- (1.) THIS is a petition under sections 397 and 398 of the Companies Act, 1956.
(2.) BRIEFLY, the facts are that the respondent is a private limited company having authorised capital of Rs. 10,00,000 divided into 1,000 equity shares of Rs. 1,000 each. The called up capital is Rs. 8,50,000 and the paid-up capital is Rs. 7,91,000. The calls in arrears amount to Rs. 59,000. It was incorporated on August 21, 1961, under the provisions of the Companies Act (hereinafter referred to as "the Act" ). The petitioners hold 1. 50 shares as detailed below : Col. Kuldip Singh, petitioner No. 1 20 Hardev Singh Minhas, " No. 2 30 Maj. K. Gurdev Singh, " No. 3 20 Smt. Nasib Kaur, " No. 4 20 Iqbaljit Singh, " No. 5 20 Smt. Kirpal Kaur, " No. 6 20 Smt. Chanan Kaur, " No. 7 20
(3.) IT is alleged that the affairs of the company are being conducted prejudicially to public interest and in a manner oppressive to the petitioners, who are in minority, as detailed below : (i) The company had been allotted 490 equity shares of Punjab Iron and Steel Co. P. Ltd. , Jalandhar Cantt. (hereinafter referred to as "pisco" ). The paid-up amount in respect of the above shares was Rs. 3. 90 lakhs. They were transferred in the names of Pavittar Singh and his wife, Nasib Kaur (122 shares), Ravinder Singh, son of Pavittar Singh, and his wife (124 shares), Ramesh Inder Singh, son of Pavittar Singh (122 shares), and Swaran Singh, son of Milkha Singh, brother-in-law of Pavittar Singh (122 shares ). These were transferred in a clandestine manner and without having been offered to any other shareholder including the petitioners, for a consideration of Rs. 3. 90 lakhs in a meeting of the board of directors of the company held on December 30, 1978. No money in cash was paid by the purchasers to the company as the price of the shares. An amount of Rs. 2 lakhs alleged to be deposited with the company was adjusted towards the purchase price and the balance amount of Rs. 1,90,000 was given by the company as loan to the purchasers with interest at the rate of 15 per cent. per annum. The meeting in which the shares were transferred was illegal and void for want of quorum. Some other irregularities were also committed by the board of directors in calling and holding the meeting. Thus, the transfer of shares is not binding on the company. (ii) Shri Ramesh Inder Singh was the managing director of the company in the year 1976 and he had been operating the bank account of the company maintained in the Central Bank of India, Civil Lines, Jalandhar City, without any authority. He issued cheques in fictitious names with the result that amounts to the tune of lakhs of rupees were misappropriated. (iii) Mohinder Singh had been appointed as manager-cum-cashier of the company during the regime of Pavittar Singh, father of Ramesh Inder Singh. The books of account were maintained by Mohinder Singh. As a result, it is alleged, an amount of Rs. 2,68,000 had been defalcated by him in the year 1976. The board of directors decided to take action against him. The matter was taken in various meetings of the board of directors but no action was taken against him. Thus, the interest of the shareholders was not protected by the management. (iv) The minutes book of the company relating to the meetings of the board of directors and shareholders was not kept properly from November, 1978, to September, 1979. Some of the proceedings have not been signed by the chairman. There are various violations of the provisions of Section 193 of the Act. Therefore, the business transacted in the meetings during that period is illegal and void ab initio. (v) The company had been advancing loans to some persons without any documents. It is alleged that it advanced loan without interest and without getting executed any document to PISCO. An amount of Rs. 14,309. 57 stands due from it to the company and an amount of Rs. 36,730. 52 from Mohinder Singh as on December 31, 1978, but no action has been taken to recover the amounts from them.;