2002 (7) TMI 809 - Board - Companies Law

CLB ruling: Petitioner granted choice between investment amount with interest or fair value for shares.

Smt. A. Kalyani Versus Vale Exports (P.) Ltd.

The Company Law Board (CLB) found in favor of the petitioner in a case under sections 397/398 of the Companies Act, 1956. The CLB directed the second ... - Issues Involved:1. Exclusion from day-to-day affairs and business of the Company.2. Denial of audited accounts and balance sheets.3. Non-convening of annual general meetings and Board meetings.4. Illegal allotment of equity shares.5. Illegal removal as a director.6. Non-issue of share certificates.7. Illegal appointment of directors.Summary:1. Exclusion from Day-to-Day Affairs and Business of the Company:The petitioner alleged exclusion from the day-to-day affairs and business of the Company, denying her statutory rights as a shareholder. The second respondent, due to matrimonial disputes, ignored the petitioner and excluded her from the management of the Company.2. Denial of Audited Accounts and Balance Sheets:The petitioner was denied access to the audited accounts and balance sheets of the Company for several years, despite written requests. The respondents failed to provide these documents, which were crucial for the petitioner to exercise her rights as a shareholder.3. Non-Convening of Annual General Meetings and Board Meetings:The Company failed to convene annual general meetings and Board meetings and did not send notices for such meetings to the petitioner. The notices allegedly sent were addressed incorrectly, and there was no proof of service.4. Illegal Allotment of Equity Shares:The petitioner challenged the illegal allotment of 2,59,000 equity shares in favor of respondents 2 to 4. The allotment was made without offering shares to the petitioner, reducing her shareholding from 26% to 3.4%. The allotment was found to be an act of oppression.5. Illegal Removal as a Director:The petitioner was illegally removed as a director of the Company. The minutes of the Board meeting held on 1-3-1995, which resolved to remove the petitioner, were not signed by the Chairman. The cessation of directorship was recorded inconsistently in different documents, and the petitioner continued to be a director as per a letter dated 23-12-1996.6. Non-Issue of Share Certificates:The petitioner was not issued share certificates for the shares originally allotted to her. This non-issuance further compounded the acts of oppression and mismanagement by the respondents.7. Illegal Appointment of Directors:The appointment of respondents 3 and 4 as directors was challenged as illegal. The appointments were made without proper notice to the petitioner, and the minutes of the meetings were manipulated and unreliable.Judgment:The Company Law Board (CLB) found that the petitioner had made a case u/s 397/398 of the Companies Act, 1956, and deserved appropriate relief. The CLB directed the second respondent to purchase the shares held by the petitioner, with the consideration being either the investment made by the petitioner with interest or the fair value of shares based on the balance sheet as on 31st March, 2000. The petitioner was given the option to choose between these two options. The petition was disposed of in these terms, with the matter kept open for ascertaining the petitioner's option and, if necessary, for appointing an independent valuer.