Banerji, Chairman - (1.) THE petitioner claiming to be the Managing Director of Skyceli Communications Ltd. (First Respondent - the company) has filed this petition praying for certain reliefs under section 409 of the Companies Act, 1956 on the ground that there has been a change in the ownership of shares and that it is likely that there would be a change in the Board of the company which would be prejudicial to the interest of the company.
(2.) The petition which was filed on 22-8-2000 was mentioned before us on 24-8-2000 when certain interim relief was sought pending final adjudication. The prayer was opposed on behalf of DSS Enterprises (P.) Ltd. (Second Respondent) who sought 5 days time to file a reply. While granting time to the said parties for exchanging their replies we fixed 6-9-2000 for hearing of the interim matter and further directed that till the said date resolution if any passed in the Annual General meeting (AGM) on 23-8-2000 shall be subject to our further orders. On 30-8-2000 the petitioner filed another application praying for certain urgent interim orders in view of some subsequent developments. On 1-9-2000 after hearing the counsel for the parties we ordered that till the matter was heard on 6-9-2000, without prejudice to the rights and contentions, both parlies were restrained from holding any meeting of Board of Directors and general meeting of the company and taking any further steps in pursuance to the resolutions passed in the AGM's of 23rd Aug. and the resolutions passed in the meeting of the Board of Directors on 26-8-2000. On 4-9-2000 the second respondent filed its reply to the petition wherein it has inter alia challenged the maintainability of the petition mainly on the ground that the ingredients of section 409 of the Act are not attracted in the facts and circumstances of the present case. On 6-9-2000 while granting time to the petitioner to fiie a rejoinder it was further directed that the question regarding maintainability and the prayer for interim relief shall be considered on 13-9-2000. The petitioner has filed a short rejoinder mainly in respect of the objection pertaining to the maintainability of the petition and reserved its right to file a detailed rejoinder. Arguments on the maintainability was subsequently heard and concluded on 25-9-2000.
(3.) BEFORE we consider the respective submissions of the learned counsel for the parties it will be proper to give very briefly the petitioners case as set out in the petition to the extent relevant for deciding the question before us. The first respondent was promoted by four shareholders namely viz. (i) Cromption Greaves Ltd. (CGL) (ii) DSS Enterprises (DSS) (III) Bell South International (Bell South) and (iv) Millicum International (Millicum) and was incorporated as private limited company on 3-3-1992. Their respective shareholding was CGL-40.5% DSS-10.5 per cent. Bell South and Millicum - 24.5 per cent each. Presently, the company is a deemed public company in terms of section 43 A of the Act. CGL entered into an agreement with the fifth respondent (Bharti) on 25-11-1999 for transfer of Us entire holding of 40.5 per cent shares in the company lo Bharti subject to various approvals. This transaction was approved by the Board of Directors of the company on 14-12-1999, and approval/consent was also received from Millicum, DSS, ICICI and ABN Arnro. Approval was also given by Department of Telecommunication (DOT) subject inter alia to the condition that management conirol of licensee company shall remain in Indian hands. In the meeting of the promoters on 3-5-2000 it was decided that DSS and Bell South would also sell their shareholdings and accordingly applied for obtaining necessary approvals from institutions including DOT. The Board of Directors also passed a resolution dated 3-8-2000 by circulation accepting the conditions stipulated in the approval of DOT including the condition that the management and control of the licensee company shall remain in Indian hands. Despite however giving their consent, Bell South and DSS back tracked and in collusion with Millicum raised irrelevant issues prejudicial to the interest of the company and causing it irreparable harm and injury. The transfer of shares held by CGL to Bharti was approved by the Board through a circular resolution on 7-8-2000 and Bharti became a shareholder of the company on that date. The AGM was scheduled to be held on 23-8-2000 and the petitioner and two other directors namely Shri K.K. Nohria and B.M. Suri who were retiring by rotation and had offered themselves for reappointment there is a strong apprehension that the other shareholders holding 59.5% of the equity will act together to keep them out and foreign shareholders nominees would then constitute the majority of the Board and control the company to suit their end without having any regard to the business interest of the first respondent. This may not only jeopardize the licence granted by DOT in favour of Skycell, but might result in the lenders recalling their loans. This petition under section 409 is necessitated as there has been a change in ownership of 40.5 per cent shareholding, resulting in a likely change in the Board of Directors and if such a change is allowed it would prejudicially affect the affairs of the company. It is, therefore, absolutely necessary as well as just and equitable that this Board may pass appropriate orders to insure that no resolution passed or action taken that may affect a change in the Board of Directors of Skycell unless confirmed by the Board. An interim order on the same lines have been sought under section 409(2).;