1971 (5) TMI 39 - DSC - Companies Law

Summary

Issues Involved:
1. Allotment of shares to Mrs. Peskoff.
2. Directors' remuneration.
3. Deletion of Mr. Littman's loan account.
4. Notice of company meetings to administrators.
5. Change of the company's registered office.

Detailed Analysis:

1. Allotment of Shares to Mrs. Peskoff:
The petitioners claimed that the allotment of 100 shares to Mrs. Peskoff was not made bona fide in the interests of the company but to give her control and increase her share in the equity. The court found that the company was in dire need of cash, and Mrs. Peskoff was taking a considerable risk by putting additional money into the company. The allotment of shares and the issue of debentures were part of a "package deal" to inject cash into the company. The court concluded that the allotment was a legitimate act done in good faith for the benefit of the company and was not oppressive.

2. Directors' Remuneration:
The petitioners argued that the directors' remuneration, particularly after the agreement with Nevilles, was grossly excessive. The court noted that the remuneration up to March 31, 1961, was not excessive and that the resolution of October 17, 1955, was not oppressive. Although Mrs. Peskoff did take excessive remuneration in later years, the court found no link between the issue of shares and the voting or taking of remuneration. The court held that the remuneration taken by Mrs. Peskoff did not amount to oppression as it was not procured or retained through the exercise of majority voting power.

3. Deletion of Mr. Littman's Loan Account:
The petitioners complained about the deletion of the lb2,936 debit on Mr. Littman's loan account from the company's accounts. The court found that this action could not be regarded as oppressive and that the debt, if valid, was statute-barred long before the petition was presented. The court disagreed with the lower court's decision to take this sum into account in granting relief under section 210.

4. Notice of Company Meetings to Administrators:
The petitioners argued that no notices of company meetings were given to the personal representatives of Mr. Littman. The court acknowledged that the directors were mistaken in omitting to give notice but found that this could not be regarded as an act of oppression. The court held that even if it were considered oppressive, it would not justify an order for one side to buy the shares of the other.

5. Change of the Company's Registered Office:
The petitioners complained about the irregular removal of the registered office from 78 New Bond Street to the Jermyn Street premises. The court noted that no reliance was placed on this issue in the appeal, and it was not considered further.

Conclusion:
The court allowed the appeal and dismissed the petition, finding that the petitioners failed to make out a case of oppression. The court emphasized that the acts complained of did not constitute oppression within the meaning of section 210 of the Companies Act, 1948.