BIPIN C MEHTA Vs. UNIFORM OFFSET (P.) LTD.

JUDGEMENT

(1.) IN this order I am considering CP No. 78/2007 filed by the petitioners late Sh. Bipin C Mehta and others, against the respondents alleging oppression and mismanagement under sections 397, 399, 402, 403 and 406 of the Companies Act, 1956 ('the Act') seeking for appropriate orders, reliefs and directions for valuation of the assets and properties of the company by an independent valuer appointed by the Board; the company to conduct a meeting of shareholders under the chairmanship of an independent chairman, to be appointed by the CLB to decide on the proposal of the petitioners to purchase the shares of the respondent Nos. 2 to 11 at such a price as may be determined by the valuers appointed by the Board; directing the respondent Nos. 2 to 11 to sell all the shares of the company standing in their names to the petitioners at a price to be determined by this Board; the respondent No. 2 to deliver this Board all the stationary belonging the company, including but not restricted to the letter head of the company, taken away by the respondent No. 2 with him to the United States of America; the respondent No. 2 to transfer and register 2,385 shares of the company transferred by the petitioner No. 1 to the petitioner No. 2, which instrument of transfer was lodged with the company on 11th December, 2005 in the register of members of the company; the purported meetings of the Board of directors held on 4th December, 2006 and 11th December, 2006 and the extraordinary general meeting ('EGM') of the members of company held on 11th December, 2006 and the resolutions passed in these meetings are illegal, non est, null and void ab initio and of no effect whatsoever; for restraining the respondent Nos. 2 to 11 and each one of them and their servants and agents from representing to anybody in any manner whatsoever either orally or in writing that the company is defunct or in the process of voluntary winding up; for restraining the respondent Nos. 2 to 11 and each one of them from in any manner dealing with, disposing of or creating any third party rights of any other encumbrances or alienating or parting with any property with any property of the company, whether movable or immovable; for restraining the respondent Nos. 2 to 11 and each one of them from implementing any of the purported resolutions passed in the aforesaid illegal meetings of the Board of directors dated 4th December, 2006 and 11th December, 2006 and the illegal EGM purportedly held on 11th December, 2006; for restraining the respondent No. 2 and the respondent No. 9 from holding out to be the directors of the company and convening and/or holding any meeting of the Board of directors of the company; for restraining the respondent Nos. 2 to 11 and each on of them from doing any act or deed for voluntary winding up of the company in any manner whatsoever; for restraining respondent No. 2 from making any false and incorrect statements to the bank(s) of the company and/or any authorities on persons and/or addressing any correspondence whatsoever for and on behalf of the company and from operating the bank accounts for and on behalf of the company in any manner whatsoever; for restraining the respondent No. 2 from, in any manner, using the stationery of the company, including but not restricted to the issue of any notices of correspondence for and on behalf of the company in any manner whatsoever and for costs of and incidental to this petition be paid by the respondents. The R1 -company was incorporated on 22nd October, 1962 and is having its registered office at Sonawala, Cross Road, Goregaon (East) Mumbai -400 063. The authorised share capital of the company is Rs. 20,00,000 divided into 20,000 equity shares of Rs. 100 each. As on 31st March, 2007, the issued, subscribed and paid -up share capital of the company was Rs. 10,69,500 divided into 10,695 equity shares of Rs. 100 each. The company was incorporated to carry on the business of printers, engraves, lithographers, letter courtesy press printers, stereotypers, electrotypers, photographic printers; as proprietors and publishers of newspapers, magazines, journals; literary agents, advertisement contractors, designers of advertisements; manufacturers of dealers in paper, printing ink; manufacturers of and dealers in all kinds of machinery, plant utensils and other articles or things used in connection with any of the business of the company, etc.

(2.) IN this matter the R1 -company a closely held family company, is admittedly being managed independently by P2, this was only an arrangement between P1 and P2. It is P2's own case that he has been managing the company to the exclusion of everybody else because R2 Shri Mukesh C Mehta had shifted to USA in 1995 and P1 had become incapacitated due to illness and is no more alive now. P2's case is that R2's conduct has been oppressive because one director does not constitute quorum sufficient, there was notice not given for : (i) Board meeting held on 4th December, 2006, (ii) EGM held on 11th December, 2006 Board meeting held on 11th December, 2006, R2 had written letters to banks closing of bank account, phones were forcibly surrendered to wind -up the company, R2 refused to take business orders, forced shareholders to give consent to winding up of the company on the ground that the company had become defunct. My attention has been drawn to R2's letter dated 10th October, 2002 in this regard, R2's letter dated 18th August, 2003 to Union Bank of India that R2 should not be considered liable for finance given to the company. On 3rd December, 2006 which was Sunday R2 gave notice to hold Board of directors meeting on 4th December, 2006 at a short notice, consent of P1 was not taken, there was no requisite quorum, it was resolved to wind up the company on 11th December, 2006, EGM was held again at a short notice, resolutions were passed which are different from agenda. On 11th December, 2006 another Board meeting was convened without any notice, R9 was appointed as director. On 25th January, 2007 R2 sent an e -mail to Rajendra Gandhi, an employee, that the R2 is not interested in business. On 5th February, 2007 R2 wrote a letter to bank to operate only one account and to add his signature for the account.

(3.) THE petitioner's case is that the company is a closely held company and all its issued, subscribed and paid -up shares are owned by the family members, being the petitioners and the R2 to 10. The company was incorporated as in 1962 By the P1 (Shri Bipin Chandrakant Mehta) and his late father (Sh. Chandrakant C Mehta). Since inception, the affairs of the company have been carried on and managed by the P1 as its permanent director and the managing director. On 27th August, 1989, the P1 resigned from the office of the managing director of the company which resignation was accepted by the Board of directors of the company. However, the P1 continued to remain a director of the company and managed the affairs of the company actively till 2004. Thereafter, due to his advanced age, the P1, with consent of the Board of directors decided to reduce his active involvement in the day -today affairs of the company. Thereafter, the day -to -day affairs of the company were managed by the P2. In fact since August 2003, the P1 was not keeping well and he was diagnosed with early stages of Frontotemporal Dementia. The R2 was appointed as a director of the company on 1st April, 1978. However, in 1995, the R2 shifted residence to the United States of America. Therefore, it was not possible for him to look after the day -to -day affairs of the company. Entire business of the company continued to be carried on and is looked after by the P1 and his late father Chandrakant Chimanlal Mehta and later by the P2 peacefully and smoothly and without any interference by the R2.