P S NANAWATI Vs. JAIPUR METALS AND ELECTRICALS

JUDGEMENT

(1.) THIS petition has been filed under Sections 397 and 398, Companies Act, 1956 (hereinafter to be called as 'the Act'), in the matter of Hindustan Processors Ltd., Bhilwara (in short 'the company'), with the allegations, in short, as follows : The company was incorporated on October 29, 1987, with nominal capital of Rs 50 lakhs divided into 5 lakhs shares of Rs. 10 each and paid -up capital of Rs. 36,60,500. Petitioner No. 1, his friends and relatives hold 1,33,500 equity shares and petitioner No. 2, his friends and relatives hold 67,500 equity shares of Rs. 10 each. Non -petitioners Nos. 1 and 2 agreed to finance the company on the basis of leasing Jaipur Metals and Electricals Ltd., Jaipur. The lease agreement was duly executed. It was agreed that the managing director of Jaipur Metals and Electricals Ltd. (non -petitioner No. 1) would be the chairman of the company, it would also have a right to nominate a certain number of directors and non -petitioner No. 1 asked the company to allot fully paid -up 55 per cent, shares of the company in favour of Ashok Kumar Doshi (non -petitioner No. 5). It was further agreed that petitioners Nos. 1 and 2 were to be the managing director and executive director of the company respectively. They got the plant and machinery approved and erected in a record time of five months and the production commenced from October 12, 1988. Non -petitioner No. 1 started interfering with the day -to -day working of the company and non -petitioner No. 5, A. K. Doshi, did not contribute any money and co -operate in the working of the company. The balance amount of Rs. 10 lakhs was also not released by non -petitioner No. 1 as per the lease agreement. Non -petitioner No. 1 started conspiring to oust the petitioners from the management of the company and ousted them on November 22, 1986. They were not allowed to attend the meetings. A committee comprising Sarvashri K. G. Toshniwal, K. K. Vijayvargiya and P. S. Chauhan was constituted for the management of the affairs of the company. The following prayer has been made in this petition :

(2.) MR . Rajendra Mehta, advocate, entered caveat on behalf of non -petitioners Nos. 2, 3, 4, 6 and 7. A joint reply to the petition was filed by these non -petitioners. Shri U. N. Bhandari, advocate, also put his appearance suo motu for and on behalf of non -petitioner No. 1. Notice was issued to non -petitioner No. 8 only. Non -petitioners Nos. 1 and 8 have filed their separate replies. The non -petitioners have raised several preliminary objections against the maintainability of the petition in their replies.

(3.) IT is not denied that petition -papers Nos. 351 to 419 (annexure R/l) under Sections 408 and 409 of the Act were already filed before the Company Law Board, New Delhi, and it is still pending. The prayers made in it run as under :