9911796707
TMI Blog2008 (8) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... ") seeking a declaration that the affairs of M/s. Gee Gee Granites Ltd. (hereinafter referred to as the "said company"), the first respondent herein, are liable to be investigated, and as such a direction is prayed for on the Central Government to appoint number of inspectors to investigate the affairs of the said company and to ensure that proper and necessary action was taken on such investigation. 2. In the said petition, the case of the petitioner is that the petitioner and his other family members, who were shareholders of the said company, had entered into an agreement with the second and third respondents in March, 2004, who agreed to purchase the shares of the petitioner and his family members for a total consideration of Rs. 87,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholding since 2007 is only one hundred shares of the said company which amounted to 0.0022 per cent of the total paid-up capital, and they questioned the bona fides of the petitioner in filing the petition. It was alleged that the petitioner purchased his 100 shares in the open market on 30-11-2007, and within 10 days thereafter moved the court with this petition. It is further stated that the sale of the assets of the said company was pursuant to a resolution passed in its board meeting held on 8-6-2006. The said board meeting was held pursuant to a valid notice. It was further stated that the petitioner managed the company from 1990 to March, 2004 and the dire financial position of the said company is purely due to the petitioner's m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Supreme Court in the case of Rohtas Industries Ltd. v. S.D. Agarwal [1969] 39 Comp. Cas. 781, wherein the principles in Barium Chemicals Ltd.'s case (supra), have been reiterated. In the said decision, pointing out the provisions of section 237(a)( i) of the said Act, the Apex Court said that the said section is an inroad on the power of the company to carry on its business and any order passed under the said section may seriously tarpish the reputation of the company. Therefore, only on disclosure of strong materials court can exercise its discretion in ordering an investigation under the aforesaid section. In our view, the learned Judge has placed the reliance correctly on those judgments, as also on the judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he majority or their duty to abide by law. At the stage of ordering an investigation under the said section, the court may not be satisfied about the truth of the allegations, but the court must be satisfied about the strong prima facie content of truth in those allegations. Merely on the grievance of a shareholder about the ways the company's affairs are being carried on, no investigation can be ordered. The learned Judge further held that the remedy which is provided under the said section being an equitable remedy the court has to take into account those allegations, which have a bearing on the fiduciary duties of the majority and the petitioner who is seeking this remedy before the court must prove his bona fides and a mere claim of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation under this section is that the courts will not entertain any petition on behalf of private persons under the said section unless the private persons have a personal interest in the matter and unless their rights and interests are in some way affected. The Delhi High Court held that section 237 of the said Act should not be given an interpretation which would make it possible for persons to start litigation in respect of what does not concern them. Rather the said section should be interpreted in such a way as to enable only those persons to obtain relief whose rights have been affected by the manner in which the affairs of the company are being conducted. The learned Judge has rightly relied on the said judgment inasmuch as the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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