1992 (9) TMI 367 - Board - Companies Law

Issues Involved:
1. Maintainability of the petition before the Company Law Board (CLB) due to identical proceedings before the Gujarat High Court.
2. Allegations of oppression and mismanagement in Gaekwad Investment Corporation Pvt. Ltd. (GICPL).
3. Requests for interim reliefs by the petitioners.
4. Allegations of fabrication of documents by the respondents.
5. Conduct of the petitioners and respondents regarding the disclosure of facts and documents.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition:
Respondent No. 3 argued that the continuation of the proceedings before the CLB would be an abuse of the process of law as the issues raised are identical to those in a petition before the Gujarat High Court. The petition before the Gujarat High Court was filed in March 1991, while the current petition was filed on February 18, 1992. The respondents contended that the parties, subject matter, and reliefs sought in both proceedings are substantially the same. The petitioners refuted this by stating that Sections 10 and 151 of the Civil Procedure Code do not apply to the present proceedings and that the parties before the Gujarat High Court and the CLB are different. The CLB decided to stay the proceedings before it to avoid conflicting decisions, as the petition before the Gujarat High Court was filed earlier.

2. Allegations of Oppression and Mismanagement:
The petitioners alleged that the respondents engaged in acts of oppression and mismanagement, including the improper issuance of shares and fabrication of company records. The petitioners claimed that the allotment of 7,975 shares was in contravention of the shareholders' resolution and the management committee's decision, leading to the SSG group gaining control of GICPL. The respondents argued that the additional equity was raised due to financial difficulties and that the petitioners were aware of the allotments. The CLB noted the serious nature of the allegations and decided to stay the proceedings while appointing an independent chairman and a representative of the petitioners' group to the board of GICPL to ensure proper management.

3. Requests for Interim Reliefs:
The petitioners sought various interim reliefs, including freezing voting rights, superseding the existing board of directors, and restraining GICPL from selling or encumbering assets. The respondents argued that the petitioners' requests were based on allegations of acts that occurred years ago and that the petitioners had acquiesced by accepting dividends on the shares. The CLB decided to appoint a representative of the petitioners' group and an independent chairman to the board of GICPL to maintain the status quo and ensure proper management, rather than granting all the interim reliefs requested by the petitioners.

4. Allegations of Fabrication of Documents:
The petitioners alleged that the respondents fabricated minutes of meetings and other company records to gain control of GICPL. The respondents denied these allegations and argued that the petitioners had not provided originals of the documents in question. The CLB noted the serious nature of the allegations but did not make a definitive ruling on the fabrication claims, instead focusing on ensuring proper management through the appointment of an independent chairman and a representative of the petitioners' group.

5. Conduct of the Petitioners and Respondents:
The respondents argued that the petitioners had not come with clean hands and had failed to disclose material documents. The petitioners countered that the respondents had also engaged in questionable conduct, including filing appeals based on false statements. The CLB expressed displeasure with the conduct of both parties and emphasized the need to avoid conflicting decisions by staying the proceedings and appointing an independent chairman and a representative of the petitioners' group to the board of GICPL.

Conclusion:
The CLB decided to stay the proceedings before it to avoid conflicting decisions with the Gujarat High Court. It vacated the interim orders issued on February 20, 1992, and appointed a representative of the petitioners' group and an independent chairman to the board of GICPL to ensure proper management. The CLB emphasized the need to maintain the status quo and avoid further conflicts while the petition before the Gujarat High Court is pending.

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