C.P. No. 40(ND)/2011. Case: Harish Chaddha and Ors. Vs Natasha Automobiles Pvt. Ltd. and Ors.. Company Law Board

Case NumberC.P. No. 40(ND)/2011
CounselFor Appellant: Rajan K. Chaurasia, Advocate and For Respondents: Vijay Nair and Neeharika Aggarwal, Advocates
JudgesB.S.V. Prakash Kumar, Member (J)
IssueCompanies Act, 1956 - Sections 108, 397, 398
Judgement DateApril 28, 2015
CourtCompany Law Board


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

  1. The petitioner filed this Company Petition against R1 Company and other Respondents u/s. 397 & 398 of Companies Act, 1956, alleging that they were ousted from the Board and the company in the year 1989-90, though they held about 60% shareholding in the company since its incorporation. Since their ouster from the Board and the company being prejudicial to the interest of the petitioners, they filed this Company Petition against the respondents to restore them as shareholders and directors of the company by cancelling all the allotments subsequently made, hence this petition.

  2. The petitioners submit, R1 Company was incorporated as a Private Limited Company on 7.1.1985 with its registered office located at Delhi. This company has come into existence to deal with the business of marketing automobiles with an authorized share capital of 5 lacs, having 5000 shares at the rate of Rs. 100/- each, out of which, P1 subscribed 100 shares, R2 subscribed 100 shares, as to remaining 37 shares, the petitioners claim that P2 held those shares. (But whereas the petitioners have not revealed their share holding as reflected in the year 1989, in fact, the petition reveals that the petitioners held 1500 shares each in the company soon after incorporation of the company). Looking at the shareholding shown in the Reply to CP, the petitioners counsel admits that the paid up capital at the inception of the company was only Rs. 23,700/- as stated by the answering respondents.

  3. The petitioners submit that R2 is husband of P1's sister, when P1 noticed that R2 was not doing well in his earlier business, to support R2 and his sister, P1 & R2 incorporated R1 Company naming it with petitioners daughter's name. In the said company, P1 had become Managing Director, his wife i.e. P2 had become one of the directors in the company. As they had an understanding that the petitioners would have controlling stake in the company, the petitioners continued with controlling stake with 60% in the paid up capital whereas R2 and his family continued with 40% stake in the company. The petitioners submit that P1 was very actively taking part in all spheres of business and attend all Board meetings till 1989. Since P1 has his own business in Delhi, he had started devoting most of his time at Delhi, thereby, P1 allowed his brother-in-law and his sister to run R1 company doing business at Bareilly. As he could not devote his time to R1 Company, the petitioners, believing his brother-in-law would take care of their interest as well, used to enquire about the affairs of the company on phone for they could not even attend Board meetings and General Meetings etc. after 1989. They further submit that they never received any dividend from R1 Company. They also submit, despite P1 being MD, P2 being director, for they being preoccupied with their own business, they allowed the answering respondents to hold meetings and meet day-to-day affairs for the sake of legal compliance.

  4. Since these two families are closely related, the petitioners submit that the respondents alone used to sign Annual Accounts, Income Tax Returns and other documents. They further submit, the main purpose of forming this R1 Company being to assist R2 and his family, the petitioners became carefree after having established the business of R1 Company. They did not doubt the bona fides of the Respondents upto 2010. The petitioners found their share certificates of R1 company missing while searching their personal records in June 2010, then immediately P1 contacted R2 over phone and informed him about loss of share certificates and also asked him to issue duplicate share certificates in respect of the shares found missing. There was no response from the respondents to the request of the petitioners. When the petitioners failed to get duplicate share certificates, they caused legal notice issued to R1 Company on 27.12.2010 for issue of duplicate share certificates. When they could not get any response to the legal notice as well, they issued another notice on behalf of them on 17.1.2011. Finally, a reply had arrived to them stating that they had resigned as directors of the company and had sold their shareholding to the respondents in the year 1989 itself. The petitioners being surprised of looking at an answer saying they sold their shareholding and resigned from the Board, they made a search on the MCA Portal. It had become more shocking that these respondents increased authorized capital from 5 lacs to one crore, looking at the shareholders list, the petitioners noticed that the entire shareholding is being shown in the name of the respondents and their family members, their names were nowhere present in the shareholders list filed with RoC Delhi.

  5. R2-R4, on seeing the petitioners demanding to restore the shareholding ante 1989, R4, son of R2, abused the petitioners in most filthy and defamatory language at a function in the family, for which also, the petitioners did not take any action against respondents or even R4 for he being a child grown up before them. The petitioners submit that P1 received messages on his mobile from phone No. 9837046339 from R4 on 9.10.2010 and 10.10.2010 abusing them in...

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