2000 (2) TMI 850 - Board - Companies Law

Summary

Issues Involved:
The petitioners, majority shareholders of a company, filed a petition u/s 398 of the Companies Act, 1956 alleging mismanagement, fabrication of documents, and illegal share issuance.

Details of the Judgment:

Allegations of Mismanagement:
The petitioners claimed majority shareholding and managerial positions in the company, accusing the first respondent of manipulating records to show otherwise. They sought various reliefs, including restraining the respondents from claiming managerial positions, interfering with company control, and accounting for funds. The first respondent controlled the petrol pump, leading to legal challenges and a pending civil suit disputing meeting genuineness.

Arguments and Evidence Presented:
The petitioners' counsel highlighted discrepancies in meeting notices, minutes, and share allotments, alleging fabrication. They argued that the respondents manipulated records to reduce petitioners to a minority, filing allotment forms after legal proceedings began. The petitioners contended that mismanagement and falsification warranted relief u/s 398 due to substantial changes in company control against shareholder interests.

Respondents' Defense:
The respondents argued against the petition's maintainability u/s 398, citing a prior civil suit with similar claims. They asserted that the present management benefited the company, declaring dividends for the first time. The respondents opposed the petition, citing High Court confirmation of their control and urging dismissal due to ongoing civil proceedings.

Judgment and Stay Order:
The Board found the petition maintainable u/s 398 but noted the pending civil suit covering similar issues. To avoid conflicting decisions, the Board stayed proceedings until the civil court case concluded. The petitioners were granted the option to revive the petition post the civil court proceedings.

In conclusion, the Board stayed the petition, allowing revival post the civil court case resolution, considering the overlapping issues and pending proceedings.