Content Provider | Supreme Court of India |
---|---|
e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Private Company |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Companies Act, 1956-Sections 397 and 398 : Private Company-Decision to increase shares and issue some of those to the members of the Company-Out of the shares to be given to the members, some were earmarked for the Chairman of the Company-Out of the remaining, few shares were allotted to two members and to the new Chairman-Out of the earmarked shares some were allotted to a member and to the family members of the new Chairman and rest of the issues were closed as the earmarked shares were renounced by the former Chairman-New Chairman transferred the shares owned by him and his family members to another Company owned by them-Company Petition filed by heir of former Chairman claiming allotment of the earmarked shares to her being his sole heir and questioning transfer of the shares of new Chairman and his family to their Company-Another petition by member before Company law Board alleging oppression and mismanagement-Single Judge of High Court held the allotments and transfer valid while the Division Bench held the same as invalid-On appeal, held: Heir of the Chairman was not entitled to allotment of earmarked shares in her favour having admitted the fact of issuance of additional shares and allotment of shares to the new Chairman-she had not proved the act of oppression against the new Chairman-Earmarked shares being provisionally allotted no legal rights in the shares were created-The claim of title as heir is not adjudicable under Company petition-Oppression and fraud not having been pleaded in the petition no relief can be granted on that count-Allotment of earmarked shares was bad in law-Transfer of the shares to the Company of the New Chairman was not an act of oppression Code of Civil Procedure-Order 6, Rules 4 and 17-Evidence Act, 1872- Section 101-Trusts Act, 1882-Section 88. Sections 397 and 398-Jurisdiction under-nature and scope of-It is of wide amplitude and not of ordinary nature-The court while exercising its discretion not bound by the terms contained in Section 402- But the remedy not to be granted for every act of omission or commission-Reliefs to be granted on satisfaction of the court that the majority of the members had oppressed the minority shareholders-Interest of the company vis-a-vis the shareholders must be uppermost-The acts of oppression must be harsh and wrongful. Words and Phrases : 'Oppression '-meaning of in the context of Companies Act. The company in question (GIC) was started by FRG. Its equity capital consisting of 425 shares were mainly held by family members. Respondent No.12 was Managing Director of its subsidiary company. Board of Directors of GIC decided to broad-base the company by increasing the capital by issuing 25000 equity shares and to issue 15000 equity shares therefrom to the members of the company. The resolution was confirmed in a meeting chaired by FRG. No one was interested in purchasing the issues. It was decided to keep 8000 shares out of the 15000 shares apart for FRG for the time being and to keep balance 7000 shares apart for other existing members. Respondent No.12 and one member subscribed for 500 and 25 shares respectively and thus remaining 6475 shares out of 7000 shares were allotted to appellant No.1 and his family members. 500 shares out of the 8000 shares were allotted to respondent No.12. As per the appellants, the remaining 7500 shares were renounced by FRG in favour of appellants. After death of FRG, appellant No.1 became Managing Director of the Company. 3000 shares were allotted to the family members of appellant No.1. The remaining 4500 shares out of the 8000 shares remained unallotted and the issue was later closed. Respondent No.12 issued to herself 1500 shares without allegedly issuing any notice to shareholders. GIC filed a civil Suit No.675/90 against the subsidiary company questioning 1500 equity shares. In Written Statement thereof respondent No.12 took the stand that the 8000 shares kept for FRG devolved on respondent No.1 (mother of FRG) as class I heir. Appellants transferred 9415 shares in favour of a Company which was wholly owned by them. Questioning the said transfer three suits were filed by different shareholders which are pending. Respondent No. 1 filed company petition u/ss. 397 and 398 of Companies Act before High Court for declaration that she being sole heir of FRG was allottee of 8000 shares of GIC and that allotment of 3000 shares in excess of 6475 shares to appellant No.1 or his nominees was null and void ab-initio. Later she amended the petition to the effect seeking declaration that all allotments of shares of GIC made beyond the original paid up capital consisting of 425 equity shares were null and void. Respondent No.12 filed petition before Company Law Board on the ground of mismanagement of the Company and oppression and the same was disposed of by Company Judge. Single Judge of the High Court dismissing the petition held that allotment of 6475 shares having been admitted, no dispute could be raised as regard thereto; that allotment of 3000 shares out of 8000 shares was in terms of the decision of Board meeting and was after 8000 shares were renounced by FRG and hence was valid; that transfer of 9415 shares to the company of the appellants did not affect GIC; that since the appellants continued to form majority, any transfer in favour of their company did not amount to oppression; that respondent No. 1 did not have right to 8000 shares by inheritence as an adhoc allotment of shares was merely an invitation which did not culminate in a right; that in this case there was no mismanagement but only an apprehension that the change in control might amount to mismanagement. Division Bench of High Court allowing the appeal, held that allotment of 6475 and 3000 shares was invalid; that transfer of 9415 shares to the company of appellants was also invalid as no transfer notice was given to the company as required in terms of Article 8 of the Article of Association; that there was breach of fiduciary duty on the part of appellant No.1. Hence the present appeals. |
Judge | Hon'ble Mr. Justice S.B. Sinha |
Neutral Citation | 2005 INSC 45 |
Petitioner | Sangramsinh P. Gaekwad And Ors |
Respondent | Shantadevi P. Gaekwad (i) Thr. Lrs. And Ors. |
SCR | [2005] 1 S.C.R. 624 |
Judgement Date | 2005-01-20 |
Case Number | 6359 |
National Digital Library of India (NDLI) is a virtual repository of learning resources which is not just a repository with search/browse facilities but provides a host of services for the learner community. It is sponsored and mentored by Ministry of Education, Government of India, through its National Mission on Education through Information and Communication Technology (NMEICT). Filtered and federated searching is employed to facilitate focused searching so that learners can find the right resource with least effort and in minimum time. NDLI provides user group-specific services such as Examination Preparatory for School and College students and job aspirants. Services for Researchers and general learners are also provided. NDLI is designed to hold content of any language and provides interface support for 10 most widely used Indian languages. It is built to provide support for all academic levels including researchers and life-long learners, all disciplines, all popular forms of access devices and differently-abled learners. It is designed to enable people to learn and prepare from best practices from all over the world and to facilitate researchers to perform inter-linked exploration from multiple sources. It is developed, operated and maintained from Indian Institute of Technology Kharagpur.
Learn more about this project from here.
NDLI is a conglomeration of freely available or institutionally contributed or donated or publisher managed contents. Almost all these contents are hosted and accessed from respective sources. The responsibility for authenticity, relevance, completeness, accuracy, reliability and suitability of these contents rests with the respective organization and NDLI has no responsibility or liability for these. Every effort is made to keep the NDLI portal up and running smoothly unless there are some unavoidable technical issues.
Ministry of Education, through its National Mission on Education through Information and Communication Technology (NMEICT), has sponsored and funded the National Digital Library of India (NDLI) project.
Sl. | Authority | Responsibilities | Communication Details |
---|---|---|---|
1 | Ministry of Education (GoI), Department of Higher Education |
Sanctioning Authority | https://www.education.gov.in/ict-initiatives |
2 | Indian Institute of Technology Kharagpur | Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project | https://www.iitkgp.ac.in |
3 | National Digital Library of India Office, Indian Institute of Technology Kharagpur | The administrative and infrastructural headquarters of the project | Dr. B. Sutradhar bsutra@ndl.gov.in |
4 | Project PI / Joint PI | Principal Investigator and Joint Principal Investigators of the project |
Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon |
5 | Website/Portal (Helpdesk) | Queries regarding NDLI and its services | support@ndl.gov.in |
6 | Contents and Copyright Issues | Queries related to content curation and copyright issues | content@ndl.gov.in |
7 | National Digital Library of India Club (NDLI Club) | Queries related to NDLI Club formation, support, user awareness program, seminar/symposium, collaboration, social media, promotion, and outreach | clubsupport@ndl.gov.in |
8 | Digital Preservation Centre (DPC) | Assistance with digitizing and archiving copyright-free printed books | dpc@ndl.gov.in |
9 | IDR Setup or Support | Queries related to establishment and support of Institutional Digital Repository (IDR) and IDR workshops | idr@ndl.gov.in |