9911796707
TMI Blog2001 (4) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... acres in the district of Nilgiris was owned by the deceased G,J. Coelho, father of the first petitioner and respondent Nos. 2 and 3. A partnership firm was constituted by the deceased G.J. Coelho under the name and style of Silver Cloud Tea Estates with the deceased G.J. Coelho and his eight children as partners. After the demise of Shri G.J. Coelho in March, 1965 the remaining members of the family jointly managed the business, Thereafter, the family of Coelho acquired 50 per cent undivided interest in a tea estate, namely, Barwood Tea Estate. In August, 1981, the Company as well as the eleventh respondent came to be incorporated taking over the management of the Silver Cloud Tea Estates and the 50 per cent undivided interest in Barwood Tea Estates on dissolution of the partnership firm. Silver Cloud Tea Estates. In the year 1985, the entire Silver Cloud Tea Estate was sold by the Company to the eleventh respondent for a sum of ₹ 111.93 lakhs which still remains unpaid. The first petitioner has been an equal partner of the erstwhile firm Silver Cloud Tea Estates and upon the incorporation of the Company and the eleventh respondent, the first petitioner has been a director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the respondents group. The petitioners are deprived of the opportunity to participate in the capital of the Company. The increase of share capital by allotment of shares in favour of the respondents group to the exclusion of the petitioners and other members was unfair and in breach of trust. By the allotment, the existing loans were converted into share capital and no fresh funds were infused. There were no bona fides in allotment of the impugned shares. The petitioners are willing to subscribe to the shares which may be allotted by the company. By virtue of the impugned allotment, shareholding of the petitioners has been reduced from 12 per cent to one per cent. Shri Raghavan further pointed out that the respondent Nos. 2 and 3 have leased out portions of Barwood Tea Estates at a throwaway price in favour of their own close relatives and caused monetary loss to the company, petitioners and other shareholders. In view of the strained relationship between the parties, the first petitioner was not elected as director at the annual general meeting held in March, 1993, contrary to the normal practice of the company to elect all the retiring directors, thereby the control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idhya Shankar has, therefore, submitted that the plea of quasi-partnership made out by the petitioners should be rejected. Shri Vidhya Shankar invited our attention to the resolution passed on 31-5-1986 by the Board of directors authorising the Company to take deposits from directors and other members of the Company with liberty to issue shares in the Company in discharge of such deposits. Accordingly, the Company was accepting deposits from directors and other members of the Company from time to time which are reflected in the balance sheets for the years ended 31-3-1987 to 31-3-1991. As at 31-3-1992, the total loan amount advanced and the aggregate amount outstanding to the credit of the account of the director members inclusive of interest comes to ₹ 66,74,950. The Company made use of these deposits to run the business, especially when the equity of the Company is to the tune of only ₹ 4 lakhs. Mr. Vidhya Shankar pointed out that the debt equity ratio of the Company was rather unsatisfactory and that the company's banker was constantly pursuing the Company to raise the capital and in this connection he referred to a series of correspondence exchanged between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 397/398 cannot be invoked by a director and therefore it does not amount to an act of oppression. Shri Vidhya Shankar pointed out that the petitioners cannot claim any relief in respect of the 11th respondent, in view of the fact that the petitioners do not satisfy the requirements of section 399. The petitioners are not shareholders of the 11th respondent-company. Section 399 does not empower shareholders of a holding company with requisite qualifications to maintain any action against its subsidiary company. Shri Vidhya Shankar has therefore categorically submitted that the claim against the llth respondent should be rejected. While concluding his submissions, Shri Vidhya Shankar reported that the entire sale consideration in respect of Silver Cloud Estates stands paid by the company and that no amount is outstanding on account of sale consideration. 5. Shri Raghavan in his reply while making a distinction between delay and laches has submitted that there has been delay on the part of the petitioners to approach the CLB but the petitioners are not guilty of laches in view of the fact that no prejudice has been caused to the respondents. He further em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise. It is an admitted position that right from the beginning, the shares in the company were held more or less equally by all the family members and the four sons of the deceased Coelho were directors right from the inception. In the cases of family companies, wherein equal shareholding and equal participation have been in vogue, this Board has always taken a view that strict principles of company law need not be applied and equitable principles should be given equal weightage. Therefore the contention that application of partnership principles would arise only in case of deadlock cannot be accepted. 8. Regarding delay and laches as contended by the counsel for the respondents, we are in general agreement with the submissions of Shri Raghavan in this regard and as such hold that the same does not bar the petitioner from prosecuting this petition. 9. In the present case, the main argument of the counsel for the respondents has been that the share capital was increased to meet the requirements of the bank. It is a settled principle of law that as long as share capital is increased for the benefit of the Company, even if it indirectly benefits certain shareholders, then such ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
