Board finds oppression, orders share restoration for petitioners, dismisses non-filing allegation. Directorship issue deferred.

The Board found the respondents acted oppressively by issuing shares without offering them to the petitioners, reducing their shareholding. Petitioners were allowed to subscribe for additional shares to restore their 33% shareholding. The issue of the 1st petitioner's directorship was left to civil court, and the non-filing of statutory returns allegation was dismissed as all returns were filed. Petition disposed accordingly.

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Issues Involved:
1. Alleged oppression and mismanagement in the affairs of the company.
2. Validity of the alleged resignation letter dated 29.1.1990.
3. Validity of the allotment of shares made on different dates.
4. Non-filing of statutory returns with the Registrar of Companies (ROC).

Issue-wise Detailed Analysis:

1. Alleged Oppression and Mismanagement:
The petitioners, holding more than 35% of the shares in M/S Bhoomi Builders Pvt. Ltd., alleged oppression and mismanagement under Sections 397/398 of the Companies Act, 1956. They claimed that the respondents were leasing out commercial spaces and depositing the lease money into their personal accounts, defrauding the company. Furthermore, the respondents allegedly failed to repay loans taken for constructing a hotel, with the income from the hotel being credited to their personal accounts. The petitioners also alleged that no Board or General Meetings were held for a long time to exclude them from the company's affairs, and the company's income was being misappropriated by the respondents.

2. Validity of the Alleged Resignation Letter Dated 29.1.1990:
The petitioners contended that the alleged resignation letter of the 1st petitioner was forged, with no Board Resolution accepting the purported resignation. The civil suit filed by the 1st petitioner was dismissed on the grounds of his non-directorship, which was upheld by the appellate forum, suggesting that the grievance could be raised before the Company Law Board. The respondents claimed that the resignation letter was filed with the ROC, but the petitioners argued that no such letter was available in the ROC records, and the ROC had issued a show cause notice to the 1st petitioner as a director in 1992. The petitioners maintained that the resignation letter was fabricated to oust the 1st petitioner from management, constituting a grave act of oppression in a family company.

3. Validity of the Allotment of Shares Made on Different Dates:
The petitioners alleged that further shares were issued without their knowledge, reducing their shareholding from 33% to less than 10%. They argued that no offer for additional shares was made to them, and the purported allotments after 1986 were made without their consent. The respondents countered that shares were issued periodically as needed, with the petitioners being aware of the increase in share capital from the balance sheet enclosed with a notice from the Sales Tax Authorities. However, the petitioners challenged the balance sheet in a civil suit and argued that they were unaware of further increases in share capital due to the company's failure to file statutory returns. The Board concluded that the respondents acted oppressively by not offering shares to the petitioners and allowed the petitioners to subscribe for additional shares to restore their 33% shareholding.

4. Non-Filing of Statutory Returns with the Registrar of Companies (ROC):
The petitioners alleged that the company had not filed any statutory returns with the ROC for several years. The respondents admitted delays but claimed that all required documents had been filed. The Board noted that the company had been in default in filing statutory returns, but since all returns had been filed by the time of the hearing, this allegation no longer survived.

Conclusion:
The Board found that the respondents had acted in a manner oppressive to the petitioners by issuing further shares without offering them to the petitioners, thus reducing their shareholding. The petitioners were allowed to subscribe for additional shares to restore their 33% shareholding. The issue of the 1st petitioner's directorship was left to the civil court, and the allegation of non-filing of statutory returns was dismissed as all returns had been filed. The petition was disposed of accordingly.

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