DEVARAJ DHANRAM Vs. FIREBRICKS AND POTTERIES PVT LTD

JUDGEMENT

(1.) This Company application is filed by the respondents seeking an order as follows: This Hon'ble Court may be pleased to permit the respondents to give effect to the resolution dated 3-8-1989 passed by the extraordinary General Meeting held on 3-8-1989 minutes whereof has been filed along with the statement of objections as Annexure R-23 to the Company petition. In the application the respondents have averred that the petitioner in the Company petition filed an application No. 868 of 1989 praying for grant of temporary injunction to restrain from holding of extraordinary General Meeting on 3-8-1989. This Court passed an order dated 1-8-1989, which reads as follows: "the respondents may hoid the General Meeting, any resolution passed thereof shall not be given effect to or acted upon until this Court otherwise directs. It is also clarified, by the holding of the General Meeting and the passing of the resolution no equity will be built up in favour of respondents 2 to 6. Any claim by respondents 2 to 6, any commitment that may result by virtue of the passing of the resolution, financial or otherwise shall be at the risk of respondents 2 to 6. The petitioner is free to attend the General Meeting or absent himself if he so chooses or so advised." Accordingly the said petition of the petitionerapplicant was disposed of.

(2.) Pursuant to that a meeting was held on 3-8-1989. All the share holders of the Company were present. The petitioner was absent. It is averred that the Company at its General Meeting held on 3-8-1989, unanimously gave consent to the proposal to transfer 2719 equity shares of Rs. 100/- each, in favour of Mr. R.N. Shetty for a consideration of Rs. 7,031/- per share. The extract of the minutes of the extraordinary General Meeting held on 3-8-1989 has been annexed to the application. It is further averred that the action taken by the respondents is absolutely legal and proper and the petitioner has no right to withhold the transfer of shares by the respondents in favour of Mr. R.N. Shetty. It is further averred that the transfer of shares in favour of Mr. R.N. Shelly is not only beneficial to the respondents but also to the Company and the workers. The proposed transferee has agreed to immediately bring funds for the purpose of meeting the immediate financial requirement of the Company. In fact, for want of which, the workers are put to great hardship. Steps taken by the respondents seeking to transfer 2719 equity shares of Rs. 100/- each, of the Company in favour of Mr. R.N. Shetty, is in accordance with law and the provisions of Article 37 of the Articles of Association. The petitioner, though has absolutely no right to claim a right of pre-emptive purchase of shares belonging to the respondents, he has been offered to purchase the same. It is clear that from the Article 37(1) of Articles of Association no right of pre-emptive purchase is available to the petitioner. At apart it permits transfer of shares to a person, who is not a member of the Company provided with the consent of the General Meeting is obtained. It is further averred that the consent of the General Meeting has been taken on 3-8-1989. There is absolute compliance with Article 37(1) General Meeting has been convened and held in accordance with law. It is therefore, prayed by the respondents be given permission to give effect of resolution passed by the General Meeting on 3-8-1989 as per Ex.R-23. It is averred that inspite of the transfer of shares in favour of Mr. R.N. Shetty no right to the petitioner is being jeopardised. The petitioner will continue to hold 15% of the shares of the Company as he now does. Even the petitioner's position as Joint Managing Director of the Company will not be disturbed. It has been offered by Mr. R.N. Shetty at the same rate. Inspite of the said offer the petitioner did not want to accept the offer and the petitioner cannot on that pretext obstruct the transfer of shares by the respondents. It is further averred that all through and it is within the knowledge of the petitioner, he has been actively participating in each of the negotiations inspite of transfer of shares earlier in this case, he has taken very exact attitude for the reasons best known to him put to obstruct for the transfer of shares of the respondents in favour of Mr. R.N. Shetty, who is offered the highest price of the share value. The petition is motivated by mala fide conduct. If resolution is not permitted to give effect to, the respondents are likely to suffer from irreparable loss and injury, which cannot be adequately compensated in tenns of money. The Company is facing grave financial crises and with the passage of every day the liability of the Company is increasing enormously in addition to the defaults being committed in fulfilling the statutory liabilities owing to want of finances.

(3.) This application was resisted by the petitioner by filing his objections statement, wherein, he has contended inter alia, that the respondents holds 85% of the equity shares of the respondent No. 1-Company have indulged in several acts of oppression and mis-management detrimental to the petitioner and also the interests of the respondent No. 1-Company including using physical violence against the petitioner's son. The respondents have also indulged in several acts of malverisation besides misappropriating more than Rs. 16 lakhs from the funds of the respondent No. 1-Company.