The court established that directors must adhere to fiduciary duties and ensure transparency in company operations, appointing an auditor to investigate mismanagement.

1. The Court congregated through hybrid mode.

2. Heard Ld. Counsels for the parties.

3. This is an application filed by Mr. Rajeev Nain Mishra and Ms. Pankhuri Mishra (hereinafter referred as “Applicants”) against Brijsons Hotel Private Limited, Mr. Brij Bihari Mishra and Mrs. Kamal Nayan Mishra (hereinafter referred as “Respondents”)

seeking following reliefs:

“a) Directions for making joint operation of the bank accounts of the company of both the present directors of the company namely the petitioner no.1 and the respondent no.2; b) Directions upon the petitioners therein to pay the EMI for November 2023 immediately and ensure timely payment of the future monthly instalments till disposal of the petition or till full satisfaction/realization thereof;

c) Orders and directions be passed against the petitioners therein to refund a sum of Rs. 1,34,350/- which has been paid as litigation costs from the bank account of the company;

d) Injunction restraining the petitioners therein and each of them and/or their men, servants and agents from paying the litigation costs from the bank accounts of the company;

e) An order thereby appointing a forensic auditor to make an enquiry into the accounts and day to day affairs of the company since 1st April, 2023 and file a report in respect of the transactions and accounts of the company;

f) An order for repayment of such amounts which have been defalcated and/or siphoned away by the petitioners therein as may be ascertained and/or found in the forensic audit report;

g) Stay of CP No. 254/KB of 2023 till disposal of the instant application;”

Brief facts of the case:

4. Applicant No. 1 namely, Mr. Rajeev Nain Mishra is a shareholder and one of the directors of the respondent No. 1 company Brijsons Hotel Private Limited. The respondent No. 2 Mr. Brij Bihari Mishra is another director and shareholder of the company. It is the claim of the applicant herein that the respondent No. 1 Mr. Brij Bihari Mishra has breached fiduciary duties in running the company. The applicant claims that the company is grossly mismanaged and its funds are diverted for the unjust enrichment of the respondent No. 2 herein.

5. Factually the applicant along with his wife owns 83.85% of the shares in the respondent 1 company whereas, the respondent 2 owns 16.15% of shareholding.

6. It is the claim of the applicant herein that respondent No. 2 is taking advantage of the bank signatory mandate of “either/or” in the company to operate bank accounts of the company as per his whims and fancies. Admittedly, it is the respondent No. 2 who is running the day-to-day affairs of the company and despite holding 83.85% shares, the applicant is unable to prevent the respondent No. 2, being father of the applicant, from running the company to the ground. The applicant claims that respondent has been engaging in gross acts of mismanagement of the affairs of the company.

7. To substantiate his contentions with reference to mismanagement, the applicant has placed following acts of alleged mismanagement with certain document supports in the form of Whatsapp messages exchanged between him and General Manager of the respondent company apart from attaching bank statements, MIS report received by him from the General Manager of the respondent No. 1 company etc.

a) Difference in sales:

The applicant submits that the entire accounting is maintained in a software meant for hotels called IDS. The applicant submits that for the month of April 2023 to November 2023, amount of revenue captured in MIS (IDS software) is Rs. 7,55,81,287/- whereas, what has been reported in the GST Forms filed with the Statutory Authority during the relevant period is only Rs. 6,02,39,732/- leading to a difference of Rs. 1,53,41,555/-. Thus, Ld. Counsel for applicant submits that cash sales must have been done but recorded in IDS software only whereas, it has not been captured in the books of accounts maintained for statutory purposes leading to under reporting of revenue in GST ret