2010 (12) TMI 1281 - Board - Companies Law

Summary

Issues Involved:
1. Allegations of oppression and mismanagement u/s 397 and 398 of the Companies Act, 1956.
2. Legality of the EGM and resolutions passed on 09.09.2005.
3. Change of registered office.
4. Creation of charge over the company's movable properties.
5. Status of directorship of petitioners.
6. Other reliefs sought by the petitioners.

Summary:

1. Allegations of Oppression and Mismanagement:
The petitioners alleged various acts of oppression and mismanagement in the affairs of M/S. Krishna Hydel Power Private Limited, including mal-utilisation of funds and assets by Respondent Nos. 2, 3, and 4. They sought the supersession of these respondents and the appointment of an administrator to manage the company.

2. Legality of the EGM and Resolutions Passed on 09.09.2005:
The petitioners contended that the EGM held on 09.09.2005 by Respondent Nos. 2 and 3, which increased the authorized share capital from Rs. 10 lac to Rs. 20 lac and allotted majority shares to Respondent No. 2, was illegal and void. The Board found that the EGM and the resolutions passed were indeed illegal and void, declaring them not binding on the company.

3. Change of Registered Office:
The petitioners argued that the change of the registered office was done without proper authorization and with malafide intentions. The Board declared the change of registered office as illegal.

4. Creation of Charge Over the Company's Movable Properties:
The petitioners claimed that Respondent Nos. 2 and 3 created a charge over the company's movable properties for Rs. 380 lac with IREDA without proper consent. The Board noted that since the State of Karnataka and IREDA were not made parties to the petition, relief on this matter could not be granted directly. However, the parties were allowed to apply to IREDA to release the charge.

5. Status of Directorship of Petitioners:
The respondents claimed that the petitioners had resigned from their directorships, which the petitioners denied. The Board held that in the absence of evidence of resignation, the petitioners continued to be directors of the company.

6. Other Reliefs Sought by the Petitioners:
The Board disallowed other prayers made in the petition, including the appointment of an administrator, convening of general meetings for a new board, and compensation for damages.

Conclusion:
The Board concluded that Respondent Nos. 2, 3, and 4 were guilty of acts of oppression. The EGM and resolutions of 09.09.2005 were declared illegal, and the change of registered office was also declared illegal. The petitioners were affirmed as directors, and the petition was disposed of with directions to take appropriate steps with the ROC, Karnataka. No orders as to costs were made.