PRAKASH TIMBERS PVT LTD Vs. SUSHMA SHINGLA

JUDGEMENT

(1.) The appellants who were respondents Nos. 1 and 3 to 6 before the Company Law Board have preferred this appeal under Section 10-F of the Companies Act against an order dated 15/09/1994, passed by the Company Law Board, Principal Bench, New Delhi, whereby it disposed of a petition preferred by Smt. Sushma Shingla and Smt. Sandhya Sharan, now respondents Nos. 1 and 2, under Sections 397 and 398 of the Companies Act. Their case was that Prakash Timbers Private Limited (now appellant No. 1) was incorporated as a Company in the year 1961 with an authorised capital of Rs. 5,00,000.00 divided into 500 shares of Rs. 1,000.00 each. The paid up capital of this Company was Rs. 3,71,000.00. The said petitioners held 154 shares in the said company having a face value of Rupees 1,54,000/-. The said company was formed by the joint family of Hirday Narain Goel, who was the grand-father of the petitioners. Various properties owned by the said joint family, including property No. 165, Civil Lines, Station Road, Bareilly, was transferred to the said Company. Sri Y. P. Goel, the son of Hirday Narain Goel, was the managing director of the aforesaid company. During the lifetime of Y.P. Goel, it was decided to bring into existence another wholly owned subsidiary company and consequently, Hirday Narain Yogendra Prakash Properties Private Limited was incorporated as a wholly-owned subsidiary of Prakash Timbers Private Limited. This company had a nominal capital of Rs. 2,00,000/- and a paid up capital of Rs. 30,000.00 consisting of 30 shares of Rs. 1,000.- each. Y. P. Goel is said to have died on 28/04/1986, leaving behind three daughters, i.e. the petitioners and respondent No. 5 before the Company Law Board. It was alleged that on 19/03/1990, the respondent No. 5 became ambitious and wanted to take away the rights of the petitioners since they were living out of Bareilly where the said company and its properties were situated. The respondent No. 5 wanted to deprive the petitioners of their rightful shares in the management of the company. She joined with S.P. Goel group and the two groups holding a majority of shares removed the petitioners from the Board of Directors. The petitioners approached them and, consequently, an agreement dated 15/09/1991, was executed between the parties. In spite of the said agreement, the respondents removed the petitioners from the directorship of the parent company and informed the Registrar accordingly.

(2.) In August, 1991, the petitioners had requested that a meeting of the Board of Directors be called to discuss the mismanagement in the company, but no such meeting was called. Regarding the subsidiary company, it was alleged that the three sisters who were daughters of Y.P. Goel were its directors during the lifetime of Y.P. Goel.

(3.) In the third week of March, 1992, the petitioners received a letter from the Assistant Registrar of Companies that it had come to their notice that the petitioners had sold their shares to one Sri Shonit Tendon, their nephew. This bogus information was given to the Registrar of Companies by Smt. Gita Tandon, respondent No. 5. In this way, the petitioners alleged that the affairs of the companies were being conducted in a manner oppressive to them. They, therefore, prayed: