2008 (2) TMI 922 - Board - Companies Law

Summary

Issues Involved:
1. Non-sending of notices for general meetings.
2. Non-appraising of affairs of the company.
3. Denying access to registered office of the company and statutory records, books of account, and other records of the company.
4. Non-availability of statutory records, books of account, and other records at the registered office of the company.
5. Sharing of profits of the company among respondents Nos. 2 and 3 and other family members in exclusion of the petitioners and non-payment of any dividend to members.
6. Siphoning off funds and treating of trawlers of the company as if personal assets of the respondents.
7. Illegal attempts for sale of trawlers.
8. Indiscriminate allotments of shares.
9. Transfers of shares in contravention of articles of association of the company.
10. Non-maintenance of board minutes in accordance with requirements of section 193.

Detailed Analysis:

Preliminary Objections:
The petition was initially filed by two petitioners, with one withdrawing later. The Company Law Board permitted the substitution of another petitioner, making the petition maintainable under section 399. The power of attorney executed by the second petitioner, though unstamped and undated, was found valid for filing the petition. The power agent, Mr. Nevil A. Kattar, was deemed to have sufficient authority to represent the petitioners.

1. Non-sending of Notices for General Meetings:
The company provided evidence of convening annual general meetings and maintaining statutory records. The petitioners failed to demonstrate any prejudice from non-receipt of notices. The petitioners' delayed complaints and lack of initiative in obtaining company records weakened their case. The Board found no merit in the petitioners' claims regarding non-sending of notices.

2. Non-appraising of Affairs of the Company:
The company had been maintaining proper books of account and statutory records, as evidenced by compliance certificates and auditor reports. The petitioners' lack of diligence in exercising their rights as shareholders and the absence of any material prejudice led to the dismissal of this grievance.

3. Denying Access to Registered Office and Statutory Records:
The advocate commissioner's report indicated that statutory records were not available at the registered office but were with the company's chartered accountant. The Board directed appropriate remedial measures to ensure future compliance.

4. Non-availability of Statutory Records at Registered Office:
Similar to the third issue, the Board found that while records were not at the registered office, they were maintained by the chartered accountant. The company was directed to ensure proper maintenance and availability of records.

5. Sharing of Profits Among Respondents and Non-payment of Dividends:
The memorandum of understanding among certain family members to share profits was found oppressive to other shareholders. The Board noted that the company had accumulated losses and any failure to declare dividends was not considered oppressive. The respondents were held accountable for the operations and financial dealings since November 1994.

6. Siphoning off Funds and Treating Trawlers as Personal Assets:
Evidence indicated that respondents treated company trawlers as personal assets and shared profits among themselves. The Board found this conduct oppressive and against the interest of the company and its shareholders. The respondents were directed to reimburse any diverted funds.

7. Illegal Attempts for Sale of Trawlers:
Attempts to sell trawlers without proper authorization were deemed illegal. The Board mandated that any decision regarding the sale of trawlers must be taken at a general meeting of members.

8. Indiscriminate Allotments of Shares:
The company had historically allotted shares disproportionately. The petitioners' delayed challenge to the allotments made in 1987 and 1992 was dismissed due to acquiescence and lack of timely action.

9. Transfers of Shares in Contravention of Articles of Association:
The petitioners failed to provide specific details regarding the impugned share transfers. The Board found the allegations vague and unsupported by necessary particulars, leading to the dismissal of this grievance.

10. Non-maintenance of Board Minutes:
The Board found that the company had been maintaining statutory records and books of account as required by law. The petitioners' allegations of non-compliance with section 193 were not substantiated.

Conclusion:
The Company Law Board directed the appointment of a chartered accountant to scrutinize the company's financial transactions since April 1, 1994. The respondents were ordered to reimburse any diverted funds. The company was instructed to maintain statutory records and send notices of general meetings to the petitioners by registered post. The main petition and connected applications were disposed of, with no costs awarded.