Karnataka High Court
Vijay Kumar Narang vs Prakash Coach Builders Pvt Ltd on 11 November, 2009
Bench: D.V.Shylendra Kumar, L.Narayana Swamy
IN THE HIGH COURT 0? KARNATAIEA A31'
BATE!) THIS ZEHEI 11?}; DAY 01:' N€.§}*$E §&BER. 3a¢j:_'§« _
PRESENT ' . ' '
THE HONBLE MR.JUSTE§$E-DEV _sm*I;§_s%BRA
THE HON'BLE MILJUSTICE L iV'x<i;1'飧fYAr§2i;
COMPA, N:3,8 a""'20'{??§
COMPA Nos,18 of 200582;
In comm No.8 of 2095:
Between:
E.
EV'
VLJEAY :~:UMAR..:\;u:.;2:§u'\:G .
S/Q SH£xN'FE.1LA§, NAE%.;":?~EG .
AGED 53 YE:AR"§'3 _» H ' ,
Rm'? N<;,:a;1',5im CRTCASS.
RA-JMAHAL vgms EXi:ff:~:NszQ'N.
gA;\:g;ALoP;@_+55008Q'; =
NEETA NARA?€G"~ _ V ' "
. V . '_ E«i?f§3;5'3%?igE'§{:' KU§»iARNaR;~::=g@
"1\.i;'zE'§ 48 YE:;§Rs
R533? EVE}, :«<;;4,.5'm _;CRG$:'~3
* asmgs ':iX'§'ENSE{)E€
E:'.:$;E'§{§§A§J{22i{i:_; 550983
_ 5§U91N:f;ER.§€g:
. 3,50. Lz:J?fi{E' RAE
:1 1 ' " -- ._ ' 'gszgsm Rags
' .R;;:':[email protected]/ :4, ABSHQE' i§':'€}U'£'
" ?éE:§.\E}{f;?T;'§ RG;%D$ éiiééfi {}R{}i;s'f\E®S
. 3::N€;A:,QRE » 5@<:;:::>;32
[J12
And:
GEETHA RAE
\?s.?';"(}. BHUPENDER RAE
AGE?) 51?} YE1ARS§
R/LAT NQ,26,/14»
ABSHGT LA3i'{}U'R SANKEE' ROAQ
HIGH GRQEENSS
BANGALORE - 568652
[BY SR1 3 3 NAGANANB, SR. (:<::'g:~:SE:L FGR ' 4. ' '
EU
-- V. A' A<::;»E:i315? 321333
'1 a, N'€}R"E'Ei' PARK RGAD
PRAKASH COACH BUELDERS P\?'E"Li{V'D»
A COMPANY INCQRPORATED UNDER
THE CQMPANIES ACT, 1958' A -
HAVING ITS» REGIS'I'EREE}~--.QE'FIC'_E V
AT "rm MILE1S'I'ONE, 'iUMKUR_ROA§) 1*
PEENYA BANGALORE ~ 56QQ58._
REP' BY ITS DIRECIQR W
BHARAT BHUSHAs;*'«T1.2§;:aRANG 2: ~
BHARAT BHE3SH;':§N -._ V.
S/'(). QMPRAKASH ;:'§ARAN@ .. '
AGED 47"r'EARE§+
R/AT 9,: L NORETP; 93:25 RQAB _
KUEvL%R.:2PARK ' . ~
BANGALORE'-» 55o{>€r1._f . "
C K NARQTi:%&M = V "
Sm, 2252*}: C32. Fj§SHA\f2;3; MURTHY
Eilfifvfi "EZ.?_;S'F
' §z~%£f«IG;%£5CiRE" v '.:::~_3G_';:;0:
ciézafééé yégggsééé
R?\?f€%';._§B}é;Rz'¥'E"BE£E§8H§£~€ mggaxa
I £33212 r:§£§E<.EARS»
"=9,/:§ NQ§?i.'_?H P§R§<: RS338
K'§::.@gRA PEEK EZAST
"T3,i:E'>$_:'"§£';§;(3R§ 2 §§G€}GE
' SE§§€§€:SE€E3;:'\E K:;:v1A;*2 ?vi§:Z\E€Hz1ji§A
._ " ~;*5*;:i}5§;r§:}§§2:§5:--:::,,$:, M§%§4C%i?1E%EBA
;>s;:«§::e gr; E'Ei§%RS§
AEé>*§i;.:;;.~¢x:*1$ 3
1351/8. SUNDARASWAMY, R;%E\/IDAS 8: ;aNé;N'D",;a;DVsf;;',:.,"
«»\\5,
2 3*'
é.
~.
R;'AT N048, BASAPPA RQAD
SHANTENAGAR
BANGALf3RE~ 2'?
E'=:iEEE\E'{} E'\/iA'éCH§§'€E}A
'€238, SUDHARSHAN §§U?vE§':.R MAE<ECH,.é§\§E§)Ex- .
AGES 45 YEARS
RXA'? NCi.4~C}, BRSAPPA RCEAD,
SHANTHINAGAR§
BANGALORE A 56082'?
K M LO}E§.A.NA'I'H
S/Q. MOGAPPA,
AGED 5': YEARS . --«
R/AT NO.5'?, HEBRON APA:::%rz;:E',;m:3 1
FLAT N03394:, EH FLOOR V 1
BENSON CROSS RGAD,
BENSON T'C)WN_.. 'j A
BANGALORE .7 :"36@<;z;6.
{BY SR: IV;§;:{Y;'if\T'C_§f~N'N§§PPA,
' RESPONDENTS
FQR
Mzs.VV,c%REs'i';éuvI A£),'y{_..,~'FOR R2 3: R4:
1:313 }%_PPEAf.,, §S.'*EffLE§if}"~_{ff<EDE§€ $2.2m':
{EN 113?' G? THE
COMPANIES .53ii'§'i'.._ 195.6 2'a€:§A}TN»S'}C'- ORDER DATEZFQ. 7.4.2394
PASSED EN COMPANY PEIT'§71.7QN"----N{). 63/20632 SN THE} FELE OF
THE CGMPANY LE3;'i3V BQA}?._D,'~..A_DDL. PRL BENC
If11'~¢_V0M,P;*%. 15:9'. :8 of ':2@e::.,5;
ggtweegg
E.
I -?fi;:,::<¢%:;<::~ [i' 'é:§:;~;§<::a: 3311,3533 PW :33
A f3{}3'¥IPANY '§?€C=C¥RFGRf\f§'E§ UNBEZR
ACT, 3955
E§A'sf§"«§G HS RE§{}L§TER§:ZD QFFECE',
..g5'{f }7)?%i §\:'{§L7£S'§QN€. 'Y'=.§E£K{}R RQAI}
' PE§fN'YA,"BAE*~SG.ALQRE -- 5§GQ5$
. gl»
~ . _ 'E33? "23? 2'55 DERE:C'£'GR
' C" 3: §\§;XR£3'§'EvL%?:f£
_,§:;/55:}; E_£§fEi s::i~.;. ?if€8E%§§:5'z% :2::':;:a':'§§:':'
" £2: ¥§;;:;23
H, CHENNAE, AN?)
5 Bfi/3xR;5{§" BHUSHELN
S,/O. OM PPJ--':KASE§ NAR/XNG
£4933 48 'EEZARS.
REA'? NQ.§;'L EGORTH PARK
RGEKD, KUMAR ?:%.RE<Z '~Ev'wES'i' _
BANGALORE -- OE :
5. CHITRA NARANG
W/O. BHARATH BHUSHAN m;:f::a.:§:<3
AGED 46 YEARS . "
9; L NORTH PARK ROAD
KUMARA PARK EAST _
BANGALORE -- 550001 .
"2, SUDERSHAN KUMAR MANCE_iz£SED:é _
S/Q;MUNSHILAL'MANC:HA.NDA *
AGED 54 YEARS, ._ _' _ -
No.40,BAsAp;:>A??QA§>
SHANTHINAGAR '
BANGALORE -- _2:?
8. ,
W/'C>. :3UDARsr:;aNVKz.;MAR~« . .
AGED :25 YEARS "
NCn4Q, Bzgs:aPpA R0953 "
SHANTH{N;:._QAR, B$NQ,A;LORE ~ 2? RESPQNDENTS
V, ._i {SYFERE S $AA:s:é.§A:§»VaND, SR. COEENSEEL FOR
_AsU:§§Ar;gsLxErAa!w. ""?€E'£}z%S & ANAND, Aavsw FOR CfR§«Rr%}
_ as FELED UNDER S;'E,';(;"'TEOE\§' 20%' GE? "mg
CQEv£PAN.E'EZ$ ;a,<;ir; $35.8' AGAINST THE SRBER §A'i'EDa 74,2934
§ASS€Ej'% 21% €3Q;'}vE?f;5x£'§7:" PE'FY§'E€>N Nfi, :33/2032 SN mg FELE GE'
<:QM.1%A:\2y- EASE? 39533? ABEL. PRL, BENCH, €3E~IENN§xE, mi:
§"§<£:.§ ' '
" " ':§=i:-.iC'01\"r§P§s..:%73E$ 13 sf 2:395:
' §;§§§§§€2.i3_Z
h 7:: Eifigaéiéé' 3m;$§:g:«s ?§ARAE"=«§{}
.._ " 350; GM ?R§:§<Z_fixSE~§ :x:€Aga;x:GV
' gag?) ":f'§AE§Sg
13
4. It is a1$0 pieaded that thevLf::fst ,5
co:npany hgui taken control of anathker e:;i3;2;Vp3L:3j€"~bj;
Rigs S EVE Kamzagspa A::fx:}m@biI§:'s--.__P3iV::t€' i,§::i§.§:ec3._:'xvhiéh
had, far its main purpaséé and {£36 aCtiv:i.€;a;fiQf bcdy
buiiding in respect of iuxuiyfib2.1SeS§-.V Dj.
5. it had b€€?i1":.::A:§§}'€aC§;3A*(i disputéa
amonggi: the §f the acquisition
9? Sh8.1"€S naL:1-eiyg M/S S M
KaI:n21P13a and same 8f the
parties hgfi, &3é fi.*0mpany law board for reiief
the rsgigtar Gf members 0f the
such developments taking' place:
j' "3:§r2c:*: differ§::;:a%s eiizisiégsi '€316 parties sscaiated argd quité
" " haté its impact an {he manner 52% management cf
".1 "fi"§::.';:i§fé."'*.3':0f the first :'€$p0nd<3mt - Cgmgany alga anfi Ehe
Z/Z{ ('£////7'///////////////,
Vj:'f{$;§;3v--'éziisgatiorz fer f;§*:&_p*:1:*p§se af ibis appeai azid
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L»""«.;_3nf{--§S€r1i3.*:i<):1 of She €:}:::§;::1§; peiitior: bfiffifé {he c:3:§:pan§5V
'zf££«'Z,';%;'/rz'/:3'«'9://zrrrrr
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iaw "bsszyé was 12:21:: thzé gééiezrahaiaiarsg - :*€:s;>0:zCié::':':;,s 0? ?§"it":?
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53:33: §'€f:§§G1E§£3}fii.'€ - €i@fi'i§>21%E'ij£ Eazzé Eiifififi 2:: 5.. ffiziilfiffif $3
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_mm=-:>§§s-\\>\\\¥\\}}\\\\\\\\\\\§ .15 gaeéiizigszzi {_}ff&E'§3C}g efisiisting Shares 3:9 fifie méinfiéfs 'ai;-..>a L xgfgmzum éi' Rs.14«£§/~ 932* sham azzd ~ 3 rézzzziitazzce {mm ihé i::ie:*esi:a:;i~ members ' $i.:.bs£'::.'i§3i:2g_ {:9 %a.fi§::m::a2 sharesgg J ' an 'éf i§ef_:3i'e 'SQ. 1},.2'8fi2§
7. It: was the versiozé ::>f iha that ' -iheug}: {hé}? ssatégericaliy shares zifzé that fihg. sffer naver ' ' ihfiiéaiéd thé holdéf, fihe peiitieners ifijag rfieut 131$ éitempi an the part::3f 'fihe in charge 0f the { managémfini: eff .. j§}1e>V;c§éz:1,:;'54a:":;s;'_.':z?as zzgthing siisrt sf an act fif,'Q§pr€§*«§%§éi1'~ afid T%a;:kk[:::eg:§ ac: am bei;t:~g-- ix: iiie me sf £25 *S2,é:;£:EiVV"spg:£':>ssiV«e =z:13::m$r gaf 'fzznégiaaizing 3%' 4:213 ' . bl}? firfii --r$sp<:;I1§°a3:;?£" 4 _rfi::~33?ii}_:%'a1.):é§'?;'-
. .?i?&?"%i%f_;fZ'€i§E-- j_ aisa ,..:%' ':*$$::§€2:t:dé:::;s' éégéré ii': --$€§§2£:*e% ihéé fé::~£:_f:%ar Liza: mg geam:§% am iZ_--2;§:*.§ rais%p%a::&::::%s% m _ _§;}i§:;2"§.'.§§€37i;3 §§:£Z: aézaifagrss agztgé ii': 31. mazxgzgzr afifiiaisréfsgzgss fie __§ '////I/////////,>>-nu»;
~w.w-:-wr-:«\\<.\.\\\\\\\¥-'r-Xfxfé¥1 :'§§\ %\ § 18 {I16 irztersst of ether menzbers am £10 virtzzaliyiV§'n§stL §§'é§:éz:
sharehalfias of the €f{>{1"1pEiI?:i€S pesiiian fiiii. The Causs Qf 2§g::%;§§3:1 Compazly Law Board was of ailoiment of the proposer} in the Board Meeting of 3:3 Qompélégy by ailotting 1500 in favour of the secand i:<:2 the Cempany Petition to the members of {he companjfg " _ 8,». A_ I': Was: s?€fS:Gn....Gt' the peliitiansrs that they had
8. S.§?}:f€',fi b 'E1223 i,sé§a:~.¢s each and hafi éenéerad chequa far s':;::i'..;§i' RsfA* each rfiprssezziing "she value 3?
_ ~..§2%%.§harés~~§f1';.€€r:'::S sf £226 prica quaaed Ear each share as '7 per Déifiér letter, //// -Vflk/7///////////,1 "Ei v£a$ tbs zrsrgian Sf fhrfii p€'€§"§§Gi1'3E'S that as {$33 //7}%f56' ghaye §i§3:?:¥:7£':?}"Z§T£ E7i?£;i§E= $38 $32335 by sash es? 356 -- S menabéi' ef fhs {3GI'£}§}E':E"E:;£} *:§'a=: afééay Shmséé be {}§3¥'§OéE8§:j 3::
~ '.;.,:xmmm»an»:-:-5muc«xxxxx\\\xx$>>$§%fi% \ & § \-\ \ . . §\\§._u ....'.'........"A\§xxxx\\\\\\\ $§§\\\\\§§§ $§§mN®§ uwmm..
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x x \\ ' ~-3-:u«um~u~<~mx\\\w«\\\\\\\\\\$s§EwE{{{{i'§§§& :§\ \N\\\ x .« .xx \\\x . .............5x\\\\\\\\\\\\««\\«§& §§§ Nw§\\\\ §&% &um\ xx xx
-.
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hwnnv\v\\\ . .,,...,MW.W-.,ggg"mmxmmxxxxxxxxwc%\\'& § § 19 ii} direct Regpazzdents, their servazzis and"
czgerzis it} aiioz'; in jtzvour 0f the Peiiiéoners a%:« eqzzai nzunber Qf 3hars2s 0f the I Resp0n§;§é:'2Z*« Canzpaizg as $326 shares :§ be «:zZE§£i'e§" i?:3'~_ Respandazi Z'J:>,:?3, 4,555 5 as' {heir rzorz2irze?e:<§'~<:§z*"*V.V Smipariyfies: "" ' ' iifaj Declare aha: the pw*poriéd_ t2£Zotmei';;;:_ bf '~ 3008 shares at the alleged B'__oar<:£' Méei€ng'VV on 23.12.2902 to Resparzdézzis .21-:1.fVZ"L'§.., 9} E13 iélegai, oppressive and m::1Zafid,e and séé.c:sidé the said aiioimeni, and ,={5€,ir':s.:,e'.:;vz,ié:*.rjz£ly ofdér reduction 9f the paid jsf;.c:r:;g';:cip.ié:1nZ";:3f the 135 Réspondent Carngrvang :"<:<',:,{_2if0;ii,n§.: the allotment ofthe.._said 3Q€20j:::ha:jes. . " V'
iii) deciarefl étZ1a:?3""ihe'.. eizciéczn g-fijQResponden:s in keeping F'é:iE:@zf{e"f$..~».§\;'ai?';;- of office as Direcfor :55 £?_€;§pOz:cie_{;i Company is 0pp:'esSi:}e- _ = iv} dirécé':.z:2*éez2:{zne:fié':qf'z5§%*EicZes cf zéssociaziien of the Respé}2::ié:r2:= Cigvnzpany to gravide thai eoz7zp'c:3si£':0.:*:" QEV .2336 'Board cf Dzjreciors wilé be V eqagil arrzgzzgn' {fie Peiiéieners gmup and 2m «-.._ARe:5;éar;fie:2f;s ;gra:Lg":2§"&nd izzcie;:>€rzden{ 3"? person . ,_;';:;.bé: _Cé];Z>§€3i??'{éZd by :he Camparzy Law Baard __SV?;a'Eé>E2vé'€i}::.2irmaz1 cf {he Board 5}' Eireciers tgf 'E--€52-'Rés§@.:z:£énij car; nfgarzyg :2} diézéci .:}z;:[:é: {he Baard of the §ire§::3rs {ff {E23 13%' _' '-»./Respoiadsni sf/zali :19: {aka any d€::'i8i@2"l reiaiing ié i.'S.E{Z,£€ gr irazngjér Qfgizareg £2: 3, :32a;mer zgjhicfz j " ?j}§"§i"_f§$ €zb:"3::£" C?"££3i§Z§€ in 53256 §§"g5:z'é §2:2E&iz2g % * §:;:§€r:"z Qf £326 C0;::g::a;2g; as 5:" géaed as: She daze .. Q5 izzCG:p§;*a§ia;::
?%{};,g;§;;;;£; %:"%:5'Cfgzg/§}}§7 (W4-W?/k///////////ro;.w.»..-.-.m......,.....W..
§ /////// 21
e) éireei thai no Genera! Body Meeieing shailfge' ' "= ' eerwened or heid by the PSI Responeiesziv "
Cempangg wéfheuz ieave of :hésVI1?Qn'bie'B"e'eaf§;i, " V iev consider {he ineresise « mi. ~:'éE:_e'._ auéherieeeifissueeffpeaié age s:§f;:ea2*s;§'e.::':1t:>ié-€_2E"~af;3',f¥' V .1 :he Cemparlgg 92" to anzenci {he ;4;ri:'e§es'_; Aeéflg" "
Assoeiaiiezz =:j' {he Conzpe:t1§;;.V.. A T'
12. We notice from the order»s%iL'eef ,' the Campany Law Beard that :'i_}?i_}{E'fi7fiII1 orciefs had been passed by the sf the Cempeny Petition ;"oef'?1.9é, it". i
3. E522.
Petition} _vrrze3?f;:'i<a_r:e,¢Z seeking the interim 2"eliej's7._so:ughi":;'g»-ghg'peiiiiorz; Counsei for the respontienfs eppesjed "é-h_e'»«rraove for granting any interim feZ:fej"_c12i:;£ 5.ougE;:i iime to file eeunier, whiqrh. may""e_e eiene 3551} O3 and rgoénder .- , {O flied by Q3. fr: {he rnearzwhéée, ihe zfe$:!,:>ori&eréisj wiii maintain the Status Que {:2 1 ' :ég<m£_:-:2 ea: ggaid Capiiai 0f ihe Cempany and ex:-gg T':*e;S<>.Z'z;£:':3;;..~~ ihai may be passed wig be ::32;kierrze;z§eed'e1enEy wiifl apprevai ef {his Bench, ctgizzgn 2812933 aé 2.3§p.§32, 2é31E2°2QQ2 X26 X26 fies»:
G§3:§}E§ gg, \ 19¢" ' 'ge-
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1984 {55)CC 160. Moreover. {he aeaion r;jj7.2'}jieVv V - "
respenderzis 3:;/{fers from Eaeie ej"'p':'eb£{:,; <:_:n';ii.X' jeir piag as evidenced by ihe ,..ierfep::gf:ee1--. ' aiieimerzts made in e.>:eZ:,:séers of i?1e1;}e:i?;ieréere.v , "
heiding 58% efg:3e:é&»L:p eepf€e:;§._.Qj' {heV_Cem;e;.1:rég; _ entitling them, fer the re£iejTe9'"e§«:zimed..Virzfiheav ' Cerrzpang; Peiitier: in support Qfkzzfiieh refererzee f;
has been made to' ~..Stan;Eidr:i. }?n_dustfi'es"
Limited and another Vs. '~;Mc;)°¢2f'E£1£AServices Limited and others, 1994 E80) C:{.3'-'Z64;_~__ By virtue ef the irr1eugne"e€'=e,iio{me:n:s,7_ tfzeie has been ehangesg.eVV_'-- £113 '«..eOfepesiéion ef shareheidezeg». g.:':e%1cefiifo£ of the first respdnde?%:~Ce'm1L>ét§:'g;."' {:1 connection, learned. Seri§:_>%' (Z3?._u_n3e'E "ea detaiied account {If similar eeerjariueffl a::ci».§ii:itude"§1dopted by the respefzdeezs. i:;fg..¢{i;1éI*1g 'eo2':2':rol of other group Companies f em:'i:ie.s e.:n1c€..:.;rged that even g' the petitioneh:-.__< f1:f:ve_ reef' .ff§'CZd€ Gui any case of 0ppgi'eesier:," :heV.vCLB is empewered ta grant reliefs in the interest ef the parties as heid in . the" ea}3'e ef..,Needle"Industries (India) Ltd. He, ' §jh€C€j'{)f€; 'gesreégedfer setting aside {he impugned e;E.ie{;"2 zeéjege.
3g Sfeg; '%f..E€§1e1aE<:rie?:z:e.e? Eeeamed Ceunsei appearéeg fer regeendents whiie eenéenfiéng .:h,ei {fie peiiéiorzere have me: made ea: any ease fie Show the: :he efieérs of {he first respendezu? *_€ZI5ee*z1eazzg are being e<::n,dL:,eéed in :1 meinnes"
prgzadieiai fie ihe pubis}: inéereeé or in eg meneer
-'eppreeeiee ie eeg; member or members?
saiésjggéng {he requiremenie Cf seeizierzs EQ7 and 3§8, every aéiegeiiezz made in relazien :0 ifie g{}'e;i3"e ef {he eeszeems eihes' {hen {he fee:
I'€3§§§G!"Zdi3?Z§f eezezgsezzgg fie Cgaziie reieeeni fer' ihe eaegeese ej' {he Cezeezeaegg Peiiiien, '?§1e gfieziiieszere have fee'§ed fie msrziiie egg: e eeee fee \\\\\\\\\\\\\\\\\\\K3.........'.a.
§«««\\\\\\\\\\\\\\\\«A.............. ..
\§~\\\\\\\\\\\\\\xs..............'. ' .30 days 0f due Zadgemeni of :he share . eerigficaies arid the énsérurnent {if ir::z:1sjer_g. by the petitioners and ' CU The reseluiions passed :2: the <:§rf:%:"::e:E' genera: meeééng heiai on 2_.2'O{_3'3,"'z;::.i:;Z. became ejjfeeiiee as agzd _:z;:?<:e":iz 'iéE1e* zrarzsfers are registered in': feiéocir é:3j.' {he peimoners in terms 0f this erc;ier,=. V' With ihe above direciziens, :efie._:§:2eti:io%:' appéieezzfien in CA N0 'F/.20:C}4"'--»$eekifzgv.._.ti?"
implement' the resoZu'iiQi':_s p.as§e¢Z--«:;_2i_iE1e annual general meeting held .3on___":i?f33}2,2.Q{}3 are disposed, however, zggitfzaegiii_any'"~::rde:? to costs, A' ' " ' A 7.04.2004"
and the Pe't.iii<:»:':. of in terms Qf the impugned §f».;je'r:_ granting partiai reiief to the petiti_0nere§;"«..Vti1e_'V._pfeeefi3; appeals, both by the ;;'éi':3'iiQne:f§i~ eerie {he re:Sp--a--:«1dents in the Cempany ?e§iti<:»:1, as izesiieefi' "s'::e§r'é§e:' paw: 43f iéhiis erder.
T§'1e"Cé1--'$%"I.}§;»é.jE'1}f ?et3Z'::iez1 fled been resisted: by ihe
--:§*ee}§;:§::»iee3j;€:evv'e§2 fihzzg a eemmen C¢3Li§";'i€?f Statemené fiateé 5 *°?1";e 5~.:**~?$*",, '~ :x.;,.'?.z:':
4014. The respondents contended; inter aha, that the petiiien was met tenabie in terms ef the pfovie§ene.«j"»e_«:«._*--_ Seeiiezizs 39'? eyed 3§8 of iirze Cempanies 332%; ihaififa j" V 110: neeeeearily ixldieajée any act of €i:ii'I€F«.Q§f3f€S;§3ii§I? V'<3r_'_j_ m:ie~m2magement, within the seepe°xVof':._[the "ef_;';aiz;'Eg>:*:gf'*~.,T ' provisions and that subsiantial 'iii:
the petitien were irrelexfatgt fe:£,efteei«" 'fie. Agiher Companies, but not to Company and that referexgeejio eras of no eensequeilee for in the Cempany 'hfesfifondent -« Company is a rfianaged eempany, as indicatedfay Lthe"b'fig;:res revealed in the Annuai €3<;:I1pe¢i§?';"'eepy ef which had been placed befe::eVV Law Beard by the eempeny vpeéitieheeefe '§§1e:f§'.eeieaies: the? i: had maée p:°e§i:s aged hafi "'e1'ir:esee§ee :e'v._e%:£:end ;Re.5f?f3 Eakh 33 em 3m2.2e<::2 am :%: :§e.é:gre paidwup eapitai ef Rs.8i3§/~ witéi the emfiée ? ee::~:;;a:~ee '€€:"}? weié is me inveeimeysi. maée by {fie g _ \«x§\\\\\\\x\?...+...42
inciudizig the bkzsod reiatianshig which has :1§th.i:1 §'~--1i 0' with the relief $0ugh$: for by the gggtitifirijéfg Camp3:1§; Fatitionz that: ihs ;)eI£i:'£.:;_€:;1e:9L2~;_v_"W€»r«3 '£115;
ma§1ag€m&n: 9f the Cempazg? fer ggéiiars and it is aniy the resp0nci»é'r.1:.'is_. the affairs of 1:116 c0mpaI}y--; éhafi' in no way respcznsible referred is in the COInp_2?t--:'}§%* ".#¢i§;;§;;'i::§'1VV'averm€nts made abeut the of the M/S S.£\/E. Kannappa Au{Vi5:r}0E3i_}ié:§_ 'Limited were not either <fQ':'rr3_c': s:§:':'«:.1'<:_1 é<53.I1i: é;::d_ such allsgationg were denied by ihéa ihat the first respendent - ilompamy xfiéé é.é5':;'ii§j;é§9:'§1curring Eczssess had been Convéried " a making {tgmparzy by the afficieni sf raspanfisntg 23,4 336 'Z? 983,; fhai, .' 3 351d 4 were infieggsméeni préfessienai and; avers net §'"iE:I1Chi"iEEi§E 431° Exifekirzgs of V' r&§g>::::r:6;€:";§$ 33 aééégefi in ihe §§'§iiée:"i and 'aha §ei§':i::;::s:*s; "
E3': Eacta had E'}€;*'i?€3;" e*;r§j€Ci€fi 9&1: thfi yreserase cf Ehfisfi M. M_.m..~....M,M,,y,,,,,,,,,,,",;;m/m% 1 \§\\\\\\\\\\xxA..............'.
V\§%\\\\\\\\\\\\\\x§.......q....n. ..
45 V V and iega} issues egainsi the responfiems; tfiat eneiesure ef Pay Qrder sf Re.1,iL§1.,?6O/-_--"§i%i'ei;15{}z§i"V reepense for seeking afietmem ené X&:§§1hOi-9;? ..§r1d;e3;~€e::*:g;iIfie« in nureber of ehares the petit%§31'":_e.re V"v::*eV'1*eV subscribe; was an act without the petitioners did not Vxiiih 0f Section 41 of the Aet; own maldng which p::1ei%¢p}:'¢d. ".f30..*§{1A":C:§V":--Vef.....E§ire(:1E<:>rs frem eliciting any and as the managemeijif mree'V"feve1uired 1:9 meet the statutory is the applications received Iifem ané 4 applying for 1508 eharee ABoe£i*<i'v~--:----f€:er deiiberaijene, had decided fie ago': E3 2:5 Tr:v':;£::'ifje1fe--«:3f Sheree each in faveer ef ihe eeeond age} §<e-xeiihlé/E1 v§eeiI§:;--Q:3;§ente arid thus the pezid-uee eepita} ef the ee:;£*:;pahy""had been ieereeeeé :0 meei éhe .:'V}§*el?;"je,§:re:?:":.en'ie' sf Section 3 ef the eee Reependeete <ie2j:_.ie%§ 'éiiéit eueh am act g1:z":e:;:1i;e£§; is: eééhez" epggreeeiexi V etiiifiegai ez" an aei ef :*:1§e~s:::aeagee3e:"§{; flee: {he petifiee §§\\§\\\\\\\\\\«.......q..+...
43' but nevertheiess, the paiiiieners haxfizsg :*e_5;§2;3:{§§§d~:::b}{ '4 fs:>:rw'a3'dis:2g fimr gay azfiers fer Rs; 4? f£:§:*éé€::'fi::g R8;2"~§§,r"~ per share? irzrslmgiaze azif V01' %2;z*h§{:h is suffizziem aim 'is gui "iegeiher 35% cf the of R35 iakh of the cemgatfiy is the petitisners ha1?§::;'§i, sf this number of hazéing tenderfid equivaieni: €33.11; _22va,?s requires} is 3110: these shares and with 'due requirement cf VS:eciiQr154%iA.xa:aVs '}t>2!2;.};jV,fVv'§H}V~L:"a:'e*:se:s:i: is ifiegaliy deprive the iegiiimate antitiement far being a1}9t£e:§ {,hé sfsf shares which they had aspired far in .:i:%1e Lpeiitiazmrs having their expresssd 5:). mmpiy Wiih the requiremgzzi Qf 133$; the }3ire£i::srs 31:': its méeiifig hem 9:: 13.32.2662, ' the sffszrs £35 £138 psiitianérs 333$ yracsséiizg is gharég 3:1 $230131" sf :'&-sgfizzdezsis 2 and 4 33113' is fhfi ssmgafiy paiiiiazz, as '§,:"2€ éxciusiafi :3?' $113 ?%iiiii§f3€fS azzii if increasing the paidagp eapitexi of the ::ter:1pan}r 1:9 Rs.2f--2--£§[ Eakh, Without assigning any justifieatien aéditienai funds was neihing ehert of fieigzciary ebligaiien and true: ioxx7ar€:i§3»AA'§':§Ae' its sharehoidersg that such conduct diéi.;ii21ouI:§;»'.te;3:é:ri' aiifi Of oppression warranting Windifigfifup <:>f:h'ee-vzizorizpany which is just and equiiabie',~~.,an(i the'-aetitm in particuiar of Seeking to éisturb the had been maintained in the e§:3§:'ehé_1dfing': the company by its. and one share by that being eeught:
{G be dis'£111/"e'e:fvV:i 'fer by the rescniutien of the Board ef v:?';es§§x§é'e en 13'12.2QQ2 and by the ef shafes, equafiy gave eause ':23 {fie paei§§i<>.$§:e:3sK-e--v"eeek feiief befere the Bear& add an Vsueh ra§:::)::e§e', -féie Cemgamy Law Bczaré paeeeeé efdeys can v§e:,:€:iV':§a::é3r:":i:1 ihe feiiewing maimer :0 grant yelief ii':
"f:%.ié;ez;:;"t_ 6? éfie {';8i".%';§§}8;i"1}/':
-. Tee S§CCi':'i§ reepeedeizi zeezzici irezizgiier egg: of F253: Efzeiéing, :28} Sheree egg}: §?'}{j:€ZZ§QE,£?' 5,3?' {he v:mn mmmwmWw,w_. , 18$ Whiie ihe petitieners arms were in appea} Company Appeai No.8/2005 are before this irnpreve their pessitier: and is get further :°e1iefHE__3fef:31re:.'_T:hnis cam': on the premise that the Cen3}:;.é1r1y"L;33>§*_B02:::f:fi~j":.eS { _ unjustifiably deprived the p€tifiQ{1_€I'S e'§e'ueh revliefé-;. 'The' eempany and the other sharehei'ifisefe 'anei ere also in appeal in two sets the Cempany Law Board; in order has committed an act in law? in partially aliosxririé. xi:i1at the Company petition if} Iimine in total;
that the peeiiiefiees "Cemeany law Beard did nei deeeeve 5;: there was abssfiutely as {hat the Cempan}; Lave Beafé: -'.f:e.e'V-:V4§'e§VaE§y.--:"misundereieed ihe 3::/epe ef the '"§:*::vis§e:};<.e e§°Se.eiienS 39? 21:13 398 ef the Aeig ithei éihe ""e§§eie:'e:V3ndi::g ef the Cerepezzg? L.:::_W Seward fie eiearijg 3:31 "g "52_ee._'é€:e%iE:ei {he fees? izaéé gieiarezx age' éeeiared as §€:" 21 T:e'::;:':ibeT:* ef weéghégg emthéariieiee eé" ihe Supfeiee fiiezm' 5% mmww«mmm"mmmMMm"W..__m._._ .., , 51 dealing with the stamt<:»ry §}§"€)V§SiGZ1S sf Se/ctions 397 arid 398 Qf {he Act and the? order of the Company Law ,, rm: 2}}: 5:12 ienabie ix: Eaw: has to bfi set asie:i€' 2__in(i*j.:}ié% j Cczmpany psiitien eiigmissed 1:5; alioxiféng t'f1:<.Ji_r'-appé:ii:._ V'
19. In such circumstances, w€31';«:;;v€ heafeiVa1i'v_t}£V:é'v:1:11fe«3 appealg together over a c011sid€r:3jj1ev_ic.:;gth.'(>5Vtirnéi and u:
with 8111*}; Naganand, appearing for the appéflants and respondents 1?}, 2005 and Campany Sri Dhyan for the appefiants in Cempany E8,f200§ Concludsd his fiiaiqgratg; EQZOOQ and having regard £0 ih}?: C§i§$€ ..reEvg;'ii~<3:1';:31"1§..g_3 of the pa:"£i§€s and as it was fat that 3:: amiéabie Seéiikféiezit sf {E13 di§pu'Ee$ am::::}g 33$ parties _V%TT._%3;as.V a }7§}{§f,fS éssirabifi {hing éhszm {H6 gudieiaé * 'é$*:<:L:f';"3::§i?z?a:~i§{>r: sf {E23 diff€3E"€f1C€ES§ 51$ :1:22*f:'ié::" §?%i'3.S f:;:.éj{j§:,1:*zi3:3d &>§i'Eh{:s:::'§ §:"{;{:s;"*s:€ii:/zfg 50:" gaégmiéfié £50 €;'§1€§D§€ 'éfm:54
eiabixately and on all the aspects of the j" V iearnad €',{)1H1S€1S having made submi§si<i:}n$;"::'@----.fm*ihe:fV hearing was necéssary anti hzéfizfg preceedeé to dictate {ha judgment -Qpinifzg éis
22. Appearing on beh:;1§f...V. of ;'i'h'€:: _:ifi%Z;f:}§=aI1j; a1'1€iV§ the sharéholders and Qthers the affairs in the Campany uA.§§&p-Ba: is by this Company and ::«'VE_§!I:f?'\}€r<>t2Lrr: was a direcmr at in the Company Pxppeai N0.:'i_6/_2--£?{§§x'V.3:;§; 1\/{f;v§}:»a:*ayfi Bhushan Narang and Sm:'Chi'{ra Nafang, cf the Campany in whase fag-gféur §he"a§fitiC§f:a1 shares have been allettedg 1ii?'§§,§L}hy§§2_V. 3fZ%1Vi:2::3.pp@é§ "" H'i,€E1§'}'1(:Eé cszzfisei has very that {he :':':spe:>m:ients in thegé "&f}§€E:'JL§;--._{h€?.~€C5£§.E§a11}' §,3€i§§i9§}€fS 22?. partisuiar were 21:}?
- .,fj:§:'i'§ied fkG.i"', 'é;£E§;' relief a? 331 b€fOE"€ the Cempany Law fiée Cempazzyf L222? Board has ':0?/ail}; migsseé Esgal 1:'?-$833338 2Z::va}v€<::? E1} 'ihs {'ii}§'§€f§'{, GE {ha §ei:i':;:<>§ 2.:/S 3'§8 :7'w S{f{?§§{,'r§§. 4&2 212:5 483 {'25 :36 fi;<::%;; "?'ha'i $136 % 58 eernrzxunieatiee defied 1G.12.2€3(}2§ the decision . Beam ef Direeters on 13.122002 resebgingf £5.12"
shares Ea f21*xzeL1:' of Respondent Ne.2V=._ar::ji~E§?;e9{:unibe':*VEr;
favour of Reependené N08? ihee'e§pe1«V£E::,e"::: :1':
Appeal N016/2005 and the ef"e0ev1fpany petitioners before the ;;_.E':~Q_erd the Company Peti:ier1e:rs__in 0:: such reference eubmififeci as revealed frem the eever eenstituie ground. for and 398, that 3.
solitary act VV%:;§La11¢:::§;fg% the manner as per the reeeiuiioe (1:25 13, $252002 ean never be eé"eit'e.e5iieeA %e7f'§n act ef eppreseien on 'she part ef '€e;eV.¢_e;§e:*e:e::s' xI;1v'_i..:n5:na,g"e:ee§1t ef the affairs ef the weéi seffded that singie aeé seiitery est flee 'ie an aei, ef eppreeeiee, me: i: éees fer relief 2;/3 39'?' ct)? ihe Aet, aha? "she eemeaey hzié eever ggeeé flee eeqeireeéereie ef 'Seeé,§e:: 3%? age iee €e::e§_>2:ey' géeéifiee ee/§e3"e ihe '.__ .
Ce:ep::1ny Lew Board for seeking relief, the': the argumeni Qf not understanding the agfeemeent between ehareheidere is mainiein p2:1'itey whiie is ciisp-%,§fea€..e:e':é" H faetie, eeeumirig ii: 1:0 be so fer e1rgun1er:i"'e'aJ«:e ';:nd_.x$é*itE:eut_i'eV eegneedingy it is pointed out that it is ':10. eo11eeque:1ee"'~ V en the affairs of the arrangement amongst the nee 'e11e' that can bind the eompany, thatefie and regulated in its Fof business only by. the <)V'f":,§f:1¢:e Company, that even in Limited Company has a righ4:V '£:e! ether members ef the eempanjvg -ihei ei:}%vAsh.ereine§'éVer eennei even elaim as ea be'Va§ §eé%ved the same 1"§ilE§1b€§' ef shares as e;re».;e.Iie1:fe:~:i' é::._.'?:'e\s@u§ ef any eihez' members, iha':
§;Z?;<:n:mer':;: ef__ve§:e.:eee 1:: & erivaée eemeeefg is 1:: the entire éiieeéeiien e§"..-its Beard ef Bireeitere, ever: as reeegeizefi by Eeeiéee 8*; GE" She eeié éhz/:3:. even the eeiééiee @2:é:e§e*:ee:e eeves" zeaée em, 2: eeee ef eeesiiexgeei eeé 58 susiaLin€<:1 action Qf oppression and if at ail :_.
case of single and golitary €xi3i:€11i:e Qfinorz aii'o'::5r::'<:::'iV.V0fA shares 1:9 the péiiiiorzera whereas ah, %;hz:~Ts?T12::§::e..§::"*a§2-£3_ increass Q5 subscribéé capital v<;€:fe.._;?f;110;€i::%V;'§"0r;1§?. of appeliants in Ccrmpany Appeal allotment, €V€f1 if it is f0ut:;i _'§;--0' with law, Cannot Canstitute an and mat thé i3€t3fi0Y1% §f siatutary violation and in tihs form of a and development not ralatsd none of the prayers sought f<;§r_v<:o1'fi:i V_hay*{: AE;¢:;.€ ;ri: granted in favaar <3-f €116: x"pi's:'a§ir1gs and supp<:>rting material aYi§'__}:§i §*:;§3§3<i>_;*t.. ?:;:f_ 816 submissians isarzzeé cauzzstfi has
-- "a..§Z3§3;€Eé'i°§E§i8I1§€é*§:?*;ih€ fifllowirzg authoriiiezs:
gig, sfimrr PRASAD JAIN 3, KALINGA _. TUBES LTD, ETC. [AIR 1§65 SC 1535} H :;£.s.5§c. %§§fARiL%£.駧§§E¥ a 2:ca:s.5 T C;LmQRAsEm3A gagg & MQTEHR 523%; 5 secs 153;50
Petition itself and if thie could happen, the examination ef {he merits and submissions :1"zedef~if1 Company Appeai Nea8x'2Q€35 wesxici i";{.f39é>;e"e«?}@eL;;eE§i:"i:>ee:fi*:V«' avoided as Company Appeal Ne._8/23:33 e111:§f_'~_e§iA<5 reiiefs ever and abeve what hafl"u§§e.en {he Company Law Board in terzixe of ihe' i::i,§3u 'g:)ed 01'5Cier';"
25. However, 8:': iifzfaunsel has defended the Board by submitting thaf Company Law Board Wee " in the facts and eirCumetane e e..V_"was etifl requirefi to be irnpreved $.23.-per: ..'}§e1~If:e ef prayer sought for by the the powers eenferred 9:: {he fer granting the reiief 2.155 3Q?'§ 398 ""'é;:'e sue}: is the legal peeiiéerz in terms ef "77€:;:;e%;:v;e;7em.é ef Seeiiee 4&2 ané 493 ef the Aei which 4' ~._ §ea§s§; e,S ::;:'7de:*:
._ "QQS, Wiéfzezié prejudice :9 $19 gezzemeiiig ::;f " - " {he pezeere Qf She {'}"%'i§3::z:g:,Z,5 :::z&er eeeigiesz ,5»? < $4 ",2?
39? Gr 398, any erder under either seeéien may pn:2L:zbie§,fE:»:* -
a} the regaaiatien Cff the eorzducie of {he eenzgeczngfs cgffhzirs iI?jfé£?;:i?'€,' E3} the purchase ef {he shares s;§z9mVif:'ierje;;~;:'s.;' ef any members 0f the cciznpcexrzg by ' _ ihereqf or} bgg they; A ' other members Céffipfilfly,' C} in {he ease of a pLarchasee.VV€§j7 its by the company as ;:_:f<§'re_s'ez_id, :"f'ae__ consequent redaiciion of {is Wshare ecipiial; 'A ' "
G3} the termination, - _ _CiSiCi€?j ' or nzoda'ficcz::0}'§.VL,e1" of ::Cé:iy"= A"agreeVir:eni, howseevzier 'lIgzzfr£v8§;'3_ 'ctzft, beiween the cempé;ng.;:<§:: the »0fzejv'eh:1n;:i, and any of the ,fE:ZZe:,:}iiig_ , pezfs:2_r:S'. ' the other, rzzfllrzzelff' .4 .
{ifg * he :*raL<i$zQ:igré,n§re.§Ziree:er§ {ii} " u any '0:_hef'difeete2*;
{iii} '€:_r:d.{iL2j._ M e ;{1e,?_ thew-.m%:z'r:age*r ._""7ug:::Qf"a _su(:?i" «iferzrzs and ceneiiigiens as :'%;¢_:he epinien ef the ;"E"ribuna2,§; ee
--;j::5.:"e ;"<z:"":<;i?_ equiiabie in ail ihe fiiazzees Cf {he ease;
e§..__ {he * fefmirzaiécgz, S€ii'iE":f;! aside 0:' :?i:e€i§jE',<:e,:iez: ef any agreemezzzl beiweez: {he-' eempang; <:ar:& any pereerz not : "~..:efe§"red :9 ifi eiauee {ii}. graezfied ihai' ' ' -- ea/53% aggreememi sftaéi he éermimzéed, sea' aside es" reedsijkieci egxseeieé after due 2':e:':'ee {es {fie gefigg €ti}';"ZC€§"?'Z€'{f§ eezd peeeicieei jzsezflzez" ieeiezei zse §E§,£C}% 62 agreement shali be ntedgfied except afier ebiczirzing {he eenseni ef {he party eeneemeci;
j} the seiitizzg aside of any transfer, "
eielieery cf geods, pezgmeni, €X€Ci£.{T{G:'E».~ or other aei relating to prepe§':y3?'zade..er_.. done by or againsi the c0mp'any-Aegithin' V three months bejbre the d::>;2';e1':)f {he "
application under se<:2i€0re--.._397 '<:1.r'398; 'A A' which wouid, Q" made 'ézxfdone I55; against an individual, be__r_,iee_med i?"i.§"£;--iSv . insolvency to be .1: " s--j}v:Vzizdulen{ preference; " 7 Q} any other <matete;s"""f0§"' i;a).lf:»z'¢h Jihe opinion {Tz=';'bLgz3--ail] "ii "is_'jL;s:jA and equitable.' ~vp:roz22'_sio§ia fshe;,:'lEi be madef h V' ;;z:e::;%{oVz¥cz.é%;feby%'¢;'j*z»:§:;¢§az;
"4O3.7Pe2-zding €%i_e._If2:;l"c'éng by it ef ca final order ainderv seeiiere 0:' 398, as the preeeedmg V_2V72;;1Z<:e Cényénierim erder which . i:~;fih§r1'§:s fit fereveegalaiing the conduct ef ¢:'?::e' e--i>mpc;z2g's eejfairse uper: such ierms 2 ' _:2:1::£' .€O'§1C§ifii3{iS as appear :6 it ie be just A (EEC: e'5qz;i:cz£:§e}~~ is su%:2:f3ii::Ed file': 'she eempany peéiiiezgers were enfifieé 'f_'_"§QErv~i5e'iiief'ég ieiai aeé undoifeiedéy ':0 {he exieni grentefi' ' Ceiegpeey Lew Board as :he meeeeer is ::1%:£e%: ihe .§;e';:'*eer2s fig: Ea/£er:ageme::i 3? {she Ce§;eg32;::2:; hexé iéiffiéfj ie the eff" ' discriminatory manner ef aliotment Of shares by ehoeeing;
eniy twe of the shareheitieris for pattrenizing ané eat the ether shareheiders, partieularty in petitieners {mm getting any atiotmentibf tE1ei:'..fax;e:;::*.was7:
23 dear misuse anei abuse ef the pov€ere.V_V'este';}_t in the "
Management; that the power xvé;;e:?":1ot proper arid a bona fide tfte'VVeft'ieient management of the Companfit, manner to deprive the ftt1eir normal allotment at 8; tpositien ef r1en~ entity in fide manner of exercise ef "Beard of Management is writ targe. B11 :t:eAtie:>.1: eemeany, particularly in Reeetettivéfity dated }3,t2.2®Q2, that this :°ee:>t2tté»e:3 ' veé.;:;:1et.VV_1%3e termed ate 3 eetitary act of V<:i§:§reee§::sI1 §if_:-'U;i.é:.S preeedeei by eerteue aete ef emieeiene htemettseieeet eeme of whieht theegh in the eeetext of <3? teanegtege the eieter eefieeyae esf tee é'e4e";;:'e'iéet1t {::>:"§:p:a;:3:; anti the ehaieheédere zehe were tee 64 iserzefieiariee of the reeeiutior: dated 13.12.2092 Beard ef Management; that too constitutes;
eppreeeiee, ii. is :12): neeeeeary fer gé:ii'e'----een:p}e;i:§e;*:::V~+_f, petitioners to derrzonetrate the e>::ister£ee x3_fA'an§}"£.1§ega§.i§:§§\/,,, or Vielation of the statutory preweisiieiias; 21$:
granted by the Company %<::é;'1'<i. n{ie 1j'ee.1iy fir'1'C>'tA oi; any avai} or benefit: ':0 the been kept eat of the ma::1'a:;'>%je}I1eej:: 055 {he company and not having in favour of the pe_iufiivVv:of time, when the assets of assets witgx reference te the eheuié have been evenly 8 V ehareheéders and each '%:§e.Veempan3? eheuld have been fairly and Veazeriiy treeaieel' the aeeeie ef the eempefiy eheuid have .ee:;§%1'§:---"?';e be a;see:t.ie:;e§_, eveeifg en: ea {he eiher L '_ane2A§E:--eA"rneet fiieeriezieatery meager ef ihe efietmeet ef eel}: fig: fievem' at)? five eéaeyeheéxjere ezhiie eezfié e%%e'eEe éheee ehereézeidere fie 2"'f3§;T§ {he §;3'ef?:te Eiiéfi eeeefiée which tbs Canlpany can :11a1<:e by Ciainzing cemmenszzyate dividend on such number of share& the c:om;'§é:nj§,%~«. "*.
geiitisners were Eefi high and fify and 16%": is mainiéifi sham each and this was noihing but 2§;i:'"acf¢:Q"_4d€_p'§§ix}s%:' company petitioners of their IeVgitimu:a§é:'-_{{i:tif:ié:i1ie:1t. n share, 1:116 profita of the c0mpaf1§<r:iVhat Cleariy constitute ads of 0p'p§e:ssi<3ii has f1}}'th€1' submitted that thé has not fully appreciateci; 1'€'1i€f to sharehoiders in {arms of Seciion X3 402, that th€ campany is mould ths relief 39 that the gsiisf hie éoznpany peiitioners was an '%:1*1'é:\vf;' ¢§'.V1"1 Ereafiy éfijéjy' azzd net merely' a :'eE:é;§3 3:23; §fafg3Vé2f.véV}:iT:€:?: {E{§':J_1Ci never iranslgis 1:22:22 actisn Gr féaiiiyg ?§'185{\%Eh€1i ihs {3{>:::pa:1}; Lgw Bearé has been :'§°i§§3y '2:;ab§€é;%-- E3 €§f€$1;U.3J:€ ihs relief g::a::t€<:} 9:': a }§€iZi'§iG§1 :2_;':3 "§3fi§;%'?-*'a:::'E 3&8; éhfi {Z§>m§:»:::r1}? Lgs22r Bzmrsi has :23}?
§:*:::,3i;»:i:'~:d €335 rfiai §':;:§pas;:3 azzsé sérzépéé {:5 8é<:::ti<>:1 £92 and 86 has not moulded the relief in 3. rnazzmer productix-&::'--:Q f§§.%é is <:0n1par:y p€*:iti0ner:s and fh€I'€fOI"€$ )Eh'$~wf)_I'4d€3I'"'.§§3LSE{.§€}. b:;§}xV the C<::mpa:1};};gaw Bgarfi in 33 far as géalréiifig. f§;f.I'*E§iéf~. { :*€:qu§r<3s suitabée motlificazions» _§é,>.._théji p€ti*Ei€:>:1€rS can rciafly g%e:,1:.I.t1e rgigzl-éf --t1:1€.}: are entiiled to as otherwise, a be realized fer their 3.dva:t1{age 3'.::dV_.ben;;:'fi'é; £0 them for even in supper'; has placed relianpe <31": a:fi}'10V1%ities:
(a) M.S.D;'C;.. v. M..S.D ANOTEHR (2008) 6 scc«75o}, 1» {b} M/s.DALE 3; ckemmwaron Izvvr. (P) LTD. 82.
ANOTHERXI, K*._PRATHAPAN & OTHERS. {AIR SC I 52% Para - I 1).;
28.' }:'a;*W_a§:is;§::f:';;.j 7a€'ii'e;f3*;§:3:: particulariy to $15 manner 2:}? bias Q? allséimént: 0f shareg by 3 1\/fa:/zagérzg f<:>":iD%?1§s awn b€§§€§'§, Iihaf 'She dirssters ii 331% rare in tbs pegsiiiign G'? Agsrxig 3:" TELEEESGS 9:' H 'V:'§'é§Vf§$;:3:2:a?:iv§$ anti éhsgs gas': 311 ixshaif £2? étazzzgangi ami in f§§12C:2::"3z <:a§3s:r§€",jg 311$ §§:€:§:" acis :a::a<3 aiéfiéss arss aiwzzjgg €39 High Caurt reparted in 134 £25308} DLT 450 by reiying ané laying emphasiss an paragraphs 16 8.: E?' which feiiowsd tbs judgménti 9f the Supreme Ceuri in 'V' CORRINGTGN INVT, (P) LTD. & AMJTHERV"'i;*,.::'_':}$V"'~;§* u "
PRATHAPAN 32, (ms. (2905) 1 sec 2i-2),::'_'_'w?1iéh.
f€f€I'f€d '£0 English decision in ifizfiease 3.2;;
CLEMENS BROS. LTD, V in 1976(2) All England Rep¢%rt};r§%':;i3;«:::§ u that a cenduct and ass0§i«;:fi¢;§n :1 é;§§§§ Qf the resalution of 1.f';%2.2OQ2 clearly amaunted and therefore submitted fihé made cut a clear sage sf Qpprasgsican CiI'C1iIfES1Z8J1C€S of the C386 E--1;_,.=-gw a§'0é2'1"r':';ié>vas fufiy jusztifisd in granting feiiéi V'§:$;s»--.,;:::i iV§g*.éiappeé Sheri GE 3. prfipei' afiii aeffesiixféa vfélfiiééf 3.3';-ii tE;{:~:§é:f:iér 3f the €<;r§1§an3; L353; Boarfi fieedg £3 é':>:jr€€:i€t3..by fizia Cour: §s$::ing §1€iCES$3;,I'};'" §iiE"€CiiGf}$ in ' €:f;é..f~2 %1}:;>§:§:.aL 370 2?'. it ia significant ':3 rioiice that 'iiia SAAKHEAfiflSflVG&f Ia zzarxruaan aa*.z:$zn§Rs 'Vin' SHANTADEVI Pg G..:§.EKWAD T.§£R0{IGH.~I;,».R'S; 3;. i' ' OTHES {(2095) 1} SCC 3141 uriiiiaiii makaai' to its eariiar dacision in INVT. (P) LTD. and having disapproved by the earlier Vi€\§.r ta1.:eti'§.i;: usizbmit that even when 1:he:;'€:§"i3_ of additional shares, I:ha:_by examination of the Inanrieiiof 'e:ii€h':=:'iiditi0na1 shares is aise a tea: fer exahiiiiing Sf acts of epprsssion and waiiid tii.at»viifi'ihc%.'V'ii§hi of the viaw expressed by iféijeci On hehaif of ihrs Qampany §>a€iii:;>_Ii*c:%_:S ihéré a dear Case sf appressiori by 1336 r1ia.::ag£:ii'36§:i;Mai' V {he majsriigz ahareholdsra 53? iha campanjs aaada aat agd iharafsra {ha yeiief was vary Iziach *aa3aaea_£ (wndw . 2% iiazna §a:f'u;aaa €336 E"r3:2i>§'f}éS, exaraizzasi the giriiaf sf C{§§Ei§L!Ei§3{§:' Law iieagxi p{;"_§EiS€C§ éiia izzigsagsjiiasi €,3§i§€i" Sf '?2 er:€nr1ies§ relatives forget that rsiationship and fighting 9116 another, Cordialiiy turns :0:
biiiérrzrass, acrimény, Can ¢'3V€I'§ lead is ¥§{}_§..t'3:ZCé',S:}ri1€.
'times. 'She persans accustomed to poizgx'€1':;m:iv 1C:23.fE1 é:@ .A up their power and on the: <3ther_ha3:1d Wgni to p1ei?p:3i:u'até; it. But in nature even a worm r€t:jfi:'$"='xzhen" c:3fr1'éreCi:§ and when it cczmes £0 a queatigfz.of.'VSuVrVia:;;1,vL"c:y'en the weak and m€€k muster Cauragei "
31. The C:OfH§g{flK§'~§? of Corparate Legislaiion Of companies rsgistersé f{<:f p1:?ovide ways and 11363113 and §012;ti0nsVVVéa;:MM may Crop up in the §:é;§:f:;fse uéET__§§;;}a§gf€'Vfifiigxiagement, when things are sziégsqniziéei. f2*i e$:~:1 «.}:A§ar€ facts agéd fmm thfi angle of 3 ' ».._3.ayp€fs<>:§'M C11' a;7[:'_:_:):*:1r::<:>:E man, the answars a;§§€a:' :0 be _ T'T~--._§{:r'3: gh: f<;sf§in§,§d§ sinépis azm' margy a 'Limes ineviiafiia.
'f_"'*Bfj::'ii.Lf"::=:fhe':3 q1;€Si,iGE}S afifi é§S§s.:*ie8 am éxaméneé '%Q'a:'§§1'1iEE f1§gi3;E Qammséérfi on :e::a;c::§: gtane Q? the éaypazrziia Eawsa .3::i{§:i::,§:§ §:':;=rz<>u:":{:€§2*:€::§.$ "ms: :32:;3€r§s::::::€: is $3133; inazfééziésigf 73 things get c:t3:11pliCated, what was clear becemas ha;s:y__,_ salutiens elude and p(}SS§f}i€ amicabk ssttlements happem Thai £3, gscisely what has happ€:2ed--A"f§:1v4.lfill§§" is pmsent situation. alas.
325 'What cauld have been ar:i1<:%§l:>lé3ll"
resalutisn by a reasonable fair on ihe Qther hand, set in a thellpérties before all forums of .dlspujte-- and non esurts, Compargy etc, The simple c0m;§l_2gi:lt'~.c;>:l'* _:;éetl}iillners bereft 0f all ether aspecés C2::;';:Al§€:»Vhg;:fll'c}.<:»f3£§afivéith whexl the sempany which was its subscribed capital f;fe.::j; a RS.8§7}*é:3;f'ii"lfi%::r}'ES€E1'€£'3Cl by 8 éqzliiy shares sf _$:alj.;:3V9f:E?,s¢.E iakh if E: is a private Cempany and ;Rs.5Hl'3,l.:§<e,s 'x§t%g:isA'T:=éV.public lirzzitecl ccmpany spréad Gazer Gr the $3.33 may bi: 21:16 by allaiiing gucéz Q"-aAa?<§iii{:::;:é;al« shareg £11 f3:<;<:v:;:* af the membeifg of $16 ' lf'Vl::_€§:":;pe:;l:a.:g 2331:; are willizég ii} :»;ub${:§ib€ ta 5:221': &Cl§§l:l{}I'§Sil ,;slé::':l;"s:§5 simail £?%';'2'z;1§é hgwsi %:2€-sfirz '%f€3E':i $al%,§$fa::§{:«r§ly resgalvsé if «as ,~ 54;, 74 ail the shareheiders should have been given 21 fa':i___r' opportuniiy £0}: subscribing an uniferm number of that is? by digtributing 'aim afidéiionai ' eguitabie manna" amozzgst all the $.E*:a:*eh01é§.éfé' some are not willing to subscribce, fig Company Account and t§".i'at._ .
uniform rnarmer amongst r'::.T;}.e €311 the ether hand turned out $6: battle as the Company in 13, 12.2002 1'€S{31ViI1g to Vzgzipniber of shares in favaur 0f é;:*i{§:1;er HRS number in favgur of a.{:'(>':xf"1€:V W319 incidentaliy happén is fébgéi to the liking 9f the othar h%§.%é"bé<:@me ihe itomgany petitioners '£>€§C::*.:é £7;-::7i:';;§}fa:1:;> :;as_:&:~ Bgardé 33', it dé:;e§,:3;<§i zequizre 3 éegaé éxpert ig recegnize that
5."-i§7£{"»§;é;:;::€r Qf sash aiiaimeni is 216% fat}? :10? 6259::
f=1;_:f:§faf.:i;::$ §':?é33'§ the iaypergezz 1"€{1{>g§1§Z€:S ihszé. Eat 'aha ,i::€;ia§§; :34" $2123; is ':9 ::::3:::?£3r§ %:§1:;::§3;s=; is maéée 2: iZTi{}§§"i§§1€)I3 zziafi 75 :10': ii} understand and to csnvert the Sbvious to be 51;}:
so? by 21. Cempiicatéci Eegai ianguage.
34' That exactly is what has happ€n¢d...V.A'b3;Viflfxe T innumerable éecisions rendered by €::@_ur*§,.3a;n:I_f;f;bu::9;is at different ieveis explaining i:':<;'gg..__§<:0'}5t:v_"é;r1;:i egg' Qperaticm cf the provisions Qf Secf:'%u'O:nV'»V thé Companies Act, What <:€sui<A:'g.._..'1}:g;A\2*é£ clear picture has blurred .b:§<:at,1:ss»€»-- {i>1fi'V uriifczrm way cf legal file pmblem cf finding 3 §_Qi§,:1:§Qf: sri::f€;1;ations and the ma::if€siati€;3_1r:s._:i; '§»§§p.:e--ssian, Human naiure is mast u:1pree:'1«ia::€:%.b1;:' and means are as i:j.r§§xratiVX»'€§.' égmder simaaiionsfi to achieve: 'Whai is i::'E$r:d€€i_o:_ a::d "ar<i infiumerabie is human miné and :3.ihe:' .uL:1f0f%;:i'§3;i;€i§z §i§~r::<:>1:iva/isd Wham it €Z{}'EZ}€fS E8 afihisving aiizisiér ihizzgga a:::h§ev§::g seifish ihiags is '£116 C . " -:'§§'=::fiV:*:£€'T:::f:.' Q? Qréhers.76
35. The provisienrs of Section 39?' of the Cer:1panie§.A?c:::_:'e~.V_ is not in 21:13; way heipful E10 resolve the situe;-§_iei:"'VV.'e{ --'-' oppressive eo§:c:Z::et:, affecting meznbere efb 21 ees:'§:fpar§*§f§:heAV Complain of sufferixlg and seek reiief in i:e1'm;s Of 'pei§tio:i3--..¢ 11/ e 399 01? the Act in View of the"e_§j§;eii*iie12e:
being fulfifled for the Conipeny ebeut a satisfactory end to the irf1"pe§sse'A--_ef act and to terminate the same indéeaeeei {b} of subsection (2) {a} envisages one of the two of the cczmpany being c0ndL:,:Ye'teeI_' to public: interest er in a mafi:2e:" member er members arid the a."1aAi.éer e:Eier:1atixre E3 atiraeied in the with farther requieemerfi ae een:e;np§3?f;e§ §:§:v.--eias;ee [bi {hat the siiuatiezig ie 83:01':
Viha: Ezasifie é$g?e{;<=,fér:t 3:1 ercier {C2 ége passed fer weiruiiiag up .4 " Véiffafirs eééhe eezmpazzy but is eay erder weuld urzfairiy me {?{2§E}}3}§é3_§.f1§1E'ET,l membere and iiierefmre :0 1"" 'W T gee:-e.eé iihem. free: gaeeéng 0? esméineg my »:}rx:%e:' ehezjéé "be '?"}7 avoicied and ixmtead the Cczmpany Law 8::>ard some up with 3 solution 1:0 brizzg 3 Sat.isfaCt0I"y eriéd' situsjziezz by rzaii Qniy §3}:'O"£€CiiI1§ {E16 "in':€itcS§. Q§._ i:i:<~:f} Qanlpiaining members but also 1*e:m01}':::g--._:he §pp1'<evs$ii«<§'~ V acts and by ensuring that the§} '*~._aLre "::<:>t' subjected is further oppr€s.:=J..y*€ aC,ts§
38. Human mind bf-iing while no one can guarantgiéiv ff.L%I4v1":1Z.4fv1"€V.3".;V'a3é}";}})I'€3SSiV'€ acts, but by 1earnin:2;.VV.Vf1€;§fi}.» égsfieriencé one can devise ways::_: i':v*.;'a%2;»V'3._:;j;;.vV'E1i<;s.;f5fi§y*e:n'iV;ecurrence of such a siiiuatien, If fi;f1s is of Eaw and within the inn0vaiiv$_1jne:h5~{i§', €.h'at €_af:"b€ admitted in terms 9f the ;_:~§wi$3° ihé hB0va3:.=.:i'u X5 4132 sf Ehe Act.
327'. "".If§:é%°:;f$:'<;§9L¢:., _ touchsionfi for axaminmg {he V{:i§:f:'eC'mE--.<33 ..__{é:* ~::zih€:rwise 95 'L313 imgmgneé 326$: in 516 _. ;?{§3gé:;:Ta§p€Va§,S is .223 {:3 whaihes the C:::::1pa:":y Law Boarci " a;'€i:f;$:j7i:'; 2: §':E€1§EI1€§' 33 'it: §:11ESW'€'§° ':,%':é:<$«3 reguiyemérzég in this inrzgzzgrsssd <:>;'d&:', It is if: 1:335: C(}1§§é'}Cf; $f 39.32% ' 78 examination, learned Caunse} far the appeflants a;é:.__{2v&i}V.3;S 'M the :*esp0:':<:1€nts have gzlaczéd rsliaitacaj-'éha. §fi::>ci_..:é{::vf1:i3I€r:<i'AV <::f authoritiézs referréd :0 ané qusied
38. This Cam": had an QCCaSié%i"- it:-,V_V€X%3;fi1éfié: av} hike Company Appeai 21134:: "(Sf an erder passed. by theAV§Z0mpg;_:;3:?f petiticm:
11/8 397 and 398$' a:1¢'#'}r; :é§-£§5'sv-gsgthe judgment dated "*?C<:fnpany Appeal No.22/2005" Mi2'.WJAYAN RAJES & ANOTHER A551? E§I.ARFT21IIQPJS PRIVATE LIMITED 3.2, OTHERS. 891333' Qf {}:1;:5s%§ 'a,§§}:>§% é':::§' had beak examined by a Divisien Betnch éfV_:i:fiis:...'~C€3.ufi. of which 3116 of us was a §T£i$'iE1§3€¥'-':.é'€§1(§;~..132$ scotfie'----€:fpe{iti0:: u/S 39? was to semfi eXte:§L'wa1i2'«:3?A é3<;3§:":ii§:3T éefj in ibis agpeal, 'v'af€§""are. é:"v:§3e aka: visa: '£1135': is <:§::Sti?:u'[6 31:: act cf iaisfkpfegaien is :13: fi€{EESSEi;F§?' 'ska: i§"'i€ ac: fshouié 3:36 am 0 gas: 2333193': :2': x3i<>§a':[i€,2n 9% 5.335; 31:a:{,umry T ;;%;'I:;*a§--5g:§<;:2§; §;'z:€én 32:": £%.{',§ 2;i{3§:§i,i::f:g éihés: ss{3..§::L2€.@:j§;" ;>§"{>:?i:3§9§:8.
E 3* Si} appressien and ihe questian 1222:}: be as is vsshgthér figs sax: ha gaié is ha aihesraaziae zszhan iastaeé an iéuchsimze Qf 'aha siaiizziery pysviaisns 9:" »S$s%:isn. 'i§9"?j'f ""
grail': sf relief axzd in "Elma gituaiierzs a$_we._§1a¥<:' .:iié::%5§»:3:;ieég A' abmze $31 ierms cf céause {a3 & (13) 7 Seciimz 3&7".
42, In respect :3f the Sefiiiaig. 39?
Mr.Chinnappa has p§:_E:1tecIvf;:.*4:¥£:'_*f;?<1$3:.V sf sub»-
sectien (2) 0f §£;~jg.S€ at a 'iime when ciaizsgm Q1' Sectian 39?' cgmprisefi __pa3;'a': an the part ef the managerzieniér $1" the ccsmpaaay and eznérz mgr: 31: 'V the part af the Qerxzgpiaixiing 1::e:::33:e2:s_V <:€}i12:p}23;i1<:i::g ggpressian is dfimansiraie that it was s'%3;3:a.tisa xarhersin the 89:32': firzés that it V'77__'i$V gust Egéiiizabie is yags am sréfir is '§?£§'§:'2§ 1333 $1223 iherafgre ':}17fl€SS a. finciirzfzg ihat it is 3, " -s::"£:§:3f£§§:::: asghétrfiizz ii is §:3€2?§%:3;.§3§as is pasg an Qfééf £33 sssigzaé Agigagfieraiiezz 3f ?:§'":€ §§1i'£1§a3'§§? 3% §'$Q€3E"§€é 353$ if i: :3 312$:
81and equiiiabie graurzd am ii} szxppari of the "
drasvm our aiianiian is Para - :9 9f :1:~:cis::g:;f_T.:'~::: 3 sgaazramasas JAIN repariefi iza giiia 1a ;'{35 1535'; 'A
43. Cauniering the abcrve sfifirfiissiahy; Iearneé Samar Cezmsei has e1:ra%?é?I1--_'i3:;r aiieniigfz to M.S.I),C -' m€%i %g2s;;g;Ag V see: 3250} which makes a f€f€1'ii1}C€ QfVi'§€fV5fi}.€":I{i£§{;i§"iI7i%§$" and Shami Prasad Jain cage 1"5ar2if2§'1 4_'i;:2S?:;.b;:1i1: that the interpretation part of clause (33) can giizéwferrnsar par: of Qiause Ia} and net A':1$€8s$a1§i1§ x£§§'§i§ "riéfer<§nce £0 iater gar: sf §§pressin;g tfié fééson 'ma: when §z'3,a:':e 9. case m%,'fi §m$z,:i, that in iiseif inc}u<:1es 9.
siiiiaiicsa. §§.. aVv'{;§:;3§3any is has axzaurzd u§ an just and €:g:ita'b1i5:.. gr§.iL:::=.::ifls. figs submissian Cflifliiééflflfi itseif far V '§§fi----§:€$€§§a:§¢é, as ihé greys: zmciérgianéirzg sf £216 sizcpe if ;§;é::%i§:L;*"3§? »:;>f {Em Cazapanies $.32.
8244. In the result, Cempany Appeais No.1i:3 <3: 1 are ciismisseci. Appeal No.8/2905 £3 ieehnieagifir»ej§;xeé;i¥;:}{r:g aiiewed onéy fer the foiiewing mQdifie:;;t§Q:1ee?f .' the Cemgany Law Board in so fa: it V:'e,1é;':es te{;"g:f3;:iin§g V relief 159 the Company Peti*:i<:>:'1ef'e'V21_Vi1:¥e_ in 'E}{ee'f'oI1:C;wing' HIEIIIIIEFI
45. The C0mpaflYfl*3:':i;§ore shares on the same is__S;L:Ae<§1'e:i;fiier aiong with additional in terms of the Resolution a_:<Viate'_cA1T ' the total additional :3-hares the favour of its existing shareh01d;::r:3LA be4ec:>:1;1'e's' .'2.?§§5 eLnd this is is be distributed éfiiéaiiy "é§j.:%fiC-::§:S'€..Aaii ehefihen 8 sh2::°eh01§er.3 '{hat is, at 282 "--"ar1d on the Same terms; The '"e»._g;}:3ere?i0ieEer$.«§}.%fi_:>..e:;are gettirgg éihese sharee fey the §E'St :9 ya}; £123 anzeégni Wiihin fear weeks fmm {edgy by ':._"'I7fT4,¥;€§!_:EZ;%: $3-3 eheqzge er éfafi, in favour cf the eempany, 'Ehe ' C'-Ci_{'>'f:%:§e;I:y in ierszzzefer Siiifh aeidiiiézneii shages in faveuz' sf?
i§.W 83 all members within a further EC} Weeks frem the recaipt of thé amount by the Company.
éé. Ths gharehaiderg who are fintitged of aciditionai shareg as indiCate€i'§;}:s~Q3Ie who' no mare the shareholders of the inéiinsd ts accept: the additionalV%:,fi¢):m'_%n§--.AV§:é:1f:».; fer;0un$e" it in faavur of any Gther than of their Choice and the of such renouncemeni iietjfer 'E->§;** 'zhé than existing shareholdelfs if:T'~. €:;vo{;f any other then existing shareholders <::£ih~e cempanye, . ' 4?'. We fiagese 55 jihéapvpsai with the earnést hepe anfi é:<_pé€;taii{3z: ihé §a1?'{ies cencernsé with this arraizggfixstsixvivvé"~.§:?::::§:;§~* pug an and :9 their iz:fighis§ '~=d£5:,hE1ff§"93§f3F_'§}° fé'Vf3ff1 3.{?E'§.I§{}§3}«' and séari a new Caréiaé ""'é?'$'i--:;%ioA::sh§p'v..--::r§i:h nzuiuai $1133': am? frisnéship and Carry ._ ':i3§: ;é,§:::f={':;?8:::;":2a5:§; fer gazsfmzzé iwsgaéii.
8448. We 3130 p}2}C€ on record our great appreciatian {he eiaberate and efficisnt legal aSSiS'{8.E1C€ received the Bar particuiarly {mm Sri Dhyan A V' Nag'a.;r:ar1d., learnefi senior COU1'}S€:.<E1§§€E{I'€)%fié:;
parties.
AB}/nv;'Akd_. MMMM