CP No. 90 of 2007. Case: A. Venkataramana and Another Vs A.K.R. Minerals (P.) Ltd. and Others. Company Law Board
| Case Number | CP No. 90 of 2007 |
| Counsel | For Appellant: C. Umashankar and For Respondents: R. Venkataraman |
| Judges | Lizamma Augustine, Member |
| Issue | Companies Act, 1956 - Sections 293(1)(a), 397, 398 |
| Citation | 2012 (111) CLA 300 |
| Judgement Date | February 09, 2012 |
| Court | Company Law Board |
Order:
Lizamma Augustine, Member, (Chennai Bench)
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AKR Minerals (P.) Ltd. ('the first respondent-company'), incorporated on 20th November, 1991 with its registered office in Andhra Pradesh, having an authorised share capital of Rs. 10 lakh (10,000 equity shares of Rs. 100 each) on the date of incorporation, is engaged in the business of mining activities. Petitioners and respondents 2 to 4 are brothers and 5th respondent is their mother. 5th respondent died during the pendency of this petition. Petitioners and respondents 2 to 4 are the signatories to the memorandum of association and also first directors of the company. The issued share capital was Rs. 5,000, with each of the original subscribers holding ten shares each. The understanding was that the affairs of the company should be carried out in the nature of a partnership with equal participation and sharing the benefits equally. The family of the parties has been in the mining business for over eighty-five years under the name and style AKR Minerals. The first petitioner along with a few relatives and second respondent were carrying on mining activities since 1982 under the name AKR Minerals, a partnership firm. In 1993, the firm was re-constituted by inducting the son of a deceased partner. Respondents 2 to 5 created another partnership firm under the existing name without the knowledge of the petitioners. The first petitioner being the eldest brother was appointed as the managing director of the company, with power to operate the bank account, to obtain advances by way of loans, overdrafts, discount bills and cheques on behalf of the company. The first petitioner also purchased three plots measuring a total extent of 11.92 acre by way of three sale deeds, for the purpose of carrying the mining activity of the company and by paying the entire consideration out of his personal funds. The second respondent was holding lease-hold right over an extent of 389.17 acres and 69.13 acres of land in different survey numbers. As per the agreement dated 1st July, 1992, the second respondent entered into an agreement with the company for the transfer of the lease-hold right to the company and for that purpose an application was made to the Government of Andhra Pradesh on 4th July, 1992. The understanding was that the mining operations in the said lands should be carried for the benefit of the company. When a need arose for further capital, the issued and paid-up capital was enhanced to Rs. 2,15,000 on 17th August, 1990 and the petitioners and respondents 2 to 5 were allotted 350 shares each. Towards the end of 1992 the first petitioner resigned as a director and the fifth respondent was inducted into the Board and made the managing director. In the beginning of 1994, dispute arose between the first petitioner and second respondent in relation to the partnership firm and the same was reflected over the company as well, following which there was a split in the family, i.e., petitioners on one side and respondents 2 to 5 on the other side. Respondents 2 to 5 who were in over-all control of the company started to act in a manner prejudicial to the interest of the company as well as the other shareholders. Decisions which required the consent of the general body were taken unilaterally by the second respondent and his group. They started manipulating the records to suit their convenience. A loan of Rs. 7 lakh was availed from the State Bank of India by providing the immovable properties of the 5th respondent as collateral. The fifth respondent is eighty-five years old and acting as a tool in the hands of the other respondents. The bank has filed a suit against the company for recovery of Rs. 9,96,818 and the respondents 2 to 4 have already sold company's land without the knowledge of the petitioners and are attempting to sell the remaining land also. The said immovable properties were bought out of the personal income of the first petitioner and there was no authority for the respondents to alienate the same and this clearly violates section 293(1)(a) of the Act, and the aim is to enrich personally respondents 2 to 5. In...
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