S RANGANATHAN Vs. SHYAMALA PICTURES HOTELS P LTD

JUDGEMENT

(1.) THE petitioners constituting more than one-tenth of the total members of Shyamala Pictures & Hotels (P.) Ltd. ('the company') as well as holding more than 10 per cent of the shares have filed this petition under section 397/398 of the Companies Act, 1956 ('the Act') alleging oppression and mismanagement in the affairs of the company.

(2.) The main acts of oppression and mismanagement relate to enhancement of the shares capital and allotment of shares to the respondents in exclusion of the petitioners, suppression of the income from the business of the company and siphoning of funds by the respondents.

(3.) SHRI A.K. Mylsamy, Advocate appearing for the respondents, while refuting the charges levelled by the petitioners has reiterated that the business of the company is not a family business. The company is not a joint family property and its governed by the provisions of the Act. When the company was incorporated in the year 1939, the paid-up capital of the company was Rs. 26,000 consisting of 260 equity shares of Rs. 100 each out of which 250 shares were owned by SHRI Annamalai Chettiar and 10 shares by Sockalingam Chettiar. Annamalai Chettiar was the promoter of the company as borne out from the memorandum of articles of association of the company. Annamalai Chettiar was never the karta. There was a partition among Annamalai Chettiar, Sockalingam Chettiar and their brothers after the death of their father and thereafter they were carrying on their respective business. The business of the company was never the joint family business. After the death of Sockalingam, there was a partition in the year 1973 among the sons of Sockalingam, wherein the shares in the company were also divided among themselves. The partition deed does not indicate that the petitioners would have equal participation and equal shares in the properties of the company. SHRI Mylsamy further pointed out that the properties of the company have been let out to third parties at a proper and reasonable rent. The rent will vary from property to property depending upon the facilities made available. He urged that the properties of the company with the existing facilities can fetch only the rent which are being received by the company. There has been no mismanagement or siphoning of funds as alleged by the petitioners. SHRI Mylsamy pointed out that the petitioners were never interested in the management of the company in all these years and now make a claim on account of the increase in value of the properties of the company. The petitioners cannot seek for partition of the properties in 397/398 proceedings and claim remedies before the CLB. He, therefore, prayed for dismissal of the petition.