B S CHOWDHARY Vs. MRS INDIRA SINGH

JUDGEMENT

(1.) THE petitioners holding 950 equity shares of Rs. 100 each representing 31.67 per cent, of the total paid up capital of M/s. Picksonic Electronics Private Limited (the company) have filed this petition under section 397/398/ 402 and 403 of the Companies Act, 1956, alleging acts of oppression and mismanagement in the affairs of the company. THE petitioners have also the consent of two other shareholders holding 100 equity shares each. THE summary of the petition is that the company was promoted by Shri B. S. Chowdhary one of the petitioners, respondent No. 1 and one Mr. P. C. Gupta and was incorporated on January 7, 1985. THEy were the first directors of the company. Subsequently, respondent No. 1 was appointed as managing director and she continues to hold that position till date. Immediately after incorporation, the company got an industrial plot allotted by the NOIDA authorities at a cost of Rs. 3.2 lakhs. THE company also got a sanction of term loan of Rs. 8 lakhs from the UPFC for which the fixed assets of the company were given as first charge by mortgage and Shri B. S. Chowdhary, one of the petitioners, gave a personal guarantee. THE company availed of a sum of Rs. 5.03 lakhs only against this sanction. Further, the Syndicate Bank sanctioned working capital of Rs. 5 lakhs against hypothecation of stocks as well as personal guarantee of the petitioners and certain respondents. Even though the company started commercial activities in the year 1985-86, it started incurring losses right from the beginning and after August, 1987, the petitioners did not involve themselves with the day-to-day business of the company. Since the petitioners were not involved in the business, respondent No. 2, being the front person of the M. D. (respondent No. 1), started managing the affairs of the company and has given a lot of advances to one M/s. Cina Electronics, a proprietary concern of respondent No. 1 without any approval from the board. In view of her own proprietary concern, respondent No. 1 did not take any interest in the affairs of the company resulting in heavy accumulated losses. In view of this, Shri B. S. Chowdhary requested the respondents to allow him to look after the day-to-day functions of the company. But it was not agreed to and the petitioners were asked to leave the company. THE petitioners agreed to do so provided their personal guarantees were released and shares were purchased at a reasonable price. An MOU was also signed on August 23, 1987. Due to some problem in the purchase of shares of one of the parties, i.e., Shri Gupta, the petitioners did not sell their shares. In view of the purchase of these shares from Shri Gupta, respondent No. 1 who became a majority shareholder was not allowing the petitioners to take part in the business of the company even though the petitioners were on the board of directors of the company. THE petitioners have also been removed from the board of directors with effect from August 1, 1994, without assigning any reason. This matter was complained of to the Registrar of Companies and on his advice this petition has been filed.

(2.) A summary of the allegations in the petition is :

(3.) THE reply of the respondent to the various allegations is as follows :