1985 (11) TMI 236 - HC - Companies Law

Summary

Issues Involved:
1. Statutory qualification under Section 399 of the Companies Act.
2. Barred by limitation.
3. Maintainability of the petition under Sections 397 and 398 of the Companies Act.

Issue-wise Detailed Analysis:

1. Statutory Qualification under Section 399 of the Companies Act:

The first issue is whether the appellant satisfies the statutory requirements under Section 399 of the Companies Act for filing a petition under Sections 397 or 398. The learned Judge dismissed the petition on the ground that the appellant did not possess the statutory qualification under Section 399 of the Act. The appellant argued that he, along with other consenting shareholders, collectively owned not less than one-tenth of the issued share capital of the company. The court found that the appellant, along with the members shown in the annexure, collectively owned not less than one-tenth of the issued share capital of the company. The court concluded that the provisions of Section 399 of the Act were satisfied, and the petition was accordingly maintainable.

2. Barred by Limitation:

The second issue is whether the petition is barred by limitation. The learned Judge held that the petition was barred by limitation under Article 137 of the Limitation Act, 1963, as it was filed beyond three years from the date of the resolution or from the date of knowledge. However, the court emphasized that Sections 397 and 398 refer to a continuing wrong and the need for bringing an end to the matter. The Supreme Court in Santhi Prasad Jain v. Kalinga Tubes Ltd. held that the conduct of the majority shareholders must be continuous and persist up to the date of the petition. The court concluded that no question of limitation could arise as the oppression or conduct of the affairs of the company is a continuing wrong. Additionally, the court found that the appellant was not aware of the resolution until August 1982, and there was no way for him to know about it earlier. Therefore, the petition was not barred by limitation.

3. Maintainability of the Petition under Sections 397 and 398 of the Companies Act:

The third issue is whether the petition is maintainable under Sections 397 and 398 of the Companies Act. The learned Judge held that the petition was not maintainable as there was no material change in the management or control of the company. However, the court noted that the petitioner had specifically alleged attempts by the respondents to gain control in the Board of Directors and ownership of the shares in a clandestine and illegal manner. These allegations were not fully considered by the learned Judge. The court concluded that these allegations deserved to be examined on merits with reference to evidence, and the petitions could not be disposed of summarily. Therefore, the petition was maintainable under Sections 397 and 398 of the Act.

Conclusion:

For the foregoing reasons, the appeal was allowed, the order of the learned Judge was set aside, and the matter was remanded for fresh disposal on merits. No costs were awarded.