1989 (9) TMI 321 - HC - Companies Law

Issues Involved:
1. Simultaneous pursuit of two remedies.
2. Consent not enclosed with the petition and validity of subsequently filed consent.
3. Defective verification of affidavits.
4. Petitioners having majority shareholding.

Detailed Analysis:

I. Simultaneous Pursuit of Two Remedies:
The non-petitioners contended that the petitioners had filed another petition under sections 408 and 409 of the Companies Act before the Company Law Board, Central Government, New Delhi, with similar allegations and prayers, which was still pending. They argued that two remedies cannot be invoked simultaneously, citing *Hungerford Investment Trust Ltd. v. Turner Morrison and Co. Ltd.* [1972] ILR 1 Cal 286 and *Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd.* [1964] 34 Comp. Cas. 777; AIR 1965 Guj 96. The court noted that both petitions contained almost identical averments and prayers, and held that pursuing parallel remedies is not permissible, referencing *Jai Singh v. Union of India*, AIR 1977 SC 898. Consequently, the present petition was deemed not maintainable on this ground.

II. Consent Not Enclosed with the Petition and Validity of Subsequently Filed Consent:
The non-petitioners argued that the petition did not include the required consent of shareholders as per rule 80 and Forms Nos. 43 and 44 of the Companies (Court) Rules, 1959. The consent was filed with the rejoinder, which they claimed was invalid. They cited *M. C. Duraiswami v. Sakthi Sugars Ltd.* [1980] 50 Comp. Cas. 154 (Mad), *Omni India Ltd. v. Balbir Singh* [1989] 66 Comp. Cas. 903 (Delhi), *K. P. Chackochan v. Federal Bank* [1989] 66 Comp. Cas. 953 (Ker), and *Kilpest Pvt. Ltd. v. Shekhar Mehra* [1987] 62 Comp. Cas. 717 (MP). The court observed that the consent did not demonstrate that shareholders had applied their minds to the petition's allegations and reliefs, making it invalid. The court concluded that the petitioners did not hold the required 10% shareholding and the consent filed was not in accordance with legal requirements, rendering the petition not maintainable on this ground as well.

III. Defective Verification of Affidavits:
The non-petitioners claimed that the affidavits did not comply with rule 21 and Form No. 3 of the Companies (Court) Rules, 1959, citing *Mool Chand Wahi v. National Paints P. Ltd.* [1986] 60 Comp. Cas. 198 (P&H), *Malhotra Steel Syndicate v. Punjab Chemi-Plants Ltd.* [1989] 65 Comp. Cas. 546 (P&H), and *Gaya Textiles Pvt. Ltd., In re*, AIR 1968 Cal 388. The court found that while the affidavits accompanying the petition were correctly verified, those accompanying the rejoinder and interim order application were not. Thus, the petition was not dismissed, but the rejoinder and interim relief application were ignored due to defective verification.

IV. Petitioners Having Majority Shareholding:
The non-petitioners argued that the petitioners, claiming majority shareholding, could not maintain a petition under sections 397 and 398, which is intended for minority shareholders, citing *Shanti Prasad Jain v. Kalinga Tubes Ltd.* [1965] 35 Comp. Cas. 351; AIR 1965 SC 1535. The court rejected this objection, noting that section 399(1) of the Act requires a minimum shareholding but does not limit maximum shareholding. Thus, the petitioners' majority shareholding did not bar them from filing the petition.

Conclusion:
The court dismissed the petition on the grounds of simultaneous pursuit of remedies and invalid consent, while the objections regarding defective verification of affidavits and majority shareholding were either partially upheld or dismissed. The parties were ordered to bear their own costs.

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