T N K GOVINDARAJU CHETTY AND CO Vs. KADRI MILLS CBE LIMITED

JUDGEMENT

(1.) IN the matter of Kadri Mills Ltd., two petitions under Section 397/398 of the Companies Act, 1956, have been filed. The substantive issue raised, in both the petitions, relates to a preferential allotment of certain convertible warrants made in September, 1994.

(2.) The first petition, C. P. No. 8 of 1995, was filed in the Southern Bench on November 11, 1994, and on advice, was again filed in the Principal Bench in June, 1995. In the hearing on March 29, 1995, we passed certain interim orders, which are still continuing. The second petition, C. P. No. 32 of 1695, was filed in July, 1995.

(3.) THE allegation in these petitions relates to the allotment of 110 convertible warrants of Rs. 1 lakh each to the promoters of the company on a preferential basis with the right to convert the same into 10,000 equity shares of Rs. 10 each at par. THE grievance of the petitioners is that when the ruling market price was about Rs. 400 per share, the directors of the company had, to the exclusion of the other shareholders, bestowed upon themselves, undue benefits to the tune of nearly Rs. 40 crores, which, according to the petitioners, is a grave act of oppression, meriting appropriate relief.