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2015 (4) TMI 1186 - COMPANY LAW BOARD, MUMBAIOppression and mismanagement - conduct of EOGM - winding up petition - Held that:- The said transfer of shares in favour of the Respondent Nos. 5 to 12 being contrary to the AOA of the Company is illegal and against the provisions of the Company law and therefore, the impugned transfer of shares In favour of Respondent Nos. 5 to 12 is liable to be cancelled. As regards mismanagement in the affairs of the company, have also examined the allegation made by the Petitioner. To certain extent they are proved. The Respondents admittedly have not Issued the notices of the meetings to the Petitioner as required in law. They have failed to make compliances as required in law within the statutory period. It is also proved that they have fabricated the documents. They have also denied Inspection of the documents to the Petitioner for no valid reason, although, he was a shareholder and a Director. Therefore, of the view that these acts amounts to mismanagement in the affairs of the Company as defined in section 398 of the Act. All these instances amount to mismanagement in the affairs of the Company. It is a well established law that to maintain a petition under Section 397/398 of the Act, it must be established that the oppression complained of affected a person in his capacity or character as a member of the company as harsh and unfair treatment in any other capacity, such as a director or a creditor, is outside the purview of the said section; (b) there must be continuous acts constituting oppression up to the date of the petition; (c) the events have to be considered not in isolation, but as part of a continuous story; (d) it must be shown as a preliminary to the application of Section 397 that there are just and equitable grounds for winding up the company; (e) the conduct complained of can be said to be oppression only if it can be said that it is burdensome, harsh and wrongful and the oppression involves at least elements of lack of probity and fair dealing to a member in matters of proprietary right as a shareholder. Therefore, having regard to the facts of the case in hand, the necessary ingredients of the provision contained in Section 397 which provides that: "to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; also stands proved. A careful analysis of Section 397 would show that the winding up on just and equitable grounds would be automatic and this Board has to only form an opinion that such winding up would not be in the interests of the Company/shareholders and, accordingly, to mould relief with a view to put an end to the matters complained of. On a overall analysis of the facts of the case discussed hereinabove, in my opinion the Petitioner has succeeded to prove that the acts of the Respondents is burdensome, harsh and wrongful and lacks in probity and fair deal to the Petitioner. The effect of acts complained of is continuous in nature, the petition therefore deserves to be allowed.
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