SURYAKANT GUPTA Vs. RAJARAM CORN PRODUCTS PUNJAB LTD

JUDGEMENT

(1.) THE petitioners collectively holding 15.9 per cent equity shares and 27.9 per cent preference shares in Rajaram Corn Products (Punjab) Ltd. (the company) have filed this petition under section 397/398 of the Companies Act, 1956 ('the Act') alleging various acts of oppression and mismanagement in the affairs of the company.

(2.) The main acts of oppression alleged by the petitioners in the petition relate to reduction of the percentage shareholding of the petitioners by allotment of shares to the respondents' group, non delivery of shares certificates to the petitioners, non sending of notices for general body meetings, falsification of records of the company, conversion of book debts into equity without authority, under selling the goods of the company and thus misappropriating the funds of the company, disposal of the assets of the company with a view to making it into a shell company and mismanagement resulting in continuing loss to the company.

(3.) HE further submitted as follows: In the year 1991, the company owed a sum of about Rs. 18.3 lakhs to a proprietary firm Rajaram Maize Products. This firm consisted of the family members and without their consent, 18,300 equity shares were allotted in the name of the 2nd respondent against the dues payable by the company to the firm. Even though the 2nd respondent claims that the conversion was done with the consent of the partners of the firm, yet, as is evident from pages 155 to 169 of the rejoinder, no consent was ever given by the partners of this firm for adjustment of the dues by allotment of shares in the name of the 2nd respondent. By getting the allotment in his name against the dues payable to the firm, the 2nd respondent is in a position to exercise the voting rights in respect of these shares. Even though the petitioners have filed a civil suit for recovery of the amount of Rs. 18.3 lakhs from the company, such adjustment has resulted in allotment of shares without proportionate offer to other shareholders which is also an act of oppression.