2019] 149
10
lakh
equity
shares
to
the
respondent
No. 4
‘P’.
Further,
HQRL
registered
transfer^
by
Moral
of
32 , 88 , 181
equity
shares
in
favour
of
‘R’.
n
On
22 - 8 - 2005
Hillcrest
and
‘A’
filed
a
petition
in
the
Principal
Bench
of
the
Company^
Law
Board
at
Delhi
and
under
sections
397
and
398
alleging
oppression^
and
mismanagement
of
HQRL
by
the
‘R’
group.
The
resolution
passed^
in
board
meetings
regarding
allotment/transfer
of
shares
was
also
challenged^
amongst
others
on
the
ground
that
no
notice
had
been
issued
to^
‘A’
who
was,
at
the
material
time,
a
Director.n
On
31 - 1 - 2006
company
petition
was
dismissed,
inter alia,
on
the
ground
that
it^
was
a
mala fidepetition
by
Hillcrest
and
‘A’
to
take
over
the
company.n
The
High
Court
by
the
impugned
order
allowed
CoA
of
Hillcrest
and
can
celled -
the
allotment
and
transfers
made
on
27 - 7 - 2004 ,
7 - 1 - 2005
and
10 - 5 -
2005
on
the
grounds
that
Hillcrest
had
voting
rights
and
there
was
breach
of^
sections
286 ,
300
and
108.n
On
appeal
to
the
Supreme
Court:HELD
n
It
has
not
been
disputed
that
no
notice
under
section
286
had
been
given
to^
‘A’,
the
director
when
impugned
resolutions
were
passed.
[Para
74 ]n
It
was
improper
for
the
directors
to
allot
shares
to
themselves
and
to
the
exclusion^
of
‘A’
in
the
facts
and
circumstances
of
the
case
and
that
too
without^
issuance
of
notice
to
him.
[Para
81 ]n
It
was
also
submitted
that
Hillcrest
would
have
no
right
to
vote
as
no
divi
dend -
was
declared
in
view
of
the
provisions
contained
in
section
87
.
[Para
82 ]^n
Section
19 ( 2 )
provides
that
nothing
in
sections
85
to
89
shall
apply
to
a
private
company^
unless
it
is
a
subsidiary
of
a
public
company
and
this
question
has^
to
be
finally
decided
whether
it
is
a
private
or
public
limited
company
in^
the
pending
civil
suit
which
have
been
stated
to
be
transferred
to
NCLT
for^
decision
in
accordance
with
law.
Otherwise,
section
87
provides
that
notice^
has
to
be
issued
to
preference
shareholders
also
for
the
meeting
and
they^
have
a
right
to
participate
in
the
meeting.
It
appears
prima facieeven
if
dividend^
has
not
been
declared.
In
that
case
also,
preference
shareholders
shall^
have
a
right
to
vote
in
the
meeting.
[Para
83 ]n
It
was
also
submitted
that
there
is
violation
of
section
108
.
It
was
submitted
on^
behalf
of
Hillcrest
that
the
board
meeting
was
held
on
10 - 5 - 2005
in
which
32 , 88 , 181
shares
of
HQRL
were
purportedly
transferred
by
Moral
to
‘R’.
Out
of^
32 , 88 , 181
shares,
8 , 98 , 166
shares
were
lying
with
the
Overseas
Bank
and
were^
available
before
the
Board
of
HQRL
for
recording
of
transfer.
Shares
can^
be
transferred
only
in
accordance
with
section
108
of
the
Companies
Act^
which
provides
for
filing
of
the
share
certificate
which
was
a
mandatory
requirement^
[Para
86 ]Ram Parshotam Mittal
v.
Hotel Queen Road (P.) Ltd. (SC)