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TMI Blog2013 (10) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... of a scheme for administration of the asset of defendant No. 1, the plaintiffs are seeking to by-pass the provisions of the Companies Act which contemplates convening board meetings as any decision in respect of defendant No. 1 which was an asset company must be by a resolution - It was quite possible that such relief had been sought as the plaintiffs have been reduced to a minority - In that event the plaintiffs ought to have restricted themselves to a derivative action - Instead the main relief sought is administration of the assets of defendant No. 1 by fair participation of the plaintiffs. The plaintiffs have sought to set aside some of the board resolutions so far so good but the prayer for administration in the light of the prayer for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1. The cause of action in the instant suit is based on two oral agreements and one written agreement. Therefore, defendant No. 1 seeks rejection of the plaint. Reliance is placed on Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp Cas 351 (SC); and V. B. Rangaraj v. V. B. Gopalakrishnan [1992] 73 Comp Cas 201 (SC). 3. Opposing the said application, counsel for the plaintiff submits that partnership concept in companies is not unknown. As the action is derivative in nature the agreement of September 23, 1998, has been pleaded to give a composite picture. By the said agreement, the shareholding of the two groups in defendant No. 1 was to undergo a change. No new share was to be issued. In fact, the said agreement has been acted upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the company. It has been argued that the agreement has been pleaded only as a backdrop to the reliefs claimed and to give a proper picture but from a reading of the plaint this does not appear to be so. Although, it has been stated that the suit is a derivative action of shareholders but this is not correct as the cause title has not been pleaded as required in derivative action. In the pleadings the commonalty of interest has not been pleaded nor has the wrong done to the company been pleaded. Order 1, rule 8 would not have been necessary in case it was a derivative action. Therefore, orders be passed as sought. 6. Having considered the submissions of the parties the rights of the parties flow from the agreement of September 23, 1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiffs ought to have restricted themselves to a derivative action. Instead the main relief sought is administration of the assets of defendant No. 1 by fair participation of the plaintiffs. 10. This tantamounts to dealing with the asset of defendant No. 1 without it being a party to the agreement, on the basis of which fair participation is sought. 11. Although it has been contended by the petitioner/defendant No. 1 that the agreement of 1998 is contrary to the articles of association of defendant No. 1. The plaintiffs have not produced any document to controvert the same. There is also no provision in the agreement that the articles of association of defendant No. 1 would be suitably amended to bring the board of directors or share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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