1. The petitioners, collectively holding 1/3rd of the share capital of M/s. Aanaam Private Limited (‘the company’) have filed this petition alleging oppression and mismanagement in the affairs of the company. The company owns a hotel in Amritsar and as such its main business is to run and manage the hotel. The main allegation is that the 1st petitioner has been removed as the MD and that the 2nd petitioner has also been removed as the General Manger of the Hotel.

2. Shri Choudhary, appearing for the petitioners submitted: The 1st petitioner is a founder promoter of the company and till the year 2000, he along with his brothers and other family members held 58 per cent shares in the company. In the year 2000, the petitioners’ group acquired the shares held by other family members and thus held the entire 58 per cent. There are 3 groups in the company, namely, Galhotra group (the petitioners), Verma group (the second respondent) and Khajinder Singh group (the third respondent). The latter two groups held the balance 42 per cent of the equity shares at 21 per cent each. Even though the petitioners group was in majority with 58 per cent shares after acquisition of shares from other family members, with the view to give equal representation on the board for all the three groups, in a Board meeting on 6-8-2001, the 1st petitioner proposed that the quorum for the board meetings should be 3 directors, one from each group and the Board resolved to accept the said suggestion. After the petitioners acquired the shares, in 2001, it was agreed and decided by the three groups that for the smooth running of the hotel, the shareholding should be equalized and the hotel should be run in the nature of a quasi-partnership among the three groups. Accordingly, the 1st petitioner voluntarily transferred nearly 25 per cent of the shares held by his group to other two groups by which presently each group holds nearly 1/3rd shares in the company. These transfers of shares to the other two groups by the petitioner group were approved in the Board meeting held on 13-8-2001. In the board meeting held on 20-8-2001, on the suggestion of the 1st petitioner, it was also decided and resolved that the post of MD would be by rotation and each group would nominate the MD for a period of two years, and the bank accounts were resolved to be operated jointly by any of the two. All the decisions were taken unanimously. On the basis of these decisions, Shri Khajinder Singh was appointed as the MD on that day for a period of 2 years. When he completed his term as MD on 14-8-2003 and on his resignation, Shri Rakesh Verma was appointed as MD for a period of two years in a Board meeting held on 14-8-2003 specifically providing that the appointment shall be for a period of two years. During the period of the MDship of Shri Rakesh Verma, the 1st petitioner noticed mismanagement in the nature of siphoning of funds in different ways and when the petitioner took up the matter with the respondents, no satisfactory explanation was forthcoming. In the mean while, Shri Rakesh Verma resigned from the post of MD after over staying for one month beyond the tenure of 2 years, and the 1st petitioner was appointed as MD on 7-9-2005 and relevant Form No. 32 was filed on the same day. This was done in terms of the Board resolution dated 20-8-2001. After taking over as MD, the 1st petitioner noticed various acts of financial mismanagement in the company. Various correspondences were exchanged between him and other two directors. Since no clarifications/explanations were forthcoming on his complaints, the petitioners also caused a legal notice to be issued to the directors on 1-10-2005. An emergency Board meeting was convened by the 3rd respondent on 14-10-2005 to discuss the legal notice, and a lot of words were exchanged due to which no business could be transacted. Both the sides filed police complaints against each other and this was also widely published in newspapers. Thereafter,