Trudy Trindade, Allied Bungalow, St. John''s Road, Bandra(West), Mumbai - 400050 Vs La-Joy Hotels Private Limited, P. O. Porvorim, Socorro, Bardez, Goa - 403501, Lazaro De Souza, P. O. Porvorim, Socorro, Bardez, Goa - 403501, Smt. Joyce Arora Santhacruz Pinto, De Souza, P. O. Porvorim, Socorro, Bardez, Goa - 403501 and Anthony Trindade, Allied Bungalow, St. John''s Road, Bandra(West), Mumbai - 400050

@JUDGMENTTAG-ORDER

N.A. Britto, J.@mdashHeard the learned Counsel on behalf of both the parties as well as the learned Counsel on behalf of the Intervenor. This petition presented on 22-6-2004 is for the winding up of the Respondent No. 1-Company which was incorporated on 23-11-1994, on just and equitable ground u/s 433(f) of the Companies Act, 1956.

2. There is no dispute that the Respondent No. 1 is a closely held Company and in the words of the Petitioner and his learned Counsel, a glorified partnership. Respondent Nos. 2 and 4 are cousins inter se. The Petitioner is the wife of Respondent No. 4, and the latter has not contested the petition nor advanced any arguments though Mr. A. D. Bhobe, the learned Counsel appears on his behalf. The Respondent No. 3 is the wife of Respondent No. 2. All four were the directors holding 10 shares each. The registered office of the Company was at the residence of Respondent Nos. 2 and 3 and the former was its Managing Director. The Company had resolved to construct a hotel and land was to be brought in by Respondent Nos. 2 and 3 which they did by virtue of lease deed dated 7-9-1995.

3. The Respondent Nos. 2 and 3 were the owners of a piece of land admeasuring 4760 sq. meters surveyed under No. 20/8. The lease was duly executed between the Respondent Nos. 2 and 3 on one side and the Respondent No. 1-Company represented by the Respondent No. 4, on the other side. The Petitioner and Respondent No. 4 were to bring in finance and this they did by spending an amount of Rs. 22,25,000/- on the construction of hotel project which remained incomplete. The contract for the construction was awarded to M/s. Rajsun Promoters and Builders by the said Company. All necessary permissions from various authorities were taken in the name of the Respondent Nos. 2 and 3. The expenditure was incurred by the Petitioner and Respondent No. 4 on the understanding that it would be reimbursed to them in the share capital of the Company which would be augmented and thereby the Petitioner and her husband would become majority shareholders.

4. The lease was for a period of 99 years and in terms of the said lease the Company was to pay an annual rent of Rs. 2,85,600/- to the Respondent Nos. 2 and 3.

5. According to the Petitioner between 1997-1998, 2000-2001, the tourism industry in Goa had come to a standstill as international tourists were not visiting India and therefore it was decided by the Petitioner and the Respondents that no loans should be obtained but after the Tourism Industry picked up, the construction should be completed after obtaining a loan. As per the Petitioner, as the situation prevailing in the market improved the Petitioner and her husband approached the Respondent Nos. 2 and 3 to complete the balance work of the hotel business. As per the Respondent Nos. 2 and 3 in the year 1996 the Respondent No. 4 had to undergo financial crunch and was involved in a number of litigations and it is on that count that the Respondent No. 4 could not comply with the terms of the agreement/arrangement for financing the Company in its hotel project and in view of the persistent default by the Company in complying with the terms of the lease deed, the Respondent Nos. 2 and 3 on 18-9-1996 addressed a notice to the Respondent No. 1-Company informing their intention to terminate the lease deed and that in view of the same and in view of the fact that the Company was unable to pay the rents to the Respondent Nos. 2 and 3 the Company resolved on 19-10-1996 to terminate the lease. According to the Respondents, in terms of the Resolution taken on 19-10-1996, the Respondent Nos. 2 and 3 on one side and the Respondent No. 1 represented by the Respondent No. 4 on the other side executed a deed of cancellation of lease dated 19-10-1996 duly attested before the Notary in Mumbai in the presence of two witnesses and in terms of the said cancellation deed, it was made clear that the rights, title and the interest of the Company/lessee stood terminated and the lessee deemed to be divested of the property and the property reverted to the lessors. The Petitioner and Respondent No. 4 on 11-11-1996 executed a power of attorney in favour of the Respondent No. 2 to execute necessary cancellation deed before the Sub Registrar. As per the Respondent Nos. 2 and 3 w.e.f. 19-10-1996 the Respondent No. 1, the Petitioner and the Respondent No. 4 were divested of all the rights of whatsoever nature in respect of the property that was leased by deed dated 7-9-1995. The Respondents have also stated that as per the discussions by the Board of Directors on 19-10-1996 it was resolved that the Respondent No. 2, the lessor would hand over an amount of Rs. 22,25,000/- to the Respondent No. 4, on behalf of the Company, so as to reimburse him with the investment made by him towards the hotel project on behalf of the Company and the said amount was duly accepted by the Respondent No. 4 as full and final settlement of the claims of the Petitioner and the Respondent No. 4 in the construction and on the same day it was resolved that the Petitioner along with the Respondent No. 4 would resign from the Company and that pursuant to the said understanding the Petitioner and the Respondent No. 4 tendered their resignations to the Board.

6. At present, there is no dispute that pursuant to the said cancellation of lease deed dated 19-10-1996 by the Company, the Respondent Nos. 2 and 3 entered into an agreement on 21-8-2002 with the Intervenor-M/s. Sansha Constructions, a Proprietor concern of Smt. Shashikala Kakodkar for development of the said property for a consideration of Rs. 82,70,835/- and thereafter by deed of sale dated 26-4-2005 the said M/s. Sansha Constructions has purchased the said property and by another deed dated 14-7-2005 the said M/s. Sansha Constructions purchased the said construction carried out by M/s. Rajsun Promoters, financed by the Respondent No. 4. The said Intervenor has put up a project in the said property consisting of 29 flats and 23 shops and as stated by the said Intervenor, various agreements of sale with various persons for the selling of the flats and shops have been entered into after receipt of consideration by the said buyers and possession of the flats and shops has been handed over to the said purchasers.

7. Although the Respondent No. 4, the husband of the Petitioner, did not contest the petition he filed an affidavit in the intervention application of the said M/s. Sansha Constructions(MCA No. 564/2005) and produced an agreement dated 11-4-2004 entered into by him with the said M/s. Sansha Constructions by which it was agreed that the Respondent No. 4 would be paid a consolidated amount of Rs. 1902000/- in full and final settlement of consideration in respect of his share capital, if any. As per the said agreement, a sum of Rs. 1,20,000/- was paid to the Respondent No. 4 upon the execution of the said agreement on 11-4-2004 and the balance of Rs. 18,00,000/- was to be paid on dates shown in the said agreement but according to the Respondent No. 4 he has given a go-bye to the said agreement as Sandeep Kalangutkar, the husband of the Proprietor of M/s. Sansha Constructions had failed to comply with his obligation to pay the said sum when he had required it badly. This plea of Respondent No. 4 appears to be too good to be true.

8. Be that as it may, the first aspect which needs consideration is the delay in filing the petition inspite of the fact that the Petitioner and her husband, the Respondent No. 4 had submitted their resignations way back on 14-11-1996 i.e. after a gap of almost 8 years. The Petitioner has not spelt out in the petition as to when the cause of action for filing the petition arose but it has been stated by her that she had visited Goa on or about 12-5-2004 for some personal work and at that time she had visited the said property and she learnt that the construction work had started and upon inquiry from the persons who were present there she came to know that the Respondent Nos. 2 and 3 had created some interest in the property in favour of the third party and the said third party had started the construction but the name of the third party was not furnished as the said person did not know the said name. However, it can be seen from the affidavit of the Respondent No. 2 that the Petitioner and her husband, the Respondent No. 4, had published a notice on or about 28-8-2002, copy of which is produced as R-6 to the reply filed, warning the public at large not to enter into any transaction in respect of the said property and therefore the Petitioners statement that she came to know about the construction work on 12-5-2004 appears to be an incorrect statement. Moreover, the Respondent No. 4 in his affidavit dated 10-5-2005 filed in MCA No. 564/2005 stated that he had agreed to settle the claim for Rs. 19,00,000/- with the said Sandeep Kalangutkar, but his wife, the Petitioner was not agreeable and therefore did not accept the said agreement dated 11-3-2004. The very affidavit of the Respondent No. 4 and a copy of the agreement dated 11-3-2004 shows that the petition has been filed with unexplained delay and with false averments. It is well settled that the Company Court exercises equity jurisdiction and will not go in aid of a party who files a petition with false averments.

9. This is a case where the petitioner has come with unclean hands and has indulged in suppression of facts particularly the notice dated 28-8-2002 and the agreement dated 11-3-2004 and as such would not be entitled to discretionary relief.

10. Both the learned Counsel have placed reliance on Hind Overseas Private Limited Vs. Raghunath Prasad Jhunjhunwalla and Another, wherein the Apex Court has stated that in a petition u/s 433(f) the allegations made in the petition are of primary importance. A prima facie case has to be made out before the Court can take any action in the matter. Even admission of a petition which will lead to advertisement of the winding up proceedings is likely to cause immense injury to the company if ultimately the application has to be dismissed. The interest of the Petitioner alone is not of predominant consideration. The interests of the shareholders of the company as a whole apart from those of other interests have to be kept in mind at the time of consideration as to whether the petition should be admitted on the allegations mentioned in the petition. The Apex Court has stated that the expression "just and equitable" u/s 433(f) is not to be read as being ejusdem generis with the preceding five clauses and that the only limitations are the force and content of the words themselves i.e. "just and equitable" and that the relief u/s 433(f) is in the nature of a last resort when other remedies are not efficacious enough to protect the general interests of the company. The Apex Court has also stated that when the said clause is invoked there must be materials to show that it is "just and equitable" not only to the persons for winding up but also to the company and to all its shareholders and the Company Court is required to keep in mind the position of the company as a whole and the interests of the shareholders and see that they do not suffer in a fight for power that ensues between two groups. The Apex Court also observed that when more than one family or several friends and relations together form a company and there is no right as such agreed upon for active participation of members who are sought to be excluded from management, the principles of dissolution of partnership cannot be liberally invoked. Besides, it is only when shareholding is more or less equal and there is a case of complete deadlock in the company on account of lack of probity in the management of the company and there is no hope or possibility of smooth and efficient continuance of the company as a commercial concern, there may arise a case for winding up on the just and equitable ground. In a given case the principles of dissolution of partnership may apply squarely if the apparent structure of the company is not the real structure and on piercing the veil it is found that in reality it is a partnership.

11. One of the main grounds urged by the Petitioner for the dissolution of the Respondent No. 1-Company is that there is a deadlock between the Members of the Board of Directors and the Board of Directors cannot see eye to eye. Does the Petitioner and her husband/respondent no.4 really require to see eye to eye with Respondent Nos. 2 and 3? That is the second aspect which needs consideration.

12. Admittedly, the Petitioner and the Respondent No. 4 have given their resignation letters on 14-11-1996 and there is no dispute about it. Nevertheless, it is the case of the Petitioner that these resignation letters were given a go-bye. However, no explanation has come from the Petitioner as to why the Petitioner or for that matter Respondent No. 4 chose not to withdraw the said resignations in case it was agreed that they were not to be acted upon. The Respondent Nos. 2 and 3 as far as the said resignations of the Petitioner and Respondent No. 4 are concerned have taken a twofold plea. As per the said Respondents, the Petitioner and Respondent No. 4 have ceased to be the Directors of the Respondent-Company by operation of law as according to them the said resignation letters did not require any acceptance. Alternately, the said Respondents contend that the said resignation letters were accepted by the Respondent-Company on 2-10-2000 and the Registrar of Companies was informed subsequently on 27-10-2000 by Form No. 32-A. As noted by this Court in its Order dated 24-2-2006 notwithstanding the submission of the said Form No. 32-A on 27-10-2000 to the Registrar of Companies, the Petitioner and the Respondent No. 4 still came to be shown as Directors of the Company for the year 2001-2002 and later Form No. 32-A was revised by the Respondent Nos. 2 and 3. Whether the Petitioner had given a fresh resignation or not prior to 2-10-2000 would be of no consequence as long as the Petitioner and Respondent No. 4 had not withdrawn their resignations given on 14-11-1996. Although, the Petitioner claims that she and her husband, the Respondent no.4, continue to be the Directors of the Respondent-Company, as per the Respondents, as stated by them in paras 12, 13 and 14 of their reply, on 19-10-1996 the Board of Directors had resolved that Respondent No. 2, the lessor, would hand over an amount of Rs. 22,25,000/- to the Respondent No. 4 on behalf of the company so as to reimburse him for the investment made towards the construction of the hotel project on behalf of the company and the said amount was duly accepted by Respondent No. 4 towards the full and final settlement of the claim of the Petitioner and Respondent No. 4 in the construction and the company and on the same day it was resolved that the Petitioner and Respondent No. 4 would retire/resign from the company and that upon payment the same would be credited in the books of the company to the account of Respondent No. 2 as share application money for further issues of shares at a later date if so desired. As per the Respondents, the Petitioner and Respondent No. 4 tendered their resignations to the Board but the Board did not immediately accept the same as it was decided by the Respondent Company that Respondent No. 4 and the Petitioner had created liabilities in the name of Respondent No. 1 and till the liabilities were satisfied, the Petitioner and Respondent No. 4 should not officially be permitted to go out and it was further decided that the Petitioner and Respondent No. 4 would not participate thereafter either in the business or the functioning of the company and would not create further liabilities on behalf of the said company.

13. Whatever might have been the understanding of the said Respondent as regards the said resignation submitted by the Petitioner and Respondent No. 4, the said Respondents contention that the Petitioner and Respondent No. 4 has ceased to be the Directors of the Company after they tendered their resignations on 14-11-1996 deserves to be accepted.

14. The Apex Court in Moti Ram Vs. Param Dev and another, , inter alia, relying on Glossop v. Glossop ( (1907) 2 Ch 370) has held that in Company Law, a Director of a company is entitled to relinquish his office at any time he pleases by proper notice to the company and acceptance of the resignation is not required(emphasis supplied). The Respondents therefore are justified in contending that the Petitioner and Respondent No. 4 had ceased to be the Directors of the Respondent Company when they submitted their resignations on or about 14-11-1996 as its acceptance was not called for. That apart the Respondent Company was also free to accept the same subsequently as long as the said resignations were not withdrawn by the Petitioner and Respondent No. 4 and whichever way one looks at the status of the Petitioner and Respondent No. 4, the fact remains that the Petitioner and Respondent No. 4 at the time of filing of the petition had ceased to be the Directors of the Respondent Company and therefore the Petitioner''s contention that there is a deadlock amongst the Directors or that the Directors cannot see eye to eye is a plea which cannot be accepted.

15. A Division Bench of this Court in Saumil Dilip Mehta v. State of Maharashtra and others (2002 48 CLA 21 (Bom.)) reiterated in para 6 of the learned Judgment that a Director of a public or private limited company can resign unilaterally and that too by writing a letter to the chairman of the said company or its secretary and without filling in Form 32 and without sending a notice to the Registrar of Companies since filling of the said form and giving due intimation to the Registrar of Companies is the duty of the company secretary and not of an individual director. This statement of law is in tune with the law laid down by the Apex Court in Moti Ram v. Param Dev and another(supra) and therefore has got to be considered as the law on the subject of resignation of a Director of a Company. Thereafter, the learned Division Bench observed in para 7 that when a director has tendered his resignation and the Board of directors has accepted it and has acted on it, such director cannot be held liable for the liability incurred by the said company after the date of acceptance of his resignation except the liability which has been incurred by him for purchase of the shares of the company and nothing more. This observation cannot be taken to mean that a resignation is required to be accepted before it takes effect. In any event, this observation has got to be considered as sub silentio the statement of law made by the Apex Court in the case of Moti Ram v. Param Dev and another(supra) which was not brought to the notice of the learned Division Bench. As rightly pointed out on behalf of the Respondents once it is accepted that a director can unilaterally tender his resignation, there is no question of its acceptance. Another Division Bench of this Court in the case of T.V. and Radio Publicity Services Vs. Union of India (UOI) and Another, again referring to the case of Moti Ram v. Param Dev and another(supra) has observed that a resignation implies relinquishment of one''s own right to the office he is holding. The act of resignation connotes voluntarily giving up of the job or the office which the person was holding till the time of his resignation. A statutory provision or a contract governing the terms of service conditions may provide for the procedure for tendering resignation and for giving effect to the resignation tendered by the person in employment or occupying an office. However, in a case where there is no such provision of law or terms of the agreement between the concerned parties governing such procedure and when the office occupied by the person is by choice and at the discretion of the incumbent of such office, the resignation by such person would be effective from the time it is tendered and communicated to the concerned party or the authority. It is only in a case where there is specific provision either in the statute or in the agreement between the parties that the resignation to be effective needs to be accepted by the concerned authority, that the date for giving effect to the resignation would stand extended to the date of acceptance of resignation. In other words, when the act of resignation is unilateral in character, it would take effect from the date of communication thereof without any further decision on such resignation by the concerned authority. On behalf of the Petitioner it is conceded by learned Counsel that there is no provision in the Companies Act or the articles of the Respondent-Company regarding resignation of the director and its acceptance and if that be so the Petitioner''s contention that she and her husband continue to be the directors cannot be accepted and what is to be accepted is the Respondents'' assertion that by operation of law they had ceased to be directors from the date they tendered their resignations i.e. 14-11-1996 and therefore there is no question of the Petitioner and Respondent No. 4 on one hand and the Respondent Nos. 2 and 3 on the other hand not having any thrust and confidence between them or they not being able to see eye to eye and work for the Respondent Company.

16. The third aspect which needs consideration is the disappearance of the substratum of the company, as claimed by the Petitioner, by selling the piece of land in favour of the said M/s. Sansha Constructions. In other words, as per the Petitioner the Respondent Nos. 2 and 3 have caused the only asset of the company to vanish and thus have destroyed the substratum of the company. As per the Petitioner the substratum of the company disappears when the subject matter of a company is gone or when the object for which the company was incorporated has substantially failed or it is impossible to carry on business of the company i.e. there is no reasonable hope that the object of the trading could be attained or the company has never been able to carry on business for the purpose it was formed or there is a complete deadlock or there is no mutual confidence between the groups. As per the Petitioner the main object of the company was to take over the running business of M/s. La Joy Hotels along with its assets and liabilities. On the other hand, it is the contention of the Respondents that Respondent No. 1-Company continues to have two directors, namely, Respondents 2 and 3 who are husband and wife and the two directors are conducting its affairs in total harmony.

17. The Apex Court in the case of Mohan Lal and Another Vs. Grain Chamber Ltd., Muzaffarnagar and Others, observed that substratum of the company is said to have disappeared when the object for which it was incorporated has substantially failed or when it is impossible to carry on the business of the Company except at a loss or the existing and possible assets are insufficient to meet the existing liabilities. On facts of that case the Apex Court found that the object for which the company was incorporated had not substantially failed and it could not be said that the company could not carry on its business except at a loss nor that the company was to meet its liabilities. In the case at hand, a perusal of the articles of the Association of the company shows that the company had certain main objects which were required to be pursued and there were also objects incidental or ancillary to the main objects. Amongst the main objects it can be seen that the company was (a) to take over the running business of M/s. La Joy Hotels along with its assets and liabilities and (b) to own, construct, establish, run, manage, carry on the business of hotels, motels, health resorts, inns, restaurants... etc. If at all the lease deed in favour of the company was subsequently cancelled and as alleged by the Petitioner, wrongly, the Respondent Company would be in a position to continue with its business to own, construct and establish other hotels and motels, as stipulated in the main objects of the said company as well as to carry out its incidental or ancillary objects as stipulated in clause (B)(3) of the Memorandum of Association. On facts of the case, it would be difficult to accept that by cancellation of the sale deed the very substratum of the company has disappeared and on this count also the Petitioner would not be entitled to any relief.

18. However, the matter cannot be allowed to end there. In terms of the resolution dated 19-10-1996 the company resolved to terminate the lease deed executed between the company and the owners of the property, i.e. Respondent Nos. 2 and 3 as the company was unable to pay the rents and accordingly a deed of cancellation of the lease deed was executed on 19-10-1996 between the company which was represented by Respondent No. 4 and Respondent Nos. 2 and 3 as owners of the land. A copy of the minutes dated 19-10-1996 shows that it was held at Bandra, Mumbai, presumably where the Petitioner and Respondent No. 4 reside and if it is the contention of the Petitioner that the Respondent Company is a closely held company the absence of a formal notice being given to the Petitioner and the Respondent No. 4 would not make any difference and at this stage what is stated in the said minutes which will have got to be prima facie accepted, as held by this Court in the case of B.D.A. Breweries and Distilleries Ltd. and others v. Cruickshank and Co. Ltd. and another(1996 CC 325 85). In this case, this Court referred to Section 195 of the Companies Act and observed that it touches a presumption as to the validity of the minutes of the meeting of the company and the settled law is that the minutes in the books are received, though not as conclusive, yet as evidence of the resolution of the proceedings and at the interlocutory stage this can be the only correct approach. The Respondents have produced not only the said resolution dated 19-10-1996 but also a letter dated 18-9-1996 addressed to Respondent No. 4 by Respondent Nos. 2 and 3 as well as the said deed of cancellation dated 19-10-1996. The Respondents have also produced a copy of the power of attorney executed by the Petitioner/Respondent No. 4 in favour of the Respondent No. 3 and it is the contention of the Respondents that after the termination of the lease deed the property did not remain as an asset of the company and as such the Petitioner could not have any claim over the same. Although, the said letter dated 18-9-1996 is addressed to Respondent No. 4 at his address C/o the Company, the fact remains that the said letter is referred to in the power of attorney executed by the Petitioner and Respondent No. 4. All that the Petitioner has been able to say as regards the said deed of cancellation dated 19-10-1996 or for that matter the power of attorney is that they are fabricated documents. Surprisingly, the Respondent No. 4 has not filed any affidavit disputing his signature on the said deed of cancellation as well as the power of attorney and the affidavit in rejoinder filed by the Petitioner has not been verified in accordance with law and in the absence of proper verification it cannot be accepted in support of the facts stated therein. Proper verification of an affidavit is not an empty formality. It is to test the genuineness and authenticity of the statements and also to make the deponent responsible to the statements made. The claim of the Petitioner that the said documents, namely the cancellation deed dated 19-10-1996 and the power of attorney dated 11-11-1996 are fabricated documents is a claim which is weak and hollow and cannot be accepted. It certainly does not require a discerning eye to observe that the said two documents were indeed signed by Respondent No. 4 who has chosen not to contest the proceedings. The said deed of cancellation dated 19-10-1996 acknowledges that Respondent No. 4 has received the money on behalf of the company invested by him in the construction of the building which had remained incomplete. The said documents in the absence of any affidavit from the Petitioner or for that matter from Respondent No. 4 that they are fraudulent, have to be accepted as prima facie proof of facts stated therein and they clearly show that Respondent No. 4 was well aware, as he represented the company, in the said transaction of cancellation of sale deed that the lease deed by Respondent Nos. 2 and 3 in favour of the company was cancelled on 19-10-1996. As regards the Petitioner''s contention that the lease deed subsequently registered before the Sub Registrar does not mention that Respondent No. 4 was paid Rs. 22,25,000/- is a fraud, the same has been sufficiently explained by the Respondents in the additional affidavit dated 4-3-2005. In this affidavit, the said Respondents have stated that it was thought necessary to execute the deed before the Sub Registrar in Goa and it was thought fit and advisable not to mention the consideration paid by the lessor to the lessee for determination as the same was not part of consideration for cancellation of the lease deed and the Sub Registrar would otherwise demand the payment of more duty in case it was reflected in the said deed of cancellation presented for registration.

19. Although on behalf of the Petitioner it is contended that the conduct on the part of the Respondent Nos. 2 and 3 has been mala fide and dishonest, it appears that the boot is on the other foot. The petition filed by the Petitioner appears to be an indirect attempt on the part of Respondent No. 4 belatedly made for the dissolution of the Respondent Company for in case it was filed directly by him he would have been required to explain the documents executed by him including the deed of cancellation of lease dated 19-10-1996 to which he was very much a party.

20. From whatever angle one looks at the petition, the Petitioner and the Respondent No. 4 having resigned as directors of the Respondent Company have no locus standi to file the present petition which otherwise also has no merit and consequently the same is hereby dismissed with costs of Rs. 5000/- to be paid by the Petitioner to the Respondent Nos. 2 and 3. Order accordingly.