PROMODE KUMAR MITTAL Vs. SOUTHERN STEEL LTD

JUDGEMENT

(1.) This is another application under Sections 397, 398, 402, 403, etc., of the Companies Act, 1956, in the series of litigations between Mohan Lal Mittal group and his opposing group. These applications are the outcome of family disputes as all the companies concerned in these applications are under the control and management of the Mittal family as the directors are either the members of the Mittal family or their relatives or nominees or stooges. They reveal a general pattern of running parallel management, one group trying to oust the other group from the companies in which the majority shares belong to the respondents. The present application is by Mohan Lal Mittal, the eldest brother of the Mittal family, and his sons as petitioners and the respondents are Indra Sen Mittal and the group of brothers and persons supporting him and the other directors of the company who are merely relatives, friends or stooges of the Mittal family. The petitioners allege in para. 8 of the petition that they themselves along with another son of Mohan Lal Mittal, Sri Laxmi Niwas Mittal, hold 1/10th of the issued and subscribed capital of the respondent-company, Southern Steel Ltd., and, therefore, they are qualified under Section 399 of the Companies Act, 1956.

(2.) The allegations which are the basis of the present application under Sections 397 and 398 of the Companies Act, 1956, are that the meeting fixed to be held on the 14th of May, 1976, could not be attended to by the petitioners and was not held due to want of quorum. It is alleged that the said meeting was adjourned till 16th of May, 1976, and was held without any notice to the petitioners that the meeting was fixed on the 16th of May, 1976, and the alleged meeting on the 16th of May, 1976, was held at Hyderabad and various resolutions were passed. The next allegations are that the secretary of the company, V.S. Modi, duly called a meeting, of the board of directors to be held on the 31st of May, 1976, at its registered office at Calcutta, for which notice was duly given by the directors. Respondent No. 5, R.K. Mittal, did not attend the said meeting on the 31st of May, 1976, at the registered office at Calcutta, and it is alleged that in the said meeting it was resolved that all the meetings of the respondent-company, the Southern Steel Ltd., would be held at the registered office at Calcutta. Next it is alleged that respondent No. 5, R.K. Mittal, took away various documents, papers and ,books of the respondent-company forcibly which were required to be kept at the registered office at Calcutta and in spite of demand and request he did not return the same. It is further alleged that, in spite of the rejection of the application for transfer of the registered office at Calcutta, from Calcutta to Hyderabad, by this court in 1970, respondent No. 5, R.K. Mittal, to circumvent the order of this court, shifted the administrative office of the respondent-company from Calcutta to Hyderabad with effect from 7th of June, 1976. There were other allegations that the accounts of the respondent-company have been lying ready and the trial balance-sheet could not be prepared for want of accounts of the Hyderabad factory which were not sent deliberately by respondent No. 5, R.K. Mittal, nor the auditor's objection forwarded by S.R. Batliboy in respect of its irregularities, and discrepancies of the Hyderabad factory were answered by respondent No. 5, R.K. Mittal, as a result of which the balance-sheet could not either be prepared or published. The petitioners' further allegations are that the said respondent No. 5, R.K. Mittal, without any lawful ground or without any resolution of the board of directors, transferred the secretary and senior officers of the respondent-company from Calcutta to Hyderabad. One of the other allegations is that the said respondent No. 5, R.K. Mittal, by his letter dated the 21st December, 1976, disclosed that the registered office of the respondent-company has been purported to be shifted to No. 8, Old Post Office St., Calcutta, from No. 2, Brabourne Road, Calcutta, and it is alleged that no resolution was passed in any meeting of the board of directors of the respondent-company nor any tenancy was ever obtained by the respondent-company at No. 8, Old Post Office St., Calcutta.

(3.) The respondent duly answered the said allegations alleging that the petitioners have no right to ask for postponement of the meeting to be held on the 14th of May, 1976. The said meeting was attended by respondent No. 3, Indra Sen Mittal, and respondent No. 5, R.K. Mittal, but it was adjourned due to lack of quorum till 16th of May, 1976, and the adjourned board meeting was duly and lawfully held on the 16th of May, 1976. It was further submitted by the respondents that no notice is required to be given for any adjourned meeting either under the Companies Act or under the articles of association of the company. The respondents denied the validity and legality of the purported notice to convene a meeting of the board alleged to be held on the 31st of May, 1976, issued by the alleged secretary, V.S. Modi. Respondent No. 5, R.K. Mittal, also denied that any paper and document has been taken away by him as alleged. The respondents, in my view, rightly submitted that the company being financed by the Andhra Pradesh State Financial Corporation was committed to shift its registered office from Calcutta to Hyderabad where admittedly the company's factory is situate and the main business is conducted and as the said Andhra Pradesh State Financial Corporation was insisting upon the said transfer, the resolution was passed accordingly on the 16th of May, 1976. It is further alleged by the respondents that according to the resolution of the said adjourned meeting dated the 16th of May, 1976, the accounts in respect of the establishment at Calcutta was to be sent to Hyderabad. It is also denied by the respondents that the accounts at Calcutta were ready as alleged by the petitioners. It is further denied that the trial balance-sheet of the Calcutta office was ever sent to Hyderabad as alleged by the petitioners. The respondents alleged that, there was enormous increase and unjustified expenses incurred at the Calcutta office and the appointment of eleven new persons at the Calcutta office warranted the said transfer of the Secretary and the senior officers from Calcutta to the Hyderabad office. It is specifically alleged, and in my view quite rightly from the facts disclosed in the pleadings and documents placed before the court, that the said secretary and the senior officers were henchmen of Mohan Lal Mittal, petitioner No. 3, the prime mover of the present application and the person behind the whole dispute. The respondents also denied that no tenancy has been taken in respect of premises No. 8, Old Post Office St., Calcutta, where the registered office of the respondent-company has been duly transferred from No. 2, Brabourne Road, Calcutta, for which proper resolution has been duly passed.