2006 (10) TMI 472 - Board - Companies Law

Summary

Issues involved:
The issues involved in the judgment are oppression and mismanagement in the affairs of the Company, including irregularities in financial transactions, non-maintenance of statutory records, improper convening of board meetings, removal of a director, and exclusion of a shareholder from the day-to-day affairs of the Company.

Details of the Judgment:

Irregularities in Financial Transactions:
The petitioner alleged irregularities in financial transactions of the Company, while the respondents argued that all decisions were taken with the consent of directors and the books of account were properly maintained. The Company faced challenges in auditing due to certain account books being removed, but they reconstructed the records and filed the balance sheet, ensuring no statutory default.

Removal of Director:
The main grievance of the petitioner was her removal from the office of director without prior notice. The judgment clarified that the petitioner had adequate notice of the annual general meeting where her reappointment was not considered by the members. The petitioner's absence and unwillingness for reappointment were noted, leading to her non-election as a director.

Access to Company Records and Share Certificates:
The petitioner sought inspection of the books of account and statutory records, as well as the delivery of share certificates. The judgment granted access to the petitioner for inspection and directed the Company to provide share certificates to shareholders, including the petitioner.

Constitution of Board of Directors:
The judgment ordered that the board of directors should comprise of the petitioner and the respondents, providing proportional representation to all parties. The new board would manage the day-to-day affairs of the Company without external interference and address the issuance of share certificates to shareholders.

Conclusion:
The judgment dismissed the petition under Sections 397 and 398 of the Companies Act, 1956, as the grievances were deemed general in nature and not sufficient for such a petition. It emphasized the importance of substantial justice and directed the constitution of a new board of directors to ensure fair representation and effective management of the Company's affairs.