9911796707
TMI Blog2007 (6) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... crafts, motor buses, lorries, motor cycles, motor rickshaws, tempos, trucks, tractors, scooters, ships, aeroplane, helicopters, trams, railways, carriers and other vehicles whether propelled or moved by electricity, petrol, vapour gas, diesel oil, oil or otherwise and to carry on the business of all other modes of transport. 3. Shri J.C. Mahindro, Counsel for the petitioners pointed out that the respondents have tried to mislead the Hon'ble Board by trying to confuse the provisions of Section 397 and 398 of the Act. It was argued that the case set up by the petitioners is clearly showing that the respondents had in a manner oppressive to the petitioners as well as the public at large, conducted the business of the respondent No. 1 in a manner prejudicial to their interest. It was pointed out that the petitioners hold 48% as against 33.9% of the paid-up equity capital of the respondent company. A search conducted of the documents file of R-1 company by one M/s Tilak Raj Associates, Company Secretary revealed that the said company had given a certificate detailing change in shareholding pattern in the R-1 company. The Respondents had hijacked the business and fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputes arose. Further, it was argued that the respondents' contention that the Division Bench has found diversification of funds of the Respondents company to H.K. Goods Transport Company Pvt. Ltd. be untrue is not correct. Admittedly an FIR has already been registered and the mischief of the R-2 is apparent from the fact that he himself wrote a letter to the SHO, Police Station Punjabi Bagh, wherein he had alleged that the record was lying with his C.A. and would be presented by him. It is apparent from the record that the goodwill and business of the R-1 has been transferred and siphoned off by the R-2 and 3 by creating the aforesaid H.K. Goods Transport Company Pvt. Ltd. just to oust the petitioners. It was further pointed out that during the interregnum of signing the said MOU and the freezing of account the R-2 managed to withdraw funds of the R-1 company from its various bank accounts to the tune of approximately ₹ 31.00 lac. My attention was drawn to the bank statements of the R-1 company reflecting the said withdrawals during the relevant time. It was contended that the respondents have also created false documents which have not been admitted by the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Case 351 also it was held by the Supreme Court that in order to constitute oppression within the meaning of S.397, there must be continuous acts on the part of the majority shareholders, continuing up to the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members . From the aforesaid judgments, it was argued that it clearly follows that (1) past acts which have come to an end cannot be challenged under S. 397 of S. 398;(2) the relief under Sections 397 and 398 would be available only if there are continuous acts of oppression by the majority shareholders; (3) illegal acts committed by the directors, unless they are oppressive on the minority shareholders, cannot be challenged in a petition under S.397 of the Act. The instances of violation of the provisions of the Companies Act, which were referred to by the learned Counsel for the petitioner, cannot be complained of in the present proceedings under S.397 or S. 398 of the Act. Further, reliance was placed on the decision in Sheth Mohnlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. [1964] 34 Comp. Cas 777 (Guj), Justice P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company which is an appropriate remedy. The said petition is pending consideration before the Hon'ble High Court of Delhi at New Delhi. 6. Further the counsel for the respondents pointed out that the petitioner is responsible for the present state of affairs in as much as if is the petitioner who wrote false, frivolous and defamatory letters to various clients of the respondent company and also to the banks to get the bank accounts of respondent No. 1 frozen. It was pointed out that in fact the business of respondent No. 1 company was running smoothly until the sons of the petitioner No. 1 started interfering with the said business. The sons of the petitioner had nothing to do with the company as they were neither its employees nor shareholders nor directors, yet they interfered with the business of the company. It was pointed out that the business of the company came to a stand still some time in November 1999 immediately after the freezing of bank accounts of the company as per instructions contained in the petitioner's letter dated 18.11.1999 which was issued to the banks. It was pointed out that in fact it is the petitioner who in conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company as of 8.7.99 is null and void or of no effect in law. It was pointed out that the same is in accordance with law. 8. Shri Vineet Malhotra, Counsel for the respondents argued that the petitioner had sought to make false and frivolous allegations against HK Goods, which was not a party in this petition, and against respondent Nos. 2 The petitioner had been writing false and frivolous letters. In this regard the Hon'ble High Court of Delhi at New Delhi by its judgment and order dated 28.2.2006 passing a decree wherein the suit of the plaintiff was decreed and the Hon'ble High Court held as under: A decree is, thus, passed in favour of the plaintiffs and against the defendants restraining the defendants or any one on their behalf from writing as defamatory letters in respect of the plaintiffs or from interfering with the business of plaintiff No. 1 company except in accordance with law as per the legal proceedings. The plaintiffs shall also be entitled to costs. Decree sheet is drawn up accordingly.' February 28,2006 It was pointed out that the Hon'ble High Court of Delhi has restrained the petitioner from writing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amounts realised from sale of trucks and a car belonging to the R-1 company. According to the respondents Petitioner's allegation that the R-1's assets and resources have been diverted to the present company namely H.K. Goods is not true as has been held by the Division Bench of the High Court mentioning that there is no document with the investigating officer to show that the amount was diverted from Pindi Roadlinks Pvt. Ltd. to H.K. Goods Transport Pvt. Ltd. Petitioner's case is that he has been ousted by the respondent, he has been removed as a director; R-3 has been appointed as a director; the respondents have made the R-1 a shell company by diverting funds and assets and other resources including the Goodwill of R-1 to H.K. Goods which is nothing but Pindi Roadlinks Pvt. Ltd. the R-1 has been made defunct company on paper only, the winding up petition filed by the R-3 is only to hoodwink the creditors, the respondents withdrew 95% of the amounts pertaining to R-1 within nine months before the dispute arose, documents have been fabricated, petitioner's signatures have been forged and hence prayer for directing R-2 and R-3 to pay back ₹ 1.97 crores into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company should be wound up . A careful analysis of the above would indicate that it is for this Board to form an opinion that the affairs of the company are being conducted in an oppressive manner and once it forms such an opinion, the just and equitable grounds for winding up of the company becomes established and this Board has to grant relief in terms of Section 402, if it again forms an opinion that such winding up would prejudicially affect the interest of the members/company. In other words, once this Board gives a finding that acts of oppression have been established, winding up of the company on just and equitable grounds becomes automatic. Shri Sarkar relevantly referred to the unreported judgment of Delhi Court in Prentice Hall case, wherein, the Court has held that once oppression is established, reliefs under Section 402 could be granted . In the present case the petitioners have succeeded in establishing a case that the affairs of the company are being conducted in an oppressive manner and that there is mismanagement as well, hence winding up would be prejudicial to the petitioners' interests safeguard of which has been prayed for in this petition. I agree that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, directly or indirectly. It is objectionable to use such power simply or solely for the benefit of directors or merely for an extraneous purpose like maintenance or acquisition of control over the affairs of the company. Directors are required to act on behalf of a company in a fiduciary capacity and their acts and deeds have to be exercised for the benefit of the company. The fiduciary capacity within which Directors have to act enjoins upon them a duty to act on behalf of a company with utmost good faith, utmost care and skill and due diligence and in the interest of the company they represent. They have a duty to make full and honest disclosure to the shareholders regarding all important matters relating to the company. The respondents' conduct has been burdensome, harsh and wrongful. Besides, the affairs of the company have been mismanaged as pointed out above. 12. In view of the foregoing and keeping in view that there are allegations and counter allegations, the parties have entangled themselves in criminal complaints and that there is an MOU dated 18.10.99 wherein the petitioners have expressed their desire of not to continue with R-2 in this business ..... 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