CP No. 60 of 2007. Case: Anand Pershad Jaiswal and Ors. Vs Jagatjit Industries Ltd. and Ors.. Company Law Board

Case Number:CP No. 60 of 2007
Party Name:Anand Pershad Jaiswal and Ors. Vs Jagatjit Industries Ltd. and Ors.
Counsel:For Appellant: Ritu Bhalla, J.K. Oberoi and Anuj Berry, Advs. and Jatin and Luxmi, Advs. and For Respondents: Sudipto Sarkar, Sr. Adv., Malini Sud, Deepak Khurana and Rohan Dheman, Advs.
Judges:S. Balasubramanian, Chairman
Issue:Companies Act, 1956 - Sections 77(A), 86, 100, 239, 397 and 398; Companies (Amendment) Act, 2000; Companies (Issue of Share Capital and Differential Voting Rights) Rules, 2001; Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; Securities and Exchange Board of India (Buyback of Securities...
Judgement Date:March 12, 2009
Court:Company Law Board
 
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Order:

S. Balasubramanian, Chairman (Principal Bench, At New Delhi)

  1. The Petitioners representing 11.5% of the Issued Share Capital of the Company filed a Petition under Section 397 and 398 of the Companies Act, 1956, aggrieved on account of certain alleged acts of oppression and mismanagement in the affairs of the Company (Jagatjit Industries Limited (JIL), wherein they, inter alia, sought the following reliefs:

    a). That the Hon'ble Company Law Board be pleased to order that the present Board of Respondent No. 1 stands superseded and appoint an Administrator to take charge of the management and affair of the Company and its books, papers, records and documents. Further, being incharge of the management of the Respondent No. 1 company for ensuring smooth and proper functioning of the Company.

    b). Remove and issue a permanent injunction restraining Respondent No. 2 from acting as, representing himself or holding himself out to be the Managing Director or a Director of the Company in any manner whatsoever;

    c). Frame a scheme for management, administration and control of the affairs of the Company on such terms and conditions as this Hon'ble Board may deem fit;

    d). Declare that the allotment of 25,00,000 Equity Shares of the Respondent No. 1 to the Respondent No. 7 Company, by the Board Resolution dated 30.4.2004 read with the resolution dated 16.6.2004 passed at the EGM of the Respondent No. 1 company is null and void and cancel the same;

    e). Order that Respondent Nos. 2-6 recompense and pay to the Company jointly and severally damages suffered on account of but not limited to the amounts lost as a result of financial mismanagement of the Respondent No. 1 company including wrongful and fraudulent divestment of holding of Respondent No. 1 in L.P. Investments as quantified post a thorough investigation into the affairs of Respondent No. 1 under the Management of Respondent No. 2 to Respondent No. 6;

    f). Declare that the transfer of shares held by Respondent No. 1 in L.P. Investment to group companies of Respondent No. 2 to be null and void and restitute the same investments in the hands of Respondent No. 1;

    g). Direct that the affairs of the Company as well as those of any other body corporate as defined under Section 239 of the Companies Act be investigated;

    h). That the Hon'ble Company Law Board be pleased to order costs of this petition.

  2. The Company and the Respondent No. 2 filed a Counter Affidavit in reply to the Petition, inter alia, denying the allegations made in the Petition. Rejoinder to the Counter Affidavit was filed by the Petitioners and in response thereto Sur Rejoinder was filed by the Respondent Nos. 1 & 2.

    At the time of admission of the petition on 22.5.2007 the following interim order was passed:

    Petition mentioned and interim reliefs sought. The counsel for the Respondent submits that no capital assets of Respondent No. 1 shall be dealt with any manner except in the normal course of business. Likewise he also submits that Respondent No. 7 shall not dispose of or create any third party rights in respect of the preferential allotment made to him. Respondents to file their replies by 15.7.2007 and rejoinder to be filed by 10.8.2007. The petition will be heard on 12th to 14th September, 2007 at 2.30 p.m.

  3. The matter was heard on merits. During the course of hearing at my suggestion the parties explored the possibility of settlement as it was essentially a family dispute. After hearing the arguments advanced by both the parties, I formed the view that there was no merit in the challenge to the allotment of shares with differential voting rights on the facts as also legally and the preferential...

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