S.Balasubramanian, - (1.) THE petitioner holding 100 shares and claiming to be entitled to 20 per cent, shares in M/s. Seth Hotels P. Ltd., has filed this petition alleging that by issue and allotment of further shares, his percentage shareholding of 20 per cent, has come down to an insignificant percentage and as such has sought for cancellation of issue and allotment of all the shares impugned in the petition. He has filed an application C.A. No. 364 of 2008 seeking for tagging this petition with C.P. No. 86 of 2006 filed by another shareholder on the same set of allegations. THE respondents have filed C.A. No. 363 of 2008 challenging the maintainability of the petition in terms of Section 399.
(2.) The facts of the case are that the company was a family company incorporated in 1993 with the petitioner and four of his brothers being the signatories to the memorandum and subscribing to 100 equity shares each of Rs. 10. Thus, each held 20 per cent, shares in the company. The paid-up capital remained as Rs. 5,000 till August 26, 2000. The petitioner was one of the five directors on the board. He resigned from the board sometime in 2004. According to the petitioner, his another brother had filed a petition C.P. No. 86 of 2006 from which he came to know that the company had issued further shares on four occasions to the second, third and fifth respondent groups in exclusion of the petitioner and the other brother Shri Mahender Kumar Seth. By these allotments, the paid-up capital of the company has been increased from Rs. 5,000 to over Rs. 1.79 crores resulting in the petitioner's shareholding percentage coming down from 20 per cent, to 0.005 per cent. According to him, since similar allegations have been made in C.P. No. 86 of 2006, to avoid conflicting decisions on the same sets of facts, this petition should be tagged on with the other petition. This has been opposed by the respondents and they have sought for deciding the maintainability of the petition in terms of Section 399 on the ground that the petitioner does not hold 10 per cent, shares nor he constitutes one-tenth of the membership of the company as there are at present 15 shareholders in the company. Therefore, before deciding on C.A. No. 364 of 2008, the maintainability of the petition should be decided. Shri Krishana Kumar appearing for the respondents submitted : Even though initially each of the brothers held 20 per cent, shares in the company, yet except one brother, late Joginder Singh, none of the other brothers took any interest in the company and he alone made investments and accordingly shares were allotted to him without any protest by other brothers. Further, a suit has been filed by one Rishi Bhatia against the company regarding the sale of the land of the company, due to which, the petitioner resigned as a director on March 25, 2004. At the time of resignation, he never objected to the shares that had been allotted up to that date, which now he is challenging. Joginder Singh died in 2005, whereafter, the shares held by him were transmitted to his wife. All the shareholders of the company except the petitioner have transferred all their shares in favour of sixteenth/seventeenth respondent and their group. On acquisition of these shares, presently, the management is under the control of sixteenth/seventeenth respondent, who have invested more than Rs. 6 crores, not only to meet the liabilities of the company, but also to compromise the suit filed by Rishi Bhatia.
(3.) LEARNED Counsel further submitted: Initially, at the time of incorporation, the paid-up capital was Rs. 5,000. Further, shares were issued and allotted on August 27, 2000, March 31, 2000, April 15, 2004 and August 26, 2004 and as on that day the paid-up capital was Rs 29.45 lakhs. All the shares had been allotted only to the family members of the family and relevant returns were filed in accordance with law. Therefore, the petitioner was fully aware of the allotments made. Further, Mahender Kumar Seth, one of the brothers, filed the Company Petition No. 86 of 2006 in which the petitioner was arrayed as the fifth respondent and this petition was mentioned on September 19, 2006. In the said petition, there was no challenge for the allotments made up to August 26, 2004 and only subsequent allotments had been challenged. In that petition, the respondents had challenged the maintainability in terms of Section 399 of the Act and the petitioner herein did not oppose the said application. In that petition, by an application dated March 12, 2007, the petitioner herein sought for transposition from respondent No. 5 to petitioner No. 2 and when the application came up for hearing, the petitioner withdrew the said application unconditionally and the same was disposed of as "dismissed as withdrawn". This order has been suppressed in the petition. As of date, the paid-up capital of the company is Rs. 1.79 crores and the petitioner's holding is less than 0.005 per cent, and since there are 15 members in the company, the petitioner does not qualify to file this petition in terms of Section 399 of the Act and as such the same should be dismissed.;