9911796707
TMI Blog2002 (10) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... any for which the respondent sent a reply enclosing the annual report of the company for the year ending March 31, 2001. In the letter dated November 10, 2001, it is strangely stated that the respondent has chosen to retire the petitioner from the directorship of Surana Textile Mills Ltd. Form 32 was filed by the respondent in the year 1996 with the Registrar of Companies. However, the respondent has not informed the same to the petitioner. The respondent has furnished a false information to the Registrar of Companies and, therefore, it is liable for criminal offence under section 177 of the Indian Penal Code, 1860. Under section 628 of the Companies Act, the respondent is liable to be convicted. 3. It is further stated that the balance-sheet of the respondent for the year 2000-2001 reflects that a sum of Rs. 16,00,484 has been invested as capital in a partnership firm and another sum of Rs. 28,50,000 has been invested in the Hindukush Processing Mills (P.) Ltd. Therefore, there has been serious diversion of nearly forty four lakhs of rupees to other business, when admittedly the business of the respondent itself is doing badly. Since such siphoning off of funds would eat into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its from the partnership firm is being used by the respondent for its own operations. The investment of purchase of shares in Hindukush Processing Mills (P.) Ltd. was, therefore, legal and proper. The Companies Act does not make it mandatory for companies to declare dividend. There is thus discretion on the general meeting as well as on the board to recommend/declare dividends. In the instant case having regard to the need to conserve resources of the company in the earlier years and the present recessionary trends in the industry the board had decided not to recommend any dividend. None of the other shareholders of the company have expressed any reservations on the course of action. The respondent-company is a flourishing profit-making company. The respondent-company also has a large export turnover and has earned a coveted status as a Government recognised export house also. The respondent-company directly employs about 300 workmen and staff. The petitioner has not only effective alternative remedy available, the petitioner herself has admitted that she has filed separate proceedings to ventilate her grievance against the respondent, hence, the present company petition is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonably in seeking to have the company wound up instead of pursuing that other remedy. Section 397. Application to Company Law Board for relief in cases of oppression. (1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Company Law Board for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1) the Company Law Board is of opinion ( a )that the company s affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and ( b )that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making for a winding up order on the ground that it was just and equitable that the company should be wound up; the Company Law Board may, with a view to bringing to an end the matters complained of, make such order as it thinks fit." 8. The matters to be considered by the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany may be wound up by the court if the court is of the opinion that it is just and equitable that the company should be wound up. Section 222( f ) of the English Companies Act, 1948, is in terms identical with the Indian counterpart, section 433( f ). It is now well-established that the sixth clause, namely, just and equitable , is not to be read as being ejusdem generis with the preceding five clauses. While the five earlier clauses prescribe definition conditions to be fulfilled for the one or the other to be attracted in a given case, the just and equitable clause leaves the entire matter to the wide and wise judicial discretion of the court. The only limitations are the force and content of the words themselves, just and equitable . Since, however, the matter cannot be left so uncertain and indefinite, the courts in England for long have developed a rule derived from the history and extent of the equity jurisdiction itself and also born out of recognition of equitable considerations generally. This is particularly so as section 35(6) of the English Partnership Act, 1890, also contains, inter alia, an analogous provision for the dissolution of partnership by the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly and effectively, many of the misdeeds of an erring or dishonest management could be checkmated and/or remedied be resort to such proceedings. This scheme of the Companies Act lies at the bottom of evaluation of the principles which insist on keeping at bay a winding up process, except in very compelling circumstance....." (p. 239) In K. Mohan Babu v. Heritage Foods India Ltd. (No. 2) [2002] 108 Comp. Cas. 793 (AP), it was concluded thus: "As seen from the above, the court s jurisdiction to wind up on the just and equitable ground is long standing, dating back to the 19th century and that where a petition is successful, it follows that the court orders rather drastic remedy of a winding up. That is the reason as to why sections 397 and 398 have been enacted in the Act analogous to section 210 of the English Companies Act, 1948, providing a genuine and more attractive alternative to a winding up petition and to set right the affairs of the company..." (p. 808) In Smt. K. Kempamma v. Peeceeyes Industries (P.) Ltd. [1983] 54 Comp. Cas. 368 , the Karnataka High Court has held that where a director is expelled from the board on the sole ground that the director had a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
