TMI Blog2000 (4) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... ajority on the Board of the company. It was mutually agreed that the 2nd respondent would be the Chairman while the 2nd petitioner would be the managing director. In addition to the investment in the shares, the petitioners invested ₹ 50.41 lakhs by way of unsecured loans and also for payment to parties and towards expenses of the company. However, the respondents did not invest any further funds. The 2nd respondent was in charge of administration and financial matters while the 2nd petitioner engaged himself in exploring the possibilities to start building up of resorts. Right from the incorporation, no board meetings or general body meetings were convened by the 2nd respondent. However, through a public notice in Statesman dated 21.8.1998, the company had notified that the 2nd petitioner was removed as a director in a Board meeting held on 25.7.1998 and by another publication in Sunday Pioneer dated 20.9.1998, it was notified that both the 1st and 2nd petitioners had been removed as directors in a board meeting held on 25.7.1998. It later transpired that the petitioner-directors were declared to have vacated the office of directors in terms of Section 283(1)(g) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. By issue of further shares and removal of the petitioner-director, the respondents have acted in a manner oppressive to the petitioners and as such sought for declaring that the petitioner-directors continue as such and for setting aside the allotment of 180 shares. He also prayed that the respondent Nos. 2 to 4 be removed as directors and all the transactions of the company from 20.5.1998 be declared as null and void. 4. Shri Manoj Singh, Advocate, for the respondents, submitted that the allegations of the petitioners are baseless. He submitted that the company has been regular in holding Board meetings and notices were issued to all the directors and the petitioner- directors had attended many board meetings as is evident from the copies of the minutes filed. He pointed out that the petitioner-directors had misused their position as directors and have collected a large amount of money from intending investors and had pocketed the same without accounting for the same in the books of account of the company. Since the respondents questioned their conduct, they stopped attending the board meeting in spite of notice. He also submitted that all the records of the company like mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hearing held on 12.5.1999, further directions were issued to the respondents to file a statement of a consolidated receipts and payment account of the company from its date of incorporation till 1.5.1999 along with sur-rejoinder. Since the petitioners had claimed that they had advanced a large amount of funds to the company, the respondents were directed to indicate as to how these amounts were reflected in the books of the company and the petitioners were directed to file, in a sealed cover, the sources of these funds. In the hearing held on 6.12.1999 and 13.12.1999, the respondents were not represented and, accordingly, the matter was finally held on 5.1.2000. 8. Before dealing with the allegations, it is appropriate to examine the authenticity of the Board minutes as it would have bearing on the two issues raised by the petitioners - their removal as directors as well as allotment of shares. They reply filed by the respondents is found to be very sketchy without full particulars and supporting documents. On our directions, inspection of documents was given to the petitioners who later on filed copies of the Board minutes and attendance slips. As per these minutes, Board me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes had been fabricated to show further shares were issued only to convert the petitioners into minority - stands sub stantiated. Conversion of a majority into minority is a grave act of oppression. Accordingly, we hold that the allotment made in a meeting without notice to the petitioner directors, without proper quorum, resulting in conversion of the majority into minority has to be declared as null and void and we do so. 9. That next issue relates to the alleged vacation of office by the petitioner-directors. According to the respondents, the petitioner-directors did not attend 3 consecutive meeting on 2.12.1997, 31.3.1998 and 26.6.1998. In view of this, in the meeting on 26.6.1998, it was decided to issue a letter calling for their explanation for their absence, and accordingly, a letter was issued to them on 28.6.1998. Since they did not respond to this letter, in the Board meeting held on 25.7.1998, they were declared to have vacated their office as directors in terms of Section 283(1)(g). No materials have been placed before us to establish that notices were issued to these directors for these meetings. Further, we also note that in the newspaper advertisements, it was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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