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2005 (6) TMI 565 - Board - Companies LawOppression and Mismanagement - allotment of additional shares - fabricating the minutes books and by filing fake returns before the Registrar of Companies (ROC) - removal of directors in terms of Section 283(1)(g) of the Companies Act, 1956 (the Act) - HELD THAT:- There is no denial by the respondents of the veracity of the minutes. In addition, the Annual Report filed with the Registrar of Companies as on 30th September, 2000 indicates that the 1st and 3rd petitioners were in office on that date and this Annual Return has been signed by the 2nd respondent and the 1st petitioner. Thus, the contemporaneous records signed by the 2nd respondent himself indicate that the 1st and 3rd petitioners were directors on 30th September, 2000 and as such they could not have been declared to have ceased as directors on 14.8.2000 and any record contrary to the contents of the Annual Return as on 30.9.2000 has no validity especially since other than enclosing photocopies of the certificates of posting about which the learned counsel for the petitioners has brought out various infirmities, the respondents have not brought on record any other document as indicated earlier. Therefore, considering all the facts, I declare that the 1st and 3rd petitioners have not ceased to be directors in terms of Section 283(1)(g) of the Act and they continue to be the directors on the Board of Limrose. As far as induction of the respondents 4 and 5 as directors is concerned, Even assuming that the authorised capital was in fact increased in an EOGM actually held on 14th August, 2000, there is nothing on record justifying allotment of further shares. It is a settled law, as has been recently reiterated by the Supreme Court, in Dale & Carrington Investment Pvt. Ltd. v. P.K. Prathapan [2004 (9) TMI 385 - SUPREME COURT] and Sangram Sinh P. Gaekwad v. Shanta Devi P. Gaekwad [2005 (1) TMI 409 - SUPREME COURT] that any allotment of further shares should be for a proper purpose, bonafide and in the interest of the company and cannot be for the purpose of creating a new majority. In the reply filed by the company, no justification has been given for allotment of further shares which has resulted in creation of a absolute majority in favour of the 2nd respondent's group. Therefore, the purported allotment deserves to be cancelled and accordingly I do so. In view of my findings that the 1st and 3rd petitioners could not have be held to have ceased to be directors and that the allotment of shares was made solely with a view to create a new majority, I direct the restoration of status quo as existed before 14th August 2000 in respect of the Board of Directors as well as authorized and paid up capital of the company. These directions will take immediate effect and the records of the company shall be suitably rectified. All returns/documents filed by the company with the ROC in respect of the affairs of the company that are contradictory to the contents of the Annual Return as on 30.9.2000 are declared as null and void and under the authority of this Order, the ROC will ignore/reject all such returns/documents. The learned counsel for the respondents, Shri Ganesh, urged that the 2nd respondent was willing to restore the status quo provided his position in Palanpur Unit is also restored. As rightly pointed out by the learned counsel for the petitioners, such a direction is beyond the scope of the petition and cannot be acceded to. The petition is disposed of in the above terms with no order as to cost.
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