L RM K NARAYANAN Vs. PUDHUTHOTAM ESTATES LIMITED

JUDGEMENT

(1.) COMPANY Application No. 266 of 1991 was filed by one L. RM. K. Narayanan to substitute him as the petitioner in COMPANY Petition No. 21 of 1990 in the place of respondents Nos. 8 to 15 (company petitioners.) COMPANY Application No. 392 of 1991 was filed by respondents Nos. 8 to 15 in COMPANY Application No. 266 of 1991 to grant leave to them to withdraw the main company petition from the file of this court for the reasons stated in the affidavit filed in support of the said company application. COMPANY Petition No. 21 of 1990 was filed by respondents Nos. 8 to 15 in COMPANY Application No. 266 of 1991 against Puthuthottam Estates (1943) Ltd., under sections 397, 398, 402 and 403 of the Companies Act to regulate the conduct of the affairs of the company and for various other reliefs. The petitioner in COMPANY Application No. 266 of 1991 is the son of the first petitioner in COMPANY Petition No. 21 of 1990 and other petitioners are his mother, brothers and sisters and brother-in-law. The petitioners have filed the company petition against the company and its board of directors seeking for relief to regulate the conduct of the company's affairs and for appointment of an administrator to take charge of the company. Very serious allegations of malpractice have been alleged against the company and its directors. It is relevant at this stage to notice certain averments made by the petitioners in the main company petition. Relevant passages are reproduced hereunder "The petitioners together hold substantial interest in the first respondent company and they hold together 18. 37 per cent. of the paidup capital of the first respondent company. The break-up figures of shares held by the petitioners respectively are as follows : Names Shares1. L. Ramakrishnan 2, 730 2. L. RMK. Valliammai Achi 3, 890 3. L. RMK. Valliappan 930 4. RM. Kannammai 2, 878 5. L. Meyammai 2, 976 6. SP. Nachammai 3, 182 7. V. Vasantha 2, 630 8. ST. Annamalai 70 19, 286

(2.) AS such, the petitioners are qualified to file this petition under section 399(1) of the Companies Act. The petitioners state that the affairs of the company are conducted in a manner detrimental to the interest of the company and oppressive to the minority shareholders and the respondents who are in management of the first respondent-company are in the management only to carry out their illegal and unlawful acts to appropriate assets of the company for their personal purposes. Respondents Nos. 2 to 6 have been acting in a manner oppressive to the minority shareholders and prejudicial to the interest of the company and its shareholders. Respondents Nos. 2 to 6 who are in management and in control of the company affairs did not disclose the real facts to the members of the company and their acts amount to mismanagement, misappropriation, misconduct and oppression on the minority shareholders and it affects the interest of the company as a whole.

(3.) THIS company petition, though signed by the petitioners, was presented on February 26, 1990, in this court. Mr. L. RM. K. Narayanan has also filed a separate affidavit supporting the cause of the petitioners in the main company petition. He is holding 5, 140 equity shares of Rs. 10 each in the capital of the company and his shareholding in the company is nearly 4. 88 per cent. Paragraph 3 of his affidavit is worth noticing : He says :" * I am entitled as a member to support the case of the petitioners and I am also joining with them in seeking the relief prayed for in the company petition. "In fact, Mr. Narayanan gave more details in regard to the mismanagement of the company by the directors. He has furnished details about various criminal proceedings wherein the company and its officers have pleaded guilty and paid fine in the cases. It is stated that the directors have pleaded guilty and paid fines for violations apparently with a view to prevent an enquiry into the extent of the offences committed by them. The facts and particulars given by Mr. Narayanan, if enquired into, may bring out startling and astonishing facts in regard to the management of the affairs of the company by its directors.However, this court is not at this stage concerned about the merits of the company petition. THIS court now is on a very short point as to whether the company petition filed by respondents Nos. 8 to 15 in Company Application No. 266 of 1991 can be allowed to be withdrawn from the file of this court to the detriment of Mr. L. RM. K. Narayanan, who supported the cause of the company petitioners earlier at the time of filing the main petition and whether the substitution petition filed by L. RM. K. Narayanan is to be ordered as prayed for.