SAKHI RESORTS & FARMLANDS (P.) LTD. Vs. SUDERSHAN SINGH SETHI AND ORS.

JUDGEMENT

(1.) IN this case, the petition has been filed by the petitioners under sections 397 and 398 of the Companies Act, 1956 ('the Act') for the alleged acts of oppression and mismanagement on the part of the respondents and the said petition is under consideration for adjudication.

(2.) Precisely speaking, the company was registered on 18th February, 1998 and is maintaining its registered office at Sakhi Mouse, M -47, Green Avenue, Amritsar -143001. Besides, against the authorised share capital of Rs. 10 lakh, the issued, subscribed and paid -up capital is Rs. 1,50,000 divided into 1,500 equity shares of Rs. 100 each. The petitioners hold 40 per cent of the paid -up capital and the remaining 60 per cent is owned by the respondents. At the time of incorporation, petitioner Nos. 1 to 3 and respondent Nos. 2, 3, 4 and 5 were promoters and, hence, were appointed as first directors and respondent No. 2 was appointed as managing director of the company under article 34 of the articles of association ('AoA'). Thus, the respondent -company is a closely held family company as quasi -partnership concern. The company has built up a Resort for marriages and other parties and functions at a Farmhouse at Village Bal Khurd, Fatehgarh, Churian Road, Amritsar admeasuring 18 Kanal 8 maria.

(3.) THE petitioner advocate argued that the respondent -company is a family company of two sisters, namely, petitioner No. 2 and respondent No. 3 and thereby, it is a partnership concern of the family members, though the petitioners were involved in the management of the company. Further, the petitioners received notice of Board meetings held on 28th April, 2008 only and thereafter, no Board meeting or annual general meeting ('AGM'), was held by the respondents. It has been alleged that the respondents treated the company as their personal property and did not take the petitioners into confidence relating to its affairs from time -to -time. The respondent Nos. 2 to 5 are also engaged in competitive business and own a banquet hall "Sakhi Guest House" at their personal residence at M -47 -48, Green Avenue, Amritsar. Besides, they also have a Eating House "Sakhi's Wats Cookin". The petitioners advocate has pleaded that the petitioners deposited Rs. 10 lakh with the company towards share application money while respondents also deposited such money. However, neither the shares were allotted nor the refund was made. It has also been alleged that no dividend has been declared by the respondent -company despite its working for more than 16 years. In addition, the respondents hatched a conspiracy to remove petitioners as directors. In this regard, it has been argued that the alleged notice for removal of petitioners as directors is bad in law as requirements of section 284(2) of the Act have not been complied with. In fact, no special notice was given to petitioners and their right of representation was denied. Moreover, in a closely held family company like respondent No. 1, removal of directors is a serious act of oppression even if the removal is perfectly legal. In this regard, the petitioners advocate has relied upon the following judgments: