ARUNA SURESH MEHRA Vs. JIFCON TOOLS PVT LTD

JUDGEMENT

(1.) THE petitioner hereinabove holding 45 per cent, equity shares in Jifcon Tools (P.) Ltd. (company) has filed this petition under Section 397/398 and 402 of the Companies Act alleging acts of oppression and mismanagement in the affairs of the company. Respondent No. 2 and his wife collectively hold 45 per cent, shares in the company and respondent No. 7 held the balance 10 per cent, shares. Presently, respondent No. 5 holds 10 per cent, after respondent No. 7 transferred his holdings to this respondent.

(2.) A summary of the petition is that the company was incorporated in 1977, and the husband of the petitioner and respondent No. 2 along with a third person were the first directors. In 1979, the third person left the directorship and respondent No. 7 joined the company as production manager and later became a director with 10 per cent, shares in the company. The husband of the petitioner, Shri S. K. Mehra, was the chairman from the beginning till he died in an accident in 1985. On the death of her husband, the petitioner was inducted into the board as a working director and the business was carried on under the directions of the petitioner, respondent No. 2 and respondent No. 7. However, the relationship between respondents Nos. 2 and 7 was not very cordial and when in the year 1994, respondent No. 2 wanted his son who had completed engineering in electronics to be appointed as an employee in the company, the same was objected to by respondent No. 7. However, with the assistance of the petitioner, the son was appointed as an employee in 1994. Since the relationship between respondents Nos. 2 and 7 was not cordial, the second respondent influenced the petitioner to have respondent No. 7 removed from the board, which was done in December, 1994. After the exit of respondent No. 7 who still held 10 per cent, shares in the company, respondent No. 2 started procuring undue benefits for his son by which in less than three years, his remuneration was increased three fold and his personal expenses were charged to the company. In spite of protest by the petitioner, this practice was not stopped and with a view to gain a larger control of the company, respondent No. 2 paved the way for induction of his son as a director of the company which was done in an extraordinary general meeting held on November 14, 1997. The legality of the meeting as well as the appointment of the son, respondent No. 4, have been impugned for various reasons in the petition. It is also alleged that respondent No. 2 was trying to acquire the shares held by the seventh respondent against the provisions of the articles. In addition to the above, some of the other specific allegations are that respondent No. 2 is operating the bank account with single signature as against joint signature with the petitioner, 'he is drawing money from the bank for his own benefits, inflated expenditure is charged in the accounts of the company, by delaying/stopping payment of wages to the employees, the morale of the employees is affected, quality materials are not being purchased leading to reduction in the turnover of the company, no stock records are maintained and the respondents have removed a computer belonging to the company.

(3.) RESPONDENT No. 2 in his reply to the petition as well as application has denied all these allegations. According to him, the petitioner, with a view to go out of the company desired exorbitant consideration which was not agreed to by the respondents and as such this petition has been filed to harass and force the respondent to submit to the exorbitant demand made by the petitioner.