MICROMERITICS ENGINEERS PVT LTD Vs. S MUNUSAMY

JUDGEMENT

(1.) THE appeals are filed against the order of the Company Law Board, Principal Bench, sitting at Chennai dated 21.5.2000 made in C.P.Nos.68 and 69 of 1998. THE respondents in C.P.No.69 of 1998 are the appellants in C.M.A. No.923 of 2000 and the respondents in C.P.No.68 of 1998 are the appellants in C.M.A.No.924 of 2000. THE petitioner in C.P.No.69 of 1998 is the respondent in C.M.A.No.923 of 2000 and the petitioner in C.P.No.68 of 1998 is the respondent in C.M.A.No.924 of 2000.

(2.) THE appeals deal with two companies, viz., M/s.Micromeritics Engineers Pvt. Ltd. and M/s.Microparticle Engineers Pvt. Ltd. As far as Microparticle Engineers Pvt. Ltd. is concerned, it was incorporated on 13.1.1992 under the Companies Act, 1956 (hereinafter referred to as "the Act"). THE respondent in C.M.A.No.924 of 2000, by name, Senthamarai Munusamy along with S.Sounder, the second appellant and one Nalini Chandrasekar were holding shares in the said company and all of them were holding 990 shares each. Later on, Nalini Chandrasekar transferred her shares equally to the second appellant Sounder and the respondent Senthamarai Munusamy with the result the second appellant Sounder was holding 1485 shares out of 2970 shares initially allotted by M/s.Microparticle Engineers Pvt.Ltd.

(3.) BY consent of both the parties, the C.M.As. were heard together. Mr.T.V.Ramanujam, learned senior counsel appearing for the appellants in both the appeals submitted that there is no material to show that the affairs of the company were conducted in the manner prejudicial to the interest of the public or in any manner oppressive to the interest of any member of the company. According to him, section 397 of the Companies Act is not attracted as nothing has been done in the manner prejudicial to the public interest or in the manner oppressive to the interest of any member of the company. He has also submitted that section 398 is also not attracted by reason of the alleged change in the constitution of the Board and there is nothing to show that the affairs of the company were conducted in the manner prejudicial to the interest of the members or public. Learned senior counsel submitted that the allotment of shares is valid. He submitted that the resolutions dated 24.2.1997 and 20.3.1997 were not challenged though copies of the resolutions were produced before the Company Law Board and a reference has been made in the written arguments. Learned senior counsel submitted that the provisions of section 195 of the Companies Act are attracted and a presumption has to be drawn in favour of the validity of the resolutions. He therefore submitted that there was absolutely no material to show the burden was discharged, and hence the presumption would operate. He also submitted that the non-production of the original minutes is immaterial as there was no notice issued for the production of the original minutes book. His main submission was that the respondent has not challenged the resolutions dated 24.2.1997 and 20.3.1997. Learned senior counsel submitted that the delay in filing the resolutions with the Registrar of Companies has no effect at all and the copies of the resolutions have been filed in May, 1998 and the company petition has been filed in November, 1998 after having made inspection of the records available with the Registrar of Companies, but the respondents have not challenged the resolutions dated 24.2.1997 and 20.3.1997. Learned senior counsel submitted that the resolution dated 14.4.1997 was passed bona fide and the presumption under section 195 would operate. As regards the payment of share moneys, even assuming that there are certain discrepancies that would not make the resolutions invalid. According to the learned senior counsel, the mere alleged discrepancies in the resolution would not make the resolutions invalid attracting the provisions of sections 394 and 395 of the Companies Act. His submission is that the allotment of shares in favour of respondents 3 to 5 was bona fide and within the jurisdiction of the Directors and it cannot be regarded as an act of oppression. As regards the balance sheet, learned senior counsel submitted that non-signing by one of the Directors is not a matter of oppression, but however, it is an isolated act and not an act of oppression.