Company Law Board
M.M. Dua And Ors. vs Indian Dairy And Allied Services Pvt. ... on 13 May, 1994
Equivalent citations: [1996]86COMPCAS657(CLB)
ORDER
1. This is a petition filed by Shri M.M. Dua and two others collectively in all holding 20.2% of the paid-up capital in Indian Dairy and Allied Services Pvt. Ltd. (hereinafter referred to as "the company") alleging various acts of oppression and mismanagement in the conduct of the affairs of the company. This company was registered in the year 1985 with an authorised capital of Rs. 30 lakhs divided into 2.5 lakh equity shares and 50,000 preference shares both of Rs. 10 each. The present issued and subscribed capital of the company is 2,49,990 equity shares of Rs. 10 each.
2. On presentation of the petition, the petitioners sought for appointment of a Commissioner to inspect the various documents in the company. By our order dated June 11, 1992, we appointed a Commissioner to visit the registered office of the company and sign certain documents. Even though, initially there were some problems relating to service of our order and inspection of documents, later an inspection was carried out by the Commissioner and his report was submitted to us.
3. Even though the major portion of the arguments was heard by the then Chairman, Shri S.P. Upasani, and Shri S. Balasubramanian as member, at the final stages the case was heard by Shri S. Balasubramanian as chairman and Shri A.R. Ramanathan, as member, due to the transfer of Shri S.P. Upasani from the Company Law Board. Therefore, the case was argued afresh for the benefit of Shri A. R. Ramanathan and orders have been passed thereafter.
4. The main acts of oppression and mismanagement, as narrated in the petition, may be summarised as follows :
(1) Irregular transfer of shares in favour of respondent No. 2, Shri H.S. Dureja, and his family members with a view to increase his holding of shares beyond 50% of the issued capital which is in violation of Article 9 of the articles of association.
(2) Non-allotment of shares to one Shri R.K. Kandhari up to 50% of the authorised share capital of the company in violation of the decision taken in the meeting of the board of directors of the company on June 29, 1990.
(3) Underbilling of sales of both skimmed milk powder as well as desi ghee with a view to pocket the difference between actual sales price and the billed price.
(4) Goods are shown to be sold at Goa while the actual sale took place in Delhi, Calcutta and Gauhati, at higher prices.
(5) Falsification of accounts and syphoning off of funds in respect of sales made in the retail depot in which the products of the company are sold.
(6) Non-maintenance of proper stock records and under recording of the production of skimmed milk powder, booking of higher production loss, thus pocketing nearly 9% of the recoveries from the raw material shown as production losses.
(7) Non-recording of full details of purchase of bags and using such unaccounted bags for sale of unrecorded production/recovery.
(8) Appointing himself as manager in the firm named A.V. Industries in which his wife holds 25% partnership, thus, Shri H.S. Dureja has violated the relevant provisions of the Companies Act.
(9) Respondent No. 2 has also floated another company with similar name Idasa Agro India Pvt. Ltd. for which land measuring 8 acres has been purchased out of the money siphoned off from the company.
(10) Non-registration of transmission of shares belonging to Shri R.K. Kandhari in favour of the heirs of the deceased in spite of production of will.
(11) Siphoning off of money by manipulation of the sale price of chillers belonging to the company.
(12) Appointment of relatives of Shri Dureja in high positions including Shri Harish Dureja, who is on bail, as a director notwithstanding that he was convicted and was in jail for 12 days.
(13) Sale of trucks of the company at higher prices but not bringing the full price into the books of the company.
5. In addition a few other allegations have also been included in the petition.
6. The acts complained of, according to the petitioners, are oppressive to the members of the company and also prejudicial to the company as well as the public. Accordingly, they have prayed that the company should be directed to follow the procedure prescribed under Article 9 of the articles of association of the company in respect of the shares which have been transferred in the name of the respondents and the respondents be directed to make up the shortfall of the Kandhari group by making it up to 50% of the total shareholding by adjusting the amount of the Kandhari group available with the company. The other reliefs that the petitioners have sought for relate only to issue of directions to the respondents to furnish various details in respect of the allegations made in the petition. In other words, the petitioners have not sought for any substantial relief that is normally sought in a petition under Section 397/398.
7. Shri J. S. Narang, counsel for the petitioners, submitted that the company was in need of funds for modernisation and, accordingly, one Mr. R.K. Kandhari, husband of the third petitioner, with whom the company had dealings for a long period by virtue of his having a dairy in Delhi was approached for necessary funds. Accordingly, Shri R.K. Kandhari and one Shri Sadhu Ram Aggarwal jointly agreed to contribute a sum of Rs. 12.50 lakhs for a 50% share in the company and this decision was minuted in the board meeting held on June 29, 1990. Even though at a later stage, Shri Aggarwal withdrew his offer of participation, the company failed to allot the agreed 50% of the share capital to Shri R.K. Kandhari though necessary funds belonging to Shri R.K. Kandhari and his family were available with the company.
8. Shri Narang further stated that the respondents have, in contravention of Articles 8 and 9 of the articles of association of the company, transferred to themselves 29,650 shares and no details as to how" and when these transfers took place have been given. He further pointed out that 3,200 shares belonging to Shri Minocha which were reportedly transferred in 1988 also is not supported by any documentary evidence. Therefore, he pleaded that the transfer of all these shares should be annulled and offered to all the members of the company as per the articles.
9. With reference to the allegation of underbillings as made in the petition, Shri Narang stated that in a period of ten days in April, 1992, with respect to supplies made to the same parties, the per kg. rate of skimmed milk powder varied between Rs. 38 and Rs. 47 except on April 3, 1992, when it was Rs. 35 per kg. During the same period, the market price was in the range of Rs. 48 to Rs. 52, While the sale is shown at these prices to Goa, really these sales were made to parties in Calcutta and other places at higher price. He alleged that the difference between the actual amount and the bill amount was pocketed by the respondents. Referring to page 28 of the reply of the respondents, he stated that this variation due to the colour of the powder cannot be accepted, and sweepings cannot be sold otherwise than as cattle feed. The respondents have not produced any rate contract in this regard, in reply to a query from the Bench about pricing policy.
10. Shri U. K. Chaudhary, advocate for the respondents, explained that there is no fixed price of skimmed milk powder and they have to contact the buyers and the prices are negotiated having regard to moisture content, colour, etc. There is fluctuation in such prices on a day to day basis also. If milk crosses four hours after the udder of the cow-there cannot be "A" grade milk powder. If the machine fails or if there is no proper cleaning of the machine it may affect the quality of the powder. Moreover, neutralised milk cannot give good taste affecting the quality of skimmed milk powder. In this connection, Shri Narang pointed out that bills in fact are raised in Malerkotla and not in Goa and, therefore, noticing the colour of the milk powder by the buyer is not possible. Having regard to the population of Goa, he stated that the total quantity of milk powder shown to have been supplied to Goa cannot be consumed there. With regard to our query whether the Goa feature was a new or old one Shri Narang replied that it is a new feature and in fact it started only in 1991. Likewise with regard to supply of desi ghee to Goa, Shri Narang invited our attention to annexure A-25 to show that the insurance cover was taken only up to Delhi as afterwards, the same is diverted to parties in Calcutta to whom the same is sold at much higher prices.
11. With regard to the allegations in para 9(vi) of the petition that the production does not tally with the milk purchase and no details of total milk purchased per day and production per day are maintained by the company, when we drew the attention of Shri Narang to annexure S-1, he pointed out that the plant is actually running at 72 to 75% capacity but production is being shown at 35 to 40% which is not even the break-even point and the plant will not be viable. Even if the claim of the company that 49,000 to 50,000 litres of milk per day are purchased, is accepted, the real production in the light of annexure S-l should be much higher. He also pointed out that out of 10,000 litres of milk at 6% fat 600 kg. milk and at 8.5% SNF 850 kg. skimmed milk should be produced. He alleged that there is substantial defalcation in this manner.
12. Shri Narang alleged that Shri H.S. Dureja invested money in the name of his wife Smt Dureja in a partnership firm under the name and style of R. V. Industries to the extent of 25%. Shri Dureja got himself appointed as the manager of the firm though he is also the managing director in the respondent-company and is not a partner in the said firm. Smt. Dureja has also been shown to be the working director of the company and is drawing a salary amounting to Rs. 3,200 per month. Shri Dureja got a general power of attorney executed in his own favour from the partners of the firm and the said power of attorney gives him absolute freedom to do anything and everything on behalf of the firm. This is against the provisions of the Companies Act, he alleged.
13. He further alleged that the majority shareholders in the company have floated a new company in the name of Idasa Agro India Pvt. Ltd. The objects of the respondent-company and the new company are identical. An extensive piece of land admeasuring eight acres has been purchased in the name of the new company at Smalkha in April 1992. It cannot be believed that the total expenses incurred on the purchase of land was only Rs. 3,09,590 as claimed by the respondents, while the going rate is about Rs. 2 lakhs per acre. The new company is not able to show the source of this huge amount. The only conclusion is that this amount has come out of the funds siphoned off from the company. It is oppressive to the minority shareholders that a new company is floated to utilise the good name of the existing respondent-company, that too with similarity in name.
14. Shri H.S. Dureja had been appointing all his relatives in key posts in the respondent-company such as : his own brother, Mr. Harish Dureja, who had been convicted by the Magistrate of Karnal in a case of fraud, has been appointed as the chief executive. The general manager, Mr. Indrajit Kandhari, is a brother of Dureja's wife who is not putting in any work worth the name but is being paid a salary of Rs. 38,000 per annum in addition to perks and other allowances. Shri Mallick who is Mrs. Sudesh Dureja's sister's son has been appointed as sales executive on a salary of Rs. 2,700 per month plus perks. As already stated, Mrs. Sudesh Dureja herself has been shown as a working director.
15. Regarding the allegation relating to sale of three vehicles, Shri Narang challenged the plea taken by the respondents that the vehicle No. PCT 1695 had been sold for Rs. 80,000 because it met with an accident. Shri Narang stated that such a sale was never brought to the notice of the board of directors nor was the procedure for sale in such cases ever got approved from the board of directors. It is also strange that another vehicle No. PCT 1696 which met with three accidents could be sold for Rs. 1,00,000 but the vehicle No. PCT 1695 which met with one accident was sold for Rs. 80,000 only. It is also not correct to say that the vehicle No. PAT 8299 was sold only for Rs. 1.2 lakhs. He alleged that these vehicles were sold for much higher prices, and the difference between the actual price and the recorded price, which may be in the region of Rs. 3 to 4 lakhs had been pocketed by Shri Dureja. All these vehicles had been comprehensively insured and for the repairs, compensation must have been obtained from the insurance company.
16. The respondents have stated that the two chillers had been kept at the milk collection centre in Punjab and were being maintained on trust basis. But Shri Narang pointed out that the name of the trust firm has not been disclosed by the respondents. Each chiller costs Rs. 55,000 approximately.
17. Continuing his submissions, Shri J.S. Narang, advocate for the petitioners, stated that as would be seen from annexures A-67 to A-69 (p. 141-143) of the rejoinder, demand drafts for Rs. 5,000, Rs. 1,000, Rs. 1,000 and Rs. 3,000 were received by the company from M.M. Dua, Jagdip, Kuldip and Saroj Dua as share application money. But no shares were allotted for the same. Instead the share money has been treated as advance without interest. Shri Harish Dureja, though he was convicted and released on bail on December 11, 1986, has been appointed as a director of the company. The Smalka land worth Rs. 20 lakhs has been purchased in the name of Idasa Agro India Pvt. Ltd. and there is no explanation as to wherefrom the money has come. Shri Narang referred to the photo copy of the personal diary of Shri Harish Dureja (pp. 127-135 of the rejoinder) to show that cash was frequently received from parties, and as would be seen from annexures A-39 to A-41 (p. 164-166 of the petition) cash was carried from Delhi to Malerkotla under false pretexts and it is not reflected in the books of the company. The letters at annexures A-39 to A-41 were to give protection to the person who carried cash, but these letters were destroyed afterwards. He also referred to annexure A-42A to show how fictitious debit vouchers about labour and mason charges were cooked up to make up entries in the accounts. For the work in Malerkotla, bills for labour charges were raised by a contractor in Deoband to escape detection and verification.
18. With regard to the law points Shri Narang referred to the various cases as follows :
(1) Scottish Co-operative Wholesale Society Ltd. v. Meyer [1958] 3 WLR 404 ; [1959] 29 Comp Cas 1--If the majority sets up a business which is in competition with the company it is oppressive. (In the present case, the respondents have set up a new company, namely, Idasa Agro (I) Pvt. Ltd. in competition with the respondent company).
(2) Bhubaneshwar Singh v. Kanthal India Ltd. [1986] 59 Comp Cas 46 (Cal)--If the company is in the colour of a partnership firm and there is an effort to oust the partners it is a case of oppression. (In the present case the petitioner has virtually been thrown out of everything).
(3) Gajarabai M. Patny v. Patny Transport Pvt. Ltd. [1966] 36 Comp Cas 745 ; AIR 1966 AP 226--Once a will is there transfer of shares cannot be denied and non-transfer of shares transmitted through will is oppression.
(4) Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 51 Comp Cas 743 ; AIR 1981 SC 1298-A liberal construction should be given to the word "oppression".
(5) Suresh Kumar Sanghi v. Supreme Motors Ltd. [1983] 54 Comp Cas 235 (Delhi)--The scope of the powers of the court under Section 397/ 398.
(6) B.R. Kundra v. Motion Pictures Association (No. 2) [1978] 48 Comp Cas 564 (Delhi)--Power of the court to regulate management.
(7) Mohan Lal Chandumall v. Punjab Co. Ltd. [1962] 32 Comp Cas 937 (Punj)--Power of court can be exercised to prevent corruption and mismanagement. (In the present case, evasion of sales tax by showing the goods to have been consigned up to Delhi only whereas the goods were actually transported to other places which amounts to corruption).
(8) N.R. Murty v. Industrial Development Corporation of Orissa Ltd. [1977] 47 Comp Cas 389 (Orissa)--If it is a public interest litigation it would be treated as oppression to the minority. (In the present case, evasion of tax is against public interest).
(9) Kalinga Tubes Ltd. v. Shanti Prasad Jain, AIR 1963 Orissa 189-Deals with mismanagement.
(10) Bennet Coleman and Co. v. Union of India [1977] 47 Comp Cas 92 (Bom)--Power of the court under Section 398 has been discussed.
(11) Marikar (Motors) v. M.I. Ravikumar [1982] 52 Comp Cas 362 (Ker)--Locus standi for filing the petition with the consent of other members has been discussed. It has also been discussed as to on what count right can be given to the minority shareholder.
(12) Shanti Prasad Jain v. Kalinga Tubes Ltd., AIR 1962 Orissa 202--Denial of right to vote and receive dividend amounts to oppression. In the present case, money has been siphoned off and no notices were served on the petitioners resulting in denial to the petitioners, to question the accounts and receive the dividend.
19. Counsel for the respondents, Shri U. K. Choudhary, as a preliminary submission, stated that the petition has been filed by Shri M.M. Dua, who, apart from being a shareholder has been in the full-time employment of the company from December, 1987, to December, 1991, as a wholetime director. The petition is filed by Shri Dua and duly supported by his affidavit. It has not been supported by affidavits by other two petitioners. Counsel submitted that during 1987 to 1991 as wholetime director of the company, petitioner No. 1 has been in the know of every matter in the affairs of the company. The said petitioner has attended almost all board meetings of the company and there had been no whisper by him as to mismanagement in any of the board meetings. Whatever, therefore, petitioner No. 1 has stated is only after January, 1992. According to counsel, the petition is mala fide, vindictive and only for the purpose of settling scores between the parties. Counsel submitted that it has to be decided whether such a petition can be entertained under Section 397/398 of the Act.
20. The respondents' counsel further submitted, that there is a serious legal infirmity in the petition. According to counsel, on a perusal of the affidavit of the petitioner, it is clear that the petition has been filed on hearsay and the matters alleged are neither based on the personal knowledge of the petitioner nor the records of the company nor his own personal knowledge. The affidavit states that the averments made in the various paragraphs in the petition are based on the information given to the petitioner by two employees of the company, Shri K.P. Singh and Shri Rajeev Nigam, who have by affidavits, denied to have given any such information.
21. He further stated that none of the allegations made in paragraphs 9.2 to 9.23 are based on records. In respect of para 9.19 counsel submitted that, except for a copy of the partnership deed, no other document has been produced. In so far as para 9.10 regarding purchase of 8 acres of land is concerned, the sale deeds produced refer to 3.3 acres only. Regarding para 9.18 dealing with acquisition of shares in names of benamis, the document annexed in connection therewith is purportedly a forged document. The respondents' counsel submitted that they have filed affidavits of the aforesaid two persons to the effect that no information has been given by them to the petitioner. He submitted that if according to the respondents, the affidavits have been produced on duress, the petitioners could have challenged the same by examining the said persons on oath. According to the respondents' counsel, nearly 50% of the allegations including those relating to financial mismanagement are based on hearsay and no document is produced to prove the allegations.
22. The respondents' counsel submitted that the petition should be dismissed as not properly filed in the light of Section 399 of the Act. Counsel's case is that Sub-sections (1) and (2) of Section 399 are mutually exclusive. The petition has to be filed by the shareholders who are entitled to file by virtue of Section 399(1) and in case one shareholder files the petition on the strength of the consent of other shareholders, then the consents should be filed along with the petition. According to counsel in the instant Case two other persons have been mentioned as petitioners in the petition itself. Their affidavits were not filed along with the petition and, if they have been allowed to file the affidavits at later stage, the very basis of the maintainability under Section 399 is affected and the petition should be dismissed as not properly filed. According to counsel, the petition should have been signed by the petitioners themselves or through a power of attorney and in the instant case petitioner No. 1 does not say that he is filing the petition on behalf of himself and two others. Counsel submitted that if a petition is not properly filed the right of filing under Section 399 stands affected.
23. On the merits of the petition, counsel submitted that the shareholding particulars furnished in para 3 of the petition are not correct. Shri A. K. Minocha who is shown as a shareholder holding 3200 shares had transferred his shares on December 20, 1988, and hence is not a member. As regards the allegation that transfers have been effected in favour of Shri H.S. Dureja and his relatives for his personal gain, counsel stated that all the transfers had taken place in 1991 when petitioner No. 1 was a part and parcel of the board and had not complained of the transfers in writing to the said Shri H.S. Dureja, and even otherwise, it is a one-time action, and hence cannot be the basis for an action under Section 397/398. Counsel stated that petitioner No. 1 was a party to the approval of the transfers in the board, and had been silent, all along, has chosen to make an allegation after the parties have fallen out. Counsel stated that there is no violation of Article 9 as made out, as no member had complained against the transfer.
24. Counsel referred to the allegation of the petitioner regarding non-transmission of the shares held by the late R.K. Khandhari to his heirs, Shri Vishal Kandhari and Shri Vikas Kandhari, as per the "will" executed by the deceased shareholder. Counsel submitted that by such non-transmission, the rights of the petitioners cannot be said to have been affected and it is for the heirs of Shri R.K. Khandhari to challenge the company's non-transmission. The issue is, therefore, not relevant for an action under Section 397/398. Even otherwise, according to counsel, the "will" was not produced to the company, and even now, it has not been given to the company.
25. The petitioner had alleged that the Khandhari group was to be given 50 per cent. of the capital of the company, but, according to counsel for the respondents, there was no such agreement. The board meeting dated June 29, 1990 (A.52 annexure to the petitioner's rejoinder) refers only that Sadhuram Aggarwal and R.K. Khandhari shall contribute Rs. 12.50 lakhs towards share capital so that they will collectively hold 50% of the share capital of the company. Referring to the petitioner's argument that Sadhuram Aggarwal had no more interest, and hence the shares were to be allotted only to Shri R.K. Khandhari as per the agreement, counsel pointed out that there was no agreement that 50% will be given to the Khandhari group and that no decision was taken regarding Aggarwal's share and allotment to Khandhari was not decided but kept open by the board. Counsel referred to the board meeting dated July 14, 1991, in this context, and the minutes book was placed for perusal. Counsel also referred to Khandhari dairy's letter dated November 17, 1991, to the company and the respondent company's reply dated November 25, 1991 (A-57 and 56 of the rejoinder) and stated that it will be clear from the company's letter that shares to the agreed amount were issued and that the correspondence does not state that there was an agreement to issue 50% to the Khandhari group. The receipt of the letter dated August 5, 1991, was not admitted by counsel.
26. As regards the amount received from Sadhuram Aggarwal, counsel stated that Rs. 2,30,000 was deposited by him (23,000 shares) and this was refunded to him on July 14, 1991. According to counsel, the board proceedings nowhere mention 50% allotment to the Khandhari group and the resolution refers only to contribution of Rs. 12.50 lakhs collectively. It is the case of counsel that what has been stated in the resolution is not reflected in the petition.
27. In regard to the other allegations, Shri Chaudhary reiterated the submissions made in the reply and prayed that in the absence of full particulars relating to these allegations, the Company Law Board should not make roving enquiries in respect of these allegations especially when such allegations have been made on purported information given by two employees of the company. He also contended that mere allegations without basis cannot entitle a petitioner to any relief.
28. Counsel cited the following case law in support of his case :
(1) dim Mills Co. Ltd., In re [1964] 34 Comp Cas 731 (Cal) :
Misappropriation/fraud full particulars to be set out.
(2) Soma Veerappa v. State of Madras [1963] 33 Comp Cas 1028 (Mad) :
(3) Stadmed Pvt. Ltd. v. Kshetra Mohan Saha [1969] 39 Comp Cas 741 (Cal) :
Oppression should be such that the company is fit to be wound up acts should be continuingland transaction one-half years back.
(4) C. K. Gupta v. PannaM Gir-dhari Lal Put. Ltd. [1984] 55 Comp Cas 702 (Delhi) :
(5) Sheth Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. [1964] 34 Comp Cas 777 (Guj) :
Past-concluded acts will not count as oppression.
(6) Mohta Bros. (P.) Ltd. v. Calcutta Landing and Shipping Co. Ltd. [1970] 40 Comp Cas 119 (Cal) :
Petitioner to give full grounds. Winding up not justified.
(7) C. P. Gnanasambandam v. Tamilnad Transports (Coimbatore) Pvt. Ltd. [1971] 41 Comp Cas 26 (Mad) :
Oppression should be burden some not an isolated act.
(8) Suresh Kumar Sanghi v. Supreme Motors Ltd. [1983] 54 Comp Cas 235 (Delhi) :
Mismanagement should be prejudicial to interest of the company.
(9) V. ]. Thomas Vettom v. Kuttanad Rubber Co. Ltd. [1984] 56 Comp Cas 284 (Ker) :
Petitioners to satisfy the allegations.
29. The company was originally incorporated in 1985 with Shri Dureja and his wife as the first directors of the company. As per the shareholding pattern furnished in the petition, there were 36 shareholders as on March 31, 1990. Shri Kandhari and his wife were inducted as members during the period between June 30, 1990, and October 25, 1990. No doubt there was an attempt to form a partnership between Shri Dureja, Shri Kandhari and Shri Aggarwal for undertaking the marketing of products of the respondent-company, yet the same did not materialise. Even though in the petition, a claim has been made that the respondent company was to be in the nature of a partnership between Shri Dureja and Shri Kandhari, the very fact that there were a large number of shareholders, it is not possible, in any way, come to the conclusion that this company was meant to be a partnership or quasi partnership between these two persons groups.
30. The preliminary objection raised by Shri Chaudhary was on two grounds. One is that petitioners Nos. 2 and 3 even though have given the consent to file the petition have not signed the petition, it is not clear according to him whether they are petitioners or they are consentors. He asserted they cannot have the dual role of the petitioners as well as consentors. However, in view of the affidavits filed by them later and in view of the fact that their consent for instituting the proceedings has been obtained and filed properly, along with the petition together with vakalatnama, we overrule this objection. Likewise, Shri Chaudhary's contention that many of the allegations were based on the information given by Shri K.P. Singh and Shri Rajeev Nigam, who have, now, through affidavits, denied having given any information and, therefore, no enquiry should be made into this allegation, taking into consideration that arguments were advanced in respect of all the allegations, we have dealt with these allegations in this order, no doubt keeping in mind this objection of the respondents which we shall deal with when we come to the relief part of this order.
31. There are a large number of allegations in the petition which can be conveniently grouped into one--pertaining to allotment/transfer of shares and two--relating to alleged siphoning off of funds of the company and other acts of mismanagement. As far as the first group of allegations is concerned, there are two major complaints one--in respect of non-allotment of the agreed percentage of shares to Shri R.K. Khandhari who is the husband of petitioner No. 3 and the other is transfer of shares in favour of the respondents' group without following the procedure prescribed in the articles of the company.
32. As far as allotment of shares to the extent of 50% to Shri R.K. Khandhari is concerned, both the petitioners as well as the respondents have relied on the minutes of the board dated June 29, 1990 (exhibit A-52). While the petitioner relies on this as a commitment of the board to allot 50% to Shri R.K. Khandhari, the respondents' contention is that 50% was agreed to be allotted jointly to Shri Kandhari as well as Shri Aggarwal and, therefore, when Shri Aggarwal withdrew his participation, it cannot be presumed that the entire 50% would be allotted to Shri Kandhari. It is an admitted position that Shri Khandhari and his wife put together now have been allotted 42% of the share capital of the company and this entire allotment was made after June 29, 1990. If the contention of the respondent is that Kandhari was entitled to only 25% of the shares, then how shares up to 42% were allotted, was not explained. However, the wording of the board resolution is that "Shri Kandhari and Shri Aggarwal would collectively contribute Rs. 12.5 lakhs towards share capital, so that they will collectively hold 50% share capital of the company. The company will issue 1,10,000 shares to them and the rest 15,000 shares will be transferred by Mr. H.S. Dureja and his party". The purpose of this allotment as obvious from the first paragraph of the resolution is that the company was in need of funds to finance the new unit that was being set up, it was, therefore, found necessary to raise the share capital by issue of shares to Shri R.K. Kandhari, Shri Aggarwal and close friends of Shri H.S. Dureja. The resolution consists of both the amounts to be contributed by Shri Aggarwal and Shri Kandhari of a sum of Rs. 12.5 lakhs and it also says that they will collectively hold 50% of the share capital of the company. The stipulation of 50% of the share capital has been computed on the basis of the total amount of share capital of the company at that time. It is contended by the petitioners that as per this resolution, Shri Kandhari and Aggarwal would hold 50% of the share capital of the company, for all time to come but we feel such a presumption is not warranted from the wording of the resolution since it has also quantified the amount to be contributed by them. It is an admitted fact that Shri Agarwal was no longer interested in the company and the contribution made by him of Rs. 2.3 lakhs was refunded to him. The only issue to be considered is whether in the absence of Shri Aggarwal, Shri Kandhari would be entitled to the 50% of the shares on a contribution of Rs. 12.5 lakhs. If the contention of the respondents were to be that the understanding was that Shri Kandhari and Shri Aggarwal each would hold 25% of the share capital, the actual position does not reflect this understanding for the reason that Kandhari and his wife were collectively allotted 42% of the share capital on different dates from June 30, 1990, and October 15, 1990. A sum of Rs. 2.3 lakhs in the name of Shri Aggarwal as loan given by him and which was to be adjusted towards 23,000 shares were refunded to him on Jury 14, 1991. The number of shares agreed to be allotted to Shri Kandhari and Shri Aggarwal put together come to 51% of the shares. From these sequence of events and the dates of payments of money for the shares, one has to necessarily come to the conclusion that the agreement was to allot 42% to Shri Kandhari and the balance to Shri Aggarwal to make 50% of the share capital. When the board took a decision to refund the amount deposited by Shri Aggarwal on July 14, 1991, there was no decision as to how these shares have to be further allotted. The allotment of shares as indicated in the resolution dated June 29, 1990, was for the purpose of mobilising more funds. In the instant case, the company which was to adjust the loan of Rs. 2.3 lakhs for shares, actually refunded the amount. At the same time they did not take any decision to whom to allot these shares. In other words, the decision of June 29, 1990, had already been implemented but after withdrawal of Shri Aggarwal if the understanding of 50% was to continue, there-should have been a separate board resolution at least when they took a decision to. refund the amount. The argument of the petitioner that there was sufficient amount of Kandhari Dairy with the company for adjustment towards the balance shares and these shares should have been allotted to Kandhari does not hold much water. In this case, we are not in a position to find any offer of shares which was not taken by Shri Aggarwal to Kandhari and, therefore, the question of adjusting any amount available with Kandhari Dairy with the company towards these shares does not arise.
33. In this connection, it is essential to refer to the decision in Kalinga Tubes Ltd. v. Shanti Prasad Jain, AIR 1963 Orissa 189, wherein it was held that an agreement between the parties as long as it does not form part of the articles is not binding on the company. In the present case the agreement of allotment of a certain percentage of shares to Shri Kandhari has not become part of the articles. But in view of the fact that a resolution to the effect of allotting certain percentage to Shri Kandhari and Shri Aggarwal was passed in a board meeting, and benefits derived by the company, we are of the view the same is binding on the company. But in the context of the wording of the resolution and subsequent events, as has been narrated above, we are of the view for the reasons stated above that the Kandhari group cannot claim any further shares on the basis of this resolution and cannot claim 50% shares in the company for all times to come.
34. There have been a lot of pleadings on the amount due from the company to Kandhari Dairy, we are of the opinion that it should be settled as a debtor and creditor and not as a member of the company in a Section 397/398 petition. Therefore, we are not dealing with this aspect in this order.
35. As far as transfer of shares is concerned, the admitted position is that 3,200 shares held by Shri A.K. Minocha have been transferred on December 20, 1988, much before petitioners Nos. 2 and 3 became members of the company. As far as the other transfers are concerned, these transfers took place on October 5, 1990, December 6, 1990, December 10, 1990. Articles 6 to 12 of the articles of association deal with transfer of shares. As per these articles, the transferor will have to give a notice to the company about his proposal to transfer the shares and in turn the company will make an offer to other members as nearly as may be in proportion to the existing shares held by them and if they do not accept, then they may be offered to other members. If within two months after the determination of the price the company is not in a position to find a purchasing member, the transferor shall be at liberty within three months thereafter to transfer the shares to any other person. However, these stipulations are not applicable in the case of transfer of shares by a member to his wife/ her husband/son/daughter or vice versa in consideration of natural love and affection or otherwise.
36. Sixteen shareholders holding in all 29,650 shares transferred the shares to Shri Dureja and his family. As admitted by the respondents, these transfers took place on October 5, 1990, December 6, 1990, and December 10, 1990, and at the time petitioner No. 1 was a director of the company and he did not object to the same. It has also been stated by the respondent-company that since these transfers took place in 1990, it cannot be considered as a continuing, oppression. It is evident from the minutes book of the board of directors that these transfers were never placed before the board. The transfers are patently in violation of the relevant provisions of the articles of association. The respondents have also not been able to establish that these transfers fall within the exceptional categories under Article 12. Under these, circumstances, the petitioners are right in questioning these transfers. The petitioners have also rightly cited the case of Bhubaneshwar Singh v. Kanthal India Ltd. [1986] 59 Comp Cas 46 (Cal) where, in an identical situation the Calcutta High Court has held that where there is a pre-emptive provision in the articles of association a transfer in violation of such provision constitutes oppression. The contention of the respondents that oppression should be continuous is not relevant as transfers in violation of the articles have taken place on three different dates and the petitioner further alleges oppression till date by non-registration of transmission of shares belonging to the petitioners' group. It is the settled proposition of law that where shares are transferred to the same shareholders particularly to the management group without making an offer to all the shareholders based on the preemptive rights in the articles, such act is definitely an act of oppression and the petitioners deserve relief. More so, in the present case where the transfer in question was effected even without being approved by the board. We have also considered the question whether we could give relief to the petitioners without impleading the transferors. It is evident that the transferors have disowned and disinvested these shares for consideration the benefit of which has gone completely to the credit of respondents Nos. 2, 3 and 4. The spirit behind the pre-emptive provisions of the article is that such a benefit should be shared with or at least offered to the other shareholders also. The equity of the transferors is in no way affected if the respondents are directed to make an offer to the other shareholders to the extent of the proportion of their shareholding. Accordingly, we direct the respondents to offer, out of the 29,650 shares, the proportionate entitlement to the present holders of shares outstanding as on the various dates of transfer, at the same price at which they acquired these shares.
This offer may be made within one month from the date of receipt of this order. A time limit of 15 days may be allowed to the shareholders to accept the offer and make the remittance. The shares accepted shall be trans ferred and registered in the name of the members in another 15 days.
With this, the oppression complained of is put an end to.
37. In regard to the allegation relating to siphoning off of funds of the company by the respondents, a lot of arguments took place on the sale of skimmed milk powder and desi ghee. The allegations of siphoning off of funds, according to the petitioners, arise out of manipulating the invoice to show that the goods are sold in Goa but are actually diverted to other places, like Calcutta, Gauhati, etc., showing the recovery rate at lesser rate than the actual rate, and underbilling the invoices. They have relied on annexures A-11 to A-23 to show that all the purported sales to Goa actually are consigned only up to Delhi and even the insurance is taken only up to Delhi. This fact of consigning up to Delhi and taking insurance up to Delhi has not been denied by the respondents. But their contention is that the goods have been sold ex-Delhi and it is the responsibility of the consignees to arrange for onward despatch to Goa. They have also relied on certain certificates issued by the sales tax authorities in Goa. According to the respondents, it is the normal practice of many traders to consign goods to Goa where sales tax is much lower than at other places and then despatch goods to other places. This is nothing but a tax avoidance practice, it was contended. They also produced the sales tax assessment made at Malerkotla. The respondents have also questioned the validity of the arrangement with M.J. Thakraso as revealed in a copy of the letter dated December 7, 1991, and December 17, 1991, expressing their willingness to deal with products of the company.
38. The petitioners' allegation in respect of sales to Goa rested on two premises. One is that the goods are removed from Delhi to the eastern part of the country for sale at higher price and the difference is pocketed by the respondents. The other premise is by doing so the company has evaded payment of tax due to be paid at Delhi. The admitted position in these cases is that the invoices have been made up to Goa, but are booked for transport by the company only up to Delhi and insurance has also been taken up to Delhi. The addresses in all the invoices enclosed in the application show the consignee to be at Goa. If the contention of the petitioner that the goods are diverted to the Eastern part of the country were correct, he has not stated as to by whom the same is done, whether respondent or the purported consignee. If it is by the consignee, whether there is any nexus between the respondent and the consignee has not been stated. He has also not been in a position to establish how and to whom such diverted goods were delivered. The petitioners have relied on the personal diary of Shri Dureja wherein entries of receipt of money from various firms from Goa have been incorporated. Even in the report of the Commissioner, the existence and despatch of goods to National Dairy Corporation has been established. Under these circumstances, even though the petitioners have taken the trouble to collect a lot of informa-tiqn to establish transport up to Delhi, they have not been able to give any evidence or proof regarding the alleged sale in the eastern part of the country. In the absence of such details, even though there are certain inconsistencies in the statement of the respondents about the scope of the consignment agreement/agency agreement with customers at Goa and in view of the fact that certain sales tax pattis that have been produced before us from Goa, we are unable to sustain the allegation in this regard. As far as the second premise that by the method adopted by the company, sales tax liability is likely to arise in Delhi is concerned, we find that in the absence of details as to how and why such sales tax liability would arise, we are not able to appreciate this argument.
39. There is another allegation relating to non-transmission of shares standing in the name of Shri R.K. Kandhari to his sons as per the will executed by Shri Kandhari. The respondents have referred to their letter addressed to petitioner No. 3 asking her to produce a copy of the will which according to the respondents was not furnished to the company nor has proper certificate been furnished. Counsel for the respondents, indicated during hearing that the company would not have any objection in recording the transmission once the will and no objection certificates from the other heirs are produced. In view of this submission, there is no need for our intervention on this.
40. Another allegation is that Rs. 1,000 each was accepted by the company in the name of Shri Jagdip Dua, Shri Kuldip Dua and Shri Anurag Dua, as share application money for which receipts were also issued, as share application money, the same has been converted into long-term loan by the company without the knowledge of these persons. The respondents have stated that these amounts were converted into long-term deposits, only with the consent of petitioner No. 1 and he never objected to the same during the last six years. It is a fact that petitioner No. 1 was a director of the company and the absence of any proof to the effect that he had raised objection on this, leads to the presumption that he was in the knowledge of the conversion of this amount into long-term deposits and he had acquiesced in the same.
41. Another allegation relates to sending cash through employees from Delhi to Malerkotla and siphoning off of some of such remittances without bringing the same into books of account. The petitioner has relied on annexures A-39 to 41 and also the personal diary of Shri Dureja (copy annexed at A-62 to A-71) to substantiate this charge. The respondents have denied siphoning off of any such funds indicating that all the transfer of money from Delhi to Malerkotla is duly accounted for and they have also furnished details of certain remittances in annexure-Y. As has been admitted by the petitioner, this allegation is based on the information given by Shri Rajiv Nigam. They have not produced any independent evidence regarding non-entry of amounts sent from Delhi. Again, relying on a document (Dureja's diary) in the rejoinder without any mention in the petition deprives the respondents from advancing their defence and, therefore, cannot be admitted.
42. As far as the allegation relating to underbilling is concerned the contention of the respondents is that there is day to day variation in the price and the rate also depends on the quality, colour, etc. According to the respondents, the company cannot all the time produce A grade milk powder. The grades sometimes are C or B or poor grade also. The main allegation of under-billing has been based on the rates at which the company sold its products during the period from April 2, 1992, to May 1, 1992, during which period the rates ranged from Rs. 35 per kg. to Rs. 47 per kg. Some times, the sale has been made to the same firm. This according to the petitioner shows that there is siphoning off of funds by under-billing. In this connection, it is essential to note that petitioner No. 1 was a director of the company till March, 1990. Nowhere he could say or assert that this type of variation in the rates was not prevalent at that time nor has he been able to show the comparative rates of sale by others. On the contrary the respondents have produced certain invoices from other companies at annexures H-1 to H-5 from which it is seen that there is fluctuation in the rates on a day to day basis and the rates compare well with the rates at which the company had sold its products. In the absence of any material evidence before us that during the period when Shri Dua was in the company, such fluctuation was not there or that the products were sold at much higher price by other manufacturers on the basis of the records produced to us, we find that the allegation of underbilling has not been substantiated.
43. The same is the position with regard to the alleged siphoning off of funds at the retail stores at Malerkotla. Except for an assertion that the sale is about Rs. 8,500 to Rs. 10,000 per day which is accounted to be Rs. 1,500 and Rs. 2,000 per day, the petitioner has not placed before us any material to substantiate this charge. According to the respondent actual sales are always accounted for, which vary from day to day. According to them the sale in April, 1992, was Rs. 10,000 per day on an average.
44. As far as the running capacity of the plant is concerned, the petitioner asserts that the capacity to handle milk is between 70 to 75% and production of the skimmed milk powder should be between 6 to 7 tonnes and desi ghee between 4 to 10 tonnes per day while the company shows the production of only about 4 tonnes of skimmed powder and 3 tonnes of desi ghee. The petitioner also asserts that as against purchase of around 50,000 litres of milk as claimed by the company it should be around 65-80,000 litres of milk. This allegation in page 31 of the petition starts with "that the petitioners have also come to know". They have not said as to how they came to know or on what basis they have made the allegation. On the contrary the company has produced a certificate from the P. N. Bank annexed at R-1 that the conduct of the company in managing the working capital against hypothecation of the stock has been satisfactory and in annexure R-2 they have also given details of recoveries for ghee and skimmed milk powder which is much higher than what is alleged in the petition. This allegation seems to be based more on surmises than on any documentary evidence.
45. As far as the allegation relating to non-accounting of all the HDPE bags purchased and siphoning off of products through unaccounted bags numbering to 1,000 to 1,500 bags, except an allegation to this effect which has been denied by the respondent, no material has been placed before us to substantiate this allegation. It is also worthwhile to look into the audit report for the year ended March 31, 1992, and the certificate given by the auditors, wherein the auditors have opined that the procedure for physical verification was reasonable and adequate, that proper books of account as required by law have been kept by the company, that reasonable records have been maintained by the company for sale of scrap and by-products, that the stock of finished goods, stores and despatch and raw material has been physically verified by the management at reasonable intervals during the year, etc. We have referred to the certificate of the auditor here only because most of the allegations of the petitioners relate to proper accounting for purchases and sales made and proper recording of the same. The first petitioner having been on the board of directors, if he had really wanted to substantiate these allegations, he could have made available to us more particulars of how the company was operating when he was a director and what different practice it was following later, giving rise to the allegations in the petition. This could have thrown some light on the veracity of the allegations especially in the absence of supporting details/evidence. No doubt the petitioner has suggested that an investigation into all the aspects would throw some light on the allegations, yet it is the settled rule of law that the petitioner should make out his own case instead of seeking a roving enquiry. None of the court decisions cited by counsel for the petitioner would be of any avail to him in respect of these allegations.
46. Certain allegations pertaining to the conduct of respondent No. 2 have been made. One is that he is running a partnership through his wife and is holding the general power of attorney in his favour and as such he is functioning as the manager of the firm while functioning as a managing director in the company, which is against the provisions of the Companies Act. While the respondent does not deny that he holds a general power of attorney, he has denied acting as manager of the firm. According to the petitioner, the firm is dealing in cattle feed and the suppliers of milk to the company are forced to buy cattle feed from this firm. This way, the petitioner alleges, respondent No. 2 is compromising his fiduciary position of the company. Now, that this firm is reported to have ceased functioning, this allegation no longer survives.
47. The allegation of the petitioner regarding floating of a parallel business by the respondents with more or less identical name is well founded. From the objects of the company as well as Idasa Agro, we find that the objects of both the companies are more or less the same and respondent No. 2 who is a managing director of the company is also a director in the other.
48. But as stated by the respondents during the hearing, Idasa Agro has not started its business activity as yet and it is not going to engage in the same business as that of the company, we do not propose to make further enquiries in this regard as there is no legal provision that a person cannot be a director of two companies having similar business. The case cited by the petitioner, viz., Scottish Co-operative Wholesale Society Ltd. v. Meyer [1958] 3 WLR 404 ; [1959] 29 Comp Cas 1 is not relevant in this respect.
49. Much argument took place on the purchase of land at Samalka by Idasa Agro India Pvt. Ltd., which has been floated by respondents Nos. 2 and 3 group. According to the petitioner, more than Rs. 20 lakhs for the purchase of 8 acres of land was spent and this money should have obviously come from the respondent company as Idasa Agro did not have sufficient funds. According to the respondents Idasa Agro had bought only 3.8 acres of land at, Rs. 70,000 per acre and the consideration was paid from the share application money available with Idasa Agro. Here also except surmises, no other proof has been given except to state that Nestle which has bought land in this area has paid a much higher price and, therefore, Idasa Agro could not have bought the land at such a cheaper price. Counsel for the respondent stated during the hearing that Idasa Agro would be prepared to sell the land to the petitioner at Rs. 3 lakhs per acre which offer the petitioner was not prepared to accept. We do not find any merit in the allegation especially when the registration authorities have accepted the rate of Rs. 70,000 per acre and Idasa Agro had enough funds to purchase the land at this rate.
50. Another allegation relates to the appointment of Shri Harish Dureja who has suffered conviction for 12 days and who was in jail, as director of the company while he was on bail. The respondents have not denied the fact of the conviction of Shri Harish Dureja but their contention is that as long as the revision petition pending in the High Court is not disposed of, there is no legal impediment to his holding office as director of the company. This issue is purely a question of law. The petitioners have other remedies to follow rather than agitating the same through this petition. Along with this allegation, there are certain other allegations regarding appointment of close relatives of Shri Dureja and also as to why Shri Dua left the company. As far as appointment of relatives is concerned, it is purely the prerogative of the management as long as the same is not in violation of the provisions of the Companies Act and as far as the statements relating to Shri Dua are concerned it is extraneous to the petition and there is no need for us to deal with the same. As far as the allegation relating to disposal of trucks belonging to the company is concerned again we find that it is based on surmise that these vehicles have been sold at much higher prices than what has been accounted for without any details. The respondents have shown that all these vehicles have been sold at much higher prices than their book value. In the absence of any material evidence to prove the allegation, we are not in a position to uphold the contention of the petitioner in this regard. Regarding the allegation of disposal of chillers the company has stated that no chillers have been disposed of by the company and they have been kept at various milk collecting centres at Punjab and we also find from the list of assets enclosed in the annual report for 1991-92 that there has been no disposal of any assets during that year.
51. There are other allegations relating to the misuse of company's money, allotment of shares to employees, maintenance of additional challan books, gift cheques to Shri Dureja's daughter, cash transactions at Delhi, payment of labour charges. All these allegations have been denied by the respondents. In the absence of material particulars to substantiate these charges, we have to perforce go by the denial by the respondents.
52. As per the prayers, as reliefs, the petitioners have desired that the Company Law Board should obtain all the details in respect of the various allegations and direct respondents Nos. 2 to 4 to deposit the money so siphoned off into the books of the company. In addition they have also sought for directions to respondents Nos. 2 to 4 to disclose their source of income for having invested money in Idasa Agro and the sources from which the land has been purchased. All the allegations are in para 9 except those relating to shares. Para 9 consists of 28 paragraphs containing various allegations of which paragraphs IX(1), XIV, XXII again relate to shares and paragraph XXIII relates to Shri Harish Dureja and paragraph XXVI relates to Idasa Agro. As per the affidavits filed by the petitioners, only the allegations indicated in these limited paragraphs are within the overall knowledge of the petitioners. All other allegations numbering about 20 are based on the information supplied by the two employees of the company and these charges are of very serious nature. Whether we should take cognisance of these allegations has been aptly answered by the Calcutta High Court in Clive Mitts Co. Ltd., In re [1964] 34 Comp Cas 731 in which a large number of allegations as in the present case on the siphoning off of funds were alleged without giving full particulars. The court held (at page 745) :
"In my view, it is not only in case of fraud, but in case of all other allegations relating to mismanagement, misappropriation or other improper conduct with which a party is charged in applications under Sections 397 and 398 of the Act, full particulars must be set out in order to enable the party charged to understand what he is charged with, and also to enable him to answer such charges. If vague and general charges are made without giving any particulars or setting out any material facts, this court should ignore such charges and not proceed to investigate them. The party charged must be given the opportunity of answering the charges made against him, and this he cannot do unless he knows what he is charged with. General and vague allegations of misappropriation, misapplication of funds, mismanagement or other improper conduct in the management of the company's affairs do not justify this court in making any order on such allegations".
53. The court further observed (at page 745) :
"I have already expressed my views in this matter, and I need only add that when a party is charged with acts of mismanagement, misappropriation or improper conduct, full particulars of the acts complained of must be set out in the pleading and unless so set out, such charges should be ignored and no reliance should be placed on them." Again, in Clive Mills Co. Ltd., In re [1964] 34-Comp Cas 731 (Cal) (at p. 748), "In my view Mr. Deb is right in his contention that where the petitioner has made serious charges of fraud, collusion, misapplication, misappropriation and other improper conduct, the petition must be confined to facts within the knowledge of the deponent... In my judgment, Mr. Deb's contentions that no notice should be taken of the allegations made in the petition regarding fraud, collusion, mismanagement, misapplication of funds, are sound. This court cannot take notice of such allegations when no particulars have been furnished... The pleadings in the matter, including the petition and the affidavits are to be treated as evidence, and that being so, the rules of evidence must be strictly adhered to. The averments in the petition and in the affidavits, which are verified as based on information, are by their very nature, hearsay evidence. And if such averments are the foundation of the case made out by the petitioner, or the foundation of the defence made out by the respondents, the court should not rely or act upon the same. To do otherwise, would be to ignore the fundamental principles of the rules of evidence. If the averments in the pleadings are such that, but for them, an order cannot be made, persons who have personal knowledge of the facts stated must come forward and put what they have to say on affidavits. If other persons, having no personal knowledge of the facts are set up to verify facts stated in petitions or affidavits, as being based on information supplied and believed to be true, the averments so verified cannot be relied on by the court."
54. It is also worthwhile referring to Mohta Bros. (P.) Ltd. v. Calcutta Landing and Shipping Co. Ltd. [1970] 40 Comp Cas 119 wherein the Calcutta High Court observed (at page 129) :
"They are no authority for the proposition that, even though a petitioner fails to make out a case for a statutory relief by setting out material facts in the pleading, yet the court should grant relief to the petitioner by directing an investigation, in the hope that the report of the investigation might disclose materials for further orders against the company, and in favour of the petitioner."
55. In Bengal Luxmi Cotton Mills Ltd., In re [1965] 35 Comp Cas 187, the Calcutta High Court observed that if an applicant before the court wants to rely upon charges of fraud and other misconduct and investigate it, he must give particulars. Mere vague allegations of fraud and other misconduct would not be enough and the court will deny to embark upon investigation into such charges of fraud and misconduct.
56. The above decisions become relevant in this case because not only are most of the allegations not within the knowledge of the petitioners but they have also, sought, in the prayers for relief that the Company Law Board should direct the respondents to furnish full details regarding all the allegations and, if need be should deposit into the books of account, the money siphoned off by them.
57. From an overall assessment of the allegations made by the petitioners and the replies given by the respondents, it is seen that the petitioners have not been able to establish any of the allegations relating to siphoning off of funds by the respondents except throwing some doubt on sale of the company's products to the parties in Goa. As far as the allotment of shares to the extent of 50% is concerned, we have already given our findings at the relevant place and in respect of transfer of shares, appropriate relief has been already provided for in this order.
58. Therefore, in the facts and circumstances of the case, we do not find any scope for giving any further relief sought for by the petitioner in this petition.
59. As far as the application of the petitioner for charging the respondents for contempt of court for not complying with our directions to give inspection of various documents as indicated in our order dated June 11, 1992, is concerned, we have considered the prayer of the petitioner. In this connection, the observation of the Supreme Court in the case of Aligarh Municipal Board v. Ekka Tonga Mazdoor Union, AIR 1970 SC 1767, may be taken note of. It has been observed in that case that "a contempt proceeding against a person who has failed to comply with the court's order serves a dual purpose (1) vindication of the public interest by punishment of contemptuous conduct ; and (2) coercion to compel the contemnor to do what the law requires of him". In view of the fact that an apology was tendered, by counsel for the respondents and in view of the fact that he immediately undertook to extend all co-operation to the Commissioner in his assignment and that the Commissioner also carried out the inspection on June 23, 1992, we do not propose to take any further action on this application. With these observations, we dispose of the petition with the limited relief relating to transfer of shares complained of by the petitioners.