Ina Malhotra, Member - (1.) Respondent No. 1, a Company engaged in the business of manufacture and sale of liquid gases used for medicinal as well for industrial purposes, was incorporated in April 1987 by Respondent No. 2 as one of its initial promoter Directors. Petitioner No. 1 was inducted as a share holder in 1999 and was allotted 8000 shares of the face value of Rs. 10/-. On 30th September, 1999 he was appointed as the fourth Director, the other three being Respondents 2-4. As per averments made in the petition, Respondents 3 & 4 resigned w.e.f. 01.01.2000 and effectively thereafter, Respondent No. 2 and Petitioner No. 1 were the only two directors on the Board of the Respondent Company. This is borne out from the annual returns approved and filed with the office of the RoC pursuant to the AGM held on 29.09.2001.
(2.) The petitioner alleges that in September 2005, the paid up capital was increased to 41 lacs after which the Petitioners' Group and the Respondents' Group each held 50% equity, having been allotted 2.05 lakh shares of Rs. 10/- face value. This shareholding pattern finds due corroboration in the annual returns approved on 29.09.2005 filed with the RoC for the F.Y. ending 31.03.2005.
(3.) As per averments, the discord between the two parties arose in 2006, after which the Petitioner No. 1 alleges various acts of oppression and mismanagement against the respondents. It is stated that Respondent No. 2 who had control over the finances of the Respondent No. 1 company refused to sign cheques for his remuneration and reimbursements and also instructed the employees to disregard his directions. It is alleged that without any prior intimation, Respondent No. 2 proceeded to pass a resolution on 07.08.2006, revoking the signing authority of Petitioner No. 1 in the Bank Account and replacing his brother Respondent No. 3 as the signatory. It is also pointed out that Respondent No. 3 was reappointed as a Director on 24.04.2006 without a proper Board Meeting. This act of appointment of Respondent No. 3 without the consent and knowledge of the petitioner, is perse an act of oppression and mismanagement. The appointment of Respondent No. 3 as a director on 24.04.2006 was contrary to the statutory requirements in-as-much as there was no quorum and was sought to be justified on the grounds of an alleged board resolution dated 08.02.1999 whereby Respondent No. 2 had conferred upon himself the unbridled right to appoint or remove any person from the board of the company. The petitioner's case is that the appointment of a director to the Board is governed by the provisions of Section 260 of the Companies Act 1956 and the Articles of Association of the company. It is argued that if a director is appointed as an additional director, his tenure can be regularised only upto the date of the next AGM when he retires and may be re-appointed for the next term. It is alleged that the power exercised solely by Respondent No. 2 is void ab initio without any authority or legal sanction. As the respondent company had only two directors on the Board, Respondent No. 2 could not have unilaterally appointed Respondent No. 3 as an additional director on 24.04.2006.;