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TMI Blog2004 (4) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... tures of the deceased on the minutes may not be genuine. Even otherwise, to come to the conclusion that late Vinod Kumar Pathak expressed his unwillingness to infuse funds, there should have been proper material. The minutes dated 16.2.2001, in which the alleged decision to mobilize funds by issue of shares was taken, does not record any details of the financial needs of the company like the quantum of funds required etc for the deceased to express that he was not in a position to infuse any funds. Even the minutes of the next meeting on 15.7.2001 doest not record the quantum of money to be raised. The allotment was purportedly made on 5.11.2001, that is nearly 9 months after the need for funds was felt by the Board as recorded in the minutes of the purported Board meeting on 16.2.2001. There is nothing on the record to show as to how the Board computed the requirement of funds to the extent of ₹ 3.2 lakhs to allot 1600 shares to the wives of the 3rd and 4th respondents. The very fact that the Return of allotment was filed only on 25th January 2002, that is after the demise of Vinod Kumar Pathak, would also raise a doubt as to whether the said allotment was made on 5.11.2001. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was registered with Superior Court of Justice, Ontario, Canada on. 1.3.2002. As per the said Will, the 1st petitioner has been appointed as sole executor and trustee to administer the estate of late Shri Vinod Kumar Pathak. As a legal heir, the 1st petitioner requested the company by a letter dated 28.12.2001 to effect transmission of 2455 shares in her favour. However, the company refused to transmit the shares in her favour. In November, 2001, the company had issued 3200 equity shares to respondents group. The petitioners have questioned the refusal to transmit the shares and the further allotment on the ground that by these oppressive acts, the respondents have reduced the petitioners' group into a minority and have created a new majority. 3. When this petition was heard on 19.4.2002, the, 2nd and 3rd respondents who were present agreed to transmit the impugned shares on a proper application being made by the petitioners together with a copy of the Will of late Shri Vinod Kumar Pathak. Accordingly, this Bench directed the company to effect transmission within 10 days of receipt of application together with a copy of the Will. When the matter was considered on 23.8.2002, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in the name of late Vinod Kumar pathak in favour of the 1st petitioner no longer survives as the company has already effected the transmission and the petitioners have also been taken on the Board of the company now. As far as the allotment of further shares is concerned, it was done with the knowledge and consent of late Vinod Kumar pathak. In a Board Meeting held on 2nd Feb. 2001 which was attended by Vinod Kumar Pathak, the financial position of the company was discussed. Late Vinod Kumar Pathak informed the Board his inability to infuse further capital into the company and requested 3rd and 4th respondents to contribute in the equity share capital either by themselves or through their relatives. Accordingly, a resolution was passed authorizing these two respondents to mobilize funds for the share capital. In a Board Meeting held on 15th July, 2001, which was also attended by late Vinod Kumar Pathak, it was resolved to issue the equity shares to the 3rd and 4th respondents or their relatives. In view of the approval given by the Board, in the meeting held on 5th November, 2001, 1600 shares each were allotted to the wives of 3rd and 4th respondents. The Board also rioted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to get the signatures verified by two different experts-one suggested by the petitioners and the other suggested by the respondents. Accordingly, I appointed Pt.Ashok Kashyap and Shri B. Lal, the former suggested by the petitioners and the latter by the respondents to give their opinion on the genuineness of the signatures of the deceased on the minutes of the Board meetings dated 16.2.2001 and 15.7.2001. Even though the respondents insisted that various signatures of the deceased available in the records of the company should also be taken into consideration for verification with those in the minutes, the counsel for the petitioners objected to the same on the ground that the petitioners had no way of knowing that they were the signatures of the deceased. Since I found justification in the objection of the learned counsel for the petitioners, I directed that only signatures on legal documents viz the ones in the Passport of the deceased, his Will and the Social Security Card in his name would be the basis for comparison purposes. Accordingly, they were submitted to the handwriting experts for verification with the signatures on the Minutes. 9. The hand writing experts have subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erogative of the Board to allot shares, the power should be exercised in the interest of the company and not for any ulterior purpose. In the present case, by this allotment, the existing majority has been converted into a minority and a new majority has been created in favour of the respondents, which is a grave act of oppression and is an act in breach of the fiduciary duties of the directors. Thus, taking into consideration all these aspects, I declare by allotting 3200 shares to the respondents group, the Board had acted in a manner oppressive to the majority shareholders and in breach of the fiduciary duties of the Directors. Therefore, I direct that the said allotment shall stand cancelled with immediate effect. The company shall refund the amount paid by these two allottees at the earliest and reduce its paid up capital to that extent. While canceling the allotment, I have noted that the two allottees are not parties to the proceedings. Since they are not third parties but are the wives of the directors who had allotted the shares, their presence is not considered necessary, especially when the allotment is cancelled on the ground that the directors had acted in breach of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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