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TMI Blog2007 (6) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance with the law. The petitioner was very much aware of his removal, he was served with the notice of EGM on 13.1.2003. Though the petitioner has denied the receipt of this notice served under Certificate of Posting, the circumstances of assessee make it amply evident that the petitioner was in full knowledge of his removal from 4.1.2003 when the first notice of his removal was received by him. However, even if the petitioner's contention is believed to be true that the last notice sent under Certificate of Posting was not received by him an action in contravention of law may not per se be oppressive. The CLB, however, will have to consider the entire materials on record and the totality of the circumstances of the case. Otherwise too, the directorial complaints cannot be entertained in a petition under Sections 397 and 398 of the case and particularly so when the petition already stands dismissed on account of preliminary objections. Increase in the shareholding , the petitioner had failed to make out a case that the petitioner groups' shareholding has been reduced from 51.40% to 33.33%, that it has been made with merely for an extraneous purpose and not in the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and types of textile and ginning machineries, engineering goods, crop cutting and processing machineries, thrashing machineries, and to deal in all types of parts, accessories, components, devices, tools, fittings, tackles, substances of such machines and to carry on the agency business of all types of machineries of any description, specifications, characteristics, applications land uses. 3. Shri Vibhu Bakru, Counsel for the petitioners argued that it has been held by this Hon'ble Board and various High Courts in a catena of cases that when powers are used merely for an extraneous purpose and not in the interest of the company but to gain control over the affairs of the company the same cannot be upheld. In the instant case the share capital was increased only with a view to reduce the Petitioners into minority. Also, no legal procedure was followed for such increase and allotment of such shares to the Respondent group. It was pointed out that the Respondent company was formed by the Petitioners and the Respondent Nos. 2 3 and their family members with the Petitioner group having 51.40% of the authorised and paid up share capital. The Respondents with the only view to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiation of contempt proceedings against the persons responsible for the same. 6. Furthermore, it was argued that the Respondents with an intention to strip the Respondent No.1 company of its assets and to enrich other entities controlled by them, have been transferring, alienating the funds, assets, plant and machinery, stocks, etc., to the Respondent No.4 company and other entities controlled by them. The quantum of diversion of funds was shown by referring to the bank statement, sales and purchase register, register of contracts and delivery vouchers/challans of the Respondent No.1 and Respondent No.4 companies. It was argued that this Hon'ble Board has held that any payment which is not for the purpose of the business of the company, the concerned directors of the company are personally responsible to make good the payment. The counsel for the petitioner relied on the case laws reported at [1992] 3 Comp LJ 89; [1998] 5 Comp LJ 463; [2006] 6 Comp LJ 161; [2002] 6 Comp LJ 423; [2002] 110 Comp Cas 31; [1997] 3 Comp LJ 321 . 7. Shri Alok Dhir, Counsel for the respondents replying to the allegation that the Respondent Nos.2 and 3 have illegally raised the paid up share c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to increase of capital. Now, it was argued, for the reason best known to him, he has raised this untenable issue of illegal share allotment. My attention was drawn to the correspondence which the Petitioner No. 1 has attached to the Petition at pages 73 to 77. In none of those letters, it was pointed out, has he raised the issue of fresh allotment. Accordingly, he has very much consented to the issue of such shares to the respondents. If at all Respondent No. 2 No. 3 were to have ill motive, it was argued, they could have ensured that the Petitioners are reduced to hopeless minority. That shows credibility of the Respondents vis-a-vis Petitioners. It was argued that the allotment was made with the consent of the Petitioner No. 1. 8. As regards the Petitioner's removal as Director of the AVI Sales Private Limited without his knowledge and Notice, the counsel for the respondents contended that the Petitioner No. 1 was very much aware of his removal. In fact, Petitioner No. 1 was served with the Notice of the Extraordinary General Meeting to be held on 13th January 2003 on 4th January 2003. On 13th January 2003, the Petitioner No. 1 was to be removed. Since the Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank to keep the amount in Fixed Deposit. The Petitioner No. 1 was, therefore, it was pointed out, not allowed to achieve his ulterior motive. It was admitted that the Respondent No. 4 is very much an associate company of respondent no. 1 company. No business of the Respondent No. 1 company has been diverted to Respondent No. 4 company. Rather it is Respondent No. 4 company that has advanced a sum of ₹ 21.78 Lacs to Respondent No. 1 company. It was pointed out that the contrary, the Petitioner No. 1 himself is running two units by the name of AVI Trading and AVI Engineering Private Limited. He has been diverting the business of the Respondent No. 1 company even while he was a Director of Respondent No. 1 company. The Petitioner No. 1 was removed only because of his lack of probity in financial dealings vis-a-vis Respondents. In fact, the export order received by AVI Sales private Limited was executed based on the Agreement, when the amount was received in the name of AVI Trading, the petitioner siphoned off the money without rendering account to Respondent No. 2 and 3. It was due to timely intervention of Respondent No. 2 and 3 that the amount of ₹ 40 Lacs could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 40 lakhs by the petitioner. The matter, is sub-judice wherein the Court after hearing the parties has directed the bank to keep the amount in fixed deposit. The respondents have raised preliminary objections that the petitioner has not come with clean hands and that there is* delay in filing this petition. It has been argued that the petitioner has given his consent and has also acquiesced to the increase in the shareholding, the petition is not maintainable at the threshold itself. On consideration of the facts and circumstances of the case and the catena of judgments relied upon by the counsels, I find the preliminary objections raised by the respondents the tenable. It is an admitted case that the issue of shares in favour of R-2 and R-3 was made during May 2002, for more than 3 years the petitioner did not raise any objection, whatsoever, in relation to the increase of the capital and further issuance thereof. The petitioner had several occasions to register his complaint or grievance about this but it was not done as is evident from the correspondence adduced by the respondents for that period. This issue has been raised for the first time by way of filing this petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner himself being a wrong doer is not entitled to any relief and it is settled law that the CLB may refuse to grant relief where the petitioner does not come to the court with clean hands. Thus, I find that the petition is not maintainable even on the basis of the preliminary objections raised in this case. 13. However, considering the case on merits, I find that the respondents are right in contending that the provisions of Section 80(1A) are not applicable to this case and that the removal of the petitioner as director has been as per the compliance with the law. The petitioner was very much aware of his removal, he was served with the notice of EGM on 13.1.2003. However, the petitioner was not removed in the meeting on 13.1.2003 and a fresh notice of Board Meeting was issued on 10.2.2003 by Regd. Post duly informing that the Board of Directors would be meeting on 20.2.003 for considering the notice of removal of the petitioner. This notice was also received by the petitioner. Thereafter, the notice of EGM on 20.3.2003 was served on the petitioner envisaging his removal from the directorship. Though the petitioner has denied the receipt of this notice served under Certi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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