1. Company Appeal No.222/05 is preferred by the appellants challenging the order dated 16th April 2004, passed by the Company Law Board, under Section 397 and 398 read with Section 402 of the Companies Act, for short, hereinafter referred to as the ‘Act’. The parties are referred to as they are referred to in the petition before the company Law Board.

FACTURAL MATRIX

2. The Canara Land Investments Limited is a public limited company, for short, hereinafter referred to as the ‘Company’. It was established in the year 1932. Dr. T.M.A. Pai was one of the shareholders. His brother, Tonse Upendra Pai was appointed as Manager of the Company till 1941 and then he became the Managing Director of the Company up to 1945. Though seven persons subscribed to the Memorandum of Company, at its inception Dr. T.M.A. Pai, was not one among them. Obviously, he has acquired shares after the Company was incorporated and he held majority of shares. Dr. T.M.A. Pai had sons by name Mohandas Pai, Ramdas M Pai and Ashok Pai. Mohandas Pai was in control of the Company as General Manager. Tonse Upendra Pai died in the year 1956. Dr. T.M.A. Pai died in the year 1979. After his death T. Ashok Pai, T. Ramesh Pai and T. Satish Pai, sons of T. Upendra Pai managed the Company for about two years, till the death of T. Ashok Pai, in the year 1981. Originally, Ramesh U Pai and his other family members held 19% of the shares in the Company. After the demise of T.A. Pai, Ramesh U Pai who was a Director of the Company, acquired shares of the Company and thus he and his other family members acquired shares to the extent of 41.72%. However, the total shareholding of Ramesh U Pai and his family members and the Companies in which he has substantial interest as on today stands at 44%.

3. The case of the petitioners before the Company Law Board was that the Company had purchased vast extent of land in Manipal apart from the various buildings it had constructed. In all, the Company owned 83 acres of land. Most of the immovable properties have been leased to the group companies in which the respondents in the Company Petition are interested. The Company had leased vacant lands and buildings at a very nominal rent for a period running to 20 to 90 years. The beneficiary of these leases are the lessees in which respondents-2 to 7 are interested since they are in control and management. So far as the Company is concerned, it is getting only nominal rental income and the same has not been revised till date. The total value of the land and building owned by the Company will be about Rs.83 crores. None of the leases are advantageous to the Company. The first petitioner in the Company Petition who was the Director of the Company was not re-elected as Director of the Company for the year ending 31.03.1997. The first petitioner had been writing letters to the Company that he had not been receiving notices for the Board and General Meeting for the period when he was a director of the Company. He had asked for the minutes of the Board for the period when he was a Director and even this was not furnished to him. Apart from that, petitioners have also not been receiving notices for the Annual General Meetings and the balance sheets. Therefore they have written letters complaining about non-receipt of the notices and asking the Company to send the balance sheets. The Company had not complied with the request of the petitioners. The petitioners-1 to 5 have received by special post on 22.05.2003 the old balance sheets of the Company without even a covering letter.

4. The petitioners state that both they and the respondents are called “Pai Group” in Manipal and they have established and have been controlling various industries and managing educational institutions. In or about 1990, differences cropped up between the petitioner’s group (Ramesh Pai Group) and second respondent’s group (Mohandas Pai Group). Both the groups have initiated several cases against each other. Finally, th