Company Law Board
State Bank Of India vs Business Development Consultants Pvt. ... on 29 October, 2004
Equivalent citations: [2005]128COMPCAS557(CLB), [2005]61SCL226(CLB)
ORDER
S. Balasubramanian, Chairman
1. M/s Business. Development Consultants Private Limited (the company) was incorporated in December, 1981 with late Jahar Sengupta, 2nd and 3rd respondent as subscribers to the Memorandum with 10 shares each. The authorized capital of the company was Rs. 60,000/- comprising of 6000 equity shares of Rs. 10/- each. As on 30th Sept. 2002, the deceased Jahar Sengupta held 4800 shares constituting 80% of the issued capital and respondents 2,3,4,5 and 8 held 220 shares each and respondents 5 and 6 held 50 shares each and thus the entire authorized capital of 6000 shares had been subscribed and paid up. Jahar Sengupta expired on 28th Dec. 2002. During his lifetime, he had executed a Will on 10th April, 2001 through which he also created a Trust known as Jahar Sengupta Family Trust to which he bequeathed the said shares. He had also appointed State Bank of India as Trustee to manage the Trust. State Bank of India obtained a probate of the Will by an order of Calcutta High Court.
2. This petition has been filed by State Bank of India in its capacity as the sole Trustee of Jahar Sengupta Family Trust and executor of the probated Will of Jahar Sengupta alleging that respondents 2 to 7 by enhancing the authorized capital of the company and allotting further shares to themselves have created a new majority in the company and have also appointed two directors with a view to gain control of the Board and they have also declined to register the name of the petitioner in the register of members of the company in respect of the 4800 shares held by late Jahar Sengupta. The Bank has also alleged that the contesting respondents have siphoned of nearly Rs 8 lakhs from the company. On the basis of these allegations, the petitioner has sought for various reliefs inter alia including for rectification of the Register of Members of the company by entering the name of the petitioner, for setting aside the two allotments made etc. The 8l respondent, being the widow of late Jahar Sengupta, is supporting the petitioner.
3. Shri Sarkar, Sr. Advocate appearing for the petitioner submitted: Jahar Sengupta held 80% of the shares in the company. The respondents 2,3 and 4 are his nephews and respondents 5 and 6 are close relatives of respondents 2,3 and 4. The 7th respondents is a close associate of respondents 2 to 5. The shareholding as on 30th Sept. 2002 is undisputed and as a matter of fact in the Will of the deceased, it has been very clearly indicated that he held 4800 shares out of 6000 constituting 80% of the issued capital in the company. (Page 28 of the Will). At page 36 of the Will, the deceased has very clearly stipulated that after his demise, these shares shall be transferred to Jahar Sengupta Family Trust and that the Board of the company shall approve the transfer. However, in spite of repeated requests by the Bank, the Board of the company had not effected the transfer in the name of the Bank as Trustee of the Trust. In terms of the Will, the State Bank, in its capacity as Trustee of the Trust has been entrusted with a. lot of responsibilities but the contesting respondents by refusing to enter the name of the SBI in the Register of members are obstructing the Bank from discharging its responsibilities in terms of the Will notwithstanding of the fact that in terms of the Will, the decision of the Bank on various matter shall be final and conclusive. The company owns a very valuable property at the center of Calcutta. With a view to take over the control of the property, the contesting respondents had fraudulently and purportedly, issued additional shares to themselves without making any offer either to the Bank as a Trustee or to the 8th respondent. In an EOGM purportedly held on 9.12.2002 by the contesting respondents, the authorized capital had been raised from Rs. 60,000 to Rs. 1,10,000 and on the same date 5000 shares were allotted to the 2nd and 3rd respondents at 2500 shares each. No notice for the EOGM was received by the 8th respondent or by the deceased who was hospitalized at that time. Form No. 5 reflecting this allotment was filed only on 7.1.2003 after the demise of Jahar Sengupta. It is on record that from 2nd December, 2002 till his demise on 29.12.2002, late Jahar Sengupta was hospitalized and during his sickness the contesting respondents had purportedly allotted the shares on 9.12.2002. This allotment of 5000 shares straightaway reduced the holding of the deceased to below 50%. Again on 7.2.2003, 10240 shares were allotted in another EOGM, that too, only to the contesting respondents without any offer to the Bank, being the executor of the Will/Trustee. There is nothing on record to show that notices for the EOGM were given to the Bank or the 8th respondent. Further, in terms of Article 6 of the AOA of the company, only the Board has the power to allot shares and the general body has no such powers. Further, any increase in authorized capital requires special resolution which could not have been passed without the presence of the petitioner. For the shares allotted on 7.2.2003, Form No. 5 was filed only on 7.3.2003. There is nothing on record to show as to when the contesting respondents brought money for the shares allotted to them. Even though for the first allotment, the contesting respondents have justified the same on the ground that the paid up capital had to be increased to Rs. 1 lac in view of the provisions of Section 3 (3) of the Act, yet, they have not given any justification for the second allotment and this allotment was made only with a view to reduce the petitioner to below 25%. The company was actually a proprietorship of late Jahar Sengupta. All the shares held by the contesting respondents as on 30th Sept. 2002 were gifted to them by the deceased and these respondents did not invest even a single pie for the shares. But now, they are trying to take control of the company and are preventing the petitioner from discharging its responsibilities cast on it by the Will. Having reduced the petitioner to a hopeless minority, the contesting respondents had also appointed the 4th & 7th respondents as additional directors on 11.1.2003. There was absolutely no need for additional directors and they were appointed only to gain absolute majority on the Board. Further when the petitioner sought for transfer/transmission of the shares held in the name of Jahar Sengupta in favour of the petitioner by its letters dated 5.9.20003, 12.9.2003, 13.9.2003, 6.10.2003 & 14.10.2003, the company did not take any action. In terms of Regulations 25 & 26 of Table A, which the company has adopted, the company was bound to register the name of the petitioner as the petitioner is the legal representative of the deceased. Even in terms of Section 211 of Indian Succession Act, all properties of deceased vest in the executor of the Will and in terms of Section 212 of the same Act, once probate is granted, the title of the executor is confirmed. There are a number of decisions to the effect that on the death of a shareholder, the shares held by him vest in the legal representative and the Board of Directors cannot refuse the registration of the shares in the name of that representative. Therefore, by refusing to enter the name of the petitioner in the Register of Members, the Board of Directors have acted in a manner highly oppressive to the petitioner.
4. The learned counsel further submitted that the contesting respondents are also guilty of siphoning of funds of the company. After they gained control of the company, they have withdrawn over Rs. 8 lacs as is evident from the copies of the Bank statements enclosed with the petition and rejoinder. There are no details of the purpose for which such huge amount had been withdrawn. Perhaps, the amount so withdrawn had been invested by them for the additional shares issued after the demise of Jahar Sengupta. Therefore they should be directed to account for the this huge withdrawal. As far as the locus standi of the petitioner to file the petition is concerned, the Supreme Court has held in Worldwide Agencies v. Margret Dessor case (AIR 1990 SC 737) that the legal representative of the deceased shareholder can file a petition under Sections 397/398 of the Act even though the name of the representative is not entered in the Register of Members of the company.
5. Shri Mookherjee, Sr. Advocate appearing for the 8th respondent submitted: His client is the widow of the deceased. The deceased had gifted shares not only to his wife but to all the contesting respondents and as such none of them made any investment in the company. A reading of the Will would indicate that the petitioner should continue to hold 80% shares in the company and it is to be the largest shareholder. In the Will, the deceased has specifically stipulated various payments to be made to all the respondents every month and this proportion cannot be changed. In the same way if the respondents had felt the need to increase the capital, it should have been done on proportionate basis so that the shareholding percentage of every shareholder remained the same. In the reply, the contesting respondents have taken a stand that the allotment made on 9th Dec. 2002 was with the knowledge and consent of the deceased as well as the 8th respondent and as such question of issuing notices to them for the EOGM did not arise (Para (3e) of the Reply). There is nothing on record to show that either the deceased or the 8th respondent had consented for issue of additional shares on 9th Dec. 2002. The deceased could have never consented to the issue of shares as it would . be completely against the provisions in the Will which he had executed in 2001 itself, wherein he had specifically indicated that 80% shares held by him would be vested in the Trust. The respondents have relied on Annexure R-1 to state that on an earlier occasion when 2000 equity shares were allotted, the general body had approved the same by a special resolution. Even though the general body approved the allotment, actually it was the Board which allotted the shares as is evident from Annexure R-1. The very fact which has been admitted by the respondents that no notice was given to the deceased and the 8th respondent for the EOGM on 7.12.2002 would nullify any decision taken in that meeting. The justification that capital was increased to meet with legal requirement is fallacious. If it was for legal compliance, the share capital should have been increased to Rs. 1 lac only and not to Rs. 1.10 lac. It was done only to increase the shareholding of the contesting respondents to 51% and thus to create a new majority. There is no explanation as to why offers were not made to the deceased and the 8th respondent. The main purpose of issue of further shares to the respondents was with a view to gain control of the property of the company wherein the 8th respondent is residing as the contesting respondents had developed a sort of animosity towards the 8th respondent as is evident from paragraph 3 (n) of the Reply. Various provisions in the Will which have not been challenged by any of the contesting respondents, would clearly indicate that the Bank is to be the majority shareholder in the company and then only all the obligations cast on the Bank could be discharged by it. As per Annexure R-3 which is a copy of the minutes of EOGM held on 9.12.2002, 2500 equity shares were allotted to the 3rd and 4th respondents each as applied for by them. In other words, even before the resolution to increase the authorized capital was passed, these two respondents had already applied for the shares. It would indicate that the allotment was with a pre-meditated plan. There is nothing in the minutes to indicate as to why either the deceased or the 8th respondent could not have been offered/allotted proportionate shares. This allotment was purportedly made when the deceased was in the hospital. Only after the 8th respondent joined as director of the company, the deceased had gifted shares to his nephews. Now they are trying to highjack the company. In so far as the second allotment on 7.2.2003 is concerned, by these allotments the shareholding of the petitioner has been reduced from 43% to 23% and as such the contesting respondents are even in a position to pass special resolutions. Further, the allotment made on this day also suffers from legal infirmities. The authorized capital of the company was increased from Rs. 1.10 lacs to Rs. 6 lacs only on 7.2.2003 as per Annexure R-6. However, as is seen from the same minutes, the Board had issued 14520 equity shares on 11.1.2003 itself. No shares could have been issued beyond the authorized capital of the company. However, having issued the shares on 11.1.2003 itself, again the approval of the general body was obtained for allotting 10240 shares to the contesting respondents excluding the 8th respondent on the ground that she had not paid the application money for 4280 shares issued to her on 11.1.2003. The sequence of events would indicate that the entire allotment was a sham transaction done only with a view to highjack the company. Further, in a Board Meeting held on 11.1.2003, various decisions fixing the remuneration of directors had been taken. All these decisions are contrary to the terms of the Will. Even though, according to the contesting respondents, the 8th respondent had attended this meeting and signed the minutes, the fact is that she did not attend the meeting and she was forced to sign the minutes. This would be evident from the fact that she was also forced to issue a cheque for Rs. 42800/- being the consideration for the shares proposed to have been issued to her but later on she had stopped payment of the cheque after coming to know of the ill designs of the contesting respondents. The contesting respondents are also guilty of siphoning of funds of the company. They have debited the accounts of the company with over Rs. 2 lacs as legal expenses to contest the present proceedings. When these proceedings had been initiated against the ill deeds of the contesting respondents, the question of the company paying the litigation cost does not arise. Therefore, all the allotments made by the contesting respondents should be cancelled, they should be directed to account for all the withdrawal from the company and they should also be directed to repay the litigation cost charged to the company.
6. After the learned counsel for the petitioner and the 8th respondent concluded their arguments, Shri Jayanta Mitra, Sr. Advocate appearing for the contesting respondents suggested that the dispute could be compromised and accordingly the following order was passed on 19.3.2004.
" With the consent of the Respondents the following directions are given as an interim measure:
(1) The share capital of the company shall be restricted to Rs. 1.00 lakh, both authorized and paid up, and any other shares issued in addition to this will stand cancelled.
(2) Out of the 5000 shares allotted on 9.12.02, 4000 shares shall be distributed proportionately among the existing shareholders and the balance 1000 shares shall stand cancelled.
(3) All the shares issued on 7.2.03 shall stand cancelled.
(4) Two directors appointed on 11.1.03 shall stand discharged with immediate effect. I hereby appoint Shri P.N. Narielwala and Shri Aloke Mitkherjee as directors with immediate effect.
(5) The Board shall take appropriate decision regarding transfer of 4,800 shares standing in the name of the deceased in favour of the Trustee.
(6) The Board shall ensure compliance with the terms of the Will of the deceased.
(7) The respondent No. 8, by virtue of the powers conferred on her, is authorized to appoint Shri Sukhendu Roy as a Director in terms of the Will.
(8) The statutory auditor will conduct a special audit of the accounts of the company effective from 1.1.2003.
(9) No refund of the amount in regard to the cancelled shares shall be made till the audit is over.
(10) For any board meeting, 04 days notice in writing to be given to all the members of the board. Final order will be passed on 23.4.2004 at 10.30 a.m. in consultation with all the parties."
7. This order was taken on appeal by the contesting respondents to Calcutta High Court on the ground that their learned counsel had not given any consent to pass that order. The High Court directed the respondents to file an application before this Bench challenging the order dated 19.3.2004. When this application was moved on 23.4.2004, Shri Mitra submitted that while he had no quarrel with the contents of the order dated 19.3.2004, the terms contained in that order were to be finalized only in the hearing on 23.4.2004 and therefore the question of his giving consent to the terms of that order on 19.3.2004 did not arise. Shri Sen appearing for the 7th respondent also contended that his client would have never agreed for the terms contained in that order. However, Shri Sarkar and Shri Mookerjee vehemently argued that the said order was a consent order. Since, I desired that the petitioner and the 8th respondent should file their replies to the said application, while giving directions to do so, I also passed the following order: "Since the order dated 19.3.2004 has brought about changes in the Board, till the matter as to whether the order was a consent order or not is decided, the existing Board is suspended. I appoint Shri Justice Suhas C. Sen, retired Supreme Court. Judge, subject to giving his consent as the administrator with full powers of the Board". In terms of this order, Shri Justice Sen assumed charge as administrator. In the hearing held on 27th August, 2004, the learned counsel appearing for the contesting respondents, Shri Chakraborty submitted that his clients were willing to go out of the company on receipt of fair consideration for their shares which were held by them before additional shares were issued. This suggestion was not acceptable to the counsel for the petitioner and the 8th respondent and instead they desired that the consent order dated 19.3.2004 should be confirmed or else the petition should be decided on merits.
8. As far as the order dated 19.3.2004 is concerned, in view of the statement of the learned counsel Shri Mitra that while he had no quarrel with the terms contained in that order but they were the terms to be decided finally in the hearing on 23.4.2004, I would like to give the benefit of doubt and as such I am not confirming that order and will be deciding the petition on merits.
9, In the absence of any arguments on merits by the counsel of the contesting respondents, I shall be considering the merits of the case on the basis of the reply filed by the contesting respondents. They have questioned the maintainability of the petition in terms of Section 399, on the ground that the petitioner is not a shareholder. As far as this objection is concerned, it is true that the name of the petitioner is not on the Register of Members of the company and as such is not a member. However, in terms of the Supreme Court judgment in Margret Dessor case, the Bank, being the legal representative of the deceased who held 80% shares in the company before the issue of further shares, can maintain the petition notwithstanding the fact that its name is not in the Register of Members. Accordingly, I hold that this petition is maintainable.
10. In so far as the merits of the case are concerned, the main allegations of oppression by the petitioner against the contesting respondents, relate to issue of further shares on two occasions and appointment of two additional directors. In so far as the allotment of shares on 9.12.03 is concerned, the admitted fact is that no notice for the EOGM was given to the 8th respondent as well as the deceased who was alive on that date. It is also an admitted position that it was on 9.12.2003 that the deceased was undergoing a major operation. It is inconceivable that on the day when the shareholder holding 80% shares in the company and also who was the head of the family was undergoing the major surgery, that the contesting respondents decided to hold an EOGM for increasing the authorized as well as paid up capital of the company for bonafide interests of the company. Obviously it was with an ulterior motive. There is nothing on record to show when notices for this meeting was issued to other shareholders also. Further, there is nothing on record to show as to when and in which meeting of the Board, the decision to increase the capital and to hold the EOGM was taken. As rightly pointed out by Shri Mookherjee, the allotment of shares appears to have been a pre medicated one as even before the authorized capital was enhanced, the 3rd and 4th respondents had already made payments against the shares to be issued, as indicated in the minutes of the EOGM. Again as rightly pointed out by Shri Mookherjee, if the intension of the shareholders was to comply with legal requirements, there was no need to have issued 5000 shares as with issue of 4000 shares, the share capital would have been Rs. 1 lac. By issue of 5000 shares, the contesting respondents' group had 5980 shares out of 11000 shares constituting more than 51% shares in the company. Therefore, it is quite obvious that 5000 shares were issued only to gain majority shareholding in the company by the contesting respondents, even though, in the process, legal compliance was also ensured. Coupled with this, there is also violation of the provisions of Article 6 of the Articles of Association of the company according to which the shares are to be under the control of the Board and as such it alone has the power to issue further shares. Therefore, the allotment of 5000 shares resulting in creation of a new majority, which is a grave act of oppression against the deceased and the 8th respondent, has to be set aside and accordingly I do so.
11. As far as the second allotment is concerned, it is seen from the Board Minutes dated 11.1.2003 (Annexure R-7) that the Board had decided to increase the authorized capital of the company from Rs. 1.10 lacs to Rs. 6 lacs and also to allot 14520 shares to 7 persons on payment. In the EOGM held on 7.2.2003, as is seen from the minutes (Annexure R-6), 10240 shares were allotted to the contesting respondents excluding the 8th respondent on the ground that she had not sent any application money for 4280 shares proposed to be allotted to her. I do not find any reasons or justification for issue of these additional shares either in the minutes of the Board Meeting on 11.1.2003 or in the minutes of the EOGM on 7.2.2003. By this allotment, the contesting respondents, as a group, have come to control nearly 77% shares in the company as against 80% shares originally held by the deceased/the petitioner. Therefore, it is crystal clear that both the allotments have been made only with a view to create a new majority and convert the majority into minority. The settled law is that the power to issue further shares should be exercised bonafide in the interest of the company and not for benefiting any group and that the directors cannot utilize the fiduciary powers purely for the purpose of destroying an existing majority or creating a new majority. Therefore, in the absence of any justification indicated in the minutes of the meetings on 11.1.2003 and 7.2.2003 for increasing the capital of the company, the allotment made on 7.2.2002 has also to be declared to be oppressive to the petitioner and the 8th respondent and as such deserves to be set aside and accordingly I do so.
12. As far as induction of two additional directors (Respondents 4 and 7) in the Board Meeting held on 11.1.2003 is concerned, there is nothing in the Board Minutes to indicate the need for appointing these persons as additional directors especially when the company was not carrying on any substantial business. Considering the fact that in the same Board Meeting, remuneration has also been fixed for both these additional directors, it appears that their appointment was more for the purpose of remunerating them than for the purpose of meeting any requirements of the company. Therefore, their appointments are also declared as invalid. One Deb Kishore Bhattacharjee, claiming himself to be a director of the company had applied for impleading himself as a party. He has relied on a letter issued by the 2nd respondent dated 3.12.2002, intimating him that he had been appointed as an additional director on 3.12.2002. According to the 8th respondent, there was no Board meeting on 3.12.2002 and as such there could have been no appointment of any additional director. I am not adjudicating on this issue as I have already suspended the Board and in view of the final direction that I propose give for constitution of the Board.
13. As far as the transmission of shares standing in the name of late Jahar Sengupta in favour of the petitioner is concerned, I find that the learned administrator has already done so in the meeting held on 17th July, 2004. By an application dated 26.8.2004, the contesting respondents have raised an objection regarding the transmission of shares in favour of the petitioner. According to the respondents, the learned administrator has directed transmission of shares in favour of "State Bank of India as executor and Trustee of Jahar Sengupta Family Trust". In terms of Section 153 of the Act, no notice of any trust, express or implied or constructive can be entered on the Register of Members or of Debenture holders. Further, Section 153B of the Act dealing with declaration as to shares and debentures held in Trust has been made inapplicable effective from 13th December, 2000 and this fact has not been noted by the learned administrator. Even though the State Bank of India Act permits the Bank to undertake the services of acting as Trustees, yet, SBI has to separately register with SEBI. The name of a Trust cannot be entered in the list of members unless it is registered under Societies Registration Act. Further, to hold the shares in its name, SBI should take permission from RBI. Therefore, the shares held by the deceased cannot be registered in the name of the Bank and should be entered in the name of the beneficiaries to the Will. I do not find any merit in these objections. No doubt, Section 153 mandates that no notice of any Trust shall be entered on the Register of Members of a company, yet, the name of the Trustee can always be entered as is evident from Press Note dated 25th June, 1957 issued by the Department of Company Affairs which reads "It has been brought to the notice of the Government of India that in the share register of some companies Trustee or Trustees described as such are entered as members. Government are advised that under the relevant provisions of the Companies Act, 1956, shares in a company, being the property of a Trust can be held in the names of its Trustees being individuals, corporations, companies or societies registered under Societies Registration Act, 1960 without the addition of the statement that they are Trustees. Shares cannot be held in the name of the Trust as such unless it is a separate legal entity such as a registered society. Companies are requested that wherever necessary the shares registered should be rectified so as to comply with law as explained above". This would indicate that shares can be registered in the name of trustees. In the present case, the name of State Bank being the sole Trustee of Jahar Sengupta Family Trust to which the impugned shares have been bequeathed by the deceased can be entered in the Register of Members. As far as the applicability of the provisions of Section 153B is concerned, it only deals with declaration as to the shares held in Trust and the non applicability of this Section presently does not in any way affect the name of State Bank being entered in the Register of Members in respect of the impugned shares. As far as the objection that State Bank cannot function as a Trustee is concerned, in terms of Section 33 of SBI Act read with Section 6 (i)(h) of the Banking Regulations Act, State Bank is entitled to be engaged in the business of undertaking the administration of estate as a Trustee and as such there is no bar in State Bank acting as a Trustee. Accordingly, the impugned shares shall be registered in the name of State Bank of India which would also be in line with Regulations 25 and 26 of Table A which has been adopted by the company.
14. The respondents have also questioned the manner and mode of holding meetings by the learned administrator in their application dated 26.8.2004. According to them, various provisions of the Companies Act have been violated in convening general meetings by the learned administrator. I do not find any substance in these allegations. In terms of my order dated 23.4.2004, the learned administrator was to have the full powers of the Board as the then existing Board had been suspended by the same order. Therefore, the learned administrator could have exercised all the powers of the Board by himself. However, it appears that he has desired to take decisions in consultation with the members of the company and has accordingly as and when needed, called for meetings of the members. These meetings cannot be considered to be general meetings as envisaged under the Act. These meetings appear to be more in the nature of a consultative process and therefore the allegation of the respondents that the meetings have not been held in accordance with the provisions of the Act cannot be sustained. The contesting respondents have also filed certain other applications relating to various meetings held by the learned administrator, the details of which I am not elaborating, in view of the above finding.
15. In fine, the allotments made on 9.12.2002 and 7.2.2003 are cancelled. The share capital of the company shall remain at Rs. 60,000/- comprising of 6000 equity shares of Rs. 10/- each. The Register of Members of the company shall be deemed to have been rectified with immediate effect, reflecting only the shareholding position as on 30.9.2002. The ROC, Calcutta, shall ignore the Returns of Allotments filed by the company relating to the allotments made on 9.12.2002 and 7.2.2003. The learned counsel for the respondents submitted that his clients would be willing to go out of the company on receipt of fair consideration for their shares computed on the basis of the present valuation of the assets of the company. No doubt, in a number of cases, this Board has directed either the company or one party to purchase the shares held by the other party. But in the present case, the circumstances are different. The admitted position is that all the contesting respondents received their shares by way of gilt given by the deceased and all of them have been made beneficiaries in the Will either to receive certain payments every month or have been given some properties. Therefore, I am of the view that the decision whether the shares held by the contesting respondents should be purchased by the company or not should be left to the discretion of the Board of Directors. Accordingly I do so.
16. The learned administrator will convene a general meeting of the company at the earliest to transact the only business of election of directors. The voting shall be only on the basis of the shareholding as on 30th September, 2002. The number of directors to be elected will be the same as it existed as on 30.9.2002. To assist him in convening and holding the said meeting, the learned Administrator is authorized to appoint a practicing company secretary on such remuneration as he deems fit, which will be charged to the company. The directors so elected shall constitute the Board of the company and on such constitution, learned administrator shall stand relieved of his assignment as administrator. The company will pay a consolidated remuneration of Rs. 1.5 lacs to the learned administrator for his service as administrator. There are allegations of siphoning of funds by the contesting respondents. The Board constituted in the general meeting shall examine all the payments/withdrawals made during the impugned period and the contesting respondents shall provide all necessary vouchers/documents etc that are necessary for scrutiny. In case of any withdrawals/payments, which are unwarranted, then the contesting respondents responsible for the same shall reimburse the amount quantified by the Board. The litigation charges paid out of the company funds by the contesting respondents shall be reimbursed to the company by them. All the payments due by the contesting respondents as above shall be reimbursed within a period of 3 months. In computing the amount due by the contesting respondents, if any, credit shall be given for the amount invested by them for the shares allotted to them on 9.12.2002 and 7.2.2003. The Board is also empowered to take a decision on purchase of the shares held by the contesting respondents by the company and in case the Board decides that the company should purchase the shares, the company is permitted to do so and is also authorized to reduce its share capital to the extent of the face value of the shares so purchased.
17. The petition is disposed of in the above terms.