Cp No. 17 of 2008. Case: Nirulata Sadh and Others Vs Arsh Fashions (P.) Ltd. and Others. Company Law Board

Case NumberCp No. 17 of 2008
JudgesKanthi Narahari, Member (Judicial)
IssueCompany Law
Citation2012 (107) CLA 257, 2011 (168) CompCas 370 (CLB)
Judgement DateOctober 14, 2011
CourtCompany Law Board

Order:

Kanthi Narahari, Member (Judicial)

  1. The present petition is filed by invoking various provisions of the Companies Act, 1956 ('the Act') alleging certain acts of oppression and mismanagement in the affairs of the company and sought declarations that:

    (i) and (ii) All the Board and shareholders resolutions passed by the respondents 2 to 8 from March 2000 onwards are illegal, null and void.

    (iii) Appointment of respondent Nos. 3, 6 and 7 as purported directors of R1 is illegal, null and void.

    (iv) R1-company is a quasi-partnership between petitioner No. 1 family and the respondent No. 2 family with 50: 50 and the same should be maintained.

    (v) The equity share capital of the R1-company will not be further increased without express consent of the petitioners.

    (vi) Any agreement to sell, transfer, alienate in respect of fixed assets situated at Vapi Industrial Estate, Vapi, Valsad without consent of the petitioners is set aside.

    (vii) Non-sending of notices for the Board meetings, general meetings and non-sending of annual accounts and reports of the R1 to the petitioners are illegal.

    Shri Sanjay Maria, learned counsel for the petitioners, narrated the brief facts. He submitted that R1-company was incorporated as a private limited company on 13th March, 2000 and was registered with the Registrar of Companies ('RoC'), Maharashtra by taking over the business of the partnership firm PNN International along with its assets and liabilities. The partners of the said partnership firm were the petitioner Nos. 1, 2 and 3 and R2, 3, 4 and 5. Petitioner Nos. 1, 2 and 3 hold 250 equity shares of Rs. 100 each, out of total of 500 equity shares of Rs. 100 each representing 50 per cent of the issued, subscribed and paid-up share capital of R1-company as on 16th June, 2000. Respondent Nos. 2, 3, 4 and 5 hold 250 equity shares of Rs. 100 each out of total of 500 equity shares of Rs. 100 each representing 50 per cent of the issued, subscribed and paid-up share capital of R1 as on 16th June, 2000. It is further submitted that R1 is a quasi-partnership between the petitioner No. 1 family and the R2 family on 50: 50 basis and the same ratio will always be maintained in future as well. Petitioner No. 1 and the R2 had signed the annual accounts for the year ended 31st March, 2004 and after that the R2 has not sent any annual accounts for the year ended 31st March, 2005, 2006, 2007 and 2008, respectively, petitioner No. 1 requested R2 to 5 to clarify how the authorised share capital of the R1 has been increased from Rs. 50,000 to Rs. 1,00,000 without her knowledge and the petitioner Nos. 1 and 2 have serious objection to the same but the R2 to 5 neither gave any details nor gave any clarification for the same. Petitioner No. 2 had given unsecured loan of Rs. 4,57,481 to the R1 which is still outstanding and the same has not been returned by the R2 to 5 till date. Petitioners requested the R2 to 5 to provide the progress report of business of the R1 and the use of the property at Vapi, Gujarat owned by R1, but the R2 to 5 always postponed the matter on one pretext or the other and never provided the report of the same. Petitioners requested the R2 to 5 to provide the copy of the financial statements including annual accounts of R1 from the year 2001 to 2008 but the R2 to 5 never provided any statement while understanding well that the petitioners are 50 per cent partner in the quasi-partnership. Petitioners also requested the R2 to 5 to provide the notice of Board meetings and general meetings and minutes of the same but the R2 to 5 never provided any statement while understanding well that the petitioners are 50 per cent partner in the quasi-partnership.

  2. It is further submitted that the petitioners decided to inspect the record of the R1 with the RoC and inspected the records of the R1 on 14th January, 2008 on MCA website and were shocked to know that the R2 has appointed her two sons, namely, Shri Uttam Dev Sadh (R3) and Shri Varun Dev Sadh (R5) and her husband Shri Bazzar Dev Sadh (R6) as directors of R1 unlawfully and un-authorisedly with effect from 12th December, 2004 without knowledge and consent of petitioners. R2 to 5 by this unlawful and unauthorised act, had increased their strength on the Board of directors from one member on 1st April, 2000 to four members in the year 2004 and on the other hand the strength of the petitioners on the Board of directors...

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