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2019 Supreme(Mad) 3442
IN THE HIGH COURT OF MADRAS
N. Sathish Kumar, J.
Suresh Kumar Jalan and Ors. - Appellant
Versus
East coast Steel Limited and Ors. - Respondent
Company Appeal No. 20 of 2015, C.M.P. Nos. 15207 of 2017 and 13385 of 2019
Decided On : 26-08-2019
For the Appellant :AR.L. Sundaresan, Senior Counsel for K. Gowtham Kumar, Advocate
For the Respondent:R. Sankaranarayanan, Senior Counsel for J. Harshini, Advocate
Headnote:
Company Appeal - Scheme of amalgamation and arrangement - Sanction of - Resolution - First Respondent company was incorporated Appellants/Petitioners collectively hold 12.72% of shares in First Respondent company. First Respondent company owns 58 acres of land Production plant of First Respondent company was located in aforesaid land - Held, Any resolution approved or passed by company at relevant applicable provision of old Act during period from can be implemented in accordance with provisions of Old Act, notwithstanding repeal of relevant provision subject to conditions - When main aim of minority shareholders is to acquire company's properties some or other and make certain allegations to bring application within parameter of Act, merely making of such allegation in my view, is not sufficient to hold that there is mismanagement and oppression - On a perusal of entire materials clearly indicate that main focus of petitioner is only to gain control over the company's property. Such is actual intent of parties, petition filed for mismanagement and oppression cannot be entertained - Appeal dismissed
JUDGMENT :
N. Sathish Kumar, J.
1. Aggrieved over the Order passed by the Company Law Board in C.P. No. 56 of 2013 dated 11.05.2015 the present appeal has been filed.
2. Brief facts leading to file this Company Appeal is as allows:
2(a). The First Respondent company was incorporated on 20.08.1982. The Appellants/Petitioners collectively hold 12.72% of shares in the First Respondent company. First Respondent company owns 58 acres of land which is located on East Coast Road, opp. Mahatma Gandhi Medical College in Pondicherry. The Production plant of the First Respondent company was located in the aforesaid land. Since the production was stopped in 1995, the machineries were sold and the shed was also dismantled. The guideline value of the land is approximately Rs. 50 lakhs and the market value is more than Rs. 100 crores. Though the First Respondent did not carry on any business activity for the past 17 years, they claimed that it posted a loss of Rs. 57,41,703/- due to the operations in 2010-2011 and loss of Rs. 51,42,089/- for the year 2009-2010. It is not explained how the First Respondent incurred a loss when there was no production activity and there was no factory or shed for the First Respondent to maintain. Similarly, in the Annual Report for the year 2010-2011 under the head remuneration committee they have tried to manipulate the accounts. The First Respondent also proposed a scheme of amalgamation between the First Respondent and M/s. Mind Factory Entertainment Private Limited at Rs. 7.83 per share as against the market price of Rs. 32.30 per share of the First Respondent. The Petition filed for amalgamation in C.A. No. 194 of 2012 and this Court directed the first Respondent to convene a meeting of the equity shareholders of the First Respondent for considering the scheme of amalgamation and on 18.4.2012 resolution was passed approving the scheme of amalgamation and arrangement. Subsequently the First Respondent in June 2012 filed C.P. No. 155 of 2012 for sanction of scheme of Amalgamation and Arrangement between the Transferor and Transferee company, which was objected by the appellants/petitioners and thereafter the above Petition was withdrawn.
2(b). The first Respondent thereafter on 08.08.2013 issued the statement of standalone financial results for the quarter ended 30.06.2013 and also stated that the Board of First Respondent proposed on 08.08.2013 to issue shares on preferential basis to improve the net-worth of the First Respondent. The First Respondent on 08.08.2013 issued the Annual Report for the year 2012-2013. In the Annual Report for the year 2012-13, the notice was given for conducting the 30th Annual General Meeting of the First Respondent on 12.09.2013. Under the head "Special Business", a special resolution was to be passed in the Annual General Meeting scheduled on 12.09.2013 with or without modification for the following subjects:
"The consent, authority and approval of the Company be and is hereby accorded to the board to offer, issue and allot up to an aggregate of 5,00,000 (five lakh only) equity shares of Rs. 10 each (ean an equity share and collectively as issue shares) at such price including a premium, if any at a higher price of the following:
a. The average of the weekly high and low of the closing prices of the related equity shares quoted on the recognized stock exchange during the 26 weeks preceding the relevant date or
b. The average of the weekly high and low of the closing prices of related equity shares quoted on the recognized stock exchange during the 2 weeks preceding the relevant date,
To Ashok Kumar Dalmia ("the investor"), on preferential allotment basis, at such time or times and on such terms and conditions and in such manner as may be decided by the board in this connection.
As Annexure to the notice was issued stating as follows:
"Item No. 7
The company has suspended the product
