1995 (2) TMI 302 - HC - Companies Law

Transfer to shares Power to refuse registration and appeal against refusal, Oppression and Mismanagement

Issues Involved:
1. Safety of goldware belonging to the Sanga.
2. Closure of the printing press at Secunderabad.
3. Expenditure on the compound wall at Gunatala, Vijayawada.
4. Delay in holding Annual General Meetings (AGMs).
5. Donations and expenses incurred by the Sanga.
6. Legality of the Rs. 15 lakhs donation to Sri Bilweswara Charitable Trust.
7. Rectification of the share register of the Sanga.

Detailed Analysis:

1. Safety of Goldware:
The petitioners alleged mismanagement regarding the goldware of the Sanga. However, the respondents contended that all gold items were duly recorded in the assets register, which had been periodically inspected by auditors and the petitioners. Since the petitioners' counsel did not address this issue during the hearing, the court did not consider it further.

2. Closure of the Printing Press:
The petitioners alleged mismanagement in the closure of the Sanga's printing press at Secunderabad. Evidence was provided by both parties, but no specific arguments were advanced by the petitioners' counsel on this issue. Consequently, the court did not render any findings on this matter.

3. Expenditure on Compound Wall:
The petitioners claimed that Rs. 4,44,486.93 spent on constructing a compound wall at Gunatala, Vijayawada, was exaggerated and wasteful. The respondents argued that the actual expenditure was Rs. 2,54,329.25, and the discrepancy was due to an accounting error. The court found that the expenses were properly recorded and vouched for by auditors, and the petitioners had not proven any misappropriation. Therefore, the court rejected the petitioners' claims on this issue.

4. Delay in Holding AGMs:
The petitioners questioned the delay in holding AGMs for the years 1979 and 1980. The respondents attributed the delay to the non-cooperation of the third petitioner, who was responsible for providing necessary accounts from Secunderabad. The court found that the delay was indeed due to the third petitioner's actions and upheld the validity of the AGMs held on January 21, 1981. The court also noted that the petitioners did not make a compelling case for superseding the current board or appointing administrators.

5. Donations and Expenses:
The petitioners challenged the donations and expenses incurred by the Sanga, alleging mismanagement by the second respondent. The respondents provided detailed explanations and evidence showing that all expenditures and donations were approved by the board, general body, and auditors. The court found no merit in the petitioners' allegations and rejected their claims.

6. Legality of Rs. 15 Lakhs Donation:
The petitioners questioned the legality of a Rs. 15 lakhs donation made to Sri Bilweswara Charitable Trust. The respondents argued that the donation was within the Sanga's powers under its memorandum of association. The court found that the donation was legally valid and that the petitioners had acquiesced to it for over a decade before raising any objections. The court rejected the petitioners' claims on this issue as well.

7. Rectification of Share Register:
The petitioners sought rectification of the share register, alleging improper transfers of shares without complying with statutory requirements. The respondents contended that all transfers were valid and that the petitioners had acquiesced to them for many years. The court found that the share transfers were genuine and legally valid, and noted that the petitioners had failed to prove their allegations. Consequently, the court dismissed the petition for rectification of the share register.

Conclusion:
The court dismissed both Company Petition No. 12 of 1982 and Company Petition No. 13 of 1982, finding no merit in the petitioners' allegations of oppression and mismanagement. The court upheld the validity of the AGMs and the share transfers, and found that the expenditures and donations were properly authorized and accounted for. The court also noted the inordinate delay and laches in seeking remedies, which further weakened the petitioners' case. The court directed the parties to reconcile their differences and work together in the interest of the Sanga.

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