V V PURIE Vs. E M STEEL LIMITED

JUDGEMENT

(1.) This is a petition under Section 237 of the Companies Act seeking an order for an investigation into the. affairs of E.M.C. Steel Ltd., (hereinafter referred to as "the company"). Sri Ved Vyas appearing for the respondents raised two preliminary objections to the maintainability of the petition : (1) that the petitioner has no locus standi to file a petition under Section 237; and '2) that the allegations in the petition and the circumstances in which the petition has been filed show that the petition is mala fide and intended only to harass the respondent by setting in motion a fishing enquiry into the affairs of the company. I am disposing of by this order only these two preliminary objections which, if up-held, would result in the petition being dismissed in limine.

(2.) The first respondent, the company, was incorporated on August 21, 1971 as the Private Limited Company but became a public company on December 28, 1973. The paid up capital of the company is rupees five lacs being the amount fully paid up on its 50,000 equity shares of the face value of Rs. 10 each. Of these 49996 shares are held by M/s. Electrical Manufacturing Company Ltd., (hereinafter referred to as the holding company') and the remaining four shares are held by three individuals. Respondents 2 to 6 are Directors of the company.

(3.) The petitioner is the attorney of Smt. Savitri Devi Maini and her five daughters who owned premises No. II, Panchsheel Park, Diplomatic Enclave, New Delhi. In response to an advertisement by the petitioner the second respondent approached the petitioner with an offer that the company would take on lease the first floor of the above house (hereafter referred to as 'the premises') on rent for a period of three years from August 15, 1975. The rent payable was agreed to be Rs. 2750 per month from August 15, 1975 to July 31, 1977 and Rs. 3000 from August 1, 1977 to July 31, 1978. The terms of the tenancy were set out in a letter addressed to the petitioner by the first respondent. The allegation of the petitioner is that though tenancy was in the name of the company it was really intended for the use of .respondents 2 and 5 and that in addition to the sum of Rs. 2750 per month, the second respondent had agreed to pay a sum of Rs. 5000 per month as retainer fee to one P. P. Singh, husband of one of the co-owners of the premises who had been an employee in the holding company till December 31, 1974. It is further alleged that respondents 2 and 5 had assured the petitioner that they would vacate the premises in the event of the premises finding a buyer for the premises and desiring to sell the same. In October 1976 it is stated the owners entered into an agreement to sell the premises to the Government of Egypt and so called upon the respondent to vacate the same. But the respondents had a great influence in political circles and refused to vacate the premises till March 1977. At that time they agreed to vacate the premises provided the full rent paid by them for the period from August 15, 1975 to December 31, 1976 was refunded to them. It is stated that since the petitioners had agreed to sell the property to the Egyptian Government they had no alternative but to agree to this demand. Accordingly, it is stated, that the petitioner's paid a sum of Rs. 53,625 (Rs. 45,375 being rent at Rs. 2750 per month and Rs. 8250 being the sum received by P. P. Singh) to the 5th respondent in cash on March 23, 1977 in the presence of witnesses. It is the allegation of the petitioner that the 5th respondent did not pass on this amount to the company but mis-appropriated it. The petitioner has filed suit No. 554 of 1977 in this Court for declaration that the sum of Rs. 53,625 has been given to the first respondent company through the 5th respondent and this suit is pending adjudication.