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TMI Blog2009 (3) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... anged by the 2nd respondent in a fresh Form No. 2, dated 30-5-2000. The changes were in respect of the names of the allottees as well as the number of shares allotted. The other act complained of was, Form No. 32 filed in respect of the alleged appointment of the 3rd respondent as Director as having been made on 20-5-2001 and also making reference to cessation of office of the 3rd petitioner on his alleged resignation on the basis of signatures of the 3rd petitioner, allegedly forged at the 2nd respondent's instance. The further complaints of the appellants were that the RoC failed to take appropriate action on the fabricated and manipulated reference of the allotment in Form No. 2 and the wrong details given in Form No. 32 and that further the 2nd respondent had syphoned off funds of the company to his own benefits. Background facts : 3. Now to the nature of the company and relations between the parties : The 1st respondent-company having its registered office at Ludhiana had been incorporated on 10-1-2000 under the Companies Act with the object of acquiring land for the purpose of establishing a multiplex cinema theatre. The authorized share capital of the company was Rs. 1.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent Nos. 2 to 4 and Ludhiana Improvement Trust against any transfer or creation of encumbrances in respect of the theatres-The Sikri Multiplex (P.) Ltd. in favour of any person without the consent of the plaintiffs. The suit contained reference to the initial incorporation and the subsequent allotment of shares, the essential particulars of which pertain to a decision of the Board of Directors in its meeting dated 10-5-2000 to allot 8,30,000 equity shares at Rs. 10 each to all the petitioners and the 2nd respondent to inject more funds into the company. The father had been allotted 1,79,000 shares. Petitioner Nos. 2 and 3 and 2nd respondent were respectively allotted 1,79,000, 1,97,000 and 1,95,000 shares. M/s. Sikri Exports (P.) Ltd. which had been floated by the members of the family held 80,000 shares. The pattern of holding was such that the 1st petitioner held 21.6 per cent of the paid up capital, the 2nd petitioner held 21.6 per cent of the paid up capital and the 3rd petitioner held 23.85 per cent and together the petitioners held possession of 67.05 per cent of the total shareholding. The petitioner Nos. 1 to 3 had themselves the major shareholders in M/s. Sikri Exports ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to several properties including the multiplex was null and void. A permanent injunction had also been sought by the first plaintiff restraining of the parties in suit from claiming any benefit under the alleged family settlement dated 16-9-2002. The father had arrayed all his sons and wife as party-defendants. One Manjit Singh, who is not a party in the company petitions was second defendant in suit and his wife was the 5th defendant in suit. (iv) The core issue in 2nd suit : 8. A declaratory action regarding the family settlement became essential in view that the defence taken by the second defendant at all times prior to the institution of the suit to lend credence genuineness of the letter of resignation. (v) Basis of family arrangement, a plea in defence to explain the resignation of father : 9. According to second defendant, under the terms of the family arrange-ment dated 16-9-2002, following things had taken place:- (i)The father had secured Rs. 86,40,000 pursuant to an Award of Arbitration Tribunal that was made a rule of the Court by decision of the Hon'ble Supreme Court when the 1st petitioner's brother gave the amount as consideration for relinquishment by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relief of declaration with reference to the family arrangement and the relief of the injunction against the defendants mentioned in the suit for taking any benefit under the family arrangement was to stave off any claim by the 2nd respondent as a person being in exclusive control of the affairs of the company by virtue of the so-called understanding between the parties to let the 2nd respondent and his suits to manage the affairs of the multiplex. The reference to the family arrangement itself become relevant to consider how the parties had attempted to divide their assets as per the contentions of the 2nd respondent. Cause for withdrawal of 1st company petition and possible explanation for a fresh company petition : 12. The first company petition No. 15 of 2004 had been withdrawn only because civil suits had been filed and the criminal complaints were pending investigation. Evidently, the petitioners knew that the subject of adjudication complaining of oppression and mismanagement could not be pursued without a finding of facts whether the petitioners were still the shareholders of the company and whether the so-called resignation of the 1st petitioner should be accepted as tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mismanagement. The Company Law Board also made reference to the fact that the C.P. No. 15 of 2004 had been withdrawn on the grounds inter alia, that the CFSL's report had not been obtained but actually a report had also come and there was no new cause of action or new facts than what had been set forth in C.P. No. 15 of 2004. The Company Law Board also observed that the petitioners were really engaged in sharp practice of forum-shopping and had made reference to the family arrangement as an admitted fact. All the adverse inferences that the Company Law Board has made are indeed quite unnecessary for the Company Law Board could have easily seen that the issues of oppression and mismanagement raised were squarely the issues, which were to be adjudicated before the Civil Court. The validity of the alleged resignation letter, the resolution inducting the 3rd respondent as a director and the exclusive control attempted to be taken by the 2nd respondent on the basis of family arrangement, which was denied, are all matters which fall for consideration only before the Civil Court. None of the matters, which are complained of as constituting oppression and mis-management could be adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omp. Cas. 4811 (Delhi). which deal with the case of a complaint under section 397 of the Companies Act and the Court had an occasion to consider the extent that a Company Court would traverse in an appeal under section 10F of the Companies Act. It is said that when the Company Law Board exercised its equitable jurisdiction in a given set of circumstances where the Board of Directors and Management of the Company had taken a normal business decision and exercised its powers, it would not be proper to interfere with the equitable discretion in an appeal under section 10F of the Act. In Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 11 SCC 3142. Hon'ble Supreme Court dealt with several aspects relating to what would merit consideration in petitions under sections 397 and 398 and while referring to the powers of the Company Court under section 10F it had held that adjudicating of question of title as to share was not contemplated under section 397, especially when a civil suit was pending in respect of the same. In Gordon Woodroffe & Co. Ltd. v. Gordon Woodroffe Ltd. Chennai [1999] 97 Comp. Cas. 5823 , the Madras High Court had held that a mere change of ownership of shares wou ..... 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