S. Balasubramanian, Chairman - (1.) THE two petitioners hereinabove, collectively holding 1,900 fully paid equity shares of Rs. 100 each in the issued and subscribed capital of Rs. 10,90,000 constituting about 17.5 per cent, of the subscribed and paid up capital in Trinity Combine Associates Private Limited (for short "the company") have filed this petition under Section 397/398 of the Companies Act, 1956 (for short "the Act"), alleging acts of oppression and mismanagement in the affairs of the company.
(2.) When the petition was taken up for hearing, in view of the fact that the petitioners and respondents belong to a single family (petitioner No. 2 being the father and petitioner No. 1 and respondents Nos. 2 and 3 being the sons), the Bench suggested that the parties should try to resolve the disputes amicably. In a number of hearings held, attempts were made by the Bench to settle the disputes amicably but unfortunately it could not materialise. Since one of the main contentions was about the composition of the board of directors, on January 28, 1998, this Bench passed an order that the company should convene an extraordinary general meeting for election of directors and in the meanwhile the respondents should also take steps to vacate two shops belonging to the petitioners and pay to them the arrears of rent. This order was taken on appeal to the High Court of Rajasthan. In the hearing on November 10, 1998, when the arguments of counsel on the petition were in progress, it was mentioned by counsel for the petitioners that his clients were prepared to withdraw the petition if the two shops belonging to the petitioners were handed over to them. Since counsel for the respondents desired to consult his clients on this proposal, the matter was adjourned. In the next hearing on November 27, 1998, while the respondents agreed to the suggestion for vacating the shops, they also stipulated, that the civil suit filed by the petitioners in regard to the sale of certain property of the company should be withdrawn by the petitioners. This was not acceptable to the petitioners and as such the efforts to resolve the disputes failed. Thereafter, the arguments of counsel from both the sides on the petition were heard and they were also given the liberty to file their written submissions.
(3.) SHRI Mehta, advocate for the petitioners initiating the arguments submitted that this company is a family company, the father (the second petitioner) and his sons, petitioner No. 1 and respondents Nos. 2 and 3 were directors of the company and the business of the company was smoothly carried on till 1995. However, the differences between the petitioners and respondents arose, in the affairs of the company, due to alleged convening and holding of a board meeting on June 26, 1995, in which certain far reaching decisions were allegedly taken as is seen from the minutes of the meeting. Even though the petitioner-directors received notice for the meeting, no agenda was enclosed with the notice and it was also noticed that the said notices had also been sent to some rank outsiders as "special invitees". When the petitioners reached the venue of the meeting, they were asked to sign the attendance register wherein something had been written in English. The petitioners protested against the same as it was the usual practice of the company to maintain all records in vernacular langauage. Thereafter, respondent No. 2 declared the meeting closed and left with the minutes book and the attendance register. Later, the petitioners came to know that fabricated minutes were prepared as if the meeting was held and certain decisions were taken in that meeting. Learned counsel submitted that, when there was no meeting, any alleged decisions taken in that alleged meeting have no validity especially when such decisions are completely against the interests of the company. Some of the far-reaching decisions alleged to have been taken in that meeting are : (1) Appointment of five additional directors. (2) Release of four shops belonging to respondents Nos. 2 and 3 from lease with the company. (3) Sale of a shop belonging to the company to Smt. Nisha Kothari. (4) Purchase of a house belonging to Smt. Nisha Kothari.;