Board orders winding up due to oppression, cancels share capital, directs director changes, freezes accounts.

The Board found that the acts alleged were oppressive to the majority by the minority, justifying winding up of the company under the just and equitable ground. The additional share capital allotted to the first respondent was deemed oppressive and was ordered to be canceled or transferred proportionately to the petitioners. Respondents Nos. 2 and 3 were directed to cease as directors, while Petitioners Nos. 1 and 2 were to continue as directors. The transfers of shares to the third respondent and from the first respondent to the second respondent were canceled. The company's bank accounts were to be frozen, and the bankers were to act as per the new board's decisions.

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Issues Involved:

1. Issue of additional shares.
2. Transfer of 680 shares to the third respondent.
3. Transfer of 1,015 shares from the first respondent to the second respondent.
4. Alleged vacation of the second petitioner as director u/s 283.
5. Removal of the first petitioner as director.
6. Failure to furnish copies of certain documents.
7. Appointment of respondents Nos. 2 and 3 as directors.

Summary:

1. Issue of Additional Shares:
The petitioners alleged that the issue of additional shares to the first respondent was an act of oppression aimed at converting the majority into a minority. The respondents contended that the allotment was necessary for additional funds as required by TIIC and was approved in a meeting attended by the first petitioner. However, it was found that no fresh cash was brought in, and the allotment was made against credits standing in the name of the first respondent. The Board concluded that the allotment was made with a view to gaining undue advantage and converting the majority into a minority, thus constituting an act of oppression.

2. Transfer of 680 Shares to the Third Respondent:
The petitioners argued that the transfer of shares to non-family members violated Article 17 of the articles of association. The respondents claimed the transfer was approved in a board meeting attended by the first petitioner. The Board found that the transfer without following the provisions of Article 17, especially without the presence of the second petitioner, was against the spirit of the article and thus invalid.

3. Transfer of 1,015 Shares from the First Respondent to the Second Respondent:
Similar to the transfer of 680 shares, this transfer was also found to be against the spirit of Article 17 and was set aside by the Board.

4. Alleged Vacation of the Second Petitioner as Director u/s 283:
The petitioners claimed they never received notices for the board meetings. The respondents argued that notices were sent to the registered address. The Board noted that considering the family nature of the company and the fact that the respondents were aware of the petitioners' actual addresses, proper notice was not served. Therefore, the second petitioner did not vacate his office by operation of law.

5. Removal of the First Petitioner as Director:
The first petitioner was removed in an extraordinary general meeting convened by the board consisting of the first respondent and respondents Nos. 2 and 3. The Board found this removal to be a grave act of oppression, especially considering the family nature of the company, and declared it invalid.

6. Failure to Furnish Copies of Certain Documents:
This issue was not specifically addressed in the judgment summary provided.

7. Appointment of Respondents Nos. 2 and 3 as Directors:
The petitioners contended that the co-option of respondents Nos. 2 and 3 was without proper quorum and was an act of oppression. The respondents claimed it was done with the consent of the first petitioner. The Board found that this co-option upset the equilibrium in the board and was an act of oppression, thus setting it aside.

Conclusion:
The Board concluded that the acts alleged were oppressive to the majority by the minority, justifying winding up of the company under the just and equitable ground. The following directions were given:

1. The additional share capital allotted to the first respondent shall either stand canceled or be transferred proportionately to the petitioners.
2. Respondents Nos. 2 and 3 shall cease to be directors.
3. Petitioners Nos. 1 and 2 will continue as directors.
4. The 680 shares transferred to respondent No. 3 shall be re-transferred to the original family shareholders.
5. The transfer of 1,015 shares from the first respondent to the second respondent stands canceled.
6. The board will meet to decide on these directions and allocate responsibilities.
7. The company's bank accounts will be frozen, and the bankers will act as per the new board's decisions.

The petition was disposed of with no order as to costs.

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