Company Law Board
N. Kuberan And Ors. vs Srivari Mutual Benefit Finance Ltd. And ... on 14 November, 2007
Equivalent citations: [2008]142COMPCAS799(CLB)
ORDER
K.K. Balu, Vice-Chairman
1. he petitioners collectively claiming more than 10% of the paid up capital M/s Srivari Mutual Benefit Finance Limited ("the Company") aggrieved on account of certain acts of oppression and mismanagement in the affairs' of the Company have invoked the provisions of Sections 397 & 398 read with Section 402 of the Companies Act, 1956 ("the Act"), seeking the following reliefs:
(a) to declare that the proceedings in C.A. No. 16 of 2003 on the file of this Bench are not valid and illegal and recall the order dated 03.07.2003 made in C.A. No. 16 of 2003;
(b) to declare that the respondents 2 to 5 are not validly appointed as directors in any general meeting of the Company purportedly held pursuant to the order dated 03.07.2003 made in C.A. No. 16 of 2003;
(c) to declare that the alleged resolutions of the board of directors dated 24.01.2004 are null and void by operation of law;
(d) to direct the sixth respondent to file annual accounts for the year commencing from 31.03.1997 till date; and
(e) to appoint an administrator to regulate the affairs of the Company.
2. Shri T.K. Seshadri, learned Senior Counsel, while initiating his arguments submitted:
• The Company has been incorporated as a public limited company in June 1992, with the main object of encouraging thrift and savings habits and rendering financial assistance to its members by receiving deposits from them as are allowed by law. The sixth respondent, one of the subscribers to the memorandum of association was appointed in September 1994 as the Managing Director for a period of five years who was primarily responsible for the profitable management of the Company. However, the sixth respondent, on account of the financial crisis faced by the Company, as a result of diversion of funds due to his over enthusiasm and adventurous attitude, abruptly stopped discharging the functions of the Managing Director, since the year 1997 and further undertook (i) to complete the books of account of the Company to be presented to the, board on or before 25.09.1997; and (ii) to manage the affairs of the Company in a systematic manner adopting all procedures, directions and guidelines given by the board of directors of the Company, as borne out by his communication dated 07.09.1997 addressed to the Chairman and board of directors of the Company. The communication dated 07.09.1997 of the sixth respondent would reveal the mis-appropriation of funds of the Company by him and is accountable for an aggregate amount of Rs. 96 lakhs which is bound to be reimbursed to the Company, in terms of his above communication.
• In the meanwhile, the sixth respondent apparently caused some inspection to be made by Central Bureau of Investigation on 20.07.1997 leading to the seizure of some of the books of account of the Company from 262, Rangapillai Street, Pondicherry. The sixth respondent as the Managing Director signed the mahazer and cleverly implicated the second petitioner as the accused in the prosecution launched by the CBI. Though the sixth respondent was the main offender, he manoeuvred to be a witness for prosecution in the CBI case. However, the criminal case registered against the second petitioner and several others ended in acquital of all the accused persons. This would show that the books of account are not with the second petitioner.
• The sixth respondent deliberately never completed the books of account of the Company and fulfilled his undertaking in terms of his communication dated 07.09.1997, causing grave prejudice to the investors of the Company. Consequently the petitioners, as directors of the Company were constrained to initiate criminal proceedings against the sixth respondent and others. Accordingly, one Shri B. Kumaranand launched criminal complaint in the name of the Company before the Judicial Magistrate, which came to be registered as CC No. 94 of 1999 on the file of the Court of Magistrate-II, Pondicherry, and summons were issued to all accused persons.
• The Company has filed a civil suit represented by Shri Ramkumar and three others as authorised by the petitioners as directors of the Company, against the sixth respondent and others in OS No. 161 of 1999 on the file of the Court of Principal Sub-ordinate Judge, Pondicherry, for appointment of an administrator and recovery of the amounts diverted by the sixth respondent and others.
• This Bench by an order dated 03.07.2003 made in C.A. No. 16 of 2003 on the application of one Shri G. Iyyanar, made under Section 186 directed the calling of a general meeting of the Company under the Chairmanship of Shri K. Munusamy, Chartered Accountant, to appoint new board of directors for carrying on its affairs. However, no general meeting ever took place in terms of the order dated 03.07.2003 and no new directors were elected. At the same time, Shri G. Iyyanar in collusion with Shri Munusamy C.A. fabricated the minutes as if the meeting had taken place, electing new directors to manage the Company's affairs. Any report containing the purported proceedings is fabricated document without any legal consequences. The respondents 2 to 5 claiming to be newly appointed directors of the Company have suppressed various materials in C.A. No. 16 of 2003 and obtained permission by means of a false affidavit to convene the general meeting of the Company. Shri G. Iyyanar, who filed the application in C.A. No. 16 of 2003 was not even a member on the date of the said application. His name is not found in the register of shareholders of the Company as borne out by a report furnished by a Chartered Company Secretary to the petitioners on inspection of the records carried out at the Registrar of Companies in December 2004 and, therefore, Shri G. Iyyanar had no locus standi to file the company application in C.A. No. 16 of 2003. The report filed by the Registrar of Companies would show that the second respondent is not a member of the Company. Shri G. Iyyanar not only made false statements in C.A. No. 16 of 2003 but also deliberately omitted to implead all the petitioners herein who are admittedly shareholders and also directors at one point of time till they resigned. In view of this, the order dated 03.07.2003 made in C.A. No. 16 of 2003 has to be recalled and an administrator may be appointed for managing the affairs of the Company. The respondents 2 to 5 without complying with the statutory requirements, namely, declaration of consent, deposit of monies, acquisition of qualification shares, etc. had convened the meeting by themselves and, therefore, the resolution passed on 02.08.2003 pursuant to the order dated 03.07.2003 was fraudulently obtained by Shri G. Iyyanar and is therefore, null and void. The court can recall its order as held in Deepa Gourang Murdeshwar Katre v. The Principal, V.A.V. College of Arts and Ors. (2007) 2 L.W. 312, if it is obtained by fraud or mis-representation. The power to recall an order founded upon fraud and mis-representation is an inherent power of the court. The respondents 2 to 5 are not validly appointed directors and they cannot constitute a valid board of the Company. These respondents not domiciled in Pondicherry with little business experience have been chosen by the sixth respondent to act as shadow directors so as to relieve the latter from all the court proceedings initiated by the Company and absolve him of misconduct and misappropriation of funds of the Company. This is evident from the steps taken by the new board to withdraw the private complaint in C.C. No. 94 of 1999 on the ground that the sixth respondent has not committed any violations. This illegal withdrawal is now the subject matter of an appeal before the High Court of Madras. Similarly, the new board has approached the civil court by filing an application to withdraw the suit in O.S. No. 161 of 1999 filed against the sixth respondent and his family members. This is a serious fraud played on the members and creditors of the Company. The applicant or the respondents in C.A. No. 16 of 2003 never brought to the notice of this Bench about the pending civil and criminal proceedings against the sixth respondent and his family members, which establishes the fact that appointment of new directors was a stealthy scheme, planned and manoeuvred by the sixth respondent to get away with the consequences of pending civil and criminal proceedings. The new board at the instance of the sixth respondent, in the proceedings initiated by Indian Bank before the Debts Recovery Tribunal against the Company for recovery of huge outstanding dues, filed an application by intruding in the suit, with a view to delay the bank's claim.
• The new board did not hold any meeting once in three months for the past one year and never discloses the address of the registered office from where the Company's affairs are being managed by the directors.
• The sixth respondent was the Managing Director during the period 1996-97 and 1997-98. It is found from a show cause notice dated 04.03.2004 issued by the office of Deputy Commissioner of Income Tax, Pondicherry that the funds of the Company to an extent of Rs. 80.48 lakhs have been diverted to various companies in which the respondents 6 & 7 are directors. These diversions were treated as loans by the Income Tax Department during the financial year 1997-98 together with interest charged at the rate of 20% amounting to Rs. 17 lakhs. The Company is put to irreparable loss on account of the acts of omission and commission on the part of the respondents 6 & 7. The fifth respondent purportedly filed a return of income on behalf of the Company for the year ended 31.03.1998 disclosing a taxable income of Rs. 21.51 lakhs, even in the absences of the books of account of the Company. This act of the fifth respondent is causing prejudice to the Company as if some income has been earned as taxable. Therefore, it is justifiable to initiate action under Section 406 read with Schedule XI of the Act against the respondents 2 to 8 who have diverted the funds of the Company.
• The sixth respondent as the Managing Director is subjected to the legal obligations under Section 88 and other provisions of the Indian Trust Act. The sixth respondent committed breach of trust and failed to produce the books of account and other assets of the Company. The siphoning of funds is established by the audit reports of (late) Rajendran, Company Secretary. The sixth respondent, as the trustee of the Company is liable to make good the loss caused by breach of trust.
3. The respondents 1 to 5 and 8 have raised the following objections:
• The petitioners not holding the minimum number of shares as prescribed in Section 399 are not competent to file the present petition. The petitioners have not produced the original share certificates to establish their shareholding in the Company. They do not have any locus standi to agitate their grievances before the CLB. The petition is beyond the limitation prescribed under law and hence deserves to be rejected.
• The registered office of the Company is situated at No. 24 (old No. 42) 4th Cross, Brindavanam, Pondicherry-605013 which is the residence of the second petitioner and the registered office was never shifted to No. 262, Rangapillai Street, Pondicherry.
• It is the duty of the petitioners to ensure that upto date statutory returns are filed with the Registrar of Companies till the alleged date of resignation from directorship. The petitioners, with a view to escape from their liabilities towards the Company and various stakeholders prepared self signed Form No. 32 and filed the same with the Registrar of Companies. Thereafter, the petitioners through their representatives have filed civil and criminal cases against the sixth respondent and his family members with ulterior motive of taking cover under those litigations. The petitioners do not either handover the books of account, statutory records and other records to any one including the Advocate-Commissioner appointed by this Bench. It is, therefore, clear that even after the alleged resignation from the office of director, the petitioners are in complete control and custody of all the records of the Company. The second petitioner was solely in charge of the affairs and management of the Company and is directly responsible for the affairs of the Company.
• The contents of the communication dated 07.09.1997 of the sixth respondent are the subject matter of dispute forming part of the proceedings in C.C. No. 67 of 1999 and C.C. No. 94 of 1999. The police authorities after thorough investigation found the complaint in C.C. No. 94/99 and various allegations to be false and filed "action dropped" report with the concerned Magistrate. Similarly, the suit for appointment of an administrator in O.S. No. 161 of 1999 before the Court of Principal Sub-Judge, Pondicherry has become infructuous, as new set of board of directors is in place. In view of the police investigation reports, steps were taken to withdraw the civil suit by the Company and the application for withdrawal is pending. At the same time, the CBI officials after investigation found that the funds of the Company were misused and misappropriated by the petitioners and their relatives. The respondents will take appropriate criminal action against the culprits on receipt of the investigation report in the affairs of the Company.
• The order dated 03.07.2003 made in C.A. No. 16 of 2003 has become final. The Chartered Accountant appointed by the Bench has conducted the meeting as per the directions of the Bench and also filed his report. The proceedings of the meeting so duly conducted cannot be challenged in the present proceedings.
• The Company and the present directors are bound to discharge their statutory obligations in compliance with the provisions of the Income Tax Act. The income tax assessment proceedings for the years till 1997-1998 are complete and in the absence of books of account, the tax authorities including the Deputy Commissioner of Income Tax, Pondicherry, have completed the assessment, based on the estimated income. The Company never lent any amount to any concern as reported in the show cause notice of the tax authorities. The matter relating to income tax assessment is sub-judice before the Madras High Court in W.P. No. 41958 of 2003 and the second petitioner is a party and hence the same cannot be raised in the present proceedings.
• In the suit filed by Indian Bank (OA No. 536 of 1998) before the DRT against the Company and petitioners 1, 2 & 4 and others, the Company remained ex-parte. The present directors appointed in a validly conducted general body meeting of the Company, with a view to contest the proceedings, filed an application to set aside the ex-parte order passed by the DRT. This cannot cause any prejudice to the interests of the Company. In a number of cases including the income tax proceedings, matters before other forums and courts the Company must be represented by proper persons, knowing the present details. Any order restraining the directors from contesting various litigations will be detrimental to the interest of the Company.
• There is no business activity being carried on by the Company and there is neither any income nor resources to carry on its affairs. The assets of the Company are still under the custody of the Rent Control Court, Pondicherry. There is nothing whatsoever available to be administered by an administrator. The Company cannot even afford to meet any expenditure on account of the remuneration of an administrator.
• The respondents 1 to 5 have prayed in C.A. No. 174 of 2007 for an order of interim stay of the present proceedings until the report of the Advocate-Commissioner is filed before the Bench. These respondents have sought in yet another application to stay the present proceedings till (a) the matter before the Rent Controller in E.A. No. 283 of 2004 in E.P. No. 22 of 1999 reaches finality, (b) the advocate-commissioner files his report and (c) the investigation into the affairs of the Company is completed and report is filed before the Bench.
• The sixth respondent in C.A. No. 230 of 2006 prayed that the CLB proceedings may be stayed until the matters in O.A. No. 536 of 1998 on the file of the DRT and SA(SR) 142/2005 initiated under Securitisation and Re-construction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) against the Company by the Indian Bank reached finality, thereby enabling the sixth respondent to obtain material documents from the premises seized by the Indian Bank under SARFAESI Act and the Advocate-Commissioner obtains the records of the Company in terms of the order of the Bench. The sixth respondent further filed an application in C.A. No. 175 of 2007 seeking an order of interim stay of the present proceedings till the Advocate-Commissioner files his report.
4. The Registrar of Companies, Pondicherry, in his report dated 10.05.2005 submitted:
As per the annual return made upto 27.09.1996 the registered office of the Company is situated at No. 262, Ranga Pillai Street, Pondicherry-605 001. The petitioners and respondents 6 to 8 are the promoters of the Company and are also directors as per the annual return made upto 27.09,1996. These directors have subsequently resigned in terms of Form No. 32 filed with the Registrar of Companies. Thereafter, the respondents 2 to 5 have been reportedly appointed as directors at the general meeting held on 02.08.2003 pursuant to the order dated 03.07.2003 made in C.A. No. 16 of 2003 by the Bench. Form No. 32 dated 07.08.2003 for appointment of the directors and Form No. 29 giving consent of the directors were filed on 12.08.2003 and taken on record on 13.08.2003. However, the new board of directors have not filed any balance sheet since the year 1996 and annual returns since 1997.
5. I have considered the elaborate arguments advanced by Shri T.K. Seshadri, learned Senior Counsel and the voluminous documents produced in support thereon. It is reported that the second petitioner died after advancement of the arguments on behalf of the parties. Nevertheless, no steps have been taken to implead the legal heirs of the deceased second petitioner. Shri D. Chandragupta, learned Counsel, representing the respondents 6 to 8 submitted that "orders may be passed on available records on merits". There has been no representation on behalf of other respondents. It may be observed that the company petition has been filed as early as on 21.03.2005 charging the respondents with serious acts of oppression and mis-management in the affairs of the Company, while at the same time, the respondents are fingering at the petitioners for the present financial crisis faced by the Company, ultimately leading to a series of civil and criminal proceedings, against each other at the cost of a large number of investors and depositors. In this connection, the order dated 05.09.2007 assuming importance is reproduced here below:
The matter came up for hearing from time to time, when the company petition was heard in part on 08/03/2007 by advancing arguments on behalf of the petitioners. When, the company petition came up for further hearing on 25/04/2007, the respondent Nos. 6 to 8 took adjournment and was therefore posted to 09/05/2007. While the petitioners were ready for further arguments on 09.05.2007, the respondents again took adjournment and the matter was posted to 16.05.2007, on which date arguments on behalf of the petitioners were concluded. The respondents took adjournment on 17.07.2007, 27.07.2007, 08.08.2007 and 17.08.2007, despite the fact that the respondents undertook to argue on 27.07.207 and the subsequent hearings. Nevertheless, at the hearing held on 05.09.2007, learned Counsel representing respondents 6 to 8 by his letter dated 04.09.2007 addressed to the Bench Officer sought adjournment till 1st week of October, 2007, on account of the marriage engagement function of one of his close relative's daughter.
2. Shri T.K. Seshadri, learned Senior Counsel, pointed out that the respondents are deliberately adopting delaying tactics to defeat the rights of the petitioners and protested vehemently of the conduct of the respondents.
3. It is observed that arguments of the petitioners have already been concluded. The respondents are yet to complete their arguments. But, they are taking adjournments from time to time as indicated here above. While the respondents 6 to 8 are seeking adjournment there is no representation on behalf of the other respondents. Nevertheless, I am not inclined to set the respondents exparte, which only further delay the proceedings. In view of this and with a view to meet the principles of natural justice, the matter is adjourned finally to 01.10.2007 at 2.30 PM for arguments of the respondents. If they fail, for any reason, to advance arguments, the matter will be decided in their absence.
It is thus found that more than adequate opportunity has been afforded to the respondents, inspite of which they have not chosen to justify their purported acts of commission and omission in the affairs of the Company. In these circumstances and with a view to avoid any delay in rendition of justice, I am constrained to proceed with disposal of the company petition on merits. Accordingly, the issue for consideration is whether the petitioners have made out any case of oppression and mismanagement in the affairs of the Company, entitling them for any of the reliefs as claimed by them. In regard to the preliminary objections raised on the maintainability of the company petition it is unequivocally clear from the memorandum of association of the Company that among others, each of the petitioners subscribed to 5000 equity shares, thereby collectively holding 25,000 equity shares, out of the paid up capital of Rs. 43,279/- comprising of 43279 shares of Re. 1/- as at 30.09.1996 in terms of the report dated 20.03.2003 of the Registrar of Companies, Pondicherry. Further the annual return of the Company made upto 30.09.1995 would show that the petitioners holding qualifying shares as prescribed in Section 399, are entitled to maintain the present company petition, agitating their grievances before the CLB. The bald defence that the petition is barred by the law of limitation is liable to be rejected in the light of the continuing impact of the alleged acts of oppression and mismanagement on the part of the respondents.
6. The main grievances of the petitioners are in relation to (i) the legality of the proceedings in C.A. No. 16 of 2003 on the file of this Bench and the consequent events resulted thereon; (ii) non-filing of annual accounts by the sixth respondent since the year commencing from 31.03.1997; (iii) serious acts of mismanagement warranting the appointment of an administrator to regulate the affairs of the Company; and (iv) series of acts of commission and omission on the part of the respondents 2 to 8. Before considering the company petition on merits, I may point out that the prayer of the sixth respondent to stay the present proceedings till disposal of the proceedings initiated by the Indian Bank against the Company under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and SARFAESI Act for the purpose of obtaining material documents from the premises seized by the bank is in no way justifiable for the simple reason that there is no prohibition for the sixth respondent to approach the Competent Authority for obtaining copies of the records of the Company, by making necessary application under either of the foregoing Acts. There is nothing to suggest that the sixth respondent showing his bonafides has ever taken any initiative at any point of time in this behalf. There are serious disputes in regard to the custody of the books of account, statutory records, and other records of the Company. While according to the petitioners all the records of the Company are with the respondents, the latter have been vehemently contending that the records are unlawfully kept under the control and custody of the petitioners. The location of the registered office of the Company is also a bone of contention between the parties. In view of this, this Bench by an order dated 05.08.2005 appointed Shri J. Madanagopal, Advocate, thereby authorising him to apply before (i) CBI, Chennai; (ii) District Court, Pondicherry; (iii) Rent Control Court, Pondicherry; and (iv) the Court Commissioner appointed by the Rent Control Court, Pondicherry seeking their permission to take inventory and possession of all the records of the Company and file a report by 30.09.2005 on the action taken in terms of the order. The Advocate-Commissioner, despite the efforts taken in terms of the order of the Bench, is not so far successful in obtaining any of the records from the custody of any of the persons, as reflected in various memos filed by him from time to time. It is observed from the memo dated 04.10.2005 of the Commissioner that certain records of the Company have been reportedly filed before the District Court, District Magistrate (Rent Control) Court, Sub-Court, Pondicherry. The owner of the premises bearing door No. 262, Rangapillai Street, Pondicherry, where the Company's office was reportedly located till obtaining possession by an order of the Court in the year 1998, is in custody of the movables including a safety locker belonging to the Company. The directors of the Company are in possession of some of the records of the Company. In the light of the memo dated 04.10.2005 of the Advocate-Commissioner, and after hearing, learned Counsel for the petitioners, the Company and the Advocate-Commissioner, it has been directed by an order dated 10.11.2005 that the Commissioner will approach (a) the authorities, courts, the Commissioner's appointed by the Rent Controller and any other court listed out in his memo dated 04.10.2005 and the order dated 05.08.2005 of the Bench; (b) second petitioner and (c) any other person who has been arrayed a party to the present proceedings to regain possession of the Company's records. The Advocate-Commissioner in his memo dated 21.07.2006 has furnished the details of persons in whose possession the statutory records, books of account, registers and other documents of the Company are available. The efforts taken by the Advocate-Commissioner are narrated in his memo dated 11.10.2007, the relevant portion of which reads thus: "...the undersigned has filed applications before various courts/forums/authorities for retrieval and safe custody of the records/registers/documents of Srivari Mutual Benefit Finance Ltd. Pondicherry. The application filed by the undersigned before the Hon'ble Principal Dist. Munsiff Pondicherry (Rent Controller) is coming up for hearing on 22nd October 2007 for further orders. The Directors of the company have received various documents from CBI and the same will be received by the undersigned. An ex-staff member of the company has agreed to handover the records of the company that are available with him which were made available to him during 1998 from the registered office and business premises of the company. Details of progress made in this regard will be reported after taking detailed inventory during the second week of November 2007...." The Advocate-Commissioner ultimately filed his interim report dated 03.01.2007, which discloses the steps taken by him in collecting the records of the Company, without however, yielding any desired results. The end result is that none of the statutory or other records of the Company could not be procured by the Advocate-Commissioner, despite the lapse of more than two years. It was for the parties concerned to apply for certified copies of the material records, which are in the custody of the Courts/Forums, listed out by the Advocate-Commissioner in his various reports filed before the Bench. Nevertheless, the respondents never evinced any interest in taking any such steps to pursue diligently the present proceedings, and therefore, this Bench cannot indefinitely wait till procurement of copies of the records by the Advocate-Commissioner without disposal of the company petition as claimed by the respondents. Similarly, this Bench, cannot defer the present proceedings, as urged by the fifth respondent, till disposal of the proceedings before Rent Controller, Pondicherry, more so, when it is open to the respondents to obtain certified copies of which they are desirous of placing before the Bench, to justify their claim.
7. A careful perusal of all the records in connection with C.A. No. 16 of 2003 would reveal that Shri G. Iyyanar has filed the said application on 06.02.2003 under Section 186 of the Act to call for a general meeting of the Company to appoint the directors and Chairman of the meeting. By virtue of Section 186, if it is impracticable to call a meeting of a company, other than an annual general meeting according to the provisions of the Act or articles, the Company Law Board may direct either of its own motion or on the application of any director or any member of the company who would be entitled to vote at the meeting, the calling of a meeting and accordingly the CLB may give necessary directions for calling and conducting the meeting and any other incidental directions as it deemed fit. The petitioners are seriously contending that Shri G. Iyyanar was not even a member of the Company, on the date of the company application, namely C.A. No. 16 of 2003 and further that Shri G. Iyyanar committed fraud with a view to stultify the civil and criminal proceedings initiated by the Company against the sixth respondent and his relatives, thereby defeating those proceedings. In this connection, Clause 5 of the articles of association of the Company assumes relevance, according to which "any person intending to have any transaction with the Company shall first become a member of the Company, by subscribing to one equity or non-cumulative redeemable preference share of the Company." The Company being a Nidhi company, no person can have any transactions with the Company unless he is a member of the Company. It is observed from a copy of the communication dated 01.10.1997 of the Company addressed to G. Iyyanar, containing the details of his accounts standing in the books of account for the period from 01.04.1997 to 30.09.1997 that the Company had received on 21.07.1997 a sum of Rs. 25,100/- by way of cash from G. Iyyanar, towards the cumulative deposit for a period of five years against the issue of a fixed deposit receipt No. 1455 and further an amount of Rs. 100/- towards 100 equity shares of Re. 1/- each and obtained a temporary loan of Rs. 10,000/- from the Company on 04.08.1997 against the pledge of the deposit receipt, which however came to be liquidated by Shri G. Iyyanar, on 11.08.1997 thereby closing the loan account. Despite closure of the loan, according to Shri G. Iyyanar, the Company neither returnrd the original deposit receipt nor settled the maturity deposit amount of Rs. 50,000/- as borne out by a lawyer's notice dated 11.10.2002 issued on behalf of G. Iyyanar in favour of the Company and its authorised officers. It is on record that the first petitioner had applied for and filed necessary application under the Company Law Board Regulations 1991 and obtained certified copies of (a) application in C.A. No. 16 of 2003; (b) counter filed by the first respondent in C.A. No. 16 of 2003; (c) memorandum filed by Counsel for G. Iyyanar; (d) notice given by Shri Chandra Gupta, Advocate, (e) report of Shri K. Munusami, Chartered Accountant, and (f) report of Registrar of Companies, Pondicherry from the Bench Office. The copies of communication dated 01.10.1997 of the Company and the legal notice dated 11.10.2002 referred to herein above, forming part, of the company application, certified copies of which have been obtained by the first petitioner, must necessarily be within his knowledge. Nevertheless, the petitioners never challenged the genuiness of those communications which would establish the fact that Shri G. Iyyanar was a member of the Company during the period between 01.04.1997 and 30.09.1997. There is no material to suggest that the maturity proceeds in respect of the fixed deposit receipt No. 1455 have been settled by the Company in favour of Shri G. Iyyanar, in which case, in the light of Clause 5 of articles of association of the Company, Shri G. Iyyanar being an unpaid depositor must be deemed to be a member of the Company. The reliance placed by the petitioners on the report of the Registrar of Companies dated 04.03.2003 would show that as per the list of shareholders furnished by the Company, in the annual return made upto 27.09.1996, Shri G. Iyyanar is not a member of the Company will be of little assistance to the petitioners, especially when Shri G. Iyyanar claims to be a member only after 27.09.1996. Furthermore, the Company failed to file the annual return for the subsequent period, compelling the petitioners to seek the intervention of the Bench in directing the sixth petitioner to file annual accounts for the year ended 31.03.1997 till such period as Bench deems fit and proper in the facts of the present case. It has been asserted in the present company petition (para 7) that "From the inspection of the records of the Registrar of Companies done through the Chartered Company Secretary on 22.12.2004 caused inspection to be done of the records of the first respondent company. A report was given to the fourth petitioner herein in and by which it is noticed that the second respondent's name was not found in the Register of shareholders of the Company and has no locus standi to file the application before this Hon'ble Bench in C.A. No. 16 of 2003." In this connection, the petitioners have produced a search report dated 29.12.2004 of Shri J. Jayakumar, Company Secretary, from wherein it is observed that the Company Secretary has made an inspection of the documents of the Company maintained at the office of the Registrar of Companies on 22.12.2004 and reported, among other things, that the name of Shri G. Iyyanar was not found in the list of shareholders of the Company as per the annual return made upto 27.09.1996 by the Company and filed with the Registrar of Companies on 07.04.1998. This report also does not assume any relevance, in view of the fact that Shri G. Iyyanar was not a member as on 27.09.1996. I therefore do not see any justification in the plea of the petitioners that Shri G. Iyyanar have no locus-standi to invoke the provisions of Section 186 of the Act. It will not be irrelevant to point out that the persons who have been authorised to file civil suit on behalf of the Company against the respondents 6 to 8 and others, claim to be members of the Company as contemplated in Clause 5 of the articles of association of the Company on the strength that they have fixed deposits with the Company.
8. When the company application (C.A. No. 16 of 2003) was mentioned on 05.03.2003 the matter was adjourned to 27.03.2003. for the report of the Registrar of Companies, Pondicherry on which date the applicant was directed to file proof of shareholding in the Company. In pursuance of the order dated 27.03.2003, it is observed that Shri G. Iyyanar's advocate called upon the Company to furnish the details of share certificates allotted to him, by means of speed post acknowledgement due at its address bearing No. 24 (old No. 42) 4th Cross, Brindavanam, Pondicherry-8 as well as No. 262, Rangapillai Street, Pondicherry-1, which, however, returned back to sender with the endorsement of postal authorities namely, "refused". This Bench by yet another order dated 14.05.2003 on an application filed by the applicant in C.A. No. 48 of 2003 directed that the Company shall be impleaded as a party to the proceedings and notice was ordered to be sent to the Company for the hearing on 10.06.2003. The memorandum dated 10.06.2003 filed by Counsel for Shri G. Iyyanar would show that the notice for impleadment of the Company along with copy of the application sent to the registered office of the Company by speed post was returned back with the reason No such addressee". While the first respondent had conveyed no objection on 10.06.2003, none appeared for the Company and, therefore, the Company was said ex-parte, which resulted in the following order:
...I have considered the application. Taking into consideration of the facts and circumstances of the case, submission of Counsel for the applicant, as well as the first respondent, the opportunity afforded to the Company and report of the Registrar of Companies, Union Territory of Pondicherry the application is allowed as prayed for. Shri K. Munusami, Chartered Accountant, Villupuram shall be the Chairman of the proposed general meeting, who shall give 21 days notice of the proposed meeting in at least two newspapers, one in English and one in vernacular language circulating the place, where the registered office of the Company is located, indicating therein, inter-alia, that members attending the meeting must bring with them the original share certificate(s) or share allotment letter(s) or fixed deposit receipt(s) or savings pass book or any other document to show that they are the members of the Company and comply, inter alia with the relevant provisions of the Act, in regard to appointment of directors. The petitioner shall pay an honorarium of Rs. 2000/- to Shri K. Munusami, Chartered Accountant besides conveyance charges which shall be re-imbursed by the Company. It is further ordered that one member present in or by proxy shall from the quorum of the general meeting.
9. The communication dated 06.11.2003 of Shri K. Munusami, Chartered Accountant, addressed to the Bench Officer, forwarding a report would show that pursuant to the order dated 03.07.2003 of the Bench, a general meeting of the members of the Company was convened and held on 02.08.2003. The report of Shri K. Munusami, containing the proceedings of the general meeting of the shareholders of the Company, reads thus:
1. The General Meeting of the shareholders of the above said company was called and convened on 2nd Aug. 2003 and notice was issued in leading two newspapers one each in Tamil News Paper and another in English news paper.
2. The meeting was held at No. 20 Kambalisamy Madam Street, Pakkamudayampet, Pondicherry around 4.00p.m. on 2nd Aug. 2003.
3. In all 12 members of the company participated in the meeting. Those members who produced original share certificates/share allotment letter/fixed deposit receipts etc. as proof of identification were allowed to participate in the meeting.
4. The meeting was called to order by the undersigned and the agenda was read out in the open meeting.
5. Nominations/applications were invited from the participating members for the Post of Directorship of the company and 1) Mr. G. Iyyanar, 2) Mr. S. Kannadasan, 3) Mr. D. Amavasai and 4) M. Narayanasamy applied for the post of Directorship of the company and gave their consent.
6. Mr. G. Iyyanar being eligible for the post of Directorship of the company offered himself and was declared elected unanimously as Director of the Company.
7. Mr. S. Kannadasan being eligible for the post of Directorship of the company offered himself and was declared elected unanimously as Director of the Company.
8. Mr. D. Amavasai being eligible for the post of Directorship of the company offered himself and was declared elected unanimously as Director of the Company.
9. Mr. M. Narayanasamy being eligible for the post of Directorship of the company offered himself and was declared elected unanimously as Director of the Company.
10. All the members wished all t he best to the newly elected Board of Directors of the Company.
10. The petitioners have challenged the order dated 03.07.2003 in CMA No. 88396 of 2003; before the High Court of Madras, wherein it has been contended that no notice of the general meeting has been served on the petitioners being promoter directors, whereas the report of Shri Munusami is categorical that notice of the general meeting was published in two local dailies and therefore, the grievances on account of non-sending of any notice of the general meeting to the petitioners do not survive. The petitioners have placed reliance on a legal opinion dated 29.12.2004 of Shri J. Jayakumar, Company Secretary, suggesting grounds of appeal against the order dated 03.07.2003 of the CLB, the relevant portion of which assuming importance reads thus:
The CLB in its order dated 03.07.2003 appointed Mr. Munusamy, Chartered Accountant as the chairman of the meeting proposed to be called under the directions of the said order. The chairman is found professionally qualified but convened an Annual General Meeting instead of an Extraordinary General Meeting. To avoid the repercussions, following the Annual General Meeting held on 02.08.2003 again an Extraordinary General Meeting was convened on 10.11.2003. The purpose of the order obtained was also found failed, (clause vii).
It is clear from the above observations that the Chairman of the meeting appointed by the Bench is professionally qualified, but convened an annual general meeting instead of an extra ordinary general meting. The Company Secretary is further categorical that following the annual general meeting held on 02.08.2003, an extra ordinary general meeting was convened on 10.11.2003. It is observed from the report of the proceedings of the general meting of the shareholders of the Company that after issuing notice in leading two dailies one in Tamil and other in English daily, a general meeting was held on 02.08.2003, pursuant to the order dated 03.07.2003 of the Bench at 20, Kambalisamymadam Street, Pakkarmudayanpet, Pondicherry. There is no denial in the legal opinion of the Company Secretary, about the issue of public notices in local dailies before holding of the general meeting of the Company on 02.08.2003. It is, in the above background, the serious charges of collusion and fabrication of the proceedings of the general meeting attributed to Shri K. Munusami, Chartered Accountant appointed by the Bench, without any concrete evidence do not lie in the mouth of the petitioners, more so when Shri K. Munusami, was acting as an officer of the Bench and public notices were effected before holding the general meeting on 02.08.2003 at Door No. 20, Kambalisamymadam Street, Pakkarmudayanpet, Pondicherry and not at Door No. 24, (old No. 42) Brindavanam, Pondicherry, as pointed out by the petitioners. It is relevant to point out that the petitioners claimed to have resigned from the office of director as early as on 06.08.1998 and therefore, there is neither any need or requirement of Section 186 for their impleadment as parties to the proceedings in C.A. No. 16 of 2003, despite the fact that the petitioners are shareholders of the Company. Mere pleadings of serious charges of collusion and fabrication without the requisite particulars and unsupported by any independent and concrete evidence whatsoever will not entitle the petitioners to impugn in any way the proceedings of the general meeting in question. By virtue of the categorical conclusions reached by the Company Secretary in his legal opinion dated 29.12.2004, on which reliance is placed by the petitioners, it is not open to them now to contend that..."none of the conditions preceding in the meeting was complied" (para 6.6. of company petition) Shri K. Munusami, Chartered Accountant, was appointed as Chairman of the meeting, at the request made by learned Counsel for Shri G. Iyyanar. This, alone, however, will not lead to any inference that Shri K. Munusami, Chartered Accountant, colluded with the applicant and fabricated the minutes of the general meeting. In these circumstances, it cannot be argued that there are no new directors appointed at any validly convened general meeting of the Company, by the officer appointed for this specific purpose despite the alleged irregularities in the conduct of the general meeting on 02.08.2007, and notwithstanding the claim that the respondents 2 to 5 are not domiciled in Pondicherry and that they lack business experience, especially when it is aimed at the restoration of the management in the Company. It is, thus, found that the order dated 03.07.2003 made in C.A. No. 16 of 2003 has not been obtained by fraud or misrepresentation and therefore, there is no question of recalling the said order, in which case the decision in Deepa Gourang Murdeshwar Katre v. The Principal, V.A.V. College of Arts and Ors. (supra) will not go in aid of the petitioners. The apprehension of the petitioners that these respondents are shadow directors of the sixth respondent is being adequately safeguarded by proposing suitable conditions, ensuring the interests of the Company as well as the petitioners.
11. The Company represented by one Shri B. Kumaranand, lodged a private complaint on the strength of a board resolution dated 15.01.1998, which is seriously disputed by the petitioners, against the sixth respondent, his wife, respondents 7 & 8 and bank officials in C.C. No. 94 of 1999 before the Court of Judicial Magistrate, Pondicherry under Sections 406, 477-A read with Section 120-B of the Indian Penal Code, on account of the following alleged acts:
• The sixth respondent herein dishonestly defalcated the funds of the Company by falsification of accounts. The other accused persons in active connivance with the sixth respondent were committing the fraudulent and dishonest acts against the interest of the Company.
• The sixth respondent, in connivance with the officers of the Company's banker got sanctioned "at par facility", whereby customers could purchase pay orders from the Company on payment of commission and the same could be realised from as many as thirty collecting centres of the Company's banker. The Company's banker, on account of the manipulation of the sixth respondent, extended "at par facility" to M/s. Srivari Services Private Limited, a Company started by the sixth respondent and his wife, and six of its branches. This facilitated the sixth respondent to misappropriate funds, which caused wrongful loss to the Company. The sixth respondent dishonestly diverted and misappropriated an aggregate sum of Rs. 140 lakhs through M/s. Srivari Services Private Limited, in active connivance with other accused persons. The funds so diverted were utilised by sixth respondent, his wife and respondents 7 & 8 for purchasing several movable and immovable assets. The defalcation and misappropriation of funds made by the sixth respondent, resulted in huge liabilities of the Company in favour of its bankers and the consequent recovery proceedings initiated before the DRT for over Rs. 45 lakhs.
• The sixth respondent in criminal conspiracy with the other accused persons has committed criminal breach of trust and falsification of accounts in order to dishonestly enrich themselves by acts of commission and illegal omission in conducting the affairs of the Company. The public at large has been affected on account of the criminal conspiracy indulged by the sixth respondent with other accused, thereby the public using the safety lockers were deprived of this facility, the persons who pledged their jewellery could not redeem the same and the depositors were deprived of the maturity proceeds of the deposits.
12. The Court of the Judicial Magistrate, Pondicherry, on a petition filed by Shri G. Iyyanar, seeking permission to withdraw the complaint, granted permission to withdraw the complaint, by an order dated 16.02.2004, for the following reasons putforth by Shri G. Iyyanar:
The present Directors have now found that the complaint has no basis at all, is totally false and fabricated and is filed by Dr. V. Sambasivam, Chairman, T. Natarajan, K.J. Mani, N. Kuberan and B. Djeabarathy with all malafide intensions and due to various personal reasons. The allegations in the complaint are unfounded and the false allegations in the complaint are made only in order to silence the accused from disclosing the misdeeds by the said Directors. The present Directors have now decided to launch criminal proceedings against the said Directors and those other persons, who have colluded with them for filing false complaint against innocent persons in the name of our company without any proper authority/authorization whatsoever. Under the above circumstances, the Directors of their company have now decided to withdraw the present false complaint filed in the name of their company. Hence, this petition to withdraw the complaint filed against the accused persons.
13. It would amount to a judicial impropriety on my part to go into the merits of various reasons put forth by Shri G. Iyyanar for withdrawing the private complaint in C.C. No. 94 of 1999, in view of the order dated 16.02.2004 already made by the Competent Judicial Forum. It is reported that the petitioners have preferred an appeal against the above order of withdrawal before the High Court of Madras, which is pending adjudication and therefore, the parties to the litigation will abide by any order of the High Court which may be passed in the appeal proceedings. At the same time, it is found that, despite the opportunity afforded to the board of directors of the Company, they failed to establish that their action in withdrawing the criminal complaint in C.C. No. 94 of 1999 is in the interest and for the benefit of the Company and its members. While the present board successfully withdrew the private complaint against the respondents 6 to 8 and others, before the Court of Judicial Magistrate Pondicherry, they failed to offer any explanation whatsoever for the charges of oppression on account of withdrawal of the private complaint in C.C. No. 94 of 1999 by the petitioners, in the absence of any of the records and books of account of the Company, which is rather unjustifiable.
14. The Company represented by M/s. Ramkumar, Abdul Mazeed, Kalaiselvi and Gnanasekar on the basis of the contentious authority derived from the board of directors, filed a suit in O.S. No. 161 of 1999 before the Court of Principal Subordinate Judge, Pondicherry, against the sixth respondent, his wife, respondents 7 & 8 herein and others, claiming the following reliefs:
(i) to appoint an administrator in order to carry out the day-to-day affairs of the Company;
(ii) to recover the amounts diverted and defalcated by the sixth respondent, his wife and respondents 7 & 8; and
(iii) to indemnify the Company for all costs and expenses that may be incurred by it.
The suit claim (O.S. No. 161 of 1999) is based on the following reasonings:
• The sixth respondent, his wife and respondents 7 & 8 herein created several fictitious companies, namely, (i) Srivari Housing and Construction Limited; (ii) Srivari Services Private Limited; (iii) Suraj Constructions; (iv) Pondicherry Realtor Private Limited; and (v) Monarch Steel (India) Private Limited, who are arrayed as defendants in the civil suit filed by the Company, and thereby diverted and misappropriated the funds of the Company, unlawfully making use of "at par facility" extended by the Company's banker.
• The sixth respondent dishonestly diverted through Srivari Services Private Limited, funds of the Company to a tune of several lakhs of rupees, as borne out by the reports of an independent Company Secretary, appointed by the Company and the admissions made by the sixth respondent in his communication dated 07.09.1997, addressed to the board of directors of the Company, wherein the sixth respondent had undertaken to rectify and remedy the situation before 25.09.1997.
• The Company's banker initiated recovery proceedings before the DRT claiming over Rs. 46 lakhs from the Company. This claim has arisen only on account of the diversion, defalcation and misappropriation of funds of the Company at the instance of the sixth respondent.
• The customers of the Company, on account of the closure of the Company by the sixth respondent, were deprived of operating the locker facility; redeeming their jewels and getting back maturity proceeds of the deposits, thereby causing prejudice to the public at large.
• The accounts of the Company have not been audited or maintained properly by the sixth respondent and no general body meting was held to adopt the final accounts of the Company. An amount of Rs. 12.21 lakhs was reflected in the balance sheet for the year ended 31.09.1995, but it is not known as to what happened to such cash balance after the relevant financial year.
15. The civil suit is pending for trial, whereas the board of directors of the Company at the meeting held on 20.02.2004, as reflected in the copy of the extract of the board resolutions, resolved as under:
RESOLVED to file appropriate petition and affidavit to withdraw O.S. No. 161/2000 now pending before the Hon'ble Principal Sub Judge, Pondicherry which is filed in the name of our company with bogus and backdated authorisation letter purportedly issued by the erstwhile Directors of our company by Mr. Ram Kumar, Ms Kalaiselvi, Mr. Abdul Mazeed and Mr. Gnanasekaran.
RESOLVED further that Mr. M. Narayanasamy, Director of our company is hereby authorised by the Board of Directors to prepare and sign on behalf of company necessary petitions and affidavit and such other applications and to appoint an advocate and to fix pay towards the fee and all other necessary expenses in this regard.
The resolution merely indicates that the civil suit (O.S. No. 161 of 1999) has been filed in the name of the Company "with bogus and back dated authorisation letter purportedly issued by the erstwhile Directors of our Company "....There is no material to show whether the directors applied their mind on the serious allegations made in O.S. No. 161 of 1999, against the respondents 6 to 8 herein and without going into the genuiness of such averments, any action to withdraw the civil suit filed against the respondents 6 to 8 and others would constitute an act of oppression, more so when the interest of the Company assumes paramount importance. While the affidavit of the fifth respondent herein filed in support of the application for withdrawal of the civil suit filed against the respondents 6 to 8 and others, running into as many as twelve pages, throws only counter allegations against the petitioners herein, and challenges the letter of authority dated 10.03.1998 issued to those who have filed the civil suit, it does not whisper anything about the merits of the plaint averments made in O.S. No. 161 of 1999. The board resolution authorising the fifth respondent to withdraw the civil suit filed against the respondents 6 to 8 without gauging the correctness of the plaint allegations is not only oppressive but also harsh warranting the intervention of this Bench. I, therefore, do not find any justification to modify the interim order made on 21.03.2005 to the effect that... "the Company will not withdraw any of the pending court proceedings - civil and criminal - already initiated against the respondent Nos. 6, 7 & 8.
16. The board of directors constituted by the petitioners at the board meeting held on 15.01.1998 resolved to initiate proceedings, against, among others, the respondents 6 to 8 for recovery of the funds of the Company, which is followed by the civil suit in O.S. No. 161 of 1999, wherein it has been explicitly pleaded that the Company is closed and is under lock and key of the sixth respondent and no business is being carried out to the detriment of the customers. It is, therefore, just and necessary to appoint an administrator to discharge the functions of the Company more so when no board is functioning. It is further contended in the suit that the customers are deprived of making use of the locker facilities, redeeming the jewellery and denied of their deposit amount, which necessitated appointment of a suitable person to manage and administer the properties and funds of the Company as well as the customers' property. The civil suit is pending adjudication. In the meanwhile, the very same persons, who are wholly responsible for filing of the civil suit in O.S.Np.161 of 1999 seeking inter-alia, for (i) appointment of an administrator to carry on the day-to-day affairs of the Company; and (ii) recovery of the amounts diverted by the respondents 6 to 8 and others, have filed the present company petition in the year 2005, based substantially on the very same acts of commission and omission on the part of mainly the sixth respondent herein, in the affairs of the Company, for appointment of an administrator to regulate the affairs of the Company. In the present proceedings also the sixth respondent is accused of diversion and defalcation of the funds of the Company in connivance with other. The petitioners are heavily placing reliance on the admission of the sixth respondent, regarding the purported mis-appropriation of funds of the Company in terms of a communication dated 07.09.1997 addressed the Chairman and board of directors in both these proceedings. In view of the pendancy of the civil claim already made by the petitioners to recover the amounts diverted and defalcated by the respondents 6 to 8, the petitioners cannot seek to initiate action against the respondents 6 to 8 under Section 406 read with Schedule XI of the Act and further no charges of diversion of funds of the Company have been established against the respondents 2 to 5 in the present proceedings. The petitioners are, thus found to be engaged in forum shopping, which is always desisted by the Company Law Board and therefore, they are at liberty to pursue the claim for appointment of an administrator to regulate the affairs of the Company for recovery of the funds reportedly diverted and defalcated by the sixth respondent in the pending civil suit which is in prior point of time, thereby avoiding any imminent conflict of decision. Furthermore, in the civil court, witnesses will be examined and trial will be conducted to unearth the purported diversion and defalcation, of the funds of the Company. The need for an administrator does not also arise, in view of the constitution of the board of directors of the Company, in pursuance of the order dated 03.07.2003 made in C.A. No. 16 of 2003. I therefore, do not deem it fit to go into merits of the claim made in the matter of appointment of an administrator for regulating the affairs of the Company. In view of the rival contentions concerning the place of registered office of the Company, the present board of directors shall duly endeavour to establish the registered office in accordance with law at any suitable place, take custody of the statutory records, books of account and other records of the Company from every one of the persons/authorities listed out in the Advocate-Commissioner's reports and comply with all the statutory obligations from time to time and file necessary statutory returns with the Registrar of Companies.
17. The proceedings of the Income Tax Department for the financial year 1996-1997 in relation to the Company would show that its funds to an extent of Rs. 80.48 lakhs given to the same group concerns have been treated as loans advanced by the Company and interest has been charged on such loans at the rate of 20% amounting to over Rs. 16 lakhs. The categorical charges levelled by the petitioners that the income diverted by the sixth respondent together with interest thereon is subjected to treatment as loan, thereby the company suffered losses are merely brushed aside by the sixth respondent as sub-judice in view of the writ petition (W.P. No. 41958 of 2003) filed against the assessment proceedings.
18. The respondents 2 to 5 having been elected as directors at the general meeting held on 02.08.2003, in pursuance of the order of the CLB any of their action in discharging the statutory obligations under the Income Tax Department cannot be construed as an act of mismanagement and further, correctness of the income disclosed in the return for the year ended 31.03.1998 filed with the Income Tax Department through the fifth respondent cannot be entertained in the present proceedings. The filing of the income tax returns by the respondents 2 to 5 in the name of the Company, can neither justify the recalling of the order dated 03.07.2003 made in C.A. No. 16 of 2003, as claimed by the petitioners.
19. In view of my foregoing conclusions, and in exercise of the powers under Sections 397 and 398 read with Section 402, it is ordered as under:
(i) The respondents 2 to 5 shall duly arrange to file with the Registrar of Companies, Pondicherry annual accounts and annual reports for the period from 31.03.1997 till date, within sixty days of the receipt of this order;
(ii) The respondents 2 to 5 shall take appropriate steps to establish the registered office of the Company at a suitable place in a manner known to law; take custody of the statutory records, books of account and other records of the Company, in terms of this order, and comply with all the statutory obligations from time to time;
(iii) The appointment of Shri J. Madanagopal, Advocate, as the Commissioner for taking custody of the statutory records, books of account and other records of the Company in terms of the order dated 05.08.2005 stands revoked. The Advocate-Commissioner's remuneration and all the expenses incurred in execution of the warrant shall equally be borne by both the parties within thirty days of the receipt of this order.
(iv) The board resolutions dated 20.02.2004 passed in connection with the withdrawal of the civil suit in O.S. No. 161 of 1999 on the file of the Court of Sub-Judge, Pondicherry are declared as null and void.
(v) The respondents 2 to 5 shall not withdraw the pending civil and criminal proceedings initiated by the Company against the respondents 6 to 8 and others, who will comply with the order(s) of the respective civil and criminal courts and the connected appeal filed before the High Court of Madras against the order dated 16.02.2004 made by the Court of the Judicial Magistrate, Pondicherry, allowing withdrawal of the private complaint in C.C. No. 94 of 1999, as and when orders are made in these matters;
(vi) The sixth respondent shall make good the loss to the Company on account of the treatment by the Income Tax Authorities of an amount of Rs. 80.48 lakhs as loans advanced by the Company to its group concerns during the financial year 1996-1997 together with the interest thereon amounting to Rs. 16.10 lakhs, which shall however, be subject to the outcome of the writ proceedings in W.P. No. 41958 of 2003, on the file of the High Court of Madras; and
(vii) The Registrar of Companies, Pondicherry shall ensure that the respondents 1 to 5 comply with all the statutory requirements, in terms of this order, and in the event of any default, the Registrar of Companies is free to take appropriate action against them in accordance with the relevant provisions of the Act.
20. With the above directions, the above company petition stands disposed off. All the interim orders are merged in the main order. No order as to costs.