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Shri Kishan Khariwal Versus The Ganganagar Industries Limited and Ors.

2003 (10) TMI 671 - COMPANY LAW BOARD, NEW DELHI

CP No. 69 of 2001 - Dated:- 6-10-2003 - Hon'ble Judges:S. Balasubramanian, Chairman For Appellant: Hitesh Joshi, Company Secy. For Respondents: Party-in-person Resp. 2 and B.S. Goyal, Coy. Secy. ORDER S. Balasubramanian, Chairman 1. The petitioner claiming to hold 606 equity shares of ₹ 20/- each and also having authority in the form of Power of Attorneys from 7 other shareholders holding an aggregate 928 equity shares and also a consent letter from holder of 300 fully paid equity shar .....

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against the market value of ₹ 2 crores to his own people in breach of his fiduciary duties and that by virtue of a resolution passed under Section 81(1A) of the Act in an EOGM held on 25.1.2001 authorising the company to issue and allot not more than 82280 equity shares and another resolution passed under the same section in an EOGM held on 28.2.2001 allotted further shares to a number of members of the company excluding the petitioners' group and alleging that these allotments were m .....

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ingly, the petitioner has sought for setting aside the sale of the factory land and allotment of shares made in pursuance to the resolutions passed in the EOGMs, removal of the 2nd respondent as the managing director and for ordering an investigation into the affairs of the company. 2. In the reply, the 2nd respondent has while denying the allegations, has also questioned the maintainability of the petition in terms of Section 399 of the Act as with the increase in the share capital, the holding .....

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ccording to the respondents this petition has been filed only because the company has filed a case against a firm belonging to the petitioner's family for eviction from the land and building of the respondent company the possession of which was unauthorizedly given by the petitioner to the firm when he was a director of the company and therefore this petition has been filed mala fide and for an oblique purpose of putting pressure on the company to withdraw the eviction case. 3. The authorize .....

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er 10% or more shares of the subscribed capital or should constitute 10% or more of the total members in the company. In the present case, the petitioner has claimed that the shares held by him together with those of the members supporting him, account for 10.35% shares in the company and such the requirements of Section 399 are satisfied. This percentage is based on the share capital of the company before the issue of further shares impugned in the petition. This Board has always taken the view .....

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case, the petitioner claims the support of those holding more than 10% shares and he has also impugned the further issue of shares, which has resulted in the holding of the petitioner and his supporters to around 1%. Therefore, this petition cannot be dismissed at the threshold before examining as to whether the issue of further shares could be considered to be an act of oppression against the petitioner and his supporters. 5. However, the respondents have questioned even the shareholdings claim .....

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has given letter of consent holds 300 shares. Thus, the total number of shares claimed to be held by the petitioner and his supporters account to 1834 equity shares. According to the respondents, the petitioner by himself holds only 530 shares and not 606 shares as claimed by him. According to them, 36 shares allegedly claimed by the petitioner are registered in the name of some other shareholder. Likewise, another 40 equity shares are held in the name of another shareholder. In the rejoinder, t .....

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mpany and if so, his holding of 300 shares should also be excluded. If it is done so, then, the shareholding of the petitioner and his supporters would account to only 1458 equity shares which is less than 10% of the subscribed shares of 17720 shares in existence before further issue of shares impugned in the petition. Therefore, the petitioner and his supporters do not satisfy the shareholding requirement in terms of Section 399 to maintain this petition. 6. As far as the total number of member .....

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ition including the petitioner would be only 6 which is less than 10% of 95 members in the company and as such numerically also this petition is not maintainable. Even though in the petition, the petitioner has stated that the number of shareholders as per the annual return made up to 30th September, 2000 (before issue of further shares in 2001) was 62, he has not enclosed a copy of the annual return to verify this fact. As a matter of fact, in paragraph 26 of the petition, he has averred that f .....

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g the position, it is evident that the petitioner and his supporters do not constitute 10% of the total number of members in the company. In view of the fact that neither the petitioner and his supporters held 10% or more of the subscribed capital nor they constituted 10% or more of the total number of shareholders in the company even before further issue of shares impugned in the petition, this petition does not satisfy the requirements of Section 399 of the Act and therefore deserves to be dis .....

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