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TMI Blog2013 (4) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise the option of provisionally taking the rights shares without making any payment for them, for the time being - The rights shares will be allotted to them, subject to the stipulations - Upto this time they will not have any voting right in 9,66,638 - Only, after disposal of the Company Law Board petition the said group will be obliged to exercise the final option to take and pay for the rights shares- The rights shares should be strictly in the ratio of 1:1 - Therefore, even if the rights shares are allotted, the said group will not be prejudiced by dilution of their shares or by being put to financial burden - Therefore, the Company Law Board should not have dismissed the application - This appeal is disposed of with the above directions - The Company Law Board is directed to dispose of the Company Law Board petition within six months from date positively. - A.C.O. No. 55 of 2012 with A.P.O. No. 104 of 2012 - - - Dated:- 22-3-2013 - I. P. Mukerji, J. For the Appellant : Mr. Pratap Chatterjee, Senior Advocate with, Mr. Abhrajit Mitra, Mr. S. S. Bose, Mr. S. S. Banerjee, Mr. S. Bhattacharjee, Mr. Sanjay Bose, Advocates For the Respondent : Mr. Jishnu Saha, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard made a mistake in the order dated 29th February, 2012 which is before me in appeal. It recorded that it was not deciding the point of maintainability because it was decided before. The point of maintainability was never decided before. Mr. Mitra for the respondents urged that I should decide the question of maintainability. On the other hand Mr. Mookerji, learned Senior Advocate appearing for the petitioners said that for 2 years since they approached the Company Law Board by way of the above petition, the respondents had not asked the Board to decide the question of maintainability, as a preliminary decision, by making an application before it or otherwise. Of course, the point had been taken in the counter affidavit. Quite lengthy arguments on merits were made as to why the point of maintainability had no substance and equally lengthy arguments in aid of the contention. The submissions on the merits of the dispute in the above application C.A. 366 of 2011 were as follows: The debt equity ratio of the company was going up. Unsecured loan liability rose from Rs.14 crores as on 31st March, 2009 to Rs.34.58 crores as on 31st March, 2011. Secured loan liability went up from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idst of hearing the Company Board was most mischievous. The letter of the bank dated 4th February, 2009 was after the letter dated 14th January, 2008. In that letter in Clause 22 in Annexure D , the company was asked to inter alia introduce fresh capital of Rs.2 crores. That was before the application on which the order dated 24th March, 2009 was passed. In fact, the letter of 4th February, 2009 was also before the Company Law Board proceedings. Of course, the letters of 12th March, 2011 and 2nd February, 2012 were written after the Company Law Board proceedings and after the above order of status quo passed by it. According to the petitioners there was no threat contained in those letters. In addition, the following arguments were also made. The first respondent was a family company. This is mentioned in the company s website and in the project report of Shaktigarh Jute Park. The business was started by Bijay, the eldest brother, Ajay, the younger brother came in later and Sanjay, the youngest even later than Ajay. Their shareholdings in 2005 were 21.29%, 23.29% and 21.65% respectively of the paid up capital. Their respective group shareholding at the point of time was 31.33% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipation in the rights issue. DECISION: I will decide the point of maintainability first. Many things were argued. It was said on behalf of the respondents that since the grievance of the petitioners was alleged wrongful transfer of shares by Ajay and Sanjay, it was a private dispute and the Company Law Board could not decide it under S. 397 and S. 398, relying on the case of [ Sangram Singh Gaekwad; 2005 (11) SCC 315 para 191and Murat Viniyog Ltd.; 165 Co. Cases 151 para 27]. My views are as follows. First of all, it was rightly pointed put by Mr. Mookerji that this point of maintainability of the Company petition was sought to be raised about 2 years after its filing. It was open to the respondents to file an application, much before, to get the Company petition dismissed. They did not do so. Now, the Company petition has reached the stage of final hearing. Taking this point now by an application was not very proper. For whatever reason the Company Law Board did not decide the point of maintainability raised before it. Now, the question is: should this Court decide this point at this stage? This point of maintainability, as raised, is very delicate. It is not so eas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within 31st March, 2008. There is no denial of this position. On 4th February, 2009 the same bank wrote to the Company asking them whether they had fulfilled this obligation. The Company was once again reminded by the letter of the bank dated 12th March, 2011 which was reiterated by their letter of 2nd February, 2012. The letter of 12th March, 2011stated that the Company had negative net working capital . The 2nd February, 2012 letter was an advice to the company to improve its Debt Equity Ratio . The financial condition of a company, its improvement and in general the management of a company are very technical matters. It requires professional expertise. When the bank had written these letters to the company asking it to improve its debt equity ratio and suggesting that net working capital was negative, its advice is to be taken as true. Moreover, the Board of Directors of the Company on 22nd March, 2011 took the decision to go ahead with the rights issue on the terms and conditions mentioned above. It is to be assumed, at this point of time, that the Board was duly constituted and knew what was going wrong with the company and what was to be done for its benefit, subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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