AI Drafter 
TaxTMI 
TaxTMI 
2019 (6) TMI 1487
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.... the petition are as follows : "(i) Declare that the increase in authorized share capital of the company from 3,40,000 shares to 7,90,000 shares in 2011-2012 as illegal and void. (ii) Direct the rectification of the register of members of the company to reflect the issued and paid-up capital of the company as 3,40,000 shares of Rs. 10 each as held by the original subscribers to the memorandum of the company. (iii) Declare all annual returns/balance-sheets, forms and records filed on behalf of the company for the financial years 2011 to present, including Form 32 inducting the twelfth respondent as director to be invalid and not binding on the company. (iv) Surcharge respondents Nos. 5, 6 and 12 to the extent of losses caused to the company due to breach of their fiduciary duty and for various acts of misappropriation and fraud as detailed in the petition. (v) Pass such further or other orders as the hon'ble Bench may deem fit and proper in the circumstances of the case and render jus tice." 3. The petitioners state that the first respondent-company bearing Registration No. U28122TN2005PTC055993 was incorporated under the Companies....
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....A. Rathinasamy Nadar on October 17, 2009 the second respondent became the family elder and all other brothers including the petitioner began to conduct the business under his instructions and guidance out of respect. 9. The petitioners would further contend that in or about April 2004, the second respondent convinced the other brothers and family members that it would be beneficial for everybody if the partnership firm is converted into an incorporated company. Believing the representation of the second respondent, the family members agreed and the partnership firm was converted into a private limited company, viz., Thangam Metal Cans P. Ltd., on April 25, 2004. The capital standing to the credit of the partners was converted into shares and they were allotted shares to the extent in the company in proportion. The shareholdings of the different parties at the time of incorporation are as follows : Sl. No. Name, address, description and occupation of the subscribers No. of equity shares taken by each subscriber (1) Mr. L. Balaji, 10,000 S/o. R. Lenin No. 605, T. H. Road, Chennai-81. Business age-39 &n....
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....; No. 40 Muthusamy Street, Virudhunagar, Business age-61 (3) Mr. R. Srinivasan, 60,000 S/o. A. Rathinasamy Nadar, No. 40 Muthusamy Street, Virudhunagar, Business age-44 (4) Mr. L. Saravanan, 27,500 S/o. R. Lenin, No. 8, Patel Road, Virudhunagar, Business age-34 (5) Mr. M. Venkatesh Kumar, 8,500 S/o. R. Mahesh Kumar, No. 40 Muthusamy Street, Virudhunagar, Business age-22 (6) Mr. M. Rajesh Kumar, 9,000 S/o. R. Mahesh Kumar, No. 40 Muthusamy Street, Virudhunagar, Business age-20 (7) Mr. R. Krishna Kumar, 12,500 S/o. R. Srinivasan, No. 40 Muthusamy Street, Virudhunagar, Business age-20 (8) M. Ramkumar, 50,000 S....
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....er, minutes books, resolution copies, accounts, etc., along with the petitioners' representatives including their auditor and advocate on any date between December 22, 2014 and December 26, 2014. Though the letter was served on the said respondents, no reply was received by the petitioners. Therefore, the petitioners have stated that it is absolutely necessary that respondents Nos. 5 and 12, who are now the directors of the company be prevented from altering the share capital of the company. 14. Respondents Nos. 1 and 5 (hereinafter referred to as respondents) have filed reply statement on February 8, 2016 wherein it has been stated that the petition is not maintainable either in law or on facts. The petitioners complain about increase of authorized capital which happened in 2011 and 2012 and the petition has been filed long after the event. This is an isolated transaction and the petitioners do not make any other allegation of oppression or mismanagement and the petition is therefore not maintainable. 15. The respondents have stated that the issuance of further shares has been done in accordance with law. The company allotted the shares on December 30, 2011 as per the re....
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.... and the same was acknowledged by the petitioners. The annual general meeting was accordingly held on September 30, 2011. All the resolutions were passed unanimously. The petitioners did not take objection to the resolutions even after they were passed and they did not attend the meeting on September 30, 2011. 19. It is stated by the respondents that since the petitioners failed to subscribe, on December 27, 2011 one B. Adhithya Kumar, a member of the company agreed to subscribe to the additional shares and issued cheque No. 761961, dated December 27, 2011 drawn on UCO Bank. The said amount was duly credited to the account of the first respondent-company. On December 27, 2011 another person, viz., B. Ram Kumar, a member of the company agreed to subscribe to the additional shares and issued a cheque No. 761001, dated December 27, 2011 drawn on UCO Bank. The said amount was also duly credited to the account of the first respondent-company. The fifth respondent, viz., L. Balaji, had already brought in Rs. 6,00,000 towards future allotment of shares as required by the bank as early as 2007 and the said amount has been shown as opening balance under the share application account. The....
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.... by the petitioners in the year 2008 were in competition with the first respondent-company. The concerns run by the petitioners were based in Virudhunagar and supplied tin cans to customers in and around Virudhunagar whereas the first respondent-company has no presence outside Chennai and supplies to customers in other States such as in Cochin and Bangalore. The businesses of the petitioners have absolutely no effect on the business of the first respondent-company. 23. The petitioners have denied that notice of the sixth annual general meeting along with the accounts and balance-sheet were sent to the petitioners on August 30, 2011. What was sent to petitioners was only an inland letter weighing 10 gms, containing notice of the annual general meeting typed on the same, with no agenda with respect to any allotment of shares. No accounts or documents could have been enclosed to the said notice because it was an inland letter to which there can be no enclosures. The averment that the company also forwarded a letter dated August 30, 2011 to the petitioners offering their proportionate shares in the further issue are denied as false and baseless. No such letter was ever received by t....
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....e allotment was made on September 30, 2011 and the petition is filed on February 9, 2015 after the lapse of three years. However, it is settled proposition of law that if the alleged wrongful act is such that its effect is continuous course of oppression and there was no prospect of remedying the same then the Tribunal is entitled to interfere by passing an appropriate order. The alleged increase of authorised share capital and allotment of share without proper notice and offer to the petitioners is wrongful act which has the recurring effect on the rights of the petitioners, who are the shareholders. In view of it, the act complained of is not an isolated act, therefore, the petition is not barred by the law of the limitation and maintainable. 28. In relation to issue No. (ii), the petitioners would contend that for three years they did not get any notice regarding the affairs of the company or any annual general meeting and no dividend was paid to the petitioners and the shareholdings of the petitioners have been diluted heavily that too without any intimation by increasing the share capital of the company to 7,90,000 shares from the year 2012 and allotting the same without an....
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....xth annual general meeting and offer to the petitioners for subscribing the shares. 30. Further, the share allotments made on December 30, 2011 in favour of the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively seem to have been made by the respondents for creating a new majority due to which the existing shareholders were reduced to minimal position. This is in breach of fiduciary duty and constitutes an act of gross oppression. In this connection, reliance is placed upon the case of Uma Pathak v. Eurasian Choice International P. Ltd. reported in [2004] 122 Comp Cas 922 (CLB). 31. Moreover, the claim of the respondents that the notices of subsequent annual general meetings were served to the petitioners do not justify the increase of the authorised capital of the company and allotment of the shares in favour of the fifth respondent, his two sons and wife, i. e., tenth, eleventh and twelfth respondents respectively. However, the acknowledgments placed on file as proof of sending notices cannot be relied upon without corroboration of services of notice, when there is no collateral evidence like dispatch register showing paymen....