Shareholders consenting to private placement and benefiting via share sales are estopped from alleging oppression; Section 77 violations need strict proof of purpose-specific funding, not mere inferences.

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

Company Appeal (AT) No’s 121, 123 and 124 of 2022 have been filed against common impugned order dated 18.07.2022 passed in C.P. No. 222 of 1991 by Ld. NCLT, Kolkata. Vide the impugned order, the petition under Section 397-398 of the Companies Act, 1956 was allowed after more than 31 years of its institution by passing various directions.

2. Before coming to the contentions raised it would be appropriate to state about the issues involved and the findings given in the impugned order qua such issues

3. The issues for consideration before the Ld. NCLT were as follows:-

a) whether the issuance of 30,000 equity shares by private placement was wrongful and illegal;

b) whether purchase made by Respondent Nos. 26 and other Respondents of 15,626 shares of Respondent No.1 company was bad in law and could not have been done;

c) limitation.

4. Qua (c) viz. limitation the Ld. NCLT had stated the Original Petitioners had no knowledge of the purported issue/allotment of shares till October, 1990 and the notice dated 25.11.1987 of the AGM of PGFI/appellant was not received by the original petitioners and they relied upon the Director’s Report dated 1988 to say they never knew the names of the allottees; and it was not shown the petitioners were aware of these fact, at any time prior to three years from date of the filing of the petition and the acts of oppression and mismanagement, if are continuing, then the company petition cannot be brushed set aside.

5. For (a) and (b) above, we need to look to certain dates before we proceed further with the matter.

6. On 30^th October, 1987 a Board Meeting of the appellant company was held wherein a Resolution was passed to issue 30000 shares @ Rs.100/- each in a private sale. Mr. P. Lodha participated in the Meeting and was a party to such resolution. Admittedly a notice dated 25.11.1987 was then issued for holding of AGM on 30th December, 1987. In the said AGM dated 30.12.1987, the participants, including Mr. P. Lodha and M/s Bhagwati Developers Pvt Ltd., (earlier known as M/s Lodha Services Pvt. Ltd.) voted in favour of resolution for issuance of 30000 shares @ Rs.100/- each, in private sale.

7. On 02.02.1988 another Meeting was held and the Share Transfer Committee was given an authority to allot such 30000 shares; and to receive applications by private negotiations, as the Committee may deem fit in terms of the Resolution passed on 30^th December, 1987. It allotted these shares on 26.04.1988 to various person. Admittedly, Mr. P. Lodha was present in the said Meeting dated 02.02.1988 and the Resolution was passed with his consent as he never raised any objection to such allotment. Reference was also made to the Minutes of Meeting dated 30th December, 1987 wherein Mr. Sunil Jain appeared on behalf of M/s Lodha Service Pvt Ltd viz Respondent No. 1 herein and one Mr. P.K. Jain appeared on behalf of Mr. P. Lodha wherein resolution was passed to issue 30000 equity shares @ Rs.100/- each, for an aggregate value of Rs.30 lakh for cash at par, payable in full on application by private placement to such person and in such manner as the Board may deem fit. The proxy form of appointment of Mr. P.K. Jain for Mr. P. Lodha to vote in the AGM of dt. 30th December, 1987 is annexed