TMI Blog2006 (8) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... as incorporated on 28th December, 1962, as a family company with Tara Chand Agarwal (since deceased), Dankha Devi Agarwal, his wife (since deceased), their elder son, Bhagirath Agarwal and younger son Chandra Prakash Agarwal. Each of them was allotted 10 shares each in the newly-formed company. On 2nd March, 1963 Dankha Devi Agarwal granted a lease of the land at 13, Camac Street, Calcutta, to the Company and in lieu of premium of ₹ 3 lakhs, 3000 shares of the Company were allotted in favour of Dankha Devi Agarwal. By virtue of such allotment, Dankha Devi Agarwal came to hold 3010 shares and the rest continued to hold 10 shares each. All the share holders were indicated as the first Directors of the Company. On account of transfer of shares by Dankha Devi Agarwal during her life time, the share holding pattern as on 28th June, 1977, was as follows:- Dankha Devi 1660 shares Tara Chand Agarwalla 10 shares Bhagirath Agarwal 10 shares Chandra Prakash Agarwal 10 shares Smt. Lila Agarwalal wife of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meeting of the Board of Directors held on 20th October, 1989. The Company decided to allot 1500 shares out of the said 1960 equity shares to Tara Chand Agarwal and to allot the remaining 450 shares to his younger son, Chandra Prakash Agarwal. On 24th October, 1989, a special notice was given for calling an extra-ordinary general meeting. A copy of the said notice was duly served on Bhagirath Agarwal, and a copy was also sent to the Registrar of Companies. Despite receipt of notice, Bhagirath Agarwal did not attend the meeting and the Board of Directors took a Resolution to remove both Bhagirath Agarwal and Smt. Leela Agarwal from the Directorship of the company. The decision of the Board of Directors was conveyed to the Registrar of Companies and the requisite forms were also deposited with him. Simultaneously, with the notice for holding the extra- ordinary general meeting of the company, Dankha Devi Agarwal also filed a suit, being No.874 of 1989, in the Ordinary Original Civil Jurisdiction of the Calcutta High Court for a declaration that the purported transfer of 1650 shares in the name of the plaintiff to Bhagirath Agarwal and his wife were null and void and without an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 4th August, 1999, was dismissed by the Division Bench on 13th September, 1999. In the first of the two appeals being heard by us, this Court granted leave to appeal to Smt Dankha Devi Agarwal against the aforesaid order of the Division Bench of the High Court dated 13th September, 1999. While the said appeal was pending in this Court, Smt. Dankha Devi Agarwal died in January, 2001. Simultaneously with the aforesaid proceedings Shri Bhagirath Agarwal also filed an application for setting aside the resolution adopted by the Board of Directors of the Company removing him and his wife from the Directorship of the Company. On 6th August, 2001, the said application was allowed by the learned Single Judge and the removal of the said respondents from the Board of Directors and the allotment of 1960 shares to Tara Chand Agarwal and Chandra Prakash Agarwal were struck down. Further, the appointment of the respondents 1 to 5 as Directors of the Company in the Board meeting of 5th September, 1998, was upheld. Aggrieved by the said Judgment and Order of the learned Single Judge, the appellant filed an appeal, being APOT No. 594 of 2001, and filed an application therein for appointm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company were being managed by Shri Bhagirath Agarwal, Smt. Dankha Devi Agarwal, his own mother, was compelled to file a suit to undo the fraudulent activities of Shri Bhagirath Agarwal. Mr. Hansaria submitted further that the learned Single Judge of the Calcutta High Court decided Smt. Dankha Devi Agarwal's application for restoration of her suit in a completely injudicious manner and based his decision on a comparison of Smt. Dankha Devi Agarwal's signatures on the different documents in the case without taking into consideration the passage of time and the age of Smt. Dankha Devi Agarwal. The defence set up by Shri Bhagirath Agarwal is one of denial of all the allegations made on behalf of the appellant. In fact, it is his specific case that Dankha Devi had no role to play in the events subsequent to the transfer of 1650 shares by her in his and his wife's favour. It was contended that the transfers had been effected by Dankha Devi Agarwal in favour of her elder son on her own volition as far back as in 1983-84 and returns were filed before the Registrar of Companies on 15th June, 1984 where such transfer of shares was recorded. Nothing was done in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariman submitted that it had been rightly decided by the learned Company Judge that the removal of Shri Bhagirath Agarwal and his wife from the Board of Directors of the company was unlawful as was the allotment of the said 1960 shares. Both the decisions said to have been adopted by the Board of Directors at the meeting held on 22nd November, 1989 were struck down and the appointment of the respondent Nos. 1 to 5 as Directors of the company at the Board meeting held on 5th September, 1998, was upheld. From the facts as disclosed, it is quite clear that there were differences within the family with Shri Tara Chand Agarwal and his younger son, Shri Chandra Prakash Agarwal, on one side and his elder son, Shri Bhagirath Agarwal on the other, and that Smt. Dankha Devi Agarwal was merely used as a front for the parties to further their individual gains. As has been revealed from the materials on record, the transfer of the 1650 shares of Smt. Dankha Devi Agarwal in favour of Shri Bhagirath Agarwal and his wife was effected some time in 1983-84 at a time when Shri Tara Chand Agarwal and Smt. Dankha Devi Agarwal along with the family of Chandra Prakash Agarwal had shifted to Delhi. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Anjali Agarwal, who, as indicated hereinabove, was the advocate of Shri Bhagirath Agarwal against whom the suit had been filed, particularly when it was to his interest that the suit stood withdrawn. In such circumstances, we allow the appeal and set aside the order passed by the Division Bench of the High Court dated 13th September, 1999, dismissing the appeal against the order dated 4th August, 1999, passed by the learned Single Judge dismissing the application filed by Smt. Dankha Devi Agarwal for recalling the orders passed by the learned Single Judge dated 20th June, 1995 and 28th July, 1995. We also set aside the said order of the learned Single Judge dated 4th August, 1999 and direct the aforesaid application to be re- heard and decided afresh after taking into consideration the manner in which the change was obtained by Smt. Anjali Agarwal and the mentioning of the matter ex-parte for non- prosecution of the suit on a date when the matter was not listed for such purpose. As far as Civil Appeal No.6535/2004 is concerned, it has not been seriously argued on behalf of the appellant that the learned Single Judge had erred in holding that the removal of Shri Bhagirath Ag ..... 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