SH. KISHAN KHARIWAL Vs. THE GANGANAGAR INDUSTRIES LTD. AND ORS.

JUDGEMENT

(1.) IN this order I am considering Company Petition No. 69 of 2001 filed by Sh. Kishan Khariwal under Sections 397, 398, 402, 403 & 406 of -the Companies Act, 1956 (hereinafter referred to as the "Act") against M/s The Ganganagar Industries Ltd. and Ors. alleging that the R -1 passed special resolution Under Section 81(1A) of the Act in the EGM held on 25.1.2001 authorizing the Board of Directors to allot 82,280 equity shares and another resolution on 28.2.2001 for allotment of further 50,000 equity shares to 18 persons with the sole objective of reducing the shareholding of the petitioners' group as there was no need of any fresh funds in the Respondent company, these shares were allotted to R -2 and his family members and his associates; the accounts of the company were maintained in such a way as to reduce the profit, R -1 paid 24% interest on the loans taken from the directors with a view to reduce the profitability of the company, the accounts were manipulated with the assistance of statutory auditors of the company (R -8) who belong to the close family of R -2 to 7 who were directors of the company; the main allegation being that the R -2, the Managing Director sold a portion of the industrial land held by the company as agricultural land by misrepresenting at a throw away price of Rs. 40 lakhs as against the market value of Rs. 2 crores to his own people in breach of his fiduciary duties. C.P. No. 69 of 2001 was dismissed by the Company Law Board vide its order dated 6.10.2003.

(2.) THE Hon'ble High Court of Rajasthan at Jodhpur set aside the impugned order dated 6.10.2003 with the following directions: "In the facts and circumstances of the case the present petition stands disposed of with a direction to Company Law Board that it would be proper if the Company Law Board hear the parties once again on the point of maintainability and if thinks proper then it may proceed to hear on merits as well" The undisputed facts of the case are: M/s The Ganganagar Industries Ltd. (R -1) was incorporated in the year 1933 having its registered office at Industrial Area, Sri Ganganagar, (Raj). The authorised share capital of company was Rs. 20,00,000. divided into 1,00,000 equity shares of Rs. 20/ - each.

(3.) SH B.S. Goyal, Practicing company Secretary for the respondents reiterated that the Petition is outrightly not maintainable and liable to be rejected at preliminary stage as the Petitioner No. 1 has still not placed the real facts in his submission before the Hon'ble Principal Bench of Company Law Board with reference to his Shareholding and wrongly showing belongings of others Shareholders in his support with a malafide intention. The petition does not fulfil the requirements of Section 399 of Act which requires that not less than one hundred members or one/tenth of the number of members of the Company, whichever is less, or any member or members holding not less than one/tenth of the issued share capital, provided that all calls and other sums due on their shares have been paid, can apply under Section 397 or 398 of the Companies Act, 1956. As per the Register of Members of the Company on the date of lodging the Petition No. 69 of 2001, the Petitioner was holding just 1054 Equity Shares including Power of Attorney in respect of 524 Equity Shares, which is just 0.76% of the total issued and fully paid up 137565 Equity Shares of the Respondent Company. The petitioner has filed the petition without taking into account 119845 Equity Shares allotted on 31.03.2001.