Judgment :

Dr. Arijit Pasayat, J.

1. Leave granted.

2. Challenge in this appeal is to the judgment of a Division Bench of the Delhi High Court dismissing the appeal filed by the appellants as not maintainable. Challenge in the appeal was to the judgment of a learned Single Judge of High Court. Two appeals were disposed of by a common order dated 7.2.2005.

3. Background facts in a nutshell are as follows:

M/s. Aar Gee Board Mills was incorporated as private limited company in which two groups hold the shares. One group is led by Girdhar Gopal Gupta (hereinafter referred to as `Gupta Group) and other by Guru Charan Dass (hereinafter referred to as `Garg Group). The company was incorporated with authorized share capital of Rs.20 lacs (20,000 equity shares of Rs.100/- each). At the time of incorporation, the Gupta Group subscribed 1722 equity shares and the Garg Group was allotted 1662 equity shares. The shareholding between the two groups was accordingly in the ratio of 50.9% : 49.1%. This company purchased a sick unit from UPFC in the year 1985 consisting of land at GT Road Industrial Area Ghaziabad measuring 7215 sq. yards along with the plant and machinery. The company operated the aforesaid unit for few years after its purchase. However, in October 1994 this unit had to be closed down. Reasons were stated to be non-installation of water treatment plant for pollution control and non payment of Government dues. Both the groups alleged non cooperation and mis-management against each other.

After the closure of the aforesaid unit, disputes arose between the parties. Both the parties referred the matter for arbitration. Three arbitrators were appointed who gave their awards. In the final award given on 18th April, 1998 the arbitrators inter-alia concluded that the aforesaid unit should be divided equally between the two groups. There is some dispute about the terms of reference to the aforesaid arbitrators. Fact remains that although proceedings before the said arbitrators were initiated under the Arbitration Act, 1940 and, therefore, awards were required to be made rule of the Court, but no steps were taken in this behalf by either of the groups.

On 20th August, 1998, Garg Group filed the return with the Registrar of Companies informing the Registrar of Companies about the allotment of 9507 equity shares of Rs.100/- each which was allotted in favour of the members of the Garg Group. It was stated that these allotments were made in the years 1994 and 1995.

With the allotment of aforesaid shares in favour of the family members of the Garg group the shareholding pattern changed drastically. The shareholding of the Gupta Group which was hitherto to the extent of 50.9% came down to 13.4% and that of the Garg Group rose to 86.6%. Aggrieved by this and some other acts on the part of the Garg Group, Gupta Group filed CP.65/2001 under Sections 397 and 398 of the Companies Act, 1956 (in short the `Act) before the Company Law Board (for short the `Board) alleging oppression and mis-management on the part of the Garg Group. Three acts of oppression and mis-management were highlighted which are as under:

.(a) Illegal allotment of 9507 equity shares as noted above.

.(b) Appointment of Mr. Parmanand, brother of Mr. Guru Charan Dass Garg as the Additional Director with effect from 20th October, 1994, return in respect of which was also filed with the Registrar of Companies on 20th August, 1998.

.(c) Removal of Mr. Girdhar Gopal Gupta and Mr. Ram Narain Gupta as directors from the company on 16th September, 1998 without notice of any Board meeting.

The Board decided this petition vide order dated 25th March, 2004. As far as issue of allotment of shares is concerned, the Board opined that allotment of 5564 shares to the Garg group was illegal and set aside the same. In so far as allotment of 3943 shares is concerned, benefit of doubt was given to the Garg Group on the ground that this allotment was within the knowledge of the Gupta Group.

On the tw