2000 (1) TMI 1017 - Board - Companies Law

Summary

Issues Involved:
1. Non-cooperation among directors/shareholders.
2. Dispute regarding the holding of AGMs and finalization of accounts.
3. Allegations of mismanagement and oppression under Sections 397 and 398 of the Companies Act.
4. Dispute over the shareholding pattern.
5. Alleged cessation and appointment of directors.
6. Allegations of siphoning off funds and tampering with records.

Issue-wise Detailed Analysis:

1. Non-cooperation among directors/shareholders:
The petitioner alleged that due to the non-cooperation of the respondent, it was impossible to hold Board meetings and finalize accounts for 1996-97 and 1997-98. The respondent disputed these allegations, claiming that AGMs were held and accounts approved.

2. Dispute regarding the holding of AGMs and finalization of accounts:
The petitioner claimed that no AGMs were held after 30.9.1996, while the respondent asserted that AGMs for 1997 and 1998 were held and accounts approved. The Board found that no AGM was held on 30.9.1997 due to lack of quorum, thus invalidating the adoption of accounts and appointment of directors in that meeting.

3. Allegations of mismanagement and oppression:
The petitioner alleged mismanagement and oppression, citing false and forged documents filed with the Registrar showing his cessation as a director and the appointment of Shri Bhushan Ahuja. The Board found these allegations substantiated, noting that the documents were filed significantly late and lacked proper evidence.

4. Dispute over the shareholding pattern:
The petitioner claimed to hold 50% shares individually and 50% jointly with the respondent. The respondent contested this, claiming a different shareholding pattern. The Board examined evidence, including annual returns and share certificates, and concluded that the petitioner held 2,000 shares individually and 2,000 shares jointly with the respondent.

5. Alleged cessation and appointment of directors:
The petitioner contested his cessation as a director and the appointment of Shri Bhushan Ahuja. The Board found that the petitioner's cessation under Section 283(1)(g) was invalid due to lack of quorum in Board meetings. The appointment of Shri Bhushan Ahuja as an additional director was also invalid due to lack of quorum and proper documentation.

6. Allegations of siphoning off funds and tampering with records:
The respondent alleged that the petitioner embezzled funds and tampered with records. The Board noted that these allegations were not pressed during the hearing and focused on the primary issues of shareholding and directorship.

Conclusion:
The Board concluded that the shareholding pattern as of 30.9.1996 was correct, with the petitioner holding 2,000 shares individually and 2,000 shares jointly with the respondent. The Board invalidated the appointment of Shri Bhushan Ahuja and the cessation of the petitioner as a director. The petitioner was given the option to convene a general body meeting with a single shareholder constituting a valid quorum, or the respondent could transfer his interest in the joint holding to the petitioner for fair consideration determined by an independent valuer. The petitions were disposed of with these directions.