C.P. No. 19 of 2008 and C.A. Nos. 363 and 364 of 2008. Case: Amrit Lal Seth Vs Seth Hotels (P) Ltd. and Ors.. Company Law Board

Case NumberC.P. No. 19 of 2008 and C.A. Nos. 363 and 364 of 2008
CounselFor the Appellant: Amrit Lal Seth and For the Respondent: Krishna Kumar, Pradeep Kumar Kar, R.L. Garg and Anil Bhutan
JudgesS. Balasubramanian, Chairman
IssueCompany Law
Judgement DateFebruary 17, 2009
CourtCompany Law Board

Order:

S. Balasubramanian, Chairman (At Delhi)

The petitioner holding 100 shares and claiming to be entitled to 20 per cent, shares in M/s. Seth Hotels P. Ltd., has filed this petition alleging that by issue and allotment of further shares, his percentage shareholding of 20 per cent, has come down to an insignificant percentage and as such has sought for cancellation of issue and allotment of all the shares impugned in the petition. He has filed an application C. A. No. 364 of 2008 seeking for tagging this petition with C. P. No. 86 of 2006 filed by another shareholder on the same set of allegations. The respondents have filed C. A. No. 363 of 2008 challenging the maintainability of the petition in terms of section 399.

The facts of the case are that the company was a family company incorporated in 1993 with the petitioner and four of his brothers being the signatories to the memorandum and subscribing to 100 equity shares each of Rs.10. Thus, each held 20 per cent, shares in the company. The paid-up capital remained as Rs.5,000 till August 26, 2000. The petitioner was one of the five directors on the board. He resigned from the board sometime in 2004. According to the petitioner, his another brother had filed a petition C. P. No. 86 of 2006 from which he came to know that the company had issued further shares on four occasions to the second, third and fifth respondent groups in exclusion of the petitioner and the other brother Shri Mahender Kumar Seth. By these allotments, the paid-up capital of the company has been increased from Rs.5,000 to over Rs.1.79 crores resulting in the petitioner's shareholding percentage coming down from 20 per cent, to 0.005 per cent. According to him, since similar allegations have been made in C. P. No. 86 of 2006, to avoid conflicting decisions on the same sets of facts, this petition should be tagged on with the other petition. This has been opposed by the respondents and they have sought for deciding the maintainability of the petition in terms of section 399 on the ground that the petitioner does not hold 10 per cent, shares nor he constitutes one-tenth of the membership of the company as there are at present 15 shareholders in the company. Therefore, before deciding on C.A. No. 364 of 2008, the maintainability of the petition should be decided.

Shri Krishana Kumar appearing for the respondents submitted: Even though initially each of the brothers held 20 per cent, shares in the company, yet except...

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