9911796707
TMI Blog2009 (2) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... company was incorporated with authorised share capital of Rs. 20 lakhs (20,000 equity shares of Rs. 100 each). At the time of incorporation, the Gupta group subscribed 1,722 equity shares and the Garg group was allotted 1,662 equity shares. The shareholding between the two groups was accordingly in the ratio of 50.9 per cent, 49.1 per cent. This company purchased a sick unit from the UPFC in the year 1985 consisting of land at GT Road, Industrial Area, Ghaziabad, measuring 7,215 sq. yards along with the plant and machinery. The company operated the aforesaid unit for few years after its purchase. However, in October 1994, this unit had to be closed down. The reasons were stated to be non-installation of water treatment plant for pollution control and non-payment of Government dues. Both the groups alleged non co-operation and mismanagement against each other. 4. After the closure of the aforesaid unit, disputes arose between the parties. Both the parties referred the matter to arbitration. Three, arbitrators were appointed who gave their awards. In the final award given on 18-4-1998, the arbitrators, inter alia, concluded that the aforesaid unit should be divided equally between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p as it is held that appointment of Mr. Parmanand as additional director was invalid. Likewise, removal of Mr. Girdhar Gopal Gupta and Mr. Ram Narain Gupta as directors was also held to be illegal. 10. The Gupta group has preferred Co. A. (SB) No. 9 of 2004 against that portion of the order whereby allotment of 3,943 shares is not disturbed. The Garg group on the other hand, filed Co. A. (SB) No. 11 of 2004 in respect of other findings which were returned in favour of the Gupta group. That is how these appeals were heard together and were disposed of by a common order. 11. Insofar as issue of allotment of shares is concerned, the Board in paragraph 12 held as follows : "The last point for consideration is the allotment of 9,507 equity shares which have been allotted on 25-6-1994, 20-10-1994 and 9-1-1995. The respondents have failed to produce notice/minutes of the board meeting in which 9,507 shares were allotted. The return of allotment of shares in Form No. 2 has been filed in one lot on 20-8-1998, with the Registrar of Companies after a delay of four years. The respondents have submitted that in the balance-sheet signed of 1993-94 by the petitioner indicated application money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The High Court noted that the respondents never came out with a case that there was no such notice for allotment of shares given to the existing shareholders or there was any such decision taken by the board of directors for allotment of shares. That part of the Board's order was therefore confirmed. 15. The residual issue was the balance 3,943 shares. Here again, a categorical finding recorded was that there was no notice or board's decision for allotment of shares. However, the benefit of doubt was given as share application money was reflected in the balance-sheet of the company as on 31-3-1994. It indicated share application money of Rs. 3,94,320. The original balance-sheet was produced which shows that it bears the signature of Mr. Girdhar Gopal Gupta as well as Mr. Guru Charan Dass Garg. The Board from the aforesaid entry in the balance-sheet came to conclude that allotment of these shares were within the knowledge of the Gupta group. The High Court held that such knowledge cannot be ruled out. It was inferred that the Gupta group had information about the allotment of shares in the year 1994 and challenge was made only in the year 2001. Accordingly, it was held that the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not belated. Oppression in converting majority shares to minority shares is continuous one and, therefore, there is continuous oppression. It is stated that the appellants learnt about the ostensible issue of shares by the respondents only when they carried out the inspection with the Registrar of Companies in the year 2000. The appellants sent a letter on 3-4-2000, to the respondents intimating about the issuance of shares. Since there was no satisfactory reply, the petition under sections 397 and 398 of the Act was filed. 20. Sofaras the receipt of share application money is concerned the balance-sheet only shows that it was under the head of "share application money" and there was no allotment. 21. In response, learned counsel for the respondents submitted that the case of the appellants before the Board was that the respondents have raised the share capital of Rs. 3,94,320 by allotting 3,943 shares at Rs. 100 each on 25-6-1994, 20-10-1994 and 9-1-1995, without issuing notice of such meetings to the appellants. It is pointed out that admittedly meetings were held at the registered office of the company, i.e., the residence of the appellants and as such allotments made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same was to be treated as share capital in the next financial year ending on 31-3-1995. 23. To give effect to the understanding, the same was converted on 25-6-1994, 20-10-1994 and 9-1-1995. Resolution dated 21-4-1997, was passed and signed by appellant No. 1 authorising respondent No. 2 for getting sales tax and income-tax assessment completed. In the sales tax assessment proceedings appellant No. 1 was representing the company. The balance-sheet was filed at that time before the assessing authority. An order dated 16-6-1998, for the assessment year 1994-95 clearly disclosed that appellant No. 1 had appeared before the sales tax authority on 3-6-1998 and produced records of the company. Thus, the balance-sheet of the company as on 31-3-1995, was available with appellant No. 1 and produced before the sales tax authority. Therefore, the claim of the ignorance of the records by the appellants is wrong. 24. It is pointed out that because of rising prices of estates of the company the petition under sections 397 and 398 of the Act was filed on 20-10-2001. However, the returns for allotment of 9,507 shares including 3,943 shares were filed before the Registrar of Companies on 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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