JAIDEEP HALWASIYA Vs. RASOI LTD.

JUDGEMENT

(1.) ALL the three appeals being directed against the judgment and order dated 4 -7 -2008 passed by a learned Single Judge of this Court, they were heard together and shall be governed by this common judgment.

(2.) THE appellant in APOT Nos. 266 and 267 of 2008 (hereafter the plaintiff) instituted C.S. No. 274 of 2006. The cause of action giving rise to the suit, in brief, is that the plaintiff is a shareholder of the company holding 1, 29, 677 shares representing more than 7 per cent of the total shareholding; that from the notice of the Annual General Meeting, he noticed that the company as a special business was proposing to pass a resolution under Section 81(1A) of the Companies Act, 1956 (hereafter the Act) for issue and allotment of 1, 32, 000 equity shares of Rs. 10 each on a preferential basis to the promoters, viz. Hindusthan Composites Limited (defendant No. 2) and M/s. J.L. Morrison (India) Limited (defendant No. 3) out of un -issued authorized share capital; that the explanatory statement attached to the notice of the Annual General Meeting under Section 173 of the Act revealed the object of issuing the said shares on preferential basis to the defendants 2 and 3 which, purportedly, was to augment the capital of the company and retire certain debts, to improve its Debt Equity Ratio; that from the explanatory statement it was also evident that the Debt Equity Ratio of the company was not favourable to obtain ditional financial assistance from banks as it had huge borrowings, 4 that the notice of the Annual General Meeting of the company and the explanatory statement under Section of the Act are tricky inasmuch as Sub -section (3) of Section 173 thereof had not been complied with; that on 18 -9 -2006, the plaintiff had a meeting, inter alia, with the Vice -chairperson of the company (defendant No. 5) where he had duly explained that the company was not in need of funds and in any event there is no justification for issue and allotment of shares on a preferential basis in favour of the defendants 2 and 3 for various reasons; the defendant No. 5 and her son apparently seemed to be convinced with his reasoning, whereupon a commitment was made to, the plaintiff by the defendant No. 5 on behalf of the Board of Directors of the company that the concerned resolution would not be pressed at the Annual General Meeting and necessary steps would be taken for withdrawal thereof; that an explanation had been given to the plaintiff in course of the said meeting that the purpose of issue and allotment of shares on preferential basis was that loans of Rs. 5, 68, 25, 000 and Rs. 75, 00, 000 had been taken by the company from the defendants 2 and 3 respectively and the said issue and allotment of shares on preferential basis in their favour was intended to repay the loans; that according to the plaintiff, the reason for issue and allotment of shares on a preferential basis in favour of the defendants 2 and 3, as mentioned in the Explanatory Statement, is intended to deceive and perpetrate fraud upon the plaintiff and other shareholders of the company except those who are defendants in the suit; that surprisingly on 25 -9 -2006, when the plaintiff attended the Annual General Meeting with an expectation that resolution No. 6 would not be pressed and considered in view of decision arrived at in the meeting as aforesaid between the plaintiff, defendant No. 5 and representatives of defendant No. 3, the resolution for issue and allotment of 1, 32, 000 shares of the company in favour of respondents 2 and 3 on a preferential basis was proposed at the said meeting which was opposed by him; that other shareholders present in the said meeting were neither given opportunity to debate nor were the representatives of shareholders present thereat intending to speak against the said resolution allowed to speak on the ground that they did not have proper authority; that the plaintiff demanded a poll but without there being good and sufficient reason, the Chairman of the meeting wrongfully and illegally fixed 26 -9 -2006 as the date of poll at the registered office of the company between 11.00 a.m. and 12.00 noon; that the plaintiff had protested against such high -handed action on the part of the Chairman in postponing the poll without adjourning the meeting but to no avail; and that on the following day, the plaintiff attended the poll at the registered office of the company when, however, the resolution was passed although gross irregularities in conducting the polling on 26 -9 -2006 were noticed. According to him, some of the shareholders of the company had not been allowed to cast their votes by the management of the company being respondent Nos. 4 to 11 on one pretext or the other while a number of votes cast against the resolution were rejected on flimsy grounds.

(3.) IN connection with the said suit, the plaintiff took out an interlocutory application being G.A. No. 3253 of 2006 praying for temporary injunction. The same was heard by the Trial Court during vacation on 11 -10 -2006. It was directed that any step taken by the company in pursuance of the special resolution purportedly passed at the Annual General Meeting held on 25 -9 -2006 would abide by the result of the application.