V.D. SEBASTIAN Vs. CITY HOSPITAL

JUDGEMENT

(1.) This is a petition against oppression and mismanagement, under S.397 and 398 of the Companies Act, 1956. The four petitioners are members of the City Hospital Private Ltd., incorporated in 1971. The 1st respondent is the company, and respondents (2) to (7) are some of the directors, including the Chairman and the Managing Director. Authorised capita] was originally Rs. 5 lakhs. It was raised to Rs. 10 lakhs (1000 equity shares of Rs. 1000 each) in March 1976. A decision was taken in 1977 to issue some preference shares also. Paid up capital is now Rs. 10,28,000. The petitioners hold 166 fully paid up equity shares. The 8th respondent was impleaded subsequently, in Application No. 482/81. The Central Government has not made any representations in pursuance of notice under S.400.

(2.) The company was formed with the object of establishing hospitals and clinics. The City Hospital at Ernakulam belongs to it. Dr. V. K. Thomas, Dr. T. M. Paul, Dr. Roseline Sebastian and Managing Director Mr. Albert were associated with the company from the very beginning. Dr. Paul left for U.S.A. in 1980; and shorn of details, this petition is the result of a fight between two groups for control over the company. The petitioners belong to the Paul-Sebastian group. The 1st petitioner is the husband of Dr. Roseline Sebastian. The 2nd petitioner is a brother of Dr. Paul. The 3rd petitioner is his brother inlaw, and the fourth, his wife. The rival group, which now controls a majority in the director board, is led by Dr. V. K. Thomas, the Chairman and Sri. Albert.

(3.) The allegations in the petition are briefly the following