The judgement establishes that shareholders holding not less than one-tenth of a company have the right to apply under the Companies Act for remedies regarding oppression and mismanagement.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

1. Heard the parties.

2. Both these appeals have been preferred with the self-same prayer to set aside/ quash the order dated 20.11.2013 passed by the Company Law Board, Kolkata Bench in Company Petition No. 912 of 2012 hence, both these appeals are heard and disposed of by this common judgment.

3. The brief fact of the case is that the respondent nos.1 and 2 of both these appeals filed Company Petition No. 912 of 2012 against the original appellants of Company Appeal No. 01 of 2014 under Sections 397, 398, 399, 402 and 403 of the Companies Act, 1956. It was the case of the petitioners before the Company Law Board that the petitioner no.1 before the Company Law Board who is the respondent no.1 of these appeals is a promoter shareholder of M/s Sokhi Engineering Company Private Limited (SECO) holding 100 shares out of the total 300 shares and the petitioner no.2 before the Company Law Board who is the respondent no.2 of this appeal also held 100 shares out of the said total 300 shares as per the Annual Return of 2009-10. Both the petitioner nos.1 and 2 before the Company Law Board represent 1/10th of the total number of the shareholders as per the annual return of 2009-10 and the petitioners are entitled to 1/11th share pertaining to the shares of their deceased father which has accrued to them by operation of law thus, the petitioners are entitled to the right to apply for the relief under Section 397/398 of the Companies Act, 1956; in view of the provisions of Section 399 of the Act. It is the further case of the petitioners before the Company Law Board that the respondent nos. 2 to 4 are the Directors of the respondent company i.e. M/s Sokhi Engineering Company Private Limited and the respondent nos.2 to 4 are also the members of the family but the respondent nos. 5 to 10 are the directors of the respondent company, who were appointed as directors illegally by the respondent nos.2 to 4, even though no outsiders could be made director by company owned and controlled by a partnership firm namely M/s Pioneer Engineering Company, which is a family company. In the year 1956, the father of the petitioners and the respondent no.2 namely late Boota Singh formed a partnership firm under the name and style of M/s Pioneer Engineering Company, as a family business with all partners being the family members only. Initially the partners of the firm were late Boota Singh, his elder son Shri Gurucharan Sing and second son Shri Amolak Singh. For smooth running of the partnership firm M/s Pioneer Engineering Company (PECO) was divided into five departments and used to be managed by the four partners of the said firm. In the year 1967, Shri Rajwant Singh who was the in charge of foundry department started a new proprietorship firm under the name of style of Rajwant Industries (RI) with the help of PECO. All assets of PECO, Foundry Department were transferred to a place called Bagbera to start RI, though Shri Rajwant Singh continued as a partner of PECO as well. Subsequently, two new companies were incorporated with the help of PECO namely the respondent no.1 M/s Sokhi Engineering Company Private Limited (SECO) and M/s Pioneer Technocrats Private Limited (PTPL). Shri Amlok Singh one of the brothers and partners of PECO secured 3 acre plot of land for PTPL and registered and incorporated as company on 13.12.1973. Shri Amolak Singh became the Managing Director and his wife Mrs. Sukhwant Kaur as a director were the promoters of the company. Shri Amolak Singh continued to function as partner of PECO. The respondent company i.e. SECO was started in 1972 in a rented premises and a plot of land