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High Court Of Calcutta
SALIL KUMAR ROY CHOWDHURY
PROMODE KUMAR MITTAL - Appellant
Versus
SOUTHERN STEEL LTD - Respondent
Company Petition 506 Of 1976
Decided On : 10/30/1979
SOUTHERN STEEL LTD. - COMPANIES ACT, 1956 - SECTIONS 397, 398, 402, 403 - OPPRESSION AND MISMANAGEMENT - MEETING HELD ON ADJOURNED DATE WITHOUT NOTICE - VALIDITY - TRANSFER OF REGISTERED OFFICE - LEGALITY - SHIFTING OF ADMINISTRATIVE OFFICE - INTERPRETATION OF ARTICLES OF ASSOCIATION.
Fact of the Case:
Petitioners, Mohan Lal Mittal and his sons, filed an application under Sections 397, 398, 402, and 403 of the Companies Act, 1956, alleging oppression and mismanagement by the respondents, Indra Sen Mittal and his group, in the management of Southern Steel Ltd. The petitioners claimed that a meeting held on 16th May 1976, without notice to them, was invalid and that the transfer of the registered office from Calcutta to Hyderabad was illegal. They also challenged the shifting of the administrative office to Hyderabad and the transfer of the secretary and senior officers from Calcutta to Hyderabad.
Finding of the Court:
The court held that the meeting held on 16th May 1976, was valid and legal as no fresh notice was required for an adjourned meeting. The court also found that the transfer of the registered office to Hyderabad was legal and in the best interests of the company. The court further held that the shifting of the administrative office to Hyderabad and the transfer of the secretary and senior officers were not oppressive or prejudicial to the interests of the company.
Issues: 1. Whether the meeting held on 16th May 1976, without notice to the petitioners, was valid? 2. Whether the transfer of the registered office from Calcutta to Hyderabad was illegal? 3. Whether the shifting of the administrative office to Hyderabad and the transfer of the secretary and senior officers from Calcutta to Hyderabad constituted oppression and mismanagement?
Ratio Decidendi: 1. The court held that Article 146 of the articles of association of the company empowered the directors present at a meeting that failed for want of quorum to adjourn the meeting to a date, time, and place fixed by them. Therefore, no fresh notice was required for the adjourned meeting held on 16th May 1976. 2. The court found that the transfer of the registered office to Hyderabad was in accordance with the resolution passed at the meeting held on 16th May 1976. The court also noted that the company's factory and main business were in Andhra Pradesh, and the Andhra Pradesh State Financial Corporation, which had a nominee-director on the board, was insisting on the transfer. 3. The court held that the shifting of the administrative office to Hyderabad and the transfer of the secretary and senior officers were not oppressive or prejudicial to the interests of the company. The court found that these acts were in the best interests of the company and were conducive to its efficient management.
Final Decision: The court dismissed the application with costs. The court also discharged the Special Officer appointed in the case and fixed his remuneration at 100 g. ms.
( 1 ) THIS is another application under Sections 397, 398, 402, 403, etc. , of the Companies Act, 1956, in the series of litigations between Mohan Lal Mittal group and his opposing group. These applications are the outcome of family disputes as all the companies concerned in these applications are under the control and management of the Mittal family as the directors are either the members of the Mittal family or their relatives or nominees or stooges. They reveal a general pattern of running parallel management, one group trying to oust the other group from the companies in which the majority shares belong to the respondents. The present application is by Mohan Lal Mittal, the eldest brother of the Mittal family, and his sons as petitioners and the respondents are Indra Sen Mittal and the group of brothers and persons supporting him and the other directors of the company who are merely relatives, friends or stooges of the Mittal family. The petitioners allege in para. 8 of the petition that they themselves along with another son of Mohan Lal Mittal, Sri Laxmi Niwas Mittal, hold 1/10th of the issued and subscribed capital of the respondent-company, Southern Steel Ltd. , and, therefore, they are qualified under Section 399 of the Companies Act, 1956.
( 2 ) THE allegations which are the basis of the present application under Sections 397 and 398 of the Companies Act, 1956, are that the meeting fixed to be held on the 14th of May, 1976, could not be attended to by the petitioners and was not held due to want of quorum. It is alleged that the said meeting was adjourned till 16th of May, 1976, and was held without any notice to the petitioners that the meeting was fixed on the 16th of May, 1976, and the alleged meeting on the 16th of May, 1976, was held at Hyderabad and various resolutions were passed. The next allegations are that the secretary of the company, V. S. Modi, duly called a meeting, of the board of directors to be held on the 31st of May, 1976, at its registered office at Calcutta, for which notice was duly given by the directors. Respondent No. 5, R. K. Mittal, did not attend the said meeting on the 31st of May, 1976, at the registered office at Calcutta, and it is alleged that in the said meeting it was resolved that all the meetings of the respondent-company, the Southern Steel Ltd. , would be held at the registered office at Calcutta. Next it is alleged that respondent No. 5, R. K. Mittal, took away various documents, papers and ,books of the respondent-company forcibly which were required to be kept at the registered office at Calcutta and in spite of demand and request he did not return the same. It is further alleged that, in spite of the rejection of the application for transfer of the registered office at Calcutta, from Calcutta to Hyderabad, by this court in 1970, respondent No. 5, R. K. Mittal, to circumvent the order of this court, shifted the administrative office of the respondent-company from Calcutta to Hyderabad with effect from 7th of June, 1976. There were other allegations that the accounts of the respondent-company have been lying ready and the trial balance-sheet could not be prepared for want of accounts of the Hyderabad factory which were not sent deliberately by respondent No. 5, R. K. Mittal, nor the auditor's objection forwarded by S. R. Batliboy in respect of its irregularities, and discrepancies of the Hyderabad factory were answered by respondent No. 5, R. K. Mittal, as a result of which the balance-sheet could not either be prepared or published. The petitioners' further allegations are that the said respondent No. 5, R. K. Mittal, without any lawful ground or without any resolution of the board of directors, transferred the secretary and senior officers of the respondent-company from Calcutta to Hyderabad. One of the other allegations is that the said respondent No. 5, R. K. Mittal, by his letter dated the 21st December, 1976, disclosed that the registered of
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