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TMI Blog2020 (11) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... pital followed by allotment of shares with a view of saving the Company from its state of crises. There was no diversion of the company s business to any other company. Hence, there is no oppression made out. Therefore, it is no longer res-integra that the right issue for genuine purpose and for the benefit of the company is not illegal until proved otherwise. The petitioner/minority shareholders have to prove the mala fide of the majority in order to get relief against the Righst issue. In the case in hand petitioner himself attended the meeting, submitted his objections against the Rights issue. The petitioner has a chance to purchase/invest more in the company. There is no single instance of oppression or mismanagement by way of further issue of Rights by the directors of the company. Let the matter be listed on 04.12.2020 for further consideration. - CP-86/ND/2020 - - - Dated:- 6-11-2020 - MR. P.S.N PRASAD AND DR. V.K SUBBURAJ, JJ. ORDER DR. V.K SUBBURAJ, J. 1. The Present Petition has been filed, by Mr. Abhishek Jain, as Petitioner holding 30% shareholding in Respondent No. 1 Company, against the existing directors (respondent no.2 to 6) and shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has been bestowed with all powers in the respect of operation and management of the Company. 8. The Respondent No.3 is the promoter of the Respondent No.1 and has been the chairman of the Board of Directors upto 6 March, 2020 when he transferred his total equity holding in the respondent No.1 and Respondent No.2 (his father) and resigned from the directorship however, he is still very much active in the affairs of the company even after the resignation from directorship. 9. The Respondent No.4 is the Director in the Respondent No.1 since 25th October, 2018 and has been actively engaged in the management of the Respondent No.1 ever since although he does not have any share in the paid up capital of the Respondent Company No.1. 10. The Respondent No.5 is the promoter of the Respondent No.1 and hold 20% of the paid up equity share capital in the Respondent No.1 Company. 11. The Respondent No.6 is the promoter of the Respondent No.1 and holds 15% of the paid up equity share capital in the Respondent No.1 Company. 12. It is stated by the petitioner that the Respondent No.2 to 6 have preexisting business relations and mutual financial interest as they have been working c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sguided the lender bank and lapsed in regulatory compliances. 17. The respondents in favour of the rights issues have submitted as follows: A Rights Issue was floated by the company in the Board Meeting of 09.05.2020 for increasing the paid-up capital of the Respondent Company No.1 as the most specific reason for the proposed increased in capital is the mandate of the Lender Bank i.e South Indian bank, pursuant to its letter dated 12.02.2020. It is submitted that the Petitioner wrote certain e-mails, letters to the SIB (Lender Bank) with an intent of portraying management dispute, questioning the financial viability of the Project, reflecting that there is mismanagement in the affairs of the Respondent Company No.1 and made the Lender Bank suspicious about the affairs of the Respondent No.1 Company. Due to the collective and repeated acts of the Petitioner, the Lender Bank had kept the disbursement of the Bank Loan in abeyance and required personal guarantee of the petitioner.(Copy of South Indian Bank e-mail dated 26.05.2020 informing abeyance of bank Laon disbursement and requiring personal guarantee of Abhishek Jain annexed). Only ₹ 10 crore was disbursed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bursal of Loan amount of Balance of ₹ 15 Crores for the Project. Thus due to his act the finances of the company has been stifled and company has no option but for the Rights issue which is in interest of Company. Thus the Rights issue is in the interest of the company and should not be stopped and company should be allowed to go ahead with decision taken pin board meeting held on 22.07.2020. 18. Heard the parties and perused the case records. 19. It can be seen that the petitioner has not raised any specific objection against the Rights issue. The petitioner has not pointed out any negative impact on the rights of the petitioner by issuance of further shares. 20. It is well settled principle that for a case of oppression and mismanagement, there needs to be a conduct amounting to misconduct by the majority towards the minority. Further, where a majority of members exercise their rights as shareholders in the conduct of the company s affairs, the fact that there is oppression, lapse or impropriety on the part of an officer not pertaining to or unconnected with the exercise of voting rights by a majority of shareholders, will not justify invocation of Section. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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