NUKALA NAGESWARA RAO Vs. BHARAT CIRCUITS P LTD

JUDGEMENT

(1.) THE petitioner, represented by Shri R. Venkatavaradan, learned Counsel, holding in excess of 10 per cent, of the issued and paid up capital of M/s. Bharat Circuits Private Limited ("the company") aggrieved in the affairs of the company on account of (a) allotment of 2,40,000 shares of the company in favour of respondents Nos. 2 to 4, gaining control over the company; (b) removal of the petitioner and his son from the office of director; (c) appointment of the fourth respondent as director; (d) efforts to mortgage and sell the assets of the company without any need, thereby laundering the money belonging to the company ; (e) denial of inspection of the statutory records to the petitioner ; and (f) falsification and fabrication of the board minutes and other records of the company, have invoked the jurisdiction of the Company Law Board, under Sections 397 and 398 of the Companies Act, 1956 ("the Act"), seeking the following reliefs:

(2.) Shri P. S. Suman, learned Counsel for the respondents, while denying any act of oppression and mismanagement in the affairs of the company, pointed out that (i) the fourth respondent was duly appointed as director at the board meeting held on May 10, 2006, which was attended by the petitioner and accordingly filed Form No. 32 with the Registrar of Companies ; (ii) the petitioner and his son came to be duly removed, after proper notice to them, at an extraordinary general meeting of the company held on October 30, 2006, on account of their various actions, being detrimental to the interest of the company; (iii) the company was constrained to increase the paid up capital and issue further shares at the board meeting held on August 18, 2006, attended by the petitioner at the insistence of the company's banker, by conversion of the existing share application money into share capital, in favour of respondents Nos. 2 and 3, while the petitioners had requested to keep his share application money as it is, till his son returned to India, thereby declining to subscribe to the shares offered by the company; (iv) the machinery and other assets of the company were to be offered as security for the bank loans for the purpose of commencing the operations of the company; (v) the respondents never indulged in any act of laundering of the company's funds at any point of time ; and (vi) the petitioner and his son were given free access to the statutory records, books of accounts and all the other records of the company, on the request made by them.

(3.) RS. 7.50 lakhs plus interest on the outstanding balance by February 28, 2009.