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TMI Blog1999 (10) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of this High Court was seized of those other applications in its appellate jurisdiction and, therefore, the instant application was also directed to be placed before that Bench for being heard and disposed of analogously. However, it appears that while the other appeals were disposed of, the instant application was neither mentioned nor taken up for hearing. That is how the instant application has come up before this Division Bench. 3. The brief facts leading to the filing of the instant application as also the disputes between the groups of two brothers, need to be stated. One Mohanlal Jalan (MLJ), the father of Tolaram Jalan (TRJ), M.P. Jalan (respondent No. 9) (MPJ) and B.P. Jalan (petitioner No. 1) (BPJ), Smt. Sabitri Devi Khaitan, Smt. Sita Devi Rangta and Smt. Damayanti Pitti, was a senior partner of a very famous partnership firm carrying on business in the name and style of Soorajmull Nagarmull. In 1963 disputes and differences arose between the partners of Soorajmull Nagarmull and one of the partners instituted a suit in this Hon'ble Court to resolve such disputes. By an order passed by this Calcutta High Court each of the partners of Soorajmull Nagarmull were allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thers and executed all necessary documents in this regard to give effect to and implement such settlement. The shareholding pattern in the companies allotted to TRJ and those allotted to MPJ and BPJ were jointly rearranged by effecting transfer inter se. All these documents are on record and have been referred to in the aforesaid Division Bench judgment in Bajrang Prasad Jalan's case (supra), Akshay Nidhi Ltd. (see paras. 6-12). Subsequent thereto MPJ and BPJ together acquired and floated several other companies as noted in paragraph 10 of Bajrang Prasad Jalan's case (supra), Akshay Nidhi Ltd. judgment. The aforesaid facts are undisputed and have also been noted in the other two judgments of the Division Bench of this Court relating to Sandeep Investments Co. Ltd., In re [C.P. No. 439 of 1989] and Bajrang Prasad Jalan v. Debonair Agencies Ltd. [2000] 102 Comp. Cas. 81 (Cal.). 6. The present petition is filed under sections 397, 398, 402, 403 and 406 of the Act, and relates to Raigarh Jute & Textile Ltd. ('the company') and its affairs. The company is under the joint ownership, management and control of BPJ and MPJ. BPJ and his group had filed other proceedings with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal shall not be treated as a bar for prosecuting the applications before the learned company judge. 9. The instant application as already noticed, is filed alleging oppression and mismanagement in respect of Raigarh Jute & Textile Mills Ltd. and others (referred to as the said company) being the target company. Respondent No. 2, Raigarh Trading Co. Ltd. ('RTC') has 99.16 per cent shareholding of the total paid-up capital in the company and can, therefore, be appropriately referred to as the holding company. The Company has three subsidiaries, viz., Swagat Properties Ltd. (respondent No. 3), Amritsar Estate Ltd. (respondent No. 4) and Varanasi Hotel & Estates Ltd. (respondent No. 5.) 10. It is stated that the company at present does not carry on any business, which has been stopped since 1989. At present it only holds the property being No. 36, Chowringhee Road, Calcutta. The jute mills and the woollen units, it is alleged, have been clandestinely sold by the MPJ group. 11. According to the petitioner MPJ and his group have, inter alia, brought about a material change in the ownership of the holding company of RTC. Such alteration, it is alleged, in the shareholding of RT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, it is stated, that the alleged divestments of shareholding is for the purpose of taking control of the said valuable asset of the company and the same cannot be permitted without the valid authority and resolutions of the company in that behalf. 15. In the affidavit-in-opposition filed by MPJ (page 123, Vol.-R-1-i of the proper book), it has been denied that there have been any such divestments. In that view of the matter, no order is required to be passed except that, if any, such transfer of shares of Varanasi Hotel & Estates Ltd. (respondent No. 5) have been made to any persons or body whomsoever, the same shall be non est and null and void. 16. The next allegation of oppression and mismanagement is with respect to wrongful sale of jute mill of the company by MPJ group to Mohan Jute (respondent No. 14). 17. It is alleged that pursuant to a purported agreement which is an annexure to the instant application MPJ and HKJ have sought to handover possession of the jute unit belonging to the company to respondent No. 14. 18. According to the petitioner in the board meeting held on 28-6-1989, BPJ was present but no resolution had been passed for the holding of extraordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order passed by this Court in Punjab National Bank's case (supra), and in our view, therefore, the same could not have been made except with the leave of Court, even if the sale, as it is contended by respondent No. 1 was to liquidate the outstanding with the plaintiff-bank and that negotiations in that behalf were held between the company and the plaintiff-bank to work out the modalities. 22. In the circumstances, we hold that if leave is applied for by the company-defendants in Punjab National Bank's case (supra), the sale will abide by the result of the order that may be passed by the learned trial judge. 23. The next allegation with regard to oppression and/or misman- agement is with respect of sub-tenancy right of the company under Bhanu Traders (Pvt.) Ltd. (Bhanu) which in turn was a tenant of MPJ. This issue was also raised but not considered by the Division Bench in Bajrang Prasad Jalan v. Mahabir Prasad Jalan AIR 1999 Cal. 156, Akshay (Nidhi Ltd.) matter on the ground that the same was the subject-matter of this company petition. According to the petitioner the sub-tenancy rights were surrendered without the consent or approval of the board of the company and to fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case Raigarh Trading Co. Ltd. has an issued share capital of Rs. 12,50,000. The petitioners jointly hold 1125 shares of Rs. 100 each aggregating to Rs. 1,12,500 which is less than one-tenth of the issued share capital of Raigarh Trading Co. Ltd. Raigarh Trading has 43 shareholders, in other works, to qualify for the purpose of making an application under sections 397 and 398, five shareholders were required to be the petitioners. In the instant case, there are only two petitioners. Mr. Sen submitted that the English Companies Act does not have a provision similar to section 399 nor is there any provision prescribing the jurisdiction of the Court wherein petitions under sections 397 and 398 have to be filed based upon territorial jurisdiction of the Court where the registered office of the company is situated. 26. For that reason, it was also submitted that Brenfiled Squash Racquests Club Ltd., In re [1996] 2 BCLC 184, wherein the English Court went into the affairs of the holding company who was the majority shareholder was inapplicable as the Court did not have to consider the question of its own jurisdiction. 27. In the instant case, the application of respondent No. 2 (Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese proceedings are binding on us and effect would have to be given to the same. The further fact to be noticed is that the parties hereto have considered these companies as their family properties and as the facts disclose the same have been managed and administered by the family members of the two brothers and/or their groups. The objection, therefore, as to the jurisdiction of this Court in relation to the holding company, respondent No. 2 (RTC) is concerned, the same is rejected. 31. In the circumstances, we hold that the petitioners have made out a case as regards oppression by the MPJ group and against the interest of the petitioners. The question as to the nature of reliefs to be granted in the instant case apart from the transfer of shares which as noticed above has been set aside and declared non-est, therefore, now needs to be considered. 32. Mr. Sen on this aspect of the matter submitted that it is well settled and the preponderance of judicial opinion is that majority shareholders in the company should never be ousted from the management and should be given the first option to buy out the shareholding of the minority. It was submitted that the view of Lord Denning J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued on 8-12-1978, and the same was also got settled under the Kar Vivad Samadhan Scheme, upon payment of Rs. 67,548. Whereas, according to the company, the conduct of the petitioner which should disentitle the petitioner to the relief to buy out the majority are that : As on the date of filing of the instant petition a suit was filed by the company against Mehrotras for recovery of possession of the said company's property at Amritsar. Even a criminal case filed by the company against one of the Mehrotras for keeping wrongful possession of one motor car of the company was also pending. The petitioners have joined hands with the wrongdoer and are acting against the interest of the company and cannot be entrusted with the management of the company. In respect of premises No. 14, Dover Park, Calcutta, in the occupation of tenant, B.P. Jalan caused the same to surrender its tenancy rights and thereafter at considerable costs of the company BPJ as lessee renovated the same and upon the renovation being stopped by C.M.C. a penalty of Rs. 1,23,520 had to be paid and which sum was paid by the company, though the same has been shown in the records as payment made on account of 'Municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision arises out of a judgment passed by a learned single judge of this court directing sale of the shares by the BPJ group to the MPJ group. The said decision has been upheld by a Division Bench of this Court with slight modification by appointing of Hon'ble Mr. Justice K.M. Ganguly, a retired judge, as a special officer to hold a meeting of the respondents therein for the purpose of finding out as to which group has the majority share. **** ** 101. Furthermore, proceedings under section 397/398 of the Companies Act provide for breakdown a machinery and in view of the fact that the applicants herein did not make an attempt whatsoever to take part in the management of the companies for all these years and further in view of the fact that the accounts maintained by the respondents herein have not been questioned ; in our opinion, proper exercise of the jurisdiction would be to direct the appellants to sell their shares in favour of the respondents. However, the value of such share may be fixed as on the date of passing of the judgment keeping in view the fact that the property in question is an immovable property and during the course of the pendency of the proceedings, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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