pending and being categorized as “management dispute”;
e) Sale of immovable properties standing in the name of the 1st respondent company to close associates of respondent no.2, at grossly undervalued consideration thereby causing loss and in breach of fiduciary duty.
2. According to the petitioner, the genesis for the entire manipulation as alleged above in relation to the 1st respondent company arose when the petitioner divulged plans about the proposed acquisition of real estate in Goa with the help of one Mr. Narayan Laddu Mandrekar, his friend to four of his other friends, including the 4th respondent herein, who also wanted to participate in the investment and which investment was made in one M/s Hotel Jackpot inn, in which the petitioner has a 45% stake and 22.5% of the stake was picked up by his four friends, and it is averred that save the petitioner the investment subsequently was sold by others to certain persons from Delhi.
3. The petitioner further avers that with the assistance of the said Mr. Narayan Mandrekar, he was able to identify four other properties at different locations in Goa namely, at Assagao, Chapora Village, Siolim and Pernem Highway project properties. In the meanwhile the 4th respondent introduced the 2nd respondent and backed him heavily and induced the petitioner into joint venture with 1st respondent. He also made promise to the effect that the petitioner will have a 50% holding in the 1st respondent company and that he would be inducted in the Board of the 1st respondent company and to this effect consent was also obtained on 05.08.2007 from the petitioner. The petitioner was also made to believe that the other directors of the 1st respondent company had already resigned and the 2nd respondent and the petitioner will be the only directors and no other person would be inducted into the Board without the consent of the petitioner. However, it is alleged by the Petitioner that none of the above promises were adhered to, despite a Memorandum of Understanding having been entered into assuring 50% stake in the 1st respondent company to the petitioner.
4. Based on the promise of equal participation in the shareholding as well as the management of the 1st respondent company, it is averred by the petitioner that immovable properties in the four locations as above mentioned were purchased by the petitioner and 2nd and 4th respondent jointly in different combinations i.e. in the name of legal entities including the 1st respondent company, their family members and in their own names. While in relation to Assagao and Chapora Village property, the contribution of the petitioner and his family member
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were to the extent of 50%. in relation to Siolim and Pernem Highway project, the petitioner and his family members’ contribution, it is asserted was to the extent of 40% with 20% of the stake being given to Mr Narayan Mandrekar and the rest of the 40% being contributed by the 2nd and 4th respondents, either jointly or severally. The petitioner avers that his contribution of the amounts was brought on several dates, both through bank and by way of cash.5. Based on consensus, the petitioner avers that the original documents in relation to the above four properties were allowed to be retained by the petitioner in view of his 50% contribution for the purchase of the properties and as well as shareholding. Further, papers relating to incorporation of three legal entities including the 1st respondent company and the Memorandum of Understanding establishing his right in relation to the legal entities were also allowed to be retained with the petitioner. After the acquisition of the above properties and with a view to commercially exploit, a corporate entity by the name of M/s. Jackpot Superstructures Private Limited was incorporated for the purpose of marketing and business development in which the Petitioner became the Managing Director, his son along with the respondent 2 and 4 were named as directors with specific responsibilities including that of administration and construction of flats in various categories. Based on active promotions and marketing for the project named as ‘Colonia De Goa’, several bookings were made along with advances. Seeing the huge response and the good will earned due to promotions, the 2nd and 4th respondent conspired against the petitioner to have him thrown out of the companies and the projects to usurp his shareholdings and acquisitions. In perpetuation of their conspiracy effectively stonewalled the petitioner access to books of accounts and to the statutory records of the 1st respondent company and other entities, and even when specifically sought for by the petitioner, the respondents used to avoid giving details on one pretext or the other including in relation to the appointment of 4th respondent at the behest of 2nd respondent and his resignation in the year 2011. In between, it is alleged by the petitioner that the 2nd and 4th Respondents had in connivance with each other perpetrated all the misdeeds.6. Contrary to the understanding of their contribution vis-à-vis the petitioner in the ratio of 50%:25%:25%, the 2nd and 4th respondents took money from the petitioner to the extent of Rs.30 Lakhs in relation to Chapora property without fully bringing in their contribution. Even in relation to the said property, it is asserted by the petitioner that they had accounted only for expenditure of Rs.5,16,000/- and Rs.3,47,000/- respectively as incurred by the 4th and 2nd respondent, out of pocket, and that too, after receiving advance amounts towards booking from customers. Seeing the high capital appreciation in land values, the 2nd and 4th respondents it is alleged by the petitioner, deliberately stalled the project, and in the meanwhile without complying with due process of law increased their stake by passing illegal resolutions in the 1st respondent company. Due to lack of any material development in the project, the petitioner had to return the money to the investors and buyers from whom amounts had been collected as booking advance including from well known individuals. In the above circumstances it is claimed by the petitioner that the said projects came to a halt.7. In the circumstances with a view to restart the project, a developer was identified, who was willing to plough in money into the project, and the petitioner had travelled to Goa in the first week of March 2010. With a view to finalize the deal on 16.03.2010, the petitioner had to meet the developer along with the original documents, Even-though their presence was not required, the 2nd and 4th respondents travelled to Goa on 15.03.2010 and accompanied by them as well as the original documents in relation to the properties and the companies had gone to meet the representative of the developer, as the intended developer wanted to obtain legal opinion in relation to documents after seeing the originals. The said documents were also duly handed over to the representative of the intended developer. However, the deal got frustrated because of the attitude of the 2nd and 4th respondents and in the circumstances, all were forced to return to Delhi along with the original papers on 16.03.2010. It is the specific allegation of the petitioner that under the circumstances as stated in the petition, on their return journey to Delhi from Goa on 16.03.2010, he was deliberately deprived at the Goa airport of the original documents concerning properties and companies including the Memorandum of Understanding, and despite attempts made by the petitioner with the 2nd and 4th respondents to have it returned, it did not yield any results, but on the other hand was threatened with his life. In the circumstances, the petitioner rushed to Goa airport and lodged complaints with both airport and law enforcement authorities there on 20th and 21st March 2010 including request for production of video recordings at the check in counter. However, fearing investigation and their deeds becoming exposed, the 2nd and 4th respondents through law enforcement authorities convinced that the matter between friends should be settled amicably and the complaint not to be pursued.8. However, it transpired according to the petitioner that the respondents had in the meanwhile using the stolen papers and records manipulated the shareholding of the legal entities, including that of the 1st respondent company to their favour as given in paragraph 1 herein above, all to the detriment of the petitioner and without his consent or knowledge. Thus, the allotment of shares in favour of 2nd respondent of 240,000 equity shares, constituting 96% of the share capital, in the 1st respondent company on 15.03.2010 is challenged by the petitioner, inter-alia, on the ground that no board meeting could have taken place on the said date, as both the petitioner and 2nd respondent were at Goa and 3rd respondent was at Delhi and hence the resolution could not have been passed by R2 and R3 and the share certificates signed by them on the said date in view of both being separated by considerable distance from each other and therefore, the document annexed as Annexure P-10 to the petition is illegal. The annexure to Form-2 dated 15.03.2010, it is contended by the petitioner is forged, and he denies having signed it. The resignation of Mr. Narayan Mandrekar as Director on 02.04.2010 it is claimed by the Petitioner was obtained due to threat and coercion on the part of the 2nd respondent and he was forced to resign. Further the actions of the respondents who had also sought further shares to be allotted illegally, in addition to 2,40,000 shares, is also challenged.9. The petitioner avers that subsequent to all of the above, under the mediation of a well-known builder in Delhi, an amicable settlement on 20th and 21st June 2010 as between the parties took place, where in it was agreed between the parties that all original documents taken would be returned to the Petitioner, Rs.60 lakhs would be paid by 2nd respondent along with interest of 24% p.a. and that in the respondent no.1 company from there onwards the shareholding would be 53% to 2nd respondent and 47% to the petitioner.10. However, after the above compromise, the petitioner contends that the attitude of the 2nd respondent became very oppressive, with the petitioner being removed from the Board of the 1st respondent company under Section 284 of the Companies Act, 1956 on 26.07.2010 without adherence to clue process of law. Efforts to retrieve his shareholding by the petitioner also proved futile and it came to the knowledge of the petitioner that the properties belonging to the 1st respondent company at Goa had also been palmed off by the 2nd respondent in collusion with the other respondents by incorporating another company. That the petitioner came to know about the alleged corporate fraud and found out that no formal board or general meetings were held nor any share certificates issued nor any statutory compliances were adhered too by the respondents, in relation to the 1st respondent company and that Respondent No.2 had co-opted. Respondent No.3 only for his self-serving interest, that too without any investment being made by him, and for the purpose only to manipulate resolutions and record it and also with a view to incorporate shell companies thereby to escape liabilities. It is also averred that the bank accounts of the 1st respondent company has been completely wiped out and no accounts or audit have been done for all these years and that when the petitioner tried to establish his rights, he was direly threatened with his life, as well as that of his family consisting of his wife and son, and ultimately unable to bear the injustice the petitioner was forced to lodge a criminal complaint with the state police agency at Goa bearing FIR No.155 of 2011 and also to approach the Company Law Board (Presently NCLT) by way of the above Petition.11. Primarily based on the above facts, the petitioner has sought for the following reliefs:1) To set aside and quash the Resolution shown to have been passed in the meeting of the Board of the Directors alleged to have been held on 15.03.2010 allotting 2,40,000 Equity Shares of Rs.10/- each in favour of the Respondent No.2 under the control of Respondent No.2 and accordingly for rectification of Register of Members.2) That the resolution alleged to have been passed in the alleged Extra Ordinary General meeting held on 26.07.2010 thereby removing the Petitioner from the post of Director in the Respondent No.1 Company be set aside and quashed and thereby admitting and appointing the Petitioner as a Director on the Board of the Petitioner No.1 Company.3) That purported resolutions claimed to have been passed in the purported meetings of the Board of Directors held on 04.6.2010 in relation to subsequent allotment of shares to the Respondent No.2 and Kanica Metals Pvt. Ltd. be set aside and quashed and accordingly order for rectification of the Register of Directors.4) That the purported resolution claimed to have been passed in the purported meetings of the board of Directors held on some date not known to the petitioner by which the respondent no.2 was authorized to represent the respondent no.1 to execute the Sale Deed dated 07.7.2011 registered in the office of Sub-Registrar of Pernem under No.450, Book-1, Vil. No.405, dated 08.7.2011, and the sale deed dated 07.7.2011, registered in the office Sub-Registrar of Pernem Under No.440 of Book-1, Vol. No.405, dated 08.7.2011 both, executed by Mr. Raj Kumar Mittal may be set aside and quashed and accordingly, order for the rectification of the Register of Company may be made.5) Restrain permanently the Respondent No.1 Company from changing, altering, modifying the capital and Board structure of the Respondent No.1 Company without the consent in writing of the Petitioner.6) Allow the Petitioner to inspect the accounts of the Company on a regular basis.7) Direct the Respondents to give notice of all meetings of Board of Directors and General Meetings to the Petitioner by registered post.8) Part with the amount of consideration including cash proportionately to the extent of investment made by the Petitioner with family members at a market value of the land area sold authorized.9) to appoint a Committee of Managers for the purpose of running the day to day affairs of the Respondent No.1 Company.10. to order for investigation into the affairs of the Respondent No.1 Company by a firm of independent Chartered Accountants in order to find out the extent of financial embezzlement, siphoning of funds and financial mis-management by the Respondents.11. pass orders or give directions as this Hon’ble Court may deem necessary to relieve the oppressive, harsh and unreasonable conduct of the Respondents on the Petitioner and to relieve the Company from the mismanagement of the Respondents and to stop such acts and conducts of the Respondents which are prejudicial to the interest of the Petitioner in particular and the Company in general.12. In response to the petition, the 1st to 4th respondents have filed a reply jointly wherein the allegations of the petitioner has been denied outright as ‘cook and bull story’. The respondents deny that the petitioner is entitled to any shares of the 1st respondent company, leave alone the 46.5% of the share capital as claimed by petitioner which it is alleged to have been allotted to him. Further the petition is also being seriously assailed on the point of delay and lathes as it is contended that his appointment as a director took place in the year 2007-2008 and hence he cannot maintain the petition on the said count also, in addition to the ground that the petitioner is not a shareholder. The Memorandum of Understandings as claimed by the Petitioner between himself, 2nd respondent and 4th respondent regarding the contribution and holdings in relation to the immovable properties and legal entities and the one alleged to have been entered amongst the three legal entities in relation to business development and marketing are all denied outright. Further the respondents also rely on the affidavit given by the said Mr Narayan Mandrekar annexed as Annexure - XXVI to the reply to deny the allegations of the Petitioner, as false and untrue. However, the respondents in their joint reply admit to the remittance of an amount of Rs.29,50,000/- by the petitioner, but in the same breath, it is contended by the respondents that the same was made available as a ‘Unsecured Loan’ under which head it has been consistently classified in the financial statements for the year ending 31.03.2008 to 31.03.2012 and not otherwise, as contended by the petitioner as subscription towards share capital. In the circumstances the shareholding of the petitioner is vehemently denied. It is the contention of the respondents 1 to 4 that there was no agreement of 50% participation by the petitioner in the it respondent company nor in relation to the immovable properties purchased and those that have been reflected in the sale deeds and registered in the names of the purchasers is the actual transaction. It is also contended that in relation to some of the sale deeds, the petitioner himself had acted as a witness which in effect vouch safe for the transaction contained in the sale deed itself and not as otherwise contended by the petitioner in the petition.13. Further the respondents 1 to 4 also contends that entities or persons who are not parties to the proceedings, like M/s. Jackpot Superstructure Private Limited cannot be brought into fray, and the respondents cannot be made to answer averments concerning the same. In whose affairs it is contended by the respondents that they are also not interested, either as a shareholder or in the capacity of a director. In the circumstances all those averments pertaining to these entities should not be considered. It is categorically submitted by the respondents that no amount was received by the 1st respondent company towards advance booking in relation to “Colonia De Goa” and that respondent 2 was never involved in the day to day affairs of M/s. Jackpot Superstructure Private Limited as alleged by the petitioner. In relation to 1st respondent company it is contended by the other respondents that the petitioner being a non-working, non-executive director was not entitled to be in the know of, about day to day affairs of the company, save such information as are required to be provided in the Board Meetings.14. The allegation of forgery of the petitioner’s signature is denied on the ground that the petitioner has not signed any financial statements or statutory records and hence there was no need for his signature in any paper as he was never a working director of the 1st respondent company and in the circumstances fabrication is also ruled out by the respondents as alleged by the petitioner.1.5. In relation to development in the properties of the 1st respondent company, it is the contention of the respondents that no development was contemplated during the relevant point, nor was any advance canvassed for obtained towards bookings and hence there was never a question of repayment to the persons alleged to have made bookings. The understanding with a third-party developer of the properties of 1st respondent company is also denied. Further it is also contended by the respondents that since the petitioner was only an ordinary director, the custody of original documents of the immovable properties belonging to 1st respondent was never handed over to him. It was always kept in the custody of the 2nd respondent being the holder of entire shareholding of 1st respondent company and that the same had been deposited, under the directions of Bombay High Court along with other documents with the Police authorities at Goa which is evidenced by Panchnama issued on 27.03.2012 by the said authorities. It is also the contention of these respondents that the inconsistency in the two complaints filed by the Petitioner one on 20.03.2010 and another on 24.09.2011 completely exposes the lie of the petitioner, as well as his plans to take control of 1st respondent company. The further allegation relating to attempt to retrieve the documents from respondents by the petitioner or his son is denied as false and frivolous. In the same vein the understanding of return of Rs.60 lakhs with 24% interest p.a. and 47% shareholding to the petitioner by the 2nd respondent has also been denied as false.16. On the contrary, these respondents contend that all the resolutions passed suo moto by the petitioner are illegal and cannot be acted upon by the petitioner including the allotment made to himself and to others on 30.03.2010. In relation to allegation pertaining to Rangoli Gardens Resorts Private Limited it is contended that the petitioner is neither a director nor a shareholder and hence the allegations are not relevant and it is also contended that all the transactions in relation to the said company have been done by way of cheque payment. In relation Pernam property of 1st respondent company, it is contended that as against the purchase price of Rs.90 lakhs it was sold for Rs.1.25 crones all backed by proper resolutions passed which are also annexed to the reply as Annexure XLVI and by way of proper documentation. In any case it is contended that the petitioner was not a director in 2011, he having ceased to be a director on 26.07,2010 itself. All the allegations made by the petitioner relating to statutory compliances are denied as false by these respondents.17. In relation to allotment of shares of 240,000 equity shares to 2nd respondent in the respondent company, it is contended that it was made with the full knowledge and. consent of the petitioner and hence the question of forgery does not arise, Further in relation to allotment it is contended that on 15.03.2010 the board meeting took place in the morning and that on the same day, 2nd respondent had left in the afternoon, and hence the two signatures are in order and all formalities had been complied with. The allotment was for a bonafide purpose of expansion into real estate and that the respondent 2 had acted keeping in line with his fiduciary duty and in any case the allotments made in March 2010 could not be challenged after considerable delay and ladies, that too after 3 years in April 2013, when for the first time the above company petition came up for hearing.18. In relation to removal of the petitioner from directorship under Section 284 of the 1956 Act, it is contended by the respondents that all due compliance with law had been followed and that it is in compliance with Article 5 of the Articles of Association of the 1st respondent company. These respondents have also denied that there are outside liabilities payable by the respondent company. The respondents also contends that delay in finalizing accounts for the years 2007 to 2010, had occasioned due to the fault of the petitioner. Being one of the directors of the respondent company, he had always pleaded that he has been engaged in his activities at Goa and in the circumstances there has been delay in finalization. Hence not arising solely due to respondent no.2 and 3. It is thus submitted by respondents 1 to 4 that the petitioner, neither being a director after 2010 or a shareholder throughout, is not entitled to file the petition and make allegations of oppression and mismanagement under Section 397 and 398 of the 1956 Act and in the circumstances not entitled to any equitable relief and the petition must be dismissed outright with exemplary costs.19. The petitioner has filed a lengthy rejoinder. He has denied the counter allegations of the respondents made in the reply and has reiterated that the contributions made to the 1st respondent company was towards share capital. In this connection, he points out the close proximity of time in relation to his remittance, either personally or through associates, and the purchase of different properties by the 1st respondent company. Further it is also pointed that the documents for the purchase of properties at Pernem and Solim had been executed by the petitioner as director of the 1st respondent company which clearly evidences his involvement in the affairs of the company and not as otherwise contended by the other respondents. The petitioner vehemently contends that no board meeting took place and no resolution for allotment of shares in favour of the 2nd respondent could have also taken place in view of the fact that on the said day there could not have been any quorum at Delhi in view of 2nd and 3rd respondent separated by distance of nearly 1700 kilometers. The petitioner also, for the purpose of proving that the statement of respondents is false, seeks to rely on the air tickets by which the petitioner and 2nd respondent travelled to Goa on 15.03.2010. In relation to allotment of shares in favour of the petitioner on 30.03.2010, it is submitted by the petitioner that the meeting indeed took place on 30.03.2010 and also denies that any meeting took place on 01.04.2010 as contended by the respondents. The petitioner further contends that all the records and statutory returns have been concocted by the respondents and that they are only after thoughts in order to get over the compliant preferred by the petitioner with law enforcement authorities. It is also the submission of the petitioner that even his removal has been stage managed with a view to overcome the complaint and as a reaction to it. The petitioner contends that no notice was given of any Board or general meetings including the one on 26.07.2010 allegedly held for his removal and that due process of law including compliance with Section 284 of 1956 Act has not been followed and hence his removal from directorship is not valid. The affidavit of Mr Narayan Mandrekar is denied and on the other hand the petitioner contends that the statement given by the said Narayan Mandrekar before the police at Goa must be relied for ascertaining the facts. The Memorandum of understanding between the three legal entities is stated by the petitioner to have been entered into, but contends that the memorandum of understandings have been stolen by the respondents under the circumstances as already stated. Annexure XLIX of the reply relating to annual returns for 5 years, it is contended by the petitioner are created records and fabricated as an afterthought. The record has been filed belatedly with the statutory authorities, as a counter blast to the complaint filed by the petitioner and are hence not genuine. Finally it is contended that the principles of quasi partnership should be applied and relief granted as prayed for in the petition.20. We have carefully considered the rival pleadings and the submissions made on behalf of the parties by their respective counsels. From the rival contentions placed before us the following crucial preliminary issues arise for consideration:-i) Whether the Petitioner satisfies the requirement of Section 399 of the Companies Act, 1956 in order to maintain the petition under Sections 397 and 398 read with Section 399 of the Companies Act, 1956?ii) If the answer to the above is affirmative whether under the facts and circumstances of the case the principles of partnership can be applied in order to sustain the petition as contended by the petitioner?iii) Whether the petition suffers from any delay and laches as contended by the respondents disentitling the petitioner from maintaining the petition?21. In order to maintain a petition under the provisions of Section 397 as well as Section 398 of the Companies Act, 1956 it is required that the Petitioner satisfies first the requirement of Section 399 of the said Act. For ready reference, the same is extracted below:-SECTION 399. Right to apply under Sections 397 and 398. (1) The following members of a company shall have the right to apply under section. 397 or 398:-(a) In the case of a company having a share capital, not less one-hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares;(b) In the case of a company not having a share capital, not less than one-fifth of the total number of its members.(2) For the purpose of sub-section (1), where any share or shares are held by two or more persons jointly, they shall be counted only as one member.(3) Where any members of a company are entitled to make an application in virtue of sub-section(1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.(4) The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorize any member or members of the company to apply to the Tribunal under section 397 or 398, notwithstanding that the requirements of clause (a) or clause (b), as the case may be, of sub-section (1) are not fulfilled.(5) xxxxxxxxxxx22. A perusal of the above provision shows that in the case of a company having a share capital, one hundred or more members, or not less than one-tenth of the aggregate number of members whichever is less, or a member or members holding 10% or more of the issued share capital shall have the right to apply under the provisions of Section 397 or 398 of the Companies Act, 1956. A plethora of precedents evolved over a considerable period of time establishes that such holding should be held at the time of filing of the petition. The provisions of Section 399 of the Act are held to be mandatory and not merely procedural. Further, where the petition is sought to be filed on behalf of other shareholders as well, who are similarly aggrieved as that of the petitioner then consents of such shareholders are required to be obtained and filed in order to maintain a petition under the provisions of Section 397 and 398 of the Companies Act, 1956. The primary mode of establishing the shareholding in a company limited by shares is by the production of share certificates issued by the company which is considered to be a prima fade evidence. Further a person’s name entered in the Register of Members of the company also can be a pointer to consider such a person as a member of the company. Names figuring in the Annual Returns of the Company or other statutory returns and documents maintained and filed by the Company can also be another pointer in relation to the shareholding of a person. To sum up, as held by the Hon’ble High Court of Karnataka in Sri Mail Textile Mills Pvt. Ltd v. Ashok Kavle, 66 Comp.Cas.654 (Kar) (DB) a shareholder would be competent to make an application under section 397 and 398 of the Act if he is a shareholder of the company by virtue of allotment of shares or otherwise and his name appears in the Register of Members, Statutory Returns and Documents maintained and filed by the company.23. It is required to be seen in. the instant case while the petitioner is asserting his right as a shareholder alleged to have been allotted to him along with his associates to maintain the petition, on the other hand the respondents are vehemently disputing his shareholding rights and thereby his right to maintain the petition under Sections 397 and 398 of the Companies Act, 1956.24. The facts narrated in the earlier paragraphs as culled out from the pleadings of the respective parties as well as perusal of the pleadings and documents clearly shows that the 1st respondent company was incorporated on 18th January 2002 as a private limited company with two subscribers to the Memorandum and Articles Association of the company, they being the 2nd and 3rd respondents respectively subscribing to 5000 equity shares each. Hence it is evident that the petitioner was not involved subscriber to the charter documents of the 1st respondent company at the time of incorporation of the company and in the circumstances, he could have become a member or shareholder of the 1st respondent company only on the basis of allotment of shares subsequent to the incorporation of the 1st respondent company or by way of purchase of shares or other mode like inheritance, gift etc. However, no letter of allotment of shares nor share certificates issued by the 1st respondent company or share transfer forms or any transfer/transmission document in relation to 4,65,000 equity shares which is claimed to be held by him has been produced along with the petition in order to establish that he is in fact having title to the said shares. The piece of evidence on which the petitioner is relying to establish his claim over the 4,65,000 equity shares is based primarily upon Form No.2, namely the return of allotment filed with the Registrar of Companies which is seriously disputed by the respondents as not valid and which has been categorized as “Management Dispute” by the Registrar of Companies, NCT & Haryana, New Delhi. In relation to the said Form No.2 and whether it can be made as a basis by the petitioner for claiming the shares of the 1st respondent company the same is dealt with separately elsewhere in this order particularly in light of the absence of any other document being produced, even though alleged to be in existence, to sustain the claim of the petitioner relating to the ownership of 4,65 000 shares in relation to himself and 2,80,000 shares to his associates in all aggregating to 7,45,000 shares. At the cost of repetition, the onus is on the petitioner to first establish his claim of shareholding in the petitioner company to the satisfaction of this Tribunal, before this Tribunal can venture into the merits of the case as alleged by the petitioner in his petition.25. Going forward in this endeavor it is not in dispute that the petitioner was appointed as an independent non-executive director in the tat respondent company on 18.02.2008 which is borne out by Annexure P5 as filed by the petitioner along with the petition. Thus, it is quite obvious that he has been a part of the Board of Directors of the 1st respondent company ever since the date of his appointment almost from the beginning of 2008. It is the claim of the petitioner that he was promised equal shareholding rights as well as management rights by the respondents by virtue of Memorandum of Understandings entered into between the petitioner and respondents and that in terms of such promise subscription monies were also brought into the 1st respondent company as monies towards subscription of shares. However, the said Memorandum of Understanding, either in original or a copy of it has been produced before us to establish the claim of the petitioner about the promise of equal shareholding and management participation. Specific particulars like date on which the Memorandum of Understanding was entered into and the parties to such a memorandum of understanding as well as the amount of contribution to be brought in by each of the parties is also not specifically pleaded in the petition other than vague statements. Be that as it may, it is the claim of the petitioner that he and his associates had brought in money by way subscription towards shares in tranches based on the requirements of the 1st respondent company in relation to acquisition of the immovable properties as specified. If that were so as a director of the company was it not the responsibility of the petitioner to see that the shares were allotted in proportion to his contribution and in accordance with the provisions of the Act. If it were not so allotted within the time limits as specified in the Act, he was required to bring it to the notice of the authorities of such non-compliance. No such action on the part of petitioner seems to have been taken, either in relation to allotment of shares nor in relation to the issue of share certificates which necessarily brings to focus the contention of the petitioner about the so-called arrangement between himself and the other respondents in relation to equal participation and management, more so in the absence of any records being produced to fortify the said contention made by the petitioner. The petitioner has conveniently taken a plea that he is precluded from producing the Memorandum of Understanding in relation to the agreement between the parties about equal participation in the shareholding due to the fact that they were stolen under the circumstances narrated in the petition. The loss of documents it is contended by the petitioner took place on 16th March 2010 at Goa Airport under the circumstances stated in the petition which prompted the petitioner to approach the law enforcement authorities on 20th March 2010 about the said loss of documents occasioned due to the same being stolen from him.26. However, at Para V of page 21 of the petition it has been stated by the petitioner as follows:‘That in the meanwhile, the efforts of compromise took place at the office of Mr, Bharat Anand (who is a renown builder) and it took two days (on 20-21 Tune, 2010) to settle the entire issue and finally it was decided that Respondent No.2 would pay 60 lass to Petitioner and he would return all original documents to Petitioner and that he would also pay Petitioner interest at the rate of 24% per annum on Rs.60 LACS for the period of one year because the money of Petitioner was invested on behalf of him also to the extent which he should have to repay to Petitioner and that he would get 53% shareholding of the AR Plaza property and that the Petitioner’s thereonward would be 47%. On these points, both were fully agreed with free and full consent and that both of the persons signed the paper of compromise also in the presence of Mr. Shobit, Mr. Bhagat Anand”.27. Curiously even the said document, namely the compromise which is alleged to have been signed between the parties had not been produced before this Tribunal. It is required to be noted that while the former Memorandum of Understandings as alleged to have been entered into between the parties, containing the promise of shareholding as contended by the petitioner and further assuming that the same had been stolen, in the month of March 2010 as alleged, this Tribunal fails to understand as to what prevented the petitioner from filing the Compromise as alleged to have been entered into between the parties in the month of June 2010, well after the alleged incident of March 2010 which document of Compromise or at least a copy of it duly signed by the parties should have been very much available with him. However for reasons best known only to the petitioner the said Compromise made in June 20th -21st of the year 2010 has not been produced. Hence there is a clear lack of material or evidence to support the contentions of the petitioner in relation to promise of participation in the equity as said to have been assured by the respondents in relation to the 1st respondent company. This Tribunal cannot base its conclusions on assumptions and premises founded on mere allegations by the parties in their pleadings, and despite it being a court of equity, the parties are required to produce sufficient evidence in a manner known to law, in order to sustain and prove their claim which seems to be clearly absent in the instant case.28, Thus in the absence of any prima facie evidence to sustain the plea of the petitioner in relation to the shareholding in the 1st respondent company and to corroborate the plea of equal participation and shareholding of the petitioner, the only document which is required to be considered in relation to shareholding is the Form 2 as filed with the Registrar of Companies, NCT of Delhi & Haryana by the petitioner himself and which has been categorized by the said authority as under “Management Dispute”. The consistent refrain of the petitioner in the entire petition has been that as between himself and the second respondent there was an understanding of equal shareholding. However, even assuming that the enhanced authorized capital and the allotment of equity capital on 30.03.2010, suo moto, by the petitioner to himself and to his nominees are taken into consideration the same is clearly in excess of the understanding as it almost comes to 74.5% of the capital of the 1st respondent company and in clear violation of the same demonstrating that the petitioner has not come before this Tribunal with clean hands which is also a pre-requisite for invoking the equitable jurisdiction of this Tribunal. Further it is seen that along with the petitioner, Mr Narayan Ladu Mandrekar, his associate seems to have been also allotted shares to the extent of 1,60,000 equity shares of Rs.10/-each. However, the said Mr Narayan Ladu Mandrekar, claimed by the petitioner initially to be his acquaintance had given an affidavit (Annexure XXVI) dated 28.12.2011 filed by the respondents in their typed set to the effect that the deponent therein never had any interest in the Delhi based company, A.R. Plaza Pvt. Ltd. (the first respondent company) either as a director or a shareholder or in any other capacity.29. In the rejoinder filed by the petitioner and totally contrary to the stand taken by petitioner in the petition, it is stated that Mr Narayan Ladu Mandrekar was introduced to the petitioner by respondent no.2 and goes on to add that his appointment was done at the insistence of respondent no.2 which was authorized by the meeting of Board of Directors on 30.03.2010. The petitioner further goes on to state in the rejoinder that during the course of investigation in relation to the FIR filed against Respondent No.2, said Mr Narayan Ladu Mandrekar had implicated Respondent No.2. Since we are not going into the merits of the case, and the limited question here is whether and as to the extent to which credence can be given to Form 2, being the return of allotment based on which the petitioner claims his shareholding and thereby his competency to file the petition. The affidavit of Mr Narayan Ladu Mandrekar dated 28.12.2011 if taken alone, completely demolishes the stand of the petitioner and if taken as contended by the petitioner along with that of statement made before the police authorities loses its evidentiary value because of approbation and reprobation which also does not help the cause of the petitioner in relation to allotment of shares. It is also pertinent to note that despite having shares allotted to him along with the petitioner, the said Mr Narayan Ladu Mandrekar has not joined the petitioner nor given consent to the prosecution of this petition nor he has put up any resistance, all of which only reinforces his statement made in the affidavit and seriously assails the veracity of the Return of Allotment based on which the Petitioner is claiming ownership. We do not feel persuaded by such a weak evidence, whose veracity is seriously assailed by the respondents and which evidence is also not supported by the other real person, namely Mr Narayan Ladu Mandrekar who has benefitted from such an allotment in addition to the petitioner and which seem to be self serving.30. For all the above reasons we are constrained to dismiss the petition on the issue of maintainability arising out of Section 399 of the Companies Act, 1956 and since the petition is dismissed on the issue of maintainability we were not required to venture into the merits of the case. We hasten to further add that the order of dismissal based on the preliminary issue of the competency of the petitioner to prefer the instant petition will not in any way fetter his rights to pursue remedies elsewhere as may be available to him including the one he is currently prosecuting before any Court of law and the order of dismissal shall not prejudice him in relation to those proceedings.The petition is hence dismissed but without any costs.