Company Law Board
Mr. Dilip Kumar Chandra And Mr. Ajit ... vs Chandra & Sons Private Limited, Mr. ... on 30 September, 2002
Equivalent citations: [2003]45SCL405(CLB)
ORDER
C.R. Das, Member
1. The petitioners have filed proceedings under Section 397 and 398 of the Companies Act. 1956 ("the Act") alleging case of the oppression and mismanagement in the affairs of M/s. Chandra & Sons Private Limited ("the Company"). The Company is an existing private limited company. A partnership firm called Chandra and Sons was converted into a company in the year 1948. The registered office of the Company situate at 116/1 and 117, B.B. Ganguly Street, Kolkata 700012. The authorized share capital of the Company is Rs. 05,00,000/- divided into 5,000 equity shares of Rs. 100/- each. The issued and subscribed and paid up capital of the Company is Rs. 05,00,000/- divided into 5,000 equity shares of Rs. 100/- each. The petitioners, however, have a grievance with regard to the further issue of share capital in respect of the Company. According to the petitioners, the issued, subscribed and paid up capital of the Company should be Rs. 52,000/- dividend into 520 equity shares of Rs. 100/- each. The excess 4,480 equity shares which according to the petitioners were issued without notice to the petitioners, should not be taken into account and in fact the petitioners have sought relief with regard thereto.
2. According to the petitioners, the Company is a family concern. The three Chandra brothers, namely, Haripada Chandra (since deceased) was the eldest, Gouripada Chandra (since deceased), father of the petitioners and Taraknath Chandra, the respondent No. 2 and the youngest brother were the subscribers of the Memorandum of Association of the Company.
3. The petitioners relied on an Annual Return of the Company as on 03rd September, 1992, in support of the shareholding position. According to the petitioners, as on 03rd September, 1992, the eldest brother, Haripada Chandra (since deceased) held 150 shares.
4. The respondent No. 2 had filed an affidavit in reply to the petition of the petitioners. The respondent No. 2 had filed such counter on behalf of all the respondent. The petitioners had filed a rejoinder.
5. The parties were represented before us by Learned Counsels, Shri P C Sen, for petitioners and Shri S.N. Mookherjee, for respondents. Elaborate submissions had been advanced on behalf of the parties. The petitioners had submitted notes on argument. The respondents had also submitted short notes on submissions.
6. According to the petitioners, the Company was a partnership concern which was converted into a private limited company in 1948. The three Chandra brothers, namely, Haripada Chandra (since deceased) was the eldest, Gouripada Chandra (since deceased), father of the petitioners and Taraknath Chandra, the respondent No. 2 and the youngest brother were the subscribers of the Memorandum of Association of the Company, all shares of the Company were distributed among the members of the family of the three brothers in equal proportions excepting that of Amala Das whose husband was a friend of the family and who held 40 shares. Amala Das has since died and her shares were transmitted to her son Arun Kumar Das. According to the petitioners, these 40 shares were wrongfully and illegally transferred in violation of the Articles of the Company to the respondent No. 3 being the wife of the respondent No. 2. In support of their contentions the petitioners had relied on the decisions reported in AIR 1992 SC 453.
7. The petitioners contended that there was inordinate and motivated delay in recording the transmission of 8 shares standing in the name of Urmila Chandra, the mother of the petitioners, in favour of the petitioners. The petitioner had applied for transmission of the shares held by their mother in 1994. It was only on 24/07/1998 that the transmissions were effected in favour of the petitioners although such application was made as late as in 1994 with succession certificate. The Petitioners have also grievances with regard to non-registration of shares held by late Parbati Chandra, wife of Haripada Chandra (since deceased). Haripada Chandra died in October, 1976. Smt. Parbati Chandra, the widow of Haripada Chandra, died on 23/06/1985. According to the petitioner, Smt. Parbati Chandra had executed a Will dated 26/02/1985 where under the entire movable and immovable properties were bequeathed in favour of the petitioner No. 1. The properties of Smt. Parbati Chandra (since deceased) include 150 shares in the Company. The petitioner No. 1 had applied for probate of the said Will which has been challenged by the respondent No. 2 and the same is pending before the Hon'ble High Court at Kolkata.
8. According to the petitioners, their father, Gouripada Chandra, during his lifetime had gifted 50 shares each in favour of the petitioners in 1994. The petitioners had applied for registration of transfer of the said 100 shares in their name with the Company and the Company had allegedly refused to transfer such 100 shares. According to the petitioners, such gift was made by their father on 14/02/1994 and that their father during his life time by a letter dated 14/07/1994 had requested the Company to make necessary transfer. In support of their contention, the petitioners had relied upon a letter dated 10/01/1998 written by the petitioners to the Company and the letter dated 21/03/1998 written by the Company to the petitioners. According to the petitioners, the grounds for refusal are mala fide.
9. The petitioners have also made out grievances against the respondents contending that the delay in transmission of the shares devolving upon the petitioner after their mother's death was an attempt on the part of the respondents to deny the petitioners any access so far as the affairs of the Company was concerned. The petitioners have also grievances with regard to the increase of share capital and allotment of 4,480 shares of the Company to the respondent Nos. 2, 3, 4 and 5. According to the petitioners, the issue and allotment of further shares of the Company were mala fide, illegal and had been resorted to not for the benefit of the Company but to create a new majority. The petitioners relied upon the cases reported in 84 Comp. Cas. 838; 109 Comp. Cas. 533; 109 Comp. Cas. 732 and 1974 Appeal Cases 821 in support of the contention with regard to the issue and allotment of shares in favour of one group of shareholders for their benefit and to the detriment of oppressed shareholders as an act of oppression.
10. The petitioners have challenged the appointment of the respondent No. 3 as a director of the Company. According to the petitioners, such appointment was oppressive and was made in order to tilt the balance of power in the board in favour of the respondents. At the material point of time when the respondent No. 3 was appointed as a director of the Company, the father of the petitioners was also a member of the board of directors and also challenged the appointment of the respondent Nos. 4 and 5 as directors of the Company. The respondent Nos. 4 and 5 were appointed as directors on 18/05/1998. According to the petitioners, no notice of the Extra-Ordinary General Meeting (EGM) in which the respondent Nos. 4 and 5 were appointed as directors, was received by any of them.
11. The petitioners alleged that the changes made in the composition of the members of directors of the Company were done with the sole motive to oust the petitioners from management and to prevent the petitioners from exercising their right as majority shareholders. Such actions were oppressive to the interest of the petitioners and also alleged that some of the documents on which the respondents had relied upon were concocted and that no reliance should be placed on the same. In particular, the petitioners had pointed out the Balance Sheet and Profit & Loss Account of the Company for the year ended on 31/03/1995. The petitioners also alleged that the respondents had falsified statutory documents for the accounting years commencing from 1993-94 till 1996-97. In addition to the Balance Sheet, the petitioners had also alleged that the respondents have made wrongful statement with regard to a letter dated 20/06/1994. The petitioners alleged that they did not receive the letter dated 20/06/1994 contending requisition for holding an EGM but had received a letter of the Company on the same date with regard to transmission of 100 shares to the petitioners. In fact, the deceased father of the petitioners had replied to the letter dated 20/06/1994 as received by the deceased father of the petitioners by a letter dated 14/07/1994. Elaborate submissions were also advanced with regard to the notice of the EGM having been requisitioned by the letter dated 20/06/1994 on behalf of the petitioners.
12. The petitioners contended that in the facts and circumstances of the case, there should be a division of the properties of the Company. The Company, according to the petitioners, has a show room at B.B. Ganguly Street. There are branches of the Company at Asansol and at Suri. The petitioners alleged that the show room of the Company at Kolkata is about 1000 Sq.ft. and can be easily divided into 2 lots.
13. In course of argument, Shri P.C. Sen, the Learned Senior Counsel for petitioners contended that business of the Company could be divided between the two groups now existing in the Company on 50:50 basis. The petitioners sought division of the show room at Kolkata on 50:50 basis.
14. The Senior Counsel for the petitioners in the alternative had submitted that the event of division of properties of the Company is not granted then the petitioners be inducted in the board of directors in the Company and be given proportional representation on 50:50 basis. The petitioners have also sought relief with regard to the further issue of share capital of 4,480 shares and the transfer of 40 shares in favour of the respondent No. 3. The petitioner relied on the decision reported in 109 Comp. Cas. 350; 53 Comp. Cas. 883 and AIR 1980 Cal 28, in support of the contention that the properties of the Company can be divided among the contesting parties to bring to an end to the act complained of.
15. In the course of arguments on behalf of the petitioners, reliance were also placed by the Learned Senior Counsel on the decisions reported in AIR 1981 SC 1298; AIR 1973 SC 2389; AIR 1990 SC 737; 84 Comp. Cas. 838 and 109 Comp. Cas. 533.
16. In course of argument, the respondents sought to rely upon the admissions made on behalf of the petitioners during the hearing. It was pointed out on behalf of the respondents that the petitioners have admitted that the respondent No. 2 and his group were always in charge of Kolkata unit of the Company, the petitioners and his group were always in charge of Asansol unit of the Company and Shri Haripada Chandra and his group was initially in charge of Suri unit and after his death, the Suri unit was being looked after by respondent No. 2 and his group. The respondents also relied upon the petition of the petitioners in support of the contention that the respondent No. 2 and his group were and still are in control of Kolkata and Suri unit of the Company.
17. The respondents contended that the 3 units of the Company were having independent financial management and control. Among three units, namely, Kolkata, Asansol and Suri, Kolkata and Suri were under the control of the respondents group while Asansol was under the control of the petitioners group. The petitioners at no point of time raised any objections to the present arrangement as mentioned hereinbefore. The three units had different bank accounts and were operated by the persons and/or groups in charge of the concerned unit.
18. Learned Counsel for the respondents replying to the charge with regard to the transfer of shares held by Smt. Amala Das (since deceased) in favour of the respondent No. 3, the respondents contended that after the death of Smt. Amala Das in 1984, the 40 shares held by her, were transmitted in the name of her son, Arun Kumar Das in 1994. The respondent No. 3 had purchased the 40 shares of Arun Kumar Das for valuable consideration in 1995. At the time of such purchase, the respondent No. 3 was an existing member of the Company. The respondents contended that none of the Article of Association of the Company had been violated nor had their been any understanding between the parties that the shareholding in the Company would remain equal and that the parties would have equal pre-emptive rights. Learned Counsel for the respondents further contended that the transfer of shares took place on 10/03/1995 and that such transactions cannot be impugned in the present proceedings as the cause of action in respect thereof was barred by the laws of limitation. Further, the respondents contended that the transfer of the shares cannot be treated as an act of oppression in as much as by the time of such transfer, the petitioners have already had a Will in their favour allegedly executed by Smt. Parbati Chandra (since deceased) seeking to bequeath 158 shares of the Company in favour of the petitioners.
19. In response to the charge of the petitioners that there were inordinate and motivated delay in recording the transmission of 8 shares standing in the name of the mother of the petitioners, Learned Counsel for the respondents contended that such charges does not survive any longer as the transmission had been completed by the Company much prior to the filing of the petition.
20. With regard to the charge of the petitioners as to the non-registration of the shares held by Late Parbati Chandra, the respondents contended that the Company was justified in refusing such transmission. Learned Counsel for the respondents contended that the Will dated 26/02/1985, by which the bequeath of the shares of Smt. Parbati Chandra (since deceased), is alleged by the petitioners to have taken place is under challenge before the Hon'ble High Court at Kolkata. The probate proceedings are pending adjudication before an appropriate forum, such probate proceedings were earlier in point of time than the instant proceedings. In that view, the Learned Counsel for the respondents contended that without the validity and legality of the Will being established before a competent Court and probate thereof obtained, the petitioners were not entitled to act in accordance with the Will of Smt. Parbati Chandra and the Company was justified in refusing the recognize an un-probated Will.
21. So far as the grievance of the petitioners of the failure of the Company to register transfer of 100 shares gifted by the father of the petitioners in favour of the petitioners is concerned, the Learned Counsel for the respondent contended that the Company had refused to register such transmission as the share certificates did not accompany the transfer deeds and the transfer deeds were not duly stamped. The Counsel for the respondents pointed out that Gouripada Chandra (since deceased) during his lifetime had stated that the share certificates had been lost. The Counsel for the respondents, thus, contended that in absence of the share certificates a valid gift could not have taken place. The Company had requested Gouripada Chandra (since deceased) during his lifetime to give evidence of the loss of share certificates, which Gouripada Chandra had failed. Gouripada Chandra during his lifetime had failed to take any steps for issuance of duplicate share certificates. Gouripada Chandra was a member of the board of directors of the Company during his lifetime. The Counsel for the respondents, however, submitted during the course of argument that in the event of a valid gift was made out by the petitioners, the Company will register the 100 shares in favour of the petitioners.
22. Replying to the charge of wrongful appointment of the respondent No. 3 as a director of the Company, the Counsel for the respondents contended that such charge is an after thought. The respondents contended that the petitioners were aware of the appointment of the respondent No. 3 as director at the material point of time when the respondent No. 3 was appointed. The Counsel for the respondents contended that Gouripada Chandra was a member of the board of directors till his death on 19/04/1998, did not raise any objection or query with regard to the said appointment of the respondent No. 3 as a director. The respondent No. 3 was appointed as a director on 30/07/1994. Even after the death of Gouripada Chandra on 19/04/1994 till the date of the filing of the petition, none of the petitioners had ever raised any objection. The Counsel for the respondents submitted that assuming though not admitting that the petitioners were not aware of the appointment of the respondent No. 2 at the material point of time, the petitioners were aware that there were two directors of the Company, namely, the respondent No. 2 and Gouripada Chandra (since deceased), their father. After their father's death in April, 1998, the petitioners in normal course of business should have raised queries with regard to the Company's functioning with one director, if the petitioners had no knowledge of the appointment of the respondent No. 3. The Counsel for the respondents further contended that the Company had recorded the transmission of shares of the deceased mother of the petitioners in their favour on 24/07/1998 which could only be possible and valid if the respondent No. 3 was a director of the Company. The Counsel for the respondents contended that the appointment of the respondent No. 2 as a director was with the consent and knowledge of Gouripada Chandra who was sick at the relevant time and that the respondent No. 3 was the only person with requisite share qualification to be appointed as a director. Such appointment was necessary to ensure that there was no deadlock in the functioning and management of the affairs of the Company in terms of the Companies Act, 1956.
23. The Learned Counsel for the respondents contended that the challenge of the petitioners with regard to the appointment of respondent Nos. 4 and 5 as directors of the Company, must also necessarily fail in view of the fact that the respondent Nos. 4 and 5 were appointed by requisite majority and that even if the petitioners were present, the petitioners would not have been in a position to stop the appointment of the respondent Nos. 4 and 5 as directors. The Counsel for the respondents further contended that this new issue and allotment did not create a new majority nor did nit convert a majority to a minority as the petitioners did not raise any objection and/or query herein before filing the present under Section 397/398 of the Act.
24. The charge that the changes made in the composition of the board of directors of the Company were made with the sole motive to oust the petitioners from management must also fail according to the Counsel for the respondents in view of the fact that the petitioners never made themselves available for the management for the affairs of the Company nor did the petitioners hold any requisite share qualification.
25. Replying to the charge of fabrication of documents by the respondents, it was contended by the Counsel for the respondent that the Balance Sheet of 31/03/1995 as disclosed by the respondents and as filed with the Registrar of Companies, contained the same figures. The Counsel for the respondents explained that the Balance Sheet was signed by the respondent No. 2 and Gouripada Chandra, father of the petitioners (since deceased) and that another Balance Sheet containing the same figures of the same year was also signed by the respondent No. 2 and 3 and the same Balance Sheet signed by the respondent Nos. 2 and 3 was filed with the Registrar of Companies. The Counsel for the respondents contended that the concerned Balance Sheet and in fact all accounts of the Company at all material point of time had been shown to Gouripada Chandra (since deceased) and the petitioners.
26. The Counsel for the respondents denied that the allegations of the petitioners with regard to the letter dated 20/06/1994. The Counsel for respondents contended that the petitioners had been given notice of the EGM.
27. Learned Counsel for the respondents in course of argument had contended that the petition filed by the petitioners should be dismissed. The Counsel for the respondents submitted that no case of oppression and mismanagement had been made out. In the event, the Counsel for the respondent contended that further issue and allotment of shares and the proportionate representation of the board of directors and the cancellation of transfer in favour of the respondent No. 3 were granted there would be deadlock in the management. There would be two equal groups of shareholders with parity in the board of directors. This deadlock should not be allowed to take place by this board. In this connection, the Counsel for the respondents relied upon an unreported decision of the CLB delivered in M/s. Kamrup Developers Pvt. Ltd. in support of such contentions, wherein it has been held that the oppressed should be asked to sell out the shares. The Counsel for the respondent also relied upon another decision reported in AIR 1966 Cal. 512.
28. Learned Counsel for the respondents submitted that the respondent No. 2 and his group had inducted funds into the Company to the extent of Rs. 26.59 lacs. The respondent No. 2 and his group had furnished personal guarantee to the Bank for credit facilities granted by the Bank to the Company to the extent of Rs. 90.00 lacs. The Counsel for the respondents submitted that one method of bringing to an end the matters complained of would be to allow the respondent No. 2 and his group to purchase the entire shareholding of the petitioners and his group. The Counsel for the respondents also stated that in as much as the petitioners and the respondent have 50% shares in the Company. Accordingly, the respondents be directed to purchase the balance 50% belonging to the petitioners. In determining the price of the shares of the petitioners, the Counsel for the respondents contended that the goodwill of the three units of the Company and the value of the three premises should be determined and after such determination, the respondent No. 2 be allowed to pay 50% to the petitioners in exchange and in lieu of the petitioners entire shareholding including the shares of Haripada group in the Company.
29. Learned Counsel for the respondents also submitted that the business of the Company can be divided on the basis of the groups in control of individual units retaining such the units of the Company. The Company admittedly had three units. The respondent No. 2 and his group were in control and management of the Kolkata and Suri units. The petitioners were in control of the Asansol unit. The units as aforesaid can be allowed to be managed by the respective groups as separate unit. In support of such proposition, the Counsel for the respondents relied on 104 Comp.Cas 611 and 109 Comp.Cas. 350. In such a situation, the Counsel for the respondents contended that the goodwill of the three units of the Company and value of the premises should be valued and the petitioners should get 50% of the same less the value of the unit at Asansol and its goodwill in exchange and in cancellation of their shareholding and claim to the Company.
30. Learned Counsel for the respondents contended that the method of valuation as proposed by the respondents were just and reasonable in the facts of the case in as much as the three units were different and independent to each other, the persons in the control and management of the different units had developed and crated the assets of the different units. The respondent No. 2 and his group had created the assets at Kolkata and Suri units out of their own funds to which the petitioners cannot have any claim and should not be allowed to take any advantage from the same. By the method suggested by the Counsel for the respondents, the petitioners would receive just and adequate compensation as the petitioners would remain in the management and control of the Asansol unit and will receive compensation for the Kolkata and Suri units as per valuation as may be made by the valuer appointed by the CLB.
31. The Counsel for the respondents contended that the division of the showroom at Kolkata in two lots was not feasible nor would be prudent for the business of the Company. The respondents contended that the demand for such partition by the petitioners was mala fide. The respondents contended that in the event the show room at Kolkata was allowed to be partitioned in two lots, the same would ruin the business of the Company completely. The Counsel for the respondents contended that the show room at Kolkata was only 600 Sq.ft. approximately having one entrance. The Counsel for the respondents relied upon a site plan of the show room and also some photograph of the show room. The Counsel for the respondents also contended that the intention of the family was against the division which will be evident from a letter dated 17/01/1994 addressed to Mr. Ashok Nain, Value duly signed by both Managing Director, Shri G.P. Chandra and Shri T.N. Chandra. The partition of the unit was never contemplated by them. Moreover, two warring groups cannot be allowed to carry on business side by side, particularly, where some civil suit being Title Suit No. 2786 of 1997 filed before the City Civil Court, Kolkata and interim order obtained by the petitioners have been vacated, as stated by the Counsel for the respondents during the course of arguments with regard to roof of Kolkata show room.
32. The Counsel for the respondents next contended that the petitioners had always acted mala fide against the respondents. The petitioners had launched litigation in respect of the roof of the show room at Kolkata and was unsuccessful there. The Counsel for the respondents further submitted that the show room at Kolkata is a tenanted premises. The landlord is not likely to give his consent for division. In the case reported in AIR 1980 Cal. 28 on which the petitioners had relied upon in support of the contention that division of assets can be made including that of tenancy, the Counsel for the respondents contended that in that case the landlords had consented and that the area of the show room in the case before the Calcutta High Court was substantially much more than the present case and that there was commercial feasibility in the partition which is lacking in the instant case. The Counsel for the respondents from the short notes on submissions handed over to us submitted that the petitioner No. 1 had filed a suit before the Learned City Civil Court at Kolkata relating to the roof of a portion of the Kolkata Unit. In the said plaint of such suit being Title Suit No. 2786 of 1997, the petitioner No. 1 had stated that he had a show room at Kolkata at No. 34, B.B. Ganguly Street, Kolkata 700 012, i.e. in the same area where the Kolkata unit of the Company is situated. Accordingly, it can not be said as alleged by the petitioners that the petitioners not having any space in doing business in the prime area of jewellery business in Kolkata. The Counsel for the respondents also contended that the case reported in AIR 1980 Cal. 28 was a proceeding under the Arbitration Act, 1940 and not under the provisions of the Companies Act, 1956.
33. We have considered the pleadings and arguments of the counsel as also the written submission given by the parties. The admitted position in this case is that it is a family company consisting of 3 brothers holding equal number of shares. It is also on record that after the death of Shri Haripada Chandra in 1976, Shri Gouripada Chandra (the father of the petitioners) and the 2nd respondent were the directors on the board till the death of Shri Gauripada Chandra in 1994. Thus, for nearly 20 years, even though there were 3 groups of shareholders, two groups were jointly managing the company. Since Late Haripada Chandra had no children, the shares held by him and his wife are under disputes--while according to the petitioners, these share have been bequeathed in favour of the petitioners by a will of the wife of Late Haripada Chandra - Parbati Chandra -, the same has been challenged as fabricated by the respondents in a court of law.
34. As far as the issue of further shares of 4480 exclusively to the respondents' group alone on 18.5.1998 is concerned, both during the arguments and the written submissions, the respondents have justified the same on the ground that it was in line with the provisions of the Articles and that on the day of allotment, the petitioners' group held 198 equity shares against the holding of the petitioners of 158 shares and that the petitioners were fully aware of this allotment. In other words, according to the Respondents, by issue of further shares, no new majority has been created. In addition, the respondents have also taken a stand that by a fraudulent will of Parbati Chandra, the petitioners had tried to gain majority control of the company and therefore to thwart their attempt to do so, further shares were issued to the respondents' group. We do not find much substance in any of these arguments. In a Section 397 proceeding, it is not that only illegal/unlawful acts could be considered as oppressive. In a family company where the shareholding has been maintained in a particular ratio over a long period of time, any disturbance in the ratio could be considered to be oppressive notwithstanding that the same is legal ad valid. As far as their justification for the allotment of further shares on the ground that the same was done to thwart the petitioners from gaining majority under a fraudulent will, we do not find any justification as the petitioners have not derived any benefit of the same due to the proceedings initiated by the respondents in respect of the will. Therefore, as far as the allotment of further shares is concerned, the petitioners are fully justified in alleging oppression.
35. In regard to non registration of transmission of 8 shares standing in the name of the mother of the petitioners in favour of the petitioners, it is on record that the petitioners made an application in 1994. The registration was done only in July, 1998 i.e. nearly after 4 years. The stand taken by the respondents is that the delay was on account of non production of succession certificate early. The contention, according to us, is not tenable in as much as in a closely held company with only family members, the Board has to take a pragmatic and practical view in stead of insisting on legalities. The same is applicable in case of non registration of gift of 50 shares each made by late Gauripada Chandra in favour of the 1st and 2nd petitioners. It is on record that the gift was made in February, 1994 and late Gauripada Chandra wrote to the company in July, 1994 for registration of the same in the names of the petitioners but was not acceded by the company for non submission of original shares script along with the instruments of transfer. However, in January, 1998, the petitioners submitted transfer instruments duly stamped along with the original share certificates. Gauripada Chandra died on 19.4.1998. Having kept the registration pending from January to April, 1998 -- during the lifetime of Gauripada Chandra -- the company demanded the petitioners to produce a succession certificate by a letter dated 21.5.1998. This action of the company, according to us, is highly oppressive as the transfers could have been registered at any time during January to April, 1998 or having received the transfer instruments during the life time of late Gauripada Chandra, the company need not have insisted on the succession certificate after his death especially since this company is a family company. As far as other allegations regarding the appointment of the 3rd respondent as a director in an EOGM on 30.7.1994 and appointment of respondents 4 and 5 on 18.5.1998 as directors, non issue of notices for AGM etc. are concerned, we do not consider it necessary to deal with the same in detail in as much as we have already held that there had been gross act of oppressions against the petitioners in the matter of allotment and transfer/transmission of shares. We may also record that while the respondents allege that the petitioners had tried to gain majority by a fraudulent Will, similar allegations that the respondents also are guilty of attempting to gain majority by getting the 40 shares held by Amaladas in favour of the 3rd respondent, has been made by the petitioners.
36. Having given our finding on the major allegations, the question of relief arises. Both the parties are at ad-idem that the shareholding between the two groups could be considered to be 50:50. This being the case, there is no need to give any directions regarding the further allotment of shares, non registration of transfer of shares, and the transfer of 40 shares. It may also end the disputes in regard to the will of Parbati Chandra. On the basis 50:50, the petitioners have suggested two alternatives. One is that they should have equal shares and equal representation on the Board and the other is that all the assets of the company including the 3 units (showrooms) should be divided equally between the two groups. On the other hand, the respondents have suggested that they should be allowed to purchase the shares held by the petitioners or they should be allowed to retain the showrooms in Calcutta and Suri and that the petitioners could retain the showroom in Asansol. We are of the firm view that the question of both the sides continuing together with equal representation on the Board would only create further disputes and as such is not a feasible proposition. Likewise, asking the petitioners to go ut of the company would also be inequitable. Therefore, the only possible solution, to put an end to the disputes between the parties, is that there should be a division of the assets ad business of the company-being one of the alternative suggestions given by both the sides. The petitioners have suggested that all the units of the company more particularly that of Calcutta showroom should be divided equally. It is on record that Calcutta showroom had always been controlled and managed by the respondents and according to them, they have inducted fresh funds to the tune of about Rs. 26.6 lacs out of their personal funds into this unit and have also given personal guarantee to the banks for a loan of about Rs. 90 lacs. As far as the premises in which the unit is functioning is concerned, according to the respondents it is reported in be having 600 sq.ft. of area with a mezzanine floor with another 600 sq.ft. However, the petitioners contend that it has 1000 sq.ft. with a mezzanine floor of equal area. Whatever may be the area, as we see from the photograph of the showroom at Calcutta that even with the existing one showroom, there is not much space for the customers to move around and serviced. We are of the view that division of such a small premises for locating two showrooms -- one by the respondents and one by the petitioners -- would not be feasible especially when the company is in jewellery business which requires sufficient space for public. Further, functioning of two showrooms - one of the respondents and another of the petitioner-side by side would only crate further disputes among the parties. Therefore we are of the firm view that the showroom at Calcutta should continue only with the respondents under whose control it had remained for a long period. In doing so we have taken note of the fact that the petitioners have averred in their Title Suit 2786/97 that they are carrying on their own business in the same locality at 34, B.B. Ganguly Street. As far as the showroom at Asansol is concerned, since it has been under the control of the petitioners for a long time, it should remain with them. As far as showroom at Suri is concerned, since we are attempting at equitable distribution of not only the assets but also the business, the decision to allot the same either to the respondents or to the petitioners would depend on the business potential of that unit. We find from the report of Dr. Ashok Nain, Valuer appointed by the parties in 1994, that the average annual turnover of Calcutta showroom for 10 years ending in 1992-93 was about Rs. 45.6 lacs an that of Suri and Asansol of about Rs. 3.6 and Rs. 38 lacs respectively. This report indicates, in the absence of latest particulars in regard to the business in the showrooms, that the total business of Calcutta showroom is more than the combined business of both showrooms at Suri and Asansol. Therefore, it is equitable that the showroom at Suri should go to the petitioners in case the petitioners desire to take over the same. For this purpose they should send a notice to the company/respondents indicating their desire to take over Suri unit within 30 days from the receipt of this order. In case they do not do so, then the Suri unit will remain with the respondents. To settle the accounts between the two groups on 50:50 basis, the business and goodwill of all the 3 units will be valued by an independent valuer to be appointed by this Bench. If the total valuation of the business and the goodwill of the units going to respondents is more than that going to the petitioners, then, the difference will be paid by the respondents to the petitioners in cash and vice versa. The parties will present themselves before us on 20.11.2002 to suggest the name of an acceptable valuer failing which the this Bench will appoint a valuer.
This petition is disposed of in the above terms reserving the right to appoint a valuer as indicated in the earlier paragraph.