2008 (2) TMI 907 - Board - Companies Law

Summary

Issues Involved:
1. Investigation of membership u/s 247/250 of the Companies Act, 1956.
2. Alleged concerted acquisition of shares violating SEBI regulations.
3. Maintainability of the petition under Section 247/250 for listed companies.
4. Interim relief for restraining transfer of shares.

Summary:

1. Investigation of Membership u/s 247/250:
The petitioner, M/s. Rasoi Limited, filed a petition u/s 247/250 of the Companies Act, 1956, seeking an investigation into the membership of respondent Nos. 1 to 27 to determine the true persons financially interested in the company. The petitioner also sought interim relief to restrain the respondents from transferring their shares or exercising voting rights. The petitioner had previously filed a petition u/s 111A for rectification of the register of members, alleging concerted acquisition of shares by respondents in violation of SEBI regulations. During the pendency of the 111A petition, some respondents transferred their shares to others, leading to the current petition.

2. Alleged Concerted Acquisition of Shares:
The petitioner argued that the respondents acted in concert to acquire 21% of the company's shares, significantly increasing the share price. The petitioner highlighted the interconnections among the respondents, such as common shareholding, loans, registered offices, directors, bank accounts, and auditors. The petitioner contended that the investigation was necessary to uncover the true persons financially interested in the company and to aid the pending 111A petition.

3. Maintainability of the Petition:
The respondents challenged the maintainability of the petition, arguing that Section 247 was not applicable to listed companies post-SEBI regulations. They contended that the petitioner should approach SEBI for investigation under Regulation 38(a) of the Takeover Regulations. The respondents also argued that the petition lacked specific allegations and was filed with an oblique purpose. The Board examined whether a petition u/s 250 could be independently filed and concluded that it could, provided there were circumstances warranting an investigation u/s 247(1A).

4. Interim Relief for Restraining Transfer of Shares:
The petitioner sought to restrain the respondents from transferring their shares, arguing that the investigation would reveal interconnections among the respondents. The Board noted that an investigation u/s 247(1A) was not an end in itself but a means for further action. The Board also observed that the petitioner had not impleaded respondents 17 to 27 in the 111A petition, limiting the effectiveness of any investigation. The Board found that the petitioner sought the restraint order to circumvent the lack of such power under Section 111A.

Conclusion:
The Board dismissed the petition, vacating all interim orders, and granted liberty to the petitioner to implead respondents 17 to 27 in the 111A petition. The Board emphasized that SEBI should handle investigations related to violations of Takeover Regulations for listed companies. The Board also directed the 1st respondent to respond to an application alleging violation of the status quo order.