BINOD KUMAR AGARWAL Vs. RINGTONG TEA COMPANY PRIVATE LTD

JUDGEMENT

(1.) SHRI Binod Kumar Agarwal, his wife, Smt. Manju Devi Agarwal, and his son, SHRI Rajiv Choudhry (Agarwal), all shareholders of Ringtong Tea Co. Pvt. Ltd. (hereinafter referred to as "Ringtong") filed a petition dated April 30, 1992, under sections 397 and 398 of the Companies Act, 1953, on May 1, 1992, alleging that the affairs of the company are being conducted in a manner prejudicial to public interest and the interest of the company and in a manner oppressive to the petitioners.

(2.) Ringtong was incorporated as a private limited company in March, 1960. The authorised capital of the company is Rs. 100 lakhs divided into 10,000 equity shares of Rs. 100 each. Petitioner No. 1 is the son of respondent No. 7, Shri Dedraj Choudhry, and petitioners Nos. 2 and 3 are the wife and the minor son, respectively, of petitioner No. 1. Respondent No. 2, Shri Sushil Kumar Choudhry, is the brother of petitioner No. 1 and respondent No. 3, Shri Sanjay Kumar Choudhry, is the son of respondent No. 2. Respondent No. 4, Smt. Sarda Devi Choudhry, is the wife of respondent No. 2. Respondent No. 5, Nirmal Choudhry, is the son of respondent No. 6 and has received shares out of the further shares issued by Ringtong. Respondent No. 6, Subhkaran Choudhry, is the brother of respondent No. 7 and is a shareholder and director of the company. Respondent No. 7 is described in the petition as the managing director of Ringtong and he and respondent No. 8, Registrar of Companies, are treated as pro forma respondents in the petition and no reliefs are claimed against them. Prior to the issue of further shares which is the subject-matter of the petition, the petitioner held 34.28 per cent. of the shareholding of Ringtong, respondents Nos. 2 to 4 and daughter of respondent No. 2 held 30.56 per cent. and respondent No. 7 and his wife held 31.93 per cent. The company is the owner of a tea estate known as Ringtong Tea Estate situated in Distt. Darjeeling.

(3.) ON May 1, 1992, Shri S. Sarkar, senior counsel, appearing on behalf of the petitioners, submitted that the increase in the issued share capital of the company and allotment of further shares to respondents Nos. 2 to 6 were in violation of article 31 of the articles of association of the company and also in violation of the terms of settlement before the High Court in Suit No. 642 of 1991. He further stated that by the purported allotment of shares, the shareholding of the petitioners has been reduced from 34.28 per cent. to 21.25 per cent. He also submitted that the company has appointed Carrit Moran and Co. (P) Ltd. as its auctioneers and brokers for sale of tea but respondents Nos. 2 and 3 were selling the tea through private negotiations for their personal gains and at substantial loss to the company. He, therefore, prayed for interim orders prohibiting the company from making any private sale of tea, restraining respondents Nos. 4 and 6 from acting as directors and restraining giving effect to allotment of shares made on. March 25, 1991, and May 2, 1991. After carefully considering the submissions made by learned counsel and the material on record, we ordered that no voting rights would be exercised in respect of allotment of shares made on March 25, 1991, and May 2, 1991, and restrained respondents Nos. 4 and 6 from acting as directors till the disposal of the matter.