ANIRUDDHA BOSE, J. - (1.) This proceeding arises out of a petition filed by the respondent no. 1 to 6 before the Company Law Board (CLB) under Sections 235, 237, 247, 250, 397, 398, 402 and 403 of the Companies Act 1956. I shall refer to them as the applicants in the later part of this order. The petition has been registered as C.P. No. 1 of 2010 by the CLB. In this petition, various allegations have been made in the operation of Birla Corporation Limited, being the appellant/company which according to the applicants before the CLB constituted mismanagement of the company as well as the acts complained against have been alleged to be oppressive and prejudicial to the interest of the minority shareholders as well as public interest. The allegations are in the nature of siphoning of funds of the company by way of payment of brokerage to undeserved persons and through various other means like payment of freights for doubtful consignments and certain other acts. The applicants have filed the petition before the CLB on the strength of having consent of holders of more than 10% of the shares out of total issued capital of the company as well as having support of more than 100 shareholders numerically. Several applications in the past have been filed alleging mismanagement of the affairs of the company by their existing management. These applications with prayers for interim reliefs were heard earlier but relief was refused by the CLB in those applications in an order passed on 9th February 2011. The petitioners before the CLB have preferred an appeal against this order which is also pending before me for final adjudication. This appeal has been registered as ACO No. 42 of 2011.
(2.) The order under appeal in this proceeding was passed in a further interlocutory application taken out by the applicants, which was registered as CA No. 302 of 2011. Primary prayer for relief in this application was for restraining the company and other respondents therein from giving any effect to a notice for postal ballot dated 28th April 2011. Through the postal ballot, Special Resolution was sought to be carried through effecting alteration of memorandum of association of the company amending the object clause permitting the company to venture into new business areas, being trading in commodities and financial products. The contention of the applicants opposing such alteration is that if such alteration was allowed, that would have changed the fundamental character of the companys business, which at present is centered around cement, jute and power generation. In this petition, allegations were also made that the company was already indulging in trading in financial products through business processes known as Collateral Borrowing and Lending Obligations (CBLO) and MIBOR (Mumbai Inter-Bank Offer Rate) linked non-convertible debentures. The case of the applicants is that by borrowing money through these routes and instruments the company had already started indulging in financial trading which they sought to sanctify by expanding the object clause in the memorandum of association of the company. The postal ballot notice was dated 28th April 2011 but the applicants claim to have received them on or after 24th May 2011.
(3.) The substance of the allegations of the applicants in this interlocutory application as well as in the main petition is that the respondent no. 7, Harsh Bardhan Lodha (HVL) had illegally assumed control of the group of companies and entities who together exercise voting rights to the extent of 62.9% of the shares of the appellant/company. It is complaint of the applicants that HVL had been indulging in siphoning of funds from the said company through various means and money market transactions of the company was also being made through investment companies in which HVL had substantial interest which generated huge sums as commissions. Such activities, according to the applicants, lead to conflict of interest.;