2010 Supreme(Raj) 1611
RAJASTHAN HIGH COURT AT JAIPUR BENCH
Prakash Tatia, J.
Yogeshwari Kumari and others - Appellant
Versus
Lake Shore Palace Hotels Pvt.Ltd and Others - Respondent
S.B. Company Appeal Nos. 3, 2 and 1 of 2008.
Decided On : 16-07-2010
For the Appellant in CO. Appeal No. 3/08 and for respondent No. 1 and 5 in Company Appeal Nos. 1 of 108 and 2 of 08:Sudipto Sarkar, Sr. Advocate with S/Shri Vibhu Bakhru, Mrinal Kanti Mandal, Rahul Sharma, Snehasish Mukherjee, Anjay Kothari and Neeraj Jain, Advocates.
For the Respondent No. 1 in company Appeal No. 3/2008 and for respondent no. 6 in Company Appeal No. 2 of 2008 and Company Appeal No. 1 of 2008:S.N. Mookharjee, Sr. Advocate with Shri Arun Bhansali, Advocate.
For the Respondent No. 2 in Company Appeal No. 3/2008 and for respondent no. 6 in Company Appeal No. 2 of 2008 and for appellant in Company Appeal No. 1 of 2008 and for appellant in Com.Appeal No. 2 of 2008:M.S. Singhvi and Ramit Mehta, Advocates.
For the Respondent No. 3 in Company Appeal No. 3/2008 and for respondent no. 7 in Company Appeal os. 2 of 2008 and 1 of 2008:Vikash Balia, Advocate.
Headnote:
Companies Act, 1956 S. 397 and 398 – Mismanagement and oppression of pat of the directors in the affairs of company – when the Petition was presented before CLB the Petitioners were given following options with inter se liberty to chose - (i) Petitioner to give long term loan @10% ; (ii) Company will issue new shares and liberty given to 2nd respondent to acquire unsubscribed shares, (iii) Share value of petitioners shareholding equivalent to value of shares of lake Place Hotels, (iv) Company will give Rs. 5 cr. as share value to Petitioners by considering the value of the n assets of company as also that of lake Palace Hotel - The CLB studied all the options and gave its finding on each issue and held that the issues did not relate to any oppressive role of the directors and Petitioners were not entitled to any relief.
JUDGMENT
1. - The petitioners, having 25% shares in Ms Lake Shore Palace Hotels Pvt.Ltd. have filed present Company Petition No.32/2005 before the Company Law Board (for short CLB ), Principal Seat, New Delhi under Section 397/398 of the Companies Act and prayed that (a) the Board of Directors of the respondent-Company be superseded and an Administrator and/or Receiver and/or Special Officer be appointed to forthwith take over the management and administration of the respondent company on such terms as the Board may deem just and proper,(b) if necessary, a scheme of management be framed for running the management and administration of the company on such terms as the CLB may deem just and proper and (c) the Board of Directors of the Company be reconstituted. The petitioners further sought declaration that the business conducted at and/or the proceedings of the meetings of the Board of Directors attended by respondent no.3 are bad in law in view of the Department's Circular No.14/51/62-PR and as such, the same cannot be acted upon and/or implemented. In addition to above reliefs, the petitioners prayed for (a) injunction restraining the respondents from issuing any shares or from increasing either the authorised or paid up share capital of the Company, (b) injunction restraining the respondents and each of them from dealing with or disposing of or alienating or encumbering or transferring any of the assets of the company in any manner whatsoever and (c) permanent injunction restraining the respondents and each of them from expending any funds of the company in any manner whatsoever including for the purpose of contesting the present proceedings. The petitioners then prayed for direction for an independent audit of the accounts of the respondent-company.
2. The company petition was contested by the company and the private parties, the Directors of the company.
3. The company petition was allowed by the Company Law Board vide order dated 14.12.2007. Present three Company Appeals have been preferred, one by petitioner before the Company Law Board and two company petitions by non-petitioners before the Company Law Board. To avoid any confusion in this judgment, the petitioners who preferred company petition, inter alia, are referred as the petitioners and non-petitioner in the company petition are referred as respondent.
4. It will be appropriate to mention here that the appellants (Company petitioner No.1) earlier preferred S.B.Company Petition No.1/1991 under Section 397/398 of the Companies Act, 1956 before the Rajasthan High Court in the year 1991 with the allegations and on the grounds that respondent no.2, the real brother of the petitioner and appellant no.1 was having 10% shareholding in the respondent-Company in the year 1984 and was able to increase his share holding in the respondent-Company to 56%. The respondent no.2 also controls another 23% of the shareholding in the respondent-Company belonging to the Estate of Maharana Bhagwat Singh of Mewar(father of appellant no.1 and respondent no.2), which he controls as an Executor of the Trust created by Maharana Bhagwat Singh which is Maharana Mewar Institution Trust. According to the petitioners-appellants, respondent no.2 attempted to oust the petitioners from the management and control of the respondent-Company and, therefore, prayed in the the Company Petition No.1/1991 that:-
(1)A Scheme be framed for management and control of the affairs of the company so that the respondent No.2 is divested of his powers to control the company and so that the controlling interest in the company vests in the Maharana Mewar Institution Trust when the Will is administered;
(2)An interim scheme be framed for management and control of the affairs of the company till such time the Will is administered so that the interest of the Maharana Mewar Institution Trust and that of the petitioner are secured;
(3)The respondent No.2 be removed from the Board of Directors of the company and an independent D
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