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of <h1>Court Orders Restoration of Shareholding, Supersedes Board, Imposes Costs on Respondents</h1> The court ordered the restoration of the shareholding pattern as of September 25, 1997, and the rectification of the members' register to reflect this. ... Ownership and shareholding of the company - Appointment of an inspector or such other person to investigate into the ownership of the company and the shareholding in the company - Held that:- The respondents Nos. 4 to 29 have never contributed to the capital of the first respondent-company. They have allotted shares of the first respondent-company to themselves and became the directors by excluding the actual shareholders by forging the documents on the letter head papers of the first respondent-company, which were given as blank for keeping with respondents Nos. 4 and 5, as security for dues owed by the first respondent-company to them. The respondents have also violated the order dated February 19, 2008 passed by the then Company Law Board by which the status quo regarding the shareholding pattern was ordered to be maintained till further orders. The shareholding pattern with regard to the first respondent-company as on September 25, 1997 is restored along with the issued, sub scribed and paid-up capital of ₹ 6,10,000 consisting of 6,100 equity shares of ₹ 100 each. Accordingly, the register of members of the first respondent-company shall stand rectified by entering the names of the petitioners and removing the names of respondents Nos. 4 to 29. Petition disposed off. Issues Involved:1. Alleged mismanagement and oppression under Sections 397 and 398 of the Companies Act, 1956.2. Validity of share allotments and transfers.3. Unauthorized management changes and directorship appointments.4. Fabrication of documents and fraudulent filings with the Registrar of Companies (RoC).5. Request for investigation and rectification of the members' register.6. Supersession of the current board of directors.7. Financial mismanagement and request for an external audit.Detailed Analysis:1. Alleged Mismanagement and Oppression:The petitioners, twelve in number, alleged that the affairs of the first respondent-company were being conducted in a manner prejudicial to their interests and the company itself. They claimed that respondents Nos. 2 and 3, who were managing director and director respectively, had approached them for capital contributions, which they provided. However, the management was later handed over to respondents Nos. 4 and 5 without the petitioners' knowledge, leading to unauthorized changes and mismanagement.2. Validity of Share Allotments and Transfers:The petitioners were allotted shares, as evidenced by Form 2 and annual returns filed up to September 25, 1997. The issued, subscribed, and paid-up capital of the company was Rs. 6,10,000 consisting of 6,100 equity shares of Rs. 100 each. The petitioners alleged that their share certificates were never handed over, and unauthorized share transfers were made to respondents Nos. 4 to 29, who did not contribute any capital to the company.3. Unauthorized Management Changes and Directorship Appointments:Respondents Nos. 2 and 3 allegedly entered into a private arrangement with respondent No. 4 and his group, resulting in unauthorized management changes. The Commissioner’s report indicated that respondents Nos. 4 and 5 created documents using blank letterhead papers signed by respondent No. 2 to induct themselves as directors and remove the original directors. This was done without any authority and without conducting proper meetings.4. Fabrication of Documents and Fraudulent Filings with the RoC:The petitioners alleged that Form 2 dated May 7, 1998, and Form 32 filed on July 11, 2000, were fabricated. The Commissioner’s report corroborated these claims, stating that the annual return filed for the period up to September 30, 1998, reflected a new set of shareholders, excluding the actual shareholders. This was deemed a rank forgery and fraud.5. Request for Investigation and Rectification of the Members' Register:The petitioners requested the appointment of an inspector to investigate the ownership and shareholding of the company. They sought rectification of the members' register to show the correct shareholding, removing the names of respondents Nos. 4 to 29. The Tribunal ordered the restoration of the shareholding pattern as on September 25, 1997, and rectification of the register accordingly.6. Supersession of the Current Board of Directors:The petitioners sought the supersession of the current board of directors and the constitution of a fresh board. The Tribunal ordered the supersession of the board and directed the petitioners to convene an extraordinary general meeting to appoint new directors. All purported board meetings and annual returns filed after September 25, 1997, were set aside.7. Financial Mismanagement and Request for an External Audit:The petitioners alleged financial mismanagement and requested an external audit. The Tribunal did not specifically address this request in the final order but emphasized the need for proper management and compliance with the Companies Act.Order:1. The shareholding pattern as on September 25, 1997, was restored, and the register of members was rectified to reflect this.2. The current board of directors was superseded, and the petitioners were directed to convene an extraordinary general meeting to appoint new directors.3. Respondents Nos. 4 to 29 were directed to hand over all company records and vacate the office within two weeks.4. Costs of Rs. 20,000 were imposed on respondents Nos. 4 to 29.The petition was disposed of accordingly.
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