TaxTMI 
TaxTMI 
1984 (1) TMI 255
X X X X Extracts X X X X
X X X X Extracts X X X X
....om the said position. It appears, subsequently, disputes took place between the parties and, ultimately, the management of the company went into the hands of Basheshar Nath group and Anil Saran group. This petition consequently, has been filed by D. P. Agarwal group seeking relief from this court against the Basheshar Nath group and Anil Saran group. P. L. Gupta has been impleaded as respondent No. 9 in this petition. According to the petitioners, Basheshar Nath group and Anil Saran group are managing the affairs of the company. Learned counsel for the petitioners, consequently, stated that they do not want any relief against P. L. Gupta. This petition was filed on November 30, 1981, and, thereafter, notices were issued to the opposite parties. The opposite parties contested the petition. I heard the parties on merits of the petition for some time. Thereafter, the parties took time to explore the possibility of a compromise. This procedure was adopted as it was felt that in case the dispute continued between the D. P. Agarwal group and the two other groups, namely, Basheshar Nath group and Anil Saran group, the entire company could be completely ruined resulting in colossal loss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ound to continue as the managing director of this company. It was further held by this court that the defendants in the said suit, namely, Basheshar Nath group and Anil Saran group, were in effective control of the management and affairs of the company. It, consequently, emerges that neither is Pyare Lal Gupta the managing director of the company nor is he in effective control of the management and affairs of the company. This is a petition under sections 397 and 398 of the Companies Act seeking relief in respect of the oppression sought to be caused to the petitioners because of the mismanagement of the company. Sri P. L. Gupta, not having control over the management of the company, is not at all affected by any compromise which may have been arrived at between the petitioners and the other two groups. In any case, I am considering the arguments raised by counsel for P. L. Gupta in this regard. The first contention raised by learned counsel for P. L. Gupta is that this petition is not maintainable and, as such, the terms of the compromise cannot be accepted in this petition. His submission is that the petitioners do not have the requisite number of shares as provided by sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....justified in refusing to register the shares of the applicants in those cases. So far as the other four petitions are concerned, they are still pending. The allegations are that the company had unjustifiably refused to register the shares with the mala fide object of keeping control over the affairs of the company in its own hands. In Gajarabai M. Patny v. Patny Transport (P. ) Ltd., Secumderabad [1966] 36 Comp. Cas. 745 (AP), it had been held that in case the directors act unjustly, harshly and in a high-handed manner in refusing to register the shares, it would amount to oppression. I am also of the view that in case it is shown by the petitioners under sections 397 and 398 of the Companies Act that the persons, who are in the management of the company, consistently refused to register shares with the mala fide object of retaining control over the affairs of the company and thereby not permitting the other shareholders to have voting rights in the company, it would be a case where a court would have power to interfere and grant relief under sections 397 and 398 of the Act. This depends upon the facts and circumstances of each case. Refusal once by the company may not be oppres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dends on its shares, as stated at the Bar. It would, consequently, be in the interest of the company that the two groups transfer their shares to the petitioner's group so that all these litigations come to an end, the relations between the three groups may become normal and the company may start functioning. Petitions Nos. 18 19 and 21 of 1981 and No. 1 of 1982 in regard to the registration of the shares of the company would also be finally disposed of, thereby terminating the dispute between the parties in regard to the registration of the shares. It has been stated that the company has borrowed money from Lakshmi Commercial Bank Ltd. and the U. P. State Financial Corporation. The compromise will benefit both the bank as well as the U. P. State Financial Corporation, as these authorities will be able now to realise their amounts due against the company. One of the main contests in this petition was in regard to the act of the company in forfeiting certain shares. This compromise seeks to annul the forfeiture. The allottees of the forfeiture shares have consented for the annulment of the forfeiture. This would automatically restore the status quo ante with regard to the shar....