2007 (11) TMI 682 - Board - Companies Law

Summary

Issues involved:
Consideration for shares not paid, maintainability of petition u/s 399 of Companies Act, 1956, allegations of oppression and mismanagement.

Summary:

Consideration for shares not paid:
The petitioner had subscribed to 2,000 shares at the time of incorporation but they were not issued to him. The respondents argued that since the petitioner had not paid the consideration for the shares as agreed in the memorandum, he cannot be considered a member for the purposes of Section 399 of the Act. The petitioner contended that he was willing to pay for the shares but the respondents refused to accept the payment, which he considered as an act of oppression against him.

Maintainability of petition u/s 399:
To maintain a petition under Section 397/398 of the Act, the requirements of Section 399 need to be fulfilled. Section 399 specifies that only a member who has paid all calls and other sums due on their shares can apply under Section 397 or 398. In this case, the petitioner had subscribed to the memorandum, his name was entered in the register of members, and he was allotted 10,000 shares. However, he had not paid the consideration for the 2,000 shares he agreed to subscribe, which became due immediately on incorporation. The petitioner's offer to pay was conditional on the respondents also contributing, which they did not agree to. As a result, the petitioner failed to fulfill the requirements of Section 399, and the petition was dismissed as not maintainable.

Allegations of oppression and mismanagement:
The petitioner alleged oppression and mismanagement by the respondents for not accepting his payment towards the shares and for claiming that he cannot maintain the petition due to non-payment of consideration. The petitioner argued that the respondents' refusal to accept his payment was oppressive, and he was willing to contribute if the company agreed. However, the Board found that the petitioner had not paid the consideration due on the shares, making the petition not maintainable under Section 399 of the Act.