UUNET INDIA LIMITED Vs. I C RAO

JUDGEMENT

(1.) This company petition is filed under section 237(a)(ii) of the Companies Act, 1956, invoking this court's jurisdiction to declare that the affairs of the first petitioner-company, namely, Uunet India Ltd., are fit to be investigated by an inspector appointed by the Central Government. In support of the said relief, several allegations are made that the respondents, particularly, respondents Nos. 1 and 2 have committed acts contrary to the company law as also the memorandum and articles of association of the first petitioner-company.

(2.) The first petitioner-company is hereinafter referred to as "the company". The company was firstly incorporated as a private limited company on 25/05/1990, and later on a resolution was passed on 3/05/1993, to convert the same into a public limited company and it was incorporated as a public limited company with effect from 25/11/1993. The authorised capital which was hitherto Rs. 10 lakhs was raised to Rs. 1 crore. Petitioner No. 2 and respondent No. 1, who were hitherto managing director and joint managing director respectively, were both appointed as managing directors in the annual general meeting held on 6/02/1993, for a period of five years. Even before that, Mr. N. Ch. Subba Raju, who was the director, had resigned and in his place, Dr. B. Achanti was appointed as NRI director on 22/11/1992. The same was approved by the annual general body meeting held on 6/07/1993.

(3.) Respondents Nos. 2 and 3 are the father and the maternal grandfather, respectively, of the first respondent. Respondent No. 2 was projected as the alternate director to Dr. Mrs. Vijayalakshmi Achanti who is the wife of Dr. B. Achanti, NRI director on the board of directors of the company. The second respondent had participated in the board meetings and also had performed some functions. The petitioners dispute the position of the second respondent as alternate directors to Dr. Vijayalakshmi Achanti and questioned his consequential acts of participation in the affairs of the company as illegal and unauthorised. The meeting of the board of directors said to have been held on 20/09/1993, October 4, 199 3/03/199 4/04/1994, and Ap 24/04/1994, are disputed by petitioners Nos. 2 to 6. With regard to the meeting held on 4/07/1993, the petitioners admit the same only to the extent of passing of resolution to raise funds for purchase of the cars of Maruti Van and Ambassador. The petitioners claim that they had convened a board meeting on 6/04/1994, preceded by notice dated 25/03/1994, and that the said meeting was held at Hotel Krishna Oberoi to transact the business of the company. It is stated that in the said meeting dated 6/04/1994, resolutions were passed (a) appointing petitioners Nos. 4 to 6 as directors of the company; (b) to change the registered office of the company from the residential premises of the first respondent to the business office in Software Technology Park, HUDA Complex, Maithrivanam, Ameerpet, Hyderabad; (c) for allotment of 24,500 equity shares to the applicants whose share applications were pending with the company; (d) to change the authorised signatory to operate the bank account in the name of the second petitioner jointly with the sixth petitioner instead of the previous signatories, i.e., the second petitioner and the first respondent. This meeting and the validity of the same is disputed by the respondents. In fact, impugning the same a suit was filed in O.S. No. 458 of 1994, on the file of the court of the Additional Judge, City Civil Court, Hyderabad, on 21/04/1994, seeking a declaration that defendants Nos. 3 and 4 (petitioners Nos. 4 and 5) are not the directors of the company and D-5 (petitioner No. 6) is not the additional/alternate director of the company and to cancel or forfeit the shares allotted to the petitioners and to declare that the board meeting was not held on 6/04/1994, and not to take cognizance of any resolution passed in the said alleged meeting dated 6/04/1994. Two interlocutory applications Nos. 593 and 594 were filed seeking restraint orders against petitioners Nos. 2 to 6. In I.A. No. 593 of 1994, the court of the Ist Additional Judge, City Civil Court, Hyderabad, granted injunction on 22/04/1994, restraining petitioners Nos. 2 to 6 from holding any board meetings, passing any resolutions, casting any votes, issuing any share capital or increasing the authorised share capital, operating the bank account of the petitioner-company or interfering in the day-to-day affairs of the company and from entering into the company from time to time including the general body meeting. In I.A. No. 594 of 1994, the said court issued injunction orders restraining petitioners Nos. 2 to 6 from paying any amounts in respect of cheques, instruments, whatsoever of any nature presented by or through or signed by any one of the above petitioners whether jointly or severally in respect of account No. 387. The said order was also passed on 22/04/1994. Against the order passed in I.A. No. 593 of 1994, petitioners Nos. 2 to 6 had preferred CMA No. 580 of 1994, before this court and this court by order dated 28/04/1994, allowed the same by converting it to a revision under article 227 of the Constitution of India when an objection was raised by the respondents that on the ground of pecuniary jurisdiction the said appeal was not maintainable in this court and is only maintainable in the court of the Chief Judge, City Civil Court, Hyderabad. Against the said order in the CMA, the respondents have preferred LPA No. 96 of 1994, and a Division Bench of this court by order dated 3/05/1994, allowed the same setting aside the order passed by the learned single judge with directions to file a CMA before the lower appellate court. Pursuant to the same, CMA No. 92 of 1994 was filed before the Vacation Judge, City Civil Court and I.A. No. 86 of 1994, was filed to suspend the interim injunction orders issued by the trial court. Against the orders in I.A. No. 594 of 1994, petitioners Nos. 2 to 6 had filed CMA No. 93 of 1994, before the said vacation judge. I.A. No. 86 of 1994 in CMA No. 92 of 1994, to suspend the interim orders passed by the trial court was dismissed by the Vacation Judge of the City Civil Court by order dated 25/05/1994. Assailing the same, CRP No. 2034 of 1994 was filed by petitioners Nos. 2 to 6 before this court and this court allowed the same by order dated 2/09/1994. Now, Mr. A. Krishnamurthy, learned counsel for respondents Nos. 1 and 2 submitted a photostat copy of letter dated 12/12/1994, addressed by Mr. P. S. Narasimha, Advocate, Supreme Court, to him stating that the Supreme Court in SLP No. 19935 of 1994, has set aside the said order dated 2/09/1994, passed in the above CRP.