NEELAM DEEPAK DIVEKAR Vs. METALLURGICAL LABORATORIES (P.) LTD.

JUDGEMENT

(1.) IN Company Petition No, 54 of 2011 filed under section 397 -398 of the Companies Act, 1956 ('the Act'), the petitioner has alleged oppression and mismanagement by the respondents in R -1 -company, namely, Metallurgical Laboratories (P.) Ltd. It was contended that petitioner is a member of the R -1 -company as is evident from annual returns of the company made upto 9th March, 2011, list of shareholders as on 9th March, 2011 and letter dated 27th July, 2009 written by the company to Registrar of Companies ('RoC') Mumbai.

(2.) THE petitioner's case is that her shareholding has been reduced from 28.43 per cent to 17.53 per cent as the respondents have allotted 1,592 shares to themselves. It was pointed out that the respondents have given contradictory reasons for increase of the capital, one being for payment of liability towards tax and other dues, whereas in the letter dated 21st July, 2008 issued by the respondents another reason has been given that it is for reducing the interest burden. No member or director except Wagles were intimated or informed about the actual reason of the purpose of increasing the share capital. As on relevant date, the company had to recover a sum of Rs. 18,04,000 from its sister concern Metallurgical Analytical Laboratory, a Partnership Firm. No attempt was made to make recovery of the sum from the partnership firm. It was contended that the absolute contradiction in both version shows the dishonesty and malafides of the respondents.

(3.) IT was contended that without passing a proper resolution recording that the petitioner has failed/or refused to exercise her rights, the respondents allotted the 694 shares which were to be given to the petitioner to Wagles. There is no intimation to the petitioner about it that her shares are allotted to Wagles. The last date of submission by the petitioner was till 5 p.m. on 29th July, 2008. On 29th July, 2008 itself the Wagles made an application for allotment of the said shares in favour of Mr. R.S. Wagle and on their own showing the said letter for issuing the shares in favour of Wagle was received by the company on 29th July, 2008, without waiting for the letter of acceptance to be sent by the petitioner as it was to the knowledge of the respondents that the letter is sent as late as 'Friday', i.e., 25th July, 2008 and certainly the petitioner would not be able to exercise her right on or before 29th July, 2008, it was a pre -planned act of the respondents. All resolutions" regarding the increase of share capital are required to be given to all the members to attend the general meeting with regard to the increase of the share capital. No such procedure is followed. As provided in section 81 of the Act, fifteen days' notice is required to be given. Reliance was placed on the case law reported in the matter of Dale & Carrington Invt. (P.) Ltd. v. P K Prathapan : [2004] 62 CLA 245 (SC) : [2005] 1 SCC 212, at p.228, above para 12, to contend that "directors owe a fiduciary duty to issue shares for a proper purpose"... "Directors in a private limited company are expected to make a disclosure to the shareholders of such company when further share are being issued. This requirement flows from their duty to act in good faith and make full disclosure to the shareholders regarding affairs of a company. Non -applicability of section 81 of the Act in case of private limited companies casts a heavier burden on its director". It was contended that nothing is placed on record that what is the utilisation of the fund generated from issuance of additional shares. No meeting was, in fact, held to allot the said 694 shares to Wagle. No decision of any Board of directors has been placed on record.