LexTIN PLATE DEALERS ASSOCIATION PVT. LTD. & ORS. versus SATISH CHANDRA SANWALKA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2016] 8 S.C.R. 145
TIN PLATE DEALERS ASSOCIATION PVT. LTD. & ORS.
A
v.
SATISH CHANDRA SANWALKA & ORS.
(Civil Appeal No. 589 of20 l 0)
OCTOBER 07, 2016
B
[RANJAN GOGOi AND PRA:FULLA C. PANT, JJ.]
Companies Act, 1956:
ss.397, 398, 53 - Compa11y petitio11 maintainability of -
Company petilion ll'as filed by lhe respo11dents No. 1-7 (Sanwalka
group) against the appel!a11ts No.2-5 (Gupta group) - CLB held
pelition maintainable - Shares ll'ere allotted lo lhe respondents after
the forfeiture of the same i11 ha11ds of the appellants - Plea of
appellants 1hat shares 11•ere held by the re.1pondents as beneficiary
holders on behalf of appella11ts and respondenls failed lo compZv
with the notice 10 pay the u11paid value of fmfeited shares - Held:
Share certificates discloses that the allotment was fresh and
i11depe11dent - Certificates do not contain any stipulation or
condition that the same are being held either on account of a third
person or as beneficiary on behalf of a11y third person - Shares
were held by the respondents in their own right without any
connection with the fm:feited shares held by the appellants - Also,
compliance of call notice in terms of s.53 was not proved by the
appella11ts and its cm?fimnity ll'ilh clauses <~f Articles of Association
of the company - Therefore. company petition maintainable.
ss.397, 398 - Oppression and mismanage111enl - Respondenl-
Sanwalka group filed company petition alleging oppression by the
appellants-Gupta group and questioning the act of removal of lll'o
members of respondent-Saml'C/lka group jiY1111 the Board of Directors
and induction of two others of appellant-Gupta group in their place
- Held: Satisfaction that oppression has been committed has to be
reached in the facts of each case - Facts of the present case
demonstrate a series of unacceptable decisions and actions 011 the
part of the appellants-Gupta group.
s.205(3) - Issue of bonus shares - Held: Proviso of s.205(3)
permits issue of bonus shares out of revaluation reserves of a
145
c
D
E
F
G
H
146
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2016] 8 S.C.R.
company - Also, Articles of Association of the company to permit
and contemplate such an action - In the present case, the Articles
of Association do not empower the Directors to issue bonus shares
out of revaluation reserves - When the Articles of the company do
not confer such power in the Board, exercise thereof on the basis
that the Act so provides would be impermissible - Enabling provisions
under the Act would require incorporation in the Articles of a
company.
Company Law:
Issue of ordinary equity shares - Held: Power of the Board
of Directors to issue fi·esh shares is an adjunct of its extensive
powers under the Companies Act, I956 - Fundamental fair play is
expected fi·om the Board of Directors in making fair and
proportionate distribution/allotment of such shares - Issue of
ordinary equity shares should be proportionate lo the share holdings
of the members of the company - Companies Act, 1956 - s.I72(2)
rlw s.41.
Issue of ordinary equity shares in lieu of preference shares -
Conversion of preference shares to equity shares - Held: Resolution
of the Board relating to the conversion of preference shares into
equity shares proceeded m1 basis that dividends l1111•e not been paid
and shareholder.1· agreed to accept equivalent equity shares, is
unreliable - Just and proper to strike down the conversion of
preference shares into equity shares and revert the preference shares
to earlier status - Companies Act, 1956 - s.87(2){a).
Dismissing Civil Appeal No.589 of 2010 and Disposing of
Civil Appeal No.599 of 2010 with directions, the Court
HELD: 1.1. Share certific;ites disclose that the same
constitute a fresh and independent allotment of the shares by
reference to their distinctive numbers specified therein. The
certificates do not contain any stipulation or condition that the
same are being held either on account of a third person or as
beneficiaries on behalf of any third person. The shares in question
were allotted on payment of Rs.35 being the application money
(Rs.25) and allotment money (Rs.10). A further amount of
Rs.10/- per share was paid against the first call. Therefore, the
share certificates, ex facie, do not support any of the contentions
TIN PLATE DEALERS ASSOCIATION PVT. LTD. v. SATISH
147
CHANDRA SANWALKA
advanced on behalf of appellants-Gupta Grou1>. If the Excerpt shown. Read the full judgment & AI analysis in Lexace.