2006 (12) TMI 572 - Board - Companies Law

Summary

Issues Involved:
1. Appointment of an Administrator/Special Officer.
2. Appointment of an independent auditor.
3. Notification of changes in the Register of Members.
4. Transfer and endorsement of shares.
5. Restraining the N.C. Jain group from managing the company.
6. Allegations of oppression and mismanagement.
7. Non-compliance with the Memorandum of Understanding (MOU).
8. Change of Registered Office.
9. Removal of petitioners from the Board of Directors.

Summary:

1. Appointment of an Administrator/Special Officer:
The petitioners sought the appointment of an Administrator/Special Officer to take charge of the management and affairs of the respondent company. However, the court found no substantial evidence to justify such an appointment.

2. Appointment of an independent auditor:
The petitioners requested an independent auditor to re-audit the company's accounts since 2000. The court did not find sufficient grounds to grant this request.

3. Notification of changes in the Register of Members:
The petitioners alleged that the respondent company failed to notify changes in its Register of Members. The court noted that the petitioners did not provide conclusive evidence to support this claim.

4. Transfer and endorsement of shares:
The petitioners claimed that the respondent company did not endorse share certificates handed over for transfer. The court observed that the petitioners did not apply for duplicate share certificates despite being advised to do so, leading to doubts about their possession of the shares.

5. Restraining the N.C. Jain group from managing the company:
The petitioners sought to restrain the N.C. Jain group from managing the company. The court found that the petitioners failed to prove acts of oppression or mismanagement by the respondents.

6. Allegations of oppression and mismanagement:
The petitioners alleged various acts of oppression and mismanagement, including siphoning off funds and unilateral closure of bank accounts. The court found that these allegations were not conclusively proven and noted that the petitioners themselves had acted contrary to the company's interests.

7. Non-compliance with the Memorandum of Understanding (MOU):
The petitioners contended that the respondents did not comply with the MOU, which envisaged equal representation and joint financial authority. The court found that the petitioners did not bring in the required funds as per the MOU and acted contrary to the company's interests.

8. Change of Registered Office:
The petitioners alleged that the respondents changed the Registered Office without following proper procedures. The court noted that the Registered Office was shifted at the petitioners' own insistence and found no merit in this allegation.

9. Removal of petitioners from the Board of Directors:
The petitioners claimed they were removed from the Board of Directors illegally. The court held that such directorial complaints could not be adjudicated in Section 397/398 proceedings and noted the lack of evidence for the petitioners' claims.

Conclusion:
The court dismissed the petition, stating that the petitioners failed to establish any acts of oppression or mismanagement. The petitioners' conduct was found to be prejudicial to the company's interests, and the relief sought would be oppressive to the respondents. The petition was dismissed with no order as to costs, and all interim orders were vacated.