ALAKNANDA MANUFACTURING AND FINANCE PVT LTD Vs. BAHUBALI SERVICES LTD

JUDGEMENT

(1.) THE Alaknanda Manufacturing and Finance Private Ltd. and eight other petitioners have filed a petition/complaint on September 23, 1992, under Sections 247 and 250 of the Companies Act, 1956, praying for a declaration for investigation to find out the true and relevant facts about 4,75,618 shares of Gammon India Ltd. (GIL) and determine the identity of the true persons who are or have been financially interested about the success or failure, whether real or apparent, of the company or who are or have been able to control or materially influence the policy of the company and also praying for interim orders imposing restrictions in respect of the said shares under Section 250(2) of the Companies Act. It is also alleged in the petition that by transfer of these shares there has been a change in the composition of the board of directors of the company which is prejudicial to public interest as persons who are ostensibly involved in the company have no experience or technical expertise relating to business of the company. It is also alleged that the management is seeking to transfer the shares held by the ostensible owners to some other persons whereby there is likely to be a change in the composition of the board of directors which would be prejudicial to the public interest and detrimental to the interest of the company and its bona fide shareholders. THE petitioners have further complained that whereas the 6,75,587 shares lodged by them and their group for registering the transfer were rejected in 1989 on the ground that their induction will be prejudicial to the interests of the company, the directors have indiscriminately registered the transfers lodged by various parties in order to perpetuate themselves in the management of the company. In addition, certain allegations have also been made about GIL management in respect of loss of foreign exchange/improper deployment of funds relating to construction contracts.

(2.) There are 17 respondents. Respondents Nos. 1 to 16 have become shareholders during the period September, 1988, to February, 1992, and some of them are also at present shareholders. Respondent No. 17 is Gammon India Ltd. At the initial hearing, we gave necessary directions for filing of replies by the respondents. We had also given certain directions to the respondents to file additional information regarding the invest ment in, shares of GIL, sources of finance of the investment, etc. Ultimately, out of 17 respondents, the following did not file any replies or additional information nor were they represented at the hearings.

(3.) ULTIMATELY detailed replies and additional information as well as full representation at the hearings were all there, in respect of seven companies, namely, (a) respondent No. 11, Motivala Investment and Company Private Ltd. (Motivala), (b) respondent No. 12, Benaras Beads Limited (Benaras Beads), (c) respondent No. 13, Prashant Glass Works Private Ltd. (Prashant Glass), (d) respondent No. 14, Mogra Investment Private Ltd. (Mogra), (e) respondent No. 15, Lakhani Engineering Works Private Ltd. (Lakhani), (f) respondent No. 16, Cuckoo Trading Private Ltd. (Cuckoo), (g) respondent No. 2, Bhavi Investments Ltd. (Bhavi), besides the company, viz., Gammon India Ltd. (GIL). We gave further opportunity to respondents Nos. 1 and 7, viz., Bahubali and MGF, to file replies, etc. We also called for information from the Registrar of Companies.