BEFORE THE COMPANY LAW BOARD, PRINCIPAL BENCH 

Appearances : K. Jagadisachandran Nair for the Petitioner. 

Dinesh R. Shenoy, C. Krishnamoorthy & B. Anil Kumar for the Respondents. 

ORDER 

BALU 

1. The petition in CP No. 2/96 (first petition) is filed under section 111 (4) of the Companies Act, 1956 (hereinafter referred to as 'the Act') against Anandamandiram Hotels (P.) Ltd. (hereinafter called as 'the company') for rectification of the register of members of the company in respect of 6,030 equity shares (6,000 in the name of second respondent and 30 shares in the name of third respondent) impugned in the petition by deleting their names. 

2. The petition in CP No. 92/97 (second petition) is filed under section 397/section 398 of the Act alleging that the affairs of Anandamandiram Hotels (P.) Ltd. are being conducted in a manner prejudicial to minority shareholders and seeking the following reliefs : 

(a) To rectify the register of members and to cancel the issue of 6,030 shares allotted in favour of the respondents 3 and 4 in the Board meeting held on 20th December, 1995. 

(b) To remove respondents 2 and 3 from the office of directors of the company. 

(c) To remove the present managing director from the post of managing director and director of the company. 

(d) To order for an extraordinary general meeting of the shareholders of the company after rectification of the register of members of the company under the chairmanship of a competent person appointed by the Company Law Board. 

(e) To transfer the management of the company to a newly elected Board of directors. 

(f) To invalidate the proceedings of Board of directors held on 7th December, 1995 and 20th December, 1995 as well as of the annual general meeting held on 31st January, 1996. 

3. The petitioner and the company in both the petitions are common. The respondents 2 to 4 in CP No. 2/96 are respondents 4, 3 and 2 in CP No.92/97. The reliefs sought in both the petitions are substantially the same. In view of this, both these petitions were heard together and as such are being disposed of by this common order. 

4. The allegations in both the petitions relate to a Board meeting held on 7th December, 1995 in which two additional directors were appointed and a Board meeting held on 20th December, 1995 in which further shares were allotted to the second respondent in CP No. 2/96 against the credit balance standing in her name in the books of account. According to the petitioner, no notice for the first meeting was received by him and as such he did not attend the said meeting. Since there were only two directors in the Board including him, there would have been no quorum to consider any business and as such the appointment of additional directors is invalid ab initio. Since he did not attend the second Board meeting, even though he received a notice for the meeting, the said meeting held with the participation of the additional directors, is also invalid as also the allotment of shares in that meeting. According to the petitioner, the said allotment of shares was only with a view to reduce the majority holding of the petitioner in the company into minority. 

Even though these allegations are directly against Shri Rajendran, managing director of the company, he has not been made a party to the proceedings. However, it is who has filed the replies and affidavits on behalf of the company and attended all the hearings. 

5. Shri K. Jagadisachandran Nair, counsel for the petitioner, submitted that the company was incorporated as a private limited company in the year 1973 with main objects of carrying on hotel and restaurant business. The petitioner is holding 5,265 equity shares, out of which 5,164 shares are in dispute, being the subject-matter of CP No. 20/85 before the High Court of Kerala. As on 7th December, 1995, the company had two directors consisting of the petitioner and the present managing director. Between August, 1994 and May, 1995, the managing director was outside India in search of employment. After May, 1995, the managing director was not taking any interest in holding Board meetings and general meetings. The petitioner had preferred a complaint on 15th November, 1995 against the managing director with the Registrar of Companies, Ernakulam for not convening Board meetings for the past one year and annual general meeting for the years 1994 and 1995. The company's building was used for the purpose of running hotel. The building was let out to the second respondent in CP No. 2 of 1996, wife of the managing director for conducting the hotel. The term of the licence deed for the hotel building expired on 14th November, 1995, upon which the second respondent filed a suit in OS No. 599 of 1995 on the file of munsifs court, Kottayam and obtained an order of injunction restraining the company and petitioner from forcibly evicting her from the premises. The petitioner's son filed a civil suit on 21st November, 1995 for restraining the second respondent from forcibly preventing the continuance as a partner in the hotel business. These will show that the relationship between the petitioner and managing director became strained as early as November, 1995. It cannot be expected in such circumstances that the managing director would have convened a Board meeting on 7th December, 1995 without a written notice. It is neither probable that the petitioner would have been orally advised of the Board meeting. He further submitted that section 286 of the Act provides that notice a of every meeting of the Board of directors of the company shall be given in writing to every director of the company, failing which the officer in default shall be punishable with fine which may extend to Rs. 100. The issue of notice is mandatory and the proceedings of the meeting will have to be treated as invalid for want of notice. He relied on Prameshwari Prasad Gupta v. UOI AIR 1973 SC 2389 to show that any resolution passed in a Board meeting without prior notice to a director is invalid. There has been no document to show that notice had been issued to the petitioner in compliance with the provisions of section 286. The a petitioner neither received any notice nor attended the Board meeting. There has been no document to show that the petitioner attended the meeting. In absence of the petitioner there could not have been a valid quorum for the Board meeting. In this connection, he relied upon the decision of the Kerala High Court reported in 1957 KLT 1065 to show that there cannot be a one man meeting. Article 48 stipulates that there should be a quorum, when the meeting proceeds to business. He further relied on London Flats Ltd., In re. [1969] 1 WLR 711 to urge his point that a single shareholder could not constitute a meeting. Therefore, according to him, the appointment of the 3rd and 4th respondents as additional directors in that meeting has to be declared as invalid. He also countered the stand of the respondents that the petitioner did attend the meeting and insisted on his wife and son being inducted into the Board which was not acceptable to the managing director and, therefore, by exercise of casting vote by the managing director as chairman, respondents 3 and 4 were appointed as additional directors. Further, there has been no chairman for the company after the demise of Shri N. Gopala Pillai, father of the managing director. By virtue of articles 80 and 84 of articles of association of the company casting vote can be exercised only by a person elected as a chairman of the company for a definite period. Any other person even if elected as a chairman for a particular meeting will not be entitled to a second vote. The present managing director has never been the chairman of the company. He was neither elected as the chairman at any time by the Board of directors at least till 31st January, 1996. The minutes of the annual general meeting held on 31st January, 1996 does not disclose that he was the chairman under article 84. The proceedings said to have been held on 7th December, 1995 appointing respondents 3 and 4 in CP No. 2/96 as additional directors are not valid. The entire minutes book of the Board meetings produced by the managing director is a fabricated one. The petitioner along with another member sent a requisition on 9th December, 1995 to the managing director to convene an extraordinary general meeting. In the meanwhile, the petitioner received a notice on 12th December, 1995 from the managing director convening a Board meeting on 20th December, 1995 at the residence of the managing director. The petitioner advised the managing director that he would not attend the Board meeting proposed on 20th December, 1995. However, the meeting conducted on 20th December, 1995 was said to be attended by the managing director and respondents 3 and 4 in CP No. 2/96 as directors. In the Board meeting held on 20th December, 1995, 6,000 shares were said to be allotted in favour of the second respondent in CP No. 2/96 without receiving any cash consideration and 30 shares in favour of the third respondent in CP No. 2/96, apparently for cash consideration. The respondents 3 and 4 in CP No. 2/96 not being validly appointed as additional directors had no authority to participate in the Board meeting held on 20th December, 1995. The managing director alone cannot allot the shares. Further, the allotment was made only for the sole purpose of reducing the petitioner from majority to minority as no funds came into the company and the allotment was made against credits standing in the name of the 2nd respondent. Therefore, the allotment of shares in favour of respondents 2 and 3 in CP No. 2/96 is not valid. There after, the petitioner received a notice dated 5th January, 1996 for the annual general meeting convened on 31st January, 1996 and came to know that respondents 3 and 4 were appointed as additional directors in the Board meeting held on 7th December, 1995. The petitioner was constrained to obtain an order dated 30th January, 1996 from the High Court of Kerala in CP No. 20 of 1985 for exercising his voting right in respect of 5,264 shares held by him out of the total subscribed share capital of 7,800 shares. When the petitioner attended the annual general meeting he came to know that the impugned shares were allotted in favour of respondents 2 and 3 in the Board meeting held on 20th December, 1995. Moreover, the written notice for the Board meeting on 20th December, 1995 did not contain the name of additional directors. On the other hand, the said notice contains the name of the petitioner and the managing director and none else. There has been no record to show that written notice was sent to respondents 3 and 4 for the Board meeting of 20th December, 1995. The proceedings said to have been conducted on 20th December, 1995 are also invalid. The allotment of 6,000 shares in favour of the second respondent in CP No. 2/96 is also not supported by consideration. The extract from the account books maintained and relied by the company shows credit of Rs. 10 lakh as well as debit of more than Rs. 10 lakh in the name of the second respondent, in CP No. 2/96. No rent was being paid by the second respondent to the company all these years towards lease rental for the hotel premises. It is shown as sundry debt and interest has not been provided for it. As per the balance sheet as on 31st March, 1995 the liabilities of the second respondent in CP No. 2/96 exceeded her security deposit and consequently no amount was available for which shares could have been allotted. There has been no record to show that consideration has been paid by the third respondent in CP No. 2/96 towards value of 30 shares allotted in her favour. Both the appointment of additional directors and allotment of the impugned shares are liable to be set aside. As there was no meeting of any validly constituted Board, of directors either on 7th December, 1995 or 20th December, 1995 and without such valid meetings of the Board, the annual general meeting held on 31st January, 1996 is also invalid. The minutes of the annual general meeting dated 31st January, 1996 and 20th December, 1997 produced by the company are not in accordance with law and hence invalid. The minutes of the meeting cannot be prepared on loose sheets of paper and should be in compliance with section 193 of the Act and article 87 of the articles of a association of the company. By virtue of illegal allotment of the impugned shares the petitioner is reduced to a minority shareholder and by illegally appointing respondents 3 and 4, the petitioner has been ousted from the management of the company. It is, in these circumstances, Shri Jagadisachandran Nair prayed for rectification of the register of members of the company by cancelling the allotment of the impugned shares in favour of the respondents 2 and 3 in CP No. 2/96 and further sought for the reliefs made in CP No. 92/97. 

6. According to the company and as reiterated by Shri Dinesh R. Shenoy, counsel appearing for the company, the company being a closely held private limited company and virtually a partnership firm has been functioning in an informal manner for the past 27 years, without adhering to the formalities prescribed by the Act in totality. The directors of the Board are closely related and almost next door neighbours and hence there has been no practice of giving written notice to the directors. The company has not been maintaining any notice book or attendance register since the beginning. Neither any shareholder nor director including the petitioner ever made any demand for any change in the mode of functioning of the company or giving notices or maintenance of attendance register. The petitioner is responsible for this mode of functioning as he is one of the three founder members and directors of the company. The petitioner has established and perpetualised this practice while functioning as director all these years. He further submitted that under section 286 (1) of the Act, notice of a meeting is required to be given in writing to every director and that failure of written notice does not invalidate the meeting, but only attracts penalty. The petitioner was orally advised of the Board meeting, held on 7th December, 1995, following the practice in vogue, in pursuance of which the petitioner attended the Board meeting. The petitioner wanted to appoint his wife and son as directors of the company. The managing director presiding over the meeting moved a resolution co-opting the respondents 3 and 4 in CP No. 2/96 as additional directors of the company. Though the petitioner opposed the resolution, the managing director in his capacity as the chairman exercised his casting vote in favour of the resolution and co-opted respondents 3 and 4 as additional directors. Accordingly, Form 32 was filed on 8th January, 1996. The petitioner had admitted holding of the Board meeting on 7th December, 1995 at the annual general meeting held on 31st January, 1996. The petitioner's objection was with regard to the casting vote exercised by the chairman. The minutes of the meeting of the Board of directors have been properly maintained in accordance with the practice followed by the company. The minutes book has not been tampered. None of the pages has been either pasted or removed. The petitioner was on the Board of directors of the company till 31st January, 1996 and it is not his case that there is yet another minutes book maintained by the company. In view of the disputes raised by the petitioner with regard to the Board meeting held on 7th December, 1995, the company was forced to send a written notice for the Board meeting held on 20th December, 1995. The impugned shares were allotted in favour of respondents 2 and 3 in CP No. 2/96 by a properly constituted Board of directors at the Board meeting held on 20th December, 1995, after due notice to all the directors including the petitioner. The impugned shares were issued for valuable consideration against the amount outstanding in the credit of the second respondent in CP No. 2/96 on account of security deposit. The shares were allotted to the third respondent in CP No. 2/96 against payment of cash, duly received and accounted for in the books of account of the company. The security deposit amount outstanding in the name of the second respondent is reflected in the accounts of the company and in the balance sheets from the year 1985 till 1996. The annual accounts for the years 1993-94 and 1994-95 audited by qualified auditor were duly approved in the annual general meeting held on 31st January, 1996. The accounts were passed unanimously by all the shareholders present in the meeting including the petitioner himself. The petitioner cannot question the correctness of the accounts already duly approved by members in the annual general meeting. The petitioner has signed the minutes of the annual general meeting, as such estopped from questioning the allotment of shares and appointment of additional directors. The Registrar of Companies looked into these aspects on a complaint lodged by the petitioner and ultimately after verifying the records of the company dropped the proceedings. Thus, the allotment of shares in the name of the second respondent in CP No. 2/96 is valid and in order. Return of allotment of shares was filed before the Registrar of Companies as prescribed under the Act on 8th January, 1996. Shri Dinesh further pointed out that on earlier occasions the petitioner and other shareholders were allotted shares against the amounts payable by the company. The company adopted the same procedure in practice while conducting the meetings and allotment of shares, impugned in the petitions. Shri Dinesh concluded his submissions stating that the disputed question of facts in relation to the allotment of shares, appointment of additional directors cannot be gone into in summary proceedings under section 111 of the Act, but can only be agitated in a civil court. Though the petitioner is holding 5,264 shares, the dispute regarding allotment of 5,164 shares is pending before the High Court of Kerala in CP No. 20 of 1985. Hence, maintainability of the petition under section 397 and section 398 purely depends upon the ultimate decision of the High Court of Kerala. If the petition before the High Court goes against the petitioner he would not hold qualifying shares of 10 per cent of the paid-up share capital of the company to maintain the petition under section 397/section 398 before this Bench. It is in these circumstances, the proceedings in CP No. 92/97 should necessarily be stayed and prayed for dismissal of the petition in CP No. 2/96. 

7. Shri C. Krishnamoorthy, authorised representative and chartered accountant for respondent No. 2 in CP No. 2 of 96 as well as respondent 4 in CP No. 92/97 and Shri B. Anil Kumar, advocate for respondents 3 and 4 in CP No. 2/96 as well as respondents 2 and 3 in CP No. 92/97 have reiterated the averments made in the counter-affidavit filed on behalf of the company as well as submissions of counsel for the company and sought for dismissal of both the petitions. 

8. We have considered the pleadings and arguments of the counsel for the petitioner as well as respondents. The question for our consideration are : 

(a) Whether the proceedings of the Board meetings held on 7th December, 1995 and 20th December, 1995 and of the annual general meeting held on 31st January, 1996 are to be invalidated. 

(b) Consequently, whether the company shall rectify its register of members by deleting the name of the respondents 2 and 3 in CP No. 2/96 in respect of the impugned shares and the respondents 2 and 3 in CP No. 92/97 cease to be directors. 

9. The company being a closely held private limited company and the persons in management being related to each other, we suggested to the parties to consider settling the disputes amicably. Since the parties expressed their desire to do so, a consent order was passed on 8th July, 1997, whereby it was agreed that on payment of Rs. 45 lakh towards the value of 5,264 shares standing in the name of the petitioner, he would transfer the said shares to the managing director or to any other member and part his ways with the company. The said order provided for payment of this amount in instalments by which the first instalment was to be paid before 10th November, 1997, second instalment by 10th June, 1998, third instalment by the 10th April, 1999. However, the compromise proposal could not be given effect to on account of the default committed by the managing director in spite of our extending the period of repayment on a few occasions. We, therefore, proceeded with the petitions. 

10. While it is the case of the petitioner that there was no written notice for the Board meeting held on 7th December, 1995, it is contended by the respondents that there was a valid Board meeting duly convened and attended by both the managing director and the petitioner. Admittedly, no written notice was sent to the petitioner for the Board meeting convened on 7th December, 1995. Section 286 (1) provides that the company shall issue a notice in writing to the directors for every Board meeting. Article 80 of articles of association stipulates written notice for the Board meetings. However, it is admitted by the petitioner himself that the company has not been functioning in strict compliance with the provisions of the Act, as is evident from the deposition of the petitioner in CP 20/85. (At p. 268 of the petition in CP No. 2/96) on the file of High Court of Kerala, Ernakulam, wherein he had categorically stated : 

"....... the business was run as a family concern ...." 

".... directors by name are given in many of the minutes, but there are also instances where reference is only made in the presence of directors without mentioning their names as in the case of minutes of the meeting dated 22nd December, 1982 and 2nd February, 1985 ...." 

".... Leave of absence was granted to Mr. Haridas, director of the company on request made by him orally regarding his absence in the Board meeting ...." 

The managing director of the company while deposing on 18th November, 1992 in CP No. 20 of 85, at page 341 of the petition in CP No. 2/96 when the relationship between the parties was cordial has stated with regard to functioning of the company as under : 

".... Annual general meeting of the company was used to be conducted regularly. Regular notices were issued before the meeting was convened. Notices were served personally, and then again by post. The articles of association of the company permits issue of notice personally. Since the company is a family concern, notices were issued personally as all of them are family members. Even after the filing of this company application, notices are regularly served as before. Annual general body meeting of the company was held every year. Copy of the profit and loss account and balance sheet were given to all the shareholders before the meeting was held. No shareholder has made a request to change the working procedure of the company." 

".... It was a decision of the Board of directors to issue shares to Shri T. V. P. Nair. The managing director signed the minutes relating to the meeting on 29th May, 1985 and no other directors signed there. On such occasions of Board meeting the directors do not sign usually, since the members were all family members there was no practice of signing the minutes by the directors present." 

".... The meetings were held under the chairmanship of T. V. S. Pillai. There was a practice that the minute books is signed by the chairman." 

".... The decision for allotment of shares including those allotted in favour of T. V. P. Nair was taken in the meeting held on 29th May, 1985. There is no record to show that Shri Haridas was present in that meeting, except the minutes book. The minutes book is signed only by the managing director. There were three directors in the company at the relevant time including myself, Sri T. V. P. Nair and Sri Haridas. Sri Haridas was not present in the meeting held on 29th May, 1985, but he was present in previous meetings. The resolution for allotment of shares was proposed by the managing director. All the members present in the meeting supported the resolution." 

"..... From the very inception of the company, minutes of the Board meetings were signed only by the chairman and not by the participating members. As the company was a family concern, no director ever opposed to such a practice ....." 

10.1 From the statements of both the petitioner and the managing director of the company, it is beyond doubt that the company was treated as a family concern and that the company was run informally without strictly complying with the provisions of the Act. The minutes of the Board meeting were used to be signed by the chairman of the company and not by all the directors present in the Board meeting. The name of directors present At the time of the Board meeting were not specifically indicated in the minutes of the Board meeting. In view of this, the petitioner cannot take the stand that in the absence of his signature in the minutes book or attendance register, it should be held that he did not attend the said meeting. Even though section 286 (1) of the Act am articles stipulate written notice to directors for every Board meeting, in the facts and circumstances of this particular case, considering that the company is a closely held private company and even assuming that there had been certain lapses of not fulfilling legal procedure, we do not propose to hold the same against the company. While doing so, we have also taken not of the minutes of the annual general meeting held on 31st January, 1996, in which the managing director of the company informed the members in connection with election of respondents 2 and 3 in CP No. 92/97 who were appointed as additional directors on 7th December, 1995 as regular directors that on 7th December, 1995 a Board meeting was convened to decide the appointment of additional directors; that the managing director exercised his casting vote in the meeting and that the petitioner boycotted the meeting expressing his displeasure in exercise of casting vote by the managing director. To this statement the petitioner did not react. The petitioner only demanded poll on the said resolution. We note that the counsel for the petitioner pleaded that the minutes of the Board meeting are fabricated and that no appointment of additional directors was actually made. This fabrication was done after the petitioner refused to attend the meeting convened on 20th December, 1995. However, we also note, in the annual general meeting on 31st January, 1996, no such complaint was made by him. In the circumstances, it appears to us that there might have been a Board meeting on 7th December, 1995 and that the petitioner might have been present in the meeting, as seen from the minutes of the Board meeting (Annexure R-1) in accordance with the prevailing practice in the company and that respondents 3 and 4 in CP No. 2/96 might have been co-opted as directors by the managing director, in exercise of the casting vote, as chairman of Board meeting under article 80. Even though the counsel for the petitioner advanced an argument that only a person regularly appointed as the chairman of the company can exercise a casting vote in terms of article 80, we do not see any such stipulation in the said article. Once a person is elected to occupy the chair as chairman of a meeting, he also would have casting vote. Now the issue for our consideration is whether the appointment of the additional directors could be termed as an act of oppression. It is an admitted position that the petitioners, as on that date, even though disputed, held majority shares in the company over a long period of time, are the petitioner and Shri Rajendran, managing director, were the directors. In other words, the petitioner had equal representation on the board along with Shri Rajendran, the managing director. It is the stand of Shri Rajendran that when the petitioner objected to the appointment of additional directors, Shri Rajendran used his casting vote to approve their appointment in the Board meeting held on 7th December, 1995. By doing so, he had upset the balance in the Board by which, from equal representation on the Board, the petitioner had been reduced to one-fourth representation on the Board even though he was holding majority of shares in the company. Therefore, the act of the managing director to use his casting vote for appointment of respondents 3 and 4 in CP No. 2/96 as additional directors, by which the present managing director acquired majority on the Board upsetting the balance in the Board, which existed for a long period of time, is definitely an act of oppression against the petitioner, the majority shareholder. The sequence of events that followed also shows that the managing director was bent upon taking over the company, first by inducting respondents 3 and 4 into the Board, secondly, by allotting shares to his wife and using the voting power on the new shares, ensured passing a resolution to remove the petitioner as a director. There were arguments on the legality of allotment of shares, whether the company could have allotted shares out of the credit standing in the name of the wife, whether, in fact, there was credit in her name, etc. We do not propose to deal with these issues as the shares issued behind the back of the petitioner by the Board, irregularly constituted on 7th December, 1995, cannot be a valid allotment, likewise the removal of the petitioner in the annual general meeting on 31st January, 1996, by virtue of exercise of voting on the shares also cannot hold good. In this connection, we also note a very valid submission made by the counsel for the petitioner to doubt the genuineness of the claim of allotment of shares. When the annual general meeting was convened, the petitioner approached the Kerala High Court for staying the meeting. In the reply to the application, by the company, there is no mention about the allotment of shares on 20th December, 1995. On this application, the court, while declining to stay the annual general meeting, permitted the petitioner to exercise voting on the shares impugned in the proceedings before the High Court. In view of the absence of any mention in the reply to the said application about the allotment, the counsel submitted that the respondents had fabricated the minutes to show that such allotment was made on 20th December, 1995 only after the High Court granted permission to the petitioner to exercise his voting on shares impugned in the proceedings before the High Court. 

10.2 Thus, we find that the inclusion of respondents 3 and 4 in CP No. 2/96, into the Board as additional directors, on 7th December, 1995, using their presence as quorum for allotment of shares on 20th December, 1995 and removal of the petitioner as a director in the annual general meeting on 31st January, 1996 and electing the respondents 3 and 4 as directors by voting on the shares, so allotted, constitute a chain of acts of oppression against the petitioner. By these acts, the petitioner has been reduced to a minority and has been excluded from the management. 

10.3 The respondents have raised an issue that the petition is not maintainable in terms of section 399 as 5,164 shares held by the petitioner are in dispute before the Kerala High Court, The admitted position is that his name continues in the register of members in respect of these shares and the Kerala High Court has permitted him to exercise voting rights in respect of these shares. As per section 399, members having 10 per cent of the subscribed capital of a company, can file a petition under section 397/section 398. The petitioner fulfils this requirement. Accordingly, the petition is maintainable. 

10.4 It is thus clear from the various issues that we have examined, the intention of the respondents seems to gain control of the company, irrespective of the fact whether the provisions of the Act or articles of association are followed or not. In section 397 proceedings, first one has to establish that there is oppression. Without an element of oppression being established, the question of grant of relief does not arise, as has been decided in quite a number of cases by the Company Law Board. Whether any act is an oppression or not would depend upon the facts and circumstances of each case. In the present case, by allotment of further shares a majority shareholder has become minority and further the majority shareholder who has been all along in the management of the company is removed from the office of director. The present managing director's kith and kin have been appointed as additional directors of the company. We are, therefore, of the view that the grounds on which the petition in CP No. 92/97 has been filed fully merit winding up of the company on just and equitable grounds in section 397 proceedings and that winding up of the company is prejudicial to the interests of the shareholders. 

11. Having held that the petition is maintainable and that the allegations of oppression have been established and that these acts of oppression justify winding up of the company on just and equitable grounds, we pass the following order : 

(i) The allotment of 6,030 shares in favour of respondents 2 and 3 in CP No. 2/96 is hereby set aside and the register of members of the company shall be rectified accordingly. 

(ii) The respondents 2 and 3 in CP No. 92/97 cease to be directors of the company with immediate effect. 

(iii) The resolution dated 31st January, 1996 removing the petitioner from the office of director of the company is set aside as null and void. 

(iv) The Board of directors of the company stands reconstituted with immediate effect with the petitioner and the present managing director as directors. 

12. With the above directions, we dispose of both the petitions, however, without any order to cost.