1. The petitioners, who are part of Bhushan Energy Group, collectively holding about 11.5% shares, with the consent of shareholders holding further 3% shares, have filed this petition alleging oppression and mismanagement in the affairs of M/S Orissa Sponge Iron & Steel Limited (the company). The company is a listed company and it is in the business of manufacture of sponge iron and allied steel products in a single unit in Orissa.

2. A summary of the petition is : The present management controlling the board who are also promoters hold 41.5% shares in the company. They are trying to dispose of the only unit of the company by transferring their entire shareholding to a third party without the consent of the shareholders as required in the spirit of Section 293(1)(a) of the Act. By the proposed transfer of shares, the promoters are trying to run away from the company which has been mismanaged throughout, Due to mismanagement and siphoning of funds, the company has become a loss making company as is evident from the balance sheets for the last few years. By the proposed sale of shares, the present management is trying to relieve themselves of the consequences of mismanagement and siphoning of funds. The petitioners came to know of the divestment of shares by the present management from News Channel. The company had issued convertible warrants to the promoters and the proceeds received through pledging of the warrants have been diverted by the promoters for their personal use. They have issued 70 lakhs convertible warrants to themselves without making an open offer in terms of Take Over Code. The petitioners apprehend that the promoters might further increase their holding without complying with the requirements of the Take Over Code. They have also converted part of the warrants into shares. The petitioners have strong apprehension that they will utilize the unpledged shares for raising funds to convert the warrants -30 lakh warrants at Rs. 101/- and 40 lakhs warrants at Rs. 225/-. By doing so, the promoters are attempting to raise the price of the shares and then unlawfully sell their shares in the market. A perusal of the documents filed by the company before Bombay Stock Exchange would indicate that there are variances in the promoters' holding at different point of time. The 2^nd petitioner holds 35 lakh warrants convertible into equal number of equity shares. After conversion, the petitioners would collectively hold 27,53% shares. In spite of submission of all the relevant documents, the company is not registering the transfer of the warrants. With these allegations, the petitioners have sought for a direction to the respondents to maintain status quo with regard to the shareholding and fixed assets, for a direction to the respondents not to sell their shares without the approval; of shareholders, and for an order for investigation into the affairs of the company and thereafter for reconstitution of the board.

3. Thereafter, CA 113 of 2009 was filed by the petitioners, the summary of which is : The petitioners had taken inspection of the records of respondent No. 10 and 11. From the inspection, it came to light that respondent No. 10-Torsteel Research Foundation is holding 11% shares in the company. During October-December, 2005, it purchased 12 lakh shares from IPICO for Rs. 58.06 each amounting to Rs. 6.97 crores. For funding this amount,R-10 obtained a loan of Rs. 6 crores from Star Steel Services Limited which is controlled by R-2 and R-3 being the promoters. In turn, Star Steel Services Ltd. borrowed Rs. 6 crores from UTI Bank on 29.7.2005 against the security of escrow account of payables from R-l company and a corporate guarantee from R-10, was also provided. On the same' day of taking the loan, Star Steel Services transferred Rs. 5.44 crores to the bank account of R-10 and this amount has been utilized by R-10 to purchase 12 lakh shares. This transaction is in clear violation of Section 77 of the Act as Orissa Sp