9911796707
TMI Blog1996 (7) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... a widely travelled man having vast experience in the planning and promotion of hotels, having served the premier institution known throughout the world as 'Oberoi Hotels'. It is stated in the plaint that after serving the said institution, he retired in 1990, but continued his association with Oberoi Hotel, by virtue of being the President of the Hotel Oberoi. Inter Continental Co-opera- tive-General Housing Society Ltd., as also being the President of its Employees Welfare Association. It is further stated that he is a consultant to Span Resorts, Manali and Holiday Inn, both at Manali and Ahmedabad, respectively. Plaintiff No. 2, Concept Fabrics, is stated to be a company incorporated under the Indian Companies Act and plaintiff No. 1, Shri J.K. Puri, is its managing director. Plaintiff Nos. 3 to 5 are stated to be the shareholders, being the wife and two daughters, respectively of plaintiff No. 1. Defendant No. 2, Kufri Hotels (P.) Ltd., is also a company under the Act, being a private limited company, it is running a hotel/resort at Kufri, District Shimla. Defendant No. 1, H.P.S.I.D.C. was earlier a shareholder in Kufri Hotels, defendant No. 2 to the extent of 2,500 equity sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3840 HPSIDC Ltd. Sh. Budhi Singh 1143 3520 to 3520 3520 to 3663 Sh. I.P. Anand Vipat Invest. (P.) Ltd. 100 21186 to 21285 Sh. D.B. Malik Sh. Dhian Chand 100 7436 to 7535 Sh. Surinder Aggarwal Sh. Dhian Chand 100 6786 to 6885 Sh. Shyam Chopra Sh. Dhian Chand 100 8136 to 8235 Ms. Sangeeta Chopra Sh. Dhian Chand 100 8236 to 8335 Mrs. Brij Bala Sh. Dhian Chand 100 8336 to 8435 Sh. P.N. Chandel Sh. Dhian Chand 750 10116 to 10865 Ms. Neelam Bhardwaj Sh. Dhian Chand 250 9866 to 10115 Mr. B.R. Patiyal Sh. Dhian Chand 500 9366 to 9865 Mr. Arjun Chauhan Sh. Dhian Chand 100 8856 to 8955 Ms. Sonam Chauhan Sh. Dhian Chand 100 8756 to 8855 4. It is the case of the plaintiffs that the minutes of this meeting were wrongly recorded, inasmuch as plaintiff No. 1, though present at the meeting, had never agreed to the aforesaid transfer of shares. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... induction as a shareholder, it was the effort of plaintiff No. 1 to gain a majority shareholding and to usurp the management from defendant Nos. 3 to 5 taking advantage of the heart problem of defendant No. 3, Shri Dhian Chand, who had to undergo a by-pass surgery in March 1994, on account of which he could not devote his attention to the management of the hotel, and requested plaintiff No. 1 to look after its affairs, being a substantial shareholder and a director. In addition, plaintiff No. 1 persuad-ed defendant No. 3 to sign an agreement with him appointing him as a consultant on a fee of Rs. 25,000 per month or 3 per cent of the gross revenue of the company, whichever was more. Notwithstanding this, however, plaintiff No. 1 did not render any effective of proper consultancy or any other service to the hotel. Rather, according to the defendants, plaintiff No. 1 started to dictate terms in the absence of defendant No. 3 due to the latter's illness. There are other averments in the written statement, which it is not necessary to reproduce or discuss for the purpose of deciding the interim injunction matter. In the reply filed to the application under Order 39, rules 1 and 2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the other hand, it had been submitted by the learned counsel appearing on behalf of the defendants, that article 13 is not applicable in the present case, inasmuch as the transfer of shares under the buy-back agreement entered into between defendant Nos. 1 and 2 on 20-12-1984, it was clearly provided therein that defendant No. 1 would transfer its shares to the promoters, i.e., defendant Nos. 3 to 5 after the embargo for a period of five years from the date of the commercial production of the company-defendant No. 2 was over. In this connection, he has referred to articles 5 and 10 of the articles of association of defendant No. 2, which are reproduced herebelow for facility of reference : "5. Subject to the provisions of the Act and these articles, the shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions and at such times as they may think fit. 10. Save as provided in section 108 of the Act, no transfer of shares shall be registered unless a proper instrument of transfer, stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing held on 20-9-1993, and has submitted that it confirms to the minutes of the last meeting after they were read out by Shri Amar Chand Chauhan, who presided over the said meeting of the board of directors on 20-9-1993. From this, the learned counsel would have the court infer that the minutes book was not lost, as deposed by Shri Parminder Kaushal in his affidavit, referred to above. The learned counsel has also referred to the statement in the affidavit of the said Shri Parminder Kaushal that FIR No. 14 was lodged in the Police Station, Dhalli, on 2-2-1995, regarding the loss of the minutes book containing the minutes of the meeting of the board of directors from December 1990, to June 1993. But in this connection, it needs to be pointed out that the said Shri Parminder Kaushal has also indicated in para 7 that he has been regularly getting copies of notices and the minutes of the board of directors in a meeting file maintained by the office, and from where copies of the said notices and minutes have been supplied to the company- defendant No. 2, which have been filed in this court. This prima facie explains the source of the documents filed by the plaintiffs in this court, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, Gower describes 'the members in general meeting' and the directorate as the two primary organs of a company and compares them with the legislative and the executive organs of a Parliamentary democracy where legislative sovereignty rests with Parliament, while administration is left to the Executive Government, subject to a measure of control by Parliament through its power to force a change of Government. Like the Government, the directors will be answerable to 'Parliament' constituted by the general meeting. But in practice (again like the Government), they will exercise as much control over Parliament as that exercises over them. Although it would be constitutionally possible for the company in general meeting to exercise all the powers of the company, it clearly would not be practicable (except in the case of one or two-man companies) for day-to-day administration to be undertaken by such a cumbersome piece of machinery. So the modern practice is to confer on the directors the right to exercise all the company's powers except such as the general law expressly provides must be exercised in general meeting ( Gower's Principles of Modern Company Law ) . Of course, powers whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the board of directors of defendant No. 2 has exercised its powers in the meeting held on 30-6-1995, according to the articles of association and as per the terms of the agreement entered into between defendant No. 1 and defendant No. 2 on 20-12-1984. 19. The plaintiffs have challenged the veracity of the minutes of the said meeting dated 30-6-1995, on the ground that they were wrongly recorded, because plaintiff No. 1, though present, had never agreed to the transfer of 2,500 equity shares earlier purchased by defendant No. 1, to the promoters of defendant No. 2 this again is a matter of evidence, the stage for which has not yet arrived. In the given circumstances of the case, as at present discernible from the record, it would neither be possible nor appropriate to give a finding one way or the other on this contentious issue. 20. A perusal of the minutes of the meeting of the board of directors of defendant No. 2 held on 30-6-1995, indicates that the presence of plaintiff No. 1 at this meeting is recorded. Item No. 2 therein indicates that the transfer of shares of defendant No. 1, as per the buy-back agreement, was discussed in detail and Shri J.K. Puri told th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be caused if the injunction prayed for is not granted during the pendency of the suit, because if the plaintiffs ultimate- ly succeed in getting a decree, as prayed for in the suit, the transfer of shares of defendant No. 1 to the promoters of the company-defendant No. 2 will be struck down. On the other hand, if the interim injunction prayed for by the plaintiffs is granted during the pendency of the suit, it will have the effect of nullifying the transfer of the shares already effected by the meeting of the board of directors dated 30-6-1995, before the present suit was filed. Moreover, it would be tantamount to keeping the shares thus transferred in abeyance, leading to further complications in the day-to- day management of the company-defendant No. 2. 22. On behalf of the defendants, their learned counsel has cited Mukundlal Manchanda v. Prakash Roadlines Ltd. [1991] 72 Comp. Cas. 575 (Kar.). It has been laid down therein by the Karnataka High Court that where the petitioners were present at a meeting of the board of directors in which a resolution was passed approving transfer of shares to certain members/ directors, and the former did not protest at that time ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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