Where
respondent group on basis of a disputed MOU with appellant group had held board
meeting, issued duplicate shares and transferred shareholding of appellant
group in its favour at valuation which was not acceptable to appellant group,
action of respondent group was a clear calculated act of grossest oppression
INTRODUCTION
3. The dispute pertains to the control and management of M/s.
SAF Yeast Company Pvt. Ltd. (hereinafter referred to as SAF Yeast), a Private
Limited Company, having registered office at 419, Swastik Chambers, Chembur,
Mumbai. SAF Yeast has one plant in Chiplun, Maharashtra and another at
Sandhila, Uttar Pradesh. SAF Yeast is a joint venture company. The joint
venture is between Nafan B.V. and Mr.Arunachalam Muthu and M/s.Helios Food
Additives Pvt. Ltd. SAF Yeast carries on business of manufacture of yeast and
is a dealer and exporter in the yeast products, bread, bread-improvers, their
derivatives, and allied products. The authorized share capital < of SAF
Yeast originally was 225,00,000/- divided by 25000 equity ,shares of 2100/-
(each). The authorized share capital was increased from time to time and at the
time of filing of the Company Petition, the authorized share capital of SAF
Yeast was Z3 crores (Rupees three crores only) divided by 300000 equity shares
of 2100/- (each). The approximate value and paid up capital of SAF Yeast at the
relevant time was 21,58,37,500/- comprising of equity shares of 2100/- each.
4. The shareholding of SAF Yeast is as follows: Nafan B.V.
owns 80,772 equity shares, approximately constituting 51% of the total>
shareholding. Mr.Arunachalam Muthu holds 16,800 equity shares constituting
approximately 10.607% of the total shareholding. Mr.A.M. Arunachalam holds
10396 equity shares constituting approximately 6.56% of the total shareholding.
Mr.A.M. Muthiah holds 10397 equity shares, constituting approximately 6.57% of
total shareholding. Mr.TNM Arunachalam, who passed away during the proceedings,
held 1,800 equity shares constituting 1.13% of total shareholding. Helios Food
Additives Pvt. Ltd. holds 38010 equity shares constituting approximately 24% of
total equity share capital. Mr.B.B. Pay Master, who is no more, held nominal
200 equity shares of SAF Yeast.
5. Nafan B.V. (referred to as Nafan) is a Company
incorporated under the laws of Netherlands, having its registered office at
Loatellikade I-Parnassustoren — 1076 AZ Amsterdem. Nafan is subsidiary of
Lesaffre Et Cie (referred to as Lesaffre); a Company ,incorporated in France
having its Principal Office at 137 Rue Gabriel, Pefi, 59700 NACQ-EN-BAROEUL,
France. Nafan, at the relevant time, had four nominee directors on the Board of
Directors of SAF Yeast. They were Mr.Denis Lesaffre, Mr.Moris Lesaffre,
Mr.Alain Laloum, and Ms. Corinne Wisniewski. Mr.Arunachalam Muthu (referred to
as Muthu) worked for Shaw Wallace & Co. from 1965 to 1980. He was working
as a Senior Manager in yeast and brewery division in Shaw Wallace & Co. He
was involved in setting up a yeast factory and a plant at Uran, Maharashtra.
A.M. Arunachalam is the son of Muthu. A.M. Muthiah is the second son> of
Muthu. M/s. Helios Food Additives Pvt. Ltd. is owned and-controlled by Muthu
and his family members. Arunachalam Muthu, when referred to individually, is
referred as Muthu. When Arunachalam Muthu, his two sons and Helios Food
Additives Pvt. Ltd. are referred together, they are referred as the Muthu
Group. M/s. Sharp & Tannan are Chartered Accountants, having its office at
Ravindra Annexe, 194, Churchgate Reclamation, Dinshaw Vaccha Road, Mumbai — 400
020. M/s. Sharp & Tannan are the statutory auditors of SAF Yeast.
HELD:
A. The declaration by the Board that the MOU dated 23 January
2009 is valid, effective and enforceable document and the terms thereof are
binding upon the Petitioner and Lesaffre Group, is quashed and set aside in
light of what is observed above.
B. The declaration by the Board that the Valuation Report prepared
by Sharp and Tannan is biased, partial and in contravention of the statutory
guidelines and rules to carry out the valuation of shares of a going concern
and the direction to set it aside, is confirmed.
C. i) The declaration by the Board that the Board Meeting
held on 29 January 2009 is invalid and illegal, is confirmed.
ii) The declaration that the Resolutions passed in the Board
Meeting held on 29 January 2009 are not oppressive, is quashed' and set aside.
iii) It is declared that the Resolutions passed in the Board
Meeting held on 29 January 2009, are oppressive.
D. i) The declaration by the Board that the Board Meetings
held on 23 May 2009 and 25 May 2009 are non-est, illegal and void, is
confirmed.
ii) The direction by the Board that the Resolutions passed in
both these meetings are set aside being illegal and oppressive to the Nafan and
Lasaffre, is confirmed.
E. The directions by the Board setting aside the transfer of
shares in favour of the A.M.Muthiah and canceling the duplicate shares issued
in favour of the A.M.Muthiah, are confirmed.
F. The direction by the Board that the shareholding of Nafan
\—'and Lasaffre stands restored, is confirmed.
G. The direction by the Board to Muthu Group to rectify the
Register of Members of the SAF Yeast as per law, is confirmed
H. The direction by the Board to Nafan and Lasaffre to
transfer the 80,722 shares held by them to the Muthu Group proportionately to
their respective shareholdings, is quashed and set aside. I. If within six
weeks from today Muthu group withdraws the- civil suit and associated
proceedings filed by them and files an undertaking on affidavit in the registry
of this court that they will not take any proceedings on the basis of the MOU
in question, then Part-I of this order will come in operation. If the above
mentioned steps are not taken by Muthu Group within the stipulated period as
above, Part-II of the order will come into effect forthwith and prayer clause
(a) sought for by Nafan in its company petition will stand granted on the terms
mentioned in Part II.
J. Interim orders operating in these appeals shall continue
for period of six weeks from today.
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