ROLTA INDIA LIMITED Vs. VENIRE INDUSTRIES LIMITED

JUDGEMENT

(1.) THE appellants are plaintiffs in the suit. They are aggrieved by the impugned Order dated 17th August, 1999 passed by the learned Single Judge declining to grant to them ad-interim order of injunction restraining the defendants from taking steps pursuant to or in implementation of the resolutions in respect of the allotment of rights shares and/or from appointing any Additional Directors on the Board of Directors of the First defendant - Company.

(2.) ON the request of learned Counsel for the parties, considering the facts and circumstances of the case, we have taken up for decision the application filed in the suit for grant of interim injunction, (Notice of Motion No. 2696 of 1999) instead of only considering the question of grant of ad-interim injunction. In order to appreciate the rival contentions, facts, in brief, may be noticed as follows :---

(3.) PLAINTIFF No. 2 (Kamal K. Singh) is the Chairman of plaintiff No. 1-Company (for short RIL), defendant No. 2 (Chetan K. Singh) is the Chairman and Managing Director of defendant No. 1-Company, which has three Directors on its Board of Directors. Defendant No. 3 is sought to be appointed as an Additional Director. Chetan is younger brother of Kamal. Defendant No. 1-Company, which was originally known as "rolta Motors Ltd. " (for short RML) was incorporated on 19th May, 1983. Kamal was the Chairman and Chetan was the Director of the said Company. A Memorandum of Understanding (Mou) dated 19th April, 1991 was executed between the two brothers, under which the elder brother Kamal, his wife and family trust, which held 10551 shares equivalent to 30% of the issued capital of RML, agreed to transfer, without any monetary consideration, the said shares in favour of Chetan. RIL owned 40% of the issued capital of RML. The Mou, inter alia, provides that, till RIL holds share capital in RML of the face value of Rs. 10 lacs, it will continue to have a representative on Board of Directors of RML and that the number of Directors on the Board of Directors of RML shall not exceed three, out of which two shall be the nominees of younger brother and one shall always be the nominee of RML. The younger brother shall also procure release of the Guarantees given by the RIL and give a Counter Guarantee/indemnity to the plaintiffs against any claim by the bank. It also provides that till RIL holds shares of face value of Rs. 10 lacs, the younger brother and his family members would not dispose of the shareholding to any outsider. Further, the younger brother shall also change the name of the company from RML and use any other name without word Rolta and shall also take steps for shifting the Registered Officer of RML from the address of RIL at Mumbai. The requisite Resolutions were passed and other documents, including Counter-guarantee/indemnity Bond and Undertaking were executed in implementation of the Mou, by defendant No. 1 and 2. Resultantly, the 30. 50% shares of Kamal were transferred in favour of Chetan.