2001 (12) TMI 897 - Board - Companies Law

Summary

Issues: Allegations of oppression and mismanagement in a company under Sections 397/398 of the Companies Act, 1956.

The judgment pertains to a petition filed under Sections 397/398 of the Companies Act, 1956, alleging oppression and mismanagement in a company. The petitioner, holding 1,000 shares out of 4,500 in the company, claimed to have been forced to resign as managing director due to pressure tactics by other directors. The petitioner issued a cheque that was dishonored, leading to legal proceedings. Additionally, the company failed to hold the AGM for 1997-98, prepare accounts, audit them, or file annual returns. The petitioner sought directions to regulate the company's affairs.

In response, the company contended that the petitioner resigned voluntarily as managing director and was responsible for the closure of the bank account. They alleged that the petitioner's actions, including taking crucial records, hindered finalizing accounts. The company filed a criminal case against the petitioner for misappropriation. They argued that the petition was a retaliatory move related to the criminal case. The company requested the petition's dismissal and the return of company records.

After hearing both parties, the Board found no substantial evidence of mismanagement. The Board noted that if the company failed to hold an AGM, appropriate authorities should take action, especially considering the petitioner's alleged possession of company records. Regarding the bank account closure, the Board confirmed that the petitioner himself signed the letter for closure. Consequently, the Board concluded that the petitioner did not establish grounds for relief under Section 402 of the Act and dismissed the petition.