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TMI Blog2009 (10) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to deliver the bonus shares to the petitioner-bank as and when they are declared and becomes due for delivery; (c) permanent injunction restraining the first and second respondents from dealing with the petitioner's-bank equity shares held in the first respondent-company; (d) appoint an administrator to regulate the conduct of the first respondent, namely, Indowind Energy Ltd.'s affairs. 3. Learned senior counsel for the applicant submitted that the petition is not maintainable on the ground that the shareholders status of the respondent/petitioner in the applicant-company is pending in the High Court of Madras and the respondent/petitioner has failed to state in the petition the fundamental allegation that the circumstances warranted to wind up the applicant-company and the right to seek relief for non-payment of dividend the respondent/petitioner, cannot invoke the provisions of Section 397 of the Companies Act, 1956. In respect of the first prayer of the respondent/petitioner learned senior counsel submitted that the applicant-company has not declared any dividend after 2004 to till date hence the question of payment of dividend will not arise. The non-declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has not substantiated with any material evidence for the appointment of the administrator and it is only a bald allegation. 5. On the legal issue learned senior counsel submitted that to maintain a petition under Section 397/398 there must be a minimum pleading, that the winding up of the company would unfairly prejudice the petitioners, otherwise, facts would justify the making of the winding up order under just and equitable ground. In the company petition there is no such minimum pleading as required under law hence the company petition is liable to be dismissed on this ground alone. In support of his contention reliance has been placed on (i) [2005] 123 Comp Cas 566 (SC) in the matter of Sang-ramsinh P. Gaekwad v. Shantadevi P. Gaekwad--it is held at class item 193 of page 631 : It has to be borne in mind that when a complaint is made as regards violation of statutory or contractual right, the shareholder may initiate a proceeding in a civil court but a proceeding under Section 397 of the Act would be maintainable only when an extraordinary situation is brought to the notice of the court keeping in view of the wide and far-reaching power of the court in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 Comp Cas 505 (Cal) in the matter of Jaladhar Chakmborty v. Power Tools and Appliances Co. Ltd.--it is held at page 517 that: non-declaration of dividend would not by itself amount to mismanagement , (iv) [2009] 149 Comp Cas 497 (P H) in the matter of Raghbir Singh v. Sikri Multiplex Cinema P. Ltd.)--it is held at paragraph 15 (page 505) : The Company Law Board cannot be expected to adjudicate on matters where there are disputed questions of fact and there are civil suits pending to resolve the very same disputes . The petition before the Company Law Board was required to be dismissed not on the ground that the petition has become infructuous or that the High Court's order had operated itself and revived the effect of either the resignation letter or the family settlement as wrongly observed by the Company Law Board. On the other hand the petition was required to be dismissed on the ground that points for adjudication sought before the Company Law Board were merely the issues for adjudication before the civil court, which had been filed prior to the filing of the second company petition, (v) [2005] 126 Comp Cas 898 (CLB) in the matter of Shankarlal Gilada v. Kapricon Sle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the purpose of filing the suit by the applicant is to create some cloud over the shares of the first respondent. The subject-matter of the company petition falls within the jurisdiction of this Bench and directions which are required to be issued to bring an end to the oppression complained of can be decided only by this Bench and the applicant has no right to interfere with the jurisdiction of this Bench. The applicant has not even filed full fledged counter and by merely filing the interim counter and an application on the strength of such interim counter the applicant cannot seek for deciding the issue at the threshold without taking up the matter for hearing on merits. Learned senior counsel in reply to lack of pleading that the first respondent/petitioner has not pleaded in the petition that it is just and equitable to wind up the company is concerned he submits that it is not mandatory to plead wining up and placed a note from the book of author Ramaiya wherein it is stated that As regards nature of petitions under Sections 397 and 398 and the procedure relating thereto, see Tribunal's decision reported in Union of India v. Bennett Coleman and Co. Ltd. [1965] 35 Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the conduct is mala fide and is for a collateral purpose where although the ultimate objective may be in the interest of the company, the immediate purpose would result in an advantage for some shareholders vis-a-vis the others. (c) The action is against probity and good conduct. (d) The oppressive act complained of may be fully permissible under law but may yet be oppressive and, therefore, the test as to whether an action is oppressive or not is not based on whether it is legally permissible or not since even if legally permissible, if the action is otherwise against probity, good conduct or is burdensome, harsh or wrong or is mala fide or for a collateral purpose, it would amount to oppression under Sections 397 and 398. (e) Once conduct is found to be oppressive under Sections 397 and 398, the discretionary power given to the Company Law Board under Section 402 to set right, remedy or put an end to such oppression is very wide. (f) As to what are the facts which would give rise to or constitute oppression is basically a question of fact and, therefore, whether an act is oppressive or not is fundamentally/basically a question of fact. 10. Learned senior cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent/petitioner at the request of the Subuthi Finance staring that the 20 lakhs shares belongs to it. He submitted that the Subuthi Finance the second respondent herein has filed C.P. No. 1382 of 2009 before this Bench under Section 111A of the Companies Act, 1956, for rectification of the register of the applicant/the first respondent-company. The said matter is pending for its adjudication. In view of the facts and circumstances as stated C.P. No. 50 of 2008 filed by the first respondent/petitioner is to be dismissed as not maintainable. 12. Heard learned Counsel for the parties and perused the pleadings documents reliances (citations) placed in their support and the main issue need to be considered and addressed that whether grievances of the respondent/petitioner in the company petition can be considered when the respondent/petitioner's shares are the subject-matter in C.S. No. 454 of 2008 pending before the High Court of Madras, if so whether the company petition is maintainable. Before adverting to the maintainability of the company petition on the ground that the subject-matter of shares of the respondent/petitioner pending before the High Court of Madras. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the shares. Since the applicant/the respondent have stated that they have not issued any bonus shares after 2004 and this Bench presumes the same without any demur and does not interfere in the affairs of the company. (c) The legal issue that was raised by learned senior counsel for the applicant that there must be minimum pleading that the winding up of the company would unfairly prejudice to the petitioners, otherwise, the facts would justify the making of the winding up order under just and equitable ground. As per the provisions of Section 397 of the Act that any member of a company who complained that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members may apply to this Bench for an order provided such member has a right so to apply in virtue of Section 399. Sub-section (2) of Section 397 gives power to the Bench if it is of the opinion (a) if the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members and (b) that to wind up the company would unfairly prejudice such member or members, but that otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of the company petition. Learned senior counsel for the applicant/the respondent submitted that the applicant-company filed suit bearing C.S. No. 454 of 2008 in the High Court of Madras against the respondent/the petitioner under Order VII, Rule 1 of the Civil Procedure Code read with Order IV, Rule 1 of the Original Side Rules praying for a decree against the first and the second defendant therein more particularly paragraph (b) for a mandatory injunction directing the defendants to transfer the 16,66,667 equity shares in favour of the third defendant (Subuthi Finance) or its nominees bearing distinctive numbers 22590001 to 24256667 in demat form. The suit is filed on January 9, 2008 and the present company petition filed on August 20, 2008. Since the shares of the respondent/the petitioner are the subject-matter of the suit pending before the High Court of Madras and filed prior to C.P. No. 50 of 2008. It is also contended by learned senior counsel for the applicant that there is concluded contract among the applicant and the respondent/petitioner. On the other hand learned senior counsel for the respondent/the petitioner submitted that there is no concluded contract. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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