TMI Blog2006 (12) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 1956 (hereinafter referred to as the Act) on 17.10.1990 as a private limited company in the name and style of M/s Ahimsa Mines and Minerals Pvt. Ltd. by ROC, Rajasthan. On 14th July, 1992 the name of the company was changed to M/s Shri Ahimsa Mines and Minerals Pvt. Ltd. Thereafter, on 19th August, 1992 the company got converted into a public limited company in the name and style of M/s Shri Ahimsa Mines and Minerals Ltd. having its registered office at D-50, Jyoti Marg, Bapu Nagar, Jaipur. The authorized capital of the company is ₹ 10 crores divided into 1,00,00,000 equity shares of ₹ 10/- each. The company's issued, subscribed and paid up capital is ₹ 1,51,05,000 comprising 15,10,500 equity shares of ₹ 10 each/-. The company is a 100% export oriented small scale unit engaged in the operations relating to manufacture of Natural Caffeine which is used in medicine and soft drinks. The admitted shareholding of the petitioners is 20.3%. However, as per claim in the petition the shareholding is 45.4%. 3. The counsel for the petitioners contended that the promoter of the company Shri Nemi Chand Jain (R-2) entered into an MOU with the petitioners a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the approval of the Board of Directors in a meeting attended by petitioner No. 1 and 2 is incorrect and baseless as no minutes of the said meeting have been furnished to the CLB despite an opportunity provided in this regard. The petitioners further pointed out that the respondents have changed the Regd. Office of the company from D-58A, Madhav Singh Road, Bani Park, Jaipur to D-50 Joti Marg, Bapu Nagar, Jaipur without following the proper procedure and without giving any intimation of the said change of Regd. Office to the Registrar of Companies, Rajasthan in compliance with Section 146 of the Act. Lastly, it was alleged that the petitioners have been removed from the Board of Directors illegally and without following the proper procedure. It was contended that the respondents' act of oppression and mismanagement is clear from the facts that- a. No evidence has been led for holding of Annual General Meeting or circulation of agenda for removal of the petitioners from the directorship. b. No evidence has been led for having complied with provisions of Section 190 of the Companies Act. c. No evidence has been led of having issued notice to the petitioners of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 (page 55 to 57/R) and 26,500 shares transferred to petitioners on 7.10.2003 (page 301/Ry) (N.K. Jain and Group -Narendra Kumar Jain, Mahabir Prasad Jain, Sandhya Devi Jain, Manbhar Devi Jain and Mahabir Prasad Jain HUF) whereas the Shareholding of respondents group is 10,38,500 shares (page 288/Ry) (N.C. Kaom and Group - Nemi Chand Jain, Sumitra Devi Jain, Ahimsa Holding Pvt. Ltd. and Bimneer Investments Pvt. Ltd.). 5. As regards non compliance of MOU it was pointed out that only a verbal MOU was entered between P-1,P-2 and R-2 according to which P-1 was required to increase his group's shareholding to 50% and provide minimum amount of ₹ 200 lakhs as interest free unsecured loan to R-1 and in turn P-1 and P-2 were required to be appointed as directors. This oral agreement was, in fact, immediately complied with by the respondents by making P-1 and P-2 as directors with effect from 18.8.99 till 13.3.2004 though they brought in only funds worth ₹ 172.50 lakhs into the company. It was agreed that the petitioners will hold 50% shares in the company but the petitioners failed to increase their shareholding to 50% and provide minimum interest free unsecured loan o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in possession of P1 and P2. Registered Office was shifted to this address at the insistence of P1 and P2 (para 12.2. of page 15/Pt), and thereafter again shifted to factory address since 13.11.2003 at the insistence of p1 and P2 only, it was pointed out, to hide their misdeeds as they already committed fraud by misusing the Cheque of Company. It was contended that they had filed false and fabricated complaint to Registrar of Companies regarding non-transfer of shares, which was dismissed by the Registrar of Companies due to non-submission of records by petitioners (Annexure R4-page 70/Ry). As regards the allegation regarding unilateral closure of HDFC Bank Account and opening of ICICI Bank Account it was pointed out by the respondents that the HDFC Bank Account was operated by R-2 and P-1 individually and severally vide Board's resolution dated 3.9.2002 and this account was closed on 30.3.2003 with the knowledge and consent of P-1 and P-2 besides P-1 was individually and/or severally authorised to operate SBI Bank Account with effect from 18.8.1999 to 16.2.2004 still the petitioners chose to file complaint under Section 138 of Negotiable Instrument Act vide Case No. 4330/2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended that as per the verbal MOU petitioners were to provide minimum amount of ₹ 200 lakhs as interest free unsecured loan to the respondent company. The petitioners provided amount only to the extent of ₹ 172 lakhs which was utilized for the purpose of the company and duly accounted for. SIDBI had further provided term loan aggregating to ₹ 133.60 lakhs. SIDBI has recalled the loan. Personal guarantee has been given by R-2 and his family members. The company wants to prevail upon SIDBI/SBI to consider rehabilitation proposal and for the purpose it was necessary to make part payment of the loan by selling unutilized land. 7. It was pointed out that the land would be sold after obtaining permission from SIDBI and entire sale proceeds will be deposited with SIDBI. Earlier SIDBI was agreeable to consider rehabilitation proposal but at that time P-1, it was alleged, misused his position as director and wrote a letter in which the rehabilitation proposal was rejected. The rehabilitation proposal was to consider waiver of penal interest and further interest and re-scheduling of interest overdue and term loan, and no additional funds were required. SIDBI has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion by the Board of respondent company, decided to increase the salary of his own and got the entry passed in books of accounts of the company for the increased salary. All these entries were objected to by the statutory auditor and then such unauthorized accounting entries pressurized by them were rectified to the satisfaction of the audit requirements. Thus it was reiterated by the respondents that the conduct of the petitioners has been unexpected and unbecoming, and detrimental to the interest of respondent company. Finally it was argued that the petition is frivolous and vaxatious as the petitioners have made baseless allegations against respondents without giving any evidential particulars, and there is no cause of action disclosed in the petition, and petition is submitted with sole intention to harass and harm the respondents and to pressurize the respondents to repay the unsecured loan given by the petitioners to the company, and this is a gross misuse of the process of law. 9. I have considered the pleadings and the documents filed therewith as well as the arguments of the counsels for the petitioners and the respondents. The respondents preliminary objection that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financial management but it was the petitioners own doings that they did not continue with the agreed conduct of business. The petitioners' entire case is that as per MOU they should get 50% shares and equal participation in financial management. The existence and validity of a proper MOU has been questioned. But the facts and circumstances of the case reveal that the respondents have acquiesced to the terms of the MOU. However, the petitioners themselves have not endeavoured to get it implemented in de facto. They have not brought in the required funds, and by their conduct have acted contrary to the interest of the company. In these circumstances the balance of convenience is more in favour of the respondents. As regards change of Regd. Office of the company, the petitioners have not refuted the respondents arguments that the Regd. Office of the company was at the residence of the petitioners and was later on shifted on their own insistence. The only other allegation against the respondents is removal of petitioners from the Board of Directors of the company. Since this is a public limited company such directorial complaints cannot be adjudicated by this Board in Section 39 ..... 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