MIHIR CHAKRABORTY Vs. MULTY TECH COMPUTERS PRIVATE LIMITED

JUDGEMENT

(1.) The first respondent-Multi Tech Computers Private Limited (for short 'the Indian Company') is a company dealing with modems and other related data communication products. The petitioner-Shri Mihir Chakraborty is a shareholder of the Indian Company and functioned as the Managing Director thereof. Second respondent-Dr.Raghu Sharma, a shareholder of the Indian Company, operates Multi Tech Systems Inc. in U.S.A. (for short 'the foreign company') which manufactures and markets modems. The third respondent-Shri S.P.Sharma, a shareholder of the Indian Company, is also its Joint Managing Director. The first respondent was incorporated in September 1980 with the objects of manufacturing, making, buying, selling, importing, exporting, distributing, introducing or otherwise dealing in computers, data communication equipments and business machines. Originally it was registered at Bombay. Subsequently, the provisions of memorandum of association with respect to the place of registered office were amended and the registered office was changed from the State of Maharashtra to the Union Territory of Delhi.

(2.) The authorised capital of the company is Rs.6.00 lakhs divided in 60,000 equity shares of Rs.10.00 each. It is also relevant to point out that 2000 equity shares in the first respondent company were subscribed by the petitioner constituting 33.33% of the shareholding. Similarly, 20,000 equity shares were subscribed by the second respondent and the remaining 20,000 were "subscribed by the third respondent and his family members, Shri Om Prakash Sharma and Smt Kailash Devi Sharma collectively. The first respondent commenced commercial production of modems in the year 1987 from its registered office at Anand Niketan, New Delhi. In August 1989, the first respondent company applied for allotment of land in Udyog Vihar, Gurgaon, for setting up of a factory. The land was allotted in the year 1990 over which construction has been carried out. In February 1990 the manufacturing operations were shifted to Gurgaon. But earlier thereto, on 26/01/1988 the Indian company had entered into a technical collaboration agreement with the foreign company and as per the agreement, the foreign company agreed to subscribe 33.33% of the foreign equity participation amounting to Rs.2,00,000.00 in the total paid up capital of Rs.6.00 lakhs of the Indian company. As already seen, the petitioner, the second respondent and the third respondent had subscribed to the share capital of the Indian company to the extent of Rs.2.00 lakhs each. It seems that the agreement formalised the shareholding held by each of the parties. While the respondents claim that the entire share capital of the Indian company including the share of the petitioner was funded by the foreign company, the petitioner denies the same.

(3.) On or about 28/02/1989, the petitioner was appointed as the Managing Director of the Indian company for a period of five years w.e.f. 1/10/1988. The Indian company with so little a share capital seems to have done extremely well. The sales of the Indian company grew consistently. This is apparent from the fact that for the years 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94 the net sales were Rs.63.00 lakhs, Rs.226.00 lakhs; Rs.417.00 lakhs, Rs.435.00 lakhs, Rs.430.00 lakhs and Rs.550.00 lakhs, respectively. It is not in dispute that bonus was paid by the Indian company to the petitioner and the third respondent to the tune of Rs.20.00 lakhs each for each of the years 1990-91, 1991-92, 1992-93, 1993-94. For each of the earlier years 1988-89 and 1989-90 the petitioner and the third respondent were paid bonus in the sum of Rs.5.00 lakhs and Rs.2.00 lakhs each respectively. It seems that though the sales of the company were growing from strength to strength, the relations between the parties soured., The petitioner resigned as the Managing. Director of the first respondent company on 18/02/1994, but as per his version the resignation was to take effect from 31/03/1994 but before that date he withdrew the letter of resignation by means of letter dated 17/03/1994. The respondents, however, have taken the position that the resignation of the petitioner had come into force and remained effective. It is the allegation of the petitioner that the second respondent and members of his family with a view to take over the management and control of the affairs of the company started interfering with the day-to-day management and control of the company. It is claimed that in January 1994 the second respondent along with his relatives passed resolutions to reduce the emoluments of the petitioner and his entitlement to share in the profits of the company in contravention of the agreement. It is alleged that the petitioner offered to withdraw from the company provided he was given his share. The petitioner claims that it was agreed between the parties that a sum of Rs.1.00 crore in full and final settlement of all the claims would be paid by the first respondent to the petitioner and the petitioner would withdraw from the company by the close of 31/03/1994. In view of the agreement, a statement was released to a computer magazine, namely, 'Dataquest', that the petitioner and the respondents have resolved their disputes and the respondents have agreed to take over the share of the petitioner in the Indian company. The petition alludes to the fact that in view of the agreement between the parties the petitioner tendered his resignation on 18/02/1994 to the Board of Directors of the first respondent stating that his resignation shall be effective from 31/03/1994. After tendering the resignation the petitioner found that the second respondent was not serious in implementing the agreement. In view of this position the petitioner by letter dated 17/03/1994 to the Board of Directors of the first respondent, withdrew his resignation. But in response, the respondents by letter dated 18/03/1994 addressed to. the petitioner claimed that his resignation had already been accepted. According to the petitioner, the respondents wrongfully purported to give effect to his letter of resignation. Though the resignation was to take effect from 31/03/1994 and he had withdrawn the same on 17/03/1994, the respondents even issued a circular dated 22/03/1994 to all its employees stating that the petitioner had resigned from the Directorship/Managing Directorship of the company and that Mr. Girish Krishnamurthy stood appointed as the new Director -Menaging Director of the Indian company.