9911796707
TMI Blog2006 (9) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners has complained of the following acts of mismanagement in the affairs of the Company: The Company has been lending monies, on the security of properties in and around Ambathur, to persons without any credit worthiness and adequate securities in violation of Clause 2 of the object clause of Memorandum of Association, resulting in delayed repayment of loans availed by the borrowers. The respondents misappropriated the funds of the Company by writing off the loans extended to the friends and relatives of the directors. The respondents have abused their fiduciary position and failed to perform their fiduciary obligations protecting the interests of the Company. The Compliance Certificate for the year ended 31.03.2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of salary, bonus and other allowances since the year 1997 thereby incurring a loss of ₹ 1.56 lakhs every year. 3. Shri R. Shankaranarayanan, learned Counsel appearing for the respondents opposed the Company petition on the following among other grounds: The petitioners must plead and establish that the affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interest of the Company in accordance with Section 398(1)(a) of the Act. The petitioners are bound to prove the continuous process of management of affairs, which is prejudicial to the interest of the company. Isolated, unsubstantiated, past and concluded transactions cannot be brought within the scope of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the petitioners. There is no illegality committed by the respondents in acquiring the shares from Sri Harihara Subramanian and other small investors especially when there is no bar for any director to acquire shares of the Company. The petitioners have grievances against Sri Harihara Subramanian and therefore, baseless allegations have been made against him. The transactions between the respondents and Harihara Subramanian not tainted with any illegality cannot be the subject matter of the present petition. All the transfers in favour of the respondents were done in accordance with the law and in the form in which they have been transferring shares for the past three decades. The first petitioner had also acquired shares of the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition. The main grievances of the petitioners are in relation to (a) improper lending policy adopted by the Company; (b) breach of fiduciary obligations by the directors; (c) wrongful acquisition of shares of the Company; (d) misappropriation of funds of the Company; (e) violation of the statutory provisions of the Act; (f) higher employee cost; and (g) wrongful implementation of the labour agreement. The lending and other policies are entirely left to the collective wisdom of the board of directors of the Company and do not warrant any judicial interference, unless the policies lack complete bonafides. The mere alleged irregularities in the loan portfolio of the Company cannot be the basis for the present company petition. The initiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded to them. The petitioners cannot, therefore, make any grievances on account of payment of salaries to the employees of the Company. The grievances on account of the excess employee cost of the Company are not sustained by evidence so as to provide any relief against mismanagement. When charges of misappropriation are raised, full particulars of the acts complained of must be set out in the pleading, without which, such charges should be ignored without investigating such general charges. The petitioners have neither made out as to how the Company's interests have been unfairly prejudiced on account of the purported acts of mismanagement in the affairs of the Company, in which case the CLB cannot invoke the jurisdiction of Section 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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