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TMI Blog2004 (10) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company at the time of incorporation were the 1st petitioner, 2nd and 3st respondents. The petitioner was actively managing the affairs of the company. The company took on lease certain property in Nasik wherein it started building a Hotel in the name of Krishna . Even though the hotel premises were still under construction, the respondents had been' leasing out shops and other commercial chambers in the ground floor of the said premises without the consent of the petitioners and these respondents were depositing the lease money and rentals into their own personal accounts and thus were defrauding the company. The 1st petitioner is the owner of certain plot of land in Nasik and with the permission of the petitioner, the company has started constructing a hotel Sudin . The company has taken loans for construction of this hotel. However, the 2nd and 3rd respondents have failed to repay the said loan and income from the hotel is being credited into their personal account. With a view to oust the petitioner from the Board, they have forged a letter of resignation, purportedly signed by the 1st petitioner and had filed a Form 32 with the Registrar of Companies. There is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. When the petitioners initially filed the petition, they were not aware of further issue of shares and only when the respondents took the stand that the petitioners held less than 10% shares in the company, the petitioners sought for amendment to the petition challenging the further issue of shares and accordingly the present amended petition was filed. It may be seen from Annexure -C to the reply wherein details of the shareholding of the members of the company are given, that shares had been allotted only to the members of the respondents' group. No shares were offered to the petitioners. As a matter of fact, only after filing of the petition, the respondents have purportedly shown to have issued further shares so as to reduce the petitioners to below 10% so as to claim that the petition is not maintainable in terms of Section 399 of the Act. Therefore all the shares issued in 1988 and subsequently should be cancelled. 4. The learned counsel further submitted: With an ulterior motive and by forgery, the respondents claim that the 1st petitioner had resigned from the office of director. The alleged resignation letter dated 29.1.1990 ( Annexure P-3 ) purportedly a letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the civil court and the petitioners have already questioned the validity of the annual accounts for the year ended 31st March, 1989 which reflects a part of increase in the share capital. Notwithstanding the fact that this balance sheet reflects increase in share capital, the petitioners did not challenge the same in the civil suit. The main motive for filing this petition is that the petitioners failed to get any interim relief in the civil suit. As per their own averment at para 13B of the petition, the 1st petitioner had come to know of the increase in shareholding on receipt of notice from the Sales Tax Authorities wherein the Auditors' Report for 1989 had been enclosed. If it is so, then, the petitioners were aware of the increase in share capital but did not choose to challenge it for a number of years till the present petition was filed. Therefore it is wrong on the part of the petitioners to contend that they came to know of increase in capital after this petition was filed and when the respondents questioned the maintainability in respect of Section 399. Therefore this belated allegation relating to issue of further shares cannot be adjudicated. Even otherwise, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners had not challenged in the civil suit the matter relating to the alleged resignation of the 1st petitioner. It is the respondents who had raised the issue of resignation of the petitioner in that suit, with the sole motive of non suiting the petitioners. In the suit, the petitioners have not alleged any act of oppression and mismanagement in the affairs of the company and as such the pendency of the suit need not stand in the way of this Board granting the relief sought for. 9. I have considered the pleadings and arguments of the counsel. Even though the hearing of this petition was concluded quite some time back, there had been delay in issuing this order due to the records of this case having been misplaced. It is to be noted that originally the petitioners had filed this petition in 1998 claiming that they were holding 33% shares in the company and accordingly the petition was admitted. However, in the reply to the petition, the respondents had pointed out that the petitioners were holding less than 10% shares in the company and as such sought for dismissal of the petition pursuant to Section 399. The petitioners maintained that they were not aware of any increase i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no details as to how and when the authorized capital was increased as, for increase in the authorized capital, the approval of the general body is required. If so, notices should have been issued to the petitioners for general meetings which according to the petitioners were never received by them. Taking all these aspects into consideration and also the fact that as late as in 1986, the petitioners were holding 30% shares in the company, I am of the view that by increasing the capital of the company without offering any shares to the petitioners, the respondents have acted in a manner oppressive to the petitioners and therefore the increase in share capital after 1986. cannot be taken into consideration for considering the maintainability of the petition in terms of Section 399. In other words, the petition is maintainable in terms of that Section. Having held that the respondents had acted in a manner oppressive to the petitioners in allotting further shares without any offer to the petitioners, in the normal circumstances, all the shares allotted after 1986 will have to be declared as null and void. However, since the last allotment was made in 1991 and I find that shares had b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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