ORDER :

M. Ganga Rao, J.

The petitioners three in number are the Directors of the Minority shareholders of the 2nd respondent – Andhra Pradesh Heavy Machinery & Engineering Limited filed this writ petition to issue a writ of mandamus declaring the action of the 2nd respondent in carrying out the amendment to Article 101 (3) of the Articles of Association of the 2nd respondent company proposing to reduce the number of Directors representing the minority shareholders other than Singareni Collieries Company Limited – the 3rd respondent and Andhra Pradesh Industrial Development Corporation – the 4th respondent from three (3) Directors to one (1) Director even before bifurcation of the 2nd respondent company which is included in the IXth Schedule Institutions under the Andhra Pradesh Reorganization Act, 2014 vide Extraordinary General meeting scheduled to be held on 05.09.2022 as being illegal, arbitrary, violative of the provisions of Section 53 and 68 of the A.P. Reorganization Act, 2014 and in violation of the Expert Committee Report headed by Dr.Sheela Bhide, IAS dated 15.3.2018 and consequently to set aside the proposal to amend the Article 101 (3) of the Articles of Association of the 2nd respondent company to reduce the number of Directors representing other than SCCL (3rd respondent ) and A.P.Industrial Development Corporation (4th respondent) from three (3) to one (1) as illegal.

2. The case of the petitioner is that the Andhra Pradesh Heavy Machinery Engineering Limited (for brevity ‘APHMEL’) was established on 01st September, 1976 as a subsidiary unit of Andhra Pradesh Industrial Development Corporation (for brevity ‘APIDC’), a Government of Andhra Pradesh undertaking. The land for the establishment of the said company was acquired from the local farmers of Kondapalli. They were promised of employment in the company so established as well as industrial development in the region. Initially, the share capital was collected from the local farmers also and allotted shares to approximately 42,000 residents of Krishna District where the company is located. Subsequently, the 2nd respondent company was registered as a ‘sick industrial undertaking’ by Board of Industrial and Financial Reconstruction (BIFR), New Delhi under BIFR Case No.627/1992 As part of the reviving sick industrial undertaking, the 1st respondent State Government among other reliefs, has sanctioned transfer of shares of the APHMEL - 2nd respondent vide G.O.Ms.No.201 Industries & Commerce (IFR-I) Department dated 21.8.1997. In view of transfer of shares as per G.O.Ms.No.201 dated 21.8.1997, the 3rd respondent SCC Ltd., has become major share holder and took over the 2nd respondent company as its subsidiary company. Accordingly, the composition of Board of Directors has been approved by the amendment of Articles of Association of the company while transferring majority shareholding to the SCC Ltd., to protect the interest and rights of the minority shareholders. The share capital of the 2nd respondent company is R.17.27 crores.

3. As per the provisions of the Andhra Pradesh Reorganization Act, 2014, the 2nd respondent company was included at Sl.No.34 in the IXth schedule to the A.P. Reorganization Act, 2014. The procedure for apportionment of the assets and liabilities of the State owned company such as the 2nd respondent company has to be taken up in accordance with the provisions of Section 53 and 68 of the Reorganization Act, 2014. As per the said provisions, the 1st respondent Government constituted an Expert Committee vide G.O.Ms.No.223 dated 30.5.2014 for demerger of the Government Corporations and companies in IXth Schedule of A.P. Reorganization Act. The Committee submitted its report on 03.03.2018.

4. The 2nd respondent company after deliberations regarding its demerger first came up in the Board meeting held on 22.12.2016 and the same issue was taken up