TMI Blog2007 (12) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... ain objects of the company are to buy, sell, import, export, manufacture, manipulate, treat, prepare and deal in sanitary goods, sanitary wares, earthen ware, tiles, porcelain, pipes, fittings, hardware, metals, tools and machinery, etc. 2. Shri Yogesh K. Jain, Senior Counsel for the petitioners contended that the relief in the present petition is mainly claimed by the petitioner No. 1 Sh. Raj Kumar Gupta a minority shareholder in the company M/s DP. Gupta and Co. Pvt. Ltd. against Sh. R. Gupta and his son Sh. Sanjeev Gupta who constitute the majority shareholding in the said company and had been managing the affairs thereof. The petitioner No. 1 holds 2793 shares out of the total issued 6255 shares having paid all call money and is thus competent to file the present petition under section 399 of the Act. The petitioner No. 2 3 and Sh. Nikhil Gupta the other minority share holders have also given their consent to petitioner No. 1 to file the present petition though they themselves have not claimed any separate relief for themselves in the present petition. The petitioner No. 1 and the Respondent No. 1 had equal number of shares along with their father Late Sh. D.P. Gupta who f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing so right from the inception of the company. The Respondents' contention that new account had to be opened because of withdrawals of security submitted by the family members of the petitioners in this regard does not carry any weight in as much as the persons having provided securities were free to act on their own and withdraw if they so needed to. Opening of a new account, however, could only be done by way of a proper resolution and the same too ought to have been allowed to be operated by the petitioner and the Respondent No. 1 as throughout in the past. The Respondents also stopped paying all perks and salary to the petitioner as he was entitled to and was being paid. Though they themselves continued to withdraw the same. The petitioner under the impression that he could operate the bank account withdrew a sum of ₹ 50,000/- from the bank on account of the huge arrears of his salary and perks even though the arrears were higher but on the bank informing him that under the fresh instructions of the Respondents only they could operate the account the petitioner immediately reimbursed the bank showing his bonafides. Had the petitioner been out to fraudulently withdrew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders/ directors, while in the process making unlawful gain by the directors managing the company i.e. the Respondents in the present case. Drawing my attention to the acts of mismanagement it was pointed out that the Office at 1/6-B, Asaf Ali Road was dismantled and unauthorized construction was made admittedly inviting litigation from the landlords and thus jeopardizing the most major asset of the company. Needless to say that commercial premises in a well-known commercial area having great potential are not available easily and cost as much if not more than the cost of the property itself. A thoughtless action by the Respondents in carrying out unauthorized construction so as to disturb the office of the petitioner is not only irresponsible but would cost the company dearly. It was contended that it is obviously an act of mismanagement only. The allegation that the Respondents were only renovating the premises does not carry any substance in as much as in such a case they would have sought the permission of the land lord and the land lord having given the permission would not have filed a suit against the company. Further, it was pointed out that the Respondents in the past ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence which was in their power and possession only i.e. the details of the payments received by cheque or otherwise through the bank, copy of the receipt, if any, given to the person paying the amount, etc. under section 106 of the Evidence Act. The burden of proving a fact within the personal knowledge of the party is upon it which it should prove by way of best possible evidence. It was argued that in the absence of the same an adverse presumption is to be drawn against the Respondent that a much larger amount was received against the surrender of the premises thus hitting the business of the company and shifting it to some non-descript premises in a far off industrial area that too at a rental of ₹ 7500/- p.m. For the same reason the allegation of the Respondent that the office of the company in Chandigarh had to be surrendered due to decline in sale is only an effort to pull wool over the eyes as if the sales were declining the business would have been closed all together and not shifted to costlier premises in a remote area where the sales would decline even further. In any event, it was argued that the decision to surrender the premises at Chandigarh without a proper boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and therefore the present petition should be outrightly rejected. Further, it was argued that a Petition under Sections 397/398 Companies Act, cannot be made for settling personal scores among the family members. The relief sought should be to put an end to the acts of oppression/mismanagement and not for any oblique purpose. Reliance was placed on Dr. S. Mangalam Srinivasan v. Mani Forgings P. Ltd. and others [2006] 129 Comp Cas 0544 CLB and Ramesh Bhajanlal Thakur v. Sea Side Hotel (P) Ltd. SCL 2000 (23) 164. There are no allegations of oppression of the petitioners. The petitioners have miserably failed to show that the acts of respondents are oppressive against them. Their grievance, if any, is qua director and not qua shareholders. Reliance was placed on N. K. Mahopatra v. State of Orissa [1999] 96 Company cases 49. Further, it was argued that the allegations levied by the Petitioners against the Respondents are vague and without any supportive evidence about misappropriation of assets or improper use of effects. The necessary ingredients constituting oppression or mismanagement as required under section 397/398 have not been pleaded in the Company Petition. The facts al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had keen interest in his share of profits in the business instead of business itself. He has never devoted his time, attempts and efforts on the growth of the business rather he has always spent his time and efforts on making personal gain from the business and has always been a sibling rival to his elder brother. The respondent No. 1 being the elder brother of petitioner No. 1 has always ignored his behavior. As regards the appointment of Sh. Sunjeev Gupta as Director, it was pointed out that Mr. Sanjeev Gupta was appointed by a valid Resolution of the Board of Directors. At the shareholders' meeting on 15.9.1986 his name was suggested by Respondent No. 1 and Resolution was passed accordingly. Thereafter, Mr. Sanjeev Gupta has been continuing as director in the company without any change. My attention was also drawn to the copy of the Minutes of the board dated 15.9.1986 As regards Office space in the showroom at 1/6 -B, Asaf Ali Road. New Delhi which the respondents dismantled and started carrying out some unauthorized construction therein which not only forced the petitioner to move out leaving him with no respectable office but inviting litigation from the land lord who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. Sh. R. Gupta and/or Sh. Sanjeev Gupta, excluding the petitioner from operating the bank account of the company, it was pointed out that the company initially had an overdraft limit with Syndicate Bank, Asaf Ali Road, New Delhi-II 0002, which had to be closed due to Petitioner No. 1 refusing to sign the papers for extension. The petitioner and his family members wrote letters to Syndicate Bank. Asaf Ali Road, New Delhi-110002 on 11.3.2006 for return of their FDR pledged with Syndicate Bank, collateral security against the overdraft limit. The family members of Shri Raj Kumar Gupta, Petitioner No. 1 have also clearly mentioned that he had in his capacity as Director of the company, written to the said Bank on 29.12.2005. It was contended that that petitioners No. 1, 2 and 3 have been sabotaging the smooth running, of the company. The respondent No. 1 had to substitute and mortgage his residential property at C-729, New Friends Colony, New Delhi-II 0025 with the said Bank in order to pay and close the overdraft limit. Further the other two Directors viz Shri R. Gupta and Shri Sanjiv Gupta had to open a current account under their signatures so that the working of the company is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their customers; Shri Raj Kumar Gupta was also running a business of supplying imported seeds and plants which was being done with his son, Shri Nikhil Gupta, residing in USA. This business was carried out under the name and style of RNR ENTERPRISES (signifying Raj, Nikhil and Robin i.e. father and two sons). Further, it was pointed out that by the counsel for the respondents that the parties had desired to compromise during the initial hearings before the Hon'ble Members. However, the Petitioners are not interested in any amicable settlement and are desirous to harass and malign the respondent company and its directors. 14. I have considered the pleadings as well as annexures thereto and the arguments of the parties. The petitioners have failed to make out a case of oppression and mismanagement which could entitle them to attract the provisions of Sections 397 and 398 of the Act. Considering the facts and circumstances of the case, I find that the respondents' contention that this petition under Sections 397/398 of the Act has been made for settling personal scores among the family members appears to be true. But the respondents' contention that directorial compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act are not applicable to proceedings before the Company Law Board yet there is an abnormal delay in bringing the matter before the Company Law Board and on this ground alone, the petition should be dismissed. There is no plea for condoning delay and laches on the part of the petitioners in initiating proceedings before the Company Law Board. The acts complained of amounting to alleged oppression and mismanagement are barred by delay and laches. As regards the allegations pertaining to non payment of salary and perquisites to P-1 for about last 2 years and not letting him operate the bank account, the Respondents' contention regarding the conduct of the petitioners which is a very relevant factor to be considered in equitable proceedings u/s 397/398, of the Act, cannot be lost sight of. The petitioners have not acted in the interest of the company. The P-1 has accepted having withdrawn an amount of ₹ 50,000 from the account of the company on 19/6/2006 and the same has been explained only as a mistake at the time of arguments. The petitioners have withdrawn their securities given to the bank leaving the Respondents Company to fend for itself to be able to operate its cur ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
