DALJEET PURI Vs. ABHA PURI

JUDGEMENT

(1.) The present company appeal arises from the judgment and order dated 22.5.2009 of the Company Law Board, Principal Bench, New Delhi in Company Petition No. 33 of 2008 (Smt. Abha Puri and others v. Amethi Hume Pipes Pvt. Ltd. And others) which was filed under Sections 397/398 of the Companies Act, 1956 ("the Act") seeking cancellation of the allotment of 1340 additional shares to the Appellants (wife and son of Sri Ajeet Singh Puri who is not a party to the instant appeal) having the effect of converting the majority shareholding of the Respondents (Petitioners therein) into minority and for a declaration that the appointment of the Appellants (Respondents 3-4 therein) as directors null and void and restoration of their own directorship. The Company Law Board disposed of the petition accordingly and held that the appellants including Sri Ajeet Singh Puri acted in a highly oppressive manner towards the Respondents and declared the impugned appointment of the Appellants as directors null and void and removal of the instant Respondents 1 and 2 as directors null and void and further restored shareholding as it prevailed before 31.3.2007.

(2.) The Company Law Board hence ordered rectification of the register of members and refund of the consideration paid for the cancelled shares and protected Sri Ajeet Singh Puri (respondent No. 2 therein) from being excluded from the management of the company and discharge functions as he was doing before 31.3.2007. The Board also stipulated that bank accounts be operated jointly by either of the Respondents and the 2nd respondent therein (Sri Ajeet Singh Puri) so as to prevent allegations of siphoning of funds and provided for five days' notice alongwith the agenda to be circulated amongst the other two directors by the person whosoever convenes board meeting. The Company Law Board also observed that since post of Managing Director never existed in the company, Sri Ajeet Singh Puri shall cease to be the Managing Director.

(3.) To state the facts briefly. Amethi Hume Pipes Private Limited was incorporated in the year 1982. The Respondents 3-4 and Sri Ajeet Singh Puri are brothers being the sons of Sri Dayal Singh Puri. The company was promoted by their father. The signatories to the Memorandum was the father, Sri Ajeet Singh Puri and Respondent Nos. 1 and 2. Before the allotment of the shares impugned therein, the Respondents group held 2100 equity shares out of 3600 equity shares subscribed and paid-up. Sri Ajeet Singh Puri group held 1000 shares. The balance 500 shares continued to remain in the name of their late father. The Board of Directors of the company consisted of Respondent Nos. 1-2 and Sri Ajeet Singh Puri being whole-time directors of the company drawing remuneration. It was alleged before the Company Law Board that with a view to gain majority in the Board, Sri Ajeet Singh Puri had allegedly appointed the Appellants (his wife and son) as directors on March 31, 2007 and that 1340 shares were allotted to them to gain majority in the shareholding. Various other allegations were made against the conduct of Sri Ajeet Singh Puri allegedly detrimental to the affairs of the company.