JUDGMENT :

Jayant Patel, J.

The main O.J. Appeal is directed against the judgment and order dated 10.12.2008 passed by the Company Law Board, Principal Bench, New Delhi [hereinafter referred to as 'CLB'] in Company Petition No. 79 of 2007 whereby the Board passed a detailed order, the operative portion of which reads as under:-

"13. There are allegations and counter allegations. Considering the allegations of siphoning off of funds by the petitioners which remain un-controverted, I hereby direct the R-1 Company to appoint an independent auditor to ascertain the amount siphoned off between the period 1.4.06 to 13.3.07, the amount so ascertained shall be deposited back by the petitioners into the account of the respondent company within two months of such audit. If the petitioners fail to deposit the ascertained amount within the prescribed period, the respondents shall be at liberty to buy the shares of the petitioners at the value to be ascertained by an independent valuer for the purpose to be appointed by the parties' consent.

14. Considering the facts and circumstances of this case, to do substantial justice between the parties and to regular the conduct of the company's affairs in future, I hereby order as under:

I. The illegal increase in the share capital and thereafter illegal issue and allotment of 40,000 shares to the respondents is hereby declared null and void and status quo ante as on 11.12.06 is hereby restored. The R-1 Company's authorised capital shall stand restored to as on 11.12.06 and same with the shareholding as on 11.12.06. All resolutions passed and statements filed with the ROC in this respect subsequent to 11.12.06 are hereby declared as null and void and stand cancelled.

II. P-1 and P-2 shall continue to be the directors in the Comp-any, their illegal removal is hereby declared as null and void.

III. R-4 is hereby directed to allow operation of the bank Accounts of the R-1 company as it existed prior to 11.12.06.

IV. The respondents are hereby directed to restore excess dividend received to the account of the respondent company to be distributed as per shareholding as on 11.12.06."

2. The relevant facts leading to the filing of the present appeal, which are as under:

Facts upto the stage of CLB:

On 13.03.1984, Sugam Construction Pvt. Limited [hereinafter referred to as 'the Company'] was incorporated under the provisions of the Companies Act [hereinafter referred to as 'the Act'] having its registered office at 4th floor, Arun Complex, Behind C.U. Shah College, Ashram Road, Ahmedabad with the main object of carrying on business of builders and contractors. The promoters of the Company were Shri Ushakant Naranbhai Patel and Shri Naresh P. Modi. The authorised share capital of the Company was Rs.5,00,000/- divided into 1000 equity shares of Rs.100/- each and 4000 unclassified shares of Rs.100/- each and 4000 unclassified shares of Rs.100/- each. On 11.04.1984, at the first meeting of the Company, Shri Bhailalbhai Bababhai Patel and Shri Surendra C. Patel were appointed as Directors. At that time, Bhailalbhai was doing business at Delhi in the name and style of Nicolian India Pvt. Ltd. and he had his own office at Delhi. Shri Pradip Shringarpure, who had been working with the Company for a long period, was appointed as a Director of the Company on 21.05.1990. One Shri Arun Shantilal Patel was also appointed as a Director of the Company on 16.01.1996. On 18.05.1996, Shri Naresh Modi and Shri Surendra C Patel resigned from the Board of Directors, and Shri Rahul Bhailalbhai Patel was appointed as a Director. On 12.08.1997, the authorised capital was increased from Rs.5,00,000/- to Rs.10,00,000/- divided into 8000 equity shares of Rs.100/- each and 2000 preference shares of Rs.100/- each. Somewhere in 2001, Bhailalbhai Patel allowed the Company to use his office at Delhi, without charging any rent. On 28.04.2003, D