C.P. No. 29(ND)/2001. Case: Bhiku Ram Jain and Ors. Vs Bharat Foam Udyog Pvt. Ltd. and Ors.. Company Law Board

Case NumberC.P. No. 29(ND)/2001
CounselFor Respondents: Saurabh Kalia, Harshit Agarwal and Nitika Dwivedi, Advocates
JudgesB.S.V. Prakash Kumar, Member (J)
IssueCompanies Act, 1956 - Sections 283(1)(g), 397, 398, 402, 403, 81, 81(1A)
Judgement DateJune 10, 2015
CourtCompany Law Board

Order:

B.S.V. Prakash Kumar, Member (J), (New Delhi Bench)

  1. For having the petitioners already filed an application for restoration of the Company Petition dismissed for default on 17.2.2014, the same is allowed and passed orders in the main petition as below after hearing the Counsel appearing on other side.

  2. The petitioners as well as the respondents have placed a judgment of the Hon'ble High Court of Delhi dated 19.03.2015 stating that the issue remained for adjudication in this case is with respect to allotment dated 31.7.1998, because other issues wore settled and recorded in the judgment dated 19.03.2015 mentioned above.

  3. In pursuance thereof, the petitioners, herein, submits that the petitioners filed this CP 29/2001 against the respondents u/s. 397, 398 r/w Secs 402 & 403 of the Companies Act, 1956, assailing the removal of P1 and P3 as directors of the company and also allotment of 908 shares to the respondents on 31.7.1998. Since the issue relating to removal of directors has been settled by appointment of P2 & P3 as directors in the company on 24.4.2010, the sole issue remained for adjudication is over allotment of 908 shares on 31.7.1998, therefore, this Bench, for the sake of brevity, limited recording of pleadings and discussion to this issue alone.

  4. The petitioners submit that it is a family business, initially Late Mr. B.R. Jain (P1) and Mr. A.P. Jain (R4) who are real brothers, started a partnership firm along with other family members with the name and style of Bharat Petro Chemical Udyog, thereafter, this family incorporated R1 company i.e. Bharat Foam Udyog (P) Ltd. with its registered office situated at 1646/47, S.P. Mukherjee Marg, Delhi-6.

  5. The admitted position is that the authorised share capital of the company was 15,000 equity shares of Rs. 100/- each totalling to Rs. 15/- lacs in the year 1997. By that time, the shareholding pattern was that the petitioners group headed by B.K. Jain held 32.72% shareholding, whereas the group headed by brother A.P. Jain (R4) and others held remaining shareholding When this was the shareholding pattern in the company in the year 1998, A.P. Jain group (answering respondents) and others who were managing the affairs of the company, increased the authorised share capital from Rs. 15/- lacs to Rs. 16/- lacs divided into 16,000 equity shares of Rs. 100/- each without serving any EoGM notice upon the petitioners, following it, A.P. Jain group went ahead and held a Board Meeting on 31.7.1998 and passed a resolution making allotment of 908 shares out of the increased capital to the respondents themselves behind the back of the petitioners. On seeing such an allotment made to themselves, the petitioners, for their shareholding being reduced from 32.72% to 30.85%, initiated these proceedings, inter alia, for setting aside this allotment, for this impugned allotment is not only in violation of the provisions of the Companies Act, 1956 but also an oppressive act causing prejudice to the petitioners group.

  6. The petitioners submit, to get their mala fide act...

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