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Promode Kumar Mittal and ors. Vs. Southern Steel Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Petition No. 506 of 1976
Judge
Reported in[1980]50CompCas555(Cal)
ActsCompanies Act, 1956
AppellantPromode Kumar Mittal and ors.
RespondentSouthern Steel Ltd. and ors.
Appellant AdvocateR.C. Nag, ;R.K. Lala, ;Sudipta Sarkar and ;A.K. Bose, Advs.
Respondent AdvocateS.B. Mukherjee and Mrs. U.B. Mukherjee, Advs.
DispositionApplication dismissed
Excerpt:
- .....without any notice to the petitioners that the meeting was fixed on the 16th of may, 1976, and the alleged meeting on the 16th of may, 1976, was held at hyderabad and various resolutions were passed. the next allegations are that the secretary of the company, v.s. modi, duly called a meeting, of the board of directors to be held on the 31st of may, 1976, at its registered office at calcutta, for which notice was duly given by the directors. respondent no. 5, r.k. mittal, did not attend the said meeting on the 31st of may, 1976, at the registered office at calcutta, and it is alleged that in the said meeting it was resolved that all the meetings of the respondent-company, the southern steel ltd., would be held at the registered office at calcutta. next it is alleged that respondent no. 5,.....
Judgment:

Salil k. Roy Chowdhury, J.

1. This is another application under Sections 397, 398, 402, 403, etc., of the Companies Act, 1956, in the series of litigations between Mohan Lal Mittal group and his opposing group. These applications are the outcome of family disputes as all the companies concerned in these applications are under the control and management of the Mittal family as the directors are either the members of the Mittal family or their relatives or nominees or stooges. They reveal a general pattern of running parallel management, one group trying to oust the other group from the companies in which the majority shares belong to the respondents. The present application is by Mohan Lal Mittal, the eldest brother of the Mittal family, and his sons as petitioners and the respondents are Indra Sen Mittal and the group of brothers and persons supporting him and the other directors of the company who are merely relatives, friends or stooges of the Mittal family. The petitioners allege in para. 8 of the petition that they themselves along with another son of Mohan Lal Mittal, Sri Laxmi Niwas Mittal, hold 1/10th of the issued and subscribed capital of the respondent-company, Southern Steel Ltd., and, therefore, they are qualified under Section 399 of the Companies Act, 1956.

2. The allegations which are the basis of the present application under Sections 397 and 398 of the Companies Act, 1956, are that the meeting fixed to be held on the 14th of May, 1976, could not be attended to by the petitioners and was not held due to want of quorum. It is alleged that the said meeting was adjourned till 16th of May, 1976, and was held without any notice to the petitioners that the meeting was fixed on the 16th of May, 1976, and the alleged meeting on the 16th of May, 1976, was held at Hyderabad and various resolutions were passed. The next allegations are that the secretary of the company, V.S. Modi, duly called a meeting, of the board of directors to be held on the 31st of May, 1976, at its registered office at Calcutta, for which notice was duly given by the directors. Respondent No. 5, R.K. Mittal, did not attend the said meeting on the 31st of May, 1976, at the registered office at Calcutta, and it is alleged that in the said meeting it was resolved that all the meetings of the respondent-company, the Southern Steel Ltd., would be held at the registered office at Calcutta. Next it is alleged that respondent No. 5, R.K. Mittal, took away various documents, papers and ,books of the respondent-company forcibly which were required to be kept at the registered office at Calcutta and in spite of demand and request he did not return the same. It is further alleged that, in spite of the rejection of the application for transfer of the registered office at Calcutta, from Calcutta to Hyderabad, by this court in 1970, respondent No. 5, R.K. Mittal, to circumvent the order of this court, shifted the administrative office of the respondent-company from Calcutta to Hyderabad with effect from 7th of June, 1976. There were other allegations that the accounts of the respondent-company have been lying ready and the trial balance-sheet could not be prepared for want of accounts of the Hyderabad factory which were not sent deliberately by respondent No. 5, R.K. Mittal, nor the auditor's objection forwarded by S.R. Batliboy in respect of its irregularities, and discrepancies of the Hyderabad factory were answered by respondent No. 5, R.K. Mittal, as a result of which the balance-sheet could not either be prepared or published. The petitioners' further allegations are that the said respondent No. 5, R.K. Mittal, without any lawful ground or without any resolution of the board of directors, transferred the secretary and senior officers of the respondent-company from Calcutta to Hyderabad. One of the other allegations is that the said respondent No. 5, R.K. Mittal, by his letter dated the 21st December, 1976, disclosed that the registered office of the respondent-company has been purported to be shifted to No. 8, Old Post Office St., Calcutta, from No. 2, Brabourne Road, Calcutta, and it is alleged that no resolution was passed in any meeting of the board of directors of the respondent-company nor any tenancy was ever obtained by the respondent-company at No. 8, Old Post Office St., Calcutta.

3. The respondent duly answered the said allegations alleging that the petitioners have no right to ask for postponement of the meeting to be held on the 14th of May, 1976. The said meeting was attended by respondent No. 3, Indra Sen Mittal, and respondent No. 5, R.K. Mittal, but it was adjourned due to lack of quorum till 16th of May, 1976, and the adjourned board meeting was duly and lawfully held on the 16th of May, 1976. It was further submitted by the respondents that no notice is required to be given for any adjourned meeting either under the Companies Act or under the articles of association of the company. The respondents denied the validity and legality of the purported notice to convene a meeting of the board alleged to be held on the 31st of May, 1976, issued by the alleged secretary, V.S. Modi. Respondent No. 5, R.K. Mittal, also denied that any paper and document has been taken away by him as alleged. The respondents, in my view, rightly submitted that the company being financed by the Andhra Pradesh State Financial Corporation was committed to shift its registered office from Calcutta to Hyderabad where admittedly the company's factory is situate and the main business is conducted and as the said Andhra Pradesh State Financial Corporation was insisting upon the said transfer, the resolution was passed accordingly on the 16th of May, 1976. It is further alleged by the respondents that according to the resolution of the said adjourned meeting dated the 16th of May, 1976, the accounts in respect of the establishment at Calcutta was to be sent to Hyderabad. It is also denied by the respondents that the accounts at Calcutta were ready as alleged by the petitioners. It is further denied that the trial balance-sheet of the Calcutta office was ever sent to Hyderabad as alleged by the petitioners. The respondents alleged that, there was enormous increase and unjustified expenses incurred at the Calcutta office and the appointment of eleven new persons at the Calcutta office warranted the said transfer of the Secretary and the senior officers from Calcutta to the Hyderabad office. It is specifically alleged, and in my view quite rightly from the facts disclosed in the pleadings and documents placed before the court, that the said secretary and the senior officers were henchmen of Mohan Lal Mittal, petitioner No. 3, the prime mover of the present application and the person behind the whole dispute. The respondents also denied that no tenancy has been taken in respect of premises No. 8, Old Post Office St., Calcutta, where the registered office of the respondent-company has been duly transferred from No. 2, Brabourne Road, Calcutta, for which proper resolution has been duly passed.

4. It appears from the facts of the case that on the 14th of January, 1976, the respondent-company was incorporated as a public limited company having its registered office at No. 2, Brabourne Road, Calcutta, and the main business of the company has been to manufacture and/or get cold rolled, narrow strips and strapings from skelp and factory of the company was situated at Hyderabad. It also appears that the respondent-company is a public limited company and the shares are quoted in the stock exchange. On the 3rd of May, 1976, by a notice, respondent No. 5, R.K. Mittal, as a director called a meeting of the board of directors of the company at Hyderabad to be held on the 14th of May, 1976. It appears that on the 5th of May, 1976, petitioner No. 3, Mohal Lal Mittal, as a director issued a notice to all the directors intimating postponement of the meeting to be held on the 14th of May, 1976, due to unavoidable circumstances. It is not understood how a director has the power individually to postpone a meeting duly convened by the company and the said right was duly disputed by respondent No. 5, R.K. Mittal, by a letter dated the 8th of May, 1976. On the 11th of May, 1976, the said R.K. Mittal, respondent No. 5, who is admittedly the whole-time director of the respondent-company intimated the directors the supplementary agenda to be taken up in the meeting to be held on the 14th of May, 1976. Thereafter, the meeting scheduled to be held on the 14th of May, 1976, could not be held due to lack of quorum and it was adjourned till 16th of May, 1976. The whole dispute in this application turns on the question whether any fresh notice of the adjourned meeting was necessary to be given to the directors and it appears to me from the provisions of the Companies Act, 1956, and the articles of association of the company that for an adjourned meeting no fresh notice is necessary and, therefore, in my view, the meeting held on the 16th of May, 1976, appears to be legal, valid and according to law and it is not ultra vires or illegal as alleged by the petitioners. The articles of association of the respondent-company relied on by the petitioners being 147 has no application as that applies only in convening a meeting for the first time and has nothing to do with the adjourned meeting which has already been convened and the article applicable in the present case is Article 146 which gives power to the directors present in the meeting which failed for want of quorum to adjourn the said meeting to such day time and place as the director or directors present at the meeting may fix. Therefore, there is no question of any fresh notice for the adjourned meeting which was scheduled to be held on the 14th of May, 1976, and was duly held on the 16th of May, 1976, to which date it was adjourned by the directors who were present on the 14th of May, 1976. The resolutions passed therein do not suffer from any illegality or infirmity as alleged by the petitioners in any way whatsoever.

5. Mr. R.C. Nag, appearing with Mr. R.K. Lala, Mr. Sudipta Sarkar and Mr. A.K. Bose, for the petitioners, mainly challenged the validity of the meeting held on the 16th of May, 1976, and also the correctness of the said minutes of the meeting which is alleged to be subsequently disclosed to the petitioners.

6. I have already set out the charges made by the petitioners and the answers thereto by the respondents and, in my view, there is no ground whatsoever substantiated by the petitioners which can constitute an oppression or mismanagement within the meaning of Section 397 or Section 398 of the Companies Act, 1956. Mr. Nag's submission is that the respondents have suppressed the fact that the court in 1970 refused to transfer the registered office of the company to Andhra Pradesh which is a material suppression and which should be held to be an oppression and misleading the court. In my view, such comment is not justified as we are in 1979 and the situation in 1970 and in 1979 can never be the same and, on the other hand, it cannot but be admitted that it is entirely different and the application for transfer of the registered office which is now to be made before the Company Law Board may be granted as admittedly the factory and main business of the company are in Andhra Pradesh. It is only that all the companies belonged to the Mittal group and, therefore, originally the registered offices of the companies were situated in Calcutta and now there is a split in the Mittal family. The said Mohan Lal Mittal, the eldest brother, his sons and their stooges and relatives have formed a group whereas Inder Sen Mittal and R.K. Mittal and their relatives have formed another group and the spate of litigation has started making reckless allegations against each other. Serious comment was made by the petitioners for whom Mr. Nag appeared and with his usual force and thoroughness tried to make a point of the transfer of service of the secretary to Hyderabad and shifting of the administrative office at Hyderabad. In the facts and circumstances of this case, in my view, those acts cannot constitute any oppression or mismanagement in any way whatsoever. On the other hand, it appears to me that those acts on the part of respondent No. 5, R.K. Mittal, as the director-in-charge of the respondent-company, appears to be conducive to the best interests of the company and its shareholders. Further, I do not find any substance in the submission of Mr. Nag that the adjourned meeting held on the 16th of May, 1976, pursuant to the notice dated 3rd of May, 1976, issued by the said R.K. Mittal as director-in-charge to be held at Hyderabad has any legal infirmity or constitutes any oppression as alleged by the petitioners. Article 146 of the articles of association of the company is quite clear that the directors present on the 14th of May, 1976, when the meeting failed for lack of quorum, had the jurisdiction and authority to fix the date and time of the adjourned meeting and which they did and the meeting was duly held on the 16th of May, 1976, when the resolutions were duly passed. In my view, there is no ground whatsoever in the petition and I find no substance in the submission of Mr. Nag as to the allegations of oppression and mismanagement of acts prejudicial to the public interest. On the other hand, this application is absolutely mala fide and has been made at the instance of Mohan Lal Mittal against his other brothers who were no longer agreeing with him as to his despotic and karta-like attitude and treating the company and its properties, assets and its affairs as the personal and family properties of the Mittals.

7. Mr. S.B. Mukherjee, appearing with Mrs. U.B. Mukherjee, quite rightly submitted that after the arbitration between the members of the Mittal family proved abortive, the series of applications were started by the said Mohan Lal Mittal and the respondents have also made applications to prevent the said Mohan Lal Mittal from doing mischief or acts detrimental to the companies belonging to the Mittal group. It is the said Mohan Lal Mittal who has used the secretary, Mr. Modi, for the purpose of convening the alleged meeting on the 31st of May, 1976, and pass some sort of resolutions, and practically tried to run a parallel management of the company at Calcutta. Mr. Mukherjee rightly submitted that as the business and factory of the company is in Andhra Pradesh and the Andhra Pradesh State Financial Corporation has its nominee-director in the Board, it is insisting on the transfer of the registered office of the company to Hyderabad in Andhra Pradesh and for that purpose appropriate steps have been taken. He further submitted that pursuant to the interim orders made in this case from time to time all the acts complained of by the petitioners, if there is any basis therein, have been removed and have been regularised and, therefore, there is no more any substance or merit in this application at the present stage. He rightly submitted that the court is to take notice of all the subsequent events to grant relief finally after the trial of the matter. He referred to the interim orders which were passed from time to time and the meetings held under the chairman appointed by this court and the resolutions passed by the majority shareholders and directors present therein. In my view, Mr. Mukherjee is quite right in his submission and, therefore, I do not find any merit or substance in the application which should be dismissed with costs. The petitioners are at liberty to sell their shares at the market rate as the shares are quoted shares in the stock exchange.

8. In that view of the matter, the application is dismissed with costs. The Special Officer, Mr. C.R. Dutt, Barrister-at-Law, will stand discharged. If any arrears of remuneration is due to be paid to him it is to be paid out of the funds of the company. The remuneration of the Special Officer is fixed at 100 g. ms.

9. The Special Officer and all parties to act on a signed copy of the minutes.


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