2011 (5) TMI 849 - Board - Companies Law

Issues Involved:
1. Legality of the enhancement of shareholding and allotment of shares to the respondents.
2. Impact of entering into a joint venture with Menzies on the petitioner and other shareholders.
3. Provision of inspection of statutory records to the petitioner.
4. Relief sought by the petitioner.

Issue 1: Legality of the Enhancement of Shareholding and Allotment of Shares to the Respondents
The petitioner alleged that the respondents illegally increased the company's capital and allotted shares without offering them to him, violating the articles of association. The respondents argued that the petitioner's challenge, made eight years after the events, was barred by limitation and that the petitioner was aware of these facts during his father's lifetime. The minutes of the extraordinary general meetings (EGMs) on April 25, 2000, and July 3, 2000, showed authorized capital increases and empowered the board to issue shares. The petitioner participated in company affairs until 2000 and was aware of past capital increases. The company's records and statutory filings reflected these decisions. Article 74 of the articles of association allowed the board to allot shares at its discretion if empowered by an EGM. The petitioner's non-participation in company affairs post-2000 was not the respondents' fault. The court found no illegality in the capital increase and share allotment, concluding that the petitioner was acquiescent and that the articles were not violated.

Issue 2: Impact of Entering into a Joint Venture with Menzies on the Petitioner and Other Shareholders
The petitioner claimed that the respondents entered into a joint venture with Menzies without his knowledge. The respondents denied any joint venture agreement, stating that discussions were in the context of the Government of India's ground handling policy and that the petitioner was aware of these discussions but chose not to attend relevant board meetings. The respondents confirmed that no definitive joint venture agreement was signed and that the proposal had ended. Given this categorical statement, the court found no need to delve further into this issue.

Issue 3: Provision of Inspection of Statutory Records to the Petitioner
The petitioner alleged that the respondents did not provide full inspection of statutory records despite a court order. The respondents contended that all statutory records were available for inspection at the registered office and that the petitioner had received many documents. The petitioner, as a shareholder and director, had a statutory right to inspect company records. The court noted that the petitioner had attended board meetings held outside India and had not raised issues about meeting notices previously. The court found no substantial evidence that the petitioner did not receive meeting notices and concluded that the petitioner's allegations lacked force.

Issue 4: Relief Sought by the Petitioner
The petitioner sought to manage the company's affairs in Mumbai, arguing that no directors resided in India. The court held that the board of directors had the exclusive domain to decide management matters and would not interfere. The petitioner's allegations of non-access to records and non-receipt of dividends were not supported by substantial evidence. The court found that the petitioner had not made a case for oppression or mismanagement and dismissed the petition.

Conclusion:
The petition was dismissed, with no orders as to costs. All interim orders were vacated, and all applications disposed of. The court found that the petitioner was aware of the company's affairs and had acquiesced to the decisions made, and thus, the challenge was barred by limitation and lacked merit.

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