GULABRAI KALIDAS NAIK Vs. LAXMIDAS LALLUBHAI PATEL

JUDGEMENT

(1.) Petitioners four in number through their constituted attorney have filed this composite petition for reliefs under sec. 155 and secs. 397 and 398 of the Companies Act. 1955. Petitioner No. 2 is the wife of petitioner No. 1 an petitioner No. 4 is the wife of petitioner No. 3. Petitioners Nos. 1 and 2 jointly hold 75 shares in Vihar Cine Private Limited (hereinafter referred to as the Company). Petitioner Nos. 3 and 4 jointly hold 100 shares in the same company. One Mr. Niranjan Nageshwar Vyas and his Wife Mrs. Kusumben N. Vyas jointly hold 50 shares in the same company. One Mr. Ashokbhai Ramanlal Patel holds 99 shares of the said company.

(2.) The company was incorporated as private company on 29th March 1967 The company was formed for the principal object of constructing a cinema theatre and to carry on business of cinematograph film producers exhibitors distributors etc. The initial authorised capital of the company was Rs. 5 lacs divided into 500 equity shares of Rs. 1000 each. But subsequently by a resolution dated 23rd June 1976 the authorised capital of the company was increased from Rs. 5 lacs to Rs. 10 lacs divided into 1000 equity shares of Rs. 1000 each. The issued subscribed and paid up capital was Rs. 9 88 0 consisting of 988 shares of Rs. 1000 Cash fully paid up. The company erected a cinema theatre named as Vihar Cinema on Pratapnagar Road Baroda. After it obtained a licence to exhibit films in the theatre the company gave the theatre on lease to Messrs. Vihar Film Exhibitors a partnership firm of which all the equity share holders of the company were partners on a monthly rent of Rs. 20.000 and the lessee was to bear the expenses of staff salary electricity charges machinery maintenance etc. Messrs. Vihar Film Exhibitors in turn gave on lease the theatre to Messrs. Vihar Exhibitors a firm on a weekly rent of Rs. 8500 The running expenses were to be borne by Messes Vihar Film Exhibitors. After to period of lease expired the company gave the theatre on lease to Messrs. Bachubhai Dave and Sons on a monthly rent Or Rs. 15 0 on August 1 1972 with certain other conditions which are not relevant for our purpose. Unfortunately Mr. Bachubhai Dave the principal partner of Messrs. Bachubhai Dave and Sons expired and by a mutual understanding the lease in favour of Messrs. Bachubhai Dave and Sons was brought to an end in August 1973. The petitioners allege that after Messrs. Bachubhai Dave and Sons surrendered the lease the company gave on lease the theatre to Messrs. Manubhai and Brothers as per lease deed dated 6th August 1973 On a monthly rent of Rs. 12 0 for a period of three years with a specific condition that all expenses incidental to the running of the cinema theatre were to be borne by the lessee Messrs. Manubhai and Brothers. Pursuant to this arrangement it is alleged that Messrs. Manubhai and Brothers made an advance payment of Rs. 3 lacs the amount to be adjusted to wards the rent becoming due and payable. There are other allegations in respect of this lease but they are not material.

(3.) At all material times respondent No. 4 Ravjibhai Varadhbhai Patel was the Managing Director and respontents Nos. 1 3 5 and 6 were the Directors. Petitioner No. 1 and one Mr. N. N. Vyas also became Directors of the company from 1971. It is alleged that respondents Nos. 4 and 5 were in active management of the affairs of the company. It appears that the business of the company was running in a loss. The company had borrowed loans from the Gujarat Industries Investment Corporation as well as deposits from the friends and relations of the Directors and from public. There were miscellaneous loans and advances to the tune of Rs. 8 lacs. The company was thus faced with heavy weather on financial front. It is alleged that as the company needed substantial finances to come out of the financial crisis the company approached Messrs. Manubhai and Brothers the lessee of the theatre at the relevant time and who were also incidentally carrying on business of shroffs and money lenders for financial assistance. Messrs Manubhai and Brothers showed their willingness to provide finance if the control of the company should substantially remain in the hands of respondent No. 4 in whom Messrs Manubhai and Brothers had immense confidence. Pursuant to this arrangement it was alleged that it was agreed between the constituted attorney of the petitioner and respondents Nos. 4 5 and 6 that petitioners Nos. 1 and 3 respondents Nos. 5 and 6 Mr. N. N. Vyas and Mr. A. R. Patel should execute bank transfer forms in respect of their respective shares and they should hand them over to respondent No. 4 and if necessary the shares respectively held by the aforementioned persons should be nominally entered in the name of respondent No. 4 to assure Messrs Manubhai and Brothers that respondent No.4 holds the controlling block of shares in the company. And that pursuant to this arrangement the constituted attorney of the petitioners Nos. 1 and 3 and respondents Nos. 5 and 6 and Mr. N. N. Vyas and Mr. A. R. Patel executed blank transfer forms in respect of the shares respectively held by them and handed them over to respondent No. 4. The petitioners allege that on the strength of the blank transfer forms handed over to respondent No. 4 424 shares standing in the name of the petitioners respondent No. 6 and his wife Mrs. Shardaben P. Panchal Mr. A. R. Patel Mr. N. N. Vyas and his wife Mrs. Kusumben N. Vyas have been entered in the name of respondent No. 4.