9911796707
TMI Blog2007 (3) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as follows: 2.1 The company is having a paid up capital of Rs. 1,00,000. The paid up capital was raised by the company by way of sale proceeds of the shares to the shareholders. The complainant has 2.5 per cent of the shares in the company. The accused persons who were directors of the company were trying to oust the other directors and the shareholders from the company. They were functioning as a group within the director board and were trying to reduce the company to their fold. On account of the might of the three accused persons the directors and shareholders of the company are unable to resist the same. As per an important change brought about by the Company Law (Amendment) Act, 2000, every public limited company was bound to increase its paid up capital up to Rs. 5,00,000. Accordingly, the company received a direction from the Central Government to enhance its shares from Rs. 1,00,000 to Rs. 5,00,000. A time limit of two years was granted for increasing the share capital. The accused persons who are controlling the affairs of the company conspired together with a view to keep the entire shares by way of enhanced share capital among themselves without distributing the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the common first respondent. 4. Sri Gracious Kuriakose, Advocate, the learned counsel appearing for the first respondent/complainant made the following submissions in support of the sustenance of the complaint. 5. Section 108A of the Companies Act prohibits monopolizing of shares of a company. In order to attract the offence all that the complainant will have to prove is that the company in question is a public limited company, that no previous approval of the Central Government has been obtained and that more than 25,000 of the shares as a group have been acquired by the accused. The requirements of section 108G of the Companies Act are matters of evidence. Similarly, the nature of business and volume of business, etc., are matters of evidence. The audit report now produced by the accused cannot be looked into by the court. A1 to A3 have acquired 13,050 shares which is more than 25 per cent of 5,000 shares. Since there is no dispute regarding the identity of the accused, their personal appearance before court need not be insisted and exemption from personal appearance can be granted. 6. I am afraid that I cannot agree with the above submissions. Section 108A of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h acquisition, any increase ( i )in the production, supply, distribution or control of any goods that are produced, supplied, distributed or controlled in India or any substantial part thereof by that dominant undertaking, or ( ii )in the provision or control of any services that are rendered in India or any substantial part thereof by that dominant undertaking; or ( b )would be, as a result of such acquisition or transfer of shares or share capital, the owner of a dominant undertaking; or ( c )is, in case of transfer of shares or share capital, the owner in relation to a dominant undertaking." 6.3 The expressions group , same management , financial institutions, dominant undertaking and owner used in sections 108A and section 108G shall have the same meaning for the same expressions occurring in the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the MRTP Act) in view of section 108H of the Companies Act. Dominant undertaking has been defined under section 2( d ) of the MRTP Act which reads as follows: "2( d ) dominant undertaking means ****** ( iii )an undertaking which, by itself or along with interconnected underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion VII Where goods produced in India by an undertaking have been exported to a country outside India, then the goods so exported shall not be taken into account in computing for the purposes of this clause ( i )the total goods that are produced in India by that undertaking; or ( ii )the total goods that produced, supplied or distributed in India or any substantial part thereof;" 6.4 The expression group has been defined under section 2( ef ) of the MRTP Act, as follows: "( ef ) group means a group of ( i )two or more individuals, associations of individuals, firms, trusts, trustees or bodies corporate (excluding financial institutions), or any combination thereof, which exercises, or is established to be in a position to exercise, control, directly or indirectly, over any body corporate, firm or trust; or ( ii )associated persons, Explanation . For the purposes of this clause ( I )a group of persons who are able, directly or indirectly, to control the policy of a body corporate, firm or trust, without having a con- trolling interest in that body corporate, firm or trust, shall also be deemed to be in a position to exercise control over it; ( II ) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India or any substantial part thereof. Thus, Al-Ameen Ltd. does not answer the description of dominant undertaking . Unless the company is a dominant undertaking , section 108A has no application. There is not even a whisper in the complaint that the company in question is a dominant undertaking. 8. The MRTP Act itself is a legislation meant to provide that the operation of the economic system does not result in the concentration of economic power to the common detriment and for the control of monopolies and for the prohibition of monopolistic and restrictive trade practices and for matters connected therewith. It can have no application to a company in which the complainant and the accused persons are four out of seven directors. In fact, consequent on the Companies (Amendment Act), 2000, in order to comply with the statutory requirement of having a minimum paid up capital of 5 lakhs rupees, the company in its annual general body meeting for the year 2001-02 held on 4-9-2002, passed three resolutions of which one was to increase the authorised capital from Rs. 1,00,000 to Rs. 5,00,000 by the addition of 40,000 equity shares each of Rs. 10. The annual general body meeting was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
