2013 (9) TMI 1185 - HC - Companies Law

Summary

Issues involved:
The judgment involves the issue of maintainability of an application filed by the petitioner under Sections 397 and 398 of the Companies Act, 1956.

Details of the Judgment:

The petitioner, incorporated under the Companies Act in March 1983, acquired equity shares of the respondent company on specific dates in 2004. Subsequently, the petitioner filed an application under Sections 397 and 398 of the Act, making various prayers including challenging the allotment of preference shares, restraining promoters from exercising voting rights, and alleging acts of oppression and mismanagement by certain respondents.

The Company Law Board dismissed the application on the grounds that the petitioner did not hold the required percentage of the issued share capital of the respondent company. The appeal filed by the petitioner was also dismissed by the learned Single Judge, who emphasized that the petitioner did not meet the criteria to maintain the petition under Section 397/398 of the Act.

The learned Single Judge highlighted that the expression "issued share capital" includes both preference share capital and equity share capital of the company, and the petitioner needed to hold one-tenth of the total issued share capital to be eligible to file the petition. As the petitioner did not meet this requirement, the petition was rightly dismissed.

The High Court, after considering the arguments, upheld the decisions of the Company Law Board and the learned Single Judge, concluding that the application filed by the petitioner was not maintainable under Sections 397 and 398 of the Companies Act. The special leave petition was dismissed, with the petitioner being advised to explore other available legal remedies.

In conclusion, the judgment affirms the dismissal of the petitioner's application under Sections 397 and 398 of the Companies Act, based on the lack of holding the required percentage of the issued share capital of the respondent company.