2013 (8) TMI 1050 - Board - Companies Law

Summary

Issues Involved:
1. Maintainability of the Petition.
2. Allegations of Oppression and Mismanagement.
3. Eligibility of the Petitioner u/s 399 of the Act.
4. Suppression of Material Facts by the Petitioner.
5. Enforcement of Agreement and Allotment of Shares.
6. Validity of Removal and Appointment of Directors.

Summary:

Maintainability of the Petition:
The respondents challenged the maintainability of the petition on the grounds that it was filed in the capacity of a director and not as a shareholder, and the petitioner did not meet the eligibility criteria u/s 399 of the Act. The court found that the petitioner did not hold 1/10th of the total members or issued capital of the company, rendering the petition not maintainable. The petition was dismissed on this ground alone.

Allegations of Oppression and Mismanagement:
The petitioner alleged various acts of oppression and mismanagement by the respondents, including the non-issuance of promised equity shares and illegal removal from the post of director. The court found that the petitioner was not entitled to the relief sought for the allotment of shares and that the removal of the petitioner as a director was in accordance with the law.

Eligibility of the Petitioner u/s 399 of the Act:
The petitioner held only 10 shares of Rs. 100 each and did not meet the threshold of holding 1/10th of the total issued capital or members as required u/s 399 of the Act. The court upheld the respondents' contention that the petitioner was not eligible to file the petition.

Suppression of Material Facts by the Petitioner:
The court found that the petitioner had suppressed material facts and documents, including certain criminal cases pending against him and an alleged agreement and Board resolution. The court held that the petitioner did not approach the court with clean hands and dismissed the petition on this ground as well.

Enforcement of Agreement and Allotment of Shares:
The petitioner sought enforcement of an agreement dated 28th December 2007, for the allotment of 7,200 equity shares. The court found the agreement suspicious and noted that the petitioner failed to make the necessary payments as per the agreement. The court held that the petition was filed for a collateral purpose and not maintainable under sections 397/398 of the Act.

Validity of Removal and Appointment of Directors:
The petitioner claimed his removal as a director was illegal and challenged the appointment of Mr. Narendra Kumar Ambawat. The court found that the petitioner ceased to be a director by operation of law u/s 260 of the Act and that the directorial complaint did not constitute an act of oppression. The court upheld the validity of the removal and appointment of directors.

Conclusion:
The petition was dismissed on multiple grounds, including non-maintainability u/s 399, suppression of material facts, and lack of merit in the allegations of oppression and mismanagement.