TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 768
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....n 16.09.2006, (2) the decision to reflect the moneys put in by Sajal group as "disputed liability" in the balance sheet at the Board Meeting held on 16.09.2006, (3) non-cancellation of allotment of 25,000 shares made to Kamal on 24,071996, (4) alteration of Board of directors appointing Mr. Arindam Samantas and Mr. Sudip Basu as directors (5) appointment of Dr. A.K. Sanyal as director of the company and (6) wrongful alteration of shareholding in violation of the order of status quo passed by this Hon'ble Board on 15.05.2007. The other two petitioners XL Enterprises Limited and XL Fashions Limited are shareholders of the company owned by Sajal. 2. The case of Sajal is that Ruby was incorporated on 1.04.1991 with an authorized share capital of Rs. 5,00,00,000/- divided into 50,00,000 equity shares of Rs. 10/- each with a paid-up capital of Rs. 98,24,700/- divided into 9,82,470 equity shares of Rs. 10/- each. This company has come into existence to set up a hospital at Kasba Golpark, Eastern Metropolitan Bypass, Kolkata - 700 107. 3. Sajal is a Graduate Mechanical Engineer with Post Graduate degree in Business Administration from Indian Institute of Management (IIM) Calcutta. He....
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....elopment Bank of India (IDBI) for obtaining term loan for the hospital project based on the record of accomplishment and credentials of him, on seeing his credentials and efforts, a term loan of Rs. 460 Lakhs was sanctioned by IDBI in favour of Ruby on the guarantees executed by the brothers. Sometime later, Kamal was in the management of the company. When the company was unable to pay its debts, one of the creditors filed Winding-Up petition before the Hon'ble High Court of Calcutta by serving a notice upon Ruby on 18.12.1995, u/s 434 of the Companies Act. 5. Sajal submits while the company was under the control of Kamal during the period 01.04.1995 to 31.03.1996, it made losses to the extent of Rs. 115 lakhs. Having Sajal realized that the company was unable to pay the loan of IDBI which would irreparably damage his credibility and trust that IDBI reposed on him, he became the Managing Director on 09.02.1996, thereafter, he came to know that Kamal, during his control, that is the period of September 1994 to October 1995, had caused the company to import over- invoiced, obsolete and dysfunctional medical equipment to enrich himself at the expense of the company so as to usurp....
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....l, On seeing RBI reiterating the same as said in the past, Sajal filed another W.P, No, 1157 of 2004 impugning the order dated 7-5-2004 passed by RBI, the same is pending Before the Hon'ble High Court at Calcutta. Thereby, the petitioner Sajal submits that the allotment of shares is one of the subject matters of challenge in the instant petition because this impugned allotment has been made against obsolete, dysfunctional and over-invoiced equipment. 6. Sajal submits that, in the years 1995 & 1996, shares had been allotted to Sajal group and he was in fact appointed as Managing Director of the company, whereas R2 filed a C.P. No. 86 of 1997 in the month of Nov 1997 challenging the allotment u/s 397 & 398 of the Companies Act, on which, the Company Law Board passed an order on 29.10.1999, holding the "notices alleged to have been issued to the petitioner directors for the Board Meetings cannot be considered to be valid notices and as such the stand of the respondent that the petitioner directors had vacated the office of director u/s 283(l)(g) cannot be sustained that the various decisions in the Board Meetings including that of allotment of shares in the absence of valid notic....
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....of the Companies Act, 1956 and Memorandum and Articles of Association. Mr. Sajal submits that Kamal being interested director in making allotment unto himself, he ought to have not participated and voted in favour of making allotment unto himself. Because interested director shall not participate in voting, if participated it is bad in the light of Section 300 of the Companies Act, 1956. Sajal says since the resolution passed by Kamal Group is in derogation of the orders of Honorable Supreme Court and various provisions of the Companies Act. It is prejudicial to the interest of Sajal Group, he therefore submits the same shall be done away. 11. Mr Sajal submits that this allotment was made with an oblique motive to reduce him to insignificant minority to take over the absolute control of the company. He submits that his group at all material times ready and willing to subscribe as many shares as subscribed to Kamal Kumar Dutta. Fact of the matter is that Sajal money, Rs. 81, 00,000/- is already lying in credit with the Company. Sajal submits had the company, for any reason, desired of making any preferential allotment, it had to pass a special resolution, no such resolution was pas....
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....ment is the subject matter of challenge in the writ petition pending before Honourable High Court of Calcutta. He did not know that Kamal supplied second hand medical equipment and that equipment was obsolete, dysfunctional and over- invoiced until it came to his notice that his brother Kamal asked permission from RBI to consider second hand equipment as capital. He denies that that there has been any embezzlement of funds when he was in management, he further denies that the value to the second hand equipment was shown as capital during the period 1994 to 1996. He says that equipment was not capitalized in book entries. 14. He further submits that the Hospital had accreditation with National Accreditation Board for Testing & Calibration of Laboratories (NABL) in respect of pathology Department, however it was suspended soon after Kamal has come into management; that the hospital premises was used for a cocktail party, unfortunately it was exposed in the media condemning the management using Hospital premises in hosting cocktail parties; that there had been complaints against the Hospital for wrong billing, which went into the glare of media; that having the Hospital failed to tak....
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....val sought by Mr. Sajal, SIA, on 6-8-1993, granted approval mentioning foreign participation as 88.88% and the Resident Indian holding as 11.12%. 16. On the arrangement entered between them, Dr. Kamal brought in medical equipment to the hospital in the years 1994 and 1995 from U.S.A., cost estimating to Rs. 3,05, 53,290/-. In pursuance thereof, the value of the equipment was recorded under the head of 'capital' as share application money for issuing 30, 55, 329 shares at the rate of Rs. 10/- each. 17. Dr. Kamal submits that Mr. Sajal admitted in various documents this fact of proposal for allotment of shares against equipment brought in by his brother, there is one document dated 25.8.1993 showing Mr. Sajal writing a letter to the firm of CAs at New Delhi for obtaining SIA approval for allotment of shares towards the medical equipment proposed to come to the company. When Kamal dispatched this medical equipment during the years 1994-1996, Sajal, who was in charge of the project implementation, installed this machinery in the hospital and made it ready for commercial use. Kamal says that the financial accounts which were passed by Sajal for the year end 31.3.1995, 31.3.199....
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....le Supreme Court on appeal, it confirmed the CLB order by reversing the order of Hon'ble High Court of Calcutta, holding that company shall maintain status quo ante to 16-4-1995, reverse every decision adverse to the interest of Kamal and he should be brought back as MD of the company, thereafter, pass a resolution in accordance with law. It is also said in many words that not allowing allotment of shares to Kamal by filing writ petitions repeatedly against Kamal itself amounts to oppression. 19. In pursuance of Hon'ble Supreme Court's order, Kamal held Board meeting on 16.9.2006 and passed a resolution allotting 30, 55, 329 fully paid up shares of Rs. 10/- each to himself against second hand equipment as part of capital contribution, subject to outcome of WP 1157/2004 pending before the Hon'ble High Court of Calcutta, Kamal says this allotment was done in furtherance of SIA and RBI approvals; therefore, there is no occasion to Sajal to impugn the allotment as contravening Section 81 of Companies Act, 1956. He says that the equipment was brought into the company during the period in between 1994 to 1995, thereafter it was quietly used by the company, therefore, it ....
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....inaugurated by Mother Theresa; the Hospital is still maintaining it on charity basis. 24. As to the allegation of suspension of cash credit facility by Bank of Baroda, Kamal says that the company, on "internal audit", ascertained that Sajal fabricated documents to procure cash credit facility from Sank of Baroda in 2003 for Rs. 1.5 Crores and siphoned off the funds of the company. Police Investigation is pending against this issue. In a Title Suit No. 13/2007 pending on the file of District Court of Alipur, the Court passed a restraint order against Sajal and Bank of Baroda on 25.4.2007, on which, Sajal went for revision, but the Hon'ble High Court of Calcutta refused to grant any stay over the restraint order passed against Mr, Sajal and the Bank. Seeing the restraint order slapped against Sajal, to counter blast to the same, Sajal filed this CP on 15.5.2007 under the cover of fictitious with collateral purposes to cause all possible obstructions to the functioning and development of business of this company. To compete with Rl Company, Sajal set up his own Hospital at a distance of 200 meters away from Ruby (Rl). 25. Kamal submits that the secured loans obtained by the comp....
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....and 24.7.1996, the decision to reflect those moneys brought in by Sajal group to the company as "disputed liability" in the Balance Sheet of the company in the Board Resolution dated 16.9.2006 amounts to oppression against Sajal or not. (c) Whether non-cancellation of allotment of 25,000 shares made to Dr. Kamal on 24.7.1996 is prejudicial to the interest of Sajal or not. (d) Whether the efforts made by Kamal to remove Sajal as Director of the company amounts to oppression and mismanagement or not. (e) Whether appointment of Arindam Samanta and Sudip Basu as directors of the company and appointment of Dr. A.K. Sanyal as director of the company amounts to oppression and mismanagement or not. 33. Before going into the merits of submissions made by the counsel, I believe I must place back-story and facts I believe as correct. I have culled out it from the observations made by this Company Law Board in the previous order, the Honorable Supreme Court of India In the Judgment dated 11-8-2006 and from the documents placed by the parties. I need not say separately this Tribunal has come into existence to ease the litigation from the bottle necks of civil procedure, I don't say Trib....
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....ereby or that Elder could have bought the shares had he been present, no complaint of oppression could be entertained merely on the ground that the failure to give notice of the Board meeting was an act of illegality. The true position is that an isolated act, which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which the object is to cause or commit the oppression of persons against whom those acts are directed.............." 36. Though many concepts such as dead lock situation, etc., subsequently evolved while dealing with cases of oppression and mismanagement, but it is nowhere laid down that every noncompliance of law per se would become oppressive, therefore, my point is, this Bench must throw its light on whether the acts complained of are just or unjust, equitable or inequitable, fair or unfair or it is only resentment of minority at being outvoted on some issues on domestic fr....
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....ith unlawful consideration, when it is entered with an unlawful object, when it is made without consideration, when it is in restraint of marriage of any major person (absolute restriction), when it is in restraint of trade (reasonable reason), when it is in restraint of legal proceedings, when the terms of it are uncertain, it is by way of wager (betting/gambling), when it is contingent upon happening of impossible event, when it is to do impossible acts. An agreement will become illegal only when law forbids it. 39. Kamal and Sajal are brothers, Kamal has settled in US as a doctor, whereas Sajal is comfortable in India with his business, both are well read people, thriving well in their positions. I have noticed initially Kamal and his friend Sinha, who is another doctor working in US, made up their mind to set up a Hospital In Kolkata, in pursuance of their idea, they took In Sajal and started a company making Sajal as resident Indian shareholder. All these three initially agreed to have 88.88% paid up capital from NRIs and 11.12% paid up capital from Indian Residents. Out of 88.88%, it was agreed that 44.44% through medical equipment and 44.44% through cash from NRIs, remainin....
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....years 1994 and 1995 by importing medical equipment valuing around Rs. 3.5 crores, apart from this, the balance sheet as at 31st March 1995 discloses the value of the equipment imported as on 31st March 1995 was shown as Share Application money to be allotted for consideration other than cash and this was signed by Sajal himself. In the notes on Accounts for the year ended 31st March, 1995, it is said share application Account represents funds received in cash or in kind from Kamal an NRI against which equity was yet to be issued pending receipt of approval of RBI under FERA 1973. The above sum also includes Rs. 74 lacs, which was initially credited to the Share Capital Account but later, it has been shown as Share Application Account Money pursuant to resolution passed by the Board, pending receipt of the approval of RBI. This notes was signed by Sajal himself in the capacity of Director. Even the Balance Sheet dated 31-3-1996 discloses the fact that Rs. 3, 74, 33, 580/- is pending as share application money to be allotted for consideration other than cash. Thereafter, Sajal made allotments unto himself on 12-3-1996 and 24-7-1996 reducing his brother and chief promoter of the compa....
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....ipments were second hand and this is how the hospital started functioning in 1995, it seems that it started running well but when it turned the leaf and showing some profitability then the trouble started brewing which led Dr. Dutta and Dr. Sinha to file the petition before the CLB under Sections 397 & 398 of the Act, in 1997. Therefore, it would not be right on my part to make any additional observations over it, when Apex Court already observed in the first round of litigation over this aspect saying what could be more oppressive than preventing Kamal from having shares issued to the equipment supplied by him. Let us see the observation of Supreme Court:- "Apart from this, one of the most important features which have weighed with us is that Dr, Kamal Kumar Dutta brought second hand equipments, those were cleared by the Customs and permission was granted by the RBI. The hospital started with those second hand equipments and for almost one year no grievance was made and the hospital was running successfully with these equipments. On 22.3.1997 the RBI granted permission for allotment of 30, 55,329 equity shares of Rs. 10/- each to the appellant No. l against supply of second band ....
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....nt is reduced otherwise against the equipments supplied by the appellant No. l to the tune of Rs. 3.5 Crore, he will have the majority in the shareholding of the company. Therefore, this persistent effort was made by the respondents by filing one after another writ petition before the High Court to somehow reduce the shareholding of the appellant No. l. These attempts speak volumes in the subtle design on the part of the respondent No. 2 to somehow see that the holding of the appellant No. 1 is reduced and the management is passed on to his hands by outstripping the appellant No. l from the office of the Managing Director by purchasing majority of shareholding pursuant to the resolution passed on 19.4.1995, he wanted to control the entire company. The filing of repeated writ petitions in Calcutta High Court at the expense of the company adversely affected the interest of the company. If this is not the oppression of the member under section 397 and bringing material change in the management under section 398 then what could be the better case than this. We fail to understand the view taken by the learned Single Judge of the High Court directing the appellants to file suit for redre....
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....pression and mismanagement against. Sajal as laid u/s 397 & 398 of the Companies Act, 1956 or not. 43. As to the first Issue, Shri S.N. Mukherjee, Sr. Counsel arguing on behalf of Sajal group submits that allotment of shares to Kamal without making any offer to the petitioners group is in violation of Section 81 of the Companies Act, 1956. He says no offer was made to the existing shareholders of the company vis-a-vis Sajal group to subscribe equity in proportion to Sajal's existing shareholding. Kamal has also not contended in his reply that Section 81 of the Act was complied with. The counsel says, Section 81 confers a valuable statutory right on the shareholders in a Public Limited Company such as Respondent No. 1 company, the rights issue shall be offered to existing shareholders in proportion to the paid up capital held by each of the share holders proportionately, but here no offer for subscription of shares had been made to Sajal group in proportion to his existing shareholding. He says it cannot be said that the allotment is covered by 81 (1A) of this Section because no special resolution has been passed for a preferential allotment of the said shares in favour....
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....ue shares in the capital of the company for any property sold or goods transferred or machinery supplied to the company. The respondents counsel submits that Article 129 of the Articles of Association is an additional residuary provision laying down that the control of all the business of the company on the Board entitling it to exercise all powers and all such acts and things as they may be authorized to do so, inter alia, by the Articles of the Association. This provision is an enabling provision vesting rights upon the directors to allot shares for consideration other than cash. 47. The respondents counsel further submits that Sec. 81 is a pre-emptive provision and extends only to the Issues equity for cash. In lieu of this principle, the counsel submits that Sec. 81 has in no manner in application to the facts and circumstances of this case. He further submits that Sec. 81 cannot come into play when an arrangement is initially made to issue shares to the promoters, and when there is an arrangement to issue shares to the machinery or something valuable come to the company, or when shares are issued to the first subscribers at the time of sending of Memorandum and Articles of As....
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....onsider the value of second hand machinery as capital In the company. To which, RBI held that Kamal is entitled to allotment of 30,55,329 shares to second hand equipment on non-repatriation basis. Of course, the Honorable High Court first directed RBI to hear Sajal and pass orders, when RBI stuck to its stand saying second hand equipment is good enough to become capital, by seeing such finding, Sajal filed another Writ saying the officer issued order is not competent to pass order, then on the order passed by the Honorable High Court in WP1997/1999, RBI passed another order reiterating that the company shall issue 30,55,329 shares of Rs. 10/- each against the second hand equipment on non-repatriate basis. Not being satiated by three orders come from RBI, again filed another Writ 1557/2004, this time High Court has not passed any order, but it is still pending before Honorable High Court, the latest development in that case is the company having come into the control of Kamal, the writ is dismissed against the company, the only party left contesting the writ is Sajal. 51. The petitioner counsel relied upon Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 1 CLJ 193 (SC) to say that K....
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.... Kamal but not Sajal. 53. The petitioner counsel also relied upon Clemens v. Clemens Bros. [1976] 2 All ER 268 to say if the effect of proposal for allotment is to reduce the shareholding of others, such resolution should be set aside. 54. In this case, the plaintiff held 45%, her aunt held 55% of the issued share capital of a family company. The aunt was a director of the company but the niece (plaintiff) was not. There were four other directors. The total directors' emoluments exceeded the company's net profit before taxation. In each of the years 1974. Then the directors proposed to increase the company's shares capital by creation of further 1650 ordinary shares with voting rights. The directors other than Aunt would receive 200 shares each and the balance of 850 shares would be placed in a Trust for long service of employees. On seeing this proposal, the plaintiff pointed out through her Solicitor that the scheme would reduce the plaintiff's shareholding to less than 25%, she therefore opposed to it. Ignoring the objection of her niece, the aunt voted against the adjournment sought on plaintiff's behalf and the three resolutions were then passed. Aggrieve....
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....nd his rights to this litigation raised by Sajal, it took another eight years for disposal of this CP. For the facts in the citation supra is not analogous to the facts of the present case, the ratio in the case supra is not applicable to the present case. 57. When the Respondent counsel relied upon Narayandas Shriram Somani v. Sangli Bank Ltd AIR 1966 SC 170 to say estoppel is applicable, the petitioner counsel also relied upon it to say that Indian Companies Act 1913 only says that interested Director's vote shall not be counted but whereas the Companies Act, 1956 says if interested director participated in voting, the resolution will become void. The Respondents relied upon this judgment to say that the doctrine of estoppel is applicable against Sajal, because he acted and dealt with the affairs of the company showing up that the medical equipment supplied by Kamal would be towards NRI shareholding in the company amounting to 44.44%. Since Sajal himself sent an application for allotment of shares to medical equipment to S1A, it cannot now be held to say that Kamal was interested in the allotment, therefore, he could not vote in favour of allotment. 58. On hearing the submi....
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....55, 329 shares in consideration to the medical equipment costing Rs. 3.5 crores, the Company asked for RBI permission for allotting those shares to Kamal, RBI indeed gave its approval for allotment of those shares to Kamal, that being the situation, where is the need for the Board or the Company to retook into allotment of 30,55,329 shares to Kamal. It is not the case of Sajal that Board has not agreed to allot 88.88% shares to NRIs, it is not the case of Sajal that Board has not agreed for allotment of shares to the medical equipment, it is not the case of Sajal that he has not applied for approval for allotment of 30,55,329 shares to Kamal in consideration to the equipment. It is also not his case that he was not privy to all the decisions taken by the Board and the company in sending application to RBI for approval for allotment of 30,55,329 shares to Kamal in consideration to the medical equipment. As to the allegation that it is second hand equipment and it was not in his notice until he saw a letter from IDBI, that issue will be discussed in the following paras. Since there being no denial from Sajal over company seeking approval for allotment of shares to Kamal from RBI, the....
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.... allotment of 30,55,329 shares to him. Therefore, I hereby hold that arrangement for allotment of shares for consideration other than cash i.e. medical equipment is a contract already struck in the past; therefore, it will not fall within the ambit of Sec 300 to say that Kamal should not exercise voting rights for he has conflict of interest as director of the company. Therefore, the ratio decided in the case supra is totally unrelated to the facts in this case; hence, the same is not applicable. 61. The petitioner counsel also relied upon Florence Land and public Works Company In re [1885] L.R. 29 Ch. D. 421, Associated Clothiers Ltd. v. Union of India AIR 1957 Punjab 261 and Gopal Jatan v. Calcutta Stock Exchange Association [1963] 2 CU 198 to say that allotment of shares is a contract. It may be true that allotment of shares is a contract, but ever/situation is to be read in the light of history of the facts to every particular act. Here, the company came into existence with arrangement of 88.88% shareholding from NRIs and only 11.12% from Resident Indian shareholding, this arrangement came into effect when Kamal supplied medical equipment worth Rs. 3.5 Crores into the company,....
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.... is not in their notice before. Since allotment of 30,55,329 shares to Kamal for supply of medical equipment is a fact already known to Sajal, non-giving of explanatory statement along with notice makes no difference. Therefore, the meeting and resolutions passed on 16-9-2006 will not become void for want of explanatory statement along with notice. 64. The petitioner also relied upon Loch v. John Blackwood [1924] All ER 200 Pg 203], Ebrahimi v. Westboume Galleries Ltd. [1972] 2 All ER 492 Pg 499, 500], Vijay Krishan Jaidka v. Jaidka Motor Co. [(1977) 1 CLJ 268 (CLB) Pg 284-288], Sangramsinh P. Gaekwad v. Shantadevi P Gaekwad [(2005) 3 CLJ 385 pg 450, 451] and Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holdings Ltd. [AIR 1981 SC 1298 pg 1319, 1320 & 1321] to say that R1 company is a family company, therefore, exercise of legal rights must be subject to equitable consideration. 65. It is true if at all it is a family company, the equities applicable to partnership are applicable. As I already said this company has not come into existence as a family company nor with the funds of the family, these two brothers have not even come into the company as equal partn....
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....the past by making allotment to himself, this time he tried to thwart the allotment by filing this litigation. Therefore, filing this case against Kamal itself is oppression against Sajal. He filed this case with an oblique motive to ensure that no allotment is made to the medical equipment by initiating this litigation. Therefore, the ratio decided above is not applicable to the present case. 70. The Respondents side counsel relied upon Automatic Self-Cleansing Filter Syndicate Co. Ltd. v. Cuninghame [1906] 2 Chancery 34, (CA) and Life Insurance Corpn. of India v. Escorts Ltd. (59 CC 548) to say that the division of power between the Board on the one hand and the company in general on the other, depends on the construction of Articles of Association; where powers are vested in the Board, the general body also could not interfere with the powers of the Board, this principle is looking right, but it has no relevance to the present case because it is no where disputed that the Board without power passed resolution, hence the citation supra is not applicable to the present case. 71. The Respondents counsel relied upon Sree Ayyanar Spinning and Weaving Mills (43 Com Cas 225, 231) and....
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....tled to allotment on par with NRIs. Therefore section 81 will not come into operation when allotment is made to the consideration come in kind the past as capital. Kamal already subscribed twenty years before since now, ten years before 2006, therefore the allotment made to it will on any ground falls within the jurisdiction of section 81 of the Act. 73. In section 81(1), a proposal for increase of capital shall be made, and this increase shall be on subscription of capital, on subscription, allotment will be proportionate to the shareholding of the existing shareholders. This section is applicable only when a proposal is made for Increase of subscribed capital, if fund is already subscribed, then I believe this section is not applicable, that means the subscription already made in the past on some arrangement and if the previous arrangement says shares shall be allotted to that subscription, then the company cannot say that shares will not be allotted unless section 81 is complied with. The main object under section 81 is to increase the subscribed capital of the company, when such increase takes place by subscription in a public limited company proportionate to the shareholding ....
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....on dealing with allotment of shares for consideration other than cash, except section 75 talking of filing return of allotment for consideration other than cash. As I already said, an allotment could be void only when law says every allotment made shall pass through section 81, I believe there is no such bar, if the company goes for a proposal to subscribe Capital for future needs of it, then alone subscription and allotment must be in compliance of section 81, here it is not the situation, 76. The Respondents counsel relied upon Hely-Hutchinson v. Brayhead Ltd. And another (1968) (1) Q.B. 549, Movitex Ltd. v. Bulfield and others (1988 BCLC 104), Narayan Das Shreeram Somani v. Sangli Bank Ltd (AIR 1966 SC 170), Sundararaja Pillai v. Sakthi Talkies (Dindigul) Ltd. (Madras) (1967) 37 Comp. Cas. 463, Seth Mohan Lal and another v. Grain Chambers Ltd. and others (AIR 1968 SC 772), Rolta India Ltd. v. Venire Industries Ltd. (100 Comp. Cas. 19) to say that there is no breach of duty for a director to enter into a fair contract with his company, moreover when the articles of the company (Articles 113 and 127 of the Company} clarifies that the interested director shall disclose nature of i....
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....ut mockery of justice. In the light of these facts, the interestedness attributed to Kamal in passing this resolution has no merit; accordingly the resolution passed allotting shares to Kamal is valid. 80. Whether, after cancellation of allotment of 3, 96,000 shares made to Sajal group on 12.3.1996 and 24.7.1996, the decision to reflect those moneys brought in by Sajal group to the company as "disputed liability" in the Balance Sheet of the company in the Board Resolution dated 16.9.2006 amounts to oppression against Sajal or not. 81. When the Board decided that the monies of Sajal remaining with the company do not Fall under any of the categories either as share application money, loan or debentures, the company would have returned the same on 16-9-2006 itself, since it has not been returned, the company is hereby directed to return the money of Sajal along with whatever interest accrued upon it as directed below. 82. Whether non-cancellation of allotment of 25,000 shares made to Dr. Kamal on 24.7.1996 is prejudicial to the interest of Sajal or not. 83. As to this issue, the Honorable Apex Court observed and gave a finding that all resolutions are set aside with regard to rais....
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.... of minority to see somebody on Board, that per se cannot be said an oppressive act against the minority, moreover the hallmark of democracy is majority rule prevails unless their acts are tearing into the shareholders rights and harmful to the company, there being no proof to say that these people continuing as directors is prejudicial to the interest of the petitioners or the company, there is no merit in the argument to declare their continuing on the Board as invalid, hence this issue is decided against Sajal. 88. As to miscellaneous allegations leveled by Sajal, I believe all these allegations were made so as to say that allotment is not a solitary act prejudicial to the interest of Sajal, there are other acts prejudicial to the interest of the company, but on seeing the allegations and counter allegations i don't find any of them worth to be considered as allegations to be tested on the fulcrum of 397 and 398 of the Act, therefore they have not been separately discussed, but on seeing the pleadings and defense to them, this Bench hereby held there is no merit in the allegations to label them as allegations falling under sections 397 & 398 of the Act 1956, therefore those....