2013 (4) TMI 957 - Board - Companies Law

Summary

Issues Involved:
1. Validity of resolutions passed in board meetings and subsequent share allotments.
2. Allegations of fraud, forgery, and mismanagement.
3. Maintainability of the company petition considering prior legal proceedings.

Summary:

1. Validity of Resolutions and Share Allotments:
The petitioners sought to declare as non est the resolutions passed in board meetings held on April 14, 2011, April 27, 2011, May 27, 2011, and June 21, 2011, and to set aside the allotment of 4,00,000 shares on May 12, 2011, 1,90,000 shares on May 17, 2011, and 7,00,000 shares on October 19, 2011. The respondents contended the increase in share capital was due to financial needs and was done lawfully with the digital signature provided by petitioner No. 1.

2. Allegations of Fraud, Forgery, and Mismanagement:
The petitioners alleged widespread fraud, forgery, and criminal activities by respondents Nos. 2 to 5, including the forgery of resignation letters and the misuse of digital signatures to upload false information on the MCA website. They also claimed gross mismanagement and oppression. The respondents denied these allegations, asserting that the resignation and appointments were legitimate and supported by affidavits from the company secretary, Mr. Jyotirmoy Mishra.

3. Maintainability of the Petition:
The respondents raised a preliminary objection, arguing that the petitioners approached the Company Law Board with unclean hands by suppressing material facts and not disclosing prior legal proceedings. The petitioners had filed O.S. No. 99 of 2011 and C.P. No. 184 of 2011 on similar grounds, which were pending before the civil court and the High Court of Andhra Pradesh, respectively. The petitioners withdrew these cases without seeking liberty to continue the present petition, thus abandoning their claims. The court held that the petitioners' actions amounted to suppression of material facts and abuse of process, leading to the dismissal of the petition.

Conclusion:
The Company Law Board dismissed the petition on grounds of suppression of material facts, unclean hands, and abuse of process, noting that the petitioners had not sought liberty to continue the present petition after withdrawing similar cases from other courts. All interim orders were vacated, and all applications were disposed of.