SCIENTIFIC INSTRUMENT CO LTD Vs. RAJENDRA PRASAD GUPTA

JUDGEMENT

(1.) By means of the above-noted appeal filed under Section 10F of the Companies Act, 1956, the Scientific Instruments Company ("the appellant", in short) has, inter alia, prayed for setting aside the impugned order dated March 5, 1998, passed by the Company Law Board, Principal Bench, New Delhi ("the Board", in short), on the ground that the petition under Section 397/398 of the Companies Act, 1956 ("the Act", in short), was not maintainable.

(2.) The relevant facts in brief, as stated by the appellant, are that the appellant which is a public limited company, appointed A. M. I. Computers (I) Limited as its registrar to the public issue and a memorandum of understanding (MOU) was executed on September 12, 1996, in respect thereof. Though the board of directors resolved on February 24, 1997, to appoint the firm, A. M. I. Computers (I) Limited ("AMI" in short), as its share transfer agent, however, the said resolution was not given effect to and no formal agreement or MOU was executed in respect of the said resolution. After the assignment of AMI was completed the appellant asked the said firm to return all the unused stationery and other records of the company which were in their possession as registrar of public issue but the same were not returned. Consequently, a complaint had to be lodged with the Securities and Exchange Board of India (SEBI) against AMI and a civil suit was also filed before the civil court at Mumbai, seeking appropriate orders for obtaining back the documents and records from the said firm. At this stage, the respondent, Rajendra Prasad Gupta ("the respondent", in short), alleging consent of 113 persons filed a petition under Section 397/398 of the Act before the Board alleging certain acts of oppression and mismanagement against the appellant and its directors. The said company petition was registered as C. P. No. 92 of 1997. The appellant which was arrayed as respondent in the said petition filed preliminary objections before the Board, inter alia, raising the objection that the persons filing the petition are not the members of the company and the requirement of Section 399 of the Act has not been fulfilled, hence the petition deserves to be dismissed solely on the said ground. As the Board directed the appellant to produce the original record such as register of members, minutes book, etc., to substantiate its objection the required original records were also produced before the Board by the appellant. The present respondent, Rajendra Prasad Gupta, who had filed the petition, did not file any reply to the preliminary objection. However, the same was filed by one Manoj Kumar Agarwal, on behalf of one Sikkim Investment Limited contesting the allegations made by the appellant in its preliminary objection. By the impugned order dated March 3, 1998, the Board held that the petition was not hit by Section 399 and the same was maintainable. Consequently, a direction was issued to the present appellant to file its reply to the petition by April 1, 1998, and rejoinder to the same, if any, to be filed by May 1, 1998. Aggrieved against the said order the appellant has preferred the above-noted appeal before this court under Section 10F of the Act, as already noted above.

(3.) I have heard Shri R. P. Agarwal, learned counsel for the appellant and Shri R. K. Agarwal, counsel for the respondent. I have also perused the affidavits filed by the appellant and the respondent in this case before this court. I have also carefully perused the impugned order passed by the Board.