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PREM KUMAR JAIN Vs. GEOTRACKERS MOBILE RESOURCE MANAGEMENT (P.) LTD.

PREM KUMAR JAIN Vs. GEOTRACKERS MOBILE RESOURCE MANAGEMENT (P.) LTD.

Regent

LAWS(CL)-2013-10-1

COMPANY LAW BOARD

Decided on October 25,2013

Prem Kumar Jain and Others Appellant

VERSUS

Geotrackers Mobile Resource Management (P.) Ltd. and Others Respondents

JUDGEMENT

D.R. Deshmukh -

(1.) STRANGE though, as it may appear, Prem (P -1) and Karuna (P -3) words symbolising love and compassion are pitched in a battle against Luv (R -5) in this petition. Greed and ego separate even the most loved ones. The company in question is Geotrackers Mobile Resource Management (P.) Ltd. ('the company') the affairs of which are called in question in this petition under section 397, 398, 402, 403, 235 and 237 of the Companies Act, 1956 ('the Act').

(2.) ADMITTEDLY , brothers Prem Kumar Jain (P -1) and Raj Kumar Jain (R -2) are married to two sisters Karuna Jain (P -3) and Aruna Jain (R -6). Luv Jain, R -5 is the son of R -2. It is also not in dispute that R -2 and others have filed a Civil Suit No. 1417/2012 against P -1 and others which is pending in the High Court of Delhi, for partition, dissolution of partnership, rendition of accounts and for injunction in which on 23rd May, 2012 the parties were directed to maintain status quo with regard to all movable and immovable assets as shown in Schedule -I and Schedule -II to the plaint of a family partnership concern Sand Dunes. The company was initially incorporated and registered under the name and style of Radhika Steel (P.) Ltd. on 12th June, 1978 and was promoted by the two brothers P -1 and R -2 holding shares in equal ratio. The said company being a closely held private limited company did some business initially but remained defunct for over two decades. Consequently, taking into account that Radhika Steel (P.) Ltd. had not done business up to the mark, and that Geotrackers Mobile Resource Management ('MRM') Solutions, a sole proprietorship concern of R -5 was doing business in the field of software concerning location tracking solution for vehicles it was decided in the extraordinary general meeting ('EGM') held on 2nd April, 2008 to change the name and business line of Radhika Steel (P.) Ltd. into a company dealing with the above software. It is also not in dispute that the above sole proprietorship concern was the brainchild and creation solely of R -5 who had registered its domain name, i.e., www.geotrackers.com as early as on 4th September, 2000. The registered office of the company continued at B -498, New Friends Colony, New Delhi -110065, i.e., in other words the registered office of the company was not changed and continued at the same place. Admittedly, the petitioners and the respondents shared a common residence, common kitchen and the same office premises. It is also admitted that the petitioners, not having any technical expertise to carry the new business of the company, had agreed to induct Ajay Kumar Mittal (R -7) and Madhavi S. Bodhe (R -8) as executive directors of the company for remuneration on 1st July, 2008. Luv Jain (R -5), the owner of the erstwhile sole proprietorship concern MRM Solutions and the brain behind its creation was also appointed as the executive director of the company for remuneration on 14th July, 2008. On incorporation of the company there was no change in the authorised share capital in Radhika Steel (P.) Ltd., i.e., Rs. 5 lakh divided into 4,000 equity shares of Rs. 100 each and 1,000 preference shares of Rs. 100 each and the paid -up capital of Rs. 1,00,000.

(3.) THE petitioners have in the present petition alleged that the company was incorporated as a quasi -partnership giving rise to a legitimate expectation for the petitioners of having an equal share in equity and management of the company. Following acts of mismanagement and oppression are alleged against respondents: (a) Increase in the authorised share capital of the company from Rs. 5 lakh to Rs. 20 lakh divided into 19,000 equity shares of Rs. 100 each and 1,000 preference shares of Rs. 100 each in the EGM dated 15th November, 2010 conducted without notice to the petitioner group. (b) Increase in the paid -up share capital of the company from Rs. 5 lakh to Rs. 7.24 lakh divided into 6,240 shares of Rs. 100 each and 1,000 preference shares of Rs. 100 each without notice to the petitioners on 25th November, 2010. (c) Illegal allotment of 2,240 equity shares of Rs. 100 to R -7 (Ajay Mittal) without notice to the petitioners on 25th November, 2010 thereby reducing the share of petitioners from 48.58 percent to 33.54 percent. (d) Further increase in the paid -up share capital of the company to Rs. 8.34 lakh divided into 7,340 shares of Rs. 100 each and 1,000 preference shares of Rs. 100 each without notice to the petitioners on 25th November, 2010. (e) Illegal allotment of 1,100 equity shares of Rs. 100 to R -8 on 18th July, 2011 without convening Board meeting in accordance with law thereby further reducing the share of the petitioners from 33.54 percent to 29.12 percent. (f) Diversion of finance of the company in a systematic manner to MRM Solutions (P.) Ltd., the company owned and promoted by R -5 and R -7. (g) Taking on lease a house for personal use by R -5 from the rent paid by the company. (h) Restricting receipt of letters by petitioners at the registered office of the company. (i) Drawing of exorbitant salaries by R -7 and R -8 for the technical expertise provided by them to the company and also by R -5 while no salary was being paid to P -1 and P -4, and lastly. (j) Hacking of E -mail account of P -4 by R -5.;

 

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