2009 (2) TMI 868 - Board - Companies Law

Summary

Issues involved: Alleged reduction in percentage shareholding, maintainability of the petition u/s 399.

Alleged reduction in percentage shareholding: The petitioner, holding 100 shares in M/s. Seth Hotels Private Limited, claimed his 20% shareholding had decreased significantly due to further share allotments. The company, incorporated in 1993, had increased its paid-up capital from Rs. 5,000 to over Rs. 1.79 crores through multiple allotments excluding the petitioner and another brother. The petitioner sought cancellation of the impugned shares and requested to tag his petition with another shareholder's petition. The respondents challenged the maintainability of the petition u/s 399, arguing the petitioner did not hold 10% shares or constitute 1/10th of the membership due to 15 shareholders in the company.

Maintainability of the petition u/s 399: The respondents contended that apart from one brother, none of the other siblings showed interest in the company, and shares were allotted without objection. They highlighted that all shareholders except the petitioner had transferred their shares to the 16th/17th respondent group, which invested over Rs. 6 crores to manage the company and settle a lawsuit. The respondents emphasized that relevant returns were filed for all share allotments, and the petitioner was aware of these transactions. The petitioner's delay in filing the petition, despite knowing about the allotments in 2006, was noted, leading to the dismissal of the petition for being not maintainable u/s 399.

Conclusion: The petition was dismissed as not maintainable u/s 399, rendering the related application infructuous. The dismissal did not prevent the respondents from negotiating to purchase the petitioner's shares.