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TMI Blog2011 (5) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... liefs to be granted as prayed in the petition. 3. He summarised the brief facts as follows : Respondent No. 1 company was promoted by the petitioner's father Mr. Kershi Cambata. Respondent No. 1 company is engaged in the business of ground handling at various major airports in India. At the time of incorporation, i.e., in the year 1954 Mr. Kershi Cambatta and Mr. Rustom Cambata had equal stake of 50 per cent. each in the company. The shareholding of respondent No. 1 thereafter changed from time to time. In the years 1998 and 1999 the shareholding of respondent No. 1 was as follows : Sr. No. Name Percentage of shareholding No. of shares 1. Mr. Kershi Cambata 39.15 per cent. 44025 2. Mr. Nelson Cambata 0.59 per cent. 664 3. Mr. Albert Cambata 34.46 per cent. 38751 4. Mr. Burjor Nicholson 0.0008 per cent. 1 5. Eros Theater and Restaurant P. Ltd. 0.0008 per cent. 1 6. Mr. Bruce Cambata 25.78 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice received for the board meeting which was to be held on September 12, 2008, he had not received any notice of any other board meeting. Respondent No. 2 for the first time vide his letter dated August 3, 2009, informed the petitioner that the authority to deal with Menzies Aviation and to enter into a joint venture was given to respondent No. 2 in its board meeting dated September 12, 2008. In the meanwhile since no information from the respondents was forthcoming the petitioner was therefore left with no option but to question the authority of the respondent to enter into the joint venture with Menzies Aviation for which the petitioner did not receive any satisfactory response. The petitioner therefore wrote a letter dated July 13, 2009, to Menzies Aviation. In the said letter the petitioner, inter alia, stated that he was a director and shareholder of respondent No.1 and that he had learnt that Menzies Aviation was entering into some arrangement with respondent No. 1 for acquiring its business either by a joint venture purchasing shares of some of the existing shareholders of the company. On his requisition made vide his letter dated July 8, 2009, respondent No. 1 after much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to attend and effectively participate therein. The respondents have sought to frustrate the petitioner from having access to the documents. Respondent No. 1 was not willing to disclose all documents and give a clear picture of deal with regard to the joint venture agreement with Menzies Aviation and/or with one Krystal Aviation Services P. Ltd. It is further submitted that the Notice of Motion No. 3463 of 2009 (filed by the petitioner) was mentioned for circulation on September 24, 2009, before the Bombay High Court. The High Court declined to pass any orders therein. However, the said order records that the petitioner was at liberty to take out the appropriate proceedings in the matter, which the petitioner has now done by way of the present proceedings. It is further submitted that after making several requisitions to the respondents the petitioner received copies of the minutes of the annual general meeting from 1994 to March 10, 2006 and the register of shareholders. 6. The petitioner was shocked to learn that from May, 2000 till 2003, soon after he left for USA, respondents Nos. 3, 5 and 6 acting at the behest of respondents arbitrarily convened an extraordinary g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to the petitioner in spite of the fact that the petitioner resides abroad, i.e., Switzerland. On the point that notice was not given to the petitioner/director, learned counsel relied upon the following citations : (1)In the matter of (Navin R. Shah v. Simshah Estates Trading Co. (P.) Ltd. [2005] 59 SCL 282 (CLB - New Delhi). (2)Smt. Claude-Lila Parulekar's case (supra) (3)In the matter of (Bhagirath Agarwala v. Tara Properties (P.) Ltd. [2002] 39 SCL 943 (Cal.). (4)In the matter of (Dr. Kamal K. Dutta v. Ruby General Hospital Ltd. [2000] 23 SCL 91 (New Delhi). 8. The minutes of the meeting dated April 25, 2000 and July 3, 2000, whereby additional shares were issued and allotted to respondent No. 2 shows that the quorum of the meeting was not constituted. The register of respondent No. 1 shows that on July 3, 2000, September 17, 2001 and November 25, 2003 around 12,000, 24,000 and 70,000 shares respectively, have been allotted to respondent No. 2. Accordingly an aggregate of around 1,04,996 shares were illegally allotted to respondent No. 2. No notice of the aforesaid meetings of the board of directors has ever been given to the petitioner. The petitioner from ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al new companies, some of which are narrated below : (a)Cambata Aviation Ground Handling Services Mumbai P. Ltd. (b)Cambata Aviation Ground Handling Services Delhi P. Ltd. and (c) Cambata Menzies (Delhi) Handling P. Ltd. 11. He further submitted that though the company has been making profits over the years, the petitioner as a shareholder had not received any dividends since 2000 till date. It is also learnt that respondent No. 1 and Mr. R. C. Shah, are party to criminal complaint filed by one M/s. Chakshu Enterprises. This has not just exposed respondent No. 3 and Mr. R. C. Shah being criminally prosecuted but has also exposed the other directors including the petitioner to a potential criminal liability. In order to hide their own wrongful, unauthorised and illegal acts, the respondents are restraining the petitioner to take part in the affairs of respondent No. 1. Further, the respondents do not want the petitioner to take part and or get involved in the affairs of the company and for such other reasons and/or mala fide intentions best known to them. The same is evident from the following events : (i)Non-production of documents. (ii)Non-disclosure of information. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the petitioner is aware of the business all along but suddenly has woken up and alleging the acts of respondent No. 1 company after eight years. The reliefs which are sought are general and in respect of the events occurred ten years ago. It is an admitted fact that respondent No.1 company was promoted by late Mr. Kershi Cambata, i.e., the father of the petitioner and respondents Nos. 2 and 4. The day to day affairs of respondent No. 1 were managed by respondents Nos. 2 and 3 along with Mr. Kershi Cambata who was based in USA till his death on May 10, 2008. After his demise, respondents Nos. 2 and 3 are managing the affairs of respondent No. 1. The petitioner admittedly residing in Switzerland for the last few years, has never shown any inclination to participate in the affairs of respondent No. 1. Pursuant to introduction of Ground Handling Policy in 2007, it became necessary for the survival of respondent No. 1 to negotiate with third parties (Menzies and/or Krystal) for creating strategic alliances/joint ventures. This was perceived by the petitioner as an opportunity to interfere in the affairs of respondent No. 1. The petitioner has been attempting to jeopardise the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares in favour of respondent No. 2 from the period 2000 onwards when in fact he was personally present during the meeting of the board of directors which approved such transfer/allotment. Respondent No. 1 has not signed any joint venture agreement with Menzies Aviation Plc (Menzies). 14. It is further submitted that on September 28, 2007, the Government of India issued a circular titled "Grant of permission" for providing ground handling services at the airports other than that belonging to the Airports Authority of India (Ground Handling Policy). Vide ground handling policy, the Government of India decided that the ground handling services at the airports other than those belonging to the Airport Authority of India can be undertaken by the following entities only : (i)The airport operator itself or its joint venture partner ; (ii)Subsidy companies of the national carrier, i.e., National Aviation Company of India Ltd., or other joint ventures specialised in ground handling services. Due to the Ground Handling Policy per force, respondent No. 1 was required to identify a joint venture partner for conducting the operations in Mumbai and Delhi airports and, therefore, resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 had offered to reimburse reasonable travel and other expenses of the petitioner for attending the said board meeting. 15. He submitted that the authorised share capital of the company was duly increased from time to time and it was within the knowledge of the petitioner. The petitioner was aware of the fact that the paid-up share capital of the company was required to be increased from time to time by issuing fresh shares to the relevant shareholders. The meeting of the board of directors of respondent No. 1 dated July 3, 2000, which was attended by the petitioner, a resolution for increase of share capital of respondent No. 1 was unanimously passed by the Board. Even in the meeting of the board of directors held on September 17, 2001, wherein the paid-up share capital of respondent No. 1 was again increased, the petitioner was very much present and never objected to the same. Thereafter, the petitioner has never attended any of the meetings of the board of directors or general meetings of respondent No. 1 as he was not at all concerned about the affairs of respondent No. 1. Transfer of shares from Kershi Cambata to respondent No. 2 was effected during the life tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner was not entitled to receive any notice of the meeting of board of directors as he was out of India and in any case he was not concerned about the affairs of respondent No. 1 ever since he left India in the year 2000. Respondent No. 1 is being managed in most professional and profitable manner. Respondent No. 1 is not involved in any criminal activities as alleged by the petitioner. The proceedings referred to in paragraph 13 of the petition are currently pending before the competent court and are being duly defended by respondent No. 1 and no finding of guilt has been rendered against respondent No. 1 and the matter is presently subjudice. The conduct of the petitioner is causing immense loss and prejudice. Hence the petition deserves to be dismissed with exemplary costs. In support of his contentions learned senior counsel relied upon the following citations : (1)[1986] 59 Comp Cas 548 (SC) in the matter of (Life Insurance Corpn. of India v. Escorts Ltd.) (2)In the matter of (Shanti Prasad Jain v. Kalinga Tubes Ltd.) [1965] 35 Comp. Cas. 357 (SC). 17. The petitioner filed a rejoinder and denied the statements and contents made in the counter-affidavit and rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the said increase and allotment of shares have been recorded and approved in the subsequent board meetings and the same has been shown in the annual returns filed by the company. The petitioner himself admits that he is a shareholder and director of the company and took active participation in the affairs of the company till 2000. From the minutes of the general meetings from the year 1994, it is evident that the petitioner was present. It is also admitted by the petitioner that he shifted to London, thereafter to Switzerland. From the minutes of the extraordinary general meeting it is evident that it is not for the first time the authorised capital of the company was increased only on April 25, 2000 and July 3, 2000. The authorised capital of the company was increased in the extraordinary general meeting held on December 4, 1995, from Rs. 2 crores to Rs. 5 crores and in the said meeting the petitioner was present. Thereafter, the capital was further increased from Rs. 5 crores to Rs. 7.50 crores in the extraordinary general meeting held on July 30, 1997, and the petitioner was present at that meeting. Further, the capital was increased from Rs. 7,50,00,000 to Rs. 12,50,00,000 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company". From the plain reading of the article, it is clear that if the extraordinary general meeting approves the increase of the authorised capital and empowers the Board to allot the shares to the members in absolute discretion, it can do so. In both the extraordinary general meetings the resolutions were passed empowering the Board to take a decision. The Board has taken a decision accordingly. I do not find any violation of the articles. The company also transferred 38,000 shares from the father of the petitioner to the second respondent and the same was approved by the board of directors in the meeting held on February 27, 2000. The issue is answered accordingly. Now I deal with issue No. 2 20. It is contended by the petitioner that the respondents have without the knowledge of the petitioner entered into a joint ventures agreement with the Menzies. The petitioner through his advocate addressed a letter dated July 13, 2009, to the Menzies Aviation wherein it is stated that they learnt that the Menzies Aviation is negotiating to enter with some arrangement with the company for acquiring its business or purchasing the shares to the existing shareholders. It is stated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs' report, profit and loss account, balance-sheet of the company, were filed with the Registrar of Companies, on a year to year basis and the same are public documents. Further, it is submitted that the petitioner has been given inspection of all the statutory records including the minutes of the meetings of the board of directors, the minutes of the annual general meetings, the minutes of the extraordinary general meetings. From the perusal of documents it is seen that most of the documents have been filed by the petitioner himself. The petitioner being a shareholder and director of the company is entitled to inspect the records of the company. The rights are vested in the statute itself. The other allegation of the petitioner is that no notices have been given for the board meetings and the board meetings have been conducted outside India and the petitioner has to travel thousands of kilometers to attend the meetings. The defence of the respondents is that the petitioner had attended the earlier board meetings which have been held outside India and he has not raised any dispute in respect of the board meetings which have been conducted outside India. It is an admitted fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ido not find any force in the allegations of the petitioner. Hence I negate the issue. The petitioner prayed this Bench that he will look after the affairs of the company residing in Mumbai/India on the ground that none of the directors is residing in India. The board of directors is competent to decide who is to manage the affairs of the company. It is their exclusive domain and this Bench will not interfere in the affairs of the company. The other allegation of the petitioner that he was not provided the documents and he was non-accessible to the records thereby he contended that the respondents have excluded him from the affairs of the company. The petitioner being a member/shareholder and director of the company is entitled to inspect the statutory records of the company as per law. Mere non providing the copies of documents and non-accessible to records does not imply that he was excluded from the affairs of the company. Prior to 2009 there is no iota of evidence that he wanted to inspect the records and the respondents have refused the same. Further, the petitioner alleged that he was not paid dividend in spite of the fact that the company is making profits. This allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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