Bangladesh Machine Tools Ltd. Vs. Registrar Joint Stock, 2018(1) LNJ 181

Case No: Company Matter No. 194 of 2017

Judge: Md. Rezaul Hasan, J.

Court: High Court Division,

Advocate: Mr. A.S.M. Shahriar Kabir, Mr. Shafique Ahmed Senior Advocate,

Citation: 2018(1) LNJ 181

Case Year: 2017

Appellant: Bangladesh Machine Tools Factory Limited.

Respondent: The Registrar, Joint Stock Companies and Firms and others

Subject: Company Act & Registration Act

Delivery Date: 2018-06-02

HIGH COURT DIVISION

(STATUTORY ORIGINAL JURISDICTION)

Md. Reazul Hasan, J

 

Judgment on

22.10.2017

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Bangladesh Machine Tools Factory Limited.

...Petitioner

-Versus-

The Registrar, Joint Stock Companies and Firms and others

...Respondents

Company Act (XVIII of 1994)

Sections 38(7) and 43(3)

It is the duty and power of the Board of Directors to look into and consider the proposal for transfer of shares, when the transfer proposal is placed for approval of the Board as per section 38(7) of the Act. The RJSC or any other executive body cannot usurp this power of the Board of Directors, nor RJSC is the latter’s delegatee. However, the act of respondent No. 1 in not taking into consideration the documents, annexed as Annexure-C and D series is tainted by malafide and it tantamounts to colorable exercise of power by the Respondent No. 1. Since a complaint dated 13.03.2016 has been made before the RJSC with reference to the aforesaid “poripatra”, therefore, this Court may stop further proceedings in this matter. This “poripatra” has no force of law and cannot supersede the provisions of section 38 of the Act, as has been held herein before. Moreover, this kind of submission is not only misconceived, but is suggestive of supersession of the statutory jurisdiction vested in this Court by an executive fiat. Such submission, instead of espousing the doctrine of separation power, tends to undermine the same, which is one of the basic structures of the Constitution.                     . . .(16 and 19)

Registration Act (XVI of 1908)

Section 17

Besides, it has to be made clear that the Companies Act, 1994 does not require that the share transfer instruments have to be submitted to the RJSC for the purpose of registration by it as it is required in the case of the deeds mandatorily requiring registration under section 17 of the Registration Act, 1908.           . . .(21)

Company Act (XVIII of 1994)

Sections 36 and 38

The company is required only to submit a summary of share capital and the list of share holders including the changes that may occur in respect of membership (shareholding position) due to transfer or transmission of shares (in schedule X), as necessitated by the provisions of section 36 of the Act. However, the RJSC may examine an instrument of transfer to see if it has been duly stamped or not, unless such stamp duty has otherwise been exempted (as was found in the case of transfer of listed shares), although this is essentially and primarily a responsibility of the Board of Directors, before whom such transfer instruments are to be placed, as per provisions of section 38, to approve the transfer. . . (22)

Company Act (XVIII of 1994)

Section 43

The parties may (if the arbitration agreement exists) appoint arbitrator in accordance with the provisions of Arbitration Act, 2001, to decide about their monetary claim and counter claim, if any, not to decide the title, nor the question of legality of transfer of those shares, which are matters falling within the statutory jurisdiction of this Court to decide and, has therefore, been decided by this judgment and order. In this respect I shall refer to the judgment passed by the Supreme Court of India, passed in Special Leave Petition (Civil) 3695 of 1999, between Haryana Telecom Limited -Vs- Sterlite (India) Limited, wherein it is held that it is not within the competence of the arbitral tribunal to adjudicate and grant any statutory relief.         . . .(25)

Mr. A.S.M. Shahriar Kabir with

Ms. Shamima Akhter with

Ms. Zareen Rahman, Advocates.

. . . For the petitioner.

Mr. Shafique Ahmed Senior Advocate with

Mr. A.F.M. Mesbahuddin Ahmed Senior Advocate with

Mr. Mohammad Shafiqur Rahman with

Mr. Mahbub Shafique, Advocates.

..…For the Respondent Nos. 3-6

Mr. A. K. M. Badrudduza, Advocate.

. . . For the respondent No. 1.

JUDGMENT

Md. Rezaul Hasan, J: This is an application filed under section 43 of the Companies Act, 1994 (the Act). Let the supplementary affidavit filed by the petitioner and the application for amendment do form part of the main petition.

2.            It has been alleged, amongst other, in the petition that the Petitioner is a public company limited by shares, incorporated under the Companies Act, 1994 (the Act). It is engaged in the business of manufacturing tools and machineries etcetera for meeting the local needs. It is a state owned company run, operated and managed by Bangladesh Army from 2000. The Government of Bangladesh published gazette notification in this respect and thereafter handed over the petitioner company from Ministry of Industry to Bangladesh Army and Bangladesh Army engaged in different productive business scheme to make the company profitable; that the Respondent No. 1 is the statutory government authority entrusted with the responsibility of registering and recording keeping of private and public companies, Respondent No. 2 is a private company, limited by shares; that, Respondent No.3 to 6 are the directors and shareholders of the Respondent No.2 company;  that as part of the business, on 03.11.2013 the Petitioner signed a Memorandum of Agreement with the Respondents No.3 to establish a poll factory in the BMTF premises and according to the terms of the said agreement, on 10.12.2013, the Petitioner and Respondent No.3 to 6 formed a company called Power Backbones Limited and duly incorporated in the Registrar Joint Stock Companies, Dhaka Annexure-A; that, the company has been formed for producing pre-stretched concrete poles to be supplied mostly in the public sector. That, the Petitioner and the Respondents on 03.11.2013, signed a Memorandum of Understanding, herein referred as ‘MOU’. That, under the said MOU, Respondents Nos. 3 to 6 should invest 10 (ten) Crore Taka for setting up the said poles factory in the Petitioner’s premises in Joyedebpur. The authorized capital of the company is 10,00,00,000 Taka and Respondents No. 3 to 6 holds 85% shares of the company and the Petitioner hold the remaining 15% shares of the company (Annexure - “B and B1”; that, the petitioner then approached the Respondent Nos. 3 to 6 for setting up the factory in the petitioner’s premises; that, the Petitioner invested its own money to set up the factory and also purchased all machineries and boiler; that, after the formation of the company Respondent No. 3 was elected as a Chairman and Respondent No.4 was elected as Managing Director of the Respondent No 2 Company. That, the Respondent No. 3 and 4 unethically misused the fund of the Respondent No. 2 company account and the Petitioner became highly prejudiced; that, for running the factory, the Respondents Nos. 3 to 6 did not invest any money but unethically withdrawn dividend, salary and other remuneration monthly wise from the company account; that, this stalemate condition created a dispute between the Petitioner and the Respondent No. 3 to 6; that, under this compelling circumstance, the Petitioner formed an inquiry committee to unveil the truth about the misappropriation of the fund by Respondent No. 3 to 6; That, the committee found that, the Respondent No.3 was supposed to pay Taka 5.5 Crore, the Respondent No. 4 was supposed to pay 1.5 Crore, Respondent No.5 to pay 1 Crore and Respondent No. 6 to pay 0.5 Crore. However, Respondent No.3 actually paid 55 Lac Taka and Respondent No. 4 did not pay any money; that, under the MOA, the Respondent No. 3 was supposed to bear all cost for setting up the factory and also invest for production shade, inspection room, warehouse and commission all the equipment at their own cost and management but the Respondent No. 3 did not invest any money, instead asked for cash loan support from the petitioner and opened L/C by violating the agreement;  that, under this compelling circumstance, the petitioner invested Taka 7,69,42,969 for the construction of the company; that, the factory came into operation from April 2015. From April 2015 to October 2015, the factory supplied total 17822 poles to different government departments and during this period  total Taka 31,76,62,112 was credited into the account of Respondent No. 2 company, but surprisingly Taka 31,76,56,824.38 was debited from the account; that, the Respondents for their personal gain withdrawn total Taka of 16,25,66,969 under the head of personal payment, dividend, monthly salary, petty cash, remuneration and miscellaneous from the company account; that, the Petitioner asked the Respondent No. 3 to 6 for resigning from the company and also signed Form 117 in this respect. That, on 10.08.2015, the Respondent No. 3 to 6 signed Form 117 and also signed affidavit in this regard Annexure- C Series; that, the respondent No.3 to 6 sign consent from and thereafter, the Petitioner submitted Form 117 and the affidavit before the Respondent No. 1 for completion of the said share transfer. That, the Respondent No. 3 to 6 did not appear physically before the Respondent No. 1 to complete the said transfer procedure, but on 13.3.2016, Respondent No.3 to 6 made an application before the Respondent No. 1 for not executing the said transfer Annexure -D Series; that it is submitted that the Respondent No. 3 to 6 signed the consent form and also signed the Form 117 with sound knowledge and mind and as such, the said share transfer documents are valid, lawful and legal documents. That, for ulterior motive, the Respondents No. 3 to 6 did not appear before the Respondent No.1 and as such, this Court should pass an order upon the respondent No.1 for intimation of transfer of shares and update its record and issue its certified copy; that, it is further submitted that Respondent No. 3 to 6 malafidely and with ulterior motive did not appear before Respondent No. 1 and most illegally misused and misappropriated the company fund and as such, the Petitioner has no alternative, but to file this company matter for securing its right and entitlement and as such, this Court should pass an order upon the respondent No.1 for intimation of transfer of shares and update its record and issue its certified copy; that, it is further submitted that Respondent No. 3 to 6 malafidely and with ulterior motive did not appear before Respondent No. 1 and most illegally misused and misappropriated the company fund and as such, the Petitioner has no alternative but to file this company matter for securing its right and entitlement and as such, this Court should pass an order upon the respondent No.1 for intimation of transfer of shares and update its record and issue its certified copy.

3.            Hence this petition.

4.            The respondent Nos. 3-6 have filed affidavit-in-opposition along with supplementary affidavit. The same shall form part of the main affidavit-in-opposition. In the affidavit-in-opposition, the said respondents have generally denied all allegations and have stated that the petitioner by suppressing the real facts of Registered Agreement being deed No. 86 dated 13.11.2013 and the verbal agreement to enable the PBL to participate and secure award of the tender floated by the REB under direct procurement method for purchasing SPC Poles for Khulna project and subsequent future tender in DPM which is clear from Annexures- III, III-A, III-B, III-C, III-D of this affidavit, for the aforesaid reason, the respondents did not receive any amount of money against their respective shares and the petitioner nowhere in the petition stated about the financial transaction regarding execution of Form 117; that the respondent Nos. 3-6 arranged a board meeting on 11.03.2016 and decided to send a letter to RJSC with the affidavit of the directors of PBL and thereafter on 13.03.2016, the respondent Nos. 3-6 communicated the same to the RJSC (Annexure: IV and IV-A); that it is stated that the petitioner’s Bangladesh Machine Tools Factory Limited on 15.05.2017 sent a letter  to the respondents regarding co-ordination conference dated 18.05.2017 and requested to attend the conference with all necessary documents of Power Backbones Limited(PBL) which substantiate the legitimacy of registered Memorandum of Agreement Deed being No. 86 dated 13.11.2013 and also provide evidence of extraordinary circumstances regarding execution of Form 117 (Annexure-V); that the submission and grounds enumerated in the petition are vague, unfounded and misconceived and the petition is not maintainable in its present form and as such, the application is liable to be disallowed with costs.

5.            Learned Advocates Mr. A. S.M. Shahriar Kabir, Ms. Shamima Akther, Ms. Zareen Rahman appeared for the petitioner. He, having placed the petition, first of all submits that the respondent Nos. 3-6 were shareholders of the respondent No. 2 company i.e. Power Backbone Limited (PBL), but they did not make subscription of even one Taka against the shares they have agreed to subscribe by signing their names in the Memorandum of Association (MOA). As such, none of the shares registered in the name of the petitioners are paid up shares. However, they are shareholders of PBL because of signing in the MOA. He next submits that the respondent Nos. 3-6, all have executed separate instruments of transfer of share (Form 117) on 10.08.2015, and both the transferor and transferee have executed each share transfer instruments. As such, the learned Advocate proceeds on, the respondent Nos. 3-6 have transferred their one but entire shares to the petitioner BMTF Limited on 10.08.2015 and had transferred one share to the nominee of the petitioner. Moreover, the learned Advocate further submits that, in order to complete the transfer, and to convey title in the said shares, the respondent Nos. 3-6 have handed over the original share certificates to the transferees in respect of total 85,00,000 number of shares held by them. Besides, the board of directors, then including the respondent Nos. 3-6, adopted a resolution on 10.08.2015, whereby the board has unanimously resolved and approved the said transfer of shares and transferor-directors, thereafter having no share (though all unpaid), had tendered resignation by separate letters, vide Annexure-D series to the petition. The learned Advocate continues that, all these documents were placed before the RJSC for the purpose of noting the transfer of shares, but the respondent No. 1 did not record the transfer of said shares in view of the objection placed by the respondent Nos. 3-6, vide a letter dated 11.03.2016 (Annexure-IV to the affidavit-in-opposition). He also submits that the RJSC has no power or authority to refuse the recording of the transfer of shares which have been done and completed upon compliance of all legal formalities as per provisions of section 38 of the Companies Act, 1994. But, the respondent No. 2 company is not rectifying its register of members in respect of 85,00,000 shares, by deleting the names of the respondent Nos. 3-6 and by recording these 85,00,000 numbers of shares in the name of the petitioner and its nominee. He further submits that the petitioner has a clear case to get the relief prayed for and as such, the petition may be allowed.      

6.            Learned Advocate Mr. Shafique Ahmed, learned Advocate Mr. A.F.M. Mesbahuddin Ahmed, learned Advocate Mr. Mohammad Shafiqur Rahman, learned Advocate Mr. Mahbub Shafique have appeared for the Respondent Nos. 3-6. The senior Advocates for the respondent Nos. 3-6, have stressed upon the maintainability of the petition in view of the fact that the petition has been filed under section 43 read with section 233 of the Companies Act, 1994 and that the relief prayed for was not proper. Raising another point of law, referring to a notice annexed to the supplementary affidavit sworn on 17.10.2017 (Annexure XIII), the learned Advocates the respondents further submit that, by this notice of arbitration, served upon the petitioner company for and on behalf of the respondent Nos. 3-6 and thereby informing the petitioner (BMTF) about appointment of their arbitrator as per clause 31 of agreement dated 13.11.2013 in respect of the issues mentioned in the said notice, this matter should be referred to arbitration. Besides, referring to Article 49 of the Articles of Association (AOA) of the respondent company (PBL), the learned Advocates emphatically submit that, as per Article 49 of Articles of Association of the PBL this matter should be referred to arbitrator and that the instant petition is not maintainable in view of the said Article 49, hence this proceeding shall be kept in abeyance till disposal of the arbitration proceeding. As regards other dispute, they would next submit that the respondents have monetary claims against the petitioner and that the petitioner has given assurance in writing, vide their letters dated 10.10.2015 (Annexure-IIIA), in which they have assured that, fresh document will be made between the parties and that until such time, the Memorandum of Association (MOA) filed on 13.11.2015 will remain valid. The learned Advocates further adds to their submissions that the respondents have monetary claim against the petitioner and, that, without settling their claims this petition should not be allowed. Therefore, they have prayed for dismissal of this petition.

7.            I have heard the learned Advocates for both the sides, perused the petition and affidavit of compliance, along with the supplementary affidavits, filed by the contending parties.

8.            I find that the respondent Nos. 3-6 were shareholders of the respondent No. 2 company i.e. Power Backbone Limited (PBL), since they have subscribed below clause v of the MOA and had agreed to take the number of shares shown against their respective names, and that all the said respondents have, by 4 separate notices, all dated 26.07.2015, expressed their intention to transfer their respective shares, held in PBL, to the petitioner i.e. to Bangladesh Machine Tools Factory Limited (BMTF) or to any other person. It is also on record that, pursuant to the said notice, these respondent shareholders, by four other separate notices, all dated 30.07.2015, have waived their right of receiving the first offer, in respect of transfer of those 85,00,000 shares. Accordingly, the then shareholders i.e. the respondent Nos. 3-6, all have executed 5(five) sets of separate shares transfer instruments in “Form 117”, on 10.08.2015, and both the transferor and the transferee have executed each share transfer instrument, bearing transferor Nos. 01 to 05, against Register Folio Nos. 02 to 05, respectively. In this manner, the respondent Nos. 3-6 have transferred their all, but one share, to the petitioner BMTF Limited on 10.08.2015, while Ms. Nasima Ahmed transferred 1(one) share to the nominee of the BMTF, namely- Major Farhana Akhter, DG (BMTF), on the same date. Thereafter, all the transferors, namely respondent Nos. 3-6, have affirmed these transfers to have been made, out of their free will, within sound mind and without any kind of influence,  vide four separate notarize affidavits, all dated 10.08.2015. All these documents have been marked to the petition as Annexures-C series.

9.            I also find that, in order to complete the transfer and to convey title in 85,00,000 shares transferred by the respondent Nos. 3-6, all of them have handed over the original share certificates, being Nos. 02 to 05 respectively, to the transferees in respect of total 85,00,000 (eighty five lac shares) held by them in the PBL.

10.        Besides, the materials on record also prove that, the board of directors, then including the respondent Nos. 3-6, had adopted a resolution on 10.08.2015, whereby the board did unanimously resolve and approve the said transfer of shares recording that the transfer of 55,00,000 (fifty five lac) shares held by Mr. Ghulam Sarwar; of 15,00,000 (fifteen lac) shares held by Mr. Md. Abdul Alim of 10,00,000 (ten lac) held by Ms. Daizy Hassan, and 4,99,999 (four lac ninety nine thousand nine hundred ninety nine) shares held by Ms. Nasima Ahmed, totaling 84,99,999 (eighty four lac ninety nine thousand nine hundred ninety nine) shares to the petitioner Bangladesh Machine Tools Factory Limited and the transfer of the rest 1 (one) share held by Ms.  Nasima Ahmed to Major Farhana Akhter, Deputy General Manager (Procurement) of BMTF. Thereafter, these respondent Nos. 3-6 have tendered resignation on the same day (10.08.2015) from the post of directors of the PBL, amongst them the respondent No. 3 was the director-Cum-Chairman and the respondent No. 4 was the Managing Director. The Board resolution and their resignation letters comprise the Annexure-D series. 

11.        Next, all these documents were placed before the RJSC (Respondent No.1), but the respondent No. 1 did not acknowledge the transfer of said shares in view of an objection placed by the respondent Nos. 3-6, vide letter dated 13.03.2016, Annexure-IV-A to the affidavit-in-opposition, which though was self explanatory, however did not signify any violation of the provisions of section 38 of the Act, or of the AOA of the PBL, nor contained any allegation that the share transfer instruments (Form-117) were not properly stamped.

12.        The objection dated 13.03.2016 was filed by the respondent Nos. 3 to 6 with reference to a “poripatra” under Reference No. 26.06.0000.093.01.060-14/8 dated 27.03.2016, issued by the RJSC. This Court has called for an explanation from the RJSC about the authority in issuing the said “poripatra”. The RJSE has given an explanation, vide an affidavit of compliance, bearing entry No. 3926 dated 13.08.2017, stating that, mainly to ensure transparency and to prevent forgery provision for personal attendance of transferor has been kept in that circular, although these are in fact power and responsibilities of the Board of Directors, as per section 38 of the Act.

13.        Hence, the issue as to whether this “poripatra” under reference No. 26.06.0000. 093.01.060-14/1827/8 dated 27.03.2016 (Annexure-F) has any force of law has arisen, as a question of law, and it has become necessary and expedient to decide this issue, since this Court is authorized by subsection (3) of section 43 of the Act, 1994, read with sub-rule (1) of Rule 5 of Order 14 of the Code of Civil Procedure.

14.        Admittedly, having perused the said “poripatra” under reference No. 26.06.0000 .093.01.060-14/1827/8 dated 27.03.2016 (Annexure-F), I find that it has been issued pursuant to an administrative instruction. However, there is no statute, nor any Rules, authorizing or requiring the RJSC to issue such “poripatra” (circular), although this “poripatra” was issued with the approval of the Ministry of Commerce. This “poripatra” is, in the light of the law already settled by the highest Court, nothing but a mere executive fiat that has no force of law. It is totally unauthorized and has been issued without any lawful authority and have no legal effect.

15.        The RJSC may, however, even in the absence of such “poripatra”, verify the genuineness of the documents, required by law to be placed before him, only if prima-facie evidence is placed before him, then on a case to case basis, provided that it is done in good faith, since he has a duty to apply his mind in each case placed before him, but the circular does not provide him with any extra arm as purported to have been conferred by the questioned “poripatra”.  

16.        Moreover, as has already been pointed out, it is the duty and power of the Board of Directors to look into and consider the proposal for transfer of shares, when the transfer proposal is placed for approval of the Board as per section 38(7) of the Act. The RJSC or any other executive body cannot usurp this power of the Board of Directors, nor RJSC is the latter’s delegatee. However, the act of respondent No. 1 in not taking into consideration the documents, annexed as Annexure-C and D series is tainted by malafide and it tantamounts to colorable exercise of power by the Respondent No. 1.  

17.        Nonetheless, the fact remains that respondent No. 2 company is not rectifying its register of members in respect of 85,00,000 shares, by deleting the names of the respondent Nos. 3-6 and by recording these 84,99,999 numbers of shares in the name of the petitioner and 1(one) share in the name of nominee of the petitioner.

18.        Hence, based on the evidence and the materials on record, it is found that the petitioner and its nominee has acquired title in 85,00,000  number of shares shown to be held, hereto before, by the respondent No. 3 to 6 in the PBL and they have also handed over the original share certificates to the transferees, i.e. to the petitioner and to its nominee Ms. Nasima Ahmed, with intent to pass the title in these shares to the transferee as at the time of delivery of the shares certificates. The intention of the respondent Nos. 3-6 to confer title in the transferred shares as on 10.08.2015 is manifest from their acts, conducts and the circumstances of this case. Therefore, in exercise of the authority vested in this Court under sub-section (3) of section 43 of the Act, I hold that the petitioner BMTF has acquired title and is owner of 84,99,999 shares in the respondent PBL and that its nominee Major Farhana Akhter, DGM, BMTF has acquired title in and is owner of 1(one) share in PBL, by way of transfer in the manner aforesaid. The respondent Nos. 3-6 have no share in PBL. The Register of members of the respondent No. 1 company shall be rectified accordingly.

19.        Next, turning my attention to the contention of the learned Advocate for the respondent Nos. 3-6 that, since a complaint dated 13.03.2016 (Annexure-IVA) has been made before the RJSC with reference to the aforesaid “poripatra”, therefore, this Court may stop further proceedings in this matter. This “poripatra” has no force law and cannot supersede the provisions of section 38 of the Act, as has been held herein before. Moreover, this kind of submission is not only misconceived, but is suggestive of supersession of the statutory jurisdiction vested in this Court by an executive fiat. Such submission, instead of espousing the doctrine of separation power, tends to undermine the same, which is one of the basic structures of the Constitution.

20.        The RJSC has no scope to interfere with or, otherwise, to confer or to exercise the function of a Court, or to compel attendance of any person or to take any deposition on oath. Nonetheless, this Court may ask an executive authority, in an appropriate case, to hold an investigation or inspection and to furnish report before the Court, particularly when the materials on record are scanty. However, in this case, the materials on record are adequate for disposal of this matter on merit.

21.        Besides, it has to be made clear that the Companies Act, 1994 does not require that the share transfer instruments have to be submitted to the RJSC for the purpose of registration by it as it is required in the case of the deeds mandatorily requiring registration under section 17 of the Registration Act, 1908.

22.        The company is required only to submit a summary of share capital and the list of share holders including the changes that may occur in respect of membership (shareholding position) due to transfer or transmission of shares (in schedule X), as necessitated by the provisions of section 36 of the Act. However, the RJSC may examine an instrument of transfer to see if it has been duly stamped or not, unless such stamp duty has otherwise been exempted (as was found in the case of transfer of listed shares), although this is essentially and primarily a responsibility of the Board of Directors, before whom such transfer instruments are to be placed, as per provisions section 38, to approve the transfer. However, in the present case, the same Board of Directors had approved the transfer of 85,00,000 shares in their meeting dated 10.08.2015, being satisfied that the instruments were duly stamped and that the transfer formalities had been properly done and it has been endorsed on each transfer instrument (Form-117) that, ®nu¡l qÙ¹¡¿¹l n¤ó eNc¡¢uaz 

23.        I have also taken for consideration the notice dated 16.10.2017, appointing arbitrator by the respondent Nos. 3-6, which has been issued upon the petitioner company through registered post, annexed to supplementary affidavit as Annexure-XIII. I have also taken into notice a certificate dated 16.10.2017, addressed to the learned Advocate for the petitioner Mr. A.S.M. Shahriar Kabir, annexed as Annexure- 2 to the supplementary affidavit sworn on 22.10.2017, wherein it has been recorded that BMTF will not have any objection to adjudicate the matter through arbitration.

24.        So far as the question of arbitration is concerned, that has arisen at a later part of the hearing, it is relevant to record here that, in paragraph No. 5 of the petition it has been asserted that the respondents had to invest Tk. 10,00,00,000/= (as paid up capital) for setting up of the factory at Joydevpur premises of BMTF, but the respondents  Nos. 3 to 6 did not invest any money. In paragraph No. 7 of the petition it has been stated that the respondents have unethically withdrawn dividend, salary and other monthly remuneration from the company account and that, this situation had given rise to a dispute between the petitioner and the respondent No. 3 to 6. In paragraph No. 8, the petitioner has specifically stated that, under this compelling circumstance, the petitioner formed an inquiry unearth the truth about the misappropriation of the fund by Respondent No. 3 to 6 and that the committee has found that, the Respondent No.3 was supposed to pay Taka 5.5 Crore, the Respondent No. 4 was supposed to pay 1.5 Crore, Respondent No.5 to pay 1 Crore and Respondent No. 6 to pay 0.5 Crore. However, Respondent No. 3 actually paid 55 Lac Taka and Respondent No. 4 did not pay any money; that, under the MOA, the Respondent No. 3 was supposed to bear all cost for setting up the factory and also to invest to construct the production shade, inspection room, warehouse as well as to commission all the equipments at their own cost and management, but the Respondent No. 3 did not invest any money, instead they had asked for cash loan support from the petitioner and opened L/C by the loan obtained from the petitioner, all that (were done) in contravention of the agreement;  that, under this compelling circumstance, the petitioner had to invest Taka 7,69,42,969 for the construction of the factory of the company. In paragraph No. 9, the petitioner also stated that, the factory came into operation from April 2015. From April 2015 to October 2015, the factory supplied total 17822 poles to different government departments and during this period  total Taka 31,76,62,112 was credited in the Respondent No. 2 company account, but surprisingly Taka 31,76,56,824.38 was debited from the account; that, the Respondents for their personal gain withdrawn total Taka of 16,25,66,969 under the head of personal payment, dividend, monthly salary, petty cash, remuneration and miscellaneous from the company account. Then, I noticed that, in reply to these allegations the respondents, vide their affidavit-in-opposition (sworn on 17.08.2017) simply gave evasive denial stating that, the statement made in paragraph No. 5 of the petition are matters of record and that the statement made in paragraph Nos.  8 and 9 are false, fabricated and misleading. The reply



Company Matter No. 194 of 2017