ANDREW YULE AND CO LTD Vs. DESCON LTD

JUDGEMENT

(1.) The present interlocutory motion, being G. A. No. 1745 of 2006 is taken out by the petitioner primarily to prevent the respondent, DESCON LIMITED, from issuing equity shares on preferential basis, upto a limit of 49% of the increased subscribed equity share capital. When this interlocutory motion was taken out, the respondent, whom I shall refer to as DESCON in the later part of this judgment, was contemplating issuing such equity shares on preferential basis in favour of certain venture capitalists, at a premium of not less than Rs. 600/- for every equity share of Rs. 10/- each. An extraordinary general meeting was convened on 9th June, 2006 for taking a resolution for this purpose, and the main prayer in the interlocutory motion was to restrain holding of such meeting.

(2.) The meeting was, however, held and the shareholders of DESCON appears to have passed a resolution to that effect on 9th June, 2006. This Court, however, by an order passed on 14th June, 2006 directed the respondent not to give effect to that resolution until disposal of the instant interlocutory motion. DESCON has also taken out an interlocutory motion, being G. A. No. 2062 of 2006 for vacation of this interim order. Both these motions were taken up for hearing simultaneously, but arguments were advanced mainly based on pleadings filed in connection with G.A. No. 1745 of 2006. Thus any reference to pleading in this judgment would relate to the pleadings in G.A. No. 1745 of 2006 only.

(3.) The main controversy involved in the present proceeding arises out of the petitioner's claim that the respondent ought to remain within the fold of "YULE" group, from which the respondent would be dissociated if there is such allotment of equity shares on preferential basis in favour of the venture capitalists. For the purpose of understanding the real scope of the controversy amongst the parties, narration of certain facts are necessary.