ABHA PURI Vs. AMETHI HUME PIPES P. LTD.

JUDGEMENT

(1.) IN the instant petition filed under Section 397/398 of the Companies Act, 1956 ("the Act"), the petitioners have alleged that by allotment of 1,340 additional shares by the second respondent to his own group, the petitioners have been converted from a majority into a minority and that he has also appointed respondents Nos. 3 and 4 as directors without the knowledge and consent of the petitioners. On the basis of these allegations, the petitioners have sought for cancellation of the allotment of additional shares and also for a declaration that the appointment of respondents Nos. 3 and 4 as null and void. When the second respondent had disclosed in his reply that the petitioner -directors had also been removed as directors in an extraordinary general meeting, the petitioners sought for restoration of their directorship.

(2.) THE facts are : Amethi Hume Pipes P. Ltd., was incorporated in 1982. The third and fourth petitioners and the second respondent are brothers. The company was promoted by their father. The signatories to the memorandum was the father, the second respondent, the first petitioner being the wife of the third petitioner and the second petitioner being the wife of the fourth petitioner. Before the allotment of the impugned shares, the petitioners' group collectively held 2,100 equity shares out of 3,600 equity shares that had been subscribed and paid -up. The second respondent group held 1,000 shares. The balance 500 shares continued to remain in the name of the late father. The board of directors consisted of the first and second petitioners and the second respondent, each of them being a whole -time director drawing remuneration. The allegations in the petition are that with a view to gain majority in the board, the second respondent had allegedly appointed the third respondent being his wife and the fourth respondent being his son as directors on March 31, 2007 and that 1,340 shares were allotted to the third and fourth respondents with a view to gain majority in the shareholding also.

(3.) SHRI Sharma, advocate, appearing for the respondents submitted : The petitioners have suppressed material facts. They had not disclosed the fact that the second respondent was appointed as the general agent of the company in a board meeting held on May 26,1982 and a power of attorney was also executed in his favour. In terms of the power of attorney, he has the full power in so far as the management of the company is concerned. The second respondent had two other proprietary firms which he converted into partnerships between him and the third and fourth respondents as partners. Even in case of these partnership firms, the second respondent was the constituted power of attorney holder. Disputes and differences arose in respect of these two partnership firms. Since the disputes could not be settled even through conciliation proceedings by reputed persons, the second respondent resigned from the partnership firms.