AI Structured Summary
Not yet generated for this judgment
Judgment
During the course of arguments, an order dated 27.02.2019 passed by learned DRT, Mumbai has been brought to our notice in the proceedings initiated by Exim Bank. According to the aforesaid order the company namely Continental Construction Ltd. (For brevity "CCL") is refrained for creating any third party right with regard to the immovable property bearing no. 28, 29, Continental House, Nehru Place New Delhi -110019 till the next date. The interim order has been continued and is operating as on today.
Mr. Datta, learned counsel for the petitioner in CP No. 126/241-242(PB)/2019 has pointed out that there is resolution dated 18.12.2018 passed by the CCL which is unanimously passed by three directors but Mr. Chander Verma preferred to remain absent. The resolution passed on 18.12.2018 reads as under:-
"RESOLVED THAT the office Continental House No. 28,29, Nehru Place New Delhi -110019 of Continental Construction Limited be sold to the best offer after obtaining freehold of the property to M/s. Sai Dham Infradeveloper Private Limited. The same shall be finalized by the Directors present.
FURTHER RESOLVED THAT the present Director in today's meeting of the Company be and are hereby authorized to jointly execute any document, paper, affidavit, undertaking and/or any indemnity bond in favour of the Buyer of Building Continental House No. 28, 29, Nehru Place New Delhi -110019 and to appear before the Registrar and Sub-registrar for the execution of the Sale/Conveyance Deed, and to do all such acts and deeds as may be necessary to complete all the Formalities of the sale and handing over the peaceful possession of these premises to the rightful buyer, and to receive the sale proceed on behalf of the company."
In respect of the aforesaid resolution passed by the Board of Directors of CCL, Mr. Chander Verma, the absentee director has issued a public notice in Times of India' and The Hindu' (daily edition) on 26.12.2018 informing the general public to refrain from dealing with or alienation of immovable property of the Continental Construction House, 28, 29, Nehru Place, New Delhi-110019 without his consent. It has also been suggested that the aforesaid resolution is illegal, which is also pointed out in the subsequent legal notice dated 29.01.2019 sent to other directors namely Mr. Basi, Mr. Mohinder Verma and Mr. Vijay Verma. Mr. K. Datta, learned counsel has submitted that it results in causing hindrances in the implementation of resolution dated 18.12.2018 which has been validly passed by the Board of Directors in accordance with law.
On behalf of respondent no. 2-Mr. Chander Verma, it has been argued that the resolution dated 18.12.2018 passed by the Board of Directors violates the directions issued by the Company Law Board on 21.11.2007 & 16.05.2008. The order dated 21.11.2007 passed by the Company Law Board is set out below for facility of reference:-
"The parties have agreed that the Company would be divided in the ratio of 43:43:14 respectively for Bashi Group, Chander Verma Group and Vijay Verma Group. They have also agreed that the Board of the Company would be re-constituted with Chander Verma, Mohinder Verma, Bashi and Vijay Verma. They are authorised to appoint alternate directors. The board is accordingly re-constituted with immediate effect. The board will meet within 14 days and decide on the stand to be taken with the banks and shall negotiate for settlement of bank dues within 12 weeks. With immediate effect all the bank accounts will be jointly operated by the four directors/alternate directors, if any.
Each of the members of the board will circulate within 3 days businesses to be transacted in the first board meeting and all decisions should be taken unanimously. Report will be filed after the first board meeting. Liberty to apply.
Notice for all the hearing will be issued to the interested applicants."
It is evident from the perusal of the aforesaid order that the board has been constituted with Chander Verma, Mohinder Verma, M.S. Basi and Vijay Verma. The Board was to meet within 14 days and negotiate for settlement of bank dues within 12 weeks. The bank accounts were to be jointly operated by the four directors/alternate directors, if any. It is significant to notice that all decisions were to be taken unanimously and the report was to be filed after the first board meeting on 02.05.2008 and other order was passed which indicate that no individual director was authorised to act on behalf of the company-CCL or enter into any settlement with the Exim Bank or any other bank. It was clarified that the re-constituted Board of Directors only and none else was to have authority to enter into one time settlement with the banks by the unanimous decision of the all members of the Board.
On 16.05.2008, the following order was passed:-
"1. With a view to resolve the long standing disputes between the parties, with their consent, I passed an order on 21.11.2007 that the company would be divided in to the ratio of 43:43:14 respectively for Basi Group, Chander Verma Group and Vijay Verma Group. I had also reconstituted the board giving representation to each of the three above and also appointing Shri Mohinder Verma as a director.
The parties have now filed an application CA 286 of 2008 stating that all the groups have jointly agreed that the company would be divided into 43:21.50:21.50:14 for Basi Group, Chander Verma Group, Mohinder Verma Group and Vijay Verma Group, respectively. In view of the joint agreement among the parties for such a division of the company, in modification of the order dated 21.11.2007, I approve the proposed division.
It is ordered that all the four successor companies shall enjoy the goodwill, work experience and the financial achievements of Continental Construction Limited and are allowed to pursue their independent businesses, representing themselves as successor companies of Continental Construction Ltd., notwithstanding the completion of the de-merger of the parent company in the above ratio.
The application is accordingly disposed of in the above terms."
A perusal of the aforesaid order shows that the four groups filed a joint application stating that the company was to be divided into 43:21.50:21.50:14. The aforesaid application was allowed and disposed of. It is further interesting to note that on 24.08.2009, the Company Law Board issued the following directions/approval in the larger interest of the company as well as shareholders:-
"(1) Each of four directors, viz. Shri M.S. Bassi, Shri Chander Verma, Shri Mohinder Verma and Vijay Verma shall be entitled for a minimum remuneration of Rs. 2 lacs per month effective from 1.4.2007.
(2) The following four companies shall be successor companies (on de-merger) of M/S. Continental Construction Company Ltd.
(a) Continental Construction International Ltd.-Sh. M.S. Bassi.
(b) Continental Construction Projects Ltd.-Sh. Chander Verma
(c) Continental Construction Infrastructure Ltd.-Sh. Vijay Verma.
(d) Continental Construction Corporation Ltd.-Shri Mohinder Verma.
(3) The company is permitted to give business advance in the agreed proportionate ratio to the four above companies.
(4) The successor companies are permitted to utilize funds as advanced by the CCL for their day to day business purposes.
(5) The directors of CCL shall not be disqualified in terms of the provisions of Section 274(1) (g) of the Act and ROC shall not initiate any proceeding against the directors in this regard."
(6) None of the Governmental Authorities, like ROC, IT shall initiate any action against the company or its director for non compliance or contravention of the provisions of any statute as the same has resulted in view of the order of this Board that no board meetings should be held.
(7) CCL is permitted to sell its non-performing assets to a competitor bidder on as is where is basis and to utilize the proceeds to meet its obligation."
A perusal of the aforesaid order would show that long back in 2009 vide direction no. 7, the Continental Construction Limited was permitted to sell its non-performing assets to a competitor bidder on 'as is where is basis' and to utilize the proceeds to meet its obligation. It is in the context of the aforesaid circumstances that the resolution dated 18.12.2008 needs to be examined. As a matter of fact the resolution dated 18.12.2018 is consistent with the directions issued by the Company Law Board on 18.08.2009 particularly at item no. 7.
The argument advanced on behalf of the respondent no. 2-Chander Verma is that all decisions were to be taken unanimously by all four directors as per the order dated 21.11.2007 and 02.05.2008. We do not feel persuaded to accept the submission because the notice of the meeting was issued before passing the resolution dated 18.12.2018 and decision was taken unanimously by three directors and Mr. Chander Verma-respondent no. 2 preferred to remain absent. It would not mean that resolution dated 18.12.2018 violates the order passed by the Company Law Board particularly when it is remembered that sale of the properties has been permitted by the order dated 24.08.2009 passed by the Company Law Board. (See direction no. 7). The directions issued by the Company Law Board have eventually held in its order dated 24.08.2009 that the Continental Construction Limited was permitted to sell its non-performing assets to a competitor bidder on as is where is basis to utilize the proceeds to meets its obligations. The issuance of public notice and legal notice by respondent no. 2 on 26.12.2018 and 29.01.2019 respectively is wholly warranted. It has caused hindrances in the directions of sale of property so as to discharge the liabilities of the company which resulted in filing of an application by the Exim Bank in DRT, Mumbai.
As a sequel to the above discussion, respondent no. 2-Mr. Chander Verma is directed to withdraw the aforesaid public notice dated 26.12.2018 & legal notice dated 29.01.2019.
We make it clear that in the teeth of the order dated 27.02.2019 passed by learned DRT, Mumbai, no sale of the property can be conducted as it would result in creating third party right in respect of immovable property bearing no. 28,29, Continental House, Nehru Place, New Delhi-110019. The party may contest the issue before the DRT, Mumbai before undertaking any sale of the aforesaid property.
The matter be listed for further hearing on 20.12.2019, the date already fixed.