1. In the Company petition filed under sections 235, 397, 398 read with sections 402 and 403 of the Companies Act, 1956 ("the Act") alleging a series of acts of oppression and mismanagement in the affairs of M/s. Saravana Stores Private Limited ("the Company"), on account of inter alia, illegal (a) appointment of the respondent Nos. 2 and 3 as additional directors; (b) exclusion of the petitioners from the office of director; (c) usurpation of control over the Company; (d) allotment of shares, the respondents have filed the present application under regulation 44 of the Company Law Board Regulations, 1991 for stay of all further proceedings before the Company Law Board, until disposal of the civil suits in C.S. No. 943/2002 and C.S. No. 36/2003 on the file of the High Court of Judicature at Madras.

2. Shri C. Harikrishnan, learned Senior Counsel, in support of the stay application submitted :

uS. Selvarathinam, since deceased, father of the second respondent, incorporated the first respondent company in August 2002, out of his own funds with an authorized capital of Rs. two crores divided into 20 lakhs equity shares of Rs. 10 along with his brothers, being the petitioners herein, as signatories to the Memorandum of Association, each agreeing to subscribe for 50,000 shares of Rs. 10 each in the capital of the Company. While the brothers were named as the first directors. Selvarathinam was the first Managing Director of the Company. In due course of time, serious disputes arose among the brothers, soon after incorporation of the Company in regard to several of the jointly run businesses and the properties owned by them-movable and immovable - which resulted into a Memorandum of Understanding (MOU) dated 18-9-2002, agreeing to partition the properties and the businesses in the manner specified therein. In terms of the MOU, the Company ought to have been taken over by Selvarathinam, pursuant to which the petitioners had resigned from the office of director and executed appropriate returns and thereafter, the respondent Nos. 2 and 3 were inducted on the board as additional directors and were allotted 500 shares each, apart from the allotment of 21,550 shares in favour of Selvarathinam.

uThe petitioners herein, failed to act in accordance with the MOU, compelling Selvarathinam to file a suit in C.S. No. 943 of 2002 on the file of High Court of Madras, wherein the latter exclusively claimed the Company by virtue of the MOU. Accordingly, the question whether Selvarathinam has become absolutely entitled to the Company is pending consideration and decision by the High Court of Madras. In the meanwhile, the petitioners have filed C.S. No. 36 of 2003 before the High Court of Madras against Selvarathinam and his wife for a decree of partition of the common properties including the landed properties with an extent of 43.18 acres at Sriperambadur and business in accordance with the MOU, upon which a combined preliminary and final decree came to be passed allotting the properties as per the MOU. Accordingly, the parties have taken possession of the respective immovable properties allotted to them and they are in possession of the same. As a result, the landed properties at Sriperambadur are in exclusive enjoyment of Selvarathinam. In these proceedings also Selvarathinam is asserting his absolute ownership over the Company, which has been set up in the property allotted to him namely, the landed property at Sriperambadur. Selvarathinam passed away in December 2003 and thereafter, the second respondent herein was impleaded in C.S. No. 36 of 2003. The respondents failed to honour the terms of consent decree, and the decree was executed, which was unsuccessfully contested by them. The matter was agitated by the petitioners before the Supreme Court with the same result.

uThe present company petition has been filed in September, 2004 by the respondents with the ulterior motive of taking over the properties at Sriperambadur, which shall not be perm