Friday, October 17, 2014

Conduct of respondent was oppressive as it used petitioner's funds in its own Cos without informing petitioner

Where money invested by petitioner in R-1 company was utilized in other companies managed by person managing R-1 company but no information about investment was provided to petitioners, such conduct would be held to be oppressive


a)The petitioner-foreign company made FDI investment in Respondent-1-company five years ago on assurance of growth. However, nothing happened in Respondent-1-company. It virtually remained a shell company, whereas funds invested by the petitioner were invested into Respondent-7-company, which was nothing but alter ego of RC, who was managing Respondent-1-company.

b)When petitioner asked for inspection and audit of accounts and financials of the respondent-7-company, the respondents refused to provide any clue as to what had happened to investment made by the petitioner.

c)There were many companies which were alter egos of Respondent-5, who was managing Respondent-1-company.Respondent-5 and Respondent-6 who were in control of company were also not inclined to disclose any information relating to money invested by petitioner.

d)The petitioner filed instant petition.

The Company Law Board held as under:

1)The conduct of respondent-5 and respondent-6, who were running all those companies, was oppressive and prejudicial to interest of petitioner–CPI INDIA REAL ESTATE VENTURE LTD. V. PERPETUAL INFRACON (P.) LTD. (2014) 49 TAXMANN.COM 25 (CLB - NEW DELHI)