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TMI Blog1979 (8) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... ha and Mr. Ranjan Deb, for the opposing group, and Mr. Sankar Ghosh, appearing with Mr. P. C. Sen and Mr. Jayanta Mitter, for a group of respondents who alleged themselves to be neutral. But according to the opposing group they are really supporting the petitioners. The matter was argued for three days at great length as to why the interim orders should not be vacated on the one hand and on the other hand as to why a special officer should not be appointed. I may point out that it appears that respondent No. 2, Mr. Prasanta Sanyal, the managing director, who is going to retire on the 30th .of September, 1979, is now too ill and is not attending office, being a heart patient. The respondent No. 12, Phoni Bhusan Sengupta, a director of the company, has resigned after the present application was moved, from the board of directors of the respondent-company and Mr. Satyajit Roy, respondent No. 14, a person of international reputation and a director of the respondent-company, appearing through Mr. P.C. Sen, submitted that he is not in a position to attend his office as a director of the company due to his pre-occupation and he has no objection if a special officer is appointed to look af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contributed to solely by the executive and other employees who were formerly employed in the D. J. Kaymer Co. Ltd. The share capital was contributed to by payments of half of the retrenchment compensation received by the employees. It appears that petitioner No. 1, Amal Kumar Mukherjee, and respondent No. 9, Subrata Sengupta, and respondent No. 10, Sovendu Basu, were employees of the said D. J. Kaymer Co. Ltd. and they continued to be in the employment of the company since 1956. It appears that subsequently the company's paid-up capital was increased from Rs. 50,000 to Rs. 318 lakhs in 1976. In or about August, 1976, the board of directors of the company decided to increase the paid-up capital of the company to Rs. 5,00,000 by the issuance of a further 1,822 shares. At that time it appears that no shareholder of the company owned more than 31% of the paid-up capital of the company and the total shareholding of the respondents Nos. 2, to 11, at that time was about 19%. In the directors' report to the shareholders for the year ending 31st March, 1976, it was stated that the proposed issue of the said 1,822 unissued equity shares were in order to get further working capital. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of those letters are annexed to the petition and are at pages 62 to 65. It also appears that by a letter dated the 26th of November, 1976, the said respondent No. 11, C. S. Passanah, duly signed the said 3 letters and returned to respondent No. 8, Harbilas Chakravarty. The petitioners allege that the said shares were purchased in violation of article 5 of the articles of association of the company and section 77 of the Companies Act, 1956. The said allotments in favour of respondents Nos 2. to 11 are mala fide and that it was with an ulterior motive with the object of grabbing illegal control and to take over the management and control of the company. It is further alleged that the allotment was alien to the spirit and letter of the reason for the formation of the company and the same was not for the benefit of the company. As the said shares were purchased out of the funds of the company by advancing about Rs. 1,20,000 it amounts to reduction of the share capital of the company without going through the legal procedures. It further appears that the company has paid dividends in respect of the said 1,200 shares in cash and the shares scrips are alleged to be lying with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttedly the said allotments were made as far back as September and October, 1976. It is also alleged that the petitioners are not asking for cancellation of the said 622 shares, which the petitioners and other shareholders have got allotted and are alleged to have paid for. It is further alleged that two annual general meetings have taken place between the period and nowhere the questions now sought to be raised were ever raised. The explanation of the petitioners is that they had full faith and confidence in respondents Nos. 2 to 11 and they were lulled into inaction by payment of dividend at the rate of 20% and the good performance of the company and it is only in April, 1979, they have discovered the fact of the wrongful, illegal and surreptitious allotment of 1,200 shares by respondents Nos. 2 to 11, to keep the block apart for the purpose of gaining control of the respondent-company, and the occasion of discovery is alleged to be the question of appointment of a new managing director after the retirement of the present ailing managing director on the 30th of September, 1979, as alleged in paras. 20, 21 to 29 of the petition. At first blush it appeared to me that it is highly im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts on the part of respondents Nos. 2 to 11 has been disclosed and very serious questions as to the interpretation of the articles and provisions of the Companies Act are to be gone into. Further, the directors' minutes book which has been produced before me by the special officer who has taken possession appears to me not a minutes book within the meaning of section 193 of the Companies Act, 1956, as it is in a loose leaf binder and typewritten. In my view, such a book is not admissible in evidence as the minutes book of a company as it is in violation of the provisions of section 193(1B) which provides that nothing can be pasted or attached to a minutes book indicating that a minutes book must be a bound book and must be hand written and cannot be a loose leaf binder and typewritten. This is for obvious reasons for preventing interpolation, manipulation, fabrication and substitution and I am further satisfied at this stage that there is no active board of the respondent-company at the present moment and, therefore, the administration of the company cannot be left in the hands of the executives against whom serious allegations have been made in the petition which appears to be, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this stage, I am inclined to accept the prima facie case made out by the petitioner and also the statements in para. 40 that the petitioners discovered the said facts only in or about April, 1979, and, thereafter, the present application has been made. It is an admitted position that the company has extensive business and high profitability and the matter, as it stands at the present moment, is certainly not to be left as it is, particularly in the hands of the executives, who appear to be in complete control of the company. The executives, who are respondents Nos. 2 to 11 and other officers of the company, are very well paid and the particulars will appear from the statements and particulars of the employees under section 217(2)( a ) of the Companies Act in the annual report of the company for 1978. Having regard to the nature of the charges and the materials at this stage before me, as I have indicated above, and also due to the fact that it does not appear to this court, at this stage from the present array of advocates appearing for the different parties, as to what is the attitude of the directors of the company, save and except respondent No. 2, Prasanta Sanyal, managin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t management of the company. They will act jointly and severally. Any one of them should attend the office of the company during the office hours and look after the business of the company so that it is carried on in the usual course, i.e ., all the debts due to the company are realised expeditiously by taking proper steps, and see that the business of the company is not in any way interfered with or hampered by anybody including respondents Nos. 2 to 11. The joint special officers will convene a meeting of the board of directors of the company forthwith to be held within a week from date and see whether the directors are willing to act and constitute a quorum and a valid board and they should decide as to the conduct of the present litigation in this court, i.e ., whether they will contest the litigations in this court and if so in what manner. The joint special officers will be at liberty, in case of any doubt, difficulty or dispute to apply before this court with notice to all the parties to this proceeding for appropriate directions and orders whenever they think it fit and necessary. At present the joint special officers will represent the company in these proceedings until ..... X X X X Extracts X X X X X X X X Extracts X X X X
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