9911796707
TMI Blog2007 (6) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1000/-each with the main object of carrying on the business of manufacturers, dealers, hirers, repairers, cleaners, stores and warehousers of motor cars, motor cycles, cycle cars, motors, scooters, cycles bicycles and carriages, launches, boats, vans, aeroplanes, hydroplanes and conveyances of all descriptions (all hereinafter comprised in the term, motors and other things'); whether propelled or assisted by means of petrol, spirit, steam, diesel, gas electrical or other things used for, in or in connection with motors and other things and other objects set forth in Memorandum and Articles of Association of R-1 company. The respondent No. 1 company at all material times was also carrying on the following business: a. At Indore, the business of authorised dealers of Tata Engg. And Locomotive Co. Ltd. in relation to sale of trucks and other commercial vehicles. b. At Indore, the business of authorised dealer of Mahindra and Mahindra Ltd. for sale of Jeep and other light commercial vehicles. c. At Indore, business of Travel Agency in the name and Style of M/s Sanghi Travels. d. At New Delhi, the business of owing and hiring Air crafts in the name and style of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctically no one else in the management except the family members of the R-2. The R-1 and R-2 also gave interest free loan to his other firm and sister concerns from the accounts of the R-1 causing a huge loss to R-1. The balance sheet and profit and loss accounts of R-1 for the last three years clearly figure out this mismanagement of funds by R-2. The R-2 had sold shares at loss. There was no need to sell the said shares. The petitioner No. 1 was shocked when he came to know about the said illegal transaction as done by the R-1 and 2. Despite several reminders no reply was ever sent by R-2 to the P-1. This very act shows the malafide and fraudulent intention of R-2 to cheat petitioners and the shareholders of R-1. It is clear, it was argued, that the respondents are guilty of blatant concealment and suppression of relevant material facts resulting in total alienation of the petitioners from the affairs of the R-1 company. Further the petitioner No. 1 was illegally removed from the directorship of the R-1. 4. Further, the counsel for the petitioners pointed out that the respondent allege that the parties impleaded in the present company petition had also been parties to the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86/2000. The petitioners have wilfully and deliberately concealed from this Hon'ble Board the existence, pendency, judgment therein and subsequent disposal of virtually identical proceedings between the same parties before the Madhya Pradesh High Court, Bench at Indore. It was argued that the gravamen of the case alleged in the present petition was raised by the petitioners before the M.P. High Court Bench at Indore, inter alia, against the R-1 company in a Company Petition No. 1 of 1987 under Sections 397 and 398 of the Act and subsequent three interim Applications and supplementary affidavit which stand dismissed as on date. It was pointed out that most of the allegations contained in the present company petition had been raised by the petitioners in the said MP High Court proceedings at one stage or another. The said allegations were adjudicated on by the Learned Single Judge of the MP High Court exercising jurisdiction (as was then prevalent) under Sections 397/398 of the Companies Act, 1956 (MP High Court Company Petition No. 1/1987). The Learned Single Judge had held in favour of the respondents on all the points vide judgment and Order dated 10.11.1994. The petitioners f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition under Sections 397 and 398 of the Act was filed before the M.P. High Court vide CP No. 1 of 1987. But the principle of res-judicata, as pleaded by the respondents, is inapplicable to the present petition as the respondents have themselves admitted that the para Nos. 27,28,30 and 33 contain new allegations against the respondents which have resulted out of events subsequent to filing of CP No. 1 of 1987. Para 27 of the present petition contains allegation regarding supplying of goods to the debtors (over six months amounting to approximately ₹ 1.18 crores) whose integrity is doubtful; para 28 points out sale of assets of the respondents worth ₹ 505.76 crores by the respondents in the last four years; para 30 contains allegation regarding sale of shares of TDLF at a loss of ₹ 79 lakhs; and para 33 points out that despite general boom in the business, the R-1's profits have gone down noticeably betraying the faith and trust of the shareholders. The petitioners have further highlighted certain other different allegations contained in para Nos. 29, 32 and 34 as well. I find no reason to attract the principle of res-judicata. Nor can the petition be thrown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with clean hands. But in this petition I find that the respondents have not been able to prove that the petitioners have come with unclean hands. Rather it is the respondents' hands have been unclean and who have worked in a manner to convert R-1 into a R-2's family company which is prejudicial to the interests of the R-1 and its shareholders. In these circumstances, I find no justification to throw this petition at the threshold itself on account of preliminary objections. 9. Now, coming to the merits of the case, the petitioners have been able to make out a case under Sections 397 and 398 of the Act as necessary ingredients of the said Sections are present in the case. It is settled law that in a case of oppression, a member has to specifically plead on five facts - (a) what is the alleged act of oppression; (b) who committed the act of oppression; (c) how it is oppressive; (d) whether it is in the affairs of the company; (e) and, whether the company is a party to the commission of the act of oppression. On considering the present case on merits, I find that all the five aspects of oppression stand proved. The acts of oppression in the affairs of the company have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y companies or companies in the nature of partnership, depending on the facts of the case, directorial complaints have been adjudicated by this Board in Sections 397/398 proceedings. In any view of the matter, in the present case, the petition is a composite petition wherein not only directorial complaints are made, but also complaints relating to total alienation of the petitioners and the R-1 company is virtually converted into R-2's family company with practically none else in the management except the family members of the R-2, even the funds of R-1 have been siphoned off to R-2's sister concerns and other firms by way of interest free loans besides other acts of mismanagement causing loss to the R-1 resulting in burdensome and oppressive conduct of the respondents to the petitioners and prejudicial to the interest of the company. In view of the foregoing, the only conclusion that I can come to is that the respondents have not been able to refute the charges of oppression and mismanagement in the affairs of the company, the respondents reply and arguments have been only with a view to obfuscate the main issues as raised by the petitioners, the petition deserves to be al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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