1965 (4) TMI 63 - HC - Companies Law

Summary

Issues Involved:
1. Cancellation of share allotment to the executive director and her removal from the board.
2. Recovery of remuneration paid to the executive director.
3. Cancellation of share allotment to the managing director's son.
4. Invalidity of the technical director's appointment.
5. Appointment of a committee of shareholders to manage the company's affairs.
6. Illegal transfer and non-transfer of shares.
7. Non-payment of dividends.
8. Excess remuneration paid to directors.
9. Lack of notice for the general body meeting.
10. Alleged forgery of signatures.
11. Validity of the resolution admitting a partner to the managing agency firm.

Detailed Analysis:

1. Cancellation of Share Allotment to the Executive Director and Her Removal from the Board:
The petition sought to cancel the allotment of 50 shares to the executive director and remove her from the board, alleging oppression and mismanagement. The court found that the directors had acted in a high-handed and unreasonable manner, but did not specifically address the cancellation of the executive director's shares in this order.

2. Recovery of Remuneration Paid to the Executive Director:
The petitioners demanded the recovery of remuneration paid to the executive director from August 15, 1960. The court did not find sufficient grounds to grant this relief in the current proceedings.

3. Cancellation of Share Allotment to the Managing Director's Son:
The petitioners sought to cancel the allotment of 60 shares to the managing director's son, Harsha P. Karmarkar. The court noted irregularities in the transfer of shares but did not grant this relief in the current proceedings, suggesting it should be pursued in separate proceedings for rectification of the register.

4. Invalidity of the Technical Director's Appointment:
The petitioners questioned the validity of the technical director's appointment. The court did not specifically address this issue in the judgment.

5. Appointment of a Committee of Shareholders to Manage the Company's Affairs:
The petitioners requested the appointment of a committee of shareholders to manage the company's affairs. The court found no justification for this relief, except for addressing the high-handedness in dealing with the payment of dividends and transfer of shares.

6. Illegal Transfer and Non-Transfer of Shares:
The court found that the non-transfer of shares under the will of late M.R. Patny was high-handed and unreasonable. The directors had acted in a discriminatory manner by refusing to transfer some shares while transferring others under the same will. The court directed the directors to transfer the shares held by M.R. Patny in terms of his will.

7. Non-Payment of Dividends:
The petitioners alleged that dividends declared for the year 1961-62 were withheld. The court found that the directors had credited the dividends to the petitioners but had unreasonably withheld the transfer of shares, which was deemed oppressive.

8. Excess Remuneration Paid to Directors:
The court examined the allegation of excess remuneration paid to directors. It found that some excess amounts were received apart from the remuneration as director's fees, but there was insufficient material to conclude that the excess amount did not pertain to any legitimate claims by the directors.

9. Lack of Notice for the General Body Meeting:
The petitioners claimed they did not receive notice for the general body meeting held on September 28, 1962. The court found no evidence to support this claim, as none of the petitioners provided evidence, and it could not infer that no notice was given.

10. Alleged Forgery of Signatures:
The petitioners alleged forgeries of M.R. Patny's signatures from 1959 onwards. The court found no credible evidence to support these allegations and noted that the petitioners did not inform M.R. Patny of these alleged forgeries during his lifetime.

11. Validity of the Resolution Admitting a Partner to the Managing Agency Firm:
The petitioners raised an additional ground that the resolution admitting Jaikumar M. Patny as a partner of the managing agency firm was void. The court did not specifically address this issue in the judgment.

Conclusion:
The petition was partly allowed. The court directed the directors to transfer the shares held by M.R. Patny in terms of his will. Other reliefs sought by the petitioners, such as the cancellation of share allotments and the appointment of a committee of shareholders, were not granted in these proceedings. The parties were directed to bear their own costs. Company Applications Nos. 82 and 126/64 were allowed, while Company Application 83/64 was dismissed as not pressed.