2012 (7) TMI 1109 - Board - Companies Law

Summary

Issues Involved:
1. Allegations of oppression and mismanagement u/s 397-398 of the Companies Act, 1956.
2. Reduction of petitioner's shareholding.
3. Issuance of additional shares without proper notice.
4. Alleged illegal appointment of directors.
5. Continuous acts of oppression and mismanagement.
6. Allegations of limitation and non-joinder of necessary parties.
7. Conduct of the petitioners and respondents.

Summary:

1. Allegations of oppression and mismanagement u/s 397-398 of the Companies Act, 1956:
The petitioner alleged oppression and mismanagement by the respondents in the R-1-company, Metallurgical Laboratories (P.) Ltd., claiming her shareholding was reduced from 28.43% to 17.53% due to the respondents allotting 1,592 shares to themselves. The petitioner contended that contradictory reasons were given for the capital increase and no proper notice was given to other members or directors.

2. Reduction of petitioner's shareholding:
The petitioner's shareholding was reduced due to the respondents allegedly allotting shares to themselves without proper notice or resolution. The petitioner argued that the respondents acted dishonestly and with malafides, and the share capital increase was intended to convert majority shareholders into minority shareholders.

3. Issuance of additional shares without proper notice:
The petitioner contended that no notice of the meeting on 8th July 2008 was issued to the director, Mrs. Suhasini Kurkure, and the letter conveying the minutes was sent late, giving unreasonably short time for the petitioner to exercise her rights. The respondents allotted the shares to themselves without waiting for the petitioner's response, which was a pre-planned act.

4. Alleged illegal appointment of directors:
The petitioner argued that the appointment of Mr. Aseem R Wagle as director was illegal due to lack of quorum in the meetings held on 8th August 2007 and 14th August 2007. The respondents failed to provide any records showing Mrs. Suhasini Kurkure's attendance at these meetings, making the appointment and subsequent acts by Mr. Aseem R Wagle illegal.

5. Continuous acts of oppression and mismanagement:
The petitioner alleged that the respondents continued their acts of oppression and mismanagement by removing company files, data, and computers without informing anyone, and failing to prepare and present annual accounts and directors' reports for several years. The petitioner also argued that the acts of oppression and mismanagement were continuous and ongoing.

6. Allegations of limitation and non-joinder of necessary parties:
The respondents argued that the petition was barred by limitation as the petitioner learned about the share issuance in August 2009 but did not take action until February 2011. The respondents also contended that the petition was not maintainable due to non-joinder of necessary parties, as two separate petitions were filed by different petitioners alleging the same causes without joining each other.

7. Conduct of the petitioners and respondents:
The respondents argued that the petitioner's conduct was prejudicial to the company's interests, pointing out that the petitioner and Mrs. Suhasini Kurkure had filed independent petitions and taken contradictory stands. The respondents also highlighted the petitioner's alleged anti-company activities and involvement in various litigations against the company and its directors.

Conclusion:
The Board found that the petitioner failed to controvert the respondents' contentions and that the petition was not maintainable due to non-joinder of necessary parties and the petitioner's prejudicial conduct. However, to do substantial justice, the Board allowed the petitioner to move out of the R-1 company on receipt of fair value for her shares, amounting to 28.43%, based on a valuation report as of 31st March 2011. The respondents were required to buy her shares at the ascertained price within four weeks of receiving the valuation report. The petition was disposed of in these terms, with all interim orders vacated and no orders as to cost.