1979 (10) TMI 144 - HC - Companies Law

Memorandum of association Special resolution and confirmation by CLB required for alteration of Notice for meeting Oppression and Mismanagement

Issues Involved:
1. Validity of the meeting held on May 16, 1976.
2. Allegations of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956.
3. Transfer of the registered office from Calcutta to Hyderabad.
4. Alleged removal of documents and papers by Respondent No. 5, R.K. Mittal.
5. Transfer of the secretary and senior officers from Calcutta to Hyderabad.
6. Alleged irregularities in the preparation and publication of the balance-sheet.

Detailed Analysis:

1. Validity of the Meeting Held on May 16, 1976:
The petitioners challenged the legality of the meeting held on May 16, 1976, alleging that it was conducted without proper notice. However, the respondents argued that no fresh notice was required for the adjourned meeting as per the Companies Act and the articles of association of the company. The court found that Article 146 of the company's articles of association was applicable, which allows directors present at a meeting adjourned due to lack of quorum to fix the date, time, and place for the adjourned meeting. Therefore, the court held that the meeting on May 16, 1976, was legal, valid, and according to law, and the resolutions passed therein did not suffer from any illegality or infirmity.

2. Allegations of Oppression and Mismanagement under Sections 397 and 398 of the Companies Act, 1956:
The petitioners alleged oppression and mismanagement by the respondents. The court examined the allegations and found no substantiated grounds that could constitute oppression or mismanagement within the meaning of Sections 397 and 398. The court noted that the disputes were primarily family disputes within the Mittal family, and the actions taken by Respondent No. 5, R.K. Mittal, were in the best interests of the company and its shareholders. The court dismissed the allegations as mala fide and not amounting to oppression or mismanagement.

3. Transfer of the Registered Office from Calcutta to Hyderabad:
The petitioners argued that the transfer of the registered office from Calcutta to Hyderabad was against a court order from 1970. However, the court noted that the situation in 1979 was different from that in 1970. The company's factory and main business were in Andhra Pradesh, and the Andhra Pradesh State Financial Corporation, a significant financier, insisted on the transfer. The court found the transfer to be justified and in the best interests of the company.

4. Alleged Removal of Documents and Papers by Respondent No. 5, R.K. Mittal:
The petitioners alleged that Respondent No. 5, R.K. Mittal, forcibly took away various documents, papers, and books of the company. R.K. Mittal denied these allegations. The court did not find sufficient evidence to support the petitioners' claims and dismissed this allegation.

5. Transfer of the Secretary and Senior Officers from Calcutta to Hyderabad:
The petitioners contended that the transfer of the secretary and senior officers to Hyderabad was without lawful ground. The respondents argued that the transfer was necessary due to unjustified expenses and the need for better management. The court found that the transfer was conducive to the best interests of the company and did not constitute oppression or mismanagement.

6. Alleged Irregularities in the Preparation and Publication of the Balance-Sheet:
The petitioners alleged that the accounts of the Hyderabad factory were deliberately not sent, preventing the preparation and publication of the balance-sheet. The respondents denied these allegations and stated that the accounts at Calcutta were not ready. The court did not find any substantial evidence to support the petitioners' claims and dismissed this allegation.

Conclusion:
The court dismissed the application with costs, finding no merit or substance in the petitioners' allegations. The court held that the actions taken by Respondent No. 5, R.K. Mittal, were in the best interests of the company and its shareholders, and there was no evidence of oppression or mismanagement. The Special Officer, Mr. C.R. Dutt, was discharged, and any arrears of remuneration were to be paid from the company's funds.

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