KHRAITILAL RAKHRA Vs. RAKHRA SPORTS PRIVATE LTD

JUDGEMENT

(1.) this company petition is presented by the petitioners under sections 397 and 398 of the Companies Act, 1956 (to be hereinafter called the 'act'). The respondent-company is a private limited company incorporated under the Companies Act, in the name and style of M/s. Rakhra sports private ltd. (hereinafter referred to as the 'company').

(2.) petitioners 1 and 2 and respondents 2 and 3 were initially carrying on thebusiness in partnership under the name and style of rakhra sports company for more than three decades, in equal proportions contributed towards the capital and likewise in equal proportions they were sharing the profits and losses. Apart from their business relationship are also close family relationship. The firm of M/s. Rakhra sports company was being taken over as a going concern by the company with effect from the close of working hours on 30-11-1983. The registered office of the respondent is located at no. 6, commercial street, bangalore. Petitioners 1 and 2 and respondents 3 and 4 were the board of directors and directors of the respondent-company. In order to maintain business relationship between the parties inter se they have incorporated Article 3(c) in the Article which provides that the members of the 1st respondent-company shall be of a two family groups. Family group-a shall consist of krishan kumar rakhra and his immediate family members (spouse and children) and om prakash rakhra and his immediate family members (spouse and children). Family group-b shall consists of khraitilal rakhra (1st petitioner) and his immediate family members (spouse and children) and Smt. Chandra prabha rakhra (2nd petitioner) and her immediate family members (husband and children). The said clause of Articles of association further provides that the distinction between group-a and group-b shall not vitiate the voting rights of members and that the distinction is meant to give effect to two family groups who were partners in 'rakhra sports company'. Thus, it is provided that the quorum for a meeting of the board of directors shall be three directors personally present thereby ensuring that both groups 'a' and 'b' are represented at every meeting of the board of directors. If either of the two groups is not represented at the meeting of the board of directors, no meeting of board of directors can validly be held as provided by articles. This provision is made in Articles only to ensure that no decision is taken by any group unilaterally to the detriment of the other group in the absence of any member of the other group.

(3.) it is averred in the petition that All the four directors were active partners in thebusiness of the 1st respondent-company and in terms of the resolution passed by the board of directors each of them was paid a monthly salary. The family relationship between the petitioners on the one hand and respondents 2 and 3 on the other remained cordial. The main business activity of the company is selling of sport goods and ware. Till about october, 1985 the only place of business of the eompany was at commercial street, bangalore, where the company had acquired a shop premises on lease basis. It was acquired somewhere in october, 1985. The company opened additional retail premises for its business under the name of rakbra super sports at bishop cotton schools complex, residency road, bangalore, having obtained shop premises on lease from its owners. Thus the company carried on its business both at commercial street shop and also at newly acquired shop at bishop cotton schools complex, residency road, bangalore.