1. The petitioners collectively holding 47.58% of the shares of M/s Tiruppur Transports Private Limited ("the Company") before further issue of shares impugned in the Company Petition and constituting in excess of one-tenth of the total number of its members, aggrieved purportedly on account of, inter alia, (a) illegal issue of the unissued capital of the Company exclusively in favour of the respondents 3 & 4 without any consideration or need thereby reducing the petitioners into minority shareholders and gaining control of the Company; (b) illegal cessation of the petitioners 3 & 4 as directors of the Company; (c) illegal appointment of the respondents 3 & 4 as directors; (d) non-holding of annual general meeting of August 2001; (e) non-receipt of notices of the disputed board general meetings; and (1) manipulation of records of the Company, have invoked the jurisdiction of the Company Law Board under section 397 read with section 402 of the Companies Act, 1956 ("the Act"), seeking the following reliefs:

(a)to declare that the co-option of the third and fourth respondents as directors of the Company in the Board Meeting said to have been held on 29.09.2000 is non est and not binding on the Company and declare that any action taken pursuant to the said meeting is illegal;

(b)to declare that the issue of shares of the Company to the third and fourth respondents on 19.03.2001 is void and not binding on the Company;

(c)to direct the Company to rectify its register of members deleting the names of the third and fourth respondents as members of the Company;

(d)to declare that the removal of the third and fourth petitioners from directorships of the Company is void, illegal and not binding the Company;

(e)to declare that the third and fourth petitioners continue to be directors of the company; and

(f)to remove the second respondent from the board of directors of the Company and consequentially from the post of the Managing Director of the Company.

2. Shri T.K. Seshadri, learned Senior Counsel, while initiating his arguments, in support of the petitioners submitted:

OThe Company was originally incorporated in the year 1946 as a public limited company with the main object of carrying on the business of garage proprietors, with certain prominent businessmen of the town of Tiruppur, as its shareholders. Palanisamy Naidu, father of the petitioners 1 & 4 and the second respondent, was one of the signatories to the memorandum of association and one of its first directors of the Company and he died in the year 1984. The Company came to be converted into a private limited company in the year 1958. The second petitioner is the wife of the first petitioner. The third petitioner is the father-in-law of the fourth petitioner. The third respondent is the wife of the second respondent. The fourth respondent is the son of the respondents 2 & 3. There were only two outside shareholders, who died long back, but their respective legal heirs have not so far taken any steps to get their shares transposed. The names of the aforesaid deceased shareholders are still in the register of members of the Company. Thus, the Company is a closely held company with only the members of the family of Palanisamy Naidu, being its shareholders.

OThe Company is the holding Company of Tiruppur-Karur Transports Private Limited and operated buses through its subsidiary company, which owns valuable immovable property in the town of Tiruppur. The petitioners 3 & 4 and the second respondent have been directors for the past several years. The second respondent, being a resident of Tiruppur, was appointed as Managing Director, while the petitioners were residents of Trichy.

ONo board meetings were held on 29.09.2000, 14.03.2001 and 06.05.2002, as claimed by the respondents, co-opting the respondents 3 & 4 as directors, issuing unissued capital of the Company and recording cessation of the petitioners 3 & 4 as directors of the Company. The second respondent filed false returns in this