The main legal point established in the judgment is that allegations of oppressive conduct and mismanagement under Sections 397 and 398 of the Companies Act require a demonstration of actual oppressive acts and mismanagement, and mere procedural defects or irregularities may not suffice to warrant relief.

The appeal challenges an order passed by Company Law Board ('CLB') rejecting a petition of the Appellants under Sections 397 and 398 of the Companies Act, 1956 (‘the Act’).

2. The Appellants between them claim to hold about 46.71% share of the first Respondent company. The first Respondent company is claimed to be in the nature of a quasi-partnership. The grievance of the Appellants in the petition is this: The predecessor of Appellant Nos.3 to 7, late Shankarrao Mahadeo Bidkar, was a member of the first Respondent company during his lifetime, holding 671 shares in the company, and also the Chairman of its Board of Directors. The late Shankarrao Bidkar was ill since December 2002 and could not effectively contribute to the business activities of the company and as a result, Appellant No.3 was appointed as a director on or about 15 June 2003. Shankarrao expired on 20 January 2005. After the death of Shankarrao, when his legal heirs started making inquiries about the shares held by their father, they came to learn through a copy of an annual report for the year 2003-2004 that the Board of Directors had transferred 536 out of 671 shares held by the late the Shankarrao on 25 March 2003 to Respondent Nos.6 to 9. It is the case of the Appellants that a scrutiny of the share transfer forms used for the purported share transfers made it apparent that the share transfer forms contained several interpolations; thumb impressions of the late Shankarrao obtained on the forms were forged; the transfer forms used were beyond their validity periods; the stamp duty paid thereon was in contravention of the provisions of the Stamp law; and that for these reasons and otherwise also, the transfer of shares was contrary to Section 108 of the Act. It is submitted that the transfer was also in contravention of Article 11 of the Articles of Association of the first Respondent company, since no shares could be transferred thereunder without allowing the existing shareholders to exercise a right of preemption. It is submitted that there was a malafide intention on the part of the Respondents to oust the Appellants from the management of the first Respondent company. It is submitted that after the demise of Shankarrao, all his legal heirs demanded outstanding amounts in the account of late Shankarrao, but this was not done. No proper notices of Annual General Meetings were given to the Appellants and no AGMs were properly convened. The Appellants have also made reference to certain statements of the auditors about acceptance of deposits from public and noncompliance with statutory provisions in respect thereof as also to the various defaults in repayment of the dues by the first Respondent company to SICOM. On the basis of these submissions, it is the Appellants' case that the affairs of the first Respondent company have been conducted by the Respondents in a manner oppressive to the Appellants and also in a manner prejudicial to public interest and to the interests of the company. The petition is filed on 10 February 2007. The Appellants pray for various reliefs in the petition. They inter alia seek cancellation of the transfers registered on 25 March 2003 in respect of 536 shares of late Shankarrao and rectification of the register by restoring the name of Shankarrao in the first instance and then by registering the names of Appellant Nos.3 to 7 as legal heirs of late Shankarrao. They also seek reliefs for cancellation of decisions taken in AGMs and board meetings of the first Respondent company including decisions for appointment of Respondent Nos.5 and 6 as directors.

3. The CLB, in the impugned order, rejected the Appellants' contention insofar as the application for rectification of the register of members was concerned. The CLB noted that there was no application made for rectification of register under Section 111 of the Act and the provisions of Sections 397 and 398 of the Act were not attracted for this purpose. The CLB was of the vi