TMI Blog2006 (6) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... e Satpal Sharma. The Respondents 2, 3 and 5 are the sons of the petitioner. The Respondent No. 5 who is residing at Sharjah (U.A.E) is supporting the petitioner. The petitioner is holding 26,787 shares in the Company. The shareholding pattern of the Company is as follows: a) Petitioner 26,787 shares b) Respondent No.2 19,255 shares c) Respondent No.3 4,458 shares d) Sunil Sanjeev Trusts 2,000 shares Total 52,500 shares The late husband of the petitioner became the director of the Company in the year 1967. The Respondent No. 2 being the eldest son became the Executive Director in the year 1981 and became the Chairman in 1987 on resignation tendered by his father. The Respondents No. 3 4 became the directors of the Company in 1986. The Respondents No 2 to 5 are the present directors of the Company. The petitioner states that the Respondent No. 3 has filed a suit in the High Court at Mumbai against the petitioner, Respondents No. 2 5 and the daughters of the petitioner for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (CEGAT). The petitioner learnt that Government of India, Ministry of Commerce has issued show-cause notice on 22nd January, 2001 against the Company, since the Company appears to have failed to furnish the documentary evidence in compliance of Exports obligation during that period. The petitioner states that notices referred to above which are from the Sales Tax Authorities, Customs Department, Enforcement Department of DGFT and Excise Department clearly shows that the working of the Company is not properly done by the Respondent No. 2 and is a clear act of mismanagement. The petitioner has also learnt that the Gujarat Electricity Board has started proceedings against the Company on the ground of theft of electrical energy, The Gujarat Electricity Board Appellate Committee has given its findings against the Company. The Company has filed Special Civil Application bearing No. 2398 of 2001 in the Gujarat High Court for quashing and setting aside the said findings passed by the Appellate Committee. The Gujarat High Court by an order dated 5.11.2001 has given liberty to the Company to approach the Appellate Committee for reconsideration of the case on the question of theft of electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed any objection with regard to the conduct of the affairs of the Company prior to filing of this petition. The petitioner has filed the present petition with ulterior motive. The Respondents further stated that though the question of limitation is not involved in filing the present petition but the principle of delay and acquiescence should be applied to the facts of this case. The Respondents stated that the petitioner has deprived and is still depriving the Company from its legal and legitimate rights of receiving royalty amount from M/s. Shattaf Anand Steel Rolling Mills Private Limited at Sharjah (UAE). The petitioner has received the royalty amount and not passed on to the Company being legally entitled thereto. The Respondent Company has served legal notice to the petitioner and Respondent No.5 demanding payment of the said royalty. But the petitioner has not cared to reply to the said legal notice. The allegations of mismanagement against the answering Respondents are general in nature and have not been supported by evidence. The allegations in the petition pertain to the period of the life time of Late S.P. Sharma (Late husband of the petitioner). The Respondent No. 2 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Company in the year 2000. However, on the application of the Company the Gujarat High Court by an order dated 5.11.01 directed the Company to approach the Appellate Committee for reconsideration of the case on the question of theft of electric energy and the quantum of bill raised. The Advocate for the petitioner further submitted that the show cause notice was issued by the Commissioner of Central Excise, Ahmedabad on 2nd March, 2000 against the Company as to why the duty amount of ₹ 13,21,483/-, ₹ 4,46,378/- and ₹ 23,40,811/- and penalty should not be imposed on the Company. The advocate further submitted that the husband of the petitioner expired in 1999 and the Respondent No. 2 being the Mg. Director of the Company mismanaged the affairs of the Company and accordingly the petitioner prays for orders in terms of the prayers of the petition. In support of his arguments the advocate for the petitioner cited the judgment of CLB reported in (1997) 3 Co. Law Journal 331 CLB in the matter of K. Narain Das v. Bristal Grill (P) Ltd. and Ors. 5. Mr. Ajay Kumar, Practicing Company Secretary, appearing for the Respondents No. 1 to 3 reiterated the facts stated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jority shareholder is entitled to call for Extra Ordinary General Meeting to discuss the affairs of the Company. The petitioner with majority shareholding is also empowered to appoint her nominee as directors of the Company. The petitioner as a shareholder of the Company is entitled to inspect the Annual Returns and Balance sheets of the Company and she is also entitled for copies of the Annual Returns and Balance sheets of the Company. However, the petitioner has never requested for the same. The petitioner has alternative remedy than the extreme action under Section 397/398 of the Companies Act. The Company is holding regular board meetings, AGMs and filing statutory returns with the ROC. The petitioner has failed to establish that there is a mismanagement in the affairs of the Company. The Company has not removed the Respondent No. 5 who is supporting the petitioner, from the Board of Directors though he is not regular in attending the board meetings. The Respondent No. 5 is not taking any interest for the progress of the company. Since the Company is functioning smoothly there is no need to appoint any Administrator/Special Officer to oversee the affairs of the Company and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by operation of law. In the present case there is no allegation of removal of any director of the Company. There is also no allegation that the Company has paid the amount to any party without proper authority. As such I am of the view that the above judgment cited by the petitioner's advocate is not applicable to the present case. Mr. Ajay Kumar, Practicing Company Secretary, appearing for the Company argued that there was inordinate delay in filing the present petition and no relief under section 397 should be given to the petitioner. In support of his argument he cited the judgment reported in (1976) Tax LR 1682 Calcutta High Court. In the case of the above referred judgment the petition was filed after three years of knowledge and the High Court held that there was inordinate delay. In the present case the petitioner came to know in 2001 and filed the present petition in 2002. This short delay cannot be considered as an inordinate delay. The above judgment cited by Mr. Kumar is not applicable. Mr. Kumar cited the judgment reported in (1997) 88 Company Cases 274 Madras High Court to establish that non payment of dividend by the Company and the loss incurred by the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the general meeting of the Company. Though the alternative remedies are available to the petitioner she has not availed the same but filed the petition under Section 397/398. In view of the above referred judgment of the Calcutta High Court, I am of the opinion that the petition has no merit. Mr. Kumar further argued that the rejoinder filed by the petitioner to the reply filed by the Respondent No. 1 to 3 may not be taken into consideration since the rejoinder was not affirmed before the Notary/Oath Commissioner as provided under Regulation 23 of the CLB Regulations, 1991. The advocate for the petitioner submitted that the rejoinder was signed at Sharjah (U.A.E.) by the petitioner and her signature was attested by the Indian High Commission at Sharjah and it should be treated as proper affirmation. The petition filed by the petitioner has been affirmed before Notary in India but the rejoinder was signed at Sharjah but not affirmed by affidavit at Sharjah though the signature is attested by the Indian High Commission. Since the rejoinder was not affirmed by affidavit either at Sharjah or in India, the same cannot be accepted and relied upon as proper rejoinder in view of the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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