Petition for Framing of Scheme for Management
Before the Company Law Board
Principal Bench, New Delhi
Company Petition No. … of ……
| In the matter of the Companies Act 1956And
In the matter of an Application under sections 397, 398, 399, 402 and 403 of the Companies Act 1956 And X Co. Pvt. Ltd. a company registered under the Companies Act 1956 having its registered office at ……………………… And In the matter of: 1. AB, residing at ………………………… 2. CD, residing at ………………………… 3. EF, residing at ………………………… 4. GH residing at ………………………… 5. JK residing at ………………………… Petitioners versus 1. X & Co. Pvt. Ltd., a company registered under the Companies Act 1956 and having its registered office at 2. MN, working for gain at ……………… ……………………………… 3. PQ, working for gain at ……………… ……………………………… Respondents The humble petition of the petitioners above-named most respectfully |
Sheweth:
A. Particulars of the company. (1) X & Co. Pvt. Ltd. (hereinafter referred to as the company) was incorporated on 15th May 1985 as a Private Limited Company. The registered office of the company is situated at ……………… …………… in the State of West Bengal. The authorised capital of the company is Rs. 10 lakhs. The issued subscribed and paid-up capital of the company is Rs. 5 lakhs comprising of 50,000 Equity shares of Rs. 10 each.
(2) The main objects for which the company was incorporated are, inter alia, to take over the business of the firm X. & Co. and to manufacture and deal in all kinds of Computers, Hardwares & Softwares and as exporter and importer of all kinds of Electronic goods. The objects will appear from the Memorandum and Articles of Association of the Company a copy whereof is annexed hereto marked “A”.
(3) Soon after its incorporation the company commenced its business on taking over the assets and liabilities and business of the firm X & Co.
B. Particulars of petitioners. The petitioners and the respondents Nos. 2 and 3 were carrying on business in partnership in manufacturing diverse plant, machinery, tools and implements and other Electronic goods, Computers Hardware and Software and exporting the same. Due to expansion of business, the petitioners and respondents 2 and 3 converted their partnership business into a Private Limited Company, respondent No. 1 herein. Each of the petitioners subscribed 16% of the shares issued by the company. The petitioners together held 80% of the Equity Shares issued, subscribed and paid-up shares in the share capital of the company.
C. Particulars of the respondents. The respondents Nos. 2 and 3 along with the petitioners formed a partnership business under the name and style of X & Co. for manufacturing and dealing in all kinds of Computers, Hardware of Software and plant, machinery, tools, implements and other Electronic articles. After the partnership business was converted into a private limited company, the first respondent above-named, respondents Nos. 2 and 3 each subscribed and held 10% of the issued, subscribed and paid-up shares of the company. The respondents Nos. 2 and 3 together held 20% of the issued, subscribed, and paid-up capital of the company and the petitioners together held 80% of issued, subscribed and paid-up capital of the company.
D. Jurisdiction of the Bench. The petitioners declare that the subject-matter of the petition is within the jurisdiction of this Learned Bench.
E. Limitation. The petitioners further declare that the petition is within the limitation period inasmuch as the cause of action is arising day-to-day.
F. Facts of the case. (a) The respondents Nos. 2 and 3 and the petitioners were the subscribers to the Memorandum and Articles of Association of the company. The first directors were also the permanent directors of the company. The respondents Nos. 2, 3 and the petitioner No. 1 were the permanent directors.
(b) Before and at the time of incorporation of the company in reality it was a partnership firm, the petitioners and the respondents Nos. 2 and 3 were sharing profits and losses of the firm in the ratio of 80:20. Respondents Nos. 2 and 3 were managing the affairs of the company.
(c) Respondents Nos. 2 and 3 wrongfully issued shares and allotted the same to respondents Nos. 2 and 3 to the exclusion of the petitioners and thereby the total holding of respondents
Nos. 2 and 3 increased to 40% each. Your petitioners became a minority of 20% and respondents Nos. 2 and 3 combined holding being 80%.
(d) Respondents Nos. 2 and 3 by virtue of the said purported 80% holding of shares in all matters ousted the petitioners from the management of the company.
(e) The company made huge business and the turnover increased substantially but the respondents Nos. 2 and 3 manipulated the transactions and did not enter in the books of accounts of the company the real transactions.
(f) The respondents Nos. 2 and 3 did not allow the petitioners to inspect the books of accounts and since last one year have not issued notice of any Board Meeting to the petitioners and thereby prevented the petitioners from attending any Board Meeting or participating in the management of affairs of the company.
(g) The petitioners by several letters from time to time requested the respondents to issue the notice of all Board Meetings by registered post and deposited in advance Rs. 500 towards the cost of such notices by registered post. The respondents have not issued any notice of any Board Meeting to the petitioners.
(h) The respondents have manipulated the accounts and syphoned the funds of the company for the benefit of the respondents Nos. 2 and 3 to the prejudice of the petitioners.
(i) Respondent No. 2 is also diverting the business of the company to another business in the name of MN Co. and thereby making undue profits at the cost of the company and to the prejudice of the petitioners.
(j) Respondents Nos. 2 and 3 have been acting in a manner harsh, burdensome and oppressive to the petitioners and have purported to conduct the affairs of the company in a manner prejudicial to public interest. Respondents Nos. 2 and 3 have been managing the affairs of the company in a manner oppressive to the petitioners and the company and conducting the affairs of the company in a manner prejudicial to the interest of the company and to the public interest. Some of the instances of the wrongful acts and conduct of respondents Nos. 2 and 3 are given hereunder:
(i) Respondents Nos. 2 and 3 purported to have held the Board Meetings without giving notice to the petitioners;
(ii) Respondents Nos. 2 and 3 have, with the assets, products, funds and know-how of the company, been carrying on their separate businesses with the company’s customers and others;
(iii) Respondents Nos. 2 and 3 have been misappropriating the funds of the company and manipulating the accounts.
(k) The first petitioner informed the Regional Director, Department of Company Affairs, Eastern Region Bench of the said misconduct of the respondents Nos. 2 and 3 and the said Regional Director has asked the Registrar of Companies to make enquiries and the Registrar of Companies has found certain irregularities in the management of the company.
(l) From the records of the Registrar of Companies, it appears that the respondents Nos. 2 and 3 have held several Board Meetings and purported to pass several Resolutions which were prejudicial to the interest of the petitioners and in respect of such Board Meetings no notice was served to your petitioners and your petitioners were prevented from attending the Board Meetings.
(m) The purported resolutions copies whereof are annexed hereto were passed in violation of the provisions of sections 299, 300 and 287 of the Companies Act 1956 and are thus void and liable to be set aside.
(n) Respondents Nos. 2 and 3 are lacking in commercial probity in relation to their dealings with the affairs of the company and also in relation to the petitioners and it is not safe to leave the affairs of the company in the hands of the respondents Nos. 2 and 3 any more.
(o) The whole object of the respondents Nos. 2 and 3 is to exclude the petitioners from the management of the company and to usurp absolute control of the management of the company so that the respondents Nos. 2 and 3 can continue with their acts of mismanagement and syphoning away the funds and assets of the company to the prejudice of the company, its shareholders, petitioners, employees and creditors of the company.
(p) Unless appropriate directions are given by this Hon’ble Board the company and its shareholders including the petitioners will be seriously prejudiced.
(q) The petitioners are being prevented from taking part in the conduct of the business of the company.
(r) Respondents Nos. 2 and 3 have caused loss to the company by fraudulent and unlawful conduct and are liable to indemnify the company to the extent of Rs. 90 lakhs which is the sum your petitioners have very conservatively assessed.
(s) All the Board Resolutions passed during the last one year are invalid and of no effect inasmuch as your petitioners were wrongfully excluded and prevented from attending any Board Meetings in spite of the fact that the cost of sending by registered post the notices of all such Board Meetings was deposited with the company.
(t) The conduct of the respondents Nos. 2 and 3 is wrongful and has been continuing and the same being oppressive and prejudicial to the petitioners and also to the interest of the company’s creditors and employees call for intervention by this Hon’ble Board. Respondents Nos. 2 and 3 have failed to act with commercial probity and morality.
G. Matters not previously filed or pending with any other Court or Bench. The petitioners further declare that they have not previously filed any application, writ petition or suit regarding the matter in respect of which this petition has been made before any Court of Law or any other authority or any other Bench of the Board, and no application, writ petition or suit is pending before any one of them.
H. Reliefs sought. In view of the facts mentioned in paragraph F above, and in view of the fact that the wrong-doers are in control and purporting to continue in control of the management of affairs of the company and denuding the petitioners of any say in the management of affairs of the company, and manipulating the accounts, misappropriating the funds of the company and as redressal of the petitioners’ grievances is not possible in the domestic forum and it is a fit case for winding-up of the company but that would prejudicially affect the petitioners and employees and as such the petitioners pray for the following reliefs:
(a) A scheme be framed by this Hon’ble Bench for management and administration of affairs and assets of the company;
(b) An Administrator be appointed to manage the affairs of the company;
(c) A Committee of Directors be appointed consisting of the petitioners and respondents Nos. 2 and 3 to assist the Administrator;
(d) Declaration that the respondents Nos. 2 and 3 are liable to reimburse the company of the assets and funds syphoned by them;
(e) Enquiry into the losses and damages caused to the company by the wrongful acts of respondents Nos. 2 and 3;
(f) Declaration that the Board Meetings and Resolutions thereunder during the last one year are all invalid, illegal and null and void;
(g) All Minutes and Resolutions relating to the Board Meetings during the last one year be delivered up to this Hon’ble Bench and the same be cancelled and adjudged void;
(h) Ad interim Orders in terms of the prayers above be passed.
(i) Costs of this application be paid by the respondents Nos. 2 and 3;
(j) Further and other Orders be made and directions be given as to this Learned Bench may deem fit and proper to afford complete relief to the petitioners.
I. Interim Orders if any prayed for. Pending final decision on the petition, the petitioners seek issue of the following Interim Orders:
(a) Injunction restraining the respondents 2 and 3 from diverting any funds or assets of the company in any manner whatsoever;
(b) Injunction restraining the respondents Nos. 2 and 3 from utilising the funds and assets and properties of the company for their own business;
(c) That a Special Officer be appointed to make an inventory of the assets and properties of the company and to initial books and accounts and records of company;
(d) Ad interim Orders in terms of prayers above;
(e) Further and other Orders be made and directions be given as to this Learned Bench may deem fit and proper.
J. Particulars of Bank Draft Evidencing payment of fee for application made. (i) Brabourne Road Branch, Calcutta of Punjab National Bank on which the bank draft has been drawn;
(ii) Brabourne Road Branch, Calcutta of Punjab National Bank issued the demand draft;
(iii) Demand Draft No. 1234 dated …………… for Rs. ………………
K. List of Enclosures
(i) ………………
(ii) ………………
(iii) ………………
(iv) ………………
Place …………………… Signature of the
Date …………………… Petitioners
(Cause Title of the Petition)
Affidavit verifying the Petition
We AB residing at …………………………… CD, residing at ………… ………………, EF residing at …………………………, GH, residing at ……… ……………………………… and JK residing at ………………………… do hereby solemnly affirm and say as follows:
1. That we are the Petitioners. We know and we have made ourselves acquainted with the facts and circumstances of this case and we are able to depose thereto.
2. That the statements contained in paragraphs …………… of the petition shown to us and signed by the petitioners and marked with the letter “X” are true to our knowledge and those mentioned in the paragraphs …………… of the petition are based on information derived from the records in our possession and believed by us to be true and those mentioned in the paragraphs ……… of the petition are our humble submissions to this Hon’ble Bench.
3. The statements in paragraphs 1 and 2 hereinabove are true to our knowledge.
Solemnly affirmed by the said AB,
CD, EF, GH & JK at Calcutta
this ……… day of ……… 2000
1. …………………… Signatures
2. …………………… of the
3. …………………… Deponents
4. ……………………
5. ……………………
Before me
Notary Public