Vipulkumar Dahyalal Bheda v. V.S. Cosmopharma (P) Ltd. & Ors.

COMPANIES ACT, 1956

--Oppression and mismanagement--Appeal against non-maintainability of petitionFailed to consider member of company--Initial subscriber of memorandum of association of company as per section 41--Where shareholder filed petition under sections 397, 398 and 111, for relief of rectification of register of members and for setting aside his removal as a director of the company and the same was rejected by CLB on the ground that he was not a member of the company, but the CLB failed to consider the facts that the shareholder was promoter of the company and an initial subscriber of memorandum of association of the company, therefore, as per section 41, the shareholder was deemed to be a member of the company and entitled to file the petition. --Petitioner was shareholder of the company. He filed a petition under sections 397, 398, 111 and prayed for relief of rectification of Register of Members and for setting aside his removal as a director of the company without following due procedure, but CLB rejected the petition on the ground that except proof of the fact that the shareholder's name appeared in memorandum and articles of association, there was no other documentary proof to establish that he was a member of the company. Further that, as per contention of the company that the shareholder had not paid subscription amount to the company. Therefore, he filed an appeal against rejection of the petition.Held: Shareholder was one of three promoters of the company and an initial subscriber to the memorandum of association of the company. Therefore, in accordance with section 41, as an initial subscriber to the memorandum, the shareholder was deemed to be a member of the company. Further that, the shareholder had furnished a bank slip, which proved that the shareholder had spent considerable personal funds for incorporating the company. Therefore the act of usurpation of his shares in favour of another person and his removal as director was unjust. It was clear that the shareholder had paid the amount out of own funds as a subscriber to the memorandum of articles. Evidence of such payments was on record. Thus, taking into consideration all the facts on record, the CLB therefore clearly felt in error to non-suit the shareholder. Finding of the CLB that the shareholder did not fulfil the mandatory requirement under section 399 and was therefore not qualified to file a petition was contrary to the facts on record. Hence, the order passed by the CLB was to be set aside and the proceedings before the CLB stood revived for further disposal in accordance with law.