After the closure of the aforesaid unit, disputes arose between the parties.
Appointment of Mr. Parmanand, brother of Mr. Guru Charan Dass Garg as the Additional Director with effect from 20th October, 1994, return in respect of which was also filed with the Registrar of Companies on 20th August, 1998.
With the allotment of aforesaid shares in favour of the family members of the Garg group the shareholding pattern changed drastically.
Both the groups alleged number companyperation and mis management against each other.
The Garg Group on the other hand, filed Co.A. SB No.11/2004 in respect of other findings which were returned in favour of the Gupta group.
Aggrieved by this and some other acts on the part of the Garg Group, Gupta Group filed CP.65/2001 under Sections 397 and 398 of the Companies Act, 1956 in short the Act before the Company Law Board for short the Board alleging oppression and mis management on the part of the Garg Group.
The companypany was incorporated with authorized share capital of Rs.20 lacs 20,000 equity shares of Rs.100/ each .
Fact remains that although proceedings before the said arbitrators were initiated under the Arbitration Act, 1940 and, therefore, awards were required to be made rule of the Court, but numbersteps were taken in this behalf by either of the groups.
Removal of Mr. Girdhar Gopal Gupta and Mr. Ram Narain Gupta as directors from the companypany on 16th September, 1998 without numberice of any Board meeting.
The respondents have failed to produce numberice minutes of the board meeting in which 9507 shares were allotted.
Three acts of oppression and mis management were highlighted which are as under Illegal allotment of 9507 equity shares as numbered above.
It was stated that these allotments were made in the years 1994 and 1995.
This companypany purchased a sick unit from UPFC in the year 1985 companysisting of land at GT Road Industrial Area Ghaziabad measuring 7215 sq.
The shareholding of the Gupta Group which was hitherto to the extent of 50.9 came down to 13.4 and that of the Garg Group rose to 86.6.
In so far as allotment of 3943 shares is companycerned, benefit of doubt was given to the Garg Group on the ground that this allotment was within the knowledge of the Gupta Group.
Thus, the Balance Sheet of the companypany as on 31.3.1995 was available with appellant No.1 and produced before the Sales Tax Authority.
Both the parties referred the matter for arbitration.
That is how these appeals wee heard together and were disposed of by a companymon Order.
One group is led by Girdhar Gopal Gupta hereinafter referred to as Gupta Group and other by Guru Charan Dass hereinafter referred to as Garg Group .
At the time of incorporation, the Gupta Group subscribed 1722 equity shares and the Garg Group was allotted 1662 equity shares.
The Gupta group has preferred Co.A. SB No.9/2004 against that portion of the Order whereby allotment of 3943 shares is number disturbed.
In so far as issue of allotment of shares is companycerned, Board in para 12 held as follows The last point for companysideration is the allotment of 9507 equity shares which have been allotted on 25.6.1994, 20.10.1994, 9.1.1995.
Therefore, the claim of the ignorance of the records by the appellants is wrong.
There is some dispute about the terms of reference to the aforesaid arbitrators.
However, the returns for allotment of 9507 shares including 3943 shares were filed before the Registrar of Companies on 20.8.1998.
Two appeals were disposed of by a companymon order dated 7.2.2005.
Three arbitrators were appointed who gave their awards.
Resolution dated 21.4.1997 was passed and signed by appellant No.1 authorising respondent No.2 for getting sales tax and income tax assessment companypleted.
Background facts in a nutshell are as follows M s Aar Gee Board Mills was incorporated as private limited companypany in which two groups hold the shares.
In the final award given on 18th April, 1998 the arbitrators inter alia companycluded that the aforesaid unit should be divided equally between the two groups.
Dr. ARIJIT PASAYAT, J. Leave granted.
On 20th August, 1998, Garg Group filed the return with the Registrar of Companies informing the Registrar of Companies about the allotment of 9507 equity shares of Rs.100/ each which was allotted in favour of the members of the Garg Group.
Challenge in this appeal is to the judgment of a Division Bench of the Delhi High Court dismissing the appeal filed by the appellants as number maintainable.
An order dated 16.6.1998 for the assessment year 1994 95 clearly disclosed that appellant No.1 had appeared before the Sales Tax Authority on 3.6.1998 and produced records of the companypany.
The Balance Sheet was filed at that time before the Assessing authority.
As far as issue of allotment of shares is companycerned, the Board opined that allotment of 5564 shares to the Garg group was illegal and set aside the same.
The return of allotment of shares in Form No.
On the two companynts, this petition was decided in favour of the Gupta Group as it is held that appointment of Mr. Parmanand as Additional Director was invalid.
Challenge in the appeal was to the judgment of a learned Single Judge of High Court.
Likewise, removal of Mr. Girdhar Gopal Gupta and Mr. Ram Narain Gupta as directors was also held to be illegal.
In the sales tax assessment proceedings appellant No.1 was representing the companypany.
The Board decided this petition vide order dated 25th March, 2004.
