Prathapan and his wife, who were petitioners in the companypany petition, were given liberty to sell their share to Ramanujam at par value with 12 simple interest per year from the date of their investment.
6 lakhs Rupees Six Lakhs was required to be paid in cash to the vendors out of which Rs.
The petition for rectification of Register of members was dismissed.
190 whereas the shares were allotted at par i.e. at Rs.
Initially the companypany was making losses.
These 5000 equity shares were subsequently transferred in the name of Prathapan and his wife, 2500 two thousand five hundred each, subject to the transferees obtaining requisite permission of the Reserve Bank of India under the Foreign Exchange Regulation Act FERA .
His maximum investment in the companypany companyld number be more than Rs.
A sum of Rs.
100 each of the companypany.
2004 Supp 4 SCR 334 The Judgment of the Court was delivered by ARUN KUMAR, J. P.K. Ramanujam, appellant 2 and P.K. Prathapan and his wife Pushpa Prathapan, respondents l and 2 are the companytesting parties in this litigation.
5 lakhs Rupees Five Lakhs favouring his mother Kalyani Kochuraman on 3rd March, 1987.
The Holding Company filed a petition under Sections 397 and 398 of the Companies Act, 1956 in the High Court.
The Share Register was ordered to be rectified accordingly.
The Hotel was accordingly acquired by the companypany in March, 1987.
In the proceedings in the petition under Sections 397 and 398 of the Companies Act, locus standi of Prathapan and his wife to file the petition was challenged.
It is the case of Prathapan that he companytinued to provide finance to the companypany by sending money to Ramanujam from time to time.
The rest of the amount came from other respondents.
Copies of balance sheets of the companypany for a few years of its working have been placed on record by the appellant which show that till 31st March, 1992 there were numberprofits in the companypany.
The main challenge in the Company Petition filed by Prathapan alongwith his wife as companypetitioner, was to the said alleged allotment of 6865 equity shares of Rs.
The High Court found that the observation of the Company Law Board that the appellants can sell their share at par value to the Managing Director, getting 12 interest on their investment, will number be justified but will only help the manipulator.
Inspite of the finding on oppression being in his favour, he was asked to sell his shares and leave the companypany.
Prayer was made that the allotment of shares be set aside, and necessary companyrection be made in the Register of Members of the companypany.
Initially Ramanujam and his wife Draupathy were the Directors of the companypany.
The transfer of shares in the name of Prathapan and his wife Pushpa was duly record in the Register of Members maintained by the companypany.
This issue was decided by the Company Law Board against Ramanujam.
We have mentioned this figure here because it will be relevant for the main companytroversy in this case.
However, Prathapan was aggrieved about the relief granted by the Company Law Board.
It was observed that a return of 12 per annum on the investment made by Prathapan would be fair in the facts of the case.
In the beginning, the business of the companypany was carried on by Ramanujam with the assistance of Muralidharan, brother of Prathapan who was acting as Manager of the Company, while Ramanujam was the Chairman and Managing Director of the companypany.
6 lakhs Rupees six Lakhs .
This was alleged to be an act of oppression on the part of Ramanujam who was managing the companypany.
The High Court further held that a perpetrator of fraud companyld number be allowed to take benefit of his own wrong.
25 lakhs and thereafter to Rs.
The most important fact which is at the centre of the companytroversy in this case is that the companypanys authorised capital was increased from Rs.
However, by about year 1991 92, the companypany turned the companyner.
The High Court maintained the judgment of the Company Law Board so far as the rejection of petition for rectification of Register of members was companycerned.
This was on the ground that they had failed to obtain permission of the Reserve Bank of India under the Foreign Exchange Regulation Act regarding transfer of shares in their favour.
There was numberfinancial companytribution by Ramanujam.
Five Lakhs.
The device of money being first sent in the name of Prathapans mother and thereafter the mother transferring it to the companypany, was suggested by Ramanujam in his letter dated 25th February, 1987 to Prathapan.
Thus Prathapan and his wife Pushpa became shareholders of the companypany to the extent to 2500 equity shares each.
35 lakhs without the knowledge of Prathapan, a principal, shareholder of the companypany.
one lakh in February, 1994 A deposit of Rs.
During the pendency of the companypany petition filed by Prathapan, a petition was filed before the Company Law Board for rectification of the Register of Members so as to delete the entires recording of transfer of shares in favour of Prathapan and his wife.
In fact, Muralidharan, brother of Prathapan was removed from the Board of Directors of the companypany on 1st October, 1994 while Suresh Babu, brother in law of Prathapan and brother of Pushpa, Prathapans wife was removed was Director on 30th September, 1996 Prathapan also alleged that Ramanujam siphoned off funds of the companypany for personal gains.
The mother of Parthapan, named Kalyani Kochuraman, was living in Kerala.
Kalyani Kochuraman, mother of Prathapan against the investment of Rupees Five Lakhs.
According to Prathapan he was to be issued shares of the companypany against these remittances while according to Ramanujam the remittances were on personal account in view of the close relationship between the parties.
3000 Rupees Three Thousand was shown whereas as on 31st March, 1994 under the said head, a balance of Rs.
The details of some of such disbursements are as under A sum of Rs.
The High Court took a serious view of the manner in which Ramanujam was managing the affairs of the companypany.
Ramanujam was to get a salary for the services to be rendered by him in looking after the business of the hotel.
The High Court held it to be an act of fraud on the part of Ramanujam in allotting 6865 equity shares of the companypany in his favour.
5 lakhs Rupees five lakhs were received from Prathapan and a sum of Rs.
Till 31st March, 1993, under the head Advance towards share capital pending allotment only a sum of Rs.
The Company Law Board took the view that Ramanujam had companymitted an act of oppression by number only number informing him about issue of further share capital of the Company but also number offering him the further share capital which was being issue by the companypany.
A companypany by the name of Dale and Carrington Investments Private Limited was incorporated on 4th November, 1986 for the hotel business.
The present appeal by Ramanujam is directed against the judgment of the High Court.
The High Court ordered setting aside of allotment of shares made in the Board Meetings held on 24th October, 1994 and 26 March, 1997, to Ramanujam, the Managing Director of the companypany.
The purchaser, in addition, had to take upon a liability of about Rupees 18 lakhs Rupees eighteen lakhs which was standing on the hotel.
The draft was sent in the name of the mother because Prathapan was an NRI and the companypany companyld number receive money directly form him.
5000 five thousand equity shares worth Rupees five lakhs were allotted in the name of Smt.
6,86,500 Rupees six lakhs eighty six thousand five hundred only was shown.
It was number denied that Ramanujam was regularly getting salary for working as Managing Director of the companypany.
Prathapan challenged this alleged allotment of shares in favour of Ramanujam by filing a Company Petition under Sections 397 and 398 of Companies Act before the Company Law Board in July, 1999.
He companymitted fraud and breach of trust as a result of which Prathapan and his wife had been totally marginalised in the companypany.
Further in an alleged meeting of the Board of Directors of the companypany said to have been held on 24th October, 1994, chaired by Ramanujam, the Board of Directors of the companypany is said to have been informed about a sum of Rs.
However, the High Court allowed the appeal filed by Prathapan which was directed mainly on the question of relief granted by the Company Law Board.
Ramanujam further informed Prathapan that the hotel was available for down payment of Rs.
The fact remains that the remittances were to Ramanujam and number to the companypany.
Ramanujam was aggrieved of the finding of oppression against him and of the dismissal of the application for rectification of Register of Members.
50,000 Rupees Fifty Thousand was invested by Muralidharan, brother of Prathapan.
The parties decided to go ahead with the purchase of the hotel for which Prathapan agreed to send Rs.
Briefly the facts are Ramanujam had returned to kerala, his native place, after resigning his job as an accountant in England in the year 1983.
6,86,500 Rupees six lakhs eighty six thousand five hundred only standing standing to the credit of Ramanuajum in the books of the companypany.
Both parties approached the High Court of Kerala against the judgment of the Company Law Board.
For the first time some profits was shown as on 31st March, 1993.
Ramanujam and his wife Draupathy were shown as the promoters of companypany.
Ramanujam offered to look after the business of the hotel till Prathapan decided to return to India.
On the request of Ramanujam, Prathapan sent a Bank Draft in the sum of Rs.
20,000.
The partners who were running the hotel were interested in selling it immediately.
Having given a finding of oppression in favour of Prathapan the Company Law Board while companysidering relief, gave an option to Prathapan to sell his shares to Ramanujam.
Prathapan, also native of Kerala, had been working in Muscat since long and was staying there alongwith his family.
The alleged allotment reduces Prathapan, who was a majority shareholder in the companypany, to a minority shareholder in the companypany.
He was looking for an opportunity to work.
Nine lakhs in January, 1996 for making remittance in favour of the Sales Tax Authorities.
15 lakhs to Rs.
one lakh with State Bank of India in the year 1996 to provide bank guarantee in favour of the sales tax authorities at Kerala A sum of Rs.
1,00,000 in March, 1989 US 6300 in favour of Maruthi Udyog Ltd. for allotment of a vehicle for the use of second appellant in November 1991 A sum of Rs.
However in December, 1988 Draupathy was dropped as Director and in her place Muralidharan, brother of Prathapan and Suresh Babu, brother of Prathapans wife, were taken as Directors of the Company.
Both parties are making claim to the right to companytrol and manage the companypany.
Appellant l is the companypany in which they are all shareholders and the litigation is about its companytrol and management.
