9911796707
TMI Blog1998 (12) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sections 397 and 398 of the Companies Act alleging various acts of alleged oppression and mismanagement in the affairs of the Company SBL Pvt. Ltd., the respondent No. 1 was incorporated some time in the year 1979 with the technical know-how provided by the appellant. Originally there were four groups of shareholders including the appellant Company, but, some time in the year l985, there was change in the share holding and the respondent No. 3 through its associate Company, respondent No. 2, became the major shareholder holding about 60% shares in the Company. The aforesaid change of shareholding came about with the consent and concurrence of the appellant who is holding 30% shares in the Company. After gaining majority Control, the respondent No. 3 has been managing all affairs of the Company. The relationship between the two took a different turn some time during later part of 1996 culminating in filing of the application under Sections 397 and 398 by the appellant. 4. The main grievance of the appellant as raised in the petition under Sections 397 and 398 of the Companies Act is that respondent No. 3 being in control of the management of the Company has been diverting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Pvt. Ltd., and that only a sum of ₹ 2 lacs was kept as security deposit with Aspire Investment Pvt. Ltd. On the basis of the same, the Company Law Board was of the opinion that the interest of the Company was in no way being jeopardised by the aforesaid transactions. Regarding the violation of the provisions of Section 370 and other provisions, Company Law Board stated that in absence of full details, it was not possible to give any finding, and even otherwise mere violation of provisions of a statute when it itself provides for penal action, per se, would not be treated as an act of oppression. 7. The Company Law Board found that SBL (Sikkim) is a separate entity and was not funded by the Company in question and the said controversy relating to SBL (Sikkim) Pvt. Ltd., could be put to an end by entering into a manufacturing agreement with SBL (Sikkim) Pvt. Ltd., for fixing such charges as it deemed fit, for production of Company's products in SBL (Sikkim) Pvt. Ltd., which according to the Company Law Board, would set at rest the grievance of the petitioner. 8. It was also found that increase in the share capital had been under the consideration of the Board for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further submitted that the Company Law Board has considered all the issues and, thereafter as given a clear and categorical finding that the respondent had conducted the affairs of the Company in a transparent manner and there is no case of any mismanagement and oppression and, Therefore, no question of law arises from the aforesaid findings of fact recorded by the Company Law Board. He also submitted that so far dealing with SBL (Sikkim) Pvt. Ltd. is concerned, the Company Law Board has directed for entering into a manufacturing agreement with SBL (Sikkim) Pvt. Ltd., for fixing such charges as it deemed fit in pursuance of which directions such an agreement has been arrived at and, Therefore, there could be no grievance in respect of the said transactions. He similarly contended that in respect of other dealings also there was no act of any mismanagement or oppression and thus the appeal is required to be dismissed. 11. In the light of the aforesaid submissions of the learned Counsel appearing for the parties, I propose to deal with the contentions in Serialtim. 12. Mr. S. Ganesh, Counsel for the appellant submitted that the entire profits made by SBL (Sikkim) Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing for the parties in respect of the same. According to the appellant, loans and advances to Aspire Investment Pvt. Ltd., Himal Investment Ltd. and Rockland Estate Pvt. Ltd., were wrongly advanced by respondent No. 1. So far Aspire Investment Pvt. Ltd., is concerned, the allegation was that an amount of ₹ 21.50 lacs was advanced to the said Company by the respondent No. 1. According to the respondent as of today, outstanding advance from Aspire Investment Pvt. Ltd., is only ₹ 2.77 lacs. It is true that an amount of ₹ 21.50 lacs was advanced to Aspire Investment Pvt. Ltd., towards security deposit for commercial use of the premises made available to respondent No. 1 by the said Company. Aspire Investments Pvt. Ltd., had given its premises on lease at Calcutta to the Company. The Company Law Board nsideration of the evidence on record found that for leasing the said property to the respondent No. 1, the respondent No. 3 had taken only security deposit and not any rent. It is stated that the entire security deposit except ₹ 2.77 lacs has since been returned by Aspire Investments Pvt. Ltd., to respondent No. 1 leaving a balance of only ₹ 2.77 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the aforesaid allegations. It was also held that mere violation of the provisions of a statue when it itself provides for penal action, per se, could not be treated as an act of oppression. The said findings cannot be said to be illegal and unjustified and thus, the contention of the learned Counsel for the appellant has no force at all. 19. Counsel for the appellant also submitted that at least an order should be passed under Section 402 and investigation into the affairs of SBL Pvt. Ltd. and its management was required and orders should have been passed by the Company Law Board under Section 402 directing an investigations into the affairs of SBL Pvt. Ltd. and its management. Counsel for the appellant submitted that the respondent in its written submissions also agreed to get the records scrutinised by an independent auditor as may be nominated by the Board. He submitted that in spite of the aforesaid stand taken by the respondent the Company Law Board illegally rejected the prayer for investigation on the ground that the petitioner did not furnish the detailed particulars to convince that an order of investigations was to be made. The transactions at all times, particular ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
