CP No. 87 of 2010. Case: In Re: Gharda Chemical Ltd. Vs. Company Law Board

Case NumberCP No. 87 of 2010
CounselFor Appellant: Khyati Ghevaria and Mitesh Naik and For Respondents: R.N. Subramanian, Senior Advocate, Sudip Sen, Abhimanuy Bhandari, Nishad Najkemi and Vineet Srivastav
JudgesVimla Yadav, Member
IssueCompany Law
Citation2013 (114) CLA 354 (CLB)
Judgement DateAugust 13, 2012
CourtCompany Law Board


Vimla Yadav, Member

  1. In this order I am considering Company Application Nos. 73 of 2012 and 85 of 2012 filed in Company Petition No. 87/2010. It is noted that Company Petition No. 87 of 2010 was filed under section 397/398 read with section 402 of the Companies Act, 1956 ('the Act') seeking injunction against holding of proposed extraordinary general meeting ('EGM') to be held on 12th November, 2010 to consider resolutions to delete certain articles (of the AoA of the R-1-company, namely, Gharda Chemicals Ltd.) including article 57 (which provides for a right of pre-emption to the shareholders). On 9th November, 2010 the CLB rejected the application for ad interim reliefs. The meeting was postponed to 10th December, 2010. On 9th December, 2010 the meeting was postponed by two months informing the shareholders that a fresh notice would be issued. Meeting was not reconvened, the notice in relation to the same lapsed. The Petitioner withdrew the appeal filed under section 10F against Company Law Board's ('CLB's') order dated 9th November, 2010. The hon'ble High Court granted liberty to adopt appropriate proceedings on fresh cause of action. Company Application No. 73 of 2012 was filed by the petitioners to amend CP No. 87 of 2010 alleging that convening of EGM on 22nd May, 2012 on the requisitionists notice dated 31st March, 2012 is a subsequent event of oppression and mismanagement. The application also sought impleadment of the requisitionists alleging their collusion with R-2. In CA No. 73 an ad interim order was passed by CLB on 21st May, 2012 noting and ordering that: "Part heard CA No. 73 of 2012 with respect to interim injunction as prayed for in CA 73 of 2012. R-1-company is hereby allowed to hold EGM as scheduled on 22nd May, 2012 at 11.30 AM but the resolutions, if any passed, shall not be given effect to till further orders. Detailed order follows". Detailed order was also passed on 21st May, 2012 (Annexed as A-I).

  2. By CA No. 73 of 2012 the petitioners have sought to implead three additional respondents alleging collusion between them and R-2. Additional respondents 1, 2 and 3 are petitioner 1's daughter, son and daughter-in-law respectively. They had requisitioned EGM on 22nd May, 2012. It has been alleged that they have been colluding and conspiring with R-2 to deny the petitioners benefits of pre-emptive rights and that "The petitioner have reasons to believe that the 6th to 8th respondents have agreed to permit Dr. Gharda to sell the shares held and or otherwise controlled by him to an outsider in breach of the preemptive provisions in consideration of their being paid a huge amount of money, stated to be in the region of Rs. 90 crore (approx), which amount is already received by Dr. Gharda from his incumbent purchaser". Further, the petitioners have sought additions to the company petition to bring the issue relating to additional respondents requisitioning of the EGM. The petitioners have also sought amendment to the CP so as to bring out the subsequent developments in relation to the litigation pursued by the petitioners, more particularly Company Appeal 24 of 2010, Company Appeal 2 of 2011 and the petitioners contentions is SLP (Civil) No 16994 before the hon'ble Supreme Court.

  3. It is the petitioners' case that subsequent events relating to shareholders requisitioning the meeting, holding of the meeting, manner in which meeting is conducted and passing of the resolutions are narrated in the CA No. 73 and CA No. 91 of 2012 and which, according to the petitioners, are all in the nature of subsequent events that prejudices their rights and their legitimate expectations as shareholders of the company. It is also the petitioners' contention that the proposed amendments are necessary to determine the controversy and that the amendments should be allowed in the interest of justice and equity.

  4. To support his contentions the counsel for the petitioners placed reliance on the case law in Khimji M Shah v. Ratilat Damodardas Modi [1990] 67 Comp Cas 185 (Bom.); Shikharchand Jain v. Digamber Jain Praband Karini Saorsa AIR 1974 SC 1178 and Jer Rutton Kavasmaneck v. Gharda Chemicals Ltd. [2000] 36 CLA 152 (Bom.): [2000] 2 Bom. CR 56.

  5. The counsel for the respondent No. 1-company contended that the scope of the petition is limited and it only impugned EGM dated 12th November, 2010. It is R-1-company's contention that since the company requisitioned and convened EGM has not been reconvened, the Petition itself is now infructuous. It has also contended that the petition's scope and reliefs cannot be enlarged to bring within its ambit a separate and distinct cause of action.

  6. The petitioners have further sought amendment to a part of the schedule of shareholding appearing at part I of exhibit B-1 with the amended part 1 of the schedule annexed and marked as X-I. It was pointed out that a mere perusal of the amendment sought by the petitioners reflects the present shareholding pattern. Although the statement is titled as shares held/controlled by respondent No. 2 Dr. K.H. Gharda and respondent No. 3, Mrs. A.K. Gharda, the respondent No 2 In his affidavit dated 3rd November, 2010 has stated that he only holds 1010 shares. Respondent No. 3 (R-2's wife) holds 1,000 shares and that 36,652 shares are held by Gharda Medical and Advanced Technologies Foundation, an independent entity having an independent corporate existence. None of the petitioners have filed any rejoinder to the affidavit of R-2 in reply dated 3rd November, 2010. Further, the R-2 in para 2 of his affidavit dated 17th May, 2012 in reply to CA No. 73 of 2012 has reiterated his contentions in the affidavit of 3rd November, 2010. The affidavit of P-2 in rejoinder dated 19th May, 2012 in reply thereof merely denies the contents of para 2, thus, it is an admitted position that 36,652 shares constituting 57 per cent of the paid up capital of the company are held by Gharda Medical and Advanced Technologies Foundation.

  7. It was vehemently argued that the petitioners are habitual litigants and the Company Petition No. 87 of 2010 is one amongst a series of frivolous unsuccessful litigations initiated by the petitioners from time-to-time. The petitioners have not made out any case for the grant of reliefs as sought in the petition, the petitioners are in any event not entitled to any reliefs sought in the petition or the Company Application No. 73, the petitioners have filed the petition and the Company Application in bad faith and with unclean hands and the CLB ought not to exercise its discretion in favour of the petitioners.

  8. Similarly other respondents including additional respondents 2 and 3 have opposed the petitioners attempts to amend the petition. To support their contentions they relied upon the case law In Smt. Sakuntala Chakraborty v. Shiba Prasad Roy AIR 1998 Cal. 29; Mohamad Abdul Jabbar v. Lalmia AIR 1947 Nag. 254; Sitaram Krishna Padhye v. Chimandas Fatehchand [1928] 30 BLR 1300, additional respondent No. 1 initially opposed the amendment but subsequently her advocates sought discharge from appearance and were discharged. From the letters written by the additional respondent 1 to the Registrar of this Bench, it appears that she does not want to be represented by an advocate and that she is supporting the petitioners case now even though earlier she requisitioned the EGM. The counsel for the additional respondents drew my attention to p. 129 of the company petition at Exhibit E-3 which is a letter dated 6th June, 2001 from the P-2 Darius Rutton Kavasmaneck to the Managing Director, Gharda Chemicals Ltd. which reads as under:

    ... I have received Transfer Notices dated 17th May and 28th May from Mrs. B.E. Daruwala and Mrs. S C Gandhi, circulated by the company purportedly under article 57 of the articles of association of the company.

    I am surprised to receive the above Transfer Notices. I am unable to understand as to how the company continues to circulate Transfer Notices under articles 57, especially in view of the recent turn of events.

    I wish to put on record my objection to the company, circulating Transfer Notices purportedly under article 57 of the articles of association, I am ignoring these transfer notices and shall ignore further transfer notices, if any, circulated by the company purportedly under article 57.

    My attention was also drawn to p. 23 of the CP on which para 6.30 reads as under:

    6.30 Besides, having already informed the 2nd petitioner that in the 1st respondent's opinion article 57 was no longer applicable, the 1st respondent circulated two transfer notices under article 57. This came as a surprise to the petitioners. Accordingly, the 2nd petitioner addressed a letter dated 6th June, 2001 to the 1st respondent stating that he failed to understand how the company continued to circulate the transfer notices under article 57. Hereto annexed and marked Exhibit E-3' is a copy of the said letter dated 6th June, 2001. It is significant that these two transfer notices have not resulted in any transfers being made in favour of any person.

    E-3 is a letter at p. 129 as reproduced above. It was contended that it is a case of a dishonest petitioner who is making misleading statements before the CLB. Additional respondents' impleadment in an infructuous petition cannot be allowed. Nor can any amendment be allowed as the EGM dated 22nd May, 2012 is a fresh cause of action for which liberty has been given to the petitioner by the hon'ble High Court to move appropriately. The respondents argued that no case for amendment has been made out and the case law relied upon by the...

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