A shareholder in a public limited company does not have locus standi to intervene in a compromise settlement proceeding in a suit involving the company because shareholders do not have any direct or immediate interest in the company's assets or properties.

SALIL KUMAR ROY CHOWDHURY, J.

( 1 ) THIS is an application by one Puma Investment Limited, a company incorporated under the Companies Act, 1956, and having its Registered Office at No. 33a. Chowringhee Road. Calcutta, alleged to be holding 956 Equity Shares of Rs. 10/- each fully paid up in the Capital of Andhra Steel Corporation Ltd.

( 2 ) THE petition is signed and verified by Promod Kumar Mittal, a son of Mohan Lal Mittal, the Defendant No. 3 in the suit. The suit was filed by the Bank in 1977 inter alia for a decree for Rs. 4,43,41,209. 59 P. and also for a declaration of charge under an agreement on hypothecation in respect of the goods mentioned in the Deed of Hypothecation, the sale of the said hypothecated goods, appointment of Receiver etc. In the said suit an interlocutory application was made and Receiver was appointed over the Undertaking the Defendant No. 1 Company, Andhra Steel Corporation Ltd. of its Dunkuni Unit. The plaintiff bank also filed a winding up application in 1978 in this Court for realisation of its dues which was not the subject matter of the present suit. Both the suit and the winding up petition by the plaintiff bank are pending. In 1977 the Defendant No. 3, Mohan Lal Mittal instituted a proceeding under Sections 397-98 of the Companies Act, 1956, relating to the management of affairs of the said Defendant No. 1 Company, Andhra Steel Corporation Limited, and various interim orders were made from time to time in the said proceeding. It is alleged by the applicant, purna Investment Limited, through the said Promod Kumar Mittal, the son of Mohan Lal Mittal, that the Defendant No. 1 company, Andhra Steel Corporation Limited, did not file its Balance Sheets after the year ending 31st March, 1975. As such, the petitioners are unaware of the real state of affairs of the company. By a consent order passed in the Sections 397-98 application on the 25th May, 1977, an Extraordinary General Meeting of the Defendant No. 1 Co. , Andhra Steel Corporation Limited, was directed to be convened and held for the purpose of election of Directors. The said Extraordinary General Meeting was eventually held on the 12th July. 1977. In the said meeting the petitioners, Purna Investment Limited and various other members of the said Andhra Steel Corporation Limited, participated in the voting. At the said meeting those persons who were representatives of various Financial Institutions including the plaintiff bank were unanimously elected as Directors of the Defendant No. 1 Co. Besides the said six persons, four other persons after hot contest were alleged to be elected on the basis of the report of the Chairman of the meeting appointed by this Court by the said consent order dated 25th May, 1977. The said report of the Chairman has been challenged by Mohan Lal Mittal group in the pending Sections 397-98 application pursuant to a liberty given by the Appeal Court order dated 23rd Apr. 1979. It is alleged that the said four persons belong to the other camp of Mohan Lal Mittal and were elected by a slender majority of votes controlled by the alleged delinquent management of the said Andhra Steel Corporation Limited. It is alleged that on the 22nd May, 1980, Puma Investment Ltd. came to know from M/s. M. G. Poddar, Advocate-on-Record of Mohan Lal Mittal. that the plaintiff bank was trying to put certain terms of settlement in the suit as also in the Extraordinary Suit No. . . . . . . . . . of 1980 (Dena Bank v. Andhra Steel Corporation Limited) and in the pending winding up proceedings, and the petitioners are alleged to have succeeded in obtaining a copy of the proposed terms of settlement forwarded by the plaintiff bank's Advocate-on-Record inter alia to the said M/s. M. G. Poddar by its covering letter dated 2lst May. 1980, and the alleged two copies of the said terms of settlement are annexed to the petition. It is alleged that on the 23rd May, 1980, when the parties to the suit tried to put in certain terms of settlement

Click Here to Read the rest of this document