S.Balasubramanian, - (1.) THE facts of the case in a nutshell are: THE 1st respondent company is the sole and absolute owner of Bungalow No. A on the 4th floor of the complex known as "Swapnalok" in Mumbai. This is the only asset of the company. THE paid up capital of the company consisted of 1000 equity shares of Rs. 100/- each held by respondents 2 to 5. THE petitioner entered into an agreement on 22nd November, 2001 for purchase of all the 1000 shares held by these respondents at a consideration of Rs. 1,25,800 per share totaling to Rs. 12.58 crores. This consideration for shares was effectively the value of the Bungalow owned by the company. On the same day, another supplementary agreement was entered into by which the petitioner was to pay Rs. 191.126 lacs for 152 equity shares pending payment for the balance 848 shares. In terms of this supplementary agreement, the petitioner paid for the 152 shares held by the 3rd, 5th and the 6th respondents who in turn delivered transfer instruments along with share scripts to the petitioner. THEreafter, certain disputes had arisen between the parties, which resulted in filing of a suit No. 743 of 2002 by the petitioner wherein it had sought for specific performance of the two agreements by the respondents. In the suit, a consent decree was passed for specific performance. It was later modified with the consent of the parties granting liberty to the petitioner to seek for refund of the amount paid under the agreement and liberty to the respondents to claim damages. THEreafter, the petitioner filed Chamber Summons praying for various reliefs inter alia including refund of the amount paid by the petitioner to the respondents and also for a permanent injunction restraining the respondents from dealing with the property of the company. Both the prayers were declined and the SLP filed by the petitioner against the said order was also dismissed by the Supreme Court. In the meanwhile, the respondents had increased the paid up capital of the company from 1000 to 4000 equity shares, the issue of which is the main complaint in the present petition on the ground that the issue of further shares has been done malafide with a view to reduce the petitioner to a hopeless minority. When this petition was mentioned, I passed an ex-parte order directing the company and the respondents to maintain status quo as of that date of the properties and shareholding in the company. THEreafter, the respondents filed CA 356 of 2004 seeking for vacation of the interim order and also for dismissal of the petition on the ground that the petitioner did not fulfill the requirement in terms of Section 399 of the Act to maintain this petition. By a detailed order dated 26th December, 2004, I dismissed the said application and this order has been taken on an appeal by the respondents before Bombay High Court wherein the respondents sought for staying of further proceedings before this Bench which prayer has been rejected by the High Court and accordingly the petition was heard on merits.
(2.) Shri Ganesh, Sr. Advocate appearing for the petitioners submitted: By an agreement dated 22nd November, 2001, the respondents holding all the 1000 shares in the company agreed to sell all the shares to the petitioner at the rate of Rs. 125800/- per share. All the shareholders were also the directors of the company. The total consideration was actually the value of the property owned by the company. After selling 152 shares, the respondents refused to sell the balance shares to the petitioner due to which proceedings had to be initiated in Bombay High Court. Presently, the petitioner holds 152 equity shares in the company. In terms of Clause 10 of the Agreement, the company was not to increase or alter its share capital and shareholding pattern in any manner after the execution of the said agreement. The same was reiterated in Clause 12(d) of the agreement. However, in contravention of the terms of the agreement and with a view to reduce the petitioner to a hopeless minority in September, 2003 the respondents have increased the paid up capital of the company to 4000 shares by allotment of 3000 shares at par. By doing so, the respondents have not only acted in a manner oppressive to the petitioner but have also enriched themselves by allotting 3000 shares at par while petitioner himself has paid Rs. 125800 per share. The malafide intention of the respondents in increasing the capital of the company is evident from the fact that no cash was received by the company but the shares were allotted against some loan allegedly brought in by the 2nd respondent for discharging certain liabilities of the company in March, 2003. In September, 2004, it came to the knowledge of the petitioner that the respondents had initiated action to sell the shares held by the company in the Society by which the ownership of the property - Flat No. 4-A at Swapnalok would vest in the purchaser. It is to own this very same property, the petitioner had agreed to purchase all the shares held by the respondents in the company. By this act, the respondents have acted in a manner highly oppressive to the petitioner and since there is complete lack of confidence between the petitioner and the respondents, this Bench should direct the respondents to purchase the shares held by the petitioner at the same rate at which the petitioner brought those shares along with suitable rate of interest at which the shares were bought by the petitioner more than three years ago. Shri Haksar, Sr. Advocate appearing for the respondents submitted: The respondents have already appealed against the order of this Bench dated 26th December, 2004 holding that the petition is maintainable. The petitioner is seeking for, in actual terms, refund on the money paid by it for purchase of the 152 shares. Similar claim has been made in the suit before the High Court. Since this prayer was not granted by the High Court, the petitioner has come to this Board with this petition. In the proceedings before the Bombay High Court, the petitioner had repudiated the agreement and if so, he cannot claim himself to be a shareholder in the company. Further, in the SLP the petitioner has submitted that the sale of 152 shares was void and therefore was entitled to recover Rs. 1.9 crores paid in consideration for these shares. If it is so, the petitioner cannot seek any relief in this petition especially when it had sought for refund of the money in the suit. This petition was filed within a few days of dismissal of the SLP by the Supreme Court. Since a substantive suit is pending before the High Court, the petitioner cannot institute the present parallel proceedings. Therefore, this petition should be dismissed and the parties be allowed to pursue the civil suit.
(3.) SH. Ganesh, in rejoinder, submitted: Since all the averments of the petitioner before the High Court and Supreme Court have been rejected, these averments cannot be held against the petitioner in the present proceedings. The petitioner has initiated the present proceedings in its capacity as a shareholder as affirmed by this Board in its order dated 26.12.2004. If the respondents are willing to withdraw their appeal against the order of this Board dated 26.12.2004, the petitioner is willing to withdraw the suit. The learned counsel for the respondents, instead of answering the allegations relating to issue of further 3000 shares, has only argued regarding the maintainability which had already been decided by this Bench in its order dated 26.12.2004. No justification has been given for issue of 3000 shares that too at Rs. 100/- per share. Since there are only two groups of shareholders in the company and due to loss of mutual trust and confidence, the only way by which the disputes could be resolved is to direct parting of ways. In terms of Section 402 of the Act, this Board has powers to order purchase of the shares held by the petitioner either by the company or the respondents which power the High Court does not possess. Once such an order is made, the suit would become infractuous and the petitioner would withdraw the same, thus, ending the disputes between the parties. On such an order being passed, the petitioner undertakes not to make any further claims on the respondents.;