158 SEBI & Corporate Laws - Reports [Vol. 154
Mr.
Misra
argued
that
the
High
Court
has
erred
in
relying
on
decisions
of
this^
Court
in
interim
injunction
matters
which
did
not
decide
finally
the
rights
of^
parties.
Suit
is
still
pending.
He
urged
that
it
is
well
settled
by
this
Court
inState of Assam
v. Barak Upatyaka D.U. Karamchari Sanstha
( 2009 )
5
SCC
694
that^
any
interim
order
which
does
not
finally
and
conclusively
decide
an
issue
cannot^
be
a
precedent.It
was
urged
that
admittedly,
there
was
no
financial
mismanagement
in^
the
affairs
of
HQRL
by
appellants
or
R.P.
Mittal
group.
The
High
Court
while^
passing
the
impugned
judgment
has
acted
as
a
Civil
Court
and
not
as
Company^
Court
under
section
10 F
of
the
Companies
Act,
1956.
The
test
as
to^
whether
an
action
is
oppressive
or
not
is
not
based
on
whether
it
is
legally
permissible^
or
not
since
even
if
legally
permissible,
if
the
action
is
otherwise
against^
probity,
good
conduct
or
is
burdensome,
harsh
or
wrong
or
is
mala
fide
or
for
collateral
purpose,
it
would
amount
to
oppression
under
section
397.^
Reliance
has
also
been
placed
on
Needle Industries(
India)
Ltd.v. Needle
Industries Newey
(
India)
Holding Ltd.[ 1981 ]
3
SCC
333 ;
Sangran Sinh P. Gae-
kwad
v. Shantadevi P. Gaekwad
[ 2005 ]
57
SCL
476
(SC)
and
V.S. Krishnanv
.
Westfort Hi-tech Hospital Ltd.
[ 2008 ]
83
SCL
44
(SC).Shri
Misra,
learned
senior
counsel
further
urged
that
no
oppression
was
caused^
to
Mr.
Ashok
Mittal
by
allotment
of
shares
on
27. 7. 2004 ,
7. 1. 2005
and
allotment/transfer^
of
shares
on
10. 5. 2005
to
majority
shareholders
having
99. 97 %^
equity.
It
was
further
submitted
that
there
could
not
be
any
oppression
caused^
to
Mr.
Ashok
Mittal
by
inter setransfer
of
shares
from
Moral
to
Mr.
R.P.
Mittal^
as
the
said
transaction
was
between
Moral
and
Mr.
R.P.
Mittal,
whereby
HQRL^
only
records
the
transfer.
The
argument
on
behalf
of
Mr.
Ashok
Mittal
and^
Hillcrest
that
the
allotment
was
done
at
undervalue
was
also
not
correct.
The^
transfer
of
shares
from
Moral
to
Mr.
R.P.
Mittal
on
10. 5. 2005
was
between
two^
separate
legal
entities
i.e.
Moral
and
Mr.
R.P.
Mittal,
whereby
HQRL
only
had^
the
authority
to
record
transfer.
HQRL
could
not
have
raised
any
objec
tion -
and
also
Hillcrest
would
have
no
locus
to
challenge
the
same.
The
only
issue^
quaHillcrest
is
when
it
was
entitled
to
vote
on
every
resolution
placed
before^
the
company
in
terms
of
Section
87 ( 2 )(
b)
of
the
Companies
Act.
It
was
submitted^
that
the
first
allotment
made
to
Hillcrest
was
on
5. 5. 2003
hence
as
per^
the
submissions
of
Hillcrest,
two
years
period
in
terms
of
Section
87 ( 2 )
(
b)
of
the
Companies
Act,
came
to
an
end
on
5. 5. 2005
and
as
per
Hillcrest,
if
the^
dividend
was
not
paid
for
2
years,
whether
there
is
profit
or
not,
Hillcrest
were^
entitled
to
vote
on
resolution
dated
10. 5. 2005
effecting
transfer
is
not
correct^
proposition
of
law.
Section
205
of
the
Companies
Act
provides
that
no
dividend^
shall
be
declared
or
paid
by
a
company
for
any
financial
year
except
out^
of
the
profits
of
the
company
for
that
year
arrived
at
after
providing
for
depreciation^
in
accordance
with
the
provisions
of
sub-section.It
was
urged
that
the
position
of
shareholders
in
a
company
is
of
analogous
to^
that
of
partners
inter se.
Partnership
is
merely
an
association
of
persons
for^
carrying
on
the
business
of
partnership
and
in
law
the
firm
name
is
a