RAMESH NARANG Vs. RAMA NARANG

JUDGEMENT

(1.) THIS appeal is preferred by original defendant No. 1 to challenge the legality of order dated August 17, 1992 passed by learned Single Judge on Notice of Motion No. 1593 of 1992. By the impugned order, the learned Single Judge has restrained the appellant and respondent No. 5 from in any manner acting upon decisions purported to have been taken at the board meeting of respondent No. 2 company alleged to have been held on July 13, 1992. The trial Judge also granted injunction restraining the appellant and respondent No. 5 from in any manner obstructing or interfering with functioning of respondent No. 1 as Chairman and Managing Director of respondent No. 2 company. The complaint in this appeal is in respect of grant of injunction restraining the appellant and respondent No. 5 from obstructing respondent No. 1 to function as Chairman and Managing Director of the company.

(2.) THE facts which gave rise to the litigation, shorn of details, are not in dispute and are required to be briefly stated to appreciate the grievance of the appellant. Respondent No. 1 Rama Narang is a member of the Narang family which is in possession of several properties including holdings in several companies. The appellant and respondent No. 5 are sons of respondent No. 1 born from the first wife. Respondent No. 1 divorced his first wife and had contracted second marriage and that seems to have led to the disputes between the father and the two sons. Respondent No. 2 is a company which is a deemed public limited company under section 43-A of the Companies Act and is engaged in the business of hoteliing and flight catering and owns several hotels at Bombay, Madras and Aurangabad. The shares of the company stand in the name of diverse family members of Narang family and a substantial number of shares are held by respondent No. 1. Respondent No. 1 was a Director of the company, so appointed at general meeting held on September 21, 1988. The company, prior to August 1, 1990, had only the business of running the flight kitchen at Delhi and is claimed to be a loss making unit. On June 7, 1990, this Court, in Company Petition No. 593 of 1989, amalgamated Naranga Hotels and Resorts Limited, another concern held by the family, into respondent No. 2 company and all the assets of the transferrer company were taken over by respondent No. 2 company. The scheme of amalgamation was sanctioned by this Court on August 7, 1990 and the appointed day was July 1, 1987. After amalgamation, respondent No. 1 was reappointed as Director of the company. On June 25, 1990, respondent No. 1 was appointed as Managing Director of the company. On the same date, the appellant was appointed as Joint Managing Director of the company while the second wife of respondent No. 1, i. e. , Mrs. Mona Rama Narang, was appointed as a whole time Additional Director. On June 29, 1990, at the extra ordinary general meeting of the company, the Articles of Association were amended and respondent No. 1 was appointed as Chairman and Director for life of the company.

(3.) ON November 14, 1990, the appellant instituted Company Petition No. 681 of 1990 before the Company Judge in this Court in accordance with provisions of sections 397 and 398 of the Companies Act, 1956. The appellant questioned the validity of the board meeting held on June 25, 1990 and in which the respondent No. 1 was appointed as Managing Director of the Company. The challenge was on the basis that respondent No. 1 was convicted of an offence involving moral turpitude and, therefore, could not hold the office of the Managing Director in accordance with provisions of section 267 of the Companies Act. The relevant provision reads as under :