J.K. PURI Vs. H.P. STATE INDUSTRIAL

JUDGEMENT

(1.) THE plaintiffs have filed a suit for the following reliefs : That the transfers effected by defendant No. 2 company of the shares of defendant No. 1 in the meeting stated to be held on June 30, 1995, are illegal, ultra vires and void being against the provisions of the articles of association, with the consequential relief of mandatory injunction requiring the defendants to offer the aforesaid shares in favour of the plaintiffs in proportion to their holdings in accordance with the provisions of the articles of association of the company and the Companies Act and not to exercise any right of voting in respect of such shares alleged to have been transferred by defendant No. 1 in favour of defendants Nos. 3 to 5 in the meeting held on June 30, 1995.

(2.) PLAINTIFF No. 1, J.K. Puri has put forth himself as a widely travelled man having vast experience in the planning and promotion of hotels, having served the premier institution known throughout the world as "Oberoi Hotels". It is stated in the plaint that after serving the said institution, he retired in 1990, but continued his association with Oberoi Hotel, by virtue of being the President of the Hotel Oberoi Inter Continental Co operative General Housing Society Ltd., as also being the President of its Employees Welfare Association. It is further stated that he is a consultant to Span Resorts, Manali and Holiday Inn, both at Manali and Ahmedabad, respectively, Plaintiff No. 2, Concept Fabrics, is stated to be a company incorporated under the Indian Companies Act (hereinafter to be called "the Act"), and plaintiff No. 1, Shri J.K. Puri, is its managing director. Plaintiffs Nos. 3 to 5 are stated to be the shareholders, being the wife and two daughters, respectively of plaintiff No. 1.

(3.) AT the time when the company, i.e., defendant No. 2 was floated, it raised certain loans from defendant No. 1 and for that purpose an agreement was entered into between them dated December 20, 1984, whereby defendant No. 1 agreed to buy the aforementioned shares, One of the clauses in the said agreement was that defendant No. 1 would not transfer its shares to any person for a period of five years from the date of the commercial production of the company, i.e., defendant No. 2, It was further provided in the agreement that defendant No. 1 would transfer its shares to the promoter on the terms and conditions as indicated in the said agreement with regard to the fixation of their price. According to the case of the plaintiffs, this agreement was in violation of Articles 13 and 14 of the memorandum and articles of association of the company defendant No. 2.