ABANI BHUSAN BHATTACHARYA Vs. ERICSSON INDIA P LTD

JUDGEMENT

(1.) THIS is a petition filed under Section 237(b) of the Companies Act, 1956, seeking investigation into the affairs of Ericsson India Limited ("the company"). According to the petitioner, at the time of incorporation of the company, there were 12 shareholders, of which, Telefon AB L. M. Ericsson of Sweden held 60 per cent, of the shares and 11 Indians held 40 per cent, including 200 shares held by the petitioner. The petitioner was the executive director of the company. The petitioner being a technocrat in the field of electronics and telecommunications was the chief executive of Ericsson Telecommunications Sales Corporation AV, till the end of December, 1970, and became the first managing director when the company was incorporated. Later in 1977, he was downgraded to the post of Director (Research and Development) from which he was also removed on January 1, 1978. He continued to hold 200 shares. However, the company issued a notice in a local daily newspaper on October 2, 1980, stating that the company had issued duplicate shares in lieu of the shares held by the petitioner on account of the petitioner's failure to return the original certificates and as such the company would not recognise any transfer of the original certificates. The entire episode relating to his down gradation as a director, removal as a director and issue of duplicate certificates, etc., has all been done with an ulterior motive with the deep-rooted conspiracy hatched by respondents Nos. 2 and 3. The issue of such notice in leading newspapers has tarnished the image of the petitioner as a result of which he has not been able to get any other employment commensurate with the qualification. THIS has caused him an irreparable loss. According to the petitioner, the shares being goods as per the Sale of Goods Act and the value of the shares having become substantial, deprivation of the shares is irregular and wrong. Even though the company had purported to have acted as per the powers vested under articles 42 and 35 of the articles of association of the company, the prescribed procedure had not been followed by the company before issuing the duplicate shares. The whole attempt to deprive the petitioner of the shares was only to reissue these shares to the son of respondent No. 2. He has also made further allegations regarding the role of one of the officers of the Department of Company Affairs in regularising the re-issue/transfer of the shares to the son of respondent No. 2. The petitioner further states that the petitioner had filed a criminal case against the respondent including an officer of the Department of Company Affairs. Finally, he has sought for investigation into the affairs of the company as well as two other related companies and also for referring the matter to the Monopolies and Restrictive Trade Practices Commission under Section 10(a)(ii) of the Monopolies and Restrictive Trade Practices Act.

(2.) In the reply filed by the respondent, it is stated that the company has acted in pursuance of the provisions of Article 42 and related articles while issuing the duplicate share certificates and removing the name of the petitioner from the register of members. It is further stated that the complaint regarding the shares had already been agitated before the Court of the Chief Metropolitan Magistrate, Calcutta, in which the Magistrate had discharged the accused persons and the appeal petition filed against this order was also dismissed by the City Civil and Sessions Court at Calcutta, Similarly, the petitioner also filed C. P. No. 12 of 1984 before the Delhi High Court under Section 433/434 of the Companies Act seeking for winding up of the company which has also been dismissed. According to the respondents, the petitioner was allotted 200 shares and was also appointed as managing director as averred in the petition. In regard to the allegation that the petitioner's status was downgraded to that of a director, it is stated that the same was done in a board meeting held on December 2, 1976, wherein the petitioner himself had requested for such an action in view of his ill-health. While cancelling his shares, the company had remitted a sum of Rs. 33,256 being the value of 200 shares by a demand draft to the petitioner. It is further stated that the petitioner had made a similar complaint to the Registrar of Companies as well as to the Department of Company Affairs but to no avail. Accordingly, the respondent has requested for dismissal of the petition.

(3.) WE have considered the pleadings and arguments of the petitioner and counsel-for the respondent. The only issue in the entire petition relates to the cancellation of 200 shares. No other material has been furnished in the petition to satisfy ourselves that the affairs of the company ought to be investigated. Even in respect of the shares, the factum of cancellation and re-issue of the shares as alleged by the petitioner have been accepted by the respondent. Therefore, as far as the shares are concerned, there is nothing left to be investigated except to find out whether the company was right in cancelling the shares and whether the company had followed the procedure as established under the articles. This is purely an issue relating to the rectification of the register of members for which the Companies Act itself provides a remedy under Section 111. This matter by itself, in the absence of any other material in the petition, cannot be a ground for invoking the special provisions of Section 237(b) and as such we dismiss this petition.