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2015 (9) TMI 1069 - Board - Companies LawOppression and mismanagement - illegal removal of the Petitioner as a Director of the Company - illegal increase in the authorized share capital - Respondent No. 3 has been illegally appointed with a view to gain control over the management of the Company by the Respondent No.2 alone - siphoning off funds and non-payment of dividend - Held that:- It is a well-settled proposition of law that if a party approaches a court for redressal of his grievances under equitable jurisdiction, he must come with clean hands and, in case, such party conceals any material facts or suppresses the relevant documents, he is not entitled to the discretionary reliefs from the court. - Petitioner has suppressed any material facts or documents in this petition. Therefore, this preliminary objection is also not tenable and deserves to be rejected. Regarding illegal increase in the authorized share capital - Held that:- Undisputedly, the Respondent No.3 became a shareholder only on 1/9/2007 and could not be present at the said meeting as he was not a shareholder then. The said meeting was not held at the registered office of the company. All these reasons clearly go to prove that the purported meeting held on 18/6/2007 for Increasing the authorized share capital of the company was not held in accordance with law. The decisions taken at the said meeting smack mala fide intention on the part of the Respondents. - the resolutions deserves to be set aside. Regarding illegal allotment of additional shares to the Respondent Nos. 2 and 3 - Held that:- Where the Directors seek, entering into an agreement to issue new shares, to prevent a majority shareholder from exercising control of the Company, they will not be held to have failed in their fiduciary duty to the Company if they act in good faith In what they believe, on reasonable grounds, to be the interests of the Company, but if the power to issue shares is exercised from an improper motive, the issue is liable to be set aside and it is immaterial that the issue is made in bona fide belief that it is in the interest of the Company. - allotment of shares was mala fide and purpose was to gain control and management of the Company - allotments are bad in law and deserves to be set aside. Removal of the Petitioner as a Director of the company - Held that:- The Petitioner is admittedly has been primary director of the company ever since his induction as the shareholder since 1996 and 1976 and has also been the chairman of the company. In a family company, undisputedly, the principles of quasi-partnership do apply. - the petitioner has been removed as a Director illegally without following due course of law. Further, the Company is in the nature of quasi-partnership, hence, the removal of the Petitioner as a director amounts to an act of oppression. 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 are burdensome, harsh and wrongful and lack 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. To bring an end to the acts complained of and to do substantial justice between the parties. - Respondent No.2 has siphoned off the Company's funds, and the company has suffered loss, the same shall same shall be reimbursed by the Respondent No.2. - Special Auditor Appointed - Decided in favor of appellant.
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