S. Balasubramanian, Chairman - (1.) THE petitioner hereinabove holding 33.78% shares in Amigo Multifilm (P) Ltd. (the company) has filed this petition under Sections 397/398 of the Companies Act alleging acts of oppression and mismanagement in the affairs of the company.
(2.) According to the petitioner, company was conceived with an understanding between the petitioner and respondent No. 1 that the company would be run as a quasi-partnership between the two who would have equal shares in the company. Accordingly, the company was incorporated in 1989 with the petitioner and respondent No. 2 subscribing to the memorandum and articles of the company and both being designated as first directors and as per the articles, they were designated as life time directors not liable to retire by rotation. The petitioner subscribed to 62,500 shares of Rs. 10 each and respondent No. 9 in which the petitioner is a partner subscribed to 30,000 shares. Thus, the petitioner controls 50% share capital of the company while respondent No. 2 along with his family members, respondent Nos. 3 to 8, hold the balance 50% shares. The petitioner further avers that in addition to his investment in the shares of Rs. 9.25 lakhs, he has given an unsecured loan of Rs. 4.5 lakhs to the company apart from a sum of Rs. 9.01 lakhs in the form of supply of certain materials. In addition he has also given personal guarantees for the loans given by State Bank of India and Gujarat State Financial Corporation (GSFI). Therefore, according to the petitioner, he has high stake in the company. The main allegations of the petitioner are : irregular appointment of respondent No. 2 as a director, not accepting the respondent No. 10 as a nominee of the petitioner on the Board, irregular allotment of 14,000 shares to respondent Nos. 2 and 3, exclusion of petitioner from the management wrongful claim on the properties of the petitioner and his family, refusal to give particulars and details sought for by the petitioner, deliberate financial mismanagement and causing loss to the company, etc. Therefore, according to the petitioner, mere have been acts of oppression and mismanagement in the affairs of the company meriting grant of appropriate relief, more particularly relating to cancellation of the allotment of 14,000 shares, restraining respondents Nos. 2 and 3 from acting as directors, appointing of an administrator, declaring all Board meetings held after 18.3.1995 as null and void, directing the respondents Nos. 2 and 3 to render accounts, declaration that appointment of respondent No. 3 as director as null and void, and declaration that respondent No 10 is validly appointed as an additional director.
(3.) THE respondent Nos. 1 to 9 have denied all the allegations in their joint affidavit. According to them, the company was not conceived as a quasi-partnership. Respondent No. 2 is the managing director of the company and respondent No. 3 was validly appointed as a director in an EOGM held on 22 November, 1995, and prescribed Form No. 32 was filed with the RoC. Respondent No. 10 was never appointed as a director. THE allotment of 14,000 shares was made legally in accordance with law. THEre has been no mismanagement of the company and the financial losses are due to non-cooperation, high handedness and criminal activities on the part of the petitioner. It is also stated by the respondents that the GSFI has taken over the possession of the assets of the company under Section 29 of the State Financial Corporations Act and as such, the company is no longer functioning.;