H.B.M. Iqbal Vs. Md. Shirajul Islam and others, VI ADC (2009) 565

Case No: Civil Petition for Leave to Appeal No. 1691 of 2008

Judge: Md. Abdul Matin,

Court: Appellate Division ,,

Citation: VI ADC (2009) 565

Case Year: 2009

Appellant: H.B.M. Iqbal

Respondent: Md. Shirajul Islam

Subject: Company Matter,

Delivery Date: 2009-4-12

 
Supreme Court of Bangladesh
Appellate Division
(Civil)
 
Present:
MM Ruhul Amin, CJ.
Md. Abdul Matin, J.
Md. Abdul Aziz, J.
 
H.B.M. Iqbal
...............Petitioner
Vs.
Md. Shirajul Islam and others
...............Respondents
 
Judgment
April 12, 2009.
 
The Companies Act, 1994
Section 233
 It was stated that following the signing of the said shareholders agreement affairs of the company was run by respondent No.4 as majority shareholder and was also holding the post of Managing Director of the company …… (11)
 
It appears that the High Court Division was satisfied that there was total mismanagement of the affairs of the company which were being conducted in a manner prejudicial to the interest of the respondents and by the impugned order sought to protect the interest of the minority shareholders of the company and other respondents were directed to transfer the disputed share in terms of Article 5 of the  shareholders agreement. ……. (16)
 
Lawyers Involved:
Masood R. Sobhan, Advocate instructed by A. S. M. Khalequzzaman, Advocate-on-Record-For the Petitioner.
M. Moksadul Islam, Advocate (Appeared with the leave of the court) instructed by Mrs. Sufia Khatun, Advocate-on-Record-For Respondent Nos.1-2.
Not represented-Respondent Nos. 3-5.
 
Civil Petition for Leave to Appeal No.1691 of 2008
(From the judgment and order dated 18.06.2008 passed by the High Court Division in Company Matter No.145 of 2005.)
 
JUDGMENT
 
Md. Abdul Matin J.
 
1.         This petition for leave to appeal is directed against the judgment and order dated 18.06.2008 passed by the High Court Division in Company Matter No.145 of 2005 allowing the application with some directions.
 
2.         The facts, in short, are that the respondent Nos.1 and 2 as petitioners filed an application under section 233 of the Companies Act, 1994 being Company Matter No.145 of 2005 before the High Court Division seeking necessary orders to (i) direct that the affairs of the petitioner company be conducted bona fide and without any discrimination against the interest of the respondent Nos.1 and 2 and in accordance with the memorandum and articles of association and following the provisions of the sharehold­ers' agreement dated 18.10.2000, (ii) further to direct the petitioner not to shift marketing office of the respondent No.3 company from its present address i.e. 29. Showrawardin Avenue, Block # K, Baridhara Model town, Dhaka-1212, (iii) not to sell any cement or any prop­erty of the respondent No.3 company without following of association, (iv) not to deposit the proceeds of any prod­ucts of the company into the any bank account other than the accounts opened following the provisions of memoran­dum and article of association, (v) not to appoint any auditor of the company without following the provisions of memorandum and article of association, (vi) pending hearing of this application, the respondent Nos.1 and 2 beg follow­ing ad interim orders and/or directions:
 
(a) direct the company to hold its board meeting following  the  provisions  of memorandum and article of association at the marketing office of the company within 2 weeks of issuance of the order, (b) direct the company to permit the respondent Nos.1 and  2 and/or their authorized persons to inspect the books of accounts of the company at the time of preparation of the audit reports of the previous years, if it is due, (c) direct the company to permit the respondent Nos.1 and 2 and/or their authorized persons to inspect the  share register and  share transfer documents of the company, (d) restrain the petitioner from selling any cement or other property of the compa­ny without following the provisions of memorandum and article of association, (e) restrain the petitioner from changing any technical, business and administra­tive management structure of the facto­ry and marketing office of the company, (f) restrain the respondents of the appli­cation not to undertake any share trans­fer without following the provisions of memorandum and article of association of the company and shareholders agree­ment dated 18.10.2000.
 
3.         The respondent Nos.1 and 2 contested the said company matter stating, inter-alia, that the respondent Nos.1 and 2 are the promoter-directors of the respondent No.3 Company. Certified copy of the schedule X as of 13.06.2002 (which is the latest schedule Z as obtained from the office of the proforma -respondent No.4 shows that the respondent Nos.1 and 2 own 1,74,096 and 1,28,406 shares respectively i.e. 305602 shares out of 19.84,592 shares which 15.444% of the total shares and as such eligible to file this application under Section 233 of the Companies Act, 1994.
 
4.         The respondent No. 3  i.e. Bengal Tiger Cement Industries Ltd. (hereafter referred  to as the "company" or BTCL") is a public limited company having its corporate office at Iqbal Center (17th Floor) , Kemal Ataturk Avenue, Banani C/A, Dhaka-1213 and Marketing Office at 29, Showrawardi Aveneu, Block # K, Baridhara Model Town, Dhaka-1212, registered in Bangladesh. That company is primarily engaged in manufacturing Portland Cement.
 
5.         The present petitioner is the Chairman of the respondent No.3 Com­pany.
 
6.         The petitioner is not one of the pro­moters of the respondent No.3 company, however, in order to strengthen the capacity of the financial status of the company the respondent Nos. and 2 being the promoter directors invited the petitioner to purchase the shares of BTCL and issued new shares in favour of the petitioner who was also nominat­ed as the chairman of the company.
 
7.         Subsequently another company i.e. respondent No. 4 namely Taiheiyo Singapore Pte. Ltd. of 16 Raffles Quay # 41-03 Hong Leong Building, Singapore-048581 incorporated in Singapore (here­inafter referred to as the TSPL) also pur­chased shares and joined in company in 2000.
 
8.         On 18th October, 2000 to maximize the profitability for the benefit or BTCL all the shareholders of BTCL including TSPL signed a shareholder agreement with the intention to implement a joint venture project. It may be pertinent to mention here that TSPL is a fully owned subsidiary of Taiheiyo Cement Corporation (TCC), Japan a leading cement manufacturer in Japan.
 
9.         The present structure of the directors of the company as can be seen in the certified copy of the particulars of direc­tors dated 12.09.2002 (i.e.  the latest form XII as obtained from the office of the respondent No.5)
 
10.       The said shareholders' agreement it is stated that 3 directors of the company will be nominated by respondent Nos.4 and 3 directors will be from Bangladeshi shareholders and another director of the company will be nominated both by the directors of Bangladesh and the direc­tors of respondent No.4.
 
11.       It was stated that following the sign­ing of the said shareholders' agreement affairs of the company was run by respondent No.4 as majority sharehold­er and was also holding the post of Managing Director of the company.
 
12.       The management concept of the respondent No.3 Company was on the basic concept and principle of mutual reliance, mutual benefit and mutual respect between and among themselves for the successful business operation of BTCL.
 
13.       Recently the respondent No.3 Com­pany is incurring losses and TSPL lost all their interest in the respondent No.3 Company and on many occasions expressed their willingness to sell al their shares in the respondent No. 3 com­pany. However, TSPL never made any offer complying the previsions of the shareholders' agreement.
 
14.       The High Court Division allowed the application by the impugned judg­ment and order and being aggrieved thereby the petitioner has filed this peti­tion for leave to appeal.
 
15.       Heard the learned Advocate and perused the petition and the impugned judgment and order of the High Court Division and other papers on record.
 
16.       It appears that the High Court Division was satisfied that there was total mismanagement of the affairs of the company which were being conduct­ed in a manner prejudicial to the interest of the respondents and by the impugned order sought to protect the interest of the minority shareholders of the company and other respondents were directed to transfer the disputed share in terms of Article 5 of the shareholders agreement.
 
17.       We find no illegality in the order calling for interference by this court and accordingly the leave petition is dis­missed.
 
Ed.