Mentor Capital Limited vs Ramsons Vikram Private Limited

Rajeswara Rao Vittanala, J

CP. No. 143/BB/201S is filed by M/s. Mentor Capital Limited and 3 others (hereinafter referred to as 'Petitioners')Under sections 59, 213, 241, 242, 244 and 341 R/w Chapter XVI of Companies Act, 2013, by interalia seeking to direct the rectification of share register of Respondent No. 1 by entering the name of the Petitioner No. 1 in the Register, in place of the Respondent Nos.3, 7, 8 and 9 and 10, to bring an end to the acts of oppression and mismanagement perpetrated by the Respondents, to direct investigation into the affairs of the Respondent No. l;to declare the notice dated 10th July 2019 circulated on 19th July 2019 along with agenda dated 19th July 2019 with connected actions, which are prejudicial to the interests of the Petitioner, granting all consequential reliefs.

Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows:

(1) The Petitioners No. 1 is Public Limited Company, registered under the provisions of the Companies Act, 1956 with Registrar of Companies, Mumbai bearing CIN No. U65900MH1996PLC099704 and its registered office situated at 713, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400021. It is also a Non-Banking Financial Company registered with the Reserve Bank of India. The Petitioners Nos.2to 4 are nominee the Directors of the Respondent No. land they are also Directors of the Petitioner No. 1 Company.

(2) M/s. Ramsons Vikram Private Limited (hereinafter referred to as the 'Respondent No. 1) is incorporated on 10th November 2015 under the name and style of "VS Infra Private Limited" as private Limited Company with the Registrar of Companies, Bengaluru. On 15th April 2019, the name of the Respondent No. 1 was changed to the present name "RamsonsVikram Private Limited" with CIN No. U70101KA2015PTC084043. The registered office of the Respondent No. 1 is situated at 004-1, Ground Floor, Pride Hulkul No. 1 16, Lalbhag Road, Bengaluru -560027. The authorised Capital of the Respondent No. 1 Company is Rs. 10,00,000/- consisting of 1,00,000 equity shares of Rs. 10/- each and paid up capital of Rs. 1,00,000 consisting of 10,000 equity shares of Rs. 10/- each. The Respondents No. 2 & 3 are the Directors of the Respondent No. 1. The Respondent No. 4to 6 are appointed as Additional Directors on 10th October 2018.

(3) Cause of action for filing this instant Petition originates in the year 2016, when the Respondent No. 2 approached the Petitioners to facilitate in the Joint Development of the project developed by them situated at the properties bearing Sy. No. 96,96/1 and 96/2 measuring 14 acres 37 guntas situated at Kodathi Village, VathurHobli, Bengaluru South Taluk( herein after referred to as Schedule Property) by coordinating with the land owners and former developers. Accordingly, the Petitioner No. 1 agreed and entered into Facilitation Agreement dated 06.10.2016 with the Respondent No. l, through Respondent No. 2. In consideration of the services provided by the Petitioner No. l, the Respondent No. 1 agreed to construct and deliver 5% of the total saleable super built-up area together with proportionate undivided share, right, title and interest in the schedule property and proportionate car parking, terrace area, etc in the mixed development use being developed in the schedule property. To secure due delivery of the consideration, the Respondent has agreed to deposit a sum of Rs. 25,00,00,000 (Rupees Twenty Five Crores only) towards interest free refundable security deposit with Petitioner No. 1 in the manner and on the terms more particularly contained in the Facilitation agreement being Rs. 15,00,00,000/- payable upfront and the remaining balance Rs. 10,00,00,000/- on or before 07.07.2017. The R1 Company handed over three chequesduly signed by the R 1 bearing No. 016110, 016111 and 016112 all dated October 7, 2016 drawn on Axis Bank, New Bell Road Branch, Bengaluru for a sum of Rs. 5,00,00,000/-each in favour of the Petitioner.

(4) The Respondent No. 1 through Respondent No. 2, assured Petitioner No. 1 by letter dated 07.10.2016, that in case Respondent No. 1 fails to make payment of Rs. 15,00,00,000/-under the Facilitation Agreement, the entire shareholding of 10,000 equity shares would be transferred to the Petitioner No. 1 at face value of Rs. 10/- each and the entire project would be taken over by the Petitioner No. l. Further, as the R1 Company was not in a position to comply with above term of payment, the Respondent Nos. 1 & 2 has sought extension of time to make the said payment. Further, the erstwhile shareholder Vikram Structures Private Limited (Respondent No. 7) executed a Pledge Agreement dated October 07, 2016 in favour of Petitioner No. 1 in respect of 5,100 shares representing 51% of the R 1 Company and the Respondent No. 1 is also a party to the said Pledge Agreement.

(5) Despite the repeated assurances and promises, Respondent No. 1 was not able to pay the agreed sum to the Petitioner No. 1 till December 2016. Therefore, on the expiry of the specified period of 60 days, the entire shareholding of the R 1 Company was transferred to the Petitioner No. lfor consideration of Rs. 10/- each, details are as follows:

Sr. No.

Transferor

No. of Shares

Cheque No.

Consideration Amount Paid

Date of Transfer

1

Aishwarya G. Byrareddy

1

3288

Rs. 10/-

03.12.2016

2

ManjunathRavindra

2,500

3290

Rs. 25,000/-

03.12.2016

3

Vikram Structures Pvt. Limited

6,499

3287

Rs. 64,990/-

03.12.2016

4

Venketraman

500

3286

Rs. 5,000/-

05.12.2016

5

BalramVenketraman

500

3289

Rs. 5,000/-

05.12.2016

The aforesaid consideration was paid by the Petitioner No. 1 by way of cheques to the erstwhile shareholders and deposited the funds in their respective bank accounts. Subsequently, in January 2017, the R2 instructed the Petitioners to deposit the said cheques of Rs. 5,00,00,000/- (Rupees Five Crores Only) each to clear their dues, but the same were dishonoured and returned to the Petitioners as "Drawer Signature differs". Therefore, the R1 & R2 failed to honour their obligations under the Facilitation Agreement which default continues till date.

(6) it is stated that the R4 to R6 have been appointed as Additional Directors to the R 1 purportedly on 10.10.2018 without issuing notice or agenda to the Petitioner Nos. 2 to 4 without following any procedure as per the due process of law. The original share certificate Nos. 1, 2, 3, 4 and 5 in respect of 10,000 equity shares of the Respondent No. 1 Company alongwith corresponding share transfer forms (Form SH4) duly signed were placed before the R 1 Company's Board and the said transfers were duly recorded at the meeting held on December 19, 2016. In order to not to disturb the operations of the R 1 Company, Petitioner No. 1 did not cause any change in the Board of Directors of the R 1 Company and allowed the same set of Directors to continue as Directors of the R 1 in good faith and the Petitioner No. 1 assumed that the affairs of the Respondent No. 1 would be conducted in accordance with law. However, on enquiry, the Petitioner No. 1 was shocked and disturbed to notice that R2 in collusion with R3 and R4 had committed serious acts of mismanagement including not providing any notice of meetings of the Board and shareholders, maliciously and wrongfully passing various important resolutions at the shareholders' meetings and board meetings including finalization of accounts, appointment of new directors, change of R 1 Company's name, change of its registered office, alternation in Memorandum and Articles of Association, etc. at the purported meetings which had been conducted without the consent and knowledge of the Petitioners. Being aggrieved by the same, Petitioner No. 1 approached the Respondents vide letter dated 15.06.2019 requesting for inspection of the documents maintained by the R1 on 19.06.2019 at 11:00 am. Accordingly, the authorised representative of the Petitioner No. 1 visited the R1's registered office for inspection of the documents, however, the inspection of documents was denied to Petitioner No. 1's authorized representative and R2 assured the Petitioners that all the requisite information and documents will be directly sent to the Petitioners within seven (7) days as the same is not available with the Respondent No. l. Since no documents were received, the Petitioner No. 1 addressed another letter dated 12.07.2019 to the Respondents requesting them to provide inspection of all the documents and records when its representatives visit the office of R 1 Company. However, the R2 wrongfully and mischievously, by letter dated 17.07.2019 falsely contended that the representatives of the Petitioner No. 1 did not visit on scheduled date for taking inspection of the documents, therefore Petitioners are not entitled to any inspection of documents under law.

(7) The Petitioner No. 2 issued a public notice on 19.07.2019, informing the public at large of the deceptive attempts of the R2 in dealing with the subject property and rights attached thereto with third parties without being authorised to do so by Respondent No. l. On 19.07.2019, the R2 by an email circulated the notice of the Board Meeting along with the agenda dated 19.07.2019 to Petitioner No. 1 with respect to a Board Meeting proposed to be held on 27.07.2019. It is observed from the agenda that the proposed Board Meeting was scheduled to pass a resolution for removal of Petitioner Nos. 2, 3 and 4 as Directors of Respondent No. 1. The said email dated 19.07.2019 received by the Petitioner Nos. 1,2 and 3 was a forwarded copy of a letter supposed to be issued on 10.07.2019 by R3 for requisitioning a meeting for removal the Petitioner Nos. 2 to 4 from the Board of Directors of Respondent No. 1 u/s. 100 R/w Section 169 of the Companies Act, 2013 and the said email or notice was not served upon the Petitioner No. 4. Petitioners extremely helpless and without any remedy is clearly oppressive and is intended to be harsh and burdensome. The law requires that when a Director is removed or proposed to be removed, sufficient notice is required to be given to such a Director, since he is required to be heard and the Board of Directors are required to act in a fair manner in order to not dilute the interest/affairs of the R1 Company and in the present case, there was no notice or show cause provided to any of the Petitioners. However, in the instant case, neither R2, nor R3 have acted in the interest of the members/shareholders of the R 1 Company, nor have they conducted the affairs of the R 1 Company in a manner which is beneficial to the Respondent No. l.

(8) The fraudulent change which is attempted to be brought by the Respondent Nos. 2 and 3, is highly prejudicial to the interest of the Petitioners. Though the Petitioner No. 1 owns 100% of the equity shares of the R 1 Company, its name has not been entered into the register of Members, despite the repeated requests. Such an action of the Respondents is illegal with mischievous intent. The affairs of R 1 Company have been mismanaged. The oppressive acts and the acts of mismanagement are so grave that they justify the winding up Respondent No. 1, however, the winding up would be prejudicial to the Petitioners since Respondent No. 1 has potential to make profits if it is managed in the appropriate manner. Thus, the present petition is filed by the Petitioner in order to protect his right as a Shareholder of the Petitioner No. 1 and Director of the Respondent No. 1 and also to prevent continuous act of oppression and mismanagement by the Respondents, which if not prevented, would result in causing serious prejudice to the Petitioners and Respondent No. 1. The Petitioners have made out a prima facie case in their favour and against the Respondents.

(9) Further, the conduct of the R1 Company is mismanaged by the Respondent Nos. 2 and 3, detrimental to the interests of the Petitioners. The Managing Director in charge of the day to day affairs of the R 1 Company are under the fiduciary duty to act for the benefit of the Company. Further to satisfy the requirement of Section 241, it is enough to establish that there was a likelihood of the affairs of the Company being conducted in a manner prejudicial to the interests of the R1 Company.

The Respondents No. 2 & 8, have filed the counter statement of objections dated 17.09.2019 by inter alia contending as follows:

(1) The petition is filed by misrepresentation of facts and using fabricated documents, and is liable to be dismissed in limine.

(2) The Petitioners are not shareholders in the R1 Company and they are not entitled to file this petition. Further, an Application, U/s 244 of the Companies Act, 2013 seeking for dispensation with regard to the requirements of locus standi for filing of the Company petition has not been filed. Therefore, the Petition is liable to be dismissed on this ground alone. Further, the petitioners are claiming themselves to be single Shareholder holding 100% of the Company, which is in violation of basic principle of the Company law and very concept of Private Limited Company. No Company can have less than 2 Shareholders. As such the very claim of the petitioners is untenable and not sustainable. Only an aggrieved person, who is either a Member or who has ceased to be a Member unlawfully, can invoke Section 59 of the Companies Act 2013. Since the Petitioners were not Members, the question of seeking rectification of Register does not arise. As such, no relief can be granted even under section 59 of the companies Act 2013. There are only three Shareholders in R1 Company as on date and the shareholding pattern at the time of incorporation of the Respondent No. 1 Company are furnished below:-

Sl.

Members

Shareholding (Equity Shares)

1

Vikram Structures Private Limited

9,999

2

Aishwarya G Byrareddy

1

TOTAL

10,000

Later, as on 08.02.2016, the shareholding of the R 1 Company as follows:-

Sl.

Members

Shareholding (Equity Shares)

1

Vikram Structures Private Limited

6,499

2

Manjunath Ravindra

2,500

3

Venkatraman Narasimhulu

500

4

Balaram Venketraman

500

5

Aishwarya G Byrareddy

1

TOTAL

10,000

Later, from 06.10.2016, the shareholding of the R 1 Company is as follows: -

Sl.

Members

Shareholding (Equity Shares)

1

Vikram Structures Private Limited

7,499

2

Manjunath Ravindra

2,500

3

Aishwarya G Byrareddy

1

TOTAL

10,000

(3) It is denied that there was any meeting whatsoever was held by the Board on 19.12.2016 as contended by the Petitioner. The Board report evidencing the number of meetings and dates of meeting for the FY 2015-1685 2016-17 clearly shows there was no meeting held on December 19, 2016. As per the alleged Board Resolution dated 19.12.2106 Mr.Sanjay Dangi has been authorized to make the endorsement on the reverse of the share certificates. However, in the share certificate produced by the Petitioner Mr.Vikram, i.e., Respondent No. 2's signature has been forged. This itself clearly shows the manipulation and fabrication on the part of the Petitioners which clearly an illegal and false attempt on part of Petitioners.

(4) In continuation of a Facilitation Agreement dated 06.10.2016 in question, R1 entered into a Joint Development Agreement (JDA) with the owners of the property for developing the property. Since there was a dispute on the Kharab land and there was a claim on the property, the Joint Development Agreement could not be acted upon by the R 1 Company, as it was at a risk of being terminated. Further, the tenure of the Joint Development Agreement has also come to an end. It was the duty of the Petitioner No. 1 to resolve all contentious issues for the purpose of ensuring that the Joint Development Agreement is carried out. The Petitioner No. 1 has failed to perform its part of the contract. Since the Petitioner No. 1 failed to resolve the contentious issues and disputes, the property could not be developed and the JDA is at a threat of termination. Hence, the Petitioner does not get any right under the Facilitation Agreement and on the contrary, the R 1 Company is entitled to claim damages for the loss sustained by it on account of the failure on the part of the Petitioners.

(5) Further the Petitioners have failed to resolve issues like Regularisation of Kharab Land, Settling the dispute raised due to the property owned by land lord, E- Khata, Sanction Plan etc., and above all of these, they are issuing public notices, which are harming the reputation of R1 Company. Petitioner 2, 3 and 4 are not abiding by the duties as mentioned in Section 166 of the Companies Act, 2013 on account of which, there is a compulsion to remove the petitioners from the Directorship of the R 1 Company. The Respondents are following proper and legal process to remove the Directors. Further, Petitioners was acting against the interests of the company, by giving paper publications and making false claims. It is also contended that the Petitioners by clever drafting are trying to convert a civil suit into a company petition. The petitioner does not even hold one share in the company, and not have any locus standi to make this application. Section 244 of the company specifically incorporates a criteria of "not less than 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" as a pre- requirement for filing this application. As such on this ground alone the application is liable to be dismissed.

(6) It is contended that no documents were produced to state that the Petitioner No. 2, 3 and 4 are nominee Directors. Moreover, the appointment letter furnished by the petitioner themselves clearly shows that they were appointed as Additional Directors. Further it is also stated that adequate notice/information was circulated to the Board with regard to appointment of R4-R6 as additional directors of the company.

(7) It is denied that Board of the Respondent No. 2, has given any letter dated 07.10.2016 assuring to transfer the entire shareholding of 10000 equity shares to Petitioner No. 1 for failure to make payment of Rs. 15,00,00,000/- under the Facilitation Agreement. Even otherwise, that the Petitioners herein miserably failed to perform its part of the Contract on account of which the Joint Development Agreement could not be acted upon. Further, the Joint Development Agreement could not be acted upon on account of land disputes and the problems were within the knowledge of the Petitioners and the petitioners did not do anything to resolve the problems. When the basic contract, JDA was at a risk of getting terminated, the question of enforcing or trying to enforce the Facilitation Agreement does not even arise.

(8) It is further stated that behind the back of the Respondent No. 8, thePetitioners have credited Rs. 10/- to her Bank Account. Respondent No. 8 was not even aware of the receipt of Rs. 10/- in her bank account since she did not get any notification through SMS. The SMS message for crediting of amounts get reflected only if the transactions are above Rs. 500/-. The manipulation and crediting of Rs. 10/- came to her notice only after filing of the present petition by the petitioner. No share transfer deeds have been signed, no consent was given to transfer the shares by the R8. The petitioners have pre-planned everything and transferred the face value of the shares to Respondent No. 8's Bank account and very conveniently forged the share certificate and share transfer deeds of Respondent No. 8.

(9) Further, neither the Respondent No. 2 nor the Respondent No. 8 have ever executed any share transfer deeds for transfer of shares. The Petitioners herein are illegally claiming to be a shareholder based on fabricated documents. It is stated that the Petitioners had sought to inspect the records of the Company in their alleged capacity as shareholders and as such the Respondent No. 1 Company was not in a position to oblige. Further, a letter was sent to the Petitioners indicating that it could not grant the request since it was not a Member. The Respondents herein have no other option but to remove the Petitioners No. 2 to 4 from the Company to avoid the bad reputation, which the company would face from continues mischief of the Petitioners No. 2-4. The resolution was passed onl9.08.2019 by the R 1 Company in its Extraordinary General Meeting for the removal of the Petitioners 2 to 4 from the directorship of the Respondent No. l Company.

The Respondent Nos 3 and 7, have filed their Counter statement of objections dated 13.09.2019, by inter alia contending as follows:

(1) The Petitioners are not the shareholders of the R 1 Company and R3 and R7 holds 99.99% shares in R 1 Company. R3 holds 2500 shares and R7 holds 7,499 shares in the Company. They never transferred their shares to the Petitioner. The Pledged Agreement in question proposing to transfer 51% of the shares of the R 1 Company to the Petitioner No. 1 ultra vires and void ab-initio on account that R3 and R7 were surprised and shocked to know from the petition that there was a pledge entered illegal and with authorisation by R2. There is no authorisation granted by R7 & R2 for entering the pledge agreement. Further, the pledge is considered as guarantee and it needs approval of Shareholder of R7 by way of Special Resolution u/s 185 and Section 186 of the Companies Act, 2013. The same was neither proposed to the Board of R7 nor to the Shareholders for this approval. R2 acted without any authority. Hence it is ultra vires and it not valid.

(2) It is stated that R2 was never authorised by anyone to transfer the shares infavour of the Petitioner and the letter by R2 is without any basis or authority. Further the share Transfer Resolution and the Share Certificates submitted by the Petitioners are fabricated, forged and invalid on the following grounds:

1) There was no Board meeting held on 19th December 2016. It is evident from the Annual Return filed for the Financial year 2016-17

2) The fabrication and manipulation can be seen from the documents and analysing the same. The R1 Company incorporated on 10.11.2015 and the subscribers to MoA of the R 1 Company were R7 and R8. However, the share certificate produced by the Petitioner shows 6499 shares is not correct. Further the date of issuance of Share Certificate is left blank and it is without the authentication of Secretary or Authorised Persons. The table showing the detail of the share certificate after subscription of shares is mentioned below:

Sl.

Members

Shareholding (Equity Shares)

1

Vikram Structures Private Limited

9,999

2

Aishwarya G. Byrareddy

1

TOTAL

10,000

It can be seen that the pledge agreement is franked and stamped on 07.10.2016 at Shivajinagar, Sub Registrar and on the very same day even the share certificate has been franked and it clearly shows the fabrication of share certificate. It is to be appreciated that the Share certificate at 117 ought to have been issued within 60 days from the date of incorporation and not on 07.11.2016. Further the Share Certificate is created for the purpose of creation of pledge agreement to the petition.

3) The share certificates produced by the Petitioner are fabricated as R 1 Company was incorporated on 10.11.2015 with R7 & R8 as subscribers to MOA. The table showing the MOA subscription is as below:

Sl.

Members

Shareholding (Equity Shares)

Certificate No.

1

Vikram Structures Private Limited

9,999

1

2

Aishwarya G Byrareddy

1

2

TOTAL

10,000

4) The share certificate No. 1 got spitted into Share Certificate No. 3,4, 5 & 6 on 08.02.2016. R7 transferred certificate No. 4 bearing 2,500 shares to R3 certificate No. 5 bearing 500 shares to R9 and certificate No. 6 bearing 500 shares to R10 as below:

Sl.

Transferor

Transferee

No. of shares

Certificate No.

1

Vikram Structures Private Limited

Manjunath Ravindra

2500

4

2

Vikram Structures Private Limited

Venkatraman Narasimhulu

500

5

3

Vikram Structures Private Limited

Balaram Venketraman

500

6

On 06.10.2016 R9 transferred 500 shares to R7 and R10 transferred 500 shares to R7 as below:

Sl.

Transferor

Transferee

No. of shares

Certificate No.

1

Venkatraman Narasimhulu

Vikram Structures Private Limited

500

5

2

Balaram Venketraman

Vikram Structures Private Limited

500

6

5) Further the resolution submitted by the Petitioners is also fabricated and forged documents as there was no Board meeting on 19.12.2016. The Resolution gives authorisation to Mr. Sanjay Dangi to endorse the share certificate and the certificate submitted by the Petitioners having the signatures of R 2.

6) The amount received by R3 and R7 is for the services provided by him and for the JCB work done for the Petitioner No. 1's property situated in Sarjapur Road, Bangalore. The petitioner only knows the reasons for transfer of amounts to others. Further the Respondents deny the meeting was conducted on December 19, 2016 as evidenced by the MGT 7 and the Board Report of respective Financial Years.

7) Further the notice from ROC for non-filing of Annual Return for the Financial Year 2017-18 has been marked to Petitioners also. The R 1 Company has filed the Annual Returns after receiving the instructions from Petitioner No. 4 and all other petitioners are aware about the filings. The petitioners were misusing their powers as Directors. They have inappropriately and fraudulently used their position as Director and hampered the business of the Company by giving a public notice and informing the public not to deal with the Respondents.The Petitioners have misused the power and authority given to them by the Company in good faith.

(3) Further, as per the provisions of Companies Act 2013, the Petitioners have been served notice of Board Meeting on 19.07.2019 to hold the Board Meeting on 27th July 2019 which is clear 7 days' notice as per the provisions of Companies Act 2013. Further the provisions of sub-rule (2) of Rule 23 of Companies, (Management and Administration) Rules, 2014, reads as follows: "The notice referred to in sub-rule (1) shall be sent by members to the company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting." The 14 days' notice shall be given by the Member to the Company before the date of General Meeting and the Member gave the Notice to the Company on 10th July, 2019 and the Board has decided to convene a Board Meeting to schedule the Extra Ordinary General Meeting. The Notice for convening the General Meeting on 19th August, 2019 was served on 27th July, 2019 and hence, the Company, Board and Member who gave the notice complied with the provisions of the Act.

The Petitioners have also filed their Statement of Rejoinder on 01.06.2020 for the objections of the Respondents No. 2, 3, 7 8s 8 by inter-alia stating as follows:

(1) The First Petitioner is the sole shareholder of the R 1 Company, and has produced adequate documentation in support of this claimthat the First Petitioneris the only shareholder of the R 1 Company. The Petitioners Nos.2 to 4, now ex-Directors of the R 1 Company, are concerned with the opaque and brazenly illegal manner in which the affairs of the Company are being conducted by the Respondents.

(2) The share certificates, along with all the documents, make it abundantly certain that the Petitioner No. 1 is a Member of the R 1 Company.The Respondents have sought to place reliance on the fact that the Register of Members does not include the name of the First Petitioner - in fact, this is one of the acts of oppression that the petitioners are complaining against. Section 3 of the Companies Act, 2013 states that a private limited Company may be formed by two or more persons. In the present case, there is little doubt that the R 1 Company was formed in that manner. Section 3, however, does not deal with a scenario where the number of Members of a Company falls below the prescribed number - two in the case of a private Company, nor does it say that such a situation is impermissible under law. Such a situation is clarified in section 3A of the Companies Act, 2013. In other words, there is no prohibition on a private limited Company, for a certain period of time, having less than two shareholders.

(3) The Respondents have filed separate sets of objections to the present petition wherein they have taken inconsistent and contrary positions with a view to mislead this Hon'ble Tribunal and complicate the issues involved. The Respondents have illegally and arbitrarily removed the Petitioners No. 2 to 4 as Directors of the R 1 Company at an extraordinary general meeting held on 19.08.2019, on the other hand, had filed a collusive suit in O. S. No. 1017 / 2019 before the Hon'ble Principal Civil Judge, Bengaluru Rural, simultaneous with the filing of these present proceedings, to fraudulently secure the cancellation of the JDA and GPA to the detriment of the Petitioners and the First Respondent. The suit was disposed of on the first date of hearing i.e. 16.08.2019 pursuant to a compromise petition, the R 1 Company confirmed the cancellation of its JDA and GPA in relation to itsScheduled Property with effect from January 2018.

(4) While the Rl, R2 and R8 have not disputed the existence of the Pledge Agreement, the Third and Seventh Respondents in their statement of objections stated that the Second Respondent has 'gone behind their back' and executed the Pledge Agreement without authorization. Such a stand of the R3 and R7 is merely an afterthought, and is completely untenable. The Third and Seventh Respondents have stated that the documents produced by the Petitioners have been fabricated and forged, and that the Pledge Agreement has been executed by R2 'behind their back'. Yet, no action has been taken by any of the Respondents against the R2 for the alleged acts of fabrication and forgery of documents. All such documents have been executed/certified to be true by the Second Respondent, and no action has been taken by the other Respondents against the Second Respondent for playing this alleged fraud on them. The Respondents have hastily in less than two months from the date of first request from the Petitioners for seeking inspection of documents, removed the Petitioners 2 to 4 as Directors of the R 1 Company, without providing any statutory information or records, in violation of the provisions of the Companies Act.

(5) As on the date of filing the petition, the Petitioners were in receipt of the impugned letter dated 10.07.2019 issued by the R3 to the R 1 Company, seeking removal of the Petitioners No. 2 to4 from the Board of the R 1 Company and the notice and agenda dated 19.07.2019 in respect of the board meeting scheduled to be held on 27.07.2019 to consider such removal. In response, the Petitioners pointed out the illegalities being committed by virtue of this meeting, and hence requested the Respondents to refrain from holding such illegal board meeting on 27.07.2019. When all such attempts of the Petitioners failed, each of the Petitioners sent letters dated 26.07.2019 to the Respondents by way of separate emails as well as hard copies of the same letters by courier, as a final attempt at making the Respondents understand that the Board meeting ought not to be held on the following day 27.07.2019. Paying no heed to the fact that this Hon'bole Tribunal seized of the present dispute, the Respondents went ahead and conducted the illegal board meeting on 27.07.2019, and resolved thereat to place before the members of the Rl, an agenda for removal of the Second to Fourth Petitioners from the Board of the First Respondent. No minutes of this meeting were circulated, as required under the Act. Therefore, the Second to Fourth Petitioners were unlawfully and maliciously removed as directors of the First Respondent. Such removal, being in complete contravention of section 169 of the Companies Act, 2013, was illegal, and makes it evident that the Respondents have sought to illegally deny the Petitioners their legitimate rights. Therefore, the EGM held on 19.08.2019 ought to also be declared illegal, and the Second to Fourth Petitioners must be reinstated as directors of the First Respondent Company.

(6) The present petition was filed seeking various reliefs, on 26.07.2019. Thereafter, the subsidiary of the First Petitioner i.e. CLN Properties Private Limited was shocked to receive a letter dated 08.10.2019 from the Fourth and Fifth Respondents and their parents, stating that "there was" a joint development agreement dated 07.10.2016 and that the Fourth and Fifth Respondents and their parents, revoked the said JDA as well as the general power of attorney dated 07.10.2016, by way of their letter dated 22.01.2018.

Heard Shri C.K. Nanda Kumar, learned Counsel for the Petitioners. Mr. Vivekananada B.S, Learned Counsel for the Respondents No. 1, 2 & 8 and Mr. Naman.G.Joshi, Learned PCS for the Respondent Nos. 3 & 7through Video Conference. We have carefully perused the pleadings of all the Parties and the extant provisions of the Companies Act, 2013, and the Rules made thereunder and the Law on the issue.

Shri. C.K. Nandakumar, learned Counsel for the Petitioners, after arguing the case, has also filed Written Submissions dated 05.06.2020 by inter alia stating as follows:

(1) Aggrieved by the various acts of oppression and mismanagement being repeatedly committed by the Respondents, on 26.07.2019, the Petitioners filed the present petition under inter alia Sections 241, 242 and 59 of the Act seeking various reliefs. On the same day, in response to the notice and agenda dated 19.07.2019 convening the board meeting on 27.07.2019 received by the First and Second Petitioners, all the Petitioners issued a response by way of letters dated 26.07.2019 to the Respondents by way of separate emails dated 26.07.2019 as well as hard copies of the same letters by courier. The Petitioners informed the Respondents that the present petition has been filed by seeking direction to call upon the Respondents to refrain from precipitating matters by conducting the illegal board meeting on 27.07.2019. However, the Respondents never replied to any of these letters of the Petitioners.

(2) The Hon'ble Court passed an order on 09.12.2019 in O.S. No. 1643 of 2019, by way of an ad interim order of temporary injunction restraining the Respondents from, inter alia, encumbering or alienating the Schedule Property and the said order continues to be in force, and has been extended from time to time. It is this interim order alone that is preventing the Respondents from illegally selling the Schedule Property, thereby protecting the interests of the First Respondent Company, the First Petitioner and its subsidiary.

(3) The documents produced by the Respondents with respect to their shareholding are fabricated for the purposes of defending these proceedings. They state that the Third and Seventh Respondents hold 99.99% shares in the R 1 Company which are denied as false. In fact, the fabrication of the register of Members of the R 1 Company is clearly evident from the fact that the folio of the Seventh Respondent mentions the number of shares held by the Seventh Respondent as 6,499, in contrast to the number 7,499. This discrepancy is a result of the Respondents' incomplete manipulation of the records of the First Respondent. Section 59 is wide in its amplitude and does not restrict the right of a person to make an application only if he is a member. Any person, aggrieved by a delay in his name being entered into the register of members, may approach this Hon'ble Tribunal. Therefore, there can be no challenge to the maintainability of the present petition.

(4) The Petitioners No. 2 to 4, now as Ex-Directors of the R 1 Company, are concerned with the opaque and brazenly illegal manner in which the affairs of the Company are being of business on the part of the Respondents.

(5) The contention of the Respondents that the Petitioners No. 2 to 4 are not abiding the duties mentioned in Section 166 of the Act on account of which there is a compulsion to remove the petitioners from directorship of the R 1 Company is false and vague.

(6) On a perusal of the minutes of the meeting of the Board of directors of Respondent No. 1 held on 27.07.2019, it may be observed that Respondent Nos. 2, 3, 5 and 6 were present at the said meeting. As per Agenda Item No. 7.1, the Company has taken on record the progress report in relation to the Scheduled Property.

(7) Article 42(iii) of the Articles of Association of the First Respondent clearly provides that notices to general meetings have to be issued 'either in writing or through electronic mode'. Since the articles do not define 'electronic mode', reference is drawn to Rule 18 of the Companies (Management and Administration) Rules, 2014, which states that "electronic mode" shall mean any communication sent by a company through its authorized and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the member. Therefore, the articles of the First Respondent do not provide for oral notices at all.

(8) He has relied upon the following judgements in support of his case:

(1) Gulabrai Kalidas Naik and other v. Laxmidar Lallubhai Patel and others in (1977) 47 Comp Cas 151 passed by the Hon'ble High Court of Gujarat

(2) Srikanta Datta Narasimharaia Wodiyar v. Sri Venkateswara Real Estate Enterprises (P) Limited in ILR 1989 KAR 2562 passed by Hon'ble High Court of Karnataka

(3) Mr. N Satyaprasad Rao v. V.L.N Sastry, in (1988) 64 Comp Cas 492 passed by Hon'ble High Court of Andra Pradesh

(4) Banford Investment Limited and others v. Magadh Spun Pipe Limited and other in (1998) 93 Comp Cas 685 (CLB) passed Company Law Board

(5) Yusuf Kagzi and another v. Avigo Trustee Co. Pvt Limited and other in (2016) 194 Comp Cas 258 passed by Hon'ble high Court of Bombay

(6) MAIF Investment India Private Limited v. Ind-Bharat Powerlnfra Limited and other in Company Appeal (AT) No. 334 of 2018 passed by Hon'ble National Company Law Appellate Tribunal

(7) Charanjit Khanna v. M/s. Khanna Paper Mills and others in (2011) 164 Comp Cas 315 passed by Hon'ble High Court of Delhi

(8) Mohmad Bhagwan v. Sathyaprakash Subramanian and other in passed by CLB, Mumbai Bench

(9) Mohamed Ataulla and another v. Central Park Farm and Developers Private limited and other in passed by CLB, Chennai

(10) Rajiv Kumar Singh v. Shree Narayan Developers Private Limited and othrs in (2010) 153 Comp Cas 370 (CLB)

(11) Balraj Malhotra and other v. Srijee Estates and Investment Private Limited in passed by CLB, New Delhi

Shri. Vivekananda. S, learned Counsel for the Respondents No. 1,2 & 8, after arguing the case, has also filed his written submissions dated 03.06.2020 by inter alia contending as follows:

(1) It is alleged that the Petitioner by virtue of fabricated and forged documents tried to camouflage the material facts and misused the provision of law. As per section 241 of the Companies Act, 2013, only a "member" of the company has a right to make an application. But petitioner No. 1 is not a member of the company. Neither the register of members nor any other document evidences or gives ownership/membership to the Petitioner. From the Annual Returns i.e., Form MGT-7 for financial year 2016-17 produced by Respondents, it is clear that no Board meeting whatsoever was held on 19/12/2016. As such its Prima facie indicates that shares were not transferred as is being claimed by the petitioners. When there is no share transfer, there can be no question of petitioner claiming to be member/shareholder of R1 Company. Further, after a gap of more than 2 Va years the petitioners have approached this Hon'ble tribunal acting as if they were not aware of the Annual returns. Further when authenticity of the document is in question, evidence needs to be taken and trial has to be conducted, which is not permissible before the Tribunal. Further, it would fall squarely within the realm of civil court since it involves the question of forgery, fraud, and other connected aspects.

(2) As per section 3 (1) (b) of the Companies Act, 2013, the minimum Members required in case of private limited company is two. However, petitioner makes illogical claim of being 100% sole shareholder of R 1 Company. This apparent fabrication leaves no room and makes it clear that the Petitioners have tried to camouflage the entire facts and tried to prejudice the mind of the court. The question of seeking rectification of register does not arise at all since alleged Board Meeting Resolution dated 19/12/2016 is in dispute. In terms of section 59 of the Companies Act, 2013, only an aggrieved person, who is either a member or who has ceased to be a member unlawfully, can invoke Section 59 of the companies Act 2013. In the present case since the petitioners are not Members, no relief can be granted even under section 59 of the Companies Act 2013.

(3) The first Petitioner, being Non- Banking Financial Company, is meddling in the operation of R 1 Company. Being a NBFC, the Petitioner has acted ultravires its objectives and entered into facilitation agreement with a real estate Company. The petitioner intentionally has suppressed this fact and has not placed its Memorandum and Articles of Association before this Hon'ble Tribunal. The Petitioner, technically cannot take over any company which does not share similar objectives. Further, if any investment was made by the Petitioner, their Balance sheet ought to have shown the investments made in the Company; however, the Petitioner's Balance sheet doesn't not disclose any alleged holding by the Petitioner No. l. The Petitioner failed to act on facilitation agreement started causing trouble to the R 1 Company by giving defamatory public notice against the Company. Disgruntled by the act of Petitioners, the Respondents were constrained to remove Petitioner No 2, 3 and 4 from the post of Directorship. Nevertheless, the Respondents followed due procedure as laid down under law while removing the Petitioners No. 2, 3 and 4 from the directorship of R 1 Company. He also relied upon the judgement passed by the Hon'ble High Court of Karnataka, Bengaluru in Company Appeal No. 8 of 2016 (2016) 198 CompCas 481(Kar).

Shri. Naman Joshi, learned Counsel for the Respondents No. 3 & 7, has also filed his objections for rejoinder and written submissions by inter alia contending as follows:

1) It is stated that the audited and filed accounts of the Petitioner No. 1 has not recognize allegedly claimed shares as their assets in their balance sheet since 2016-17 till 2018-19, it proves the facts of creation of forged documents.

2) Transfer deed attached to rejoinder are not verified by the Company and to misguide the Hon'ble Bench fabricated documents does not have columns required to be verified by the Company as prescribed under SH4 of Companies Act, 2013. Further the initial objection filed on 16.08.2019 by R3 8B R7, they have denied the transfer of shares and share certificate is fabricated and forged because share certificates are not belonging to those persons, who transferred as per Company records and the alleged transfer was never recorded in the registered.The case laws produced by the Petitioner are not relevant to the instant case.

By perusal of the pleadings of all the Parties involved, the following broad issues arise for consideration:

a) Whether the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company, by virtue of Facilitation Agreement dated 06.10.2016, Pledge Agreement dated 07.10.2016 and Board's Resolution dated 19.12.2016 and other connected proceedings;

b) Whether the removal of the Petitioner Nos.2 to 4 from the Directorship of the Respondent No. 1 Company, is in accordance with law or not;

c) Whether the main Company Petition is maintainable U/s.241 of the Companies Act, 2013 at the instance of Petitioner No. 1.

As stated supra, cause of action arises basing on the Facilitation Agreement dated 06.10.2016, which was duly executed between the Petitioner No. 1 and Respondent No. 1 (as "Developer") represented by its MD, Mr. Vikram Prabhakar (Respondent No. 2). Relevant terms which reference to instant issue as contained in the said Agreement are Clauses/Paras - 1, 1.1, 2, 2.1, 3, 3.1, 3.2, 3.3, 4, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 6 and 6.1 which are extracted below for ready reference:

"Now therefore this Facilitation Agreement witnesseth as follows:

Services:

1.1 Facilitator has coordinated with the Owners, Former Developer and the Developer herein in settling all the contentious issues between the Owners and the Former Developer and also facilitated the Owners, Former Developer and the Developer herein in agreeing upon the terms and conditions for the joint development of the Schedule Property. Accordingly, the parties hereto have agreed to execute the below mentioned documents in settlement of all the issues pertaining to the development of the Schedule Property:

(a) Supplemental Agreement between the Owners and the former Developer;

(b) Registered Deed of Cancellation of Joint Development Agreement;

(c) Registered Deed of Cancellation of Revenue Sharing Agreement;

(d) Registered Revocation of General Power of Attorney;

(e) Registered Joint Development Agreement.

Consideration:

2.1 In consideration of the services rendered by the Facilitator to the Developer as aforementioned, the Developer shall construct and deliver 5% of the total saleable super built up area in the commercial unit/apartment to be constructed in the Scheduled Property together with proportionate undivided share, right, title and interest in the Schedule Property and proportionate car parking area, terrace area etc., to the Facilitator.

Security Deposit:

3.1 For the due delivery of the consideration agreed under Clause 2.1 hereabove to Facilitator herein, the Developer shall deposit the sum of Rs. 25,00,00,000/ - (Rupees Twenty Five Crore only) towards interest free refundable Security Deposit with the Facilitator in the following manner:

(a) Rs. 15,00,00,000/- (Rupees Fifteen Crores only) paid this day, vide Cheque Nos.016110 to 016112 dated 07.10.2016 drawn on Axis Bank, New BEL Road Branch, favoring the Facilitator, the receipt of which the Facilitator hereby admits and acknowledges; and

(b) Rs. 10,00,00,000/- (Rupees Ten Crores only) shall be paid on the date of execution of release of finance facilities to Developer vide Cheque No. 016113 and 016114 dated 07.07.2017, drawn on Axis Bank, New BEL Road Branch.

3.2 The refundable Security Deposit will be refunded by the Facilitator to the Developer without any interest thereon within fifteen (1') days of receiving written intimation from the Developer that the 5% of the total saleable super built area allotted to the Facilitator is complete in all respects and its readiness to deliver the same to the Facilitator. However, in case the development in the Schedule Property takes place in phases and the Developer hands over the Facilitator's entitlement in portions, the Facilitator shall be liable to refund the Security Deposit in stages, proportionate to the super built up area and the undivided share, right title and interest in the Schedule Property and car parking area, terrace area etc., that is handed over to it by the Developer.

3.3 If the Owners, Former Developers and the Developers herein do not complete transaction contemplated herein and are unable to execute the agreements mentioned in Para 1.1 the Facilitator will refund the Security Deposit received from the Developers within 15 days of receiving a notice from the Developers to that effect.

Definitive Agreements:

4.1 Upon the Developer entering into the Sharing Agreement with the Owners and the Former Developer, the parties hereto shall enter into an Agreement of Sale for sale of 5% of the total saleable super built up area together with proportionate undivided share, right, title and interest in the Schedule Property and proportionate car parking area, terrace area etc. The Facilitator is entitled to sell the 5% of the total saleable super built up area together with proportionate undivided share, right, title and interest in the Schedule property and proportionate car parking area, terrace area etc., allotted to it only after the said Sharing agreement is executed. However, until the execution of the aforementioned Agreement of Sale between the Parties hereto, this Facilitation Agreement shall be treated as an Agreement to sell the 5% of the total saleable super built up area together with proportionate undivided share, right, title and interest in the Schedule Property and proportionate car parking area, terrace area etc.

4.2 If the commercial unit/apartment cannot be fragmented to enable the Facilitator to own and posses exactly 5% of the said saleable area, the Facilitator agrees to receive/pay the monetary consideration for the increase or decrease in the total constructed area to be calculated at the price at which the Developer will market their share.

4.3 The Developers shall endeavor to secure at its cost sanction of License and Plants for achieving about 3.00 FAR as far as possible subject to permissible bye laws and zonal regulations.

4.4 The Facilitator and purchasers of its share of built up are shall also be entitled to use and enjoy the common areas, amenities and facilities to be provided in the development in schedule property by the developers.

4.5 The Developers may also explore the possibility of utilizing the Transferable Development Right (TDR) in the proposed development to secure sanction of higher super built up area. In such event, the Facilitator shall not require to pay the cost of purchase of TDR. In addition, the Developer shall hear the expenses of putting up construction regarding additional TDR with respect to Facilitator share also.

4.6 The entire cost of construction of the building/s to be built in the Schedule Property shall be borne solely by the Developer. The Facilitator shall not be required to pay any amount for the development and construction in the Schedule Property for its 5% shares.

Specific Performance:

6.1 If the Developer fails to perform its part of the contract in spite of the Facilitator complying with and performing the terms of this Agreement, the Facilitator shall be entitled to enforce Specific performance.

In pursuant to the above Agreements, the Petitioner No. 1 and Respondent Nos. 1 and 7, represented by Mr. Vikram Prabhakar, as Managing Director, has executed Pledge Agreement dated 07.10.2016, which inter alia states as follows:

"In order to secure payment of the aforementioned Facilitation Fee, the Company has agreed to pay to the Pledge a refundable deposit of Rs. 25,00,00,000 (Rupees Twenty Five Crores) out of which Rs. 15,00,00,000 (Rupees Fifteen Crores) ("Deposit Amount") was due and payable on this date.

The Company, not being in a position to pay the Deposit Amount on this date has requested the Pledgor and the Pledgor has agreed to enter into this Agreement and pledge 5,100 shares owned by it in the Company constitution 51% of its total issued and paid up share capital, and undertake certain other security obligations to ensure payment of the Deposit Amount.

In light of the above, the Parties have agreed to enter into this Pledge Agreement to secure the payment of the Deposit Amount and to record certain other allied matters.

Now therefore this Agreement witnessed as follows: I. Pledge:

In consideration of the Pledgee having granted extension for payment of the Deposit Amount to the Company, on or before thirty (30) days from the execution of this Agreement, the Pledger herein hereby agrees to pledge in favor of the Pledges, the "Pledged Shares" (more fully described in the Schedule hereto)

The Pledgor confirms having handed over to the Pledges, the following documents for the purpose of enabling the Pledgor to transfer in favor of the Pledgee, the Pledged Shares until payment of the Deposit Amount on or before thirty (30) days from the execution of this Agreement;

(i) Share transfer forms, duly executed by the Pledgor for the Pledged Shares;

(ii) Original Share Certificates of the Pledged Shares.

Additionally, the Company shall also deliver three postdated cheques for the Deposit Amount as security until payment of the Deposit Amount.

IV. Positive Covenants:

i. The Pledgor and the Company shall do all necessary acts, deeds, matters and things, including but not limited to passing of necessary resolutions, amendments of the Articles of Association and doing all other further acts to give effect to the transfer of the said Pledged Shares in favor of the Pledgee on an events of default taking place. All such further acts, deeds, matters and things shall be done by the Pledgor and the Company immediately on being so called upon by the Pledgee.

ii. The Company will mark a pledge in respect of the said Pledged Shares in the name of the Pledgee, in the Register of Shareholders maintained by the Company.

In the event of default, the Pledgor and the Company agrees, declares and confirms that it will do all acts, deeds, matters and things to give effect to the transfer of the Pledged Shares to the Pledgee.

In the event of part payment of the Deposit Amount the Pledgee agrees declares and confirms that it will do all acts, deeds, matters and things to give effect to the return of proportionate Pledged Shares to the Pledgor.

VII. Appointment of Directors:

In order to further secure the payment of the Deposit Amount, the Pledgee shall be entitled to nominate three (3) of its nominees to be appointed as additional Directors in the Company. Thereafter the Company shall do all such acts deeds and things required, including filing of necessary forms with the Registrar of Companies to facilitate the appointment of such Directors into the Company.

On payment of the Deposit Amount, all three (3) of the Pledgee's nominees shall resign from the directorship of the Company.

(PLEDGOR)

For Vikratn Structures Private Limited

(PLEDGEE)

For Mentor Capital Limited

(Company)

For vs. Infra Private Limited

The Total shares of the Respondent No. 7 are 5100 Equity Shares at face value of Rs. 10/- held by the Pledgor in the Company constituting 51% of its Issued & Subscribed Share Capital."

In pursuant to the above two (2) Agreements, the Board of Directors of the Respondent No. 1 Company at their meeting held on 19.10.2016, has passed unanimous Resolution, which reads as below:

"CERTIFY TRUE COPY OF THE RESOLUTION PASSSED AT THE MEETING OF THE BOARD OF DIRECTORS OF V S INFRA PRIVATE LIMITED HELD AT 11.00 A.M. ON MONDAY 19 DECEMBER, 2016 AT THE REGISTERD OFFICE OF THE COMPANY SITUATED AT FIRST FLOOR, No. 22, 5 MAIN ROAD NEAR BAPTIST HOSPITAL, BANGALORE - 560024, INDIA.

The Chairman informed the Board that Company has received share transfer request, accompanied with share transfer deed duly filled in, signed and stamped along with other related documents, for approval of the transfer of shares of the Company. The matter was discussed and following resolution was passed unanimously:

"RESOLVED THAT the consent of the Board of Directors of the Company be and is hereby accorded for the transfer of equity shares as per the details given below:

S. No

Date of Registration of Transfer

No. of Equity Shares

Names of the Transferor

Ledger Folio No. Transferor

Name of the Transferee

Ledger Folio No. Transferee

1

19.12.2016

1

Aishwarya G By Rareddy

2

Mentor Capital Limited

6

2

19.12.2016

2500

Manjunath Ravindra

3

Mentor Capital Limited

6

3

19.12.2016

500

Venketraman

4

Mentor Capital Limited

6

4

19.12.2016

500

Balram Venketraman

5

Mentor Capital Limited

6

5

19.12.201 6

6499

Vikram Structures Pvt. Ltd.

1

Mentor Capital Limited

6

"RESOLVED FURTHER THAT Mr. Sanjay Dangi, Director of the Company be and is hereby authorized to make necessary endorsement on the reverse of the Share Certificate and to make entries in the register of share transfer and to do all other necessary act in this regard to give effect to the above resolution."

For and on behalf of vs. Infra Private Limited

Vikram Prabhakar Deepu Vijaya Nath Sanjay Dangi Amit Dangi Managing Director Director Director Director DIN-02086814 DIN-06679734 DIN-00012833 DIN-06527044"

In the light of the above Agreements, Mr. Vikram Prabhakar, Managing Director of the Respondent No. 1 Company, has addressed a letter to Mr. Sanjay Dangi (Petitioner No. 2 and Director of the Petitioner No. 1 Company), by inter alia stating as follows:

"07th October, 2016

To,

Mr. Sanjay Dangi

Mentor Capital Limited

713, Raheja Center,

Nariman Point,

Mumbai - 400021.

Subject: Transferring of Equity Stake.

This is with reference to facilitation agreement and Joint Development Agreement dated 7th October, 2016 executed between us regarding Development of Property situated at bearing Survey Nos.96, 96/1, and 96/2, measuring 11 acres 37 guntas, situated at Kodathi Village, VarthurHobli, Bengaluru.

Since you have facilitated this transaction we are suppose to make you a payment of Rs. 15,000,0000/- (Rupees Fifteen Crores only).

This amount we will make you the payment within 30 days. Further in case of default we will transfer the entire holding (100,000 shares) of vs. Infra Private Limited at face value i.e. Rs. 10 per shares to Mentor Capital Limited and Mentor Capital can take over this projects.

Further we assured you that we will make the payment at the earliest.

Regards,

For and on behalf of vs. Infra Private Limited

VikramPrabhakar

Managing Director

DIN-02086814."

All the Agreements i.e., Facilitation Agreement and Pledge Agreement dated 06.10.2016 and letter 07.10.2016, have been duly executed by the authorized signatory of the Respondent Nos. 1 & 7, namely Mr. Vikram Prabhakar (Respondent No. 2). However, the Respondent No. 2 contemptuously denying everything including his signature by alleging fraud, forgery, misrepresentation for the first time in his Reply, without raising those issues before filing the instant Company Petition. It is for the Respondents to take appropriate civil/criminal action if the Petitioners are resorting to such type of frauds. Instead of doing so, they are making baseless allegations in the instant Petition.

The above facts and circumstances of the case shows even though the Petitioner has rendered substantial services to the Respondents and got executed Facilitation Agreement in its favour, the Petitioner could not get any benefit out of the transaction and on the top of it, the Respondents wanted to remove even nominee Directors of Petitioner No. 1 on un-tenable grounds, as detailed supra, in order to deprive them as not to involve in the affairs of the Respondent No. 1 Company. They have succeeded in their attempt to remove them while the Company Petition is pending.

The main contentions/allegations raised on behalf of the Respondents, such fraud, forgery, manipulation of records etc., are not at all tenable and not substantiated by the Respondents. It is relevant to point out here, the affairs of R 1 Company is under the control of other Respondents but not under the control of Petitioners, and even the nominee Directors of Petitioner No. 1 were thrown illegally, moreover by examining the signature of Mr. Vikram Prabhakar(MD/Respondent No. 2), appearing on various documents including Facilitation Agreement, Pledge Agreement, with naked eye, there is no doubt in our mind that those signatures are not all forged and those documents binds on the Respondents.

So far as procedure for Transfer of Share are concerned, Articles 20, 21 & 22 of Articles of Association of the R 1 Company deals with the Transfer of Shares, which reads as under:

"Transfer of Shares

20 (i)The instrument of transfer of any share in the Company shall be executed by or on behalf of both the transferor and transferee.

(ii) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof.

TheBoard may, subject to the right of appeal conferred by section 58 declines to register-

(a) the transfer of a share, not being a fully paid share, to a person of whom they do not approve; or

(b) any transfer of shares on which the Company has a lien.

The Board may decline to recognize any instrument of transfer unless-

(a) the instrument of transfer is in the form as prescribed in rules made under sub-section (1) of Section 56;

(b) the instruments of transfer is accompanies by the certificates of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transfer to make the transfer; and

(c) the instrument of transfer is in respect of only one class of shares."

In terms of said Facilitation and Pledge Agreements and as per said Articles of Association, all conditions required to be fulfilled for transfer of shares stand fulfilled, at least in respect of 51 % of shares held by Respondent No. 7 at the time of Pledge Agreement and the second Respondent cannot deny it and the Respondent No. 1 Company is bound to register the name of Petitioner No. 1 in the Register of Members of R 1 Company. Even subsequent consideration for transfer of shares was paid by the First Petitioner to the Respondent. The contention of the Respondent Nos.2 and 7 that the amount paid by the Petitioner No. 1 towards consideration of the share price value of the Transfer of Shares is not towards consideration for transfer of shares is not at all tenable and same is liable to be rejected. It is bounden duty of the Respondent No. 1 Company to register the names of the Petitioner No. 1 in the Register of Members. Moreover, it is not the case of the Petitioner that the Transfer of Shares in question was rejected by the Company, so as to give cause of action to the Petitioner to file any Petition/Application, U/s.58 or 59 of the Companies Act, 2013. Therefore, the Petitioner No. 1 deemed to be shareholder, holding 51% of Shares of Respondent No. 1 Company. Therefore, the Petitioner No. 1 can maintain the main Company Petition filed U/s.241 of the Companies Act, 2013. Similarly, by virtue of Facilitation Agreement, Petitioner Nos.2 to 4 are entitled to be continued as nominee Directors and they cannot be removed without participation of Petitioner No. 1 in the concerned meetings. Therefore, removal of the Petitioners No. 2 to 4 from the Directorship of Respondent No. 1 Company is illegally, contrary to law, and against the principle of nature justice.

So far as claim for transfer of all shares of Respondent No. 1 to the first Petitioner is concerned, as stated supra, there are lapses on the part of first Petitioner to take appropriate action at appropriate time. So that the Respondents able to take several actions including transfer of shares to other Persons. In respect of remaining shares, there is no pledge Agreement by other shareholders unlike Respondent No. 7. Therefore, the first Petitioner has not satisfied the Tribunal for transfer of entire shareholding of R 1 Company by producing the relevant documents for Transfer of Shares, in terms of the Article 20, 21 & 22 and the extant provisions of the Companies Act, as stated supra. So far as allegation of the Respondents that the first Petitioner failed to carry out its obligations under the Facilitation Agreement is concerned, it is for the Respondents to take appropriate legal course of action.

For the above said reason and circumstances of the case, we are of the considered opinion that the instant Company Petition is maintainable U/s.241 of the Companies Act, 2013, and the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7, and the Petitioner Nos.2 to 4 cannot removed from the position of Directors of R 1 Company, without consent of majority shareholders and it is contrary to law and against the principle of natural justice.

In the result, C.P.Nol43/BB/2019 is hereby disposed of with the following directions:

(1) We hereby declared that the Petitioner No. 1 deemed to be shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7; and consequentially, the Respondent No. 1 Company is directed to register the name of the first Petitioner in the Register of Members of the Respondent No. 1 Company, within a period of three weeks from the date of receipt of the copy of this order.

(2) We hereby set aside the removal of the Petitioner Nos.2 to 4 from the Directorship of the Respondent No. 1 Company.

(3) Other reliefs, which are sought by the Petitioners are hereby rejected, as devoid of merits.

(4) No order as to costs.