1. The Petitioner claiming in access of 10% of the paid up capital of M/s S.S. Organics Limited ("the Company"), aggrieved purportedly on account of (a) unilateral conduct of the 13^th annual general meeting of the Company, thereby (i) illegally appointing the respondents 2 to 7 as directors, without re-electing the existing directors; (ii) without re-appointing the statutory auditor and (iii) illegally appropriating statutory records and other properties belonging to the Company; (b) illegal appointment of the second respondent as Managing Director at a board meeting convened without enjoying any such authority and (c) unauthorised filing of statutory forms before the Registrar of Companies, notifying falsely the aforesaid appointment of directors and Managing Director as well as cessation of the then existing directors, has invoked the jurisdiction of the Company Law Board under sections 397 and 398 of the Companies Act, 1956 ("the Act"), seeking the following, among other, main reliefs :-

(i)to declare that the proceedings of the 13^th annual general meeting conducted by the respondents 2 to 7 on 20.10.2006 are invalid;

(ii)to restrain the respondents 2 to 7 from giving effect to any resolution purported to have been passed at the illegally conducted annual general meeting:

(iii)to declare that the proceedings of the board meeting illegally conducted on 22.10.2006 are invalid;

(iv)to restrain the respondents 2 to 7 from giving effect to any resolution passed at the illegally conducted board meeting:

(v)to direct the Registrar of Companies to delete from his records all forms purportedly filed by the respondents 2 to 7 in respect of the Company; and

(vi)to set aside the cancellation of allotment of 25 lakh shares, in favour of the petitioner and his associates, as claimed in C.A. No. 16 of 2008.

2. Shri R. Murari, learned Counsel, while initiating his arguments in support of the petitioner, submitted:

OThe Company engaged in the business of manufacture and sale of drugs started facing severe financial crisis, which resulted in erosion of its entire net worth and came to be ultimately referred to the Board for Industrial and Financial Reconstruction in the year 1997. The second respondent, one of the joint signatories to the memorandum of association or any other director could not manage the Company and the petitioner, brother-in-law of the second respondent, was appointed as Managing Director with effect from 01.01.2007, entrusting the task of reviving the Company. Thereafter, on account of the initiative taken by the petitioner, the BIFR by an order dated 12.02.2002 had sanctioned a scheme, in pursuance of which an amount of Rs.200 lakhs of unsecured loans was converted into equity in the name of the petitioner and his associates and the dues of State Bank of India were settled. However, the BIFR by an order dated 19.06.2003, declared the scheme as having failed, upon which a modified rehabilitation scheme was approved in terms of the BIFR order dated 27.01.2005. The revised rehabilitation scheme envisages that (a) unsecured loans of Rs. 250 lakhs would be brought in by the promoters, (b) unsecured loans could be converted into 25 lakh equity shares, and (c) further 1.5 lakh shares would be issued to IDBI towards a part of the interest due to them. Accordingly, at a board meeting, the allotment of 25 lakh shares to the petitioner and 1.50 lakh shares in favour of IDBI was effected, of which the second respondent being director till 29.09.2005, was quite aware. By virtue of sections 18(8) and 19 of the Sick Industrial Companies (Special Provisions) Act, 1985, once a scheme is sanctioned, the same shall be binding on the Company, its shareholders, creditors, guarantors, employees and on all concerned and therefore, the allotment of 25 lakh shares to the petitioner is binding on the Company. The Supreme Court in Tata Motors Ltd. v. Pharmaceutical Products of India Ltd. and Anr – [2008] 3 Comp. LJ 91 (SC) held that keeping in view