K G RAGHAVAN Vs. FOREWORD ADVERTISING MARKETING P LTD

JUDGEMENT

(1.) THE petitioner holding 1,000 shares out of 4,500 shares in Foreword Advertising and Marketing P. Ltd. ('the company') has filed this petition under section 397/398 of the Companies Act, 1956 ('the Act') alleging acts of oppression and mismanagement in the affairs of the company. According to the petitioner, he was forced to resign from the post of managing director due to pressure tactics used by other directors. When he was the managing director he issued a cheque for Rs. 3.3 lakhs which was dishonoured due to closure of bank account due to which proceedings under Section 138 of the Negotiable Instruments Act, 1881 have been initiated against the petitioner. Further, the company has not held the AGM for 1997-98, nor accounts were prepared, audited and adopted for the year 1997-98. Annual return has also not been filed for the year 1997-98. Under these circumstances, directions should be issued to regulate the management and affairs of the company.

(2.) In the reply, the respondents have submitted that the petitioner voluntarily resigned as the managing director and the closure of the bank account was decided in a board meeting attended by the petitioner and as a matter of fact it was the petitioner who addressed the letter to the bank seeking closure of the bank account. As far as non-holding of annual general meeting, finalisation and auditing of accounts for the year 1997-98 are concerned, the respondents submitted that it was due to the conduct of the petitioner himself. Being in-charge of finance and accounts, the petitioner did not keep proper records and whatever records were available he had taken all of them with himself and, therefore, the accounts could not be finalised. In spite of repeated letters to the petitioner he had failed to return the records including statutory records available with him. In view of this, the company could not finalise the accounts for 1997-98 and subsequent years. Further, the company had already filed a criminal case against the petitioner and two others for misappropriation of funds of the company. Further, even though he resigned from the managing director's post, still he continues to be a director of the company and he has been a party to all the decisions taken by the Board. Therefore, this petition is nothing but a motivated petition as an off-shoot of the criminal case filed against the petitioner by the company. Accordingly, they have sought for dismissal of the petition with further direction to the petitioner to hand over all the books and records of the company.