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TMI Blog2017 (12) TMI 1640X X X X Extracts X X X X X X X X Extracts X X X X ..... an application under Sections 397, 398 and 402 of the Companies Act, 1956 claiming to be entitled to 25% of the issued subscribed and paid up share capital of the M/s. Therm Flow Engineers Pvt. Ltd & Ors. (hereinafter referred to as "Company") and alleged that by issue and allotment of further shares his percentage of shareholding of 25% has gone down to insignificant percentage of 8.33% by the 2nd and 3rd Respondents. The Tribunal by impugned judgment dated 15th March, 2017 in TP No. 106/397-398/NCLT/AHM/2016 held that the act on the part of the 2nd and 3rd Respondents is only to enrich the persons in the 'Narayanbhai Patel Group' at the cost of other shareholders of the Company amounting to financial mismanagement and passed following orders: - "153. The aforesaid case of the respondents 2 and 3 in the management and affairs of the first respondent company are harsh, burdensome and detrimental to the interest of the petitioner. Therefore, finding of this Tribunal is that, respondents 2 and 3 committed act of oppression, mis-management in the conduct of the affairs and business of the first respondent company. The acts cases of oppression and mismanagement warrant passing windi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar of Companies, Ahmedabad, reflects the shareholding of the Petitioner. 5.4 The petitioner claims that he and his father Mr. Dev Narumalani are only referred in the Company as "the Narumalani Group". The Company which presently owns about 27% equity shares of the 13th Respondent (another Company) controls the affairs of 13th Respondent (the other Company) whereas 2nd Respondent to 11th Respondent are mainly the shareholders of the 1st Respondent Company. 5.5 The main allegation of the Petitioner is that he was not informed of the change in the shareholding which the Petitioner came to know from the search of records of the Registrar of Companies. No notice of the Board of Directors Meeting was issued during the years 2010, 2011 and 2013 nor served on the Petitioner. 5.6 According to the Petitioner, the notice of the Extra Ordinary General Meeting held on 28th September, 2010 was not forwarded and the shares were allotted to 5th to 10th Respondents at a discount of 99.83% and thereby, the valuation of the Petitioner's shares was brought down. 5.7 It was further alleged that the Petitioner was not served with the minutes of the meetings of the Board of Directors dated 1st No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation that the Petitioner came to know of the same in the year 2014. 11. According to Respondents, notice of concerned Extra Ordinary General Meeting dated 28th September, 2010 and the notice of the Board of Directors meeting of the 1st Respondent Company were duly issued to the Petitioner and only thereafter, it was decided to allot shares in favour of 5th to 10th Respondents. 12. Learned counsel appearing on behalf of the Respondents (Appellants in Company Appeal (AT) No. 159 of 2017) submitted that the 13th Respondent (the other Company), M/s. Patel Air Temp Ltd. and the father of the Petitioner was a Whole Time Director in 13th Respondent Company and has always been aware about the operations of both the entities. The 13th Respondent Company was incorporated prior to 1st Respondent Company and its value has always been substantial. On the contribution of the Petitioner in the affairs of the 1st Respondent Company was the initial subscription money of Rs. 25,000/- for 2,500 shares, which were allotted to him as a gesture of good faith in view of his father being the Whole Time Director of the 1st Respondent Company. 13. It was further submitted that the Petitioner is a sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to make the requirement of having an aggregate of 1/ 10th of share out of the total shareholding of the company, if the appellant alleges oppression in bringing down his shareholding. In the said case, this Appellate Tribunal noticed the Hon'ble Supreme Court's decision in "Bhagwati Developers Private Limited" and "Rajahmundry Electric Supply Corporation Ltd.," wherein the Apex Court held that the requirement of 1/ 10th of holding of the total share is to be examined in the light of whether such a number is maintained on the actual date of presentation of the company petition in the court (emphasis added). This Court while discussing the decision of Hon'ble Supreme Court in "Bhagwati Developers Private Limited" and "Rajahmundry Electric Supply Corporation Ltd." held that the said principle, which was made applicable in the case of winding up, will not be applicable where applicant alleges oppression and mismanagement in bringing down the shareholding below 1/ 10th of the total share of the company. This Appellate Tribunal further observed that if the principles laid down by Supreme Court in "Bhagwati Developers Private Limited" and "Rajahmundry Electric Supply Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 shares were allotted to 4th Respondent and it was shown in the annual return of the 1st Respondent Company filed with Registrar of Companies on 18th October, 2010. Because of this, rise in the share capital and allotment of 2500 equity shares of the face value of Rs. 10/- each to 4th Respondent, percentage of the Petitioner in the paid up share capital of the 1st Respondent Company reduced from 25% to 20%. According to the petitioner, the value of each equity share of the 1st Respondent Company as on 25th September, 2010 was Rs. 6719.69/-, but it was allotted at a base value of Rs. 10/- each to the Respondents. 22. Further, on 28th September, 2010, share capital of the 1st Respondent Company was increased from Rs. 2 lacs to Rs. 3 lacs. Relevant forms were filed with Registrar of Companies on 18th October, 2010. On 11th October, 2011, 5th Respondent to 10th Respondent were allotted 2500 shares each of face value of Rs. 10/- and thereby the share value of the Petitioner is reduced to 9.09%. According to the Petitioner, value of the share as on 24th November, 2011 was Rs. 5908.62. On 4th July, 2013, in the meeting of Board of Directors, 2500 equity shares of the value of Rs. 10/- e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at a price of Rs. 10/- per share. The Petitioner has placed on record that the value of the shares of the 1st Respondent Company on the basis of the market price of, shares of 13th Respondent at annexures 5 & 6 at pages 54 and 55 of the rejoinder. 26. The face value of the shares allotted to the 4th Respondent to 11th Respondent in the years 2010, 2011 and 2013 have been noticed by the Tribunal and shown in the table below:- Dates of allotment Allotted to (Respondent) Allotment Price (Rs.) Intrinsic fair Discount given 29.01.2010 R 4 10 5946.02 99.84% 18.01.2011 R 5 to R 10 10 5414.04 99.82% 04.07.2013 R 11 10 3230.64 99.70% 27. In the present case, we find that the Petitioner addressed e-mail to the representative of 1st Respondent Company and requested to provide audited balance sheet for the financial year ended 31st March, 2015 but there was no response to the said e-mail from the 1st Respondent Company. On 16th June, 2015, the Petitioner received a notice of the meeting of the Board of Directors of the 1st Respondent Company to be held on 22nd June, 2015. In the said notice, agenda was to appoint Additional Director on the Board of the 1st Respondent C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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