HARIKUMAR RAJAH Vs. SOVEREIGN DAIRY INDUSTRIES LTD

JUDGEMENT

(1.) THE petitioner holding 34 per cent of the paid-up share capital in Soverign Dairy Industries Ltd. ('the company') has filed this petition under section 397/398 of the Companies Act, 1956 ('the Act') alleging various acts of oppression in the affairs of the company and seeking, inter alia, the following reliefs :--

(2.) The acts of oppression agitated in the petition relate to the following :

(3.) SHRI A.L. Somayajee, the counsel appearing for the respondents while refuting the allegations made by the petitioner has submitted that the petitioner has made allegations relating to the conduct of the affairs of the company during the period 1979--1997. The petitioner had already filed CP No. 49 of 1987 before the High Court of Madras. The very same allegations are made in the present petition. The High Court having considered all the said allegations passed orders regulating the affairs of the company. The present petition is barred on the principles of res judicata. SHRI Somayajee pointed out that the second respondent was disqualified to be a director by the High Court on the sole ground that he did no possess the qualifying shares as on the date of his appointment as director. The High Court did not disqualify the second respondent from being elected director in accordance with the Act for ever. Accordingly, the second respondent after having acquired the qualifying shares was duly elected as a director in the extraordinary general meeting held on 20-6-1998 in the presence of Advocate Receiver appointed by the High Court. Thus the election of Directors in the meeting held on 20-6-1998 was approved by the High Court. Anyway, he resigned as a director in April, 2000. The petitioner has sought the same reliefs already claimed in the company petition before the High Court. The only new act of oppression made in the present petition relates to the increase of capital and the allotment of shares on right basis. SHRI Somayajee has reiterated that the petitioner cannot complain about the increase of capital as the rightful entitlement of the petitioner was offered to him. The increase of capital was required by the company and supported by decision of the board of directors. Moreover, it is an isolated act, which cannot be sustained under section 397/398. He further pointed out that the petitioner has already filed a petition before the High Court for winding up of the company. Thus, the petitioner has taken two inconsistent stands, one filing of winding up petition on just and equitable ground and the other complaining of acts of oppression and mismanagement before the CLB. The respondents are willing to offer to the petitioner 14,000 shares more than his rights entitlement, which may be subscribed to by the petitioner. The respondents denied any misappropriation of funds of the company. The properties were sold in order to liquidate the liabilities of the company with Bank of Madura Ltd. and not for personal benefit of the respondents. The second respondent has been collecting the lease amount from the lessees and accounted in the books of account of the company. The petitioner cannot challenge the allotment of shares made in favour of the third respondent as early as in 1979, especially when the petitioner did not agitate this contentious issue in the previous company petition filed before the High Court of Madras.