TMI Blog2002 (2) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was originally carrying on the business of manufacture and sale of beedies, as a sole proprietor. Thereafter, the first petitioner started a partnership firm in the name and style of M. K. Krishnan and Sons, with respondents Nos. 2 and 3 as equal partners. The first petitioner had also acquired the beedi business carried on by one Shri P. R. Ramaier in the name and style of Asal Malabar Beedi Depot, upon which a partnership deed dated July 17, 1972, was entered into with respondents Nos. 2 and 3, as equal partners. The firm M. K. Krishnan and Sons supplied beedies to Asal Malabar Beedi Depot. In the meanwhile, the first petitioner was also carrying on the business of manufacture of beedies under a sole proprietorship concern in Kerala, The first petitioner was constrained to leave in 1975-76, the partnership firm on account of the financial problems faced by him in his proprietary concern business in Kerala and to avoid any adverse impact on the partnership business. The first petitioner after settling the liabilities on account of the proprietorship concern, was readmitted into the partnership firm in the year 1991 by virtue of a partnership deed dated April 1, 1991, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt made in the petition have got to be accepted. The plea of the respondents that the allotment was made in favour of respondents Nos. 3 to 9 to bring younger people for management is not justified in the absence of maintaining parity by such allotment in favour of younger members belonging to the first petitioner. In the circumstances, Shri Datar reiterated that the company should be directed to allot such number of additional shares to the members of the petitioners family so as to achieve parity of shareholding among the families of the first petitioner and respondents Nos. 2 and 3 and order payment of unpaid dividend to the petitioners for the past three years including dividend accruing to the shares due to be allotted to the petitioners' family members. 4. Shri Datar, in support of his legal submissions relied upon the following decisions : (i) Ms. Pushpa Prabhudas Vora v. Voras Exclusive Tools Private Ltd. [2000] 101 Comp Cas 300 (CLB); [2000] 3 Comp LJ 271, to show that in a family company, where there is parity in shareholding, any change in the shareholding, without mutual agreement, is an act of oppression. (ii) S. T. Ganapathy Mudaliar v. S. G. Panduranga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness run by the first petitioner and respondents Nos. 2 and 3, the first petitioner voluntarily retired from the partnership in the year 1975. Thereafter from 1975 till 1991, the second and third respondents made all the efforts in building up the business of the firm increasing the turnover from ₹ 1 lakh to ₹ 6 crores in the year 1991, during which time the proprietorship concern of the first petitioner was closed down. The first petitioner never contributed anything to the growth of the business of the firm or the company. After incorporation of the company in October, 1992, the business of the firm was transferred to the company and was efficiently carried on by the second and third respondents as whole-time directors. Though the first petitioner received salary from the company, he did not participate in the management of the company. The first respondent did not attend three consecutive board meetings held prior to November 8, 1997, in spite of the notices ( annexure E, F and G) sent by the company and therefore ceased to be a director. At the request of the first petitioner, he was again reinducted on the board in April, 1998, but he was not attending the board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in which case, according to Shri Datar, there is no necessity to increase the paid-up capital. He invited our attention to the fact that the first petitioner was removed in ' December, 1997, and the impugned shares were allotted immediately in December, 1997, in exclusion of the petitioners, without any justification. This, according to Shri Datar, is with mala fide intention. He reiterated that though there is no written agreement regarding equal shareholding, there has been a tacit family arrangement as borne out by the partnership deeds entered into between the first petitioner and respondents Nos. 2 and 3 from time to time and the conduct of the parties by subscribing to 100 shares each at the incorporation of the company. He, therefore, reiterated that the petitioners must be allotted additional shares so as to have equal shareholding with respondents Nos. 2 and 3. 7. We have considered the pleadings and arguments of counsel. 8. The facts not in dispute are that the first petitioner and respondents Nos. 2 and 3, being brothers were carrying on the business in beedies as equal partners since the year 1972. Subsequently in the year 1975, the first petitioner retired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners when new shares were allotted. The respondents have not acted fairly but in a manner oppressive to the interests of the petitioners. However, we do not propose to set aside the impugned allotments in view of the fact that the allotment money has been utilized for the business of the company. We propose to restore parity among the three groups. Therefore, out of 2,100 shares newly allotted, the petitioners' group should be entitled to 33.33 per cent of the shares, which works out to roughly 700 shares. In case the petitioners are willing to acquire these shares respondents Nos. 3 to 9 should transfer to the petitioners these 700 shares at the consideration paid by the respondents when they were allotted shares by the company. The option to get the shares transferred should be exercised before April 30, 2002, by a notice to the company, together with a demand draft for the amount of consideration for these shares. Once the notice is received by the company along with the consideration as above, the company will arrange for getting the transfers effected by respondents Nos. 3 to 9 within 15 days thereafter and register the transfers within further ten days. Identification o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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