MICROMERITICS ENGINEERS PVT. LTD. Vs. S. MUNUSAMY

JUDGEMENT

(1.) THE appellants, being aggrieved by the order dated May 21, 2000, passed by the Company Law Board, Principal Bench at Chennai in C. P. Nos. 68 and 69 of 1998 which was confirmed by the learned judge in C.M.A. Nos. 923 and 924 of 2000, on the file of this court, in the judgment dated May 21, 2002 (since reported in Micrometrics Engineers Pvt. Ltd. v. S. Munusamy [2003] 116 Comp Cas 465), filed the above Letters Patent Appeals.

(2.) THE issue relates to the two companies which are the first appellant in the respective appeals, Micromeritics Engineers Private Ltd., the first appellant in L. P. A. No. 109 of 2002, was incorporated on September 8, 1986, and the second appellant, the respondent in L. P. A. No. 108 of 2002 and one Chandrasekaran were holding ten shares each in the said first appellant -company. Subsequently, on August 7, 1990, the said first appellant -company allotted 1,470 shares to all the above -said three shareholders equally thereby each of them were holding 500 shares. The said Chandrasekaran sold his 500 shares to the other two shareholders equally and he resigned from the post of director of the said first appellant -company. According to the appellants, in the board meeting held on February 24, 1997, the said first appellant -company was authorised to issue 7,500 shares and on April 14, 1997, the said 7,500 shares were allotted to appellants Nos. 3 to 5 who are none other than the wife, brother and father -in -law of the second appellant, and subsequently they were made directors.

(3.) STATING that the action of the second appellant allotting shares to their own persons and making them directors is an act of oppression and mismanagement, C. P. Nos. 68 and 69 of 1998 were filed by the respondents herein under sections 397, 398 and 402 of the Companies Act, 1956, hereinafter called 'the Act', seeking to supersede the board of directors of the company, to appoint an administrator to take charge of the affairs of the company, to set aside the allotment of shares to appellants Nos. 3 to 5 in each company and for a declaration that appellants Nos. 3 to 5 herein have not been validly elected as directors of the company, etc.