2001 (1) TMI 997 - Board - Companies Law

Summary

Issues Involved:
1. Illegal allotment of shares in 1979.
2. Alleged acts of oppression and mismanagement by the second respondent.
3. Alleged misappropriation of funds and properties of the company.
4. Alleged misuse of the properties of the company.
5. Increase of capital and allotment of shares in 1998.
6. Appointment of an administrator in supersession of the board of directors.
7. Awarding damages for wrongful acts of the second respondent.
8. Declaration of the special resolution passed at the general meeting held on 25-11-1998 as illegal and void.
9. Declaration that the issue of share capital between 4-12-1998 and 26-12-1998 is null and void.
10. Declaration that respondents 2 to 10 have no authority to alienate or deal with the company's properties.

Detailed Analysis:

1. Illegal Allotment of Shares in 1979:
The petitioner alleged that the company illegally allotted 30,250 shares in favor of respondents 3, 4, and two other members in 1979, making the third respondent the majority shareholder. However, the High Court had already addressed this issue in CP No. 49 of 1987, and the petitioner is barred from raising the same issue again under the principle of res judicata.

2. Alleged Acts of Oppression and Mismanagement by the Second Respondent:
The petitioner claimed that the second respondent mismanaged the company, leading to its bankruptcy and the disappearance of its plant and machinery. The second respondent was also accused of encumbering the company's properties and misappropriating funds. The High Court had previously considered these allegations and passed appropriate orders, barring the petitioner from raising them again.

3. Alleged Misappropriation of Funds and Properties of the Company:
The petitioner alleged misappropriation of funds and properties by the second respondent, including the unauthorized sale and lease of company land. The High Court had already addressed these issues, and the petitioner is barred from raising them again. The current board of directors was elected in compliance with the High Court's orders, and the second respondent has since resigned.

4. Alleged Misuse of the Properties of the Company:
The petitioner claimed that the second respondent misused the company's properties by leasing them out without proper agreements and selling land without accounting for the proceeds. The High Court had previously considered these allegations, and the petitioner is barred from raising them again.

5. Increase of Capital and Allotment of Shares in 1998:
The petitioner argued that the increase in share capital and the allotment of shares on a rights basis were unnecessary and aimed at diluting his shareholding. The board of directors decided to issue further shares considering the financial needs of the company, which was approved by the general body. The Company Law Board found this action bona fide and in the interest of the company, allowing the petitioner to apply for his rights entitlement.

6. Appointment of an Administrator in Supersession of the Board of Directors:
The petitioner sought the appointment of an administrator to replace the board of directors. However, the board was elected following the High Court's directions, and the second respondent has resigned. Therefore, this prayer does not arise.

7. Awarding Damages for Wrongful Acts of the Second Respondent:
The petitioner sought damages for the second respondent's wrongful acts but failed to provide particulars of any improper activities after the High Court's order. The High Court had already concluded that the petitioner had not established misappropriation of funds, and no further directions were sought.

8. Declaration of the Special Resolution Passed at the General Meeting Held on 25-11-1998 as Illegal and Void:
The petitioner challenged the resolution to raise the company's capital, arguing it was unnecessary and aimed at diluting his shareholding. The Company Law Board found the decision to raise capital bona fide and in the company's interest, thus not supporting the petitioner's claim.

9. Declaration that the Issue of Share Capital Between 4-12-1998 and 26-12-1998 is Null and Void:
The petitioner argued that the issue of share capital during this period was unnecessary and aimed at diluting his shareholding. The Company Law Board found the decision to raise capital bona fide and in the company's interest, thus not supporting the petitioner's claim.

10. Declaration that Respondents 2 to 10 Have No Authority to Alienate or Deal with the Company's Properties:
The petitioner sought a declaration that respondents 2 to 10 have no authority to deal with the company's properties. The petitioner failed to justify this prayer with proper material against the new board of directors, and it was not considered.

Conclusion:
The petition was disposed of with no order as to cost, with the Company Law Board finding that the issues raised by the petitioner had already been addressed by the High Court or were not supported by sufficient evidence. The decision to raise capital was deemed bona fide and in the company's interest.