Company Law Board
Suryakant Gupta vs Rajaram Corn Products (Punjab) Ltd. on 5 February, 2001
Equivalent citations: [2002]108COMPCAS133(CLB)
ORDER
Balasubramanian, Vice Chairman
1. The petitioners collectively holding 15.9 per cent equity shares and 27.9 per cent preference shares in Rajaram Corn Products (Punjab) Ltd. (the company) have filed this petition under section 397/398 of the Companies Act, 1956 ('the Act') alleging various acts of oppression and mismanagement in the affairs of the company.
2. The main acts of oppression alleged by the petitioners in the petition relate to reduction of the percentage shareholding of the petitioners by allotment of shares to the respondents' group, non delivery of shares certificates to the petitioners, non sending of notices for general body meetings, falsification of records of the company, conversion of book debts into equity without authority, under selling the goods of the company and thus misappropriating the funds of the company, disposal of the assets of the company with a view to making it into a shell company and mismanagement resulting in continuing loss to the company.
3. Shri Rajeev Dhawan, the senior Advocate appearing for the.petitioners submitted as follows. The company was incorporated as a private limited company in 1974 with members of the family as shareholders. The majority of the shares were held by the family consisting of the 1st petitioner, his brother, the 2nd respondent and their parents. In September, 1989, the company was converted into a public limited company. The authorized capital of the company consisted of both preference as well as equity shares. As on 31 -3-1991, the equity share capital was Rs. 1.4 crores and the preference capital was Rs. 60 lakhs. The petitioners held, at that point of time, 30,090 equity shares and 12,350 preference shares both of Rs. 100 each constituting 22.09 per cent and 33.46 per cent of the respective shares in the company. Similarly, the respondents' group held 47.37 per cent equity shares and 7 per cent preference shares. However, the 2nd respondent, by either issue of further equity shares or by getting shares transferred to himself and his group over a period of time, brought his group holding of equity shares to 64.43 per cent and preference holding to 49.39 per cent. In the process, the petitioners' holding was reduced to 15.91 per cent equity shares and 27.96 per cent preference shares. The chart on the shareholding pattern during the period between 1990-91 and 1993-94 would indicate that the holding of the respondents group went up from 64,525 equity shares in September 1990 to 1,32,955 shares in 1993-94. Such increase came about by issue of further shares in 1990-91 and 1991-92 and illegal transfer of shares to themselves of the parents, shares. Even when the present proceedings were pending, further 36,801 equity shares were allotted to the respondents group without any offer to the petitioners. Thus the respondents controlling 1,88,056 equity shares (inclusive of 18,300 shares allotted against the book debts) accounting to 78.36 per cent equity shares in the company. Even in respect of preference shares, 15,845 preference shares were allotted to the respondents group in 1998-99 by which the percentage holding of the respondents has gone up to 56.13 per cent. Since the company has not declared any dividend so far, these shares will also be entitled to voting rights. As and when further equity shares were issued from 1991 onwards, no offer was made to the petitioners to subscribe to the additional shares notwithstanding the fact that by virtue of the provisions of section 81 of the Act, proportionate offer and allotment should have been made to all the members of the company. Some of the shares allotted to the parents were subsequently transferred to the respondents' group in spite of objections raised. From 1991 onwards, 39,940 shares were allotted to the respondents' group and even during the pendency of the proceedings, further shares were allotted to that group. Even though the respondents claim that the petitioners were aware of the allotment of shares, since they had signed the wealth tax returns, yet, such signing of the returns which were prepared by a common accountant of the family, cannot be viewed as abandonment of the statutory right vested in the petitioners by virtue of the provisions of section 81 of the Act to get the shares allotted on proportionate basis. Non compliance with the provisions of section 81 would also make the allotment as invalid as held by the CLB in Ms. Pushpa Prabhudas Vora v. Voras Exclusive Tools P. Ltd. [2000] 101 Comp. Cas. 300/24 SCL 111 CLB, New Delhi. Further, the respondents have not given any justification for increase in the paid up capital and the only object for allotment of shares was to gain absolute control of the company. In that case as held by the CLB in Dipak G. Mehta v. Shree Anupar Chemicals (India) (P.) Ltd. [1999] 98 Comp. Cas. 575/21 SCL 107, the allotment of shares should be declared as invalid. Thus the 2nd respondent has acted in breach of his fiduciary responsibilities and therefore, the said allotment of shares have to be declared as invalid as held in Dr. Jitendra Math Saha (NRI)v. Shyamal Mondal[l993] 1 CLJ 76 (CLB). Allotment to one group exclusively has been held to be oppressive in Akbarali Kalvert v. Konkan Chemicals P. Ltd. [1994] 3 CLJ 102 (CLB).
4. He further submitted as follows: In the year 1991, the company owed a sum of about Rs. 18.3 lakhs to a proprietary firm Rajaram Maize Products. This firm consisted of the family members and without their consent, 18,300 equity shares were allotted in the name of the 2nd respondent against the dues payable by the company to the firm. Even though the 2nd respondent claims that the conversion was done with the consent of the partners of the firm, yet, as is evident from pages 155 to 169 of the rejoinder, no consent was ever given by the partners of this firm for adjustment of the dues by allotment of shares in the name of the 2nd respondent. By getting the allotment in his name against the dues payable to the firm, the 2nd respondent is in a position to exercise the voting rights in respect of these shares. Even though the petitioners have filed a civil suit for recovery of the amount of Rs. 18.3 lakhs from the company, such adjustment has resulted in allotment of shares without proportionate offer to other shareholders which is also an act of oppression.
5. The learned counsel further argued as follows: The company has not delivered share certificates in respect of the shares held by the petitioners so far. Even though the company contends that relevant certificates had been delivered to the petitioners, yet, no evidence to that effect has been placed by the company in this regard. Therefore, the petitioners were forced to file a petition under section 113 of the Act before the CLB. Even though by an order dated 11-4-1994, the CLB directed the company to issue the share certificates after submission of indemnity bond, the company with a mala fide intention did not issue the share certificates by raising certain objections on the indemnity bond. Non delivery of the share certificates to the shareholders is also an act of oppression and also an act of mismanagement as held in Trishla Jain v. Oswal Agro Mills Ltd. [1990] 67 Comp. Cas. 125 (Delhi). Further, the company had never sent any notices for the general body meeting of the company nor any annual reports and as such all the general body meetings, if had been held, were behind the back of the petitioners who hold substantial shares in the company. Further, even though, the petitioners have remitted a sum of Rs. 500 to the company in October, 1992 with a request to send all the notices by registered post in terms of section 53 of the Act, yet, the company did not send any notices or the annual reports to the petitioners. The company also did not show any evidence to the petitioners regarding dispatch of notices when they took inspection of the records of the company on 10-4-1995 as per the directions of the Bench. The onus to prove that notices were sent is on the company, which onus, the company has not discharged. By this act of not sending the notices to the petitioners, the respondents have denied the petitioners any knowledge about the performance of the company. It is the right of every shareholder to get notices for all the general body meetings in terms of sections 171,172 and 173. It is a settled law as held in M.G. Mohanraj v. Mylapore Hindu Permanent Fund Ltd. by Secretary[l990] 1 CLJ 73 aridEastern Linkers (P.) Ltd. v. Dina Hath Sodhi [1984] 55 Comp. Cas. 462 (Delhi) business transacted in meetings without notice to all shareholders is invalid. The law is also very specific about issue of 21 days notice for the general body meetings and the notice period is mandatory as held in Calcutta Chemicals Co. Ltd. v. Dhiresh Chandra Roy [1985] 58 Comp. Cas. 275 (Cal.) and it has also been held that without indicating specifically in the notice for the meeting the business of increasing the capital of the company, the same cannot be increased in the meeing Ramjilal Biswala v.Baitan Cables Ltd. (ILR 1964 14 Raj. 135). When the shareholders are denied their statutory rights, then such denial constitutes a grave act of oppression. The 2nd respondent is guilty of fabrication of documents. In the affidavit filed before the CLB in connection with the petition under section 163(6) of the Act on 28-5-J994, the 2nd respondent had stated that various document/records of the company like register of charges, register of fixed assets, minutes books of the meetings of shareholders and directors etc. had been lost and that an FIR had been filed by the company on 18-3-1992 in this regard. However, in the present proceedings, copies of various records like proceedings of general body meetings, board meetings, disclosure of interest etc. have been produced by the 2nd respondent in his various affidavits. No explanation has forthcome from the 2nd respondent as to how he could produce the copies of the various documents if they had really been lost during the year 1992. Therefore, all the documents produced now are fabricated only to counter the various allegations made by the petitioners in the petition and as such they cannot be relied on.
6. The learned counsel further argued: The 2nd respondent has been acting against the interest of the company by benefiting himself at the cost of the company. The 2nd respondent was a partner in firm Rajaram & Bros, till November 1992. Without disclosing his interest in this firm, which is a statutory requirement under section 299, the 2nd respondent allowed the company to enter into transaction to purchase raw materials from this firm worth about Rs. 8.83 crores. Even though the 2nd respondent now relies on the copy of the minutes of EOGM on 5-2-1990 at Annexure B-10 to state that the approval of the general body was taken before entering into the transactions with the firm, no reliance can be placed on these documents inasmuch as the same is fabricated as the original minutes were reportedly lost in 1992. Since he had not disclosed his interest in the transactions, thus, committing a breach of trust as held in Yashovardhan Saboo v. Groz Beckert Saboo Ltd. [1995] 83 Comp. Cas. 371 CLB, he has disqualified himself from acting as a director by virtue of the provisions of section 283(l)(i), but still continues as a director and therefore, he should be removed from that position.
7. The learned counsel further submitted: The 2nd respondent is also guilty of siphoning of funds of the company as is evident from the fact that the revenue received from sale of products is much lower than the revenue received by similarly placed companies producing similar products. Page 181 of the petition gives the details of short realization for the years 1989-90 to 1992-93 from which it could be seen that the short realization is of the order of about Rs. 3.3 crores. The short realization reflects the amount siphoned of by the 2nd respondent. He has also manipulated the production records to show under yield and has thus siphoned of the funds of the company. He should be directed to account for the said amount. Further the 2nd respondent, being in sole management of the company, has disposed of a large number of assets of the company even though there was a restraint order from the CLB. By sale of these assets, the company has been reduced to a shell, the figures in the balance sheet for the years 1996-97 to 1999-2000 would indicate that the company has disposed of substantial assets of the company including a factory land in Chandigarh. Now the company is proposing to sell the Bangalore Unit, Jnspite of certain orders from the Labour Court and once it does so, there would be no assets left in the company and the survival of the company itself would become shaky. Once the Bangalore unit is sold the company would be left with negligible assets compared to ihe liability of over Rs. 2 crores. Therefore the company should be directed not to dispose of the Bangalore unit, which proposal has also been opposed by the workers also. Considering the facts that the company has been incurring heavy losses with an accumulated loss of Rs. 3.9 crores as on 31-3-2000 as against the share capital of Rs. 3 crores, the company may have to be wound up on just and equitable grounds. It has been held in Seth Mohan Lal v. Grain Chambers Ltd AIR 1968 SC 772, Delhi Automobiles (P.) Ltd v. Maruti Ltd. [1978] 48 Comp. Cas. 676 (Punj & Har.), SBI v. Hedge A Golay Ltd. [1987] 62 Comp. Cas. 239 (Kar.) and Universal Glass Ltd. v. Meerut Bottlers (P.) Ltd [1985] 58 Comp. Cas. 68 (Delhi) that if it is impossible to carry on the business of the company except at a loss or the company is financially crippled, heavily indebted and the financial position is not satisfactory then the company has to be wound up on just and equitable grounds.
8. Summing up his arguments, the learned counsel pointed out that the acts of oppression and management as elaborated by him would merit winding up of the company on just and equitable grounds. Since the 2nd respondent is carrying on the affairs of the company as if he the sole proprietor, there had been no accountability towards other shareholders. The conduct of the 2nd respondent lacks in probity and is unfair and as such is oppressive to the petitioners as held in Needles Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 51 Comp. Cas. 743 (SC). Relying on Re HR Harmer Ltd [1958] 13 AER 689, he pointed out non compliance with the statutory procedures in the conduct of the affairs of a company itself is an act of oppression. He also referred to Clemens v. Clemens Bros. Ltd. 1976 2 AER 268 to the proposition that in a family company, when it is proved that the majority has acted in an oppressive manner by virtue of the majority shareholding, the minority would be entitled to the equitable remedy proved under section 397/398. The only way by which the grievances of the petitioners could be redressed is that all decisions taken by the 2nd respondent right from 1990 should be declared as null and void and a Receiver or Administrator be appointed to take over the management of the company. Otherwise, the respondents group should be directed to purchase the shares held by the petitioners at a fair value to be determined on the basis of the status of the company in 1989 before the company became a public limited company as was held by the CLB in Mrs. Farhat Sheikh v. Esemen Metalo Chemicals (P.) Ltd. [1996] 87 Comp. Cas. 290 (CLB). Alternatively, the CLB should recommend to the Government to apply for winding up of the company on just and equitable grounds as the substratum of the company has already gone.
9. Shri Suri, Senior Advocate appearing for the respondents initiating his arguments, contended that this petition has been filed for an oblique motive to put pressure on the 2nd respondent to settle disputes relating to other firms of the family. There are certain proceedings pending in relation to some of the firms of the family wherein the 2nd respondent has sought for rendition of the accounts and appointment of a Receiver etc. in respect of the firm Rajaram Maize Products which is presently under the control of the 1st petitioner. In respect of another partnership firm Rajararn & Bros., certain proceedings are pending and this firm is also under the control of the 1st petitioner. The family members of the 2nd respondent have deposited a huge amount of money of the order of Rs. 4.5 crores in these firms and the claim of these family members are pending before the National Consumer Commission. In view of these litigations initiated by the 2nd respondent against the firms controlled by the 1st petitioner, as a counter blast, this petition has been filed against the company which has always been under the control of the 2nd respondent. These firms are also in the same business as that of the company and by filing this petition and seeking for winding up of the company, the petitioners arc trying to eliminate the competition faced by the firms from the company. Therefore, he prayed that this petition should be dismissed in limine as being a motivated petition.
10. In regard to issue of further shares, the learned counsel submitted that the purpose of allotment of shares during different years was to augment the resources of the company. After the company became a public company, in an EOGM held on 5-2-1990, general body approval was obtained in terms of section 81 (1 A) and thereafter shares were allotted to the willing family shareholders. It is incorrect to say that the petitioner group was not allotted any shares. When shares were allotted in 1990-91, all the shareholders were allotted shares as is evident from the fact that the petitioners shareholding went up from 30,090 in September 1990 to 32,340 in September 1991. Likewise, the shareholding of the parents also went up by about 3,500 shares during this period. During 1991-92 also the parents were allotted 5000 shares when shares were allotted to the respondents. The petitioners knew about this allotment and on their own volition did not offer to subscribe to further shares. Further since the disputes between the parties started only in the middle of 1992 in respect of the firms, the question of deliberately denying the petitioners their entitlement during the earlier period did not arise. The company had to comply with the directions of Punjab National Bank which required the company to increase the capital of the company and all the shareholders were aware of the need to raise the share capital and since the petitioners never took any interest in the affairs of the company, they never sought to subscribe to additional shares. Since the company is a closely held family company, the petitioners cannot disclaim any knowledge of increase in the share capital and in case they had approached the company for allotment of shares, the company would have definitely allotted shares to them also. In regard to the transfer of shares held by the parents to the daughters of the 2nd respondent, he pointed out the parents on their own volition transferred their shares and as such the petitioners cannot make any allegation against the 2nd respondent in this regard. He also pointed out that the percentage holding of the respondent group in September, 1990 together with the shares held by the parents accounted to 63.51 per cent and in 1994, since the parents had transferred their shares to the respondents group, its percentage holding came to 64.43 per cent. In other words, he pointed out that the respondents have not increased their percentage holdings at the cost of the petitioners. He further submitted that with the view to buy peace, the 2nd respondent is willing to offer such number of shares to the petitioners that would restore the percentage holding to that of 22.09 per cent as was in September, 1990 subject to their paying the consideration for the same. By this, he pointed out that the act of oppression alleged by the petitioners could be redressed.
11. As far as the allotment of shares against the book debts of the firm is concerned, he pointed out that the allotment was made to Rajaram Maize Products on 26-5-1991. Since the shares cannot be held in the name of the firm, the shares were issued in the name of the 2nd respondent, being a partner of the firm. Since this petition was filed only in November, 1994, the petitioner cannot challenge this allotment made in May, 1991 due to limitation as has been held in Kerala State Electricity Board v. T.P. Kunhaliumma AIR 1977 SC 282, Surinder Singh Bindra v. Hindustan Fasteners (P.) Ltd. AIR 1990 Delhi 32, Anil Gupta v. Delhi Cloth & General Mills Co. Ltd. [1983] 54 Comp. Cas. 301 (Delhi), Jagjit Rat v. Punjab Machinery Works (P.) Ltd 1995 (2), Punjab Law Reporter 484. He also pointed out that the allotment to the firm was made at the specific instruction of the father, Shri Rajaram who was also a managing partner of the firm. In this connection, he referred to Pages 652 and 653 of Volume 2 wherein a letter from Shri Rajaram dated 30-3-1991 has been enclosed. He also referred to similar letters of Shrimati Prabha Aggarwal and Subodh Kumar Gupta, partners of the firm at Page 655. He also pointed out that even though the petition was filed in 1994, yet, the father, being the managing partner of the firm was not impleaded as a party as the petitioners knew that he had given his consent for the allotment. This itself would show, he contended that the petitioners were aware of the consent given by the partners for allotment of shares against the book debts of the firm. Further, since the 2nd respondent is holding the shares for the benefit of the firm, the petitioners cannot have any grievance in the shares being held in the name of the 2nd respondent. He contended that even otherwise, the petitioners cannot raise this issue in the present petition inasmuch as they have already filed a civil suit challenging the said allotment and refund of the amount.
12. In regard to non delivery of the share certificates, he submitted, that the allegation of the petitioners is not based on facts. He pointed out that the company was incorporated in 1977 and till 1992, the petitioners never complained about non delivery of the share certificates for over 15 years. Only after the disputes started between the parties in 1992, they raised this issue and complained to the Registrar of Companies and later to the Company Law Board. In accordance with the directions given by the CLB, the company was to issue duplicate certificates subject to the petitioners furnishing indemnity bonds. None of the petitioners except the 4th petitioner furnished an indemnity bond. Even this bond was not in proper form. Therefore, it is the petitioners who did not comply with the directions of the CLB and the company cannot be held responsible for non delivery of the share certificates. He also pointed out that without complying with the directions of the CLB, the compliance of which would have enabled the company to deliver the share certificates, the petitioners have filed a case before the District Consumer Forum, Chandigarh on the same issue and the proceedings are pending. They also complained to the Registrar of Companies, who filed a prosecution for non compliance with the provisions of section 113 of the Act which was later on withdrawn after the ROC took inspection of the documents of the company and after having satisfied himself that originally the share certificates had been delivered to the shareholders. He submitted that to put an end to this controversy, the company is ready and willing to deliver duplicate share certificates to the petitioners, if the Bench were to order so on any terms and conditions imposed by the Bench.
13. As far as the allegation relating to non sending of notices for the general body meetings are concerned, he pointed out that till 1992, there were no disputes between the parties and notices of the meetings used to be given to the petitioners and meetings were regularly held. Further, till 1994, Shri Rajaram, the father of the parties was the Chairman of the company with full control of the company. Till 1994, the petitioners never complained about non receipt of notices for the meetings. After the petitioners remitted Rs. 500 to the company with the request to send notices by registered post, all notices were being sent accordingly but the petitioners never attended any meeting. The annual reports of the company were also being regularly sent. As far as the grievance of the petitioners that proof of dispatch of notices was not given for inspection is concerned, the CLB had directed inspection of only the statutory records which were produced for inspection and the petitioners never sought for inspection of proof of dispatch of notices. The petitioners have not averred anywhere the details of the meetings for which notices had not been received by them. This unsubstantiated allegation, he submitted, has been made only to strengthen their case of oppression.
14. In relation to the allegation that the 2nd respondent has fabricated the documents of the company, the learned counsel submitted that the FIR filed on 18-3-1992 regarding loss of records of the company related to records prior to 1989. The ROC directed the company to produce records relating to register of charges, register of fixed assets, minutes books, register of shareholders and other documents etc. pertaining to period before 1989 in connection with scrutiny of balance sheet as on 31-12-1986. These records were lost in transit while an employee was carrying them to the ROC office. The documents given for inspection and also relied on by 2nd respondent in these proceedings relate to the periods after 1989, the records of which were always available with the company and were also given for inspection to the petitioners as per directions of the CLB. Further, the Registrar of Companies had examined the records on 6-8-1993 and had also countersigned them. Therefore, the allegation that the records of the company have been fabricated to meet the allegations in the petition has no basis.
15. As far as the allegation relating to the transaction with the firm Rajaram & Bros, are concerned, the learned counsel pointed but that the company had been having transactions with this firm even before it became a public limited company. This firm consisted of both the 2nd respondent as well as the 1st petitioner including their father as partners. In the Board Meetings held on 21-3-1989,22-3-1990 and 5-2-1990, the 2nd respondent had disclosed his interest in the firm. In addition', in a general meeting held on 5-2-1990, the general body also was informed of the interest of the 2nd respondent in the partnership firm. Therefore, the contention that the 2nd respondent had violated the provisions of section 299 and has disqualified himself as a director has no basis.
16. The learned counsel further submitted that the allegation of underselling the products of the company and consequent siphoning of funds is purely imaginary and not based on any concrete material. These allegations have been made by comparing the prices of the products of the company with that of Sukhjeet Starch & Chemicals Company. The products of the said company are of high quality and the price includes various heavy overheads. Further the plant of that company is a modern one while that of the respondent-company is old. That company has a large number of products compared to the respondent-company and as such they arc in a position to recover various overheads through other products. Further, the plant of the company is located in the heart of Maize growing area while the plant of the respondent-company is located in Chandigarh. The cost of transportation and the loss in transit have to be accounted for by the respondent-company while such costs arc not incurred by the other company. The learned counsel also pointed out that the petitioners themselves who are making similar products as that of the company are selling their products at a much iower price than the respondent-company. He also pointed out that of the four major starch producing companies in Northern Region, except Sukhjeet Starch and Chemicals, other 3 companies are also having the same problems as that of the respondent-company. He also pointed out that more than 90 per cent of the products of the company are being sold on tenders to institutions and therefore the allegation of under-selling and siphoning of funds arising there from does not stand to scrutiny.
17. Summing up his arguments, the learned counsel pointed out that nothing survives in this petition once the respondents have agreed to restore the percentage shareholding of the petitioners and issue of duplicate share certificates. Other allegations, he contended, are without merits and have been made only to harass the respondents. Referring to the prayer of the petitioners that the CLB should recommend to the Central Government for winding up of the company, the learned counsel submitted that this prayer itself would indicate that the petitioners are more interested in having the business of the company closed than to seek the equitable remedy provided for under section 397/398. Shri Suri pointed out that the company has always been under the control of the 2nd respondent and that he and his family members who are directors of the company have been actively participating in the affairs of the company and they have given personal guarantees to the banks and have mortgaged their properties on behalf of the company in addition to providing over Rs. 1.35 crores as interest-free loans to the company. Further none of the directors is drawing any remuneration except the 2nd respondent who draws only Rs. 7,500 as remuneration per month. No doubt that the company is having financial problems which has arisen due to interest burden on the borrowings and not due to operational losses. Giving a summary of the performance of the company, he pointed out that the gross sales in 1998-99 of Rs. 529 lakhs went up to Rs. 721 lakhs in J 999-2000 marking an increase of 38 per cent. He pointed out that once the Bangalore unit is sold and the proceeds utilized for clearing the outstandings, the interest burden would come down and the profitability of the company would improve. He also submitted that no minority shareholder can demand winding up of the company when the majority desires to continue with the company. Accordingly he prayed that this prayer of the petitioners should be rejected. In regard to the purchase of the shares of the petitioners, he submitted that the financial resources of either the company nor the respondents would enable them to purchase the shares held by the petitioners and as such the respondents are not willing for this option.
18. We have considered the able arguments of the senior counsel appearing for the parties. This petition was filed sometime in 1994 and during these years, both the sides had filed a number of applications. On the applications CA 212 and 220, this Bench passed an order on 1-12-1994, directing the company to give inspection of the statutory records of the company that a shareholder was entitled to under the law and also recorded the undertaking given by the counsel for the respondents that notices for all the general meetings would be given by registered post and that the company would not dispose of any asset except in the normal course of business. Later, when it was complained that the company had failed to give inspection, we once again, by an order dated 23-3-1995, directed the company to give inspection in the presence of the Bench Officer and the inspection was carried out on 8-4-1995. In the hearing held on 10-7-1995, considering the family relationship of the parties and that there were other disputes between them, we advised the parties to attempt at settling all disputes amicably and this suggestion was agreed to by the counsel for the parties. However, the parties could not reach an amicable settlement, which fact was recorded in our order dated 14-11-1995. In the meanwhile the parlies were directed to complete the pleadings. In the hearing held on 23-5-1996, compromise efforts were once again revived. In the order dated 23-5-1996 it was recorded that the petitioners were willing to sell their shares to the respondents at face value together with an interest at the rate of 10 per cent per year, while the respondents were only willing to purchase the shares at the book value which was not acceptable to the petitioners and out suggestion for appointment of an independent valuer to value the shares was not accepted by the respondents. Later the respondents filed an application dated 4-6-1996 stating that their authorized representative who appeared on 23-5-1996 had not been instructed to submit that the respondents were willing to purchase the shares of the petitioners at the book value and that due to financial difficulties, neither the company nor the respondents would be able to purchase the shares. Thus the compromise efforts once again failed and the matter was fixed for final hearing. The company filed an application CA 155 of 1996 seeking permission to dispose of certain surplus/unusable machinery lying in the Bangalore unit, which was opposed by the petitioners who desired to purchase the same at Rs. 60 lakhs. By an order dated 17-9-1996, we gave them the permission to do so with the direction that the deal should be completed on or before 17-10-1996. Later, it was reported that the petitioners had failed to complete the deal. The company thereafter filed an application, seeking permission to dispose of certain assets of the company that had become unserviceable to augment the resources of the company. After perusing the details of the need for funds and having been convinced that the request of the company was genuine, this bench passed an order on 16-1-1997, permitting the company to dispose of un-usable assets up to the book value of Rs. 50 lakhs with the direction that the money realized should be utilized only for the purpose of the business of the company. In the hearing held on 13-8-1997, the parties once again evinced interest in settling the disputes amicably but nothing was forthcoming and the matter was fixed for final hearing but was adjourned from time to time at the request of the respondents on various grounds and finally the hearing was concluded on 5-1-2001.
19. On merits of the case, one of the main act of oppression complained by the petitions is that the company had allotted shares to one group in exclusion of the petitioners in violation of the provisions of section 81 of the Act and that by doing so, the percentage holding of the respondents has gone up while that of the petitioners has come down. It is not that only when a new majority is created or an existing majority is reduced to minority by allotment of new shares, then such an act could be considered to be an act of oppression. Non compliance with the statutory provisions in the issue and allotment of shares could also be considered to be an act of oppression in given circumstances. The company is a public limited company and is, therefore, bound to comply with the provisions of Section 81 of the Act, according to which shares are to be offered on a proportionate basis to the existing shareholders except in cases where the general body otherwise decides in terms of section 81(1A), According to the respondents, the general body, in an EOGM held on 5-2-1990 had unanimously passed a special resolution in terms of section 81(1A). To substantiate this they have enclosed a typed extract of the said resolution at Annexurc B-l 0 to the reply. Later, they have also filed a Photostat copy of the minutes at Annexure R-12 to their affidavit dated 23-6-1998 (page 332 of Vol. IV). The petitioners are questioning this resolution on two grounds--one is that the same is fabricated and the other is that if at all this resolution had been passed then it was done in a meeting without notice to the petitioners and as such is invalid. It is admitted by the petitioners that between September 1990 and September 1991, their group was allotted 2,250. During the said period, the company had allotted 27,050 shares. Even though this allotment to the petitioners was less than their proportional entitlement, they did not seem to have protested. This indicates that either they were aware about the decision of the EOGM or they were not interested in getting more shares in the company to maintain their percentage holding. The company had issued further shares of about 40,000 shares during 1991-92 of which about 36,000 shares were allotted to the respondents' group and 4,000 shares to the parents. No shares had been issued to the petitioners' group. Again during 1995-96, about 36,800 shares were allotted, that too, only to the respondents' group. When the company had allotted shares to the petitioners after the EOGM resolution in 1990-91, the company could have offered to the petitioners, further shares when subsequent allotments were made considering the family nature of the company. There is nothing on record to show that the petitioners were offered any shares on these occasions. Even though the respondents have justified the allotment of shares on the basis of the need for funds of the company, yet, exclusion of a particular group of shareholders in the allotment of shares in a family company like the respondent-company has to be considered to be an act of oppression. Therefore, in the normal course, these allotments would have to be declared as invalid. However, taking into consideration that the company required funds and that these funds have been utilized for the benefit of the company and considering the facts that the 2nd respondent is ready and willing to restore the original shareholding percentage of the petitioners we do not propose to declare the allotment of further shares as invalid. The acceptance of the offer of the company by the petitioners would have put an end to this act of oppression, but the learned counsel for the petitioners declined to accept this offer.
20. As far as the allegation relating to non delivery of share certificate is concerned, we feel that such a trivial issue has become a bone of contention between the parlies resulting in a long drawn legal battle. We find the stand of the respondents in this matter has been highly unreasonable by insisting that they had delivered the original certificates to all the shareholders including the petitioners. The law permits issue of duplicate certificates, even in cases where original certificates had been issued, the only requirements being that the originals should have been lost. In a family company wherein the shares are closely held, the company could have taken a pragmatic view and issued the duplicate certificates without any legal intervention. This uncompromising stand of the company had forced the petitioners to agitate this issue lor a long time both by way of a petition before the CLB and also through an application to the Consumer Court. Without examining as to whether originally the certificates had been issued or not, we think that it is high time that this dispute is resolved. Therefore, taking into consideration the submissions made by the counsel for the respondents that on a direction from this Bench, the company would be willing to issue duplicate share certificates, we direct, that, within a month from, the dale of receipt of this order and on the strength of this order, the company should issue duplicate share certificate in respect of all the shares held by the petitioners' group without observing the formalities required under the Rules for issue of duplicate certificates, since the company is a closed held company and that no one else has so far claimed any rights under the shares.
21. in respect of the allegation relating to unauthorized conversion of the dues payable to Rajaram Maize Products of Rs. 18,30,000, this is not a matter to be adjudicated by this Bench. The petitioners have already taken appropriate proceedings for recovery of this amount from the company and therefore other than noting that when this conversion took place, the company had failed to comply with the provisions of section 81 of the Act for which we have already given appropriate directions in paragraph 19 above, no further directions are given in this regard.
22. Another allegation made by the petitioners relate to under-selling the products of the company. According to the petitioners during the years 1989 to 1993, the amount of under-selling was to the tune of about Rs. 3.31 crores, which had allegedly been siphoned of by the 2nd respondent. They have compared the working results and sale price of the products of one Sukhjeet Starch & Chemicals Limited with that of the respondent company and have alleged under-selling and consequent siphoning of funds by the 2nd respondent. We are generally in agreement with the submissions made by the learned counsel for the respondents in this regard. A perusal of the annual report of Sukhjeet indicates that as on 31-3-1991, it had a gross block of about Rs. 10 crores with a turnover of about Rs. 27.5 crores during the year 1990-91. The gross block of the respondent-company on the same date was about Rs. 2.63 crores with a turnover of about Rs. 9.28 crores for the year 1990-91. In other words, Sukhjeet Starch & Chemicals Ltd. is larger in size and turnover at least by 3 times to that of the respondent-company. Therefore, it would be inappropriate to form an opinion about the performance of this company with that of the other on a comparison basis. In case of allegations of siphoning of funds, better particulars are required to adjudicate on the allegation. In the petition, except the comparative position, no other details of underselling of the products have been furnished to substantiate the allegation and since this allegation of siphoning of funds is a serious allegation, we cannot adjudicate this allegation without some concrete materials.
23. In regard to non issue of notices for the general body meetings, it is on record that when this complaint was made in the hearing held on 1-12-1994, we recorded an undertaking given by the learned counsel for the respondents that notices to be given to the shareholders as per law would be Sent to the petitioners by registered post. After this order, a number of hearings had taken place and at no time the petitioners raised the issue about non receipt of the notices for the subsequent general body meetings. Whether the company issued notices or not prior to that order is of academic nature especially when the petitioners have not cited any decision that had been taken in those meetings which are prejudicial to the interests of the petitioners to declare those decisions as invalid for want of notice to the petitioners except the one relating to the passing of the resolution in terms of section 81(1 A). To put an end to this grievance and to ensure that the petitioners do not have any complaint in this regard in future, we direct the company to always send notices for all general body meetings to the petitioners by registered post under the authority of this order.
24. Another allegation of the petitioners is that the 2nd respondent did not disclose his interest in Rajaram & Bros, in terms of section 290 when the company entered into transactions with the firm and as such the 2nd respondent is disqualified from acting as a director by virtue of the provisions of section 283(l)(i). They have also alleged that the records produced by the respondent to evidence his disclosure are fabricated. It is on record that even when the company was a private company, it was having transactions with the said firm in which the 2nd respondent as well as the petitioner brothers were partners. As per section 299, a director has to disclose his interest in any contract or arrangement and in the instant case, since contracts were entered into with a firm in which the 2nd respondent was a partner he should have disclosed his interest. The scope of the 'disclosure of interest' in this Section was examined by this Board in A. Sivasailam v. Registrar of Companies [1995] 83 Comp. Cas. 141 (CLB) and it came to the conclusion that the term "disclosure" would mean "to make others aware of which they were not aware" to mean that if the other directors of the Board are otherwise generally aware of the interest of a director in an arrangement or a contract, then the non disclosure in a Board meeting would not attract the penal provisions. In the present case, the Board of the company consisted of family members and the firm also consisted of family members and the company even as a private company was having dealings with the firm and as such other members of the Board must have had knowledge of the interest of the 2nd respondent in the firm. Therefore, even assuming that the allegations of the petitioners that the resolutions indicating the disclosure are fabricated, yet, non disclosure of interest, in facts of the case, does not attract the provisions of section 283(1)(i).
25. The petitioners have also raised the issue of fabrication of records of the company on the ground that according to the respondents themselves, certain records of the company had been lost and they had lodged an FIR with the police. This allegation is based on an affidavit filed by the respondent-company on 28-5-1994 in a different proceedings before this Board under section 196(4) of the Act in which the company had stated about the loss of records and consequent filing of an FIR on 18-3-1992 as at page 256 of the counter affidavit. In those proceedings, the petitioners had sought for copies of the agenda and proceedings of the EOGMs and AGMs of the company from 1980 to 1992. In its order dated 27-6-1995 (Page 284 of Vol. IV) the Board has recorded that certified copies of all the resolution had been handed over to the petitioners and the same had been accepted by them and that the company filed a copy of the FIR about the loss of Register of Charges, Register of Fixed Assets, Minutes Book of Shareholder meetings and Directors, Register of Members etc. According to the respondents, the records lost pertained to the period before 1989 and the records relied on the proceedings are for the periods afterwards and, therefore, the allegation of fabrication of records is baseless. They have also stated in page 297 of Vol. IV that the records handed over to the petitioners on 27th June, 1995 pertained to the period after 1989. From page 340 of Vol. IV wherein a copy of the letter from ROC dated 17-9-1991, we find that the ROC had called for certain records to scrutinize the Balance Sheet of the company as at 31-12-1986 and 31-12-1987. If so, it is quite possible that the records lost pertained to the period relevant to the balance sheet dates. Any way, we note from the authentication of the ROC at page 97 of the Rejoinder that he had inspected certain documents on 6-8-1993, much prior in time to the filing of this petition. The petitioners had also taken inspection of the same documents authenticated by the ROC. Therefore, it is possible that the FIR filed on 18-3-1992 did pertain to records prior to 1989 as contended by the respondents. The petitioners have raised this issue of fabrication of records more with reference to the minutes of the EOGM held on 5-2-1990 wherein it is recorded that the 2nd respondent had disclosed his interest in the firm and that the general body had passed a resolution in terms of section 81 (1A). Any way, we have held in the earlier paragraph that in the facts of this case, non disclosure could not have attracted disqualification and that notwithstanding the resolution under section 81(1A), the petitioners should have been offered shares when further shares were allotted.
26. Yet another allegation relates to disposal of assets of the company on the ground that such sale of assets has resulted in the company turning out to be a shell company. In the hearing held on 1-12-1994, this Bench had recorded an undertaking by the counsel for the respondents that the company would not sell its assets. By a contempt application CA 19 of 1996, the petitioners alleged that the respondents had, in breach of the said undertaking, had issued an advertisement for sale of Sorbitol plant in the Bangalore and, thus had committed contempt of the order of this Board. In the meanwhile, the company moved an application CA 155 of 1996 seeking permission to sell Sorbitol plant in Bangalore for a sum of Rs. 51.5 lakhs. At that time the petitioners did not question the need to sell the machinery but only questioned the consideration on the ground that the plant was worth more than Rs. 60 lakhs and that they would be willing to purchase the same at Rs. 60 lakhs. On the consent given by the respondents for this proposal, this Bench passed an order on 17-9-1996 permitting the petitioners to purchase this plant at Rs. 60 lakhs. However, for some reason, the petitioners could not purchase that plant. In view of this, the company filed an affidavit seeking permission to dispose of unusable assets of the company to meet the financial needs of the company. On our directions, the company also filed detailed figures to evidence the need for funds. After hearing the parties, this Bench passed an order on 16-1-1997 observing as follows: "From the Bank statements and the details of the current liabilities as on 30-11-3996 filed by respondents duly certified by the Managing Director of the company, we are convinced that there is genuine need for funds and in order to comply with the stipulations of the company's bankers, certain unusable assets of the company have to be disposed of. In fact, if the petitioners had purchased the Sorbitol plant as per the consent order dated 17-9-1996, the problem perhaps would not have aggravated. However, keeping in view the apprehensions of the petitioners as already referred to we direct that the respondents may : 1. dispose of unusable assets up to the book value of Rs. 50 lakhs, 2. the sale proceeds of the assets shall be deposited in the CC account with the bankers immediately on receipt, 3. the company shall not utilize the funds for any purpose other than the normal operations of the company." Thus, the respondents had taken the general permission of ihis Bench to sell unusable assets of the company up to a particular book value. The petitioners have not established, even though alleged, that the company had either sold usable assets or assets worth more than Rs. 50 lakhs book value nor that any asset had been sold without need for funds. However, the petitioners complained to this Bench that in violation of our order dated 16-1-1997, the company had issued an advertisement for sale of the entire Bangalore Unit, the book value of which was more than Rs. 50 lakhs. During the hearing of the application, the petitioners also suggested that the company, in exchange of the shares held by the petitioners, could transfer the Bangalore Unit so that the disputes between the parlies could come to an end. This suggestion was not accepted by the respondents as according to them the value of the Bangalore unit was much higher than the value of the shares. Therefore, we modified the earlier order on 3-6-1999 stipulating that if the company were to sell any asset other than in the normal course of business, our permission should be obtained. The respondents filed CA 164 of 1999 seeking disposal of various unusable assets. A detailed order was passed on 19-8-1999 giving permission to the company to dispose of the assets mentioned in the list furnished by the company subject to the condition that full details of the sales should be furnished and that the consideration received should be used only for the normal business purposes of the company. Later, the company filed CA 148 of 2000 stating that in view of the closure of the Bangalore Unit right from 1995 and with a view to clear pending liabilities, the company has entered into an agreement for the sale of the land, building and machinery at the Bangalore Unit for a sum of Rs. 205 lakhs after giving wide publicity in various newspapers and as such permission be accorded to sell these assets. It was also slated that as per the terms of agreement dated 25-7-2000 with the buyer, the agreement was subject to the approval of this Bench and that the company had already taken an advance of Rs. 20 lakhs. This application was opposed by the petitioners as also by the workmen of the Bangalore Unit of the company. Elaborate arguments took place on this application - the learned counsel for the respondents pressing the application and the learned counsel for the petitioners and the workmen opposing the application. Since the permission lias been sought for in an interlocutory' application and as we are disposing of this petition itself finally by this order, we are hot detailing the arguments of the counsel. While in an interlocutory stage, with a view to preserve the assets of a company during the pendency of the proceedings, suitable directions could be given as we did in this case, at the final disposal of the petition no blanket order in the form of either permission or restraint could be passed as the decision to deal with the properties of a company is within the realm of the management/shareholders and as such we are not passing any order on the application of the respondents CA 148 of 2000 and leave the matter to the company to decide in accordance with law after taking into consideration the objections raised by the petitioners and the workmen.
27. Having given our findings on the allegations in the petition, we shall now deal with the reliefs sought for by the petitioners. While in the petition the reliefs sought relate to quashing all meetings held without notice to the petitions, canceliation of allotments made without notice the petitioners, removal of the respondents 2 to 5 as directors, appointment of a director from the petitioners group, appointment of an administrator or in the alternative order winding up of the company, during the hearing one more relief relating to purchase of the shares of the petitioners by the respondents was sought. The learned counsel for the petitioners sought for a direction that the respondents should purchase the shares of the petitioners group at a value to be determined as in 1989 or in the alternative we should direct the Central Government, to apply for winding up of the company. He relied on a number of cases to substantiate his prayers. In regard to direction for purchase of shares, this Bench has generally taken such a decision in cases where the companies had been closely held or where both the groups had participated effectively in the management of the company and that one group had, by acts of oppression, ousted the other group and that restoration of the shareholding would only result in further disputes or deadlock in relation to the affairs of the company. In the present case, while we have held that the allegations of acts of oppression have been established, we have also held the other allegations have not been established and to put an end to the acts of oppression complained of, we have given suitable direction. Further, none of the petitioners was an original promoter of the company and the petitioners' group had always been a minority and none from that group was in the management to result in possible deadlock. Once the petitioners acquire the shares as per our directions which would restore their percentage holding as existed in 1990, with our direction for issue of duplicate certificates and for issue of notices for general body meetings by registered post, majority of the acts of oppression complained of would stand redressed.
28. Therefore, direction for sale and purchase of shares would not normally arise in this case. Yet, in certain cases of family companies, even when the allegations had not been established or that the grievances could be otherwise redressed, this Board, with ihe view to avoid possible future litigations, directed either the company or the respondents to purchase the shares. In Esernan Metalo 's case cited by the learned counsel for the petitioners, wherein also the main allegation was issue of shares in exclusion of the petitioners, this Board had ordered the respondents to purchase the shares held by the respondents on the ground that continuance of the petitioner as a shareholder in the company would not be in the interest of the company. In the present case, however, since the respondents have expressed their inability to purchase the shares of the petitioners due to financial difficulties which is factual as is evident from the need of the company lo sell its assets to mobilize funds we feel that it would not be appropriate to direct the respondents or the company to purchase the shares of the petitioners more so when suitable directions to redress the grievances of oppression have been given by us. In Power Tools & Appliances Ltd. v. Jaladhar Chakroborty (96 CWN 313) wherein such a demand was made before the Calcutta High Court on the basis of the decision of the Supreme Court in Needle Industries (India) Ltd. 's case (supra) that the Court could order purchase and sale of shares even when acts of oppression are not established, the High Court held that in the Needles Industries (India) Ltd.'s case (supra) the respondents were earlier willing to purchase the shares and therefore the Apex Court took the same into consideration in directing such a purchase, while in the case before the High Court, the respondents were not willing and therefore the Court could not order the purchase and sale. To come to that conclusion the Court had relied on Maharani Lalita Rajya Lakshmi v. Indian Motor Co. (Hazaribagh) Ltd. AIR 1962 Cal. 127 wherein he had observed "It is also proper to emphasise that the power of the court to make such order, as it thinks fit under section 397(2) of the Act is expressly stamped with the purpose of 'bringing to an end the matters complained of. Therefore wide as the power of the court is flowing from words of expression 'such order as il thinks'. It is nevertheless controlled by the overall objective of this section which must be kept strictly in view that the order must be directed 'to bringing to an end the matters complained of. The marginal note of section 397 of the Companies Act shows also that the purpose of the order of the court in this section is to give 'relief in case of oppression'. "However, in Karelda Suryanamyana v. Sri Ramdas Motor Transport Ltd. [1999] 3 CLJ 422, this Board, considering the fact that the company was family company, ordered the company/respondents to purchase the shares held by the petitioner, even though the respondents were unwilling, as the unwillingness was not on account of financial difficulties. However, in Vinod Kumar Mittal v. Kaveri Lime Industries Ltd [2000] 36 CLJ 174, this Board did not pass any order for purchase and sale of shares when both the sides expressed their financial difficulties to mobilize funds towards consideration for the shares. In the present case, when the respondents and the company have expressed their inability to purchase the shares of the petitioners on account their difficult financial position, which has also been established, we do not think it would be proper to direct them to do so. In spite of our findings that in the present case, sale and purchase of shares need not be ordered, considering the fact that the parties are at draggers drawn and every action by the company is being questioned by the petitioners in their capacity as shareholders, in the larger interest of the company, the performance of which, according to the respondents is improving, we suggest that it would be in the interest of the respondents themselves, to purchase the shares held by the petitioners at a fair price to be determined by the statutory auditors of the company. However, we are not giving any direction in this regard in view of the financial difficulties expressed by the respondents and leave the option to them to do so and in case, the respondents opt to purchase the shares of the petitioners, they should be informed of the same within a month from the date of receipt of this order. The petitioners have demanded that the valuation should be based on the worth of the company in 1989. The normal principle followed in valuation of shares in a 397/398 petition is that the date of the petition is always taken as the date of valuation and in other proceedings this Bench has adopted the Balance Sheet date proximate to the date of the petition for valuation purposes. Since this petition was filed in November 1994, the date of valuation has to be 31-3-1995, being the proximate balance sheet date. The fair price of the shares will be determined by the statutory auditors of the company on the basis of the Balance Sheet as on 31-3-1995. The statutory auditor of the company, before determining the fair value, will give hearings to both the sides and once the fair value is determined by the auditor, the same will be binding on the parties. The valuation should be completed within 4 months of the respondents communicating their decision to purchase the shares. The consideration for the shares at the fair value determined will be paid within 3 months from the date of the valuation report and on receipt of the consideration, the petitioners will hand over blank instruments of transfer to the respondents along with the share certificates, duplicates of which, we have already directed for issue within a month. In case, the respondents are not willing to purchase the shares of the petitioners, the same should also be communicated to the petitioners within a month. Thereafter, the petitioners are at liberty to apply for such number of shares that would restore their percentage holding of the equity shares to 22.09 per cent. Once the petitioners express their desire to do so, then the respondents will be bound to get that number of shares transferred from their group on receipt of consideration for the same at par at which the shares were earlier allotted. In case of all future issue/ allotment of shares, the petitioners should be offered shares on a proportionate basis by registered post Ack. due.
29. The learned counsel for the petitioners has made an alternate prayer for directing the Central Government to apply for winding up of the company on just and equitable grounds, since the financial position of the company is bad. The learned counsel for the respondents relied on a number of cases to stale that when the financial position of a company is bad then it is a fit case for winding up on just and equitable grounds. Even though, in view of our directions in earlier paragraphs, this issue has become irrelevant, yet, we feel that this prayer of the petitioners is beyond the scope of this petition under section 397/398. In three of the cases cited by the learned counsel for the petitioners viz.. Universal Glass Ltd, Delhi Automobiles Ltd and Seth Mohanlalm which the Courts had applied the just equitable clause for winding up in view of the bad financial position of the companies, we find that these petitions had been filed under section 433 and not under section 397/398. Therefore, these decisions are not applicable to the present case. In Shishu Ranjan case, which was decided in 1980, the petition was under section 397/398 and the court finding that there was a deadlock in the management in view of two groups holding equal number of shares came to the conclusion that there was justification to wind up the company on just and equitable grounds and directed the division of the assets of the company into two equal parts, one part to be given to each group. It did not order winding up of the company. It is to be noted that proceedings under section 397/398 are beneficial provisions to get grievances redressed without recourse to winding up of a company since such winding up would be prejudicial to the interest of the members. The petitioners, being in minority, cannot, on the one hand file a petition under these sections and on the other hand seek for a direction to wind up the company which the majority does not desire. In this connection we may beneficially refer to the English decision in Re Agricultural Cattle Insurance Co. 41 ER 1228 wherein it was observed that the fact that some shareholders take a pessimistic view of the company's prospects does not make it 'just and equitable' to wind it up against the wishes of the majority who take more optimistic view. Therefore, this prayer deserves to be rejected and we do so.
30. Before we part with the order, we note that the petitioners had filed two contempt applications. One is CA 19 of 1996 complaining that in violation of the earlier order of the Bench dated 1-12-1994, the company had advertised for sale of Sorbitol plant. This application did'not survive once the petitioners themselves had offered to purchase the same for Rs. 60 lakhs (which did not materialize). The second is CA 128 of 1999 complaining about issue of an advertisement by the company for sale of the plant and machinery at Bangalore Unit in violation of the order of this Bench dated 16-1-1997 which had restricted the power of the company to sell unusable assets beyond a book value of Rs. 50 lakhs and that the plant and machinery at Bangalore was more than Rs. 50 lakhs and, thus, the respondents had committed contempt. Since no sale had taken place pursuant to the advertisement we do not consider that the respondents had committed any act of contempt. As a matter of fact, after the said application was filed, we had directed the company by an order dated 3-6-1999 not to dispose of any assets of the company except in the normal course of business, without our approval. Therefore, this application also does not survive.
31. With the above directions, observations we dispose of this petition without any order as to cost.