AMALGAMATIONS LTD Vs. SHANKAR SUNDARAM

JUDGEMENT

(1.) THIS appeal is preferred against that part of the order of the Company Law Board rejecting certain preliminary objections raised by the appellant and also against the order where the Company Law Board has not dealt with certain preliminary objections raised by the appellant and also against certain directions given by the Company Law Board in its order.

(2.) THE respondent herein has preferred a company petition, C.P.No.94 of 1999 before the Company Law Board under sections 397 and 398 of the Companies Act against the appellant herein and also against other 22 persons. THE appellant herein has raised certain preliminary objections to the effect that in a company petition under sections 397 and 398 of the Companies Act against the holding company, no relief can be granted in respect of the management of subsidiary companies. THE Company Law Board, by the impugned order has upheld certain preliminary objections raised by the appellant and directed deletion of the names of subsidiaries and directors from the array of party/respondents in the company petition. As against that part of the order of the Company Law Board, the respondent herein has preferred an appeal in C.M.A.No.2018 of 2000 on the file of this Court and by judgment of even date in C.M.A.No.2018 of 2000, I did not agree with the reasonings of the Company Law Board and allowed the appeal preferred by the respondent herein, who is the appellant in that appeal.

(3.) THE submission of Mr.Anil B.Divan, learned senior counsel for the appellant is that the Company Law Board has not considered the preliminary objections raised by the appellant viz., the company petition has been filed only because the respondent herein demanded a position of profit in one of the profit-making subsidiaries, but the same was not granted by the respondents 2 and 3 in the company petition. THE submission of Mr.Anil B.Divan, learned senior counsel is that the respondent herein was attending numerous General Body Meetings of the appellant company and voted for the election of respondents 2 and 3 in the company petition and even more, has seconded the resolution. Learned senior counsel submitted that the position continued even upto the General Meeting held on 30.9.1999, less than one year before the date of filing of the company petition. He referred to the proposals of various Annual General Meetings of the appellant company wherein accounts, directors' report and auditors' reports were adopted and submitted that the meetings were attended by the respondent herein and he either proposed or seconded the resolutions. Learned senior counsel also referred to the proposal for declaration of dividend and submitted that the respondent has approved and seconded the proposal for declaration of dividends. Learned senior counsel also referred to the resolution regarding reappointment of auditors and submitted that the respondent has approved, seconded and voted in favour of the resolution. He also submitted that the respondent has also received without any protest the dividend declared and paid to the shareholders by the appellant company. He therefore submitted that the relief claimed by the respondent herein in the company petition is totally inconsistent with and directly contrary to the resolutions in which he was a party. Learned senior counsel also referred to the letters of the respondent herein dated 25.9.1997, 14.10.1997, 24.9.1998 and 20.8.1999 addressed to the respondents 2 and 3 in the company petition calling upon them to give him an acceptable position in the Amalgamations Limited and giving an unequivocal assurance that if any position is given, he would have no grievance at all. Learned senior counsel submitted that there is no complaint or grievance regarding the working and management of the appellant company or any of its subsidiaries, nor is there any claim apart from that of the respondent herein for a suitable position in the group companies. Learned senior counsel referred to the letter dated 20.8.1999 wherein the respondent has raised for the first time certain grievances regarding the management of Additions Paints & Chemicals Ltd. and submitted that the letters clearly establish the existence of facts relating to the basis of the plea of waiver, acquiescence or estoppel. He there submitted that the basic facts on which the appellant has put forward preliminary objections clearly and unequivocally prove that there is waiver, acquiescence or estoppel on the part of the respondent herein and it is not necessary for the appellant to adduce any evidence, if any, to prove any fact for the purpose of enabling it to raise and sustain the preliminary objections. Learned senior counsel therefore submitted that the non-consideration of the objections by the Company Law Board would directly be contrary to the judgment of this Court in Saroj Goenka and ors v. Nariman Point Building Services and Trading (p) Ltd,. 1995 (5) CLJ 282. He referred to the submission made by the learned senior counsel for the respondent and submitted that the submission makes it clear that the company petition has been filed only with an oblique and mala fide motive to pressurise the respondents 2 and 3 in the company petition to accept the demands of the respondent for a position for himself and also for his father. Learned senior counsel submitted that the company petition under sections 397 and 398 of the Companies Act can be filed only for the relief to shareholders in the capacity of shareholders, but the grievance of the respondent clearly shows that he is raising the grievance as a family member. He further submitted that under the Articles of Association and the Memorandum of Association of the company, no shareholder is entitled to any office or profit or position in the group companies, and the grievance of the respondent is not that of a shareholder, but merely on the basis of a member of the family. Learned senior counsel submitted that the fact that the respondent has participated in various resolutions because he thought that his demand made in his capacity as a member of the family and not as a shareholder would be granted, is in law no answer at all to the plea of waiver, acquiescence or estoppel. Learned senior counsel submitted that the facts are admitted and undisputed and the company petition has been filed only as an abuse of process of court and it has not been filed by the respondent herein to obtain any genuine relief as a shareholder of the appellant company.