TaxTMI 
TaxTMI 
2014 (7) TMI 917
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....olding of the company was distributed between the members of the Modis' and the Agarwals' family. The Company was deemed to be a public company by virtue of Section 43A of the Companies Act. 1956 (as was in force at the material time). The Board of Directors of the Company approved the deletion of the word "private" from the name of the Company on 17th March, 1983 and the Registrar of Companies deleted the same on 6th October, 1983. The nominal capital of the Company is Rs. 25,00,000 divided into 25,000 equity shares of Rs. 100 and the paid-up capital is Rs. 20,00,000. Equity capital of Rs. 5,00,000 was issued and subscribed by the members of the Modis' family and Agarwals' family in the ratio of 60% and 40% respectively. The petitioners hold 2,800 fully paid up equity shares of Rs. 100/- each in the company. 3. The present Company Petition was filed by the petitioners under Section 397 & 398 of the Act on the ground of mismanagement and oppression by the majority shareholder, alleging that the respondent Company was being run for the benefits of the majority shareholder Mrs Raj Kumari Agarwal and her family. By an order dated 6th March 1989, the company petition was admitted. ....
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....o 1002/1997, for appointment of a managing administrator to take over the management of the company. The petitioners by way of this application submit that the company had fraudulently surrendered its property measuring about 2200 sq. ft situated at Connaught Place, New Delhi and property measuring 350 sq. yards situated at Defence Colony, New Delhi had been let out Mrs Raj Kumari Agarwal for a nominal rent of Rs. 500 per month. The petitioners further submitted that the inspection by the Department of Company Affairs had revealed that personal expenses of the majority shareholder has been passed off as company expenses. Even expenses on pooja held at residence of the majority shareholder and buying of gifts like dhoti etc to pujari's were also being passed off as the company expenses. The petitioners complained that the balance sheet of the company and details of the meeting held were not provided by the majority shareholders initially, however, the same were handed over only after the intervention by this court. The petitioners also alleged that the majority shareholders had floated another company called Fusion Fitting (I) Ltd in the year 1996 and shares worth Rs. 56.00 were pur....
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....n the line of management, finance and administration. With his valuable advice it will be more advantage to the Company to have Mr. Gautam Agarwal as Director of this Company. None of the other Directors other than Mr. Gautam Agarwal is interested in passing said resolution." 10. The reply filed by the respondent clearly admits that Mr Gautam Agarwal was pursuing his education in Bangalore from July 1986 to June 1990. Apparently, after passing out of a school in Delhi, Mr Gautam Agarwal had proceeded to Bangalore to pursue his undergraduate course. Therefore, the contention that at the material time when Mr Gautam Agarwal was appointed as an Additional Director, he was barely 20 years of age and was still studying in college. Despite the same, the Explanatory note to the resolution appointing Mr Gautam Agarwal claimed that he was a businessman having vast experience in the line of management, finance and administration. There is no material that has been placed on record that substantiates the claim that Mr Gautam Agarwal had any experience prior to his appointment as an Additional Director of the respondent company. Thus, in my view it is ex facie obvious that the Explanatory n....
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....s further education. This in my view is a puerile explanation and is liable to be rejected. This reason coupled with the alleged reason furnished for appointing Mr Gautam Agarwal as Director - his alleged "vast experience in the line of management, finance and administration" make it prima facie apparent that the respondents have contrived explanations and canvassed contentions to ensure the flow of benefits from the company to Gautam Agarwal. 13. The petitioners filed CA 1002/1997 alleging that the company had fraudulently surrendered 2200 Sq. Ft of commercial space in Scindia House, Connaught Place, New Delhi for which the company was paying only a sum of Rs. 250.00 per month. The explanation given for surrendering the said tenancy was that the company did not have funds to carry out the repairs required by the said property. Petitioner no.1 further alleged that during the pendency of the company petition the house bearing no. C-430, Defence Colony, New Delhi, owned by the Company as a guest house had been let out to Smt Raj Kumari Agarwal and Gautam Agarwal at a rent of Rs. 500 per month and all their personal expenses were debited as expenses of the Company. It was contended....