TMI Blog1999 (4) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... e one of the main contentions was about the composition of the board of directors, on January 28, 1998, this Bench passed an order that the company should convene an extraordinary general meeting for election of directors and in the meanwhile the respondents should also take steps to vacate two shops belonging to the petitioners and pay to them the arrears of rent. This order was taken on appeal to the High Court of Rajasthan. 3. In the hearing on November 10, 1998, when the arguments of counsel on the petition were in progress, it was mentioned by counsel for the petitioners that his clients were prepared to withdraw the petition if the two shops belonging to the petitioners were handed over to them. Since counsel for the respondents desired to consult his clients on this proposal, the matter was adjourned. In the next hearing on November 27, 1998, while the respondents agreed to the suggestion for vacating the shops, they also stipulated, that the civil suit filed by the petitioners in regard to the sale of certain property of the company should be withdrawn by the petitioners. This was not acceptable to the petitioners and as such the efforts to resolve the disputes failed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appointment of five additional directors was made only with a view to gain majority control of the board by the respondents. He, therefore, submitted, that these appointments being for a collateral purpose and not for the benefit of the company should be declared as null and void. 6. In regard to the decision relating to releasing the four shops belonging to the respondents, he pointed out that the company had taken six partly constructed shops on lease--two each belonging to petitioner No. 1, respondent No. 2 and respondent No. 3. As per the lease agreement, the company was to develop these shops with the right to sub-lease. The lease agreements were valid for a period of three years, with effect from July 21, 1992, and were registered with the Sub-Registrar, Jaipur. The lease period in respect of all the shops was to expire on July 20, 1995. However, while the respondents released four shops belonging to them from the lease much before the expiry of the lease period, as indicated in the minutes of the board meeting held on June 26, 1995, they have not released the shops belonging to petitioner No. 1 till date. Even as per the lease agreement, before releasing the shop, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt. Nisha Kothari is a forged one as no such agreement was ever entered into. Further, this alleged agreement was neither notarized nor registered and as such has no validity in law. Further, counsel submitted that the space left for the date of the board resolution at page No. 4 of the alleged agreement is kept blank indicating therein that no board resolution for sale of this property was ever passed. He also pointed out that the agreement talks of advance payment of ₹ 25,000 which does not find any entry in the books of account of the company. He also pointed out that as per this agreement Shri Ramesh G. Chitlangia has been authorised to actually sell and execute the sale documents on behalf of the company and the agreement also mentions that the other director Shri Ramesh Chitlangia had also consented to the same and has also reported to have signed the documents as witness, which is inconceivable, as according to learned counsel the same person, namely, Ramesh Chitlangia could not have been mentioned more than once in different capacities, clearly establishing that the document is a forged one. The only purpose behind this scheme, learned counsel stressed, was that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 3 are guilty of various acts prejudicial to the interest of the shareholders and the company, like non-maintenance of statutory records, non holding of regular board meetings, non-finalisation of accounts of the company and getting them audited, and non-holding of annual general meetings. He also submitted that, respondents Nos. 2 and 3, after having gained control of the company have not bothered to carry on the business and as such the business of the company has come to a standstill from June, 1995, onwards. Further, the company has not been able to discharge its liabilities as is evi dent from the fact that for over four years, the company has not paid the monthly lease rental for the shops given on lease by petitioner No. 1. 11. Summing up his arguments, Shri Mehta submitted that the grounds on which the petition has been filed fully establish that the affairs of the company are being conducted in a manner prejudicial to the interest of the shareholders and the company and these acts clearly show that the company should be wound up on just and equitable grounds. He also cited a few cases to indicate, that the prayers sought for deserve to be granted and the extent of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the notice for the meeting was sent by certificate of posting on July 15, 1995. Even though neither of the petitioner director attended the meeting. The minutes of the meeting were confirmed in the board meeting held on February 26, 1996, which was chaired by petitioner No. 2 and as such he cannot claim ignorance of the decisions taken in the board meeting held on June 26, 1995. Another board meeting held on March 14, 1996, was also chaired by petitioner No, 2 and minutes of both these meetings were signed by him. Therefore, it is wrong to say that the petitioners were not aware of the various decisions taken in the board meetings held on June 26, 1995. 14. As far as the sale of the shop to Mrs. Kothari is concerned, the same was in pursuance of a sale agreement dated December 28, 1993, entered into with her by petitioner No. 2 in his capacity as a director of the company. Since petitioner No. 2 was delaying the sale and since there was threat from Mrs. Kothari that she would initiate legal proceedings, the board decided to complete the sale in its meeting on June 26, 1995. Further, the shop was in her possession right from 1993 onwards in terms of the agreement and an adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to three issues ; they are--sale of a shop to Mrs. Kothari, purchase of a building and discriminatory treatment given to the petitioners in relation to vacation of shops. All these allegations arise out of the decisions taken in the board meeting allegedly held on June 26, 1995, a meeting in which the petitioner directors did not participate. While the petitioners admit that they received the notice for the meeting and went to the venue for attending the meeting which did not take place, according to the respondents, the petitioners did not attend the meeting which actually took place. We are of the firm view that so many major decisions should not have been taken in a family company like the respondent-company without the presence of all the family directors. We have no doubt that taking such major decisions without the participation of all the family directors, more so the managing director, who incidentally is the father and head of the family, is an act of grave oppression against the petitioner shareholders. Further, these decisions have been taken even without the same being included in the agenda which should have been sent along with the notice of the meeting. Calling five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998, recorded the statement of the respondents that the civil proceedings have already been initiated against the tenant. Therefore, as far as this issue is concerned, we only order that the respondents should immediately furnish all details regarding the civil proceedings to the petitioners and should also ensure that the said proceedings are actively pursued. 21. According to the petitioners, at the time of vacating the shops belonging to the respondents, the respondents should have paid certain amount towards construction, etc., to the company. We will be giving appropriate directions in this regard later. As far as the purchase of the property from Mrs. Kothari is concerned, the petitioners have not sought for any directions as per the written submission and as such we are not giving any decision on the same especially when she is not a party to these proceedings. 22. Now, regarding the management of the company. It was stated by Shri Mathur that the additional directors appointed in the board meeting on June 26, 1995, have ceased to be directors. It would mean that there are only four directors on the board, i.e., the petitioner and respondents Nos. 2 and 3. No general ..... X X X X Extracts X X X X X X X X Extracts X X X X
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