Jaganmohan Reddi, J. - (1.) This is a petition under Sections 397 and 398 of the Indian Companies Act, 1956, to direct the Managing Director of the respondent company to cancel the allotment of 50 shares to the Executive Director and remove her from the Board of Directors and also for the recovery of the lemuneration paid to her illegally from 15-8-1960; to cancel the allotment of 60 shares to the Managing Directors son Harsha P. Karmarkar; to invalidate the appointment of Technical Director; and for the appointment of a committee of share-holders of a Board of Directors to manage the affairs of the company, on the ground of oppression to the petitioners and mismanagement of the company.
(2.) The several grounds on which the aforesaid reliefs have been asked are that some of the shares of the company are illegally transferred, some shares were not transferred, that dividends of the company have not been paid, that the Directors of the respondent company were paid in excess towards their remuneration and that no notice was given of the general body meeting held on 28-9-1962. The petitioners allege mat they constitute more than 1/10th of the share capital, i.e., out of 2000 shares, the 1st petitioner is the holder of 580 fully paid up shares; the second petitioner 50 shares, and the third petitioner 40 shares; that in the managing agency firm of Kumarswamy and Company, which consisted of three partners A. Kumarswamy, P. G. Karmarkar and M. R. Patny, of whom Kumarswamy, according to his own declaration, was only a benamidar of M. R. Patny, the husband of the 1st petitioner, and father of the second and third petitioners, that the said Kumarswamy died on 20-2-1939, leaving 151 shares standing in his name which were purported to be transferred on 16-2-1959 to Jaikumar M. Patny, another son of the late M. R. Patny by his first wife, on the basis of a will of Kumarswamy, and that after the death of M. R. Patny on 22-9-1960, the said P. G. Karmarkar purporting to act for the non-existing firm of Kumaraswamy and Company executed a transfer form for transfer of 50 shares to Padmabai Patny, wife of Jaikumar M. Patny, for a sum of Rs. 5000 predating the said transfer form to 15-8-1960 In order to make her also a Director so that the three of them might rule as they pleased, that the said P. G. Karmarkar again purporting to act on behalf of the non-existent Kumaraswamy and Company, wrongfully transferred 60 shares to the name nf his son Harsha P. Karmarkar, predating the transfer form to 15-8-1960 that though the late M. R. Patny by his will dated 10-2-1980 bequeathed his 200 shares to his two minor sons, Surajkumar and Chandrakumar, petitioners 3 and 2 and though the directors recognised the rights of the minors under the will and credited the dividends of the minors in the account books of Patny & Company, (Private) Ltd., they refused to transfer the shares in the names of the minors in spite of the fact that previously they had, on the basis of the will, transferred 50 and 40 shares of Kumaraswamy & Company in the names of the minors; that for the year 1961-62, though the dividends were declared on 28-9-1963 at the 16th annual general body meeting, the Directors have withheld payment in spite of repeated demands; that for the same year viz. 1961-62 the directors remuneration was shown as Rs. 21,000 instead of Rs. 18,000 and the auditors have also not cared to reply to the letter asking them as to how this excess payment of Rs. 3,000 was authorised: and that for the general body meeting hero on 28-9-1962, the Managing Director deliberately lid not give notice of the said meeting to the petitioners, and when the petitioners wrote and enquired on 28-9-1962, no reply was given.
(3.) By Company application No. 82 of 1964. he petitioners sought to raise an additional ground, namely, that the resolution dated 2-11-1959, admitting Jaikumar M. Patny as a partner of the Managing Agency firm of Kumaraswamy & Company, and also appointing him as a Director is void for the reason that the meeting was not held and the proceedings do not bear the signature of the then managing Director. M. R. Patny. After the findings on the allegations of the peti-tioners (Paras 1 to 11) His Lordship proceeded.);