1994 (10) TMI 312 - Board - Companies Law

Petition upheld despite challenges, oppression and mismanagement found, relief granted for share valuation.

The petition was found maintainable despite challenges regarding additional shares and transfers. The proceedings were not stayed due to a withdrawn suit ... - Issues Involved:1. Maintainability of the petition regarding Esemen.2. Whether proceedings should be stayed due to a pending suit in the Calcutta High Court.3. Establishment of a case of oppression and mismanagement.4. Entitlement to the reliefs prayed for.Summary:1. Maintainability of the Petition Regarding Esemen:The maintainability of the petition was questioned due to the issue of additional 5,000 shares and the transfer of some shares, increasing the total number of members to 11. The petitioner was unaware of these developments. The board held that it is not justified to disqualify the petitioner u/s 399 as the respondents failed to establish the total number of shareholders was 11 before the petition was filed. The transfers appeared to be an attempt to disqualify the petitioner.2. Whether Proceedings Should Be Stayed Due to Pending Suit:The respondents argued for dismissal due to a pending suit in the Calcutta High Court. The petitioner undertook to withdraw the suit, which was subsequently done. The board noted that the issues in the suit and the petition were not identical, and the petition raised additional issues. The suit's withdrawal resulted in no alternative remedy, and thus, there was no ground for dismissing or staying the proceedings.3. Establishment of a Case of Oppression and Mismanagement:The petitioner alleged acts of oppression and mismanagement, including non-issue of notices, non-maintenance of minutes, wrongful transfer of shares, and issue of additional shares to dilute her holding.- Non-Issue of Notices and Non-Maintenance of Minutes: The respondents provided sufficient proof of filing annual returns and balance sheets and dispatch of notices. The petitioner failed to establish her allegations. - Wrongful Transfer of Shares: The board found that the shares were wrongfully transferred using a power of attorney, as established by various High Court orders. The respondents' conduct was deemed oppressive. - Issue of Additional Shares: The additional shares were issued without justifiable need for funds, as reflected in the balance sheets showing no significant capital expenditure or new activities. The issue was seen as an attempt to dilute the petitioner's shareholding and was considered an act of oppression.4. Entitlement to Reliefs:The petitioner established oppression and mismanagement. The board directed that the fair value of the petitioner's shares be determined as of March 31, 1993, excluding the effect of the additional shares issued in 1990. P.K. Mitra and Co. were appointed for valuation, and the respondents were ordered to purchase the shares at the determined value. The board did not grant further reliefs but allowed the petitioner to approach the bench for additional reliefs if the shares were not purchased as ordered. All interim orders were vacated, and there was no order as to costs.