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TMI Blog2005 (4) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 247(1A) of the Companies Act, 1956 (the Act) for determining the true persons who are financially interested in the success or failure of the company or who have been able to control or materially influence the policy of the company. They have also sought for, as an interim measure, imposition of certain restrictions on the shares held by the respondents 1 to 28 in the company, in terms of Section 250(2) of the Act. 2. The case of the petitioners is: The company is a part of M.P. Birla Group and has always been known as a Birla company. The respondents 1 to 28 hold, collectively among themselves, 63.8% -shares in the company. Respondents 1 to 19 are incorporated companies and respondents 20 to 28 are charitable institutions/societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol over the shares held by these respondents. Therefore, there is good reason to find out the relevant facts about the shareholding in the company and this cannot be done unless shares are subjected to restriction in terms of Section 250(2) of the Act. Therefore, in terms of Section 247(1A) of the Act, suitable orders should be passed and till the investigation is completed, restrictions should be imposed on the shares. 3. Most of the respondents have filed their replies questioning the maintainability of the petition more particularly in view of the pending proceedings before the Calcutta High Court. 4. Shri Sarkar appearing for the petitioners submitted: It is an undisputed fact that respondents 1 to 28 collectively hold more than 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenge before the Calcutta High Court. In the petition, the petitioners themselves have averred that Shri Lodha is controlling respondents 1 to 28. If it is so, the question of investigation under Section 247(1A) to find out facts about the shares does not arise. Whether Shri Lodha is entitled to control the respondents is a question to be decided by the High Court and the Inspector appointed under Section 247(1A) cannot decide this issue. There has been no change either in the management or in the Board of Directors of the company after the demise of Priyamvada Birla. The shares held by respondents 1 to 28 are intact and there has been no transfer of shares held by them in the company. In Gordon Woodroffe and Co. Ltd., UK v. Gordon Woodr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. Its object is to find facts. Since the shareholder controlling 63% shares in the company has expired, it is very necessary to find out as to who controls these shares now and the same can be found out only by an investigation. Since the company is a public limited company, public interest is involved as the shareholders have interest in knowing as to who controls the majority shares in the company. Even though, the petitioners have alleged in the petition that Shri Lodha is claiming control of respondents 1 to 28, the same has been denied in the replies filed by these respondents. Their denial itself would indicate that investigation is necessary to find the correct position relating to the shares. Further, this petition has nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he real ownership of substantial shares are different, by investigation as to who is finically interested in the success or failure of the company or who is able to control the management of the company, true facts about the membership of the company could be found out. This Board has deals with the provisions of Section 247(1A) of the Act, as pointed out by the counsel in Bakhtawar Construction Co. Private Ltd. v. Blossom Breweries Ltd. ( 88 CC 859) and Padma Taparia v. Assam Brook Limited(88 CC 838). In the former case, this Board declined to order an investigation on the ground that the petitioners themselves had admitted that the persons in the management of the company had held controlling interest by virtue of holding more than 40% sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d changed or there are changes in the Board of Directors of these respondents or that these respondents have transferred the shares held by them in the company. Similarly, there is no allegation that there is any change in the management of the respondents 19-28. In other words, the controlling interest in the company is still with the estate of late Priyamvada. As rightly pointed by Shri Sundaram, from the averments of the petitioners in the petition it is seen that their own case is that Shri Lodha is controlling the interests of late Mrs Birla and that is the reason why they have raised the issue of Take Over Code. Likewise, while denying that Shri Lodha is controlling the interests of the estate, the learned counsel for the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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