9911796707
TMI Blog1992 (8) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted facts of the case are as follows : Tillsoil Farms Pvt. Ltd. was incorporated on June 10, 1983, by the petitioner, Mrs. Rashmi Seth, and her mother-in-law, Mrs. Nita Seth, who were the only subscribers to the memorandum and articles of association and were also the only two shareholders and directors of the company at the time of its incorporation. Out of the paid-up capital of 20 shares of ₹ 100 each, 10 equity shares were held by the petitioner and ten shares by Mrs. Nita Seth. Under articles 51 and 53 of the articles of association of the company, the petitioner and her mother-in-law were to be the first directors of the company and were to remain as permanent directors, not liable to retire. The primary business of the company is agriculture. In 1983, the company acquired 30 acres of land at Sohna, Haryana, for planting eucalyptus trees and in 1987, three acres of land was acquired at Vasant Kunj, New Delhi, for development of a garden centre. The petitioner and respondent No. 2 were married in January, 1976, and since December, 1989, the relations between the petitioner and her husband have become strained on account of the serious differences between them and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general meeting or any meeting of the board of directors was ever convened or ever held on November 30, 1990, or on September 14, 1990, respectively, as she had not received any notice of the meeting. It is further submitted that Article 16(b) of the articles of association of the company provide that if any new shares of the company are to be issued, the same shall be first offered to the existing shareholders in proportion to their respective shareholding in the company and, therefore, the allotment of 185 shares to respondent No. 2 and five shares to Rass Intratech Pvt. Ltd. are illegal and in contravention of the provisions of the articles of association. Allegations have been made in the petition that after the unauthorised and illegal take-over of the management of the company, respondent No. 2 is also trying to siphon off the properties of the company to his personal advantage. 4. The petitioner had filed a suit (No. 1432 of 1991) on May 2, 1991, in the High Court of Delhi for a declaration and permanent injunction to prevent respondent No. 2 from further tampering and falsifying the records and in the same suit, it has been ordered that the properties of the company shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t length, the High Court of Delhi has refused to grant any interim relief of appointment of local Commissioner or seizure of the books. However, the respondents on their own offered to produce books for period after December, 1989, which were returned to the respondents after due endorsements and signatures on each page of the document by the private secretary to the Hon'ble Court. It was further pointed out that while the basic cause for the petition is matrimonial discord between husband and wife, the petition has nothing to do with any violation of the Companies Act or associated provisions. According to the respondent the shareholding in the company is as follows : Name No. of shares (i) Mrs. Nita Seth (ii) Mr. Chetan Seth (iii) Rass Intratech Pvt. Ltd. (iv) Mr. N. D. Tayal, Director Nil (v) Mr. Mark Werner, Architect (vi) Dr. C. L. Dhawan, Agricultural specialist 8. In view of this, it was contended that as she no longer holds any shares of the company, she is not entitled to any relief under Section 397 and 398 of the Companies Act. 9. It is further submitted by the respondent that the petitioner was never seriously associated with the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was convened on September 27, 1990, and the petitioner was given notice of the extraordinary general meeting. It is also mentioned in the reply at page 18 that the petitioner was present in the meeting on September 27, 1990. The company has also filed Form No. 23 with the Registrar of Companies on October 19, 1990, indicating the alteration made in the articles of association. Regarding transfer of 10 shares of the petitioner, it is stated in the petition that she was present at the board meeting held on September 27, 1990, and had consented to such transfer and has thus ceased to be a shareholder from that date, In view of the above, the contentions of the petitioner that she "came to know" that she has ceased to be a director and that she was not aware of the transfer of shares or amendment of articles are incorrect, as she was present at these meetings and therefore, there is no case of oppression and the petitioner has not come before the court with clean hands. In this connection, the respondent has relied on the petitioner's letter dated September 17, 1990, in which she has asked respondent No. 2 to take steps to give effect to her decision to sever relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1990, the petitioner is living separately. Regarding the contention of the petitioner that she was not present at the board of directors meeting held on September 14, 1990, and, therefore, the board minutes are fabricated, counsel admitted that the petitioner proceeded to Bombay by the Air-India midnight flight on September 13, 1990, arid she was not present at the board meeting held on September 14, 1990 ; but the fact remains that she filed the return of allotment on September 14, 1990, with the Registrar of Companies on the same day. Counsel could not reply to the query from the Bench how it was possible for her to return from Bombay and be available on September 14, 1990, to sign the return of allotments, and file it with the Registrar of Companies on the same day. Referring to the power of attorney given by the petitioner, Shri Srinivasan argued that it is clear from the terms of the power of attorney that Shri Chetan Seth was empowered to sell her shares. Regarding Shri N.K. Jain's signatures on the transfer form as the petitioner's constituted attorney, Shri Srinivasan explained that Shri Chetan Seth had in turn given a power of attorney to Shri N.K. Jain, auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the petitioner that the petitioner was not present at the board meeting held on September 14, 1990. A copy of the minutes of this board meeting has been filed by the respondent which not only shows that the petitioner was present, but that certain items were proposed by the petitioner. Out of eight items considered at the board meeting, her name is mentioned in five resolutions relating to allotment of 185 shares to Shri Chetan Seth and five shares to Rass Intratech Pvt. Ltd., issue of duplicate share certificates, alteration of Article53 of the articles of association of the company, the status of the working of the company and closure of bank account. Considering that now it is an admitted fact that the petitioner was not present at this meeting, there is no doubt in our mind that these resolutions are null and void and non-operative. There is nothing on record to show whether the petitioner had notice of this meeting. It is clear that the minutes are fabricated, the resolutions passed at the alleged meeting are invalid and issuing of duplicate share certificates unauthorised. Similarly, the petitioner had never given any power of attorney to Shri N.K. Jain to sign on her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copies of various documents including a copy of the petition filed in the High Court proceedings, and also noted the statement made in the rejoinder by the petitioner that she is going to move the High Court for withdrawal of the petition. We hold that the reliefs sought and the grounds mentioned in the present petition are much wider in scope and initiating the High Court proceedings for some of the reliefs will not bar the right of the petitioner to seek these reliefs. In view of this, we hold that the petition under Section 397/398 is maintainable. 17. The petitioner's case regarding oppression and mismanagement is based mainly on the grounds that respondent No. 2 has taken forcibly the control of the books of the company, fabricated documents first to reduce her status of majority shareholder to a minority shareholder, then illegally transferred her shares and modified the articles of association of the company to deprive her of her status as permanent director with a view to enable him to exclusively deal with the property of the company for getting personal benefit. It is also stated that these facts would justify the passing of a winding up order on just and equitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred to my bank account immediately. I do hope you will now take this matter seriously as we have been talking about all this for much too long. Kindly let me know as soon as you have taken the necessary actions to settle my personal matters. Thanking you, Yours sincerely, (Sd.) Rashmi Seth." 18. It is an admitted fact that marital relations between the petitioner and the respondent had taken an adverse turn since December, 1989, and they are living separately since August, 1990. It is also an admitted fact that efforts were being made to settle matters between them by negotiation. The power of attorney dated July 20, 1990, and the letter of the petitioner dated September 17, 1990, are to be considered in the context of these circumstances. In any case, neither the power of attorney nor the letter of the petitioner are part of the record of the company and are not relied on by the company for allotment of 190 shares on September 14, 1990, or approval of the transfer of the petitioner's shares on September 27, 1990, which have been held null and void for not complying with the provisions of the Companies Act/articles of association. In any case, these docume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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