LEGEND TECHNOLOGIES (INDIA) P. LTD. AND OTHERS Vs. B.V. REDDY AND ANOTHER

JUDGEMENT

(1.) THIS appeal is filed by respondents Nos. 1 to 4 in Company Petition No. 17 of 2006, on the file of the Company Law Board, Additional Principal Bench, Chennai, being aggrieved by the order dated February 15, 2008 (B.V. Reddy v. Legend Technologies (India) P. Ltd. (2009) 147 Comp Cas 81), wherein, the Company Law Board has allowed the application filed by respondent No. 1 herein filed under sections 397 and 398 read with section 402 of the Companies Act (hereinafter called as "the Act" for short) with a view to regulate the conduct, of the company's affairs and passed the following order (page 129):

(2.) THE petitioner subscribed for 50 per cent. of the capital at the time of incorporation and the balance 50 per cent. was subscribed by the second respondent. The authorised share capital of the company is Rs. 65,00,000 (rupees sixty five lakhs only) divided into 6,50,000 (six lakhs fifty thousand) equity shares of Rs. 10 (rupees ten only) each. The issued, subscribed and paid -up capital of the company as at March 31, 2005, was Rs. 28,40,000 (rupees twenty eight lakhs forty thousand only) comprising of 2,84,000 (two lakhs eighty four thousand) equity shares of Rs. 10 (rupees ten) each fully paid -up. The main object of the company is to carry on the business of manufacture and dealing in design, develop, manufacture, assemble, repair, maintain and service aerospace vehicles, their structures, systems, accessories, tooling, ground equipment.

(3.) IT is further averred that the petitioner was given to understand that company has appointed additional directors during 2004 and since then some of them got resigned and some others got inducted. There was no dispute about the shareholding pattern of the company in the beginning stages. The petitioner and the second respondent were managing the company in a harmonious manner for more than a decade. There were no differences during that time. From June, 2005 onwards the differences between the petitioner and the second respondent arose, particularly in consolidating his position and the holding in the company against all cannons of law. The first respondent is the company in respect of the affairs of which the petition has been filed. The petitioner and the second respondent are inseparable friends since 1980, did AMIE course together, passed out in 1984, and did PG course together for the next two years till 1986. The second respondent joined HAL, Bangalore and the petitioner joined Hyderabad Allwyn during 1987. In 1989, the petitioner had some offers from USA but the second respondent prevailed on him to stay in India, so that they can do some business together. During early 1992, both the petitioner and the second respondent resigned their jobs and got together to do business in the line of designing and assembling aerospace vehicles. The business got commenced, initially by formation of a partnership firm at Mysore on May 21, 1992, by the name and style of Legend Designers. The terms of partnership is on equal basis between the petitioner and the second respondent. The wife of the respective partners were inducted as partners in the firm. Thus, the entire family of the petitioner and the second respondent commenced business together and worked for each other and grown together. In order to expand the activities of the firm, it was mutually agreed between the petitioner and the second respondent that a private company be incorporated under the name and style "Legend Technologies India P. Ltd.", on equal terms and as a sequel the petitioner and the second respondent got the first respondent -company incorporated on May 6, 1998. The second respondent is a promoter shareholder along with the petitioner, each of them subscribed to 100 equity shares. Like the petitioner, the second respondent was named as first director in the articles of association of the first respondent -company. The, shareholding was at all point of time is on equal basis, save and except the illegal tactics adopted by the second respondent to enhance the same as explained in the petition, in the recent past. The third respondent was not a shareholder of the company at all. Prior to commencement of practice, the petitioner was given to understand that he was employed as a bank officer and presently he is a financial wizard and advising on strategic partnerships, joint ventures, takeovers, mergers and has leading clientele list. Besides, being a professional, he got inducted as director of the company on August 11, 2004 and for reasons best known to him, he ceased to be a director from September 30, 2005. During the period of his holding the office of director, the petitioner was given to understand that the third respondent had certified compliance certificate for the year 2001 onwards as required under section 383A of the Act, including the two years during which time he happened to be a director of the first respondent -company, perhaps, without disclosing therein that he also holds the position of director of the very same company, whose affairs he had certified. The third respondent had indulged in certain acts of oppression in collusion with the second and fourth respondents as detailed out in the petition.