(1.) THIS order relates to two petitions under Sections 111(4), (5) and (6) of the Companies Act, 1956 (hereinafter called "the Act"), in respect of Sidhartha Polyester (P.) Ltd. (hereinafter called "the company") by the respective petitioners. The first petition, being C. P. No. 2/111/94, was filed on September 6, 1993, by nine different petitioners who have a common cause seeking a common relief. The second petition, being C. P. No. 9/111/94, was filed subsequently on January 17, 1994, by Mrs. Shukla Mahajan, wife of Shri Yashpal Mahajan. Both the petitions seek identical reliefs. Since the grievances and grounds for the petitions and reliefs in the petitions and as substantially the respondents are all the same, both the petitions, with the consent of the parties, were heard together and are also being disposed of by this common order. In the case of C. P. No. 2 of 1994, more than one person has joined to file a single petition. Subsequently, on December 27, 1993, an application was filed by the legal heir of one of the petitioners in C. P. No. 2 of 1994, viz., Shri Harish Chandra Baranwal, seeking for substituting his name due, to the death of the petitioner on September 28, 1993. The respondents in C. P. No. 2 besides the company include Shri Arvind Mahajan, Shri D, C. Mahajan and Shri Ajay Mahajan, who are all directors of the company. These persons are also respondents in C. P. No. 9 as well. In addition in C. P. No. 2, Smt. Shukla Mahajan, who is the petitioner in C. P. No. 9, was also impleaded as a respondent though no relief is sought against her. The additional respondents in C. P. No. 9 include Smt. Rashmi Mahajan, wife of respondent No. 3, and also includes two more organisations, namely, Sidhartha Textiles Mills Ltd. and Sidhartha Textile Agencies, a partnership firm.
(2.) The background of the dispute is that the two groups, as stated in the petition, namely, the Mrs. Shukla Mahajan group and the Arvind Mahajan group, participated in the company from August-September, 1988, on the premises that :
(a) Mrs. Shukla Mahajan (hereinafter called "SM") shall be the principal promoter as a first generation woman entrepreneur with financial assistance from the Industrial Financial Corporation of India (IFCI). SM has been referred to as one of the first directors in Article 55 of the Articles of association ;
(b) SM and her group shall contribute to the extent of 50 per cent, of the equity capital and Shri Arvind Mahajan (hereinafter called "AM") and his group shall contribute the other 50 per cent. ;
(c) Both the groups will have equal say in the company's affairs ;
(d) The project will be set-up in Panchkula near Chandigarh and the fact of SM being the main promoter and a first generation woman entrepreneur, will be a strong point for convincing the IFCI to agree to finance the project ;
(e) The outlay for the project was as follows ;
(f) The promoters' contribution was made accordingly.
(g) The entire project which was a high-tech one was developed by SM exclusively as she was living in Chandigarh/Panchkula, whereas respondents Nos. 2 to 4 were living outside.
(h) It was understood and agreed by all concerned that SM shall be the principal promoter in the management and control of the affairs of the company. Based on the capital contribution by both the groups the company was able to approach the IFCI for financing the project as well as various authorities including the banks for approvals and assistance. SM also executed appropriate undertakings for overrun and non-disposal of shares and personal guarantees against the term loans. All steps for timely implementation of the project were taken by SM single handedly.
By March, 1990, the project was commissioned and only in 1991, respondents Nos. 2 to 4 who were involved in other businesses and were not involved in the company's work, started participating in the company's affairs. At this time, SM did not suspect any attempt on their part to control the company. However, the contesting respondents evolved a clandestine scheme to refuse issue of share certificates to the SM group to the extent of Rs. 11.70 lakhs and usurped the respondent company for their personal gain and advantage. The share certificates in respect of Rs. 4.9 lakhs were denied to the nine persons who are petitioners in C. P. No. 2 on the ground that the money was not contributed by them and the money belonged to SM's husband and also alleged that this fact was concealed intentionally. Similarly, no allotment was made against the contribution of Rs. 6.8 lakhs by SM also on account of this. Thus, respondents Nos. 1 to 4 illegally denied the rights of the petitioners in respect of their promoters' contribution of Rs. 11,7 lakhs. In perpetuation of these illegal designs letters were sent to the petitioners in, C. P. No. 2 to claim their money back within a time limit in case it belonged to them.
(3.) THE petition also contains details of the drafts sent by the petitioners in 1989, for the amount remitted by them. It is the contention of the petitioners that these amounts were deposited in the bank account maintained by the company and are also duly reflected in the accounts of the company. THE petitioners also state that they have filed application forms in the shape of letters for the shares, copies of which were submitted by the company to the income-tax authorities in connection with the income-tax assessment of the company. THE respondent company duly used the above funds and had the benefit of the said amount all along. THE amount contributed was treated as promoters' contribution in various representations and, accordingly, financial institutions have granted financial assistance for the project. In fact, the IFCI assistance was available only after the promoters had brought in their contribution in cash which was a stipulation for financial assistance. THEse contributions were shown as shareholders' funds repeatedly in the balance-sheets and annual accounts of the company beginning from March 31, 1989, to March 31, 1992. However, the respondents have attempted to manipulate the balance-sheet of 1988-89 filed along with their reply to show as if in March, 1989, these contributions were treated as unsecured loans. It is the allegation in the petition that AM who is the principal person associated with the affairs of the company was aware of these contributions towards the equity capital. In fact, AM, as director of the company has confirmed, through a letter and a detailed statement to the Assistant Commissioner of Income-tax about the share application money having been received through crossed cheques/demand drafts from various parties. It is submitted by the petitioners that, despite the above factual position, the names of the petitioners have not been entered in the register of members and the company has defaulted and delayed in entering in the register within the meaning of Section 111(4)(b) of the Act. Accordingly, they have prayed for rectification by deleting the names of other persons from the register of members and entering their names instead.;