1. The applicants are the respondents in the above C.P The present application is filed by them seeking directions from this Bench to allow the applicant company to infuse funds by way of increase in paid up capital by issue and allotment of shares to the members in proportion to their shareholding. Shri Jagtiani, Learned Counsel for the applicants submitted that this Bench vide its order dated 20 April, 2010 ordered to maintain status quo of the shareholding pattern of the Company as on that date. The Company is involved in the business of real estate and construction which requires liquidity of funds for immediate working capital, repayment of loans and interest and other taxes, charges, payments to contractors and advances for construction materials. The need for infusion of funds required for the aforementioned reasons and facts. The Company requires approximately 7,600 lacs for various payments. The details of requirements have been given in para 6 of the application. In view of the requirement of funds, the Learned Counsel prayed this Bench to allow the applicants for infusion of funds by modifying the interim order of this Bench. In support of the contention, relied upon decisions of the Apex Court:
i) AIR 1950 SC 172 In the matter of Nanalal Zaver v. Bombay Life Assurance Company Limited.
ii) (2005) 11 SCC 314 : AIR 2005 SC 809. In the matter of Sangram Sinh P. Gaekwad v. Shantadevi P. Gaekwad. It is held “the directors have a power to issue additional capital shares and in the process may obtain some pecuniary gain but only when such pecuniary gain is obtained through ulterior motive, they would be answerable to the shareholders.”
2. The respondent/petitioner has filed a detailed counter opposing the reliefs prayed in the application. It is submitted that the present application is filed to modify the order is malafide, an attempt to render the CP as in fructuous. The petitioner filed the CP challenging the allotment of shares made on 31.1.2009, 31.3.2010 and 5.4.2010 Since the CP is filed challenging the illegal allotments and this Bench to protect the interest of the petitioner passed order of status quo. The shareholding of the petitioner has been drastically reduced from 30% by the above illegal allotment. The petitioner was 30% shareholder and the remaining respondents hold 70%. The Company runs on the basis of principles of quasi partnership. The Learned Counsel submitted that the figures which were given by the Company are not correct. The sole intention of the respondents is to dilute the shareholding of the petitioner in furtherance and thereby prejudice her interest. The Learned Counsel has narrated various instances to disprove the claim of the applicants for infusion of further funds. The petitioner was willing to contribute 30% for minimum work for extended application of basement permitted to be commenced due to the aforesaid commencement certificate being re-endorsed as per amended plan dated 17.5.2010 It is submitted that once the construction of basement is completed in accordance with the commencement certificate, the Company would be entitled to receive commencement certificate upto 1 FSI i.e 29,282 sq.ft carpet area, the same would generate huge income for the Company by way of capital. The Learned Counsel relied upon a decision of the AP High Court reported in (1992) 75 Comp. Cases page 417. It was held “the respondents 3 & 4 have abused the fiduciary powers as directors in gaining control of the company and the affairs of the Company are being conducted in a manner oppressive to the shareholders like the petitioners. The change in the pattern of shareholding and the subsequent changes in the Board of Directors will prejudicially affect the interest of these shareholders.
3. The petitioner has filed the above Company Petition inter alia praying various reliefs and challenging the purported allotment of shares to the respondents. The petition is pending for adjudication. The stand of the petitioner that she holds 30% of the shareholding of the Company and her shareholding was diluted drastically by illegal allotment to the respondents. This Bench vide its order dated 20.4.2010 ordered to maintain the status quo of the shareholding pattern of the Company. The present application is filed to allow the Company to infuse funds for various requirements as detailed out in the application by way of increase in paid up share capital. Admittedly the Company is in the business of construction. The requirement of funds is the business and financial affairs of the Company. Prima facie this Bench will not interfere in its business affairs, unless and until it affects the rights of the parties and prejudice the interest of the members and shareholde Rs. In the present case the petitioner is challenging the further allotment shares. When the prime issue is pending for adjudication, it would be prejudicial to the rights of the petitioner if this Bench allows the respondents to raise the capital and allotment shares without protecting the interest of the petitioner. Without going into the other aspects, I am of the firm opinion, that the interest of the petitioner must be protected. The Learned Counsel for the petitioner expressed the apprehension if the Company increases its capital by way of allotment of shares the petitioner's shareholding would be further diluted. I find substantial force in the submission and apprehension of the Learned Counsel for the petitioner. Any further allotment of shares on proportionate basis, taking into account the present shareholding of the petitioner when the previous allotments are under challenge, such allotment would definitely prejudice the interest of the petitioner. The allotment of shares should not be made only to deprive the members those who may not be able to subscribe for want of huge funds. Since the business and financial affairs of the Company are paramount interest, any stagnation in incoming funds, the affairs of the Company would suffer. To avoid such situation I hereby allow the applicant Company to raise its capital by way of further allotment of shares. However, the Company shall allot 30% of its shares to the original petitioner. Upon allotment the petitioner may subscribe to the shares. In case the petitioner failed to subscribe for want of funds, the shares shall be kept for her/petitioner and should not be allotted to anybody till the outcome of the petition. The increase of capital and allotment of shares are subject to the outcome of the petition. The Respondents shall maintain separate statement accounts in respect of the allotment money received and furnish the monthly utilization statement before the Bench. The Company shall utilize the rights issue only for the on going construction work of the Company.
With the above directions the CA is disposed off.