VINNI CHEMICAL P LTD Vs. AKHIL KUMAR SANGAL

JUDGEMENT

(1.) Scope of dispute involved in this appeal is narrow. The Company Law Board (hereinafter called as 'the Board') Principal Bench, New delhi has passed the impugned order dated 13th December, 2002 in CP No. 64/2001 filed by the respondent herein. The said petition by the respondent herein was filed under sections 397 and 398 of the Companies Act, 1956 (for short' the Act') alleging oppression and mismanagement on the part of the appellants herein. In fact perusal of the impugned order would show that this allegation of the respondent is not substantiated and petition to that effect is rejected and, therefore, naturally, the appellants have no grievance against that part of the order. However, in the process, while deciding the company petition the Board also gave directions to the appellants to refund rs. 3.58 lacs to the respondent herein within two months of the said order. Feeling aggrieved against this part of the order present appeal is preferred.

(2.) I may quote para 4 of the impugned order which gives indication of events which took place and also the circumstances under which order of refund of amount to the respondent herein by the appellants was passed:

(3.) It may be recapitulated that the company was earlier with Goel group and the said group had inducted respondent herein as a Director on the Board of the company to look after the Randd, Marketing, Business Development etc. keeping in view his managerial and technical expertise. However, as the company was in need of additional funds which could not be mobilized by Goel group, they entered into an MOU with Jain group on 26th May, 1999 which, inter alia, provided the investment by Jain group on the purchase of stakes of Goel group by Jain group. In the company petition filed by the respondent herein his allegation was that the Jains were mismanaging the affairs of the company and they had not brought the adequate finances because of which the company was even suffering losses. There is an indication that this grievance of the respondent herein was not found to be justified. The Board observed that although the respondent herein was in- charge of the company right from 1994 during his period the turnover of the company was low and the losses substantial. After taking over of the company by Jain group the turnover increased and losses reduced substantially. The Board was also of the opinion that the project does not appear to be a viable one which was the reason for losses even when the Jain Group had invested over Rs. 40 lacs as unsecured loans. However, no final opinion was expressed in view of certain statements of the appellants and taking note of the fact that the Jain group holds 79.5 per cent shares in the company whereas the respondent herein has only 20. 5 per cent share holding and thus the respondent herein is not in the active management of the company he was not expected to keep his loan of Rs. 1.85 lacs and also could not be denied reimbursement of the expenses of Rs. 1.73 lacs as recorded in the annual report for the year 2001-02, the board directed the company to refund the said sum of Rs. 3.58 lacs to the respondent herein.