2001 (4) TMI 939 - Board - Companies Law

Issues Involved:
1. Rectification of the register of members.
2. Transmission of shares.
3. Allotment of rights shares.
4. Allegations of oppression and mismanagement.
5. Limitation and delay in filing the petition.

Detailed Analysis:

1. Rectification of the Register of Members:
The petitioners sought to rectify the register of members by deleting the name of the third respondent in respect of 3,250 equity shares and the corresponding 9,750 rights shares, and entering the names of the petitioners. The petitioners argued that the shares should have been transmitted to all legal heirs of the deceased M.A. Coelho, not just the third respondent. The respondents claimed that the shares were transmitted based on a family settlement and the wishes of the deceased. The court found no evidence of a board resolution or family settlement, deeming the transmission of shares to the third respondent an act of oppression. The court directed the shares to be transmitted to all legal heirs proportionately.

2. Transmission of Shares:
The petitioners argued that the transmission of shares to the third respondent was illegal as she was not a legal heir. The respondents contended that the transmission was based on a family arrangement. The court noted that the company did not follow the prescribed procedure under Article 16 of the Articles of Association, which requires recognition of the title of the legal heirs or a succession certificate. The court found the transmission of shares to the third respondent without proper documentation and board resolution as an act of oppression and ordered the shares to be transmitted to the legal heirs.

3. Allotment of Rights Shares:
The petitioners claimed that the first petitioner was entitled to 21,000 rights shares, which were wrongfully allotted to the third and fourth respondents. The respondents argued that the first petitioner did not subscribe to the rights issue. The court observed that there was a significant delay in the allotment of shares and that the company should have ascertained the willingness of the first petitioner to subscribe to the shares. The court found the exclusion of the first petitioner from the allotment of shares as an act of oppression and gave the first petitioner the option to apply for the 21,000 shares along with the consideration at the original price.

4. Allegations of Oppression and Mismanagement:
The petitioners alleged that the affairs of the company were conducted in a manner prejudicial to their interests, particularly by depriving them of their rightful shares and creating a new majority in favor of the second respondent group. The court found that the transmission of shares to the third respondent and the non-allotment of rights shares to the first petitioner constituted acts of oppression. The court directed the rectification of the register of members and the allotment of shares to the petitioners to address these acts of oppression.

5. Limitation and Delay in Filing the Petition:
The respondents argued that the petition was barred by limitation due to the delay in filing. The court noted that in cases of oppression with a continuous effect, the issue of limitation is of no consequence. The court found that the petitioners had raised the issue as early as 1993 and that the continuous effect of the alleged acts of oppression justified the delay in filing the petition. The court dismissed the argument of limitation and proceeded to address the merits of the case.

Conclusion:
The court directed the rectification of the register of members by removing the name of the third respondent and transmitting the shares to the legal heirs. The court also ordered the allotment of 21,000 rights shares to the first petitioner and found the actions of the respondents as acts of oppression. The petitions were disposed of with these directions, without any order as to costs.

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