2013 (3) TMI 844 - Board - Companies Law

Summary

Issues Involved:
1. Allegations of oppression and mismanagement u/s 397/398 of the Companies Act, 1956.
2. Illegal increase in authorized capital.
3. Mismanagement and siphoning of funds.
4. Fabrication and manipulation of Board meeting minutes.
5. Unauthorized leasing of land and allotment of shares.
6. Collusion with banks and illegal loans.
7. Denial of access to company records and exclusion from management.
8. Appointment of Special Officer-cum-Observer and auditors.

Summary:

1. Allegations of oppression and mismanagement u/s 397/398 of the Companies Act, 1956:
The petitioner alleged acts of oppression and mismanagement by the Chiripal group in the affairs of Vraj Integrated Textile Park Ltd. ("R-1-company") and sought ad-interim injunctions.

2. Illegal increase in authorized capital:
The petitioner claimed that the authorized capital of the R-1-company was illegally increased from Rs. 5 crore to Rs. 6 crore and further to Rs. 37 crore without proper Board meetings or notices, with the intent to reduce the petitioner's shareholding.

3. Mismanagement and siphoning of funds:
The petitioner accused the Chiripal group of siphoning off grants from the Ministry of Textiles (Rs. 36 crore) and loans from IDBI (Rs. 19.70 crore) and State Bank of Bikaner and Jaipur (Rs. 16.30 crore) by leasing lands to Chiripal group companies at throwaway prices, resulting in a loss of Rs. 29,98,98,512 to the R-1-company.

4. Fabrication and manipulation of Board meeting minutes:
Discrepancies were pointed out in the minutes of Board meetings, with allegations of manipulation and fabrication, such as the addition of agenda items later and post-dated postal receipts for meeting notices.

5. Unauthorized leasing of land and allotment of shares:
The petitioner argued that leases of land to Chiripal group companies were done without proper Board resolutions, and shares were allotted without Board meetings or proper consideration, with white fluid applied to the share transfer register to change folio numbers.

6. Collusion with banks and illegal loans:
The petitioner alleged that the creation of mortgages and granting of term loans by IDBI and State Bank of Bikaner and Jaipur were illegal and done in collusion with the Chiripal group, without proper Board meetings or authority.

7. Denial of access to company records and exclusion from management:
The petitioner claimed that he was denied access to the Textile Park premises, minutes books, and financial records, and was ousted from the management after setting up the Textile Park.

8. Appointment of Special Officer-cum-Observer and auditors:
The court appointed Shri Hari Sankar Acharya as Special Officer-cum-Observer to oversee the affairs of the R-1-company, Rawla & Co. as auditors to prepare cash flow statements and verify utilization of funds, and Hitesh Buch & Associates as company secretaries to verify statutory records and compliance with the Companies Act. The court granted the petitioner liberty to amend the company petition to incorporate subsequent events.