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of <h1>Board confirms petitioners as shareholders, nullifies equi-preference shares, grants buy/sell options.</h1> The Board confirmed the petitioners as valid shareholders of Panchmukhi Investments Ltd., holding 90% of the shares. It declared the issuance of ... - Issues Involved:1. Shareholding Dispute2. Board Composition3. Issuance of Equi-Preference Shares4. Parallel Proceedings5. Maintainability of PetitionSummary:1. Shareholding Dispute:The petitioners claimed to hold 90% shares in Panchmukhi Investments Ltd. and sought cancellation of further shares issued and a declaration of their shareholding. The respondents contended that only 30% shares were transferred to the petitioners. The Board found that the petitioners had paid Rs. 3.347 crores for 3,19,200 shares and that these shares were registered in their names. The Board rejected the respondents' claim that the petitioners held shares in trust and confirmed the petitioners as valid shareholders.2. Board Composition:The petitioners alleged that the Board composition was altered without their consent, reducing their majority to a minority. The appointment of the 3rd respondent as an additional director and the cessation of the 8th and 9th respondents as directors were challenged. The Board found that the 3rd respondent was not validly appointed due to lack of quorum and proper notice, and the AGM held on 27-9-1996 was invalid. The current Board was determined to consist of the 2nd and 7th respondents and the 2nd and 3rd petitioners.3. Issuance of Equi-Preference Shares:The petitioners challenged the issuance of equi-preference shares as ultra vires the Memorandum and in violation of the Act and Articles. The Board found that the alleged increase in authorized capital and issuance of equi-preference shares were fabricated and not legally valid. The issue and allotment of these shares were declared null and void.4. Parallel Proceedings:The respondents raised the issue of parallel proceedings due to suits in Calcutta High Court and Bangalore civil court. The Board noted that the Calcutta suit was dismissed for non-prosecution, and the Bangalore suit was filed by the respondents. The Board decided to proceed with the petition, focusing on shareholders' rights and not enforcing private agreements.5. Maintainability of Petition:The respondents challenged the maintainability of the petition under section 399, arguing that the petitioners held less than 10% shares. The Board found that the petitioners satisfied the numerical requirement of section 399 and that the petition was maintainable.Reliefs Granted:The Board declared the petitioners as holders of 3,19,200 shares and invalidated the issuance of equi-preference shares. The petitioners were given the first option to sell their shares to the 2nd respondent for Rs. 3.347 crores with 20% simple interest, to be paid by 31-3-2002. If the 2nd respondent did not exercise this option, the petitioners could purchase the respondents' shares at a fair value determined by an independent valuer. An independent director was to be appointed to manage the company during the transition period.
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