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Shree Rama Multi Tech Ltd. And The HSBC Private Equtiy India Fund Ltd. Versus Shree Rama Multi Tech Ltd., Shri Vikram R. Patel, Shri Sharad C. Patel, Shri Prakash R. Patel, Shri Chandrakant Patel and Shri Nilesh C. Vaishnav

2004 (1) TMI 706 - COMPANY LAW BOARD, NEW DELHI

CP No. 46/20(sic) and CA No. 142/0(sic) - Dated:- 28-1-2004 - Hon'ble Judge:K.C. Ganjwal, Member For Appellant: Aditya Tiwari, Adv. For Respondents: Ramani Taneja, Rajiv Nanda and Mukesh Tyagi, Advs. for Respondent U.K. Chaudhary, Sr. Adv., Ranjana Roy Gawari, Adv. ORDER K.C. Ganjwal, Member 1. The HSBC Pvt. Equity India Fund Ltd. a company incorporated in Mauritius and having its registered office at 10-Frere Felix de Valois Street, Port Louis, Mauritius have filed a company petition No. 46 .....

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he main objection related to the provisions of Section 399, an order dated 27.1.2003 was passed by this Board indicating that since Section 399 of the Act stipulate that members holding not less than one tenth of the total issued capital of the company alone can file a petition under Section 397/398, petitioners holding only 8.52% shares in the total issued capital, have no locus-standi to file the petition and as such the petition was dismissed as non maintainable. 3. Having failed to pursue th .....

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ntainability of the petition. The original respondent No. 1 Shree Rama Multi Tech Limited seeks dismissal of the company petition No. 46/2003 on the ground that the present petition is not maintainable. The respondents submit that the present petition under Section 235(2) of the Companies Act. 1956 is not maintainable in as much as Shree Rama Multi Tech Ltd. is having a share capital but the present petition is not received from or filed by more than 200 members or by a member holding not less t .....

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d up and 6.66,657 15% cumulative preference shares of ₹ 100 each fully paid. The company Shree Rama Multi tech Ltd. has not paid dividends on the said cumulative preference shares for the last two years. Consequently, in view of the provisions of Section 87 of the Companies Act, the holders of said preference shares acquired a voting power on each and every resolution that may be placed before the company at any meeting. Section 87 (2)(c) provides for proportionate representation of the pr .....

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ing power in the company and is not entitled to file and maintain the present petition under Section 235(2) and Section 237(b). Accordingly, the respondents have also submitted that the present petition is also not maintainable as the present petition is barred by the principles of rest-judicata of cause of action as the previous petition has been dismissed by this Hon'ble Board by its order dated 5.2.2003. 5. It is also submitted by the respondent that the petitioner has disposed of substan .....

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fore this Board under Section 237(b) of the Companies Act, 1956. 6. The learned counsel for respondent submitted during the arguments that it is an established principal of law that anything which cannot be done directly cannot be done indirectly. The power under Section 237 is meant to be exercised by the Central Govt. and not by its shareholder. According to the learned counsel for respondent any aggrieved shareholder cannot directly file a petition before this Board and have to approach the C .....

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ain petition submitted that the present application filed by the respondent is not maintainable as the same has been filed solely for the purpose of delaying a response on the merits of the case. This Hon'ble Board by an order dated 25.5.03 directed the respondent to file a reply to the company petition in the presence of the counsels appearing for the respondents. Instead of filing the reply to the main petition, the petitioners have-moved present application challenging the maintainability .....

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ners have submitted that filing of the previous company petition does not in any way constitute a bar to the filing of the present company petition under Section 235 of the Act. The petitioners have denied that in view of the allegations made by respondent company, they have less than 10% of voting power in the respondent company and are not entitled to file and maintain the present petition. The petitioners also submit, that the respondents are calculating the percentage of voting power by the .....

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idend on the cumulative preference shares is a wrongful act of which the company cannot take advantage. The learned counsel for petitioner was of the view that the present petition has been filed under Section 235(2) and the same would be maintainable under Section 237(b) also. 9. The petitioners have also, denied that the present petition is not maintainable as the same is barred by the principles of rest-judicata as the previous petition along with interlocutory application made therein was di .....

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dent is motivated with the purpose of avoiding investigation under Section 235 and 237(b) of the Act. 11. The learned counsel for petitioner relied on the following judgments:- I. Deodatt Purshottam Patel v. Alembic Glass Industries Ltd.(1972) 42 Comp.Cases 63. II. V.V. Purie v. E.M.C. Steel Ltd. and Ors. (1980) 50 Comp.Cases 127 III. Smt. Chandra Prabha and Anr. v. Hotel Shweta P. Ltd and Ors. (1995) 4 Comp LJ 520(CLB). 12. In the Gujarat High Court judgment Alembic Glass Industries Ltd mention .....

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here are three distinct methods by which a party desirous of getting the affairs of a company investigated may get an inspector appointed by the Central Government. If the requisite number of members are available, application can be made under Section 235. Any one who is unable to collect the requisite number of members may bring to the notice of the Central Government various malpractices committed in the administration of the affairs of a company and the Central Govt. may act suo-moto under S .....

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s clearly mentioned that the general principle is that the court will not entertain action on behalf of private person to enforce the observance of public rights and duties unless they have a personal interest in the matter and unless their rights and interests are in some way affected. The last two paras of the judgment are as under:- "The above extracts contain an enunciation of the general principle that the courts will not entertain action on behalf of private persons to enforce the obs .....

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person whose rights have been affected by the manner in which the affairs of the company have been conducted or accounts maintained and has, therefore, a grievance in the eye of law for which he seeks relief from the court. There is ample scope for the invocation of Section 237 by persons whose rights are infringed or affected and whose interests need to be protected or safeguarded by an investigation - a creditor who is unable to move the Central Govt. under Section 235; member or members who, .....

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e scope of the remedy enacted by this provision would be unreasonably curtailed or would become illusory by reading into the section an implied limitation to exclude persons having no manner of interest or concern with the company, from availing of it." In the judgment of Hotel Sweta Pvt. Ltd. and Ors. CLB has held in para 13 of the judgment that on the date of filing of the petition, the petitioners held less" than one tenth of the voting power and so cannot maintain this application .....

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owever, in view of the power conferred on us under Section 237(b) of the Act, still considered the various circumstances as set out in the petition and the various pleadings as "information" to examine whether there is justification for forming an opinion, with regard to investigation under that section. Para 14 - For the purpose of Section 237(b), we are requested (required?) to examine the various instances which are brought to our notice to find whether these instances suggest eithe .....

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tion 237(b) as inapplicable in the present case, namely, that the company was formed for an unlawful purpose, or the business is conducted for an unlawful purpose. Thus, the areas to be looked into mainly relate to,- I. intention to defraud creditors, members or any other persons or oppressive to members; II. persons connected with the management are guilty of fraud, misfeasance or misconduct; and III. members have not been given all relevant information." 13. The learned counsel for the re .....

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present petition under Section 235 has not been filed by 200 members or from members holding not less than one tenth of the total voting power. Accordingly, the company petition No. 46/2003 is not maintainable under Section 235(2) and the same is dismissed being not maintainable. 15. However, in the same company petition No. 46/2003, the petitioner has claimed relief under Section 237 (b) for an order of investigation of the company's affairs. The petition Under Section 237(b) can be filed .....

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, the Central Government - a) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if- i) the company, by special resolution; or ii) the Court, by order, declares that the affairs of the company ought to be investigated by an Inspector appointed by the Central Govt.; and b) may do so if in the opinion of the Company Law Board there are circumstances suggesting- i) that the busi .....

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