S S LAXMINARAYANAN Vs. MATHER AND PLATT INDIA LTD

JUDGEMENT

(1.) THE first petitioner holding 50 shares and the second petitioner holding 128 shares have filed the instant petition under Sections 397/398/ 402 and 403 of the Companies Act, 1956, alleging various acts of oppression and mismanagement in the affairs of Mather and Platt (India) Ltd. (company). THEy have also annexed with the petition, a schedule containing the signatures of 146 other members giving their consent to file the petition.

(2.) The respondents have taken a preliminary objection as to the maintainability of the petition on the ground that the provisions of Section 399 have not been satisfied in regard to the qualification for filing the instant petition on the ground that the purported consent given by the consentors does not meet with the legal requirement of a valid consent. They have also taken another preliminary objection that the similar issues have been raised in a proceeding before the industrial court at Mumbai instituted by the union of the company and as such to avoid conflict of the decisions, this petition should not be proceeded with.

(3.) SHRI Ganesh, advocate, appearing for the respondents submitted that the schedule containing the signatures of 146 shareholders signifying their consent cannot be treated as valid "consent in writing" as envisaged under Section 399(3) of the Act. Even if it is so treated, it is apparent from the wordings of the consent, that the consentors have not applied their mind to the various allegations made in the petition which is a requirement of a valid consent. He referred to the decision of the Company Law Board in Shanhar v. South India Concerns (24 CLA Jan 2, 1997 ; [1997] 1 Comp LJ 307) in which after considering decisions of various High Courts, the Company Law Board had held that "the requirement of consent in writing as per Section 399(3) would be satisfied if the consent letters throw some indication on the consentors' having applied their mind to the various allegations made in the petition and the reliefs sought for . ,. Therefore as long as there is an indication in the consent letters that they are aware of the various acts of oppression and mismanagement by the board of directors, the various reliefs that are required to put an end to the acts of oppression and mismanagement, then the consent letters should be considered to have met the requirement of Section 399(3)".