Final Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM 1351-20 in S.C.SUIT no.1110-20
IN THE CITY CIVIL COURT FOR GREATER BOMBAY
AT MUMBAI.
NOTICE OF MOTION NO. 1351 OF 2020
(CNR no. MHCC01-004379-2020)
IN
SHORT CAUSE SUIT NO. 1110 OF 2020
(CNR no. MHCC01-004034-2020)
1. Mr. Girish Madhukar Talwalkar
Age : about 59 years,
residing at 101, Disha Aprts.,
Gulmohar Cross Road No.7, Opp. Costa Coffee,
JVPD Scheme, Mumbai-28.
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2. Mr. Prashant Sudhakar Talwalkar
Age : about 58 years,
residing at 26/27, Sheesh Mahal,
Pali Hill Dmonte Park Road,
Bandra, Mumbai-50.
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Plaintiffs
Versus
1. Mr. Ananta Ratnakar Gawande
Age : about 53 years,
residing at A-173, Twin Towers,
Twin Tower Lane, Opp. Siddhivinayk Temple,
Prabhadevi, Mumbai-400025.
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2. Mr. Harsha Ramdas Bhatkal
Age : about 58 years,
residing at N-5, Prathamesh CHS,
Off Veer Savarkar Road,
Prabhadevi, Mumbai-400025.
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3. Mr. Girish Shriniwas Nayak
Age : about 50 years,
residing at 1303, Rustomjee Regency 11 CHS,
“B” Wing, Rustomjee Acre,
Dahisar (West), Mumbai-400068.
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2 NM 1351-20 in S.C.SUIT no.1110-20
4. Mr. Vinayak Ratnakar Gawande
Age : about 62 years,
residing at A-231, Twin Towers,
Twin Tower Lane, Opp. Siddhivinayk Temple,
Prabhadevi, Mumbai-400025.
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5. Mrs. Monika Khatri
Age : not known,
residing at Talwalkars Better Value Fitness Ltd.,
801-813, Mahalaxmi Chambers, 22, Bhulabhai
Desai Road, Mumbai-400 026.
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6. Mrs. Geeta Tribhovandas Canabara
Age not known, Occu : Company Secretary
Geeta Canaber & Associates
405, Suchita Business Park, Behind Neelyog
Square, Near Patel Chowk, Ghatkopar (East),
Mumbai-400 077.
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7. Talwalkars Healthclubs Ltd.,
801-813, Mahalaxmi Chambers, 22, Bhulabhai
Desai Road, Mumbai-400 026.
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Defendants
Appearances:-
Ld. Advocate Mr. Rajeev Matkar for the Plaintiffs.
Ld. Advocate Mr. P. D. Gandhi for Defendants no.1 to 5.
CORAM : HIS HONOUR JUDGE
SHRI C.V. MARATHE
(Court Room no. 4)
DATED : 27th October, 2020.
O R A L O R D E R
1. This is an application by Notice of Motion under
O.XXXIX R.2 of The Code of Civil Procedure, 1908.
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2. The suit arises due to conflicts between Directors of
Defendant no.7 Company. The plaintiffs have challenged resolution
dated 16.01.2020 passed in the meeting of Board of Directors on the
ground of “fraud” and in the instant Notice of Motion they have
prayed for temporary injunction (a) restraining the defendants from
preventing them from having access to the entire record and server
of the defendant no.7 Company including but not limited to minutes
books, income tax returns, case papers, loan procurement papers,
profit and loss accounts and balance sheet of the Company at 801-
813, Mahalaxmi Chambers 22, Bhulabhai Desai Road, Mumbai-
400026 and (b) restraining the defendants from further acting upon
the resolution dated 16.01.2020. It is to be noted at the first hearing
of the suit, the Ld. Advocate for the defendants no.1 to 5 made
statement that the defendants never objected the plaintiffs from
accessing to the record and gave no objection for granting prayer
clause (a). In view of the said submission there is no hurdle to grant
prayer clause (a) of the Notice of Motion and therefore, the same is
granted.
3. Coming to the prayer clause (b), the plaintiffs have
prayed for temporary injunction restraining the defendants from
further acting upon the resolution of the meeting of the Board of
Directors held on 16.01.2020 till final disposal of the suit. At the
cost of repetition the challenge to the said resolution is on the
ground of “fraud”.
4. To ascertain the controversy, the plaint allegations can
be usefully narrated as under :
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The plaintiffs no. 1 to 3 are traditionally in the field of
body building and fitness training centres. In the year 2003, the
Company name “Talwalkars Bettervalue Fitness Private Ltd.” was
formed. The said Company became a public limited Company and its
name was changed to Talwalkars Health Clubs Ltd. (defendant no.7).
The address of the said Company is at 801-813, Mahalaxmi
Chambers, 22, Bhulabhai Desai Road, Mumbai-400026 (hereinafter
“registered office”). The registered office building is owned by
Gawande Consultants Pvt. Ltd. wherein present defendants no.1 to 4
collectively hold more than 99% share capital. The plaintiffs, the
defendants no.1 to 4 are common directors in defendant no.7
Company and many other fitness companies all over India. These
defendants are qualified professionals in various finance related
subjects while the plaintiffs were always focused on running of
Gymnasiums which was their traditional expertise. The role of
defendants was to raise finance, manage accounts, maintain the
books, tax payment etc.
5. The defendants brought in the finance from Axis Bank
and from other sources. In recent past differences between the
plaintiffs and defendants no.1 to 4 in relation to the affairs of the
defendant no.7 Company arose. The defendants did not handle the
accounts in transparent manner. In 2018, the defendants transferred
an amount of Rs.16 Crores from the Axis Bank account of
Talwalkars Better Value Fitness Ltd. to Talwalkars Health Club Ltd. (
defendant no.7) by only using scanned copy of the cheque with the
signature of Harsha Bhatkal. After transferring the amount, the
defendants no.1 to 4 approached the plaintiff no.3 for signing the
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cheque. The plaintiff no.3 did not participate in such manipulation
and retained the concerned cheque and relevant communications
with him. Similarly, the plaintiff no.3 returned many attendance
sheets/minutes unsigned in disagreements.
6. On 16.01.2020, the defendants fixed the meeting of the
Board of Directors but there was no resolution to shift registered
office from one place to another. No minutes were circulated and /
or ever signed by plaintiffs. The registered office was never vacated.
The records, common seal and statutory books of the Company were
never shifted out of the registered office. Despite of the above and
as a part of design to defraud the plaintiffs and to run away from
the responsibilities of the Company and shift the onus upon the
plaintiffs for their irregularities and failures in respect of accounts,
finances and debts of the Company, defendants created false
resolution dated 16.01.2020 for shifting the registered office.
7. The defendants have denied allegations of fraud in
toto.
Their defence is as under :
On 16.01.2020, the meeting was scheduled after sending
emails to all the directors on 13.01.2020. The agenda of the meeting
was also circulated. The plaintiffs replied the email confirming their
presence. The available agenda of the said meeting on 16.01.2020
the board meeting was held at the registered office and the same
was attended by the plaintiffs no.1 and 2 and defendant no. 1.
Among other business agenda, the issue of change of registered
office was discussed and was duly approved by the Directors. On the
basis of such resolution, registered office of defendants no. 7 was
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changed to ground floor, Mangal Simran, Off Turner Road, 20th
Road, Bandra (West), Mumbai-400050 (hereinafter “Mangal Simran”)
and accordingly, registered office of the Company was notified by
submitting form INC-22.
8. The Ld. Advocate for the defendants has submitted that
the Mangal Simran office is exclusively owned by defendant no.7
Company. The defendants have further contended that the plaintiffs
were actively involved and were in control of finance and accounts
of defendant no.7 Company, They cannot run away from the
responsibilities being Managing Director and CEO, the defendants
have not committed any fraud and therefore, Notice of Motion is
liable to be dismissed.
9. From the plaint allegations and the affidavit in reply
filed by defendants no.1 to 5, undisputed fact emerges that
defendant no.7 Company is facing financial crisis in as much as the
parties have received notices from Income Tax Department and other
agencies and due to heavy default in loan repayment of Axis Bank,
action was started for the recovery of loan. These aspects are
important because there is every likelihood that the properties of the
Company may be sealed, attached by the agencies or the bank and
the allegations of fraud in resolution dated 16.01.2020 to change the
registered office to Mangal Simran will have to be looked into in
that background. Even though, the defendants have claimed that the
plaintiffs are Managing Director and CEO of defendant no.7
Company, they are solely responsible for the finance, banking and
legal matters. The shareholders agreement between parties dated
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26.06.2003 speaks differenct and clearly stipulates in paragraph
no.3.4 “The GAWANDES have expertise in banking, financial and
legal matters and they hereby undertake to be personally involved in
the day to day operational activities of the Company so far as these
areas are concerned and to make adequate time available for the
same”. It is also stated in paragraph no. 4.1 “It shall be the
responsibility of the GAWANDES to raise and/or bring in finance
either by bank loans or otherwise as may be required by the
Company from time to time for the existing and/or new projects
after ascertaining the merits and feasibility of each such project.” In
paragraph no. 5.1 and 5.3 it is mentioned “The GAWANDES are
taking responsibility for appointment of internal auditor of the
Company and submission of all screening of financial accounts, MIS
reports.” From these stipulations in the agreement, it is abundantly
clear that the defendants no.1 to 4 were responsible for banking,
financial and legal matters of defendant no.7 Company.”
10. Coming to the Board Meeting dated 16.01.2020, it is
under challenge by the plaintiffs. Ld. Advocate for the defendants
has taken me through various emails informing about the said
meeting of the board and their acknowledgment. The contents of
email dated 13.01.2020 issued by the defendant no.5 Monika Khatri
reveal the agenda of the meeting. Point no.3 of the agenda reads
“To vacate registered office of the Company at 801-813, Mahalaxmi
Chambers as per notice given by the landlords.” Point no. 5 reads
“To discuss non signing of several minutes by the Talwalkars in
respect of concluded meeting of both the Companies TBVF and
THL.” From the above point no.3, the subject of the meeting was to
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vacate the registered address office. It is worth noticing that by
resolution dated 16.01.2020 the registered address of the Company
was change to Mangal Simran. It means the registered office was
shifted to Mangal Simran vide the said resolution. If shifting of the
registered office was agenda of the meeting, then the email would
have been written in the same line. The use of word “vacate” in
point no.3 of the agenda of the said meeting was referring to
shifting of the registered address. Moreover, the agenda speaks that
the registered office was to be vacated as per the notice given by
the landlords. It is not in dispute that the defendants no.1 and 4 are
the landlords. The defendants have failed to produce any notice
given by the defendants no. 1 to 4 to vacate the registered office.
This creates doubt about the resolution dated 16.01.2020. Moreover,
the said email has been sent by defendant no.5 Monika Khatri
whose designation in the defendant no.7 is unknown. The plaintiffs
have filed the notices of previous board meeting which are signed
by Company Secretary. Moreover, the agenda were also notified in
tabular form. It is also important to note that even after the alleged
resolution dated 16.01.2020, the records, books of accounts, server
of the Company are never shifted to the new address till today. The
defendants have tried to show that due to lock down, this could not
be done. However, the lock down in Maharashtra started from
16.03.2020. The alleged resolution was passed on 16.01.2020.
Therefore, in these two months also no efforts were taken to shift
the records to the new office. Even though the plaintiffs are not
denying receipt of notice of the board meeting dated 16.01.2020, the
manner in which the meeting was called and the resolution passed
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in the meeting clearly comes under scanner and detail inquiry is
necessary to find out whether the intent was to shirk the
responsibilities of defendants and to avoid action of sealing,
attachment of the properties of the defendant no.7 by changing
address from Mahalaxmi to Mangal Simran.
11. From the above discussion, it is prima facie
demonstrated that the defendants have created the resolution dated
16.01.2020 to shift the office from Mahalaxmi to Mangal Simran to
avoid the responsibilities of the Company and to protect the
registered office address from attachment in future. Thorough inquiry
is necessary to find out whether it was done fraudulently or not and
it will be done in the course of hearing of the suit. Therefore, the
plaintiffs are entitled for prayer clause (b). Hence, following order :
ORDER
1. The Notice of Motion no. 1351 of 2020 is allowed.
2. The defendants their agents, servants or any persons on their
behalf are temporarily restrained from further acting upon the
resolution of the meeting of Board of Directors held on
16.01.2020 pursuant to items no.3 of agenda of the meeting
till final disposal of the suit.
3. Costs in cause.
(C. V. Marathe)
Judge,
Date : 27.10.2020. City Civil Court, Gr. Mumbai.
Dictated on : 27.10.2020
Transcribed on : 28.10.2020
Signed by HHJ on : 29.10.2020
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED
JUDGMENT/ORDER.”
UPLOAD DATE AND TIME : 29.10.2020 at 1.30 p.m.
NAME OF STENOGRAPHER : Mrs. G. P. Acharekar
Name of the Judge (With
Court Room no.)
HHJ Shri. C. V. Marathe
C.R. no.04
Date of Pronouncement of
JUDGMENT/ORDER
27/10/2020
JUDGMENT/ORDER signed by
P.O. on
29/10/2020
JUDGMENT/ORDER uploaded
on
29/10/2020
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