TaxTMI 
TaxTMI 
TaxTMI 
2006 (6) TMI 518
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....siding at Sharjah (U.A.E) and is the wife of Late Satpal Sharma. The Respondents 2, 3 and 5 are the sons of the petitioner. The Respondent No. 5 who is residing at Sharjah (U.A.E) is supporting the petitioner. The petitioner is holding 26,787 shares in the Company. The shareholding pattern of the Company is as follows: a) Petitioner 26,787 shares b) Respondent No.2 19,255 shares c) Respondent No.3 4,458 shares d) Sunil & Sanjeev Trusts 2,000 shares Total 52,500 shares The late husband of the petitioner became the director of the Company in the year 1967. The Respondent No. 2 being the eldest son became the Executive Director in the year 1981 and became the Chairman in 1987 on resignation tendered by his father. The Respondents No. 3 & 4 became the directors of the Company in 1986. The Respondents No 2 to 5 are the present directors of the Company. The petitioner states that the Respondent No. 3 has filed a suit in the High Court at Mumbai against the petitioner, Respondents No. 2 & 5 and the daughters of the petitioner for administration of the estate of the petitioner's husband on the ground that the deceased did not execute any Will. The petitioner states that her....
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...., since the Company appears to have failed to furnish the documentary evidence in compliance of Exports obligation during that period. The petitioner states that notices referred to above which are from the Sales Tax Authorities, Customs Department, Enforcement Department of DGFT and Excise Department clearly shows that the working of the Company is not properly done by the Respondent No. 2 and is a clear act of mismanagement. The petitioner has also learnt that the Gujarat Electricity Board has started proceedings against the Company on the ground of theft of electrical energy, The Gujarat Electricity Board Appellate Committee has given its findings against the Company. The Company has filed Special Civil Application bearing No. 2398 of 2001 in the Gujarat High Court for quashing and setting aside the said findings passed by the Appellate Committee. The Gujarat High Court by an order dated 5.11.2001 has given liberty to the Company to approach the Appellate Committee for reconsideration of the case on the question of theft of electric energy and the quantum of bill raised. The alleged demand of ₹ 21.35 lacs by the Electricity Board against the Company is pending for reconsid....
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....on with ulterior motive. The Respondents further stated that though the question of limitation is not involved in filing the present petition but the principle of delay and acquiescence should be applied to the facts of this case. The Respondents stated that the petitioner has deprived and is still depriving the Company from its legal and legitimate rights of receiving royalty amount from M/s. Shattaf Anand Steel Rolling Mills Private Limited at Sharjah (UAE). The petitioner has received the royalty amount and not passed on to the Company being legally entitled thereto. The Respondent Company has served legal notice to the petitioner and Respondent No.5 demanding payment of the said royalty. But the petitioner has not cared to reply to the said legal notice. The allegations of mismanagement against the answering Respondents are general in nature and have not been supported by evidence. The allegations in the petition pertain to the period of the life time of Late S.P. Sharma (Late husband of the petitioner). The Respondent No. 2 has already taken timely action to challenge various demands. The petitioner alongwith supporting Respondent No. 5 have not approached this Board with clea....
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....ch the Appellate Committee for reconsideration of the case on the question of theft of electric energy and the quantum of bill raised. The Advocate for the petitioner further submitted that the show cause notice was issued by the Commissioner of Central Excise, Ahmedabad on 2nd March, 2000 against the Company as to why the duty amount of ₹ 13,21,483/-, ₹ 4,46,378/- and ₹ 23,40,811/- and penalty should not be imposed on the Company. The advocate further submitted that the husband of the petitioner expired in 1999 and the Respondent No. 2 being the Mg. Director of the Company mismanaged the affairs of the Company and accordingly the petitioner prays for orders in terms of the prayers of the petition. In support of his arguments the advocate for the petitioner cited the judgment of CLB reported in (1997) 3 Co. Law Journal 331 CLB in the matter of K. Narain Das v. Bristal Grill (P) Ltd. and Ors. 5. Mr. Ajay Kumar, Practicing Company Secretary, appearing for the Respondents No. 1 to 3 reiterated the facts stated in reply and submitted that the rejoinder filed by the petitioner is not affirmed before the Notary Public and the said rejoinder should not be taken on recor....
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....s also empowered to appoint her nominee as directors of the Company. The petitioner as a shareholder of the Company is entitled to inspect the Annual Returns and Balance sheets of the Company and she is also entitled for copies of the Annual Returns and Balance sheets of the Company. However, the petitioner has never requested for the same. The petitioner has alternative remedy than the extreme action under Section 397/398 of the Companies Act. The Company is holding regular board meetings, AGMs and filing statutory returns with the ROC. The petitioner has failed to establish that there is a mismanagement in the affairs of the Company. The Company has not removed the Respondent No. 5 who is supporting the petitioner, from the Board of Directors though he is not regular in attending the board meetings. The Respondent No. 5 is not taking any interest for the progress of the company. Since the Company is functioning smoothly there is no need to appoint any Administrator/Special Officer to oversee the affairs of the Company and there is also no need to appoint any auditor to investigate the affairs of the Company. The petition under Section 397/398 is not maintainable against the Compa....
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....ny party without proper authority. As such I am of the view that the above judgment cited by the petitioner's advocate is not applicable to the present case. Mr. Ajay Kumar, Practicing Company Secretary, appearing for the Company argued that there was inordinate delay in filing the present petition and no relief under section 397 should be given to the petitioner. In support of his argument he cited the judgment reported in (1976) Tax LR 1682 Calcutta High Court. In the case of the above referred judgment the petition was filed after three years of knowledge and the High Court held that there was inordinate delay. In the present case the petitioner came to know in 2001 and filed the present petition in 2002. This short delay cannot be considered as an inordinate delay. The above judgment cited by Mr. Kumar is not applicable. Mr. Kumar cited the judgment reported in (1997) 88 Company Cases 274 Madras High Court to establish that non payment of dividend by the Company and the loss incurred by the Company cannot be the ground for an order under section 397 of the Companies Act. Both the conditions in Clause (a) or Clause (b) of Sub-section (2) of section 397 must exist before the ....