1985 (3) TMI 215 - HC - Companies Law

Shares warrants and entries in register of members, Registers, etc., to be Evidence, Meetings and proceedings - Presumptions to be drawn where minutes duly drawn and signed, Oppression and Mismanagement Right to apply under section 397 and 398

Issues Involved:
1. Locus Standi of the Petitioner
2. Transfer of Shares
3. Validity of Resignation
4. Compliance with the Companies Act, 1956
5. Alleged Mismanagement and Fraud

Issue-wise Detailed Analysis:

1. Locus Standi of the Petitioner:
The primary issue addressed was whether the petitioner had the locus standi to maintain the application under sections 237, 397, 398 read with section 402 of the Companies Act, 1956. The petitioner claimed to be a shareholder and a director of the company, M/s. Orient Engineering Works (P.) Ltd. However, the opposite parties contended that the petitioner had transferred all his shares and resigned from the directorship, thereby losing his status as a shareholder.

2. Transfer of Shares:
The court examined whether the petitioner had indeed transferred his shares to opposite party No. 2. The opposite parties presented evidence, including the statutory transfer form (Exhibit 3) and the minutes of the board meeting (Exhibit 5), which indicated that the transfer was approved and recorded. The petitioner admitted his signatures on the transfer form and the resignation letter but claimed they were obtained without his knowledge. The court found no substantial discrepancies in the evidence presented by the opposite parties and concluded that the transfer of shares was valid and complied with section 108 of the Companies Act, 1956.

3. Validity of Resignation:
The court also examined the validity of the petitioner's resignation from the directorship. The resignation letter (Exhibit 4) was presented, and the petitioner admitted his signature on it. The court noted that the petitioner did not provide a satisfactory explanation for how his signature appeared on the document. Consequently, the court held that the resignation was valid and accepted by the board of directors as recorded in the minutes (Exhibit 5).

4. Compliance with the Companies Act, 1956:
The court addressed the compliance with relevant sections of the Companies Act, 1956, particularly sections 41, 108, 150, 193, 194, and 195. The court found that the transfer of shares and the resignation were duly recorded in the company's registers and minutes, which were prima facie evidence of the proceedings. The court also addressed the issue of stamp duty and cancellation of stamps, concluding that the stamps were properly cancelled as per section 12 of the Indian Stamp Act, 1899.

5. Alleged Mismanagement and Fraud:
The petitioner alleged various acts of mismanagement and fraud by the opposite parties, including irregular maintenance of accounts, withdrawal of company funds under false vouchers, and non-conduct of general body meetings. However, the court did not delve into the merits of these allegations as it found that the petitioner lacked the locus standi to maintain the application, having ceased to be a shareholder and director of the company.

Conclusion:
The court dismissed the application, holding that the petitioner was not a shareholder of the company on the date of filing the application and thus had no locus standi to maintain it. The court vacated the stay order granted earlier and directed that the amount of rent damages deposited by the petitioner be continued in deposit until the fixation of the quantum payable by the petitioner for the house he was occupying is decided by an appropriate court. There was no order as to costs.

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