2013 (12) TMI 1634 - Board - Companies Law

Issues Involved:
1. Locus standi of the Petitioner to file the petition.
2. Allegations of suppression of facts by the Petitioner.
3. Delay and laches in filing the petition.
4. Alleged non-appointment of the Petitioner as a Director.
5. Alleged alteration of share capital without due process.
6. Alleged illegal appointment of R3 and R4 as Directors.
7. Alleged denial of inspection of statutory records.
8. Alleged siphoning of funds by Respondents.

Summary:

1. Locus Standi of the Petitioner:
The first issue was whether the Petitioner had the locus standi to file the petition u/s 397/398 read with Section 402 of the Companies Act, 1956, in terms of Section 399. The Petitioner claimed to hold 50% shareholding, while the Respondents contended he held only 8%. The judgment referenced several cases, including Vijayan Rajesh v. MSP Plantations (P.) Ltd. [2010] 98 SCL 383, which established that the eligibility to file a petition should be determined based on the last undisputed position. The Court concluded that the Petitioner held approximately 50% shareholding, making the petition maintainable.

2. Allegations of Suppression of Facts:
The Respondents argued that the Petitioner had not come with clean hands, alleging suppression of material facts and reliance on forged documents. The Court noted that the Petitioner had withheld details of a prior civil suit and other material documents. Citing Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 57 SCL 476, the Court held that a party approaching the Court with unclean hands is not entitled to equitable relief. The petition was thus liable to be dismissed on this ground.

3. Delay and Laches:
The Respondents contended that the petition suffered from delay and laches, as the Petitioner was aware of the disputes since 2007 but filed the petition only in 2012. The Court found that the Petitioner had not exercised due diligence and had approached the Bench at a very belated stage. Citing Amrit Lal Seth v. Seth Hotels (P) Ltd. [2009] 95 SCL 161 (CLB - New Delhi), the Court held that the petition was liable to be dismissed due to unexplained delay and laches.

4. Alleged Non-Appointment as Director:
The Petitioner claimed he was appointed as a Director via a resolution dated 2/11/2006, which was not acted upon. The Court found that the resolution was never implemented, and no statutory forms were filed. The Court also noted that disputes regarding directorship do not fall within the purview of Section 397/398, referencing V.M. Rao v. Rajeswari Ramakrishnan [1987] 61 Comp Cas 20 (Mad).

5. Alleged Alteration of Share Capital:
The Petitioner alleged that the Respondents altered the share capital without due process to dilute his shareholding. The Court found that the alteration was done to meet the urgent requirement of funds for the company and did not amount to an act of oppression. The Court noted that the Petitioner had demanded his investment back, which was paid by the Respondents, thus negating the claim of oppression.

6. Alleged Illegal Appointment of R3 and R4 as Directors:
The Petitioner challenged the appointment of R3 and R4 as Directors, alleging it was done without his consent and without holding a valid meeting. The Court found that the appointments were made to ensure quorum after the demise of a Director and that the Petitioner had delayed challenging these appointments. The Court held that the Petitioner was not entitled to challenge the appointments due to unexplained delay.

7. Alleged Denial of Inspection of Statutory Records:
The Petitioner alleged that the Respondents denied him inspection of statutory records. The Court found that the records were regularly filed with the ROC and available on its website. The Petitioner had not sought inspection during the trial, and thus, the allegation was found to be untenable.

8. Alleged Siphoning of Funds:
The Petitioner alleged that the Respondents siphoned off funds from the company. The Court found that the Respondents had invested significant amounts in the company's construction and that the premises were let out to M/s Bizerba with the Petitioner's knowledge. The allegation was rejected as baseless.

Order:
1. The petition stands dismissed.
2. Interim orders, if any, and C.A., if any, stand disposed of accordingly.
3. No order as to costs.
4. Let a copy of the order

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