A petition for acts of oppression requires proof of continuous oppressive behavior, which the petitioner failed to demonstrate, resulting in dismissal.

ORDER

1. The present Petition is filed by Mr. Narasimha Vara Prasad Anala, one of the Directors of M/s. Srinivasa Fibre Enterprises Private Limited seeking the following reliefs:

(i) To declare that the affairs of the R1 are being conducted in a manner prejudicial to the interest of the company and its shareholders and the acts of the R2 are oppressive against the petitioner qua shareholders of the company.

(ii) To pass an order to regulate the affairs of the 1st Respondent Company.

(iii) To pass an order declaring the sale of the land of the R1 Company by the R2 by the R3 as null and void.

(iv) Consequently, pass order cancelling the sale deed No. 13665/2005 dated 13.09.2013 registered at the office of R6.

2. Application

(i) M/s. Srinivasa Fibre Enterprises Private Limited (Respondent No.1/“R1 Company”) was incorporated in 1995 as a private company limited by shares. The authorised share capital of the R1 Company is Rs. 30,00,000/-, divided into 3,00,000 equity shares of Rs.10/- each, while its paid-up share capital is Rs. 1,00,000/-, divided into10,000 equity shares of Rs. 10/- each.

(ii) The Petitioner holds 25% of the paid-up share capital but is not involved in the day-to-day affairs of the R1 Company. Mr. Madineni Kanaka Raju (Respondent No. 3/“R3”), also a Director, was entrusted with the management of the Company.

(iii) The Petitioner recently discovered that the Company has ceased business operations and that the properties of the R1 Company were sold, with the sale proceeds allegedly misappropriated

(iv) In October 1995, the R1 Company purchased agricultural land measuring Ac. 5-00 guntas in Survey No. 229, Manchirevula Village, Gandipet Mandal (earlier Rajendranagar Mandal), Ranga Reddy District, from Mr. M.Z.M. Khan and Mrs. Arifa Begum, under Sale Deed No. 1313/1995 (Annexure-C), registered before the Sub-Registrar (Respondent No. 6/“R6”), Ranga Reddy District.

(v) Owing to the downturn in business, the land was divided into agricultural plots, some of which were sold while others remained unsold. During a recent site visit, the Petitioner discovered that Smt. Gudapati Jhansi (Respondent No. 2/“R2”) was attempting to construct a compound wall. Upon enquiry, R2 informed the Petitioner that R3 had sold the said plot under Sale Deed No.13665/2005, dated 13.09.2005 (Annexure-D).

(vi) Despite being a substantial shareholder, the Petitioner was not informed of the sale. Upon enquiry with Mr. Brahmayya Kodidela (Respondent No. 4/“R4”) and Mr. Ramakrishna Puchhakaayla (Respondent No. 5/“R5”), also Directors of the R1 Company, no action was taken.

(vii) The market value of the said land at the time was approximately Rs.20,00,000/-, whereas R3 sold it for a grossly undervalued price of Rs. 3,00,000/- under the above sale deed, allegedly for cash consideration.

(viii) The said sale is illegal, void, and unenforceable, as the R1 Company, being a juristic entity, holds its properties in trust through its Directors, who are fiduciaries. Such property can be dealt with only in accordance with law. The impugned deed bears no company seal or stamp and was executed by R3 in his personal capacity, rendering it void ab initio.

(ix) R3 acted beyond his fiduciary capacity and for personal gain, constituting an act of oppression. No valid Board Resolution authorised the sale of the Company’s immovable property.

(x) The undervalued sale of Plot No. 158 in favour of R2 was effected in collusion between R2 and R3. The recitals of the sale deed themselves reveal such collusion.

(xi) The cause of action is continuing in nature and persists as of the date of filing of this Petition, with each further act of oppression giving rise to a fresh cause of action.

(xii) Therefore, the R1 Company is liable to be wound up under just and equitable ground