AJIT SINGH AHUJA AND SMT AMRIT KAUR AHUJA Vs. SAPPHIRE INDIA PVT LTD

JUDGEMENT

(1.) IN this order I am considering Company Petition No. 71 of 2004 filed by Ajit Singh Ahuja and Smt. Amrit Kaur Ahuja under Sections 397 and 398 read with Sections 402, 403 & 406 of the Companies Act, 1956 (hereinafter referred to as the "Act") against Sapphire (INdia) Pvt. Ltd. and Ors. alleging certain acts of oppression and mismanagement. The allegations comprise illegal allotment of additional shares; unlawful removal of the majority shareholders from the management of R-1; illegal appointments of the respondents on the Board of Directors of the R-1; illegal shifting of the registered office of the R-1; manipulation and fabrication of accounts and siphoning off of funds of the R-1.

(2.) M/s Sapphire (India) Pvt. Ltd. (SIPL) Respondent No. 1 Company was incorporated on 2nd November 1982 having its registered office at A-1/B, DDA Flats, Munirka, New Delhi-110067. The authorised share capital of the company was Rs. 1 crore comprising one lakh shares of Rs. 100/- each. The Promoter Directors of the Respondent No. 1 Company were Mr. Kulbhushan Agarwal, Mr. R.K. Chopra and Mr. S.P. Agarwal. They obtained permission for manufacturing LPG Gas cylinders from Oil Companies and after getting a loan of about Rs. 73 lakhs from RIICO, constructed the factory at B-41, Bhiwadi Industrial Area, Bhiwadi, Rajasthan. They obtained license from ISI, Jaipur and started manufacturing LPG Gas Cylinders. As averred in the petition in September 1986, Mr. Kulbuhshan Agarwal and Mr. R.K. Chopra approached the petitioner No. 1 to become a director and help in running the factory. The petitioner No. 1 with the help of his friend Mr. Lakshmi Kant Jain contributed Rs. 12 lakhs as share capital to run the factory. Only Mr. R.K. Chopra of the old group of shareholders with a share capital of Rs. 1 lakh continued to remain with the company. In September 1986, the distribution of the new shareholding of Rs. 12 lacs was:- Mr. Laxmi Kant Jain- Rs. 3 lacs; Mr. Anil Jain (S/o Mr. L.K. Jain)- Rs. 3 lac; Mr. Ajit Singh Ahuja - Rs. 1.50 lac, Mrs. Amrit Kaur Ahuja - Rs. 1.50 lac; Ms. Suminder Kaur (D/o Mr. A.S. Ahuja) - Rs. 1.50 lac; and Mr. Manvinder Singh (H/o Ms. Suminder)- Rs. 1.50 lac. The entire share capital of Rs. 6 lakhs belonging to Mr Ajit Singh Ahuja and his family was paid by Mr. Ajit Singh Ahuja only. Mr. Ajit Singh Ahuja was made CMD of this closely held family company comprising father, mother, daughter, son-in-law and close family friend and Mr. Manvinder Singh and Mr. R.K. Chopra were Directors. In 1995-1996 the share holding position was:- Mr. Ajit Singh Ahuja - Rs. 8 lacs; Mrs. Amrit Kaur Ahuja, - Rs. 8 lac; Ms. Harmander Kaur (D/o Mr. A.S. Ahuja) - Rs. 2 lacs; Ms. Suminder Kaur (D/o Mr. AS. Ahuja)-Rs. 1.50 lacs Mr. Manvinder Singh (H/o Ms. Suminder) Rs. 1.50 lac; and Mr. R.K. Chopra-Rs. 1 lakh.

(3.) DR, Singhvi pointed out that the legally issued, subscribed and paid up capital of the Company is Rs. 22,00,000/- comprising of 22,000 equity shares of Rs. 100/-each fully paid up. The petitioners are the shareholders of 16000 equity shares of Rs. 100/-each which constitutes 73% (approx.). But due to illegal and unlawful allotment of 18500 equity shares of Rs. 100/- each petitioners have been reduced to 39.5% (approx.) and thereafter on 27.3.2003 further illegal allotment of 24500 shares has reduced their shareholding to 24%. The petitioner No. 1 had reposed complete faith and trust in his other family member/directors and left the control of the company due to illness. However, with great shock and pain to the petitioner No. 1 who and other family members were betrayed by small group of the company who conspired with the other members of the petitioner's family and conducted business in such a fashion which is a classic example of breach of faith and trust. The Respondents started manipulating and fabricating the records of its business purely with the express intention of ousting and removing petitioners and usurping control of the Respondent No. 1 Company. It was argued that Respondent No. 4 in connivance with Respondent No. 2 and other Respondents had completely mis-conducted the affairs of the company. The respondents had not only perpetrated fraud as regards the statutory records of the company, but had also resorted to manipulation and falsification of records and had without any authority of law and consent of shareholders of the company removed Chairman & Managing Director (the petitioner No. 1), arbitrarily, malafidely in an unlawful manner. It was contended that the respondents have ousted the petitioners to achieve their ulterior motive. Falsification of records, violation and noncompliance of law, unauthorized increase and allotment of capital constitute the acts of oppression and mismanagement. It was reiterated that Petitioner No. 1 is the chief architect of the Respondent Company after its original subscribers left the company when it was in bad shape and it is the petitioners who had set everything right and brought the company back on the track.