2008 (4) TMI 783 - Board - Companies Law

Issues Involved:
1. Legality of the agreement dated 08.03.2006.
2. Annulment and setting aside the further issue and allotment of shares to respondents 5 & 6.
3. Legality of the appointment of the fourth respondent as a director.
4. Amendment of the company petition based on subsequent facts.
5. Increased authorized capital and allotment of shares.
6. Alleged fraudulent conduct and unauthorized actions by the seventh respondent.
7. Constitution of the board of directors.
8. Oppression and mismanagement claims.

Issue-wise Analysis:

1. Legality of the Agreement Dated 08.03.2006:
The petitioners sought to declare the agreement dated 08.03.2006 as illegal and void ab initio. They alleged that the seventh respondent had entered into this agreement to defraud them and circumvent an interim order from the High Court of Kolkata.

2. Annulment and Setting Aside the Further Issue and Allotment of Shares to Respondents 5 & 6:
The petitioners challenged the allotment of 8200 shares on 26.03.2002 and 40,000 shares on 28.10.2002 to respondents 5 & 6, claiming these actions were done without their knowledge and in violation of the company's articles of association and Section 81 of the Companies Act, 1956. They sought to restore the shareholding pattern as of 31.03.2001.

3. Legality of the Appointment of the Fourth Respondent as a Director:
The petitioners contested the appointment of the fourth respondent as a director effective from 06.05.2005, arguing that it was illegal, null, and void.

4. Amendment of the Company Petition Based on Subsequent Facts:
The petitioners filed an application to amend the company petition, citing new facts that came to their knowledge after filing the original petition. They argued that these facts were due to antedating and manipulations of company records by the respondents. The CLB allowed the amendment to avoid multiplicity of litigation and ensure effective adjudication of the issues.

5. Increased Authorized Capital and Allotment of Shares:
The petitioners challenged the increase in authorized capital from Rs. 10 lakhs to Rs. 2 crores and the subsequent allotment of 17,57,000 equity shares to M/s Indoworth (India) Ltd. upon conversion of Zero Coupon Convertible Debentures (ZCDs). They alleged that these actions were taken without their knowledge and were part of a fraudulent scheme to reduce their shareholding.

6. Alleged Fraudulent Conduct and Unauthorized Actions by the Seventh Respondent:
The petitioners accused the seventh respondent of various fraudulent actions, including unauthorized increases in share capital, illegal allotments of shares, and unauthorized agreements for the sale of company property. They sought an investigation into the company's affairs under Section 237(b) of the Companies Act.

7. Constitution of the Board of Directors:
The petitioners objected to the changes in the board of directors, including the appointments of Shri Mahesh Sharma, Shri Piyush Patel, and Shri Rajesh Patel, and the removal of the petitioners and the third respondent from directorship. They claimed these changes were made without proper notice and were part of the seventh respondent's fraudulent scheme.

8. Oppression and Mismanagement Claims:
The petitioners alleged various acts of oppression and mismanagement, including unauthorized increases in share capital, illegal allotments of shares, and changes in the board of directors. They sought reliefs to annul these actions and restore their shareholding and directorship positions.

Conclusion:
The CLB allowed the amendment of the company petition to include subsequent events and developments, such as the increase in authorized capital and the allotment of shares, to ensure effective adjudication of the issues. However, it rejected amendments that would introduce new sets of facts or replace the original pleadings with entirely new allegations. The petitioners were directed to file the amended petition focusing on subsequent events, and the respondents were given the opportunity to file additional replies.

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