SINDHRI IRON FOUNDRY P LTD Vs. STATE

JUDGEMENT

(1.) IN the matter of Sindhri Iron Foundry (P) Ltd, this is an application under sections 397 and 398 of The Companies Act, 1956. The Sindhri Iron Foundry (Private) Ltd. (hereinafter referred to as the Company) was incorporated under the Companies Act, 1956 as a Private Company on September 10, 1957. The authorised capital of the Company is re. 10,00,000|- divided into 10,000 equity shares of Rs. 101'- each. The paid up capital of the Company is Rs. 8,66,000/ -. The objects the company inter alia are to carry on the business of iron-founders, iron-masters, iron-mongers, iron-smiths, steel makers, steel converters and other similar objects.

(2.) PRIOR to January 24, 1962 Ramasankar Prosad and Radhakissen Prosad, respondents Nos. 2 and 3 and one Biswanath Prosad were the Directors of the Company '. and in control of the Company's affairs. Sometime in January 1962 the petitioners came into the Company as shareholders and later on became Directors. The petitioners and their group acquired 5010 equity shares and paid over Es. 5,00,000/ - for the shares. The respondents other than the Company, hereinafter referred to as the Prosad group held 3,606 shares as against the said 5010 shares held by the petitioners. The petitioners, therefore, controlled the majority of shares of the Company.

(3.) ON or about February 25, 1962 all the three petitioners were elected Directors of the Company along with respondents Nos, 2 and 3. The petitioners thus came to control not only the majority of shares of the Company but they were also in a majority in the Board of Directors. For about a year the Company carried on its business without any apparent sign of discord between the petitioners and the Prosad group. At a Board meeting held on January 24, 1962 resolutions were passed whereby Murlidhar Jhunjhun-wala, the petitioner No. 1 was authorised to operate on the Company's banking accounts either severally or jointly with either of the two Directors, Champalal Saraogi, the petitioner No. 2 or Mahendra Kumar Saraogi, the petitioner No, 3 along with either of the two Directors, Rama Sankar Prosad, the respondent No. 2 or Radha Kissen Prosad, the respondent No. 3, The power to operate on the Company's banking accounts put the petitioners in control of the Company's affairs. The Board meeting also accepted the resignation of Biswanath Prosad from Directorship of the Company. At another Board meeting held on March 31, 1962 it was resolved that a Head Office of the Company be started at 132/1, Mahatma Gandhi Road for the convenience of the business of the Company. Those premises are the residence of the petitioners. It is thus clear that the petitioners were put in complete control of the affairs of the Company and its management. The resolutions passed at the Board meeting held on February 22, 1963 appear to have precipitated matters. At this meeting, which according to the petitioners was attended by the respondent No. 2, several important resolutions were passed. A resolution was passed that all dealings with East India Metal Syndicate of No. 9, Waterloo Street, Calcutta be made by the petitioner No. 1 severally or by either of the two Directors namely, the petitioner No. 2 and petitioner No. 3 jointly along with either the respondent No. 2 or the respondent No. 3. The object of this resolution appears to have been to put a curb on the activities of the Prosad group. Another resolution was passed that no cash payment is to be made to Hindustan Steel Ltd. , Rourkela and Bhilai Steel plants and the Tata Iron and Steel Co. Ltd. for supply of goods to the Company and the said suppliers were to be advised accordingly. The suppliers were further to be advised that they would be paid by cheque only drawn by the Company on the Central Bank of India Ltd. , 33, Netaji Subhas Road, Calcutta-1; in the alternative the suppliers were to send the documents directly to the said Bank for collection. The third resolution of importance was that Champalal Saraogi the petitioner No. 2 was elected Chairman of the Board of Directors of the Company and was to preside over all Board meetings. This resolution is alleged to have been proposed by Rama Sankar Prosad the respondent No. 2. The next resolution of importance was that 10 fully paid up equity shares were allotted to each of five persons of the petitioners' group. But the most important resolution passed at this Board meeting, was to shift the registered office of the Company from. 521, Dr. Abani Dutta Road, Howrah, to 22, Jogendra Nath Mukherjee Road, Howrah, with effect from the date of the Board meeting, namely February 22, 1963. A consequential resolution was also passed for sending intimation about the change of the registered office to the Registrar of Companies and all customers and parties concerned.