JUDGMENT
K.K. Balu, Member
1. The petitioner holding 21.47 per cent. of the paid up capital in M/s. G. K. Steels (Coimbatore) Limited (“the company”) has filed this petition under Sections 397/398 and 402 of the Companies Act, 1956 (“the Act”), alleging various acts of oppression and mismanagement in the affairs of the company.
2. The main acts of oppression and mismanagement relate to non-convening and holding of the meetings of the board of directors and general meetings of the company, non-filing of the balance-sheets of the company periodically . within the stipulated time, illegal removal of the petitioner from the office of director of the company, exclusion of the petitioner from the day-to-day affairs and management of the company, non-issue of share certificates, manipulation of the accounts and siphoning off of funds by indulging in various acts of mismanagement in the affairs of the company.
3. Shri V. Balasubramanyan, authorised representative of the petitioner, while initiating his arguments submitted that the petitioner and respondents Nos. 2 and 3 are brothers. The company was incorporated in June, 1983, by the petitioner and respondents Nos. 2 and 3 for the purpose of taking over the business of steel and management of a partnership under the name and style of G. K. Steel and Industries, consisting of the petitioner along with respondents Nos. 2 and 3 as partners. The authorised capital of the company is Rs. 25 lakhs consisting of 25,000 equity shares of Rs. 100 each. The issued, subscribed and paid up capital is Rs. 19,85,000 consisting of 19,850 equity shares of Rs. 100 each. The petitioner is holding 4,260 equity shares of Rs. 100 in the company. The petitioner was represented by his father, Shri G. Kandaswamy, in the affairs of the company till his demise in the year, 1999. Thereafter, the respondents never involved the petitioner in the affairs of the company and excluded him from the management. The petitioner by his letters dated May 27, 1999 (page 35 of set of documents by the petitioner) had complained of non-holding of the board meeting or annual general meeting since the year, 1995, as well as non-receipt of the notice to these meetings. The petitioner by his letter dated June 21, 1999 (page 22 of set of documents by the petitioner), demanded the original share certificates in respect of the shares held by him in the company. However, the respondents failed to comply with the statutory requirements within the stipulated time. According to the petitioner, the company was neither conducting any board meeting or annual general meeting nor issued notice for such meetings for the years 1996, 1997 and 1998. However, the company had filed the balance-sheets manipulating the figures for the years 1996, 1997 and 1998 in June, 1999, and showing heavy losses with the Registrar of Companies, duly signed only by respondents Nos. 2 and 3, depriving the company from carrying forward the losses to the subsequent years. Respondents Nos. 2 to 4 had falsified the accounts without participation of the petitioner in the annual general meetings and siphoned off the funds of the company to the detriment of the petitioner and other members of the company. The petitioner was removed from the office of the director of the company in the year, 1996 without his knowledge and in contravention of the provisions of the Act. In this connection, Shri Sridharan pointed out that though the amended articles of association of the company provide for retirement of directors by rotation, none of the directors was relieved on rotation in accordance with the articles. The petitioner did not retire at the 13th annual general meeting said to have been held on September 20, 1996. In this connection, Shri Sridharan drew our attention to the discrepancies in the notice dated August 28, 1996, said to have been sent for the alleged 13th annual general meeting of the company. The notice dated August 28, 1996 (page 39 of the counter), containing the agenda includes election of director in the place of the petitioner who retires by rotation. Whereas the notice produced by the petitioner (page 39 of set of documents by the petitioner) does not contain such business. The notice produced by the respondents is fabricated and the business of election of a director in the place of the petitioner was not considered at the annual general meeting said to have been held on September 20, 1996. Consequently, the petitioner could not have retired from the office of director of the company. The annual return as on September 2, 1996, intimating the Registrar of Companies that the petitioner ceased to be a director with effect from March 20, 1996, is fabricated. Shri Balasubramanyan and Sridharan, in the course of their submissions, pointed out the irregularities indulged in by respondents Nos. 2 and 3 in the affairs of the company during the years 1996 to 1998, which are as under :
During the year 1996-97, the company had shown lease rental of Rs. 3 lakhs. However, no details in regard to the asset leased, the terms and conditions of lease and lessee are furnished. Moreover, the balance-sheet for the subsequent years does not reflect any lease rent by way of income of the company, thereby the company ought to have incurred losses to the tune of Rs. 1 crore on account of non-receipt of lease rent at the rate of Rs. 18,000 per month as per the agreement of lease dated April 20, 1995 (page 77 of counter) entered into between the company and the lessee.
4. The company was undertaking conversion job in the manufacture of steel CTD bars for among others, one of its group companies, namely, G. K. Steel and Allied Industries Ltd. (“GKSAIL”), in pursuance of which a fake agreement dated September 15, 1994 (page 84 of counter) was entered into between the company and GKSAIL, as borne out by Clause 12 of the said agreement. Clause 12 provides that any dispute arising out of the agreement should be referred to arbitration in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996. This Act came into effect with effect from August, 1996, whereas the agreement was said to have been executed on September 15, 1994, for a period of three years from April 1, 1995, to March 31, 1998. Moreover, the conversion charges as fixed in the agreement at a rate of Rs. 950 per ton for the years from 1991-92 till filing the petition is not realistic, in view of the increase in the cost of electricity and oil during all these years. Respondents Nos. 2 and 3 had failed to negotiate the increase in the prevailing conversion charges causing loss to the company to the tune of Rs. 79.76 lakhs.
5. The balance-sheet for the year 1995-96 reveals that the company had wasted 509.496 tons materials out of the consumption of raw materials to the tune of 849.954 tons to manufacture 340.449 tons (page 52 of set of documents by the petitioner) of finished goods. Thus, the wastage is worked out at 60 per cent. of production, which is unrealistic and unreasonable.
6. During the year 1995-96, the company had reportedly manufactured 340.449 tons and sold 209.300 tons of finished goods, leaving the balance of 131.149 tons unsold. However, the opening stock of finished goods is at 218.483 tons and the closing stock of finished goods is 349.632 tons. The opening stock of finished goods were unsold till the year end, but at the same time the finished goods are valued at a higher rate than the market rate, thereby indulging in dubious methods to achieve personal gain by such manipulations.
7. The balance-sheet for the year 1996-97 (annexure) reveals an opening stock of finished goods of 349.632 tons and 763.500 tons of production. The sale of finished goods was shown as 195.570. The closing stock was shown as 12.570 tons. Thus, the finished goods to the tune of 905 tons were misappropriated for the benefit of respondents Nos. 2 and 3.
8. The balance-sheet for the year 1996-97 shows that 908.600 tons of raw materials valued at Rs. 53,82,896 were purchased, when the opening stock of raw materials was valued at Rs. 47,25,679. But, at the year end, the closing stock of the materials was valued at Rs. 61,42,482, which is more than the purchase value of the raw materials for whole year. Thus, the company had used only the opening stock for production during the relevant year and there was no necessity to go for purchase of any raw material. The company had on this account sustained heavy losses.
9. During the year 1993-94, the income from second sales was nil. The income from second sales for the years 1992-93, 1994-95 was rather meagre. ‘ The balance-sheet for the year 1995-96 shows an income of Rs. 2.08 crores from second sales. During the year 1996-97, the second sales were shown at Rs. 1.57 crores. But, there are no corresponding entries for the purchases made by the company during the years 1995-96 and 1996-97. Further, the second sale shown in the balance-sheet for the year 1996-97 is Rs. 2,08,59, 102 whereas in the balance-sheet for the year 1997-98, the figure relating to the second sale for the year 1996-97 has been mentioned as Rs. 1,38,588.
10. The electricity and oil consumption shown in the director’s report during the year 1996 are deceptive. If the director’s report is true regarding electricity and oil consumption of 172 units and 77 litres per tone respectively for the year 1996, the company should have produced 25,400 tons for an electricity consumption aggregating to Rs. 43.68 lakhs units during the year, whereas the actual production shown in the balance-sheet is 9,492 tons and suppressed 15,908 tons of production, which was unearthed while the company was raided by the Central excise authorities.
11. The balance-sheet for the year 1998, shows purchase of 168.859 tons of raw materials at the cost of Rs. 1,50,384.25, but the cost of normal raw materials comes around Rs. 11,000 per ton. Thus, the accounts are manipulated by the respondents. The company during the year 1998 had shown Rs. 89.77 lakhs towards sale of waste and scrap, without furnishing details as to how much waste was generated on consumption of goods and as to how and to whom the waste was sold by the company.
12. The balance-sheet for the year 1998, shows a consignment sale of Rs. 19.08 lakhs as income, but there are no details with regard to production or corresponding purchases to that effect. No such income is shown during the previous year.
13. The details of raw materials, finished goods and waste products furnished in the balance-sheets for the year 1998-99 are manipulated so as to make unlawful gain by the respondents.
14. Shri R. Vidhya Shankar, advocate appearing for the respondents, while denying the alleged acts of oppression and mismanagement in the affairs of the company has at the first instance traced the history of the company. According to Shri Vidhya Shankar, initially a partnership firm under the name and style of G. K. Steel and Industries with the petitioner and respondents Nos. 2 and 3 as partners was formed. The first respondent-company on its incorporation took over the business of the partnership firm. The petitioner at no point of time was directly involved in the affairs of the company. The petitioner’s father had acted on behalf of the petitioner in the affairs of the company. The memorandum and articles of association of the company was signed on behalf of the petitioner as subscriber to the memorandum only by his late father as power of attorney of the petitioner. The petitioner never took active interest in the management of the company and did not chose to raise any of the alleged acts of oppression and mismanagement until the demise of his father in April, 1999, upon which the petitioner demanded a partition of the family properties by causing legal notice in July, 1999. Shri Vidhya Shankar pointed out that the petitioner has resorted to the present petition with a view to exert pressure on respondents Nos. 2 and 3 for his demand in the matter of partition of the family properties. He further pointed out that the petitioner by his letter dated May 27, 1999 (page 35 of set of documents of petition), for the first time made grievances of non-holding of board meetings and the annual general meeting of the company. The petitioner at no prior point of time levelled any such charges against the respondents. The petitioner has not approached this Bench with clean hands, but with oblique purpose and there is inordinate delay in claiming the reliefs. The reliefs claimed in no way put an end to the alleged acts of oppression and mismanagement. The grievances are related to the past years. Shri Vidhya Shankar has pointed out that the petitioner has never been in the active management of the company, in which case, his claim for regulating the management of the affairs of the company and for replacing respondents Nos. 2 and 3 by an administrator does not arise. In the circumstances, the petitioner is not entitled for any equitable remedy from the Company Law Board, for which he cited the following decisions :
Anugraha Jewellers Ltd. v. K. R. S. Mani [2002] 111 Comp Cas 501 (Mad) to show that “in case of a person seeking relief under Sections 397 and 398 must come with clean hands. His conduct must not be tainted failing which the court ought not to grant any relief in favour of such litigation”.
Bengal Luxmi Cotton Mills Ltd., In re [1965] 35 Comp Cas 187 (Cal) to show that (headnote) : “the Company Law Board is not to grant the discretionary relief under Sections 397 and 398, if there is a delay in seeking the remedy and the delay is such that it is the evidence of acquiescence or condonation of wrongful acts”.
Ramesh Bhajanlal Thakur v. Sea Side Hotel P. Ltd. [2000] 100 Comp Cas 117 (CLB) to show that (headnote) : “the settled principle of law in a proceeding under Section 397/398 is that the relief sought should be to put an end to the acts of oppression/mismanagement and not for any oblique purpose”.
1. Palghat Exports Pvt, Ltd., 2. P. Ramkumar v. T. V. Chandran [1994] 79 Comp Cas 213 (Ker) to show that no relief can be granted by the Company Law Board if the grievances are related to the past years.
According to Shri Vidhya Shankar, the company having become a sick industrial company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, has already made a reference under Section 15 of the SICA to the Board for Industrial and Financial Reconstruction (“the BIFR”) and the reference has already been registered by the BIFR and the enquiry is deemed to have commenced by virtue of the proviso to Section 16(3) of the SICA. Consequently, the BIFR is empowered under Section 18 to sanction a scheme which could include any protection including reconstitution of the management, alteration of capital structure, transfer of undertaking, transfer of shares, etc. Moreover, the provisions of the SICA and any scheme sanctioned by the BIFR would have an overriding effect, notwithstanding anything inconsistent therewith in any other law or in the memorandum or articles of association of the company. In this connection, he referred to Union of India v. Krishna Mills Ltd. [1994] 81 Comp Cas 50 ; [1994] 4 Comp LJ 296 (Raj) to show that (headnote) : “the provisions contained in the Sick Industrial Companies (Special Provisions) Act, 1985, prevail qua the general provisions contained in the Companies Act”. The relief claimed by the petitioner in superseding the existing board of directors and for appointment of the administrator would fall within the jurisdiction of the BIFR. In the circumstances, the relief which may be granted by the Company Law Board may be in conflict with the directions which may be given by the BIFR. Moreover, by virtue of Section 20 of the SICA, the BIFR has vested with the powers to determine whether the company is to be wound up on the just and equitable ground. The very same issue has got to be considered by the Company Law Board before considering any relief made in the petition. Shri Vidhya Shankar, therefore, urged that the Company Law Board may leave these issues to be decided by the BIFR, especially the order that may be passed by the Company Law Board would become infructuous in the light of directions which may be issued by the BIFR. Shri Vidhya Shankar pointed out that 4,260 equity shares were allotted to the petitioner as early as in the year 1986, whereas the petitioner is claiming the share certificates, though already issued by the company after the lapse of 14 years. The alleged acts of oppression and mismanagement relate to the balance-sheets of the company for the years 1996, 1997, 1998 and 1999. The petitioner never participated in the annual general meetings, but allowed the accounts to be adopted at the annual general meetings and belatedly making false allegations. According to the respondents, the board meetings of the company and annual general meetings were periodically held within the stipulated period after due notice to the directors and shareholders including the petitioner by certificate of posting. The petitioner, therefore, cannot have any grievance on this account for which reference was made to Parmanand Choudhary v. Smt. Shukla Devi Mishra [1990] 67 Comp Cas 45 (MP) to show that in case the aggrieved person has not defrayed the expenses of having the notices served by registered post he cannot claim that he was not properly served, especially the respondents had approved the service of the notice of the meetings by certificate of posting. The balance-sheets together with profit and loss account and the annual returns were duly forwarded to the petitioner in his capacity as a shareholder. Accordingly, the affairs of the company are being carried in accordance with the wishes of the majority of its members, not warranting interference from the Company Law Board, in support of which learned counsel for the respondents relied on Dr. V. Sebastian v. City Hospital P. Ltd. [1985] 57 Comp Cas 453 (Ker). The petitioner ceased to be director on September 20, 1996, on account of his retirement by rotation in pursuance of the amended article 12 of articles of association of the company and on account of his not being re-elected to the office of director by the general body. The petitioner did not care to verify as to whether he continued to be a director for the past four years. Shri Vidhya Shankar pointed out that there was no delay in convening the annual general meetings but only in the matter of filing the balance-sheets with the Registrar of Companies. Shri Vidhya Shankar met the specific charges levelled against the respondents as under :
The furnace and electricals were leased out by the company to G. K. Steels and Allied Industries Limited (“GKSAIL”), promoted by the first respondent-company. The primary object of promoting GKSAIL was to source the entire requirement of steel ingots from the first respondent-company. The first respondent-company holds 14.17 per cent. of the shareholding of GKSAIL. The petitioner’s holding in GKSAIL is more than that of the respondents. Moreover, the proposal of lease of the furnace and electricals to GKSAIL was duly approved by the board of directors at its meeting held on January 13, 1995, and specific approval of the general body of the company was obtained for leasing of furnace and electricals to GKSAIL at the extraordinary general meeting of the company held on January 26, 1995 (annexures R-17 and R-18). The petitioner, being director on the board was a party to the resolution for lease of the furnace and electricals in favour of GKSAIL. The petitioner cannot, therefore, challenge the lease of furnace and electricals to GKSAIL. GKSAIL was to pay lease rent at the rate of Rs. 18,000 per month in terms of the lease agreement dated March 20, 1995 (annexure R-19). As GKSAIL subsequently became a sick industrial company, the first respondent-company did not chose to take any recovery proceedings against GKSAIL, but took back the leased out equipment.
15. The company was doing conversion work for GKSAIL pursuant to an agreement dated September 15, 1994 (annexure R-22), according to which the company had separately accounted for the waste generated during the process of production. The waste so accounted was being returned to GKSAIL along with the finished goods manufactured on conversion as per the agreement. However, the company required the waste so generated for its own consumption and by virtue of mutual understanding the company used to account the consumption of waste to GKSAIL either by payment of value thereof or by way of finished goods for corresponding value. In this connection, Shri Vidhya Shankar pointed out that the company did not sustain any loss on this account in view of the fact that the company had consumed the waste, in return of which finished goods for the corresponding value of the wastage were delivered to GKSAIL.
16. The alleged enormous wastage in regard to appropriation of finished goods and raw materials are based on certain figures ascertained from the balance-sheet of the company as at March 31, 1996, and March 31, 1997. However, the company has furnished the correct quantitative particulars of the wastage during the productions of finished goods, opening and closing stock, purchase and sale, production, etc., for the years ended March 31, 1996, and March 31, 1997 (respondents Nos. 20 and 21).
17. The second sales shown in the balance-sheet for the years ended March 31, 1996, and March 31, 1997, reflect sale of retrieved worn out rolling mill rolls. These worn-out rolls are scrapped over a period of time whose value is reflected in the books of account as second sale. Such second sales of worn-out goods had taken place even during the years 1990 and 1992, when the petitioner was on the board of directors of the company. The discrepancy in the figures relating to the second sales in the balance-sheet for the years ended with March 31, 1996-97 and 1997-98, is a bona fide error crept in the balance-sheet for the year ended 1997-98, by which the true and fair view of the balance-sheet for the respective years is in no way effected.
18. The mismatch regarding the power and fuel consumption, vis-a-vis, production of the company as detailed by the petitioner lacks details. The petitioner has not given any comparative data in the industry regarding the power and fuel consumption in relation to the production. The petitioner has neither produced balance-sheets of any such similar company to sustain the charges levelled against the respondents. These allegations are wild. The adjudication by the Central Excise Department in regard to the alleged charges of suppression of production by the company is still pending, which will in all probabilities end in favour of the company. Moreover, the charges of the Central Excise Department cannot amount to an act of mismanagement in the affairs of the company. The respondents are ready to face prosecution, if any, that may be lodged by the Central Excise Department. This cannot prejudice the respondents in the proceedings before the Company Law Board.
19. There is no discrepancy in the cost of the raw materials of 168.859 tons reflected in the balance-sheet for the year 1998, in view of the fact the 168.85 tons of raw materials comprise 1.500 tons of billets and 167.395 tons of ingots representing scrap and waste available with the company. The sale of waste and scrap during the year 1998, was for only Rs. 8,97,324 and not Rs. 89,77,324 as made out in the petition.
10. According to the respondents, the consignment sales are effected by the company out of its regular production and, therefore, there is no need to segregate the production for the purpose of effecting regular sales and consignment sales. The classification of consignment sales is relevant only for the purpose of sales tax assessment and transactions would be taken care by the sales tax authorities.
11. The alleged manipulation in regard to raw materials, waste products, etc., during the year 1997-98 are denied. As the company was engaged in conversion work, there was no stock of raw materials at the end of the financial year ended March 31, 1999. Moreover, there was no stoppage of production at the beginning of the next financial year.
12. Shri Vidhya Shankar, while concluding his submission, has pointed out that the petitioner has not made out any case for granting any relief in his favour and, therefore, sought for dismissal of the petition.
13. Shri Sridharan, in his reply, has pointed out that the company had filed the balance-sheets for the years 1995 and 1996 only in the year 1999, upon which the petitioner came to know of the huge losses said to have been suffered by the company and the various irregularities. Therefore, the petition does not suffer on account of any delay. The various statutory documents filed before the Registrar of Companies are different from the documents filed before the Company Law Board. Shri Sridharan pointed out that none of the directors had ever retired since the year 1997, as per the amended article 12 of the articles of association of the company. The proceedings pending before the BIFR cannot have any impact on the present petition and the Company Law Board need not wait for the order that may be passed by the BIFR, especially, when misfeasance proceedings, if any, against the respondents can be initiated only on the basis of the order of the Company Law Board. There is no legal bar for the Company Law Board to grant appropriate remedy for the acts of oppression and mismanagement made out in the petition. He, therefore, prayed for the reliefs claimed in the petition.
14. We have considered the pleadings and arguments advanced on behalf of the petitioner as well as the respondents. The question that arises for our consideration is whether the alleged acts of oppression and mismanagement in the affairs of the company against the respondents would warrant our interference to grant the reliefs sought in the petition. Before considering the merits of the petition, it is relevant to observe that the petitioner and respondents Nos. 2 and 3 are sons of the deceased G. Kandaswamy. The company consists of only the family members of the deceased Kandaswamy as shareholders, indicating clearly that it is a family company to be managed for the benefit of all family members. The company was incorporated in June, 1983, to carry on, inter alia, the business of manufactures of steel, with the petitioner and respondents Nos. 2 and 3, as subscribers to the memorandum and articles of association of the company and promoter directors, who were not subject to the regulation of retirement of directors by rotation or otherwise. The company had taken over the business of a partnership firm, viz., G. K. Steel and Industries, consisting of the petitioner along with respondents Nos. 2 and 3 as partners. The petitioner is a medical practitioner and worked in the United Kingdom for 16 years just prior to the filing of this petition in April, 2000, as seen from para. 1 and para. 2 of the petition. By virtue of a power of attorney dated February 20, 1978, executed by the petitioner, his father was looking after the interest of the petitioner in his family business and the memorandum and articles of association of the company were signed on behalf of the petitioner as subscriber by his father as power of attorney holder of the petitioner. The petitioner’s father had expired in April, 1999, upon which the differences between the brothers surfaced. The petitioner had sent a legal notice dated July 14, 1999 (annexure R-1), to the respondents demanding a partition of the family properties, wherein the petitioner had raised the issues of non-holding of board and annual general meetings of the company and non-receipt of the notice for such meetings. However, the said legal notice does not make any reference to the letter dated May 27, 1999, of the petitioner (page 35 of set of documents by the petitioner), complaining of these grievances. The petitioner had neither complained of non-sending of the original share certificates in respect of his holdings by the company in the legal notice though such a request was made to the company by him in his letter dated June 21, 1999 (page 22 of set of documents by the petitioner). Against this background, the allegations in the petition have to be examined. The main acts of oppression alleged in the petition are that the company had not convened any board meeting or annual general meeting or issue any notices to the petitioner for such meetings during the years 1996 to 1998. The company had filed balance-sheets for the years 1996 to 1998 on June 6, 1999, The petitioner was removed from the board of directors of the company with effect from March, 1996. The petitioner came to know of these acts of the respondents only when he obtained certified copies of balance-sheets of the company for the years 1996 to 1998 from the Registrar of Companies in the month of November, 1999. The petitioner being a medical practitioner and having been on the board for quite a number of years admittedly till the year 1996 is not expected to keep silent for nearly four years without enquiring as to why no such meetings were convened and as to why notices were not sent to the petitioner periodically by the company. It is surprising that the petitioner had aired his grievances for the first time only in the month of July, 1999. The silence of the petitioner all these years remains unexplained. The conduct of the petitioner does not entitle him for the reliefs claimed in this behalf in the light of the decisions cited supra by counsel for the respondents. The main grievances of the petitioner relate to his cessation of office as a director, which according to him, is an act of oppression and that there have been gross mismanagement in the affairs of the company as is evident from various issues raised by him in relation to the accounts of the company. Prior to amendment in the year 1987, article 12 of the articles of association provided that the petitioner and the second and third respondents being promoter directors were not subject to retirement by rotation. However, the article amended in the extraordinary general meeting held on July 15, 1987 (annexure R-13), provides that all directors are liable to retire by rotation. There is no record to show that any directors had at any point of time retired by rotation in accordance with this article. The petitioner and the second and third respondents being promoter directors have been on the board all these years. In this company, admittedly being a family company, equity demands that the shareholders should have ensured the petitioner’s re-election in the case of his retirement by rotation. It appears from the admission of the respondents’ counsel that the petitioner continued as a director till March, 1996, Therefore, as far as his cessation of office as a director, we are of the view that the petitioner has made out a case of oppression against him by the respondents. In regard to his claim for original share certificates, we are of the view that this grievance can be put an end to by directing the company to issue duplicate certificates in respect of the holdings of the petitioner and we accordingly direct so. It should be done within 15 days from the date of receipt of this order. In respect of the alleged mismanagement, we note that all these allegations pertain to years when the petitioner’s father, being the power of attorney holder of the petitioner, was actively involved with the affairs of the company. All the allegations are based on the annual reports of the company and from the counter filed by the company and also elaborations made by learned counsel for the company, we are convinced that all the allegations have been properly and satisfactorily explained. Under these circumstances, nothing survives on these allegations. It is an admitted fact that there are other family disputes between the petitioner and the respondents. Even though, we have given a finding that the petitioner should have been elected as a director, we are conscious that inducting him as a director would only result in further litigation which will not be in the interest of the company or the petitioner. The best course would be, as suggested by us during the hearing, that the petitioner could go out of the company on receipt of fair consideration for his shares. However, we leave this choice with the petitioner. In case he wishes to continue as a shareholder, then he must continue as a director, notwithstanding anything contained in the articles to the contrary and he will not be liable for retirement by rotation. In case he desires to go out of the company, then the respondents are bound to purchase the shares of the petitioner at the fair value to be determined by an independent valuer. The petitioner should, within 30 days from the date of this order, indicate his choice of option, whether to continue as member of the company or to go out of the company, in writing to the company and the respondents. In case he desires to go out of the company, on an application made by him, we shall appoint an independent valuer to value the shares. In case he desires to continue as a member of the company he shall be immediately taken on the board.
15. The petition is disposed of in the above terms with no order as to costs, reserving the right to appoint a valuer and give consequential directions, if the petitioner desires to go out of the company.