2015 (4) TMI 768 - Board - Companies Law

Issue and allotment of equity shares - Charges of Oppression and mis-management u/s 397 & 398 of the Companies Act, 1956 - Held that - Fact of the matter is Sajal moved writ after writ to stall kamal getting shares issued to the medical equipment, and he has remained successful in halting shares going to Kamal to the equipment till date from 1996. I should not now say separately when the Honorable Supreme Court itself held that Hospital was inaugurated with the equipment come from Kamal, in fact, the company started making profits with the same equipment that come from Kamal. The capital that has come into the company in the form of equipment is subsumed in rendering services and bringing in profits to the company. One thing is clear that the value of the equipment could not be converted simultaneously into capital for only one reason that is for want of RBI approval. That approval in no time came to the company for conversion of ₹ 3.5 crores into capital on non-repatriation basis. But by that time, Sajal already played his cards well by ousting Kamal from the company and made allotments to himself making himself as majority, not only that, though RBI approved issual of 30,55, 329 shares to Kamal in consideration to the secondhand equipment supplied to the Company on non repatriate basis, till date shares were not issued to Kamal, Since the Honorable Supreme Court held that Sajal acted prejudicial to the interest of Kamal and his acts are oppressive against Kamal, since Kamal is allowed to continue to act as MD of the Company, and pass resolution within 21 days in accordance with law. Kamal, in pursuance of it, passed a resolution on 16-9-2006 allotting shares to him in consideration to the equipment he supplied to the company in the years 1994 and 1995. This is what the truth is. As to miscellaneous allegations leveled by Sajal, I believe all these allegations were made so as to say that allotment is not a solitary act prejudicial to the interest of Sajal, there are other acts prejudicial to the interest of the company, but on seeing the allegations and counter allegations i don't find any of them worth to be considered as allegations to be tested on the fulcrum of 397 and 398 of the Act, therefore they have not been separately discussed, but on seeing the pleadings and defense to them, this Bench hereby held there is no merit in the allegations to label them as allegations falling under sections 397 & 398 of the Act 1956, therefore those issues were not considered for discussion. I must say that courts are under no obligation to discuss the allegations not directly relevant to be taken up as issues for discussion; hence, the miscellaneous allegations are held as issues not worth for discussion under section 397 & 398 of the Companies Act 1956.For there being no stay in WP 1157/2004 pending before Honorable High Court of Calcutta, on seeing several years passed, especially for having Honorable High Court already dismissed writ petition against the Company, I believe this Bench has jurisdiction to decide the issue of allotment subject to the outcome of writ petition, accordingly I have decided it. So, the allotment of 30,55,329 shares to Dr. Kamal Kumar Datta on 16-9-2006 is valid subject to the outcome of WP 1157/2004 pending before the Honorable High Court of Calcutta. Money brought in by Mr. Sajal Datta towards allotment of shares on 12-3-1996 and 24-7-1996, shown as 'disputed liability' in the books of the company shall be returned to Mr. Sajal Datta along with whatever interest accrued upon it till date since 11-8-2006 within 90 days from the date of this order. - Accordingly petition disposed of.

Issues Involved:
1. Issue and allotment of 30,55,329 equity shares to Dr. Kamal Kumar Dutta.
2. Decision to reflect the money brought in by Sajal's group as "disputed liability."
3. Non-cancellation of the allotment of 25,000 shares to Dr. Kamal.
4. Efforts to remove Sajal as Director.
5. Appointment of Arindam Samanta, Sudip Basu, and Dr. A.K. Sanyal as directors.

Issue-wise Detailed Analysis:

1. Issue and Allotment of 30,55,329 Equity Shares to Dr. Kamal Kumar Dutta:
The petitioner, Sajal, argued that the allotment of shares to Kamal was in violation of Section 81 of the Companies Act, 1956, as no offer was made to the existing shareholders in proportion to their shareholding. The respondents countered that Section 81 is a pre-emptive provision applicable only to issues of equity for cash and does not apply to shares issued for consideration other than cash. The tribunal held that the allotment of shares to Kamal was valid and not in violation of Sections 81, 299, or 300 of the Companies Act, 1956. The tribunal emphasized that the arrangement for the allotment of shares for the medical equipment was made at the inception of the company and was not a new contract requiring disclosure of interest by Kamal.

2. Decision to Reflect the Money Brought in by Sajal's Group as "Disputed Liability":
The tribunal directed that the money of Sajal remaining with the company should be returned along with any accrued interest. It was noted that the Board had decided that the monies of Sajal did not fall under any categories such as share application money, loan, or debentures.

3. Non-cancellation of the Allotment of 25,000 Shares to Dr. Kamal:
The tribunal observed that the Honorable Supreme Court had not given a direction to set aside the allotment made to Kamal and that such allotment had not affected the 11.12% shareholding earmarked for Resident Indian Shareholders. Therefore, it was concluded that the allotment did not cause any prejudice to the rights of Sajal.

4. Efforts to Remove Sajal as Director:
The tribunal held that the attempts by Kamal to remove Sajal as a director could not be considered an oppressive act under Sections 397 and 398 of the Companies Act, 1956. It was noted that the company was in continuous litigation and that it was in the domain of the company to decide who should remain on the Board. The tribunal invoked Section 402 of the Act and ordered that Sajal should cease to continue as a director for the survival of the company.

5. Appointment of Arindam Samanta, Sudip Basu, and Dr. A.K. Sanyal as Directors:
The tribunal found that the appointments were made at the wish of the majority and that there was no proof that their continuation on the Board was prejudicial to the interests of the petitioners or the company. Therefore, the tribunal concluded that the appointments did not amount to oppression or mismanagement.

Conclusion:
The tribunal validated the allotment of 30,55,329 shares to Kamal, subject to the outcome of WP 1157/2004 pending before the Honorable High Court of Calcutta. It directed the company to return the money brought in by Sajal along with accrued interest and ordered that Sajal should cease to continue as a director. The company was also instructed to release all guarantees given by Sajal to financial institutions and provide an exit option for Sajal as a shareholder on fair valuation of the shares. The company petition was disposed of accordingly.

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