ERNAKULAM FINANCIERS AND KURIES P LTD Vs. JOSEPH CHANDY

JUDGEMENT

(1.) THIS is an application filed by Ernakulam Financiers and Kuries Private Limited (hereinafter referred to as "the company") under Section 188(5) of the Companies Act, 1956 (hereinafter referred to as "the Act"), for the following reliefs :

(2.) According to respondents Nos. 1 to 4, the application filed by the company under Section 188 is not maintainable. The application is vitiated by gross and deliberate suppression of facts and also in violation of the orders of the Munsiff's Court, Ernakulam. The respondents gave a request under Section 169 of the Act, to the board of the company to convene an extraordinary general meeting for removal of the directors of the company. Though the requisition was a valid one, the board of the company refused to convene the meeting. Thereafter, the respondents circulated the proposed resolution to all the shareholders of the company with the notice dated January 27, 1997, convening an extraordinary general meeting before the interim order dated February 6, 1997. There was no prohibition against the respondent either from circulating the resolution on January 27, 1997, or convening the extraordinary general meeting on February 19, 1997, pursuant to Section 169(6) of the Act. The interim order dated February 6, 1997, was only against the company not to circulate the statement among members. Accordingly, the extraordinary general meeting was duly convened by the respondents in accordance with the provisions of Section 169(6) of the Act, unanimously resolving to remove all the members of the existing board and elected a new board in its place, who took charge of the company's affairs. The new board has been functioning as a competent board of directors of the company. The new board of directors of the company had filed a suit in O.S. No. 363 of 1997 on the file of the Munsiff's Court, Ernakulam, and obtained an ex parte order of ad interim injunction in I.A.No. 1127 of 1997, on February 21, 1997, against all the members of the erstwhile board of the company restraining them from interfering with the affairs of the company or representing themselves to be directors of the company. The ex parte order was confirmed on March 24, 1997. Though an appeal in C. M. A.No. 52 of 1997, on the file of the District Court, Ernakulam, was preferred against the order of injunction, the appellate court had not interfered with the said order. Shri M. B. Lonappan, who is the signatory to the present application has been deliberately violating the orders of the above courts. It is in these circumstances, the main application and miscellaneous applications are liable to be dismissed.

(3.) ACCORDING to the fifth respondent; he was not aware of the affairs of the company for the last 2-3 years and joined respondents Nos. 1 to 4 in requisitioning a meeting under Section 169 of the Act. The company has obtained an order of injunction against the respondent in the Munsiff's Court, Kochi, but the order of interim injunction was served on the respondents on February 18 and 19, 1997. In the meanwhile, a meeting of the members was held on February 19, 1997, wherein a resolution was passed for removing all the 14 existing directors and substituting 14 others as directors of the company, In the said meeting the third respondent was elected as chairman and managing director and the fourth respondent as joint managing director. The third respondent, chairman, instituted a suit on February 21, 1997, against eight directors of the company before the Munsiff s Court, Ernakulam, in O. S. No. 363 of 1997, praying for an injunction to restrain them from interfering in the administration of the company. Thereafter, respondents Nos. 1 to 4 took over the possession and management of the company. Respondents Nos. 1 to 4 alone are managing the affairs of the company. The other directors are not even attending the board meeting of the company. The new board of the management is acting adverse to the interest of the company and its shareholders. Respondents Nos. 1 to 4 are making unlawful gains for themselves and their families. Respondents Nos. 1 to 4 are acting prejudicially to the interest of the members of the company. The present attempt of respondents Nos. 1 to 4 is to oust the other five families and capture control of the company by unlawful means and own the company exclusively by their families. The authorised share capital of the company is Rs. 15 lakhs divided into 15,000 equity shares of Rs. 100 each, out of which only 12,080 shares are paid-up. Respondents Nos. 1 to 4 have now issued 1996 equity shares in their names and relatives as stated in the counter with the ulterior motive of gaining control over the company. Respondents Nos. 1 to 4 attempted to convene an extraordinary general meeting on June 7, 1997, for increasing the authorised capital of the company from Rs. 15 lakhs to Rs. 50 lakhs which was restrained by an order of injunction dated June 6, 1997, of the District Court at the instance of the present directors of the company. Respondents Nos. 1 to 4 are tampering with the account books of the company and attempting to fabricate a new scroll book (cash book). Respondents Nos. 1 to 4 were not allowing this respondent and other shareholders to verify the books. Consequently, this respondent and other shareholders, filed a complaint before the Circle Inspector of Police, Central Station, Ernakulam, pursuant to which the Sub-Inspector of Police made investigations and seized the original cash book and the newly fabricated cash book. Thereafter, this respondent filed a criminal complaint against respondents Nos. 1 to 4 before the Additional Chief Judicial Magistrate's Court, Ernakulam, and a case has been registered against respondents Nos. 1 to 4 which is under investigation.