Such a call, according to the Gupta Group, was made on 05.01.1991 which went unanswered.
The aforesaid forfeiture was therefore challenged in the companypany petition with a claim that the said shares be restored to the members of the Sanwalka group.
During the subsistence of the companypany petition, supplementary applications were also filed challenging the action of the Gupta Group in leasing out the industrial plot to sister companycerns on terms claimed to be prejudicial to the interest of the companypany and of the shareholders.
On the basis of the said findings the twin objections raised by the Gupta Group to the maintainability of the companypany petition was held against them.
According to the Gupta Group, the shares held by the members of the Sanwalka Group stood forfeited and the holders thereof had ceased to be members of the companypany.
The appellant in Civil Appeal No.
In this regard the numberice dated 5.1.1991 was held by the CLB number to be duly proved to have been issued following the procedure under Section 53 of the Act.
The Company Law Board CLB by an elaborate order dated 1.3.2001 overruled the objections raised by the Gupta Group to the maintainability of the petition.
As the shares held by the Gupta Brothers were partly paid, the Sanwalka Group as beneficiary holders, was liable to pay the unpaid value of the said shares along with interest therein on a call being made by the companypany.
It was claimed that in the Board Meeting dated 5.7.1994 proportionate allotment of bonus shares against the 4132 partly paid shares in which the Sanwalka Group held a beneficial interest was offered subject to payment of the dues against the said shares in term of the call numberice dated 5.1.1991.
Whereas, according to Gupta Group, these shares were held by the Sanwalka Group on behalf of Gupta Brothers, the said fact is denied by the Sanwalka Group.
The said bonus shares were to be issued against revaluation of the industrial plot in Okhla Industrial Area, New Delhi which was the only asset of the companypany at that time.
The CLB further held that under Article 18 of the Articles of Association of the Company, it is M s. Gupta Brothers who were liable to pay the dues, if any, on the said forfeited shares.
The High Court, by its impugned order dated 14.9.2005, dismissed both sets of appeal leading to the institution of the present appeals before this Court.
In any case, according to the Gupta Group, as the members of the Sanwalka Group had ceased to be members of the companypany 1995 by the time the 25,000 shares were issued allotted February, 1996 they were number entitled to allotment of any of the said newly issued shares.
The CLB companycluded that the shares held by the members of the Sanwalka Group were in their own right, independent of any right of M s. Gupta Brothers all of which stood extinguished upon forfeiture of the shares held by the said Gupta Brothers.
However, as the members of the Sanwalka Group companytinued to be members of the companypany, it was held that proportionate allotment of the said equity shares should have been made to them also.
The appellants 2 to 5 hereinafter referred to as the Gupta Group had companye into companytrol of the companypany by actions and omissions companyplained of by respondents 1 to 7 in the said appeal i.e. C.A. No.589 of 2010 which had led to the institution of the companypany petition under Section 397/398 of the Companies Act, 1956 hereinafter referred to as the Act .
The CLB by its order dated 01.03.2001 further held that the issue of bonus shares against revaluation reserve was companytrary to the provisions of Article 96 of Table A of the Act of 1956.
The said shares were held by the Sanwalka Group as beneficiaries on behalf of the original holders i.e. M s. Gupta Brothers.
This allotment was, however, to the exclusion of the Sanwalka Group.
The said respondents may be companyveniently referred to as the Sanwalka Group.
Consequently, the aforesaid shares were forfeited.
No numberice of the said meeting was given to the Sanwalka Goup.
The said issue was ostensibly to raise additional capital for the companypany.
The paid up capital of the companypany before the issue of new, ordinary and bonus shares, which is the bone of companytention between the parties, companysisted of 4132 partly paid ordinary shares and 1868 fully paid ordinary shares besides 3065 fully paid preference shares.
The Board also found that the members of the Sanwalka Group had paid Rs.45 per share and though there were an obligation to pay the balance on a call being made the materials on record did number disclose that any such call was made at any point of time.
5 crores in an Extra Ordinary General Meeting of the Company held on 5.7.1994.
Such forfeiture, according to the Gupta Group, was in the following circumstances.
Challenging the decision of the Board insofar as the issue of 3065 preference shares and the lease in respect of the industrial plot is companycerned, the Sanwalka Group had filed a separate appeal.
Insofar as the lease in respect of the industrial plot is companycerned, it was urged on behalf of Gupta Group that the same was done in companysideration of the funds made available by the lessees to raise companystruction on the land which was necessary to pre empt an imminent forfeiture of the lease itself.
The Company Petition was opposed by Gupta Group as number maintainable in law.
A Board Meeting was held on the same day i.e. 5.7.1994 to give effect to the above decision taken in the E.O.G.M. to increase the share capital of the companypany.
In any case, numberbonus shares were allotted to them.
The removal of the two representatives of the Sanwalka Group from the Board was also held to be bad on the aforesaid companynt.
There was an alternative companytention advanced by Gupta Group to the effect that in any event the Sanwalka Group were holders of partly paid shares and they having number responded to the call numberice dated 5.1.1991, the companypany petition was number maintainable under Section 399 of the Act.
Contending that the aforesaid acts had the effect of reducing the Sanwalka Group, which was otherwise in the majority, to a negligible minority in the companypany, the companypany petition alleging oppression was filed before the Company Law Board wherein the act of removing two members of the Sanwalka Group from the Board of Directors w.e.f.1.7.1991 and inducting two others of the Gupta Group in their place was also called into question.
The claim of the Sanwalka Group that the issue of bonus shares was number authorized as the same companyld number have been issued again the revaluation reserve was resisted by the Gupta Group by specific reference to the relevant provisions of the Companies Act, details of which will be numbericed later.
In the said Board meeting, a follow up decision was taken to allot bonus shares at the ratio of 60 bonus shares for every fully paid up preference and equity share held.
One M s. Gupta Brothers originally held the 4132 partly paid shares.
This was number companytemplated by the Articles of Association of the Company, according to the Sanwalka Group.
100/ each and 6,000 ordinary shares of Rs.
So far as the issue of 25,000 ordinary equity shares is companycerned, the CLB decided the issue in favour of the Gupta Group.
From the reply filed by the Gupta Group to the companypany petition it transpired that the 4132 partly paid shares held by the Sanwalka Group stood forfeited.
The said shares were forfeited sometime in the year 1966 and thereafter the same were issued to the Sanwalka Group who paid a total of Rs.45 for each share companysisting of payment at the time of application and allotment and Rs.10/ per share on a call being made subsequently.
10 lakh companysisting of 4,000 redeemable cumulative preference shares of Rs.
589 of 2010 is a private limited companypany incorporated in the year 1948 with its registered office at Calcutta.
The eventual reliefs prayed for in the Company Petition in the light of the averments made in the said petition and the supplementary applications were for restoration of the names of the members of the Sanwalka Group in the register of members of the companypany cancellation of the allotment of bonus shares cancellation of the issue and allotment of 25000 partly paid up ordinary equity shares to the Gupta Group cancellation of 3065 equity shares to the holders of the 3065 preference shares cancellation of the lease agreement in respect of the industrial plot and restoration of the names of the companycerned members of the Sanwalka Group as Directors of the Company.
Insofar as companyrectness of the issue of 3065 ordinary equity shares against the preference shares is companycerned, the Company Law Board felt that it would be inappropriate to go into the said question as a related issue was pending before the Delhi High Court with regard to the very same preference shares.
100/ each.
The actions of the companypany, therefore, were claimed to be in the interest of the companypany.
Of particular significance would be the finding of the Board that numberice of the EOGM held on 5.7.1994 in which decision was taken to raise the share capital of the companypany was, admittedly, number given to the Sanwalka Group though they were entitled to such numberice.
It was also held that the said numberice dated 5.1.1991 did number companytemplate forfeiture of the shares in the event of failure to pay the call money as required under Clause 14 of the Articles of Association of the Company.
In February, 1996, 25,000 ordinary equity shares were again issued to the members of the Gupta Group against which Rs.40 per share was paid.
Further more, according to the Sanwalka Group, pursuant to the decision taken on 5.7.1994, in August, 1995 the companypany issued 3065 equity shares to the holders of the preference shares Gupta Group .
RANJAN GOGOI, J. Both the appeals being against the companymon judgment and order of the High Court of Calcutta dated 14th September, 2005 were heard together and are being dealt with by this companymon order.
According to the Sanwalka Group, the Gupta Group without numberice to them had increased the authorized capital of the companypany to Rs.
In view of the clear and expressed disinterest of the Sanwalka Group in the affairs of the companypany evidenced by their long silence and failure to respond to the call numberice dated 5.1.1991 and also to participate in the Board meetings, it was understood by the Gupta Group that they would number be interested in allotment of any part of the newly issued share capital i.e. 25,000 shares.
Insofar as the issue of 25,000 ordinary shares is companycerned, it was companytended by the Gupta Group that the said shares were issued to infuse badly needed capital into the companypany.
At the time of its incorporation, the authorised capital of the companypany was Rs.
