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Issues involved: Declaration of nullity of Board resolution, permanent injunction, violation of Companies Act u/s 299, maintainability of suit.
Declaration of nullity of Board resolution: The plaintiff sought a declaration that the Board resolution dated 12.1.2002 passed by the defendant No.1 Company was null and void. The resolution surrendered the property leased by the company to defendant No.5. The plaintiff challenged the validity of this resolution on the grounds that the Directors did not disclose their interests as required by Section 299 of the Companies Act. The plaintiff, being a Director of the company, argued that the resolution was against the law due to lack of disclosure of interests by the Directors who were also co-parceners of defendant No.5. The plaintiff contended that the resolution was passed to further the interests of the Directors and cause grievance to the plaintiffs. Permanent injunction: In addition to seeking a declaration of nullity of the Board resolution, the plaintiff also sought a permanent injunction restraining the defendants from acting on the resolution and from dispossessing the plaintiffs from the premises. The plaintiff claimed continuous and peaceful enjoyment of the premises for years and challenged the surrender of leasehold rights by defendant No.1 Company, alleging misuse of power by the Directors. Violation of Companies Act u/s 299: The main contention of the plaintiff was that the Board resolution was in contravention of Section 299 of the Companies Act as the Directors did not disclose their interests in the property. The plaintiff argued that since the relationship between the Directors and the plaintiffs was such that they were all aware of the property being HUF property, there was no need for further disclosure. The plaintiff, being a Director himself, had ratified the resolution at a subsequent meeting, which, according to the plaintiff, did not give him the right to challenge the resolution in a Civil Court. Maintainability of suit: The Court considered the maintainability of the suit filed by the plaintiffs challenging the Board resolution. The Court observed that the plaintiffs, motivated by self-interest, wanted to retain possession of the company's property without proper rights. The Court found the suit to be frivolous and dismissed it with heavy costs of &8377; 50,000/- to be paid to the defendants equally. The Court held that the suit had been dragged for years without merit and lacked legal basis for challenging the Board resolution.
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