Tin Plate Dealers Assn. (P) Ltd. v. Satish Chandra Sanwalka:

 The Company Law Board (CLB) by an elaborate order overruled the objections raised by the Gupta Group to the maintainability of the petition. The CLB concluded that the shares held by the members of the Sanwalka Group were in their own right, independent of any right of M/s Gupta Brothers all of which stood extinguished upon forfeiture of the shares held by the said Gupta Brothers. The CLB further held that under Article 18 of the articles of association of the company, it is M/s Gupta Brothers who were liable to pay the dues, if any, on the said forfeited shares. The Board also found that the members of the Sanwalka Group had paid Rs 45 per share and though there was an obligation to pay the balance on a call being made the materials on record did not disclose that any such call was made at any point of time. In this regard the notice dated 5-1-1991 was held by the CLB not to be duly proved to have been issued following the procedure under Section 53 of the Act. It was also held that the said notice did not contemplate forfeiture of the shares in the event of failure to pay the call money as required under Clause 14 of the articles of association of the company. On the basis of the said findings the twin objections raised by the Gupta Group to the maintainability of the company petition were held against them.

 The CLB by its order dated 1-3-2001 further held that the issue of bonus shares against revaluation reserve was contrary to the provisions of Article 96 of Table A of the 1956 Act. So far as the issue of 25,000 ordinary equity shares is concerned, the CLB decided the issue in favour of the Gupta Group. However, as the members of the Sanwalka Group continued to be members of the company, it was held that proportionate allotment of the said equity shares should have been made to them also. The removal of the two representatives of the Sanwalka Group from the Board was also held to be bad on the aforesaid count. Of particular significance would be the finding of the Board that notice of the EOGM held on 5-7-1994 in which decision was taken to raise the share capital of the company was, admittedly, not given to the Sanwalka Group though they were entitled to such notice. Insofar as correctness of the issue of 3065 ordinary equity shares against the preference shares is concerned, the Company Law Board felt that it would be inappropriate to go into the said question as a related issue was pending before the Delhi High Court with regard to the very same preference shares. In fact, the issue before the High Court involved the question as to whether the said shares did exist at all or stood extinguished prior to the date of conversion. Insofar as the lease of the industrial plot is concerned, the CLB felt that the same should be left open for an appropriate decision of the company in a General Body Meeting to be held on the basis of the revised shareholding as ordered by the CLB.

Specifically, so far as the issue of bonus shares is concerned, the arguments laid down before us would require a consideration whether Section 205(3) of the Act, particularly, the proviso thereto permits issue of bonus shares out of revaluation reserves of a company.

The Civil Appeal filed by the Gupta Group is dismissed whereas Civil Appeal filed by the Sanwalka Group is disposed of with directions, as contained in the present order.