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Paragaon Utility Financiers Pvt. Ltd. Vs. Punjab Iron and Steel Co. Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberCompany Application No. 83 of 1982 and Company Petition No. 113 of 1981
Judge
Reported in[1985]57CompCas738(P& H)
ActsCompanies Act, 1956 - Sections 155; Code of Civil Procedure (CPC) , 1908 - Sections 151
AppellantParagaon Utility Financiers Pvt. Ltd.
RespondentPunjab Iron and Steel Co. Pvt. Ltd.
Appellant Advocate J.S. Narang, Adv.
Respondent Advocate N.K. Sodhi and; Amar Dutt, Advs.
Excerpt:
.....would commence from the date when the parties concerned acquire knowledge of passing of the said order. - dhillon instituted a suit in the court of the subordinate judge, 1st class, jullundur, for a permanent injunction restraining the requisitionists from holding the proposed meeting on that date and for declaration that the requisition notice of the meeting was illegal, void, ultra vires and bad in the eye of law......be deemed to have no such authority. in case the petition is decided, then some observations shallhave to be made regarding the meeting and resolution, which will be prejudicial to the interests of the parties in the civil suit.9. after taking into consideration all the aforesaid circumstances, i partly accept company application no. 83 of 1982, and dismiss company petition no. 113 of 1981, with the observation that if it is held in the suit between the parties that resolution dated april 21, 1982, was illegal and invalid, the petitioner shall be entitled to file a fresh petition under section 155 of the act. no order as to costs.
Judgment:

Rajendra Nath Mittal, J.

1. This is a petition under Section 155 of the Companies Act, 1956.

2. Briefly, the case of the petitioner is that it is a private limited company registered under the Companies Act, 1956, hereinafter referred to as 'the Act'. Similarly, the respondent is also a private limited company. The petitioner has been holding 490 equity shares in the respondent-company of Rs. 1,000 each. It is averred that the managements of the petitioner and the respondent were more or less in the same hands. The petitioner was controlled by the group of Shri Pavittar Singh till October 21, 1979, when Col. P. S. Dhillon (through whom the present petitionhas been filed) was elected to that office. The management of the respondent is still in the hands of Shri Pavittar Singh and his group.

3. It is further averred that when the group of Shri Pavittar Singh was in power, that group sold the said shares to Shri Pavittar Singh, his sons and his brother-in-law. The case of the petitioner is that the shares belonging to the petitioner still continue to belong to it and it cannot be accepted that these have been transferred in favour of any one else as the alleged transfer is illegal and void. Consequently, the petition has been filed for rectification of the register of shareholders.

4. During the pendency of this petition, C.A. No. 83 of 1982 was filed on behalf of the petitioner under Section 151 of the CPC, for withdrawal of the petition. The application has been filed by the petitioner through Shri Amar Singh, director. It is stated therein that Col. Dhillon, who has filed the petition under Section 155, has been removed from the managing directorship of the company on April 21, 1982, and Dr. Vikram Singh has been appointed as the managing director in his place. The company, vide resolution of its board of directors, dated May 10, 1982, resolved to withdraw the company petition and authorised its director, Shri Amar Singh, to take all necessary steps in that regard. It is, therefore, prayed that the application be accepted and the company petition be dismissed.

5. The application has been contested by the petitioner through Col. P. S. Dhillon. It is stated that Col. Dhillon continued to be the managing director and was acting as such till date. He had filed, annual returns and balance-sheets before the Registrar of Companies within the statutory period and had been discharging other functions as managing director. It is further stated that the meeting of the shareholders had been requisitioned by some of the defaulting shareholders for April 21, 1982. Col. Dhillon instituted a suit in the court of the Subordinate Judge, 1st Class, Jullundur, for a permanent injunction restraining the requisitionists from holding the proposed meeting on that date and for declaration that the requisition notice of the meeting was illegal, void, ultra vires and bad in the eye of law. An application under Order 39, Rules 1 and 2 and Section 151, CPC, was also filed along with the suit on April 19, 1982, for an ad interim injunction. The court issued the injunction order against the requisitionists restraining them from holding the proposed meeting on April 21, 1982, and directed them to appear in the court on April 29, 1982, to contest the application. It is alleged that service of the notice was effected on one of the requisitionists, namely, Shri Amar Singh. The process-server also asked some other requisitionists to sign the notice but they refused to sign and acknowledge the same stating that they should be served at their residential addresses. Thereafter, the requisitionists left the premises immediately saying that since themeeting had been restrained, nothing could be done. It is alleged that as they claimed that the meeting was held on April 21, 1982, an application for contempt of court was moved against them, which is still pending. It is next averred that the alleged meeting was illegal as all the requisitionists were defaulters and, therefore, were not entitled to requisition any meeting without complying with Article 36 of the articles of association according to which they were not entitled to vote in a meeting unless all sums payable by them in respect of the shares in the company had been paid. The legality of the meeting has been' challenged on various other grounds, mentioned in the reply, and also in the suit filed by Col. P.S. Dhillon. In the circumstances, it is prayed that the application be dismissed.

6. A rejoinder to the application has been filed by Shri Amar Singh wherein it is stated that one-tenth shareholders of the company served a notice on Col. Dhillon to call an extraordinary general meeting of the company. He evaded the notice as he knew that the resolutions put forth by the requisitionists would be carried out. The requisitionists, therefore, called a meeting on April 21, 1982, wherein Col. Dhillon was removed from the managing directorship of the company. No injunction order of the court was served upon the requisitionists on April 21, 1982. On the other hand, it was served on April 22, 1982. The filing of the contempt petition has been admitted but it is alleged that it has been filed mala fide. It is further averred that no money was due fr6m the requisitionists on account of call money and, therefore, the meeting called by them cannot be said to be illegal.

7. The main question that arises for determination is as to whether any valid meeting was held on April 21, 1982, by the shareholders of the petitioner in which a resolution was passed to remove Col. Dhillon from the managing directorship and to appoint Dr. Vikram Singh as the managing director in his place.

8. I have already given in detail the allegations of Col. Dhillon and counter-allegations of the other party. The matter is highly controversial. It is admitted by the parties that there is no provision in the Companies Act under which the validity of a meeting can be gone into by the court. The validity of the meeting and resolution is being examined by the Subordinate Judge, 1st Class, Jullundur, in a suit between the parties. If it is held that Col. Dhillon had been removed from the managing directorship, he, on behalf of the petitioner company, has no locus standi to continue the petition; if, on the other hand, it is held that the meeting dated April 21, 1982, was invalid, then Amar Singh, who has moved an application for withdrawal of the petition, will be deemed to have no such authority. In case the petition is decided, then some observations shallhave to be made regarding the meeting and resolution, which will be prejudicial to the interests of the parties in the civil suit.

9. After taking into consideration all the aforesaid circumstances, I partly accept Company Application No. 83 of 1982, and dismiss Company Petition No. 113 of 1981, with the observation that if it is held in the suit between the parties that resolution dated April 21, 1982, was illegal and invalid, the petitioner shall be entitled to file a fresh petition under Section 155 of the Act. No order as to costs.


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