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TMI Blog2010 (8) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... and disposed of by this common order. As we are deciding these appeals not on merits, and setting aside the order passed by the Company Law Board on procedure of irregularity, it is not necessary to set out in detail the pleadings of the parties before the Board. 3. The appellants in Company Application No. 4/2008 are the petitioners in the company petition. They filed the petition under sections 397, 398, 402, 403 and 406 of the Companies Act ('the Act') alleging case of oppression and mismanagement of the affairs of the company at the hands of the respondent. The broad features of the case is as under :- The Company owned 9 acres 7 guntas of land, in Sy. Nos. 33/1 and 33/2 situated at Nelamangala Taluk, Bangalore Rural District, which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t informing the Registrar of Companies that the petitioners have resigned from the Company, which is factually incorrect. The 3rd respondent who resigned, has been brought back by allotment of fresh shares in a clandestine manner without there being any valid allotment of shares. In respect of allotment of shares, no money is collected or paid by the shareholders. The respondent in collusion have defrauded the petitioners. It is a clear case of breach of trust. In fact, the petitioner No. 1 on coming to know of the move of the respondents to sell the property sent a telegram indicating a better sale offer for Rs. 165 lakhs, which offer was not accepted nor replied to by the respondents and therefore, the petitioners contend, the action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the parties did not adduce any evidence and after hearing the parties, the Company Law Board had proceeded to pass the impugned order directing that :- "The petitioners shall continue as directors of the company and the company shall file necessary Form No. 32 with the Registrar of Companies in accordance with the relevant provisions of the Act. All the allotment of shares made by the Company on 29-6-2002, 30-6-2003, 30-12-2004 and 14-3-2005, being oppressive as well as illegal are set aside as null and void and consequently, its share capital stands reduced. Further it held that, the Company shall rectify the register of members in respect of all the impugned shares which are set aside, by deleting the names of the concerned allottee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to meet any such case. No issues were framed. No evidence was adduced. Merely acting on the amount mentioned in a telegram, which was sent subsequent to the sale of the property, the Board has come to the conclusion that is the market value of the property and has directed the respondents to pay the difference amount to the company, which subsequently is to be distri-buted among the shareholders. This portion of the order is illegal, unsubstantiated by any legal evidence on record and therefore, it requires to be set aside. He further contended in a proceedings under sections 397, 398, 402 and 406, the said question cannot be gone into. It is after the conclusion of the said proceedings, if a finding is recorded that the respondents conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the requirement of law the independent applications have to be filed in a proceedings under sections 397 and 398. The relief under section 543 of the Act could be granted and therefore, he submits that, no case for interference is made out. 7. After going through the pleadings of the case, we are satisfied in the first place that the respondents have not admitted the case of the petitioners neither expressly nor impliedly. The case of the respondents is that they have denied the case of the petitioners. Though, some vague allegations of fraud, clandestine conduct causing loss to the shareholders and the company has been made out specific plea constituting misfeasance or breach of trust in relation to the company as contained in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded to record the findings, assuming the case of misfeasance. Infact, the entire finding of the Tribunal is based on the consideration mentioned in a telegram, which was sent 2½ months after the actual sale of the property. Unless the Board recorded a finding that the value of the property was worth Rs. 1.65 crores on the day, the property was sold, such a finding could not have been recorded. Merely because, the petitioners mentioned in the legal notice or in a telegram the value of the land by way of offer it cannot form the basis for recording the said finding. In the instant case, Regulations framed by the Board do not provide for adducing evidence. These material allegations should be established by the acceptable evidence. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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