1. In this order I am considering CP No. 71/2005 filed by Shri J.K. Paliwal and Shri V.K. Paliwal under sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) alleging certain acts of oppression and mismanagement by the respondents particularly by R-8 namely Shri Ajay Paliwal son of petitioner No. 1 namely, Shri J.K. Paliwal.

2. The undisputed facts of the case are: The respondent company namely M/s. Paliwal Steel Ltd. was incorporated on 27-10-1970 as a private limited company and with effect from 25-8-1983 the word ‘private’ was deleted from its name as per the provisions of section 43A(1A) of the Act. The company is having its Regd. Office at Alpana Cinema Building, Model Town, Delhi. The authorised capital of the company at the time of incorporation was Rs. 7,50,000 divided into 7,500 equity shares of Rs. 100 each. The authorised capital was subsequently raised during August 1971 to Rs. 25,00,000 comprising 25,000 equity shares of Rs. 100. The paid up share capital of the company as on 30-9-2004 was Rs. 11,00,000 divided into 11,000 equity shares of Rs. 100 each. The main business of the company is that of Iron and Steel founders alloy and steel makers, steel convectors and to establish steel Re-rolling Mills. The petitioners’ hold 47.71 per cent shares in the R-1 company, the respondent shareholdings is 37.29 per cent and the remaining 14.99 per cent is held by the others.

3. Shri Virender Ganda, Counsel for the petitioners pointed out that the petitioner along with certain other shareholders collectively holding 5,249 Equity Shares of Rs. 100 each, credited as fully paid-up, forming 47.71 per cent of the total share Capital, filed the aforesaid petition and inter alia challenging Form No. 32 filed with the Registrar of Companies on 28th April, 2004 under the forged signature of petitioner No. 1 in respect of illegal appointment of (i) Shri Manish Paliwal (respondent No. 3) s/o Shri. N.K. Paliwal (respondent No. 2) and (ii) Shri Abishek Paliwal (respondent No. 4) s/o Shri Ajay Paliwal (respondent No. 8); illegal and unauthorized Sale of Flat No. 105, Golf Apartments, Sujan Singh Park, Lodhi Road, New Delhi to Smt. Vijaya Paliwal (respondent No. 5) w/o Shri Ajay Paliwal (respondent No. 8) and Smt. Kamlesh Paliwal (respondent No. 6) w/o Shri N.K Paliwal (respondent No. 2) for a meagre consideration of Rs. 25 lakhs, which in turn has been repaid to Shri Ajay Paliwal (respondent No. 8) Smt. Jyotsna Paliwal (respondent No. 9) sister of Shri Ajay Paliwal (respondent No. 8) and Shri Rajiv Paliwal (respondent No. 7) s/o Shri N.K. Paliwal (respondent No. 2), all transactions i.e., execution of sale deed, exchange of consideration and then payment to respondent Nos. 7, 8 and 9 within the family happening on the one single day.

4. Shri Virender Ganda, Counsel for the petitioners pointed out that since the Company (R-1) is not carrying out any regular business activity, the Company’s bank account at New Delhi had become inoperational for quite some time, the petitioners in order to complete the annual accounts of the Company however get the periodical statement of account from each of the bank from time to time. The petitioners were shocked to observe from the statement as received from respondent No. 12 Union Bank of India, Delhi. Current Account No. 419001010026102 for the month of July, 2005 that the entries worth lakhs of rupees have suddenly appeared without there being any business activity of the Company during this period. The details of the deposits and withdrawals, all made on the same day i.e. 8-7-2005 were found as follows :

Deposits

Rs. 12.50 lakhs (by two cheques) from Smt. Kamlesh Paliwal (respondent No. 6) w/o Shri Nawal Kishore Paliwal (respondent No. 2); Rs. 12.50 lakhs (by two cheques) from Smt. Vijaya Paliwal (R-5) w/o Shri Ajay Paliwal (R-8);

Withdrawals

Rs. 1,23,000 by way of pay order favouring Manish Paliwal (R-3) s/o Shri N.K. Paliwal (R-2); Rs. 40,300 by way of pay order favour