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18. Both the sides admit that the shareholdings of the families of all the 5 brothers were more or less equal and this status continued atleast till 1988/1995 when further shares were issued on right basis and shares were issued to non member directors. But it is on record that late Debabrata was managing the company not withstanding the fact that he was not the majority shareholder. Likewise, the 2nd respondent has been managing the affairs of the company from 1996 even though he was not having majority This would indicate that majority holding was not the criteria to control the company and that by consensus one of the brothers was managing the company. The same is the position with DG Industries also wherein all the families held shares but the management was with the father of the 2nd and 3rd petitioners and after his demise with the 2nd respondent. Now, by the impugned allotment, the family of one brother controls majority shares. In other words, a new absolute majority has been created in this company in which at no point of time any single family held majority shares. Creation of a new majority in a family company by allotment of shares without the consent of all the family members is an act of oppression which would justify winding up of a company on just and equitable grounds. (Gluco Series case). It is so even if a family company needs funds or has to comply with certain requirements like bank or statute if offers had not been made to all shareholders or their consent had not been obtained for allotment to a single group. According to the respondents, the 3rd petitioner and the 11th respondent who were present in the meeting on 2.2.2001 consented to the allotment of shares to the directors of the company in view of the demand of the banks to increase the share capital, but the directors from petitioners group did not apply for the shares. According to the petitioners, even though the 3rd petitioner and the 11th respondent attended that meeting, the matter relating to allotment of shares was not at all discussed and they rely on the draft minutes at Annexure to substantiate their stands as this draft minutes do not mention about shares at all. The minutes of the meeting in relation to the decision to allot 1.55 lakh shares, as filed by the respondents, read as follows (Annexure R-1-8):

19.A reading of the above would show, that the item was allegedly discussed with the permission of the Chairman, obviously because, it was not an item on the agenda. Secondly, it refers to the requirements of ICICI Bank as early as in November 1999 for increase in the share capital to Rs 40 lakhs and also the discussion on this in the Board Meeting on 3.12.1999. It further says, that the Bank had been repeatedly asking the company to raise the capital. In other words, according to the minutes, the share capital had to be increased because of the demand of the Bank. The notice for this Board meeting was issued on 10th January 2001 but, the agenda did not contain this item of business. There is nothing in the minutes to show that there was any demand by the Bank during the intervening period for increase the capital, that the company could not include this item in the agenda. The earlier demand of the Bank was that the company was to increase the capital to Rs 40 lakhs by 31st March 2000. The minutes also indicate that the Bank would be issuing a letter specifying the time limit for raising the capital and the last date for the same would be the end of the financial year. Even with the additional allotment, the share capital has been raised only to Rs 35.5 lakhs and not Rs 40 lakhs. The letter of ICICI Bank dated 7.2.2001 (Annexure R1-16) asking the company to increase the capital by Rs 20 lakhs is subsequent to the Board Meeting on 2.2.2001 and, as such cannot be relevantly looked into. Further, the minutes indicate that shares were to be allotted to the directors of the company at a premium of Rs 3 per share as was done in 1995. In 1995, the shares were issued only to non member directors and not member directors. The minutes also records that no separate offer letters would be issued but absentee directors would be informed. The admitted fact is that 2nd petitioner did not attend that meeting and therefore, he should have been informed of the proposal to issue further shares. There is nothing on record to show that he was informed of the proposal leading to the presumption that he was not informed. If that be the case, the company had not carried out the decision of the Board. Therefore, even assuming that this matter was discussed in the meeting in the presence of the 3rd petitioner and the 11th respondent, 2nd petitioner, who was a director did not have any knowledge of the proposal and as such the company cannot claim the petitioners group did not apply for the shares. One important aspect I noticed is that as per the minutes, the Board had taken some decision relating to the of operation of Bank accounts in that meeting. But as per the draft minutes placed by the petitioners, this item relating to the Bank operation had been deferred. In case, as claimed by the respondents that the minutes produced by them reflect the correct proceedings of the meeting, they could have established the same by producing certified copies of the letters to the banks (SIC) the bank operation instructions. They have not done so. As a (SIC) act, the agenda for the board meeting on 26.2.2001 contains (SIC) for change in the bank operations but the minutes for the (SIC) on that day do not reflect any discussion on this item. All these aspects indicate that the minutes of the Board meeting on 2.2.2001 have been fabricated after the petitioners had served the requisition notice. Further, while in 1995, it was decided to issue shares to the non member directors, in 1994, the company had issued shares on right basis. Since as per the minutes of the meeting on 2.2.2001, the Bank would be requiring the increase by the end of the financial year, the board could have easily decided to issue the shares on a right basis as there was enough time to make the offer to the shareholders and getting the allotment made. Therefore, it appears that in the garb of requirement of the Bank, the Board had decided to issue additional shares to the directors only with the view to create a new absolute majority in favour of the 2" respondent as is evidenced by subsequent events. As per the impugned minutes, he last date for receipt of application for the shares was 23.2.2002. The 2nd 4th, 7th and 8th respondents apply for 80,000, 73,000, 1000, and. 1,0,000 shares by similarly worded letters dated 16.2.2001, tendering in cash 10% of the consideration. The 2nd respondent had paid Rs 1.04 lakhs and the 3rd respondent Rs 94,900 in cash towards consideration for the shares. Normally such huge sums are not paid in cash. Unless and otherwise, the respondents were definite that the petitioners group would not apply for the shares for want of knowledge, these four persons could not have applied for all the shares that too before the closure date.

20.As far as the Board meeting on 26.2.2001 is concerned in which the shares were allotted, the admitted fact is that no director from the petitioners group attended this meeting. The stand of the respondents is that notices for this meeting were sent by UPC. The respondents have not been able to justify as to why the company suddenly adopted this practice of sending notices for this meeting by UPC. As held by this Board in Bombay Dyeing case (supra), the onus to establish that notices were sent by UPC is on the respondents which they have failed to do with other independent evidence. Therefore, strong presumption has to be drawn that the certificates furnished in this regard are procured ones. If so, then the meeting on 26.2.2001 had been held with out notice to the directors from the petitioners, group. The settled law is that any business transacted in Board meetings without notice to all directors is invalid and therefore, the allotment made in that meeting without notice has to be declared as invalid. (Parmeswar Prasad Gupta case-supra) . The respondents have justified that the allotments made in this meeting was only a follow up on the decision in the meeting on 2.2.2001, which was attended by the 3rd petitioner and the 11th respondent. I have already held that the minutes containing the decision to issue further shares is a fabricated one and as such the respondents cannot take shelter under the same for not sending notices for the Board meeting on 26.2.2001. Even the decision to issue an odd number of 1.55 lakh shares appears that it was with the view to allot the same to the 2nd respondent group as this number would make them a clear majority. This has been obviously done after the petitioners had disclosed their togetherness in the requisition notice along with the details of the shares held by them totaling to about 52%. Therefore, it is clear that the issue of further shares was made, in breach of the fiduciary duties of the directors, only to create a new absolute majority in favour of the 2nd respondent group in the company in which there had never been such a majority. Even though the obvious reason for doing so is to defeat the proposal by the petitioners for appointment of Shri DK Basu, yet, they have also used the shares for removing the directors of the petitioners' group. In this connection I may refer to the case of Deepak C Sriram v. General Sales Ltd (2001 4 CLJ 450- CLB). In that case, the petitioners group held 49% shares and the respondents group held 40% shares. There were some disputes relating to the remaining 11% shares held in the name of a Trust. The petitioners group requisitioned an EOGM to induct 3 directors on the Board of the company. The respondents claimed that in a Board meeting attended by one of the petitioner directors, a decision was taken to allot shares on right basis on the requirement of the Bank but none from the petitioners group applied for the right shares inspite of offers made to them and as such all the shares were allotted to the respondents group in another meeting attended by the same petitioner director. By this allotment the respondents group became absolute majority. The petitioner director denied any knowledge of the alleged Board meetings as according to him he did not attend those meetings for want of notice and that none of the petitioners had received the letter of offer. This Bench held that the petitioners, having given a requisition notice for appointment of directors, would not have rejected the offer if the same had been made as their failure to apply for shares would result in the respondents gaining majority. The same logic could be applied here also. It is inconceivable that the 3rd petitioner and the 11th respondent, being aware of the proposal to allot shares, without applying for the same, would requisition an EOGM within a short period knowing well that on their failure to apply for shares, all the shares would be allotted to the respondents group resulting in their gaining majority. Therefore, the petitioners are justified in claiming that the act of issuing shares only to the 2nd respondent group is a grave act of oppression. Shri Sarkar relied on Indian Motor Co and Nanalal Zaver cases for the proposition that acquisition of shares by lawful means is not an act of oppression and that in raising funds for the requirement of the company, even if the directors are benefited, then such issue of shares cannot be an act of oppression. In the present case, as indicated above, the sole motive for issue of shares was to create a new majority and as such not bonafide or lawful but oppressive. Whether, the respondents are justified in creating a new majority as a counter to the proposal given by the petitioners to handover the entire management of the company to an outsider requires examination.

21.The complaint of the respondents is that the petitioners had acted against the interest of the family by proposing to induct an outsider with enormous powers. There appears to be some, justification in this complaint. The resolution proposed by the petitioners is as follows:

"Resolved that in pursuant to Section 309 and other applicable provisions, if any, of the Companies Act, 1956, that the company hereby approves the appointment of Mr. Diptish Kanti Basu as the Chief Executive Vice Chairman cum Managing Director for a period of two years commencing from ........ on the terms and conditions set out in the draft agreement submitted to this meeting and signed by all undersigned requisitionists for the purpose of identification; that the incumbent Mr. Diptish Kanti Basu will have the powers to supercede other existing directors of the company, namely, Mr. Ranendranath Datta Gupta, executive Vice Chairman and Mr. S.P. Mitra, Managing Director, the powers of management of the whole or substantially the whole of the affairs of the company in the ordinary usual course of business exercisable under the superintendence and control of the Board of Directors of the company". When the claim of the petitioners is that the company is a family company and therefore to be managed by family members, then for making the above proposal that Shri Basu would have the powers to supercede the 2nd respondent and the MD, they should have given some justification. There is no explanatory statement along with the requisition notice. Only in the petition, the petitioners have stated that due to complaints from customers/employees and on account of financial mismanagement of the 2nd respondent, the petitioners had decided that the company should be managed by a professional. There is nothing on record that that the petitioners, being directors of the company at the relevant time, made any complaint in the Board meetings in this regard. In a company, which according to the petitioners themselves, is a family company, the petitioners should not have proposed the appointment of an outsider as the chief executive of the company, that too, with the powers to supercede the powers of a family member, invited by them to take over the control of the company. To this extent, I fully agree with the contention of the learned counsel for the respondents that the petitioners have acted against the established practice of a family member controlling the affairs of the company. However, I do not consider that this act of the petitioners could be a justification to create a new absolute majority.