1998 (9) TMI 680 - HC - Companies Law

Summary

Issues Involved:
1. Initiation of a criminal proceeding.
2. Interlocutory order issuing certain directions.
3. Main petition under Sections 155/397/398/399/402/403 and 406 of the Companies Act.
4. Allegations of oppression and mismanagement.
5. Validity of Board Meetings and Annual General Meetings.
6. Shareholding pattern and corporate veil.
7. Relief and remedies under Sections 397/398 of the Companies Act.

Summary:

1. Initiation of a Criminal Proceeding:
The order dated 6-2-97 under appeal is in two parts, viz. initiation of a criminal proceeding and interlocutory order issuing certain directions. The court intends to pronounce a separate judgment in respect of the criminal aspect of the matter.

2. Interlocutory Order Issuing Certain Directions:
The interlocutory order was subject to appeal, and the court decided to dispose of the main Company Petition itself. By a separate judgment, the court disposed of the appeal regarding the criminal proceedings under Schedule XI of the Companies Act.

3. Main Petition under Sections 155/397/398/399/402/403 and 406 of the Companies Act:
B.P. Jalan filed an application against 32 persons, including Akshay Nidhi Ltd. and its subsidiaries, claiming various reliefs under the Companies Act. The court heard the parties and disposed of the main application.

4. Allegations of Oppression and Mismanagement:
Allegations of oppression and mismanagement were made against the respondents, particularly against respondent Nos. 6 and 7. The charges included fabrication of minutes of meetings, non-transmission of shares, and holding illegal meetings to acquire control over various companies.

5. Validity of Board Meetings and Annual General Meetings:
The court examined the validity of several board meetings and annual general meetings, noting serious allegations of fabrication and manipulation of minutes, lack of quorum, and non-compliance with legal requirements. The court found substantial evidence of oppressive conduct by the majority shareholders.

6. Shareholding Pattern and Corporate Veil:
The court noted that the companies were inter-linked and interwoven, with individuals maneuvering the affairs to oust others. The court emphasized the equitable jurisdiction under Sections 397 and 398 of the Companies Act, allowing the lifting of the corporate veil to address mismanagement and oppression.

7. Relief and Remedies under Sections 397/398 of the Companies Act:
The court held that the petitions must succeed, recognizing acts of oppression by the majority shareholders. The court directed the appellants to sell their shares to the respondents, with the value of such shares to be fixed as on the date of passing the judgment by a Chartered Engineer nominated by the Registrar, Original Side of the Court.

Conclusion:
The application was allowed to the extent mentioned, with no order as to costs. The judgment addressed the complex issues of corporate governance, shareholding disputes, and the equitable remedies available under the Companies Act.