- (1.) Frick INDIA LIMITED, Respondent No. 1 herein is a listed public company, in which out of the total issued, subscribed and paid up capital of 599,975 equity shares of Rs. 10/- each, while outsiders hold 36.25%, the children of Late Manmohan Singh, Late Sarabhjit Singh and Petitioner No. 1 collectively hold the rest of the 63.75% of the paid up capital of the company, however, the proportion of such holding between the family members inter se being one of the disputes before us and of which we will be encountering in paragraphs infra. Respondent No. 1 seems to have been incorporated as a public limited company in the year 1962, and subsequent to its incorporation had entered into a collaboration with FRICK, USA, who had participated in the equity of Respondent No. 1 to the extent of 51% and which holding seems to have been subsequently bought by Late Shri. Manmohan Singh to the extent of 11% and the balance 40% by Petitioner No. 1. The Petitioners aver that Respondent No. 1 was promoted by Late Sh. Manmohan Singh, Late Sarabhjit Singh and Sardar Sahib Balwant Singh and presently the Respondent No. 1 for all intents and purposes is controlled and managed by the progenies and family members of the above named promoters as is evident from the composition of the Board as disclosed in the petition, save the independent director(s) who are in the Board.
(2.) The petitioners in paragraph 6 of the petition has tabulated the extent of shareholding held by each member of the family, of course some of the holdings of shares held by Respondent 2 to Respondent 5 being disputed by the petitioners. According to Petitioners, the dispute in relation to shareholding of Respondents arises in so far as they are concerned on two counts. "a) Firstly in relation to 2500 equity shares bearing distinctive Nos. 372993 to 375492 allotted on 28.07.1969 to Petitioner No. 1 had been illegally and fraudulently transferred, in favour of Respondent No. 3, on 19.07.1990 vide a forged and fabricated transfer deed alleged to have been executed by the Petitioner No. 1 and that no consideration had been received for the said transfer and hence in any case the transfer is null, void and bad in law. b) Secondly respondent No. 2 in collusion and connivance with the other respondents is trying to acquire half of the shareholding out of a total of 40% equity shares of the Paid up Capital of the Respondent No. 1 held by the Petitioner No. 1 in his name, on the erroneous basis that Late Mr. Manmohan Singh, father of Respondent No. 2 had transferred the said 40% interest in Frick India Limited to Petitioner No. 1 to be held in trust for him, in order to avoid the applicability of Indian Laws which prohibited Late Mr. Manmohan Singh from holding more than certain percentage of the shareholding of the company in his individual name while he was alive, and in the circumstances subsequent to his life time, based on the above erroneous assumption Respondent No. 2 had initiated legal proceedings by filing a law suit in the Common Wealth of Massachusetts, Trial Court, Worcester Division, Probate and Family Department bearing Docket No. 11EO107-QC, titled as Jasmohan Singh v. Jang Bahadur Singh seeking an order preventing the dissipation of the assets of Late Mr. Manmohan Singh, including inter alia 40% stake in Respondent No. 1 and as well as monies kept in three accounts totaling to $ 5,646,136.90 and though Respondent No. 2 was successful in obtaining an Interim Order on the said premise from the Massachusetts Trial Court, subsequently the same was denied on the basis that there was no likelihood of success on merits, as there was no express trust and that the shares had been purchased by Petitioner No. 1 based on an agreement dated 25.08.1982. However, based on threats about violation of Indian Law and to have him arrested, as Petitioner No. 1 is a U.S. citizen, and under duress, an agreement dated 22.12.2011 had been executed by Petitioner No. 1 for himself and as power agent for other petitioners on the one hand, and Respondent No. 2 and Respondent No. 5 on the other, wherein it is represented as if Petitioner No. 1 agreed to transfer 20% out of the total of 40% shares as aforesaid to Respondents No. 2 to 5 and the above said agreement dated 22.12.2011 is claimed by the Petitioners as illegal, unlawful and void agreement and hence it is claimed that the respondents 2 to 5 are not entitled to the said 20% of the total equity of the Respondent No. 1 company held by Petitioner No. 1 in his personal name based on such a void agreement. In addition it is also claimed by the Petitioners that the respondents are required to conform to Indian Laws including the SEBI formulated guidelines, Take Over Code as well as FEMA, even assuming the said agreement is binding and to have the shares transferred in the manner as contemplated under the Settlement Agreement and hence the shareholding of the company must be changed only under due process of law. c) In addition to the above claims of the Petitioners, the Petitioners have alleged acts of mismanagement in relation to the affairs of the Respondent No. 1 company by Respondent No. 2, he being the Managing Director of the R-l Company which can be broadly classified as under:- a) That the respondent No. 2 has not provided any reliable information/analysis in relation to the progress of the company to the Board of Directors despite demand and has stopped reporting important decisions taken, to the Chairman of the Board of Directors and is thereby acting independently. b) That respondent No. 2 despite having his own house, is seeking to avail house rent allowance by taking on rent his own mother's property for lease, and spending enormous sums in relation to repairs and renovations to the extent of Rs. 22 lakhs, and when questioned by the Board, had termed it as arrogant. c) That respondent No. 2 had recently applied pressure in making an independent director resign as borne out by records dated 27.01.2012 and had also similarly made petitioner No. 2 to resign from Joint Managing Directorship in the year 2007. d) That due to the misconduct of Respondent No. 2, the company had lost contract and goodwill in the market particularly in Punjab and by his litigans attitude, had made the share price of the company to drop, all of which seems to be well thought out strategy by the Respondent No. 2 since 1991. e) That when the independent director pointed out instances regarding finances, the same was sought to be covered up, by making a revised statement of accounts and circulated reflecting profits instead of loss declared earlier, which connotes according to Petitioners, that the profits as revised are not true and that Respondent No. 2 is siphoning of funds for his personal use, and some of the instances being illegal sale of scrap, maintaining duplicate vouchers to assist the customers, manipulation of shares and incurring bogus expenditures, obtaining foreign currency gifts from the funds of the company through his friends and assisting his wife's relatives through the company's funds."
(3.) Pre-Dominantly based on the above allegations and averments, the Petitioners have claimed the following reliefs, in the main Company Petition under Sections 111A, 397 and 398 read with Sections 402 & 403 of the Companies Act, 1956:- "a) Declare and set aside the appointment of the Respondent No. 2 as the Managing Director of Respondent No. 1 Company and declare the Form 32 to that effect as null and void; b) Set aside the transfer of 2500 shares of Petitioner No. 1 in favour of the Respondent No. 3 and direct the rectification of register of members of the Respondent No. 1 Company to reflect the shareholding of the Petitioner No. 1 as having 242502 equity shares instead of the 240002 as presently shown; c) Restrain Respondent No. 2 from changing the shareholding pattern of the company, without the due process of law as set out under the Companies Act, 1956; d) Pass an order that the Respondent No. 2 shall not act on behalf of the Respondent No. 1 Company nor shall he interfere in the day-to-day affairs and business of the Respondent No. 1 Company in any manner, except as authorized by the Board of Directors; e) Direct Respondent No. 2 to bring back the funds siphoned off. f) Pass appropriate orders, relief's, directions under section 111A, 397, 398, 402 and 403 of the Companies Act, 1956 to bring to an end the aforesaid acts of oppression and mismanagement perpetrated by the respondents and for necessary orders and reliefs in respect thereto, including as prayed for therein; g) Pass an order awarding the costs of the present litigation to the Petitioner; h) Pass such other and/or further orders be made affording complete reliefs to the Petitioner as the Hon'ble Company Law Board may deem fit and proper.";