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ISSUE OF SHARES
Remedies for oppression and mismanagement Needle Industries (India) Ltd. vs. Needle Industries Newey (India) Holding Ltd. (1981) Sections 3, 43A and 81 of Companies Act, 1956 Facts-
- Needle Industries India was^ incorporated in 1949 as a private company.
- It was held by 2 groups, the majority (60%) located in U.K. and the minority (40%) in India.
- In 1973, FERA Regulations came in which brought a ceiling limit of 40% shareholding by non-residents in Indian Companies. Needle Industries were thus required to reduce its non-resident holding from 60% to 40% as put forth by the RBI for it to continue carrying on business.
- The Indian shareholding group led by Mr. D tried to negotiate with the non-resident shareholders to transfer the excess shares to the Indian shareholders. But none of the negotiations materialized.
- This forced Mr. D to issue rights issue without informing the non-resident holders in time about the same. Therefore, the entire issue was subscribed by the Indian holders thereby raising their stake to 60% and reducing the non-resident holding to 40%. Issue- Whether the act of Mr. D of performing Rights Issue without properly informing the non-resident shareholders, amounted to oppression and mismanagement? Observation:
- 16 days time given to members and 4 days to holding company. Received it on the last day and could not
attend the meeting and exercise their option of rights issue
- Held: offer of rights issue and issue thereof to Indian shareholders did not constitute oppression.
Acceptance of rights issue by holding company would have taken it beyond 40%. Indian shareholders- took rights shares at par when the value of those shares was much above par- asked to pay the difference in order to nullify unjust enrichment. Discussion and Holding:
- On a true construction of Section 397, an unwise, inefficient or careless conduct of a Director in the
performance of his duties cannot give rise to a claim for relief under that section. The person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes prejudice to him in the exercise of his legal and proprietary rights as shareholder.
- The 'words' just and equitable' are a recognition of the fact that a limited company is more than a mere
legal entity, with a personality in law of its own; and that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. Clause under Section 397(2)(b) In Punt v. Symons it was held that : Where shares had been issued by the Directors, not for the general benefit of the company, but for the purpose of controlling the holders of the greater number of shares by obtaining a majority of voting power, they ought to be restrained from holding the meeting at which the votes of the new shareholders were to have been used. In the instant case, the issue of rights shares was made by the Directors for the purpose of complying with the requirements of FERA and the directives issued by the Reserve Bank under that Act. The Reserve Bank had fixed a deadline and NIIL had committed itself to complying with the Bank’s directive before that deadline.
- Unless a majority in a company is acting oppressively towards the minority, this Court should not and will
not itself interfere with the exercise by the majority of its constitutional rights or embark upon an inquiry into the respective merits of the views held or policies favoured by the majority and the minority.
- The Court pointed out that the directors of a company must exercise their powers for the benefit of the
company. The directors are in a fiduciary position and if they does not exercise powers for the benefit of the company but simply and solely for personal aggrandisement and to the detriment of the company, the court will interfere and prevent the directors from doing so.
Applying this principle, it seems to us difficult to hold that by the issue of rights shares the Directors of NIIL interfered in any manner with the legal rights of the majority. The majority had to disinvest or else to submit to the issue of rights shares in order to comply with the statutory requirement of FERA arid the Reserve Bank’s directives. Having chosen not to disinvest, an option which was open to them, they did not any longer possess the legal right to insist that the Directors shall not issue the rights shares. What the Directors did was clearly in the larger interests of the Company and in obedience to their duty to comply with the law of the land.
- The power to issue shares need not be used only when there is a need to raise additional capital. The
power can be used to create a sufficient number of shareholders to enable a company to exercise statutory powers or to enable it to comply with statutory requirements.
ISSUE OF CAPITAL
Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India Section 67, Section 60B(9), Section 73 PUBLIC OFFER/PRIVATE PLACEMENT
- Two unlisted companies belonging to the Sahara Group of Companies - Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL), sought to raise funds by issuing optional fully convertible debentures (OFCDs) on a private placement basis.
- The Red Herring prospectus filed by Sahara companies provided that the Sahara companies^ did not intend to list these securities on any recognized stock exchange.
- Further, the Red Herring Prospectus provided that only those persons to whom the information memorandum was distributed and/or friends, associated group companies, workers/employees and other individuals associated with Sahara Group were eligible to apply for the issue of these OFCDs.
- Since the OFCDs were not intended to be listed, it was the opinion of the Sahara companies that the prospectus would only be required to be filed before the Registrar of Companies and not the Securities and Exchange Board of India.
- The^ information memorandum, as a pre-cursor to the prospectus, was issued through approximately a million agents and three thousand branch offices to more than thirty million persons, inviting them to subscribe to the OFCD.
- The^ SEBI was of the opinion that this amounted to a public offer^ and took cognizance of the distribution of the information memorandum while processing the draft Red Herring Prospectus (DRHP) submitted by Sahara Prime City Limited, another Sahara group company, for its initial public offering.
- At the time,^ Sahara Prime City Limited had sought to raise up to INR 30 billion through the IPO^ in order to raise funds for its various housing projects across the country.
- As part of its draft red herring prospectus, it was required to disclose fundraising details of its group companies. Upon the issue and notification of the draft red herring prospectus, SEBI invited comments and objections from the general public.
- Complaints were received. These complaints alleged that SIRECL and SHICL were issuing convertible bonds to the public throughout the country for many months and the same was not disclosed in the Sahara Prime City Limited draft Red Herring Prospectus.
- In spite of SEBI seeking clarifications on the issue of the OFCDs from the Sahara companies on a number of occasions, the Sahara companies did not furnish the details sought by SEBI.
- There evidently seemed to be reluctance on the part of the companies in providing the relevant details as sought by SEBI, which would enable SEBI to decide whether the OFCD issuances made by them are in compliance with the relevant provisions of the Act and applicable laws administered by SEBI.
- Eventually, SEBI initiated an investigation and passed a final order on June 23, 2011. SEBI concluded that neither SIRECL nor SHICL had issued OFCDs by way of “private placement” and that the issue of the OFCDs did in fact, amount to a public issue, over which SEBI would have jurisdiction. The Sahara companies appealed first before the Securities Appellate Tribunal, and when the appeal was dismissed, to the Supreme Court of India. Issues: Whether the optional fully convertible debentures issued by SIRECL and SHICL were by way of “private placement”- as claimed by the Sahara Companies on appeal, or by way of an invitation “to the public” - as counter claimed by the SEBI? Arguments on behalf of Sahara:
at a proper time for setting aside an allotment or a purchase of share, would in my opinion form no ground for an action in the nature of an action for misrepresentation .’
• For misrepresentation, there must be some active misstatement of fact, or, at all events, such a partial and
fragmentary statement of fact, as that the withholding of that which is not stated makes that which is stated absolutely false. Derry v. Peek (1889) PROSPECTUS and misrepresentation Indian counterpart: Section 34. Higher standard.
- By a special Act, the Plymouth, Devonport and District Tramways Company was authorized to make certain tramways.
- The carriages used on the tramways might be moved by animal power and, with the consent of the Board of Trade, by steam or any mechanical power for fixed periods and subject to the regulations of the Board.
- The appellants, as directors of the company, issued a prospectus containing the following paragraph:-- "One great feature of this undertaking, to which considerable importance should be attached, is, that by the special Act of Parliament obtained, the company has the right to use steam or mechanical motive power, instead of horses, and it is fully expected that by means of this a considerable saving will result in the working expenses of the line as compared with other tramways worked by horses."
- Soon after the issue of the prospectus the respondent, relying, as he alleged, upon^ the representations in this paragraph and believing that the company had an absolute right to use steam and other mechanical power, applied for and obtained shares in the company.
- The company proceeded to make tramways, but the Board of Trade refused to consent to the use of steam or mechanical power except on certain portions of the tramways.
- In the result the company was wound up, and the respondent in 1885 brought an action of deceit against the appellants claiming damages for the fraudulent misrepresentations of the defendants whereby the plaintiff was induced to take shares in the company. Action failed- not proved that director lacked honest belief in what he said. Not in his control, no intent to defraud. Held:
- To support an action of deceit it always was necessary at common law to prove fraud, i.e., that the thing
was done fraudulently. Fraud never has been and never will be exhaustively defined, the forms which deceit may take being so many and various.
- Once establish that a man honestly intended to do his duty, the consequences cannot turn his words or acts
into a fraud. The failure to meet obligations is not fraud.
- In an action of deceit the plaintiff must prove actual fraud. Fraud is proved when it is shewn that a false
representation has been made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false. Held that the defendants were not liable, the statement as to steam power having been made by them in the honest belief that it was true. Honest belief even if not reasonable to do so. In india, there is a higher standard. Indian proviso to Section 34 — REASONABLE GROUNDS TO BELIEVE. Sundaram Finance Service & Ltd. v. Grandtrust Finance Ltd. (2003 Madras HC) Section 68 and 268 of the Companies Act and Sections 409, 420 and 120-B of Indian Penal Code Facts:
- The Petitioner was the Sponsor for a company, Vishnu Forge Industries.
- Sponsorship Agreement stated that Sundaram shall be the Sponsor and shall arrange to offer the Equity Shares for sale to the public and to get them listed at the Over the Counter Exchange of India (OTCEI).
- To expand their business operations, Forge required finance and for this, it along with Sundaram approached and induced the D to subscribe for shares.
- Accordingly, the D believing their representation to be true subscribed for 50,000 equity shares of face value Rs. 10 each with a premium of Rs. 6/- for each share.
- It was also represented to the complainant that there is a possibility of the shares being sold for a price not less than Rs.25/- per share, as Vishnu Forge was going public.
- Cheque of Rs. 8,00,000/- was issued. It is on the basis of this representation that the complainant purchased the shares.
- Sundaram + Forge entered into an agreement with the complainant and other Co-investors.
- Clause 15 of the this Agreement stated: The sponsor shall arrange to offer the Equity Shares for sale to the public not later than April 30, 1996, to get them listed at the OTCEI, on such terms and conditions as may be decided by the Sponsor in its absolute discretion.
- Amendment to the Sponsorship Agreement was not disclosed to the investors. The amendment stated ‘The sponsor shall arrange to offer the shares for sale to the public and to get them listed at the OTCEI, or any other stock exchange on such terms, conditions and at such time as may be decided by the sponsor in its discretion’. Therefore, the complainant is said to have been mislead. Arguments:
- The counsel for the petitioner argued that the entire transaction would be a civil consequence and that it is only a breach of agreement, for which the remedy is only in the civil court and the parties cannot seek their vengeance through the Criminal Courts.
- Argued that there was no element of cheating. Held:
- The court must be satisfied to hold that there was^ deception at the time of representation. But that cannot be judged only on the basis of the earliest representation alone. The court reiterated that a person would never at the first instance itself come forward with any misstatements, as that will deter the person from falling into the trap.
- When the case is where the chain of events have to be taken into consideration,^ the court cannot take into consideration the earliest document alone and come to a conclusion that there was an element of cheating at the time of representation. The subsequent documents which has been entered into especially the two documents in the form of agreements. This obviously, is to drag on the process of bringing the shares for sale and admittedly, it transpires that the shares have not yet been brought for sale.
- The court also citied Hridaya Ranjan Prasad Verma Vs. State of Bihar (2000 (4) SCC 168), wherein their Lordships have held that the intention of the accused depends upon the inducement , which may be judged by his subsequent conduct also. The facts of this case reveals that there are chain of events taking place from the year 1995 to April 1996 and consequently, the court finds that there is sufficient ground for the Magistrate to take cognizance of the offence as against the accused. Shiromani Sugar Mills Ltd v. Debi Prasad (1950 Allahabad HC) Rescission for misrepresentation and unexplained delay
- The^ Company which was a public limited Company was formed with a large number of objects, the first and most important object being : "to manufacture in India or abroad all kinds of sugar by up-to-date and latest scientific method and machinery, and for this purpose to erect and construct a factory or factories at one or several places in or outside India.”
- It was incorporated on 7th November 1933 on which date the Memorandum of Association and the Articles of Association were registered with the Registrar, Joint Stock Companies.
- Prospectus was published on 16th October 1933 and was registered with the Registrar on 26th February
- 24th November 1933,^ meeting with Promoters and Directors elected.
- In the present case, the shares were allotted to the opposite parties in 1934 and they have allowed their names to remain in the register of shareholders. Held:
- A shareholder desiring to rescind his contract to purchase shares on the ground of mis-representation must
allege such misrepresentation and prove that it was in regard to definite facts, and that it induced him to enter into the contract.
- Whole Time Member of SEBI had examined all facts and rightly concluded that dealings of Respondents were in violation of Act as well as Regulations.
- It was open to Tribunal to re-appreciate evidence after looking at facts of case but upon perusal, no finding was found to the effect that arrived at conclusion of the incorrectness of the Whole Time Member. They were justified in imposing penalty.
- The fact that no Retail Individual Investor had made any complaint to SEBI was not at all relevant because SEBI need not act only on basis of a complaint received. If from its independent sources, the SEBI, after due enquiry comes to know about some illegality or irregularity, the SEBI has to act in manner as it acted in present case.
- Contracts for sale and purchase of securities, as envisaged under SCRA, could be entered into only in a prescribed manner in a notified area and that could only be effected through registered members of a recognised stock exchange (i.e. stock brokers) and only exception to this was a Spot Delivery Contract.
- It was clear that under Section 2(i)(b) of SCRA, seller had to effect actual delivery of securities and buyer had to pay price either on same day or on next day and further.
- In facts and circumstances of present case, transfer of shares did not comply with requirements of provision of either Section 13 or Section 2(i) of SCRA. Therefore, off market trading indulged into by Respondents was rightly held to be per se illegal by Whole Time Member.
- Tribunal was a final fact finding authority. Facts found by Tribunal should not be disbelieved by this Court.
- Appeals filed by SEBI were allowed and orders passed by Tribunal were quashed so as to give effect to orders passed by Whole Time Member as well as Adjudicating Officer, SEBI. DLF Limited vs. SEBI (2014) // Illustrative IPO, SUPPRESSION OF MATERIAL INFORMATION IN PROSPECTUS Facts
- DLF had filed a draft red herring prospectus with SEBI in Jan 2007 for raising Rs. 9187.5 crores through an IPO.
- Thereafter, DLF issued the RHP in May 2007 and the Prospectus was filed with the Registrar of Companies (“ROC”) on June 18, 2007.
- Meanwhile, X had filed complaints with SEBI on June 4, 2007 alleging the Sudipti Estates Private Limited (“Sudipti”) and certain other persons had defrauded him of 34 crore in relation to a transaction between them for purchase of land.
- Also registered a FIR dated April 26, 2007 alleging that two of DLF’s wholly owned subsidiaries were the only shareholders of the Sudipti and requesting to disallow the listing of DLF pursuant to the IPO and for immediate action. Charges — a) Non disclosure of material information in relation to alleged subsidiaries by DLF in RHP/Prospectus b) Non-disclosure of related party transactions (alleged subsidiaries) by DLF in RHP/Prospectus c) Non-disclosure of outstanding litigation relating to Alleged Subsidiaries by DLF in RHP/Prospectus d) Deliberate and active suppression of material information amounting to Fraud in terms of PFUTP Held:
- Active and deliberate suppression of material information in RHP/Prospectus amounts to fraud in terms
PFUTP Regulations and consequently restraining access and prohibiting dealing by Issuer, its directors and CFO in securities market.
- SEBI restrained DLF Limited, and its 5 directors and CFO from accessing the securities market and
prohibited them from dealing in securities for the period of 3 years on the ground of active and deliberate suppression of material information in its red herring prospectus /Prospectus so as to mislead and defraud the investors in the securities market in connection with the issue of shares of DLF in its IPO. Thereby violating the provisions of:
- the SEBI Act
- the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)
Regulations, 2003 (“PFUTP Regulations”)
- the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (“DIP Guidelines”)
- SEBI (Issuance of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”).
In A Nutshell: DLF did not mention group company’s name and pending criminal cases in prospectus DLF raised around Rs 9,000 crores in its IPO Company’s and promoter’s liability SEBI slapped a Rs 85 crore penalty on DLF and its executive directors, functionaries etc holding them liable for the misstatement.
TRANSFER OF SHARES
V.B. Rangaraj vs V.B. Gopalakrishnan And Others (1992) Section 44 — Shares are movable property. Company was owned by two brothers- with shares equally divided between them. Agreement: each branch would always hold equal number of shares. If any living member in either of the branches wished to sell shares- he would give first option to the members of that branch (first right of refusal). This restriction was not stated in the AoA. ARTICLES: Restriction on transfer to existing members was in respect of the shareholding of a deceased member- not a living member. No limitation on the transfer by a living member either to the existing member or to a new member. Only condition – when transfer made to a new member, it will have to be approved by the majority of the members. SHA: Restrictions- on a living member to transfer only to existing members- and only to the same branch of family. Additional restrictions which are contrary to the provisions of the Articles.
- Held:^ Section 10- AoA are the regulations of the company binding on the company and its shareholders.
- Section 44-^ Held that shares are movable property and their transfer is regulated by articles of association of company - agreement imposing restriction contrary to provisions of articles would not be binding on shareholder and company.
- Shares transferrable like movable property. Only restriction is as per Articles.
- In determining the extent of any restriction on transfer contained in the Articles, a strict construction is adopted. The restriction must be set out expressly or must arise by necessary implication and any ambiguous provision is construed in favour of the shareholder wishing to transfer.
- Hence, the private agreement which is relied upon by the plaintiffs whereunder there is a restriction on a living member to transfer his shareholding only to the branch of family to which he belongs in terms imposes two restrictions which are not stipulated in the Article. (i) Firstly, it imposes a restriction on a living member to transfer the shares only to the existing members, and (ii) Secondly the transfer has to be only to a member belonging to the same branch of family.
- The agreement obviously, therefore, imposes additional restrictions on the member's right to transfer his shares which are contrary to the provisions of the Article.
- They are, therefore, not binding either on the shareholders or on the company. Messer Holdings v. Shyam Madanmohan Ruia 111A CA, AoA of public Co. cannot restrict In Messer 2010 case, the Bombay High Court observed that Section 111A of the Companies Act , 1956 (which inter alia, provides that shares or debentures and any interest therein of a company shall be freely transferable) does not expressly restrict the right of shareholders to enter into consensual arrangement/ agreement in respect of shares held by them. Agreement between two shareholders relating to only their own shares — is a consensual agreement entered into by them, in exercise of their right of free transferability. So long as member agrees to pay prevailing market price and abides by all other regulations, there can be no violation. Both seller and purchaser must agree to the terms of sale.
Companies Act- has effect notwithstanding anything to the contrary in MoA or AoA of the company or any agreement – Section 6 Held: What company can do has to be ascertained with reference to the AoA. Where the AoA is silent on the existence of an affirmative vote- it will not be possible to hold that a clause in an agreement b/w the shareholders would be binding w/o being incorporated in the AoA. Unless AoA amended- WPIGI could not insist on exercise of the affirmative vote Section 14 – Amendment to the AoA Necessary to look to the AoA to ascertain the restrictions on transfer. Has right to transfer unless this right clearly taken away by AoA.
SHAREHOLDERS MEETINGS
LIC of India v. Escorts (1986) Extra Ordinary General Meeting [Shareholders Meeting] RBI accorded permission for purchase of shares/debentures of other Indian companies on behalf of 13 non- resident companies, through stock exchanges in India subject to certain conditions Single Judge refused to issue rule nisi in regard to declaration that purchases of shares made by non-resident companies were illegal and violative of FERA. However, Respondents Nos. 1 and 2 were restricted from issuing any directions to register transfer of shares purchased by Respondent-companies. Hence, this Appeal Issue: Whether LIC has right of issuing requisition notice to hold extra ordinary general meeting? The holder of the majority of the stock of a corporation have the power to appoint, by election, Directors of their choice and the power to regulate them by a resolution for their removal. And, an injunction cannot be granted to restrain the holding of a general meeting to remove a director and appoint another. Every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements to call an extra ordinary general meeting in accordance with the provisions of the Companies Act, 1956. He cannot be restrained from calling a meeting and he is not bound to disclose the 918 reasons for the resolution proposed to be moved at the meeting. Nor are the reasons for the resolutions subject to judicial review. When a requisition is made by a shareholder calling for a general meeting of the company under the provisions of the companies Act validly to remove a director and appoint another, an injunction cannot be granted by the Court to restrain the holding of a general meeting. Material facts- in explanatory note do not require the shareholders to disclose the reasons for the resolutions which they propose to move. Not bound to disclose reasons- has the same right to call an EoGM and move a resolution to remove some Directors and appoint others. When the State or an instrumentality of the State ventures into the corporate world and purchases shares of a company it assumes to itself the ordinary role of a shareholder and dons the robes of a shareholder, with all the rights available to such a shareholder. Therefore, the State as a shareholder should not be expected to state its reasons when it seeks to change the management by a resolution of the company, like any other shareholder. Rights of shareholders: The rights of a share holder are (i) to elect directors and thus to participate in the management through them; (ii) to vote on resolutions at meetings of the company; (iii) to enjoy the profits of the company in the shape of dividends; (iv) to apply to the court for relief in the case of oppression; (v) to apply to the court for relief in the case of mismanagement; (vi) to apply to the court for winding up of the company; and (vii) to share in the surplus on winding up.
Chandrakant Khare v. Shantaram Kale, (1989) Postponement and meetings — prerequisites of valid meeting. After the election of Members, the first meeting of the Aurangabad Municipal Corporation was held on May 6, 1983 at 2 P.M. and the Municipal Commissioner announced that the polling for the offices of Mayor, Deputy Mayor and Members of the standing Committee would commence from 2.30 p.m. onwards. But at 2.30 P.M. some of the Councillors belonging to the Opposition Party sat on the ballot boxes and some others surrounded the Municipal Commissioner and demanded that the meeting be adjourned to a subsequent date. The Councillors belonging to the ruling party demanded that the meeting and election be held later on that day. Total confusion and bedlam prevailed and the rival groups started throwing Chairs at each other, leading to a pandemonium. It was a free for all, and even outsiders were present. When the situation was brought under control, the Municipal Commissioner announced that the meeting would continue and the elections would be held at 4.30 p.m. The petitioner filed a protest at 4.15 p.m. stating that the meeting had been adjourned by the Municipal Commissioner for the day and, therefore, the holding of the meeting later on the same day would be improper and illegal. In a Writ Petition filed before the High Court, the appellant questioned the election, on the basis that the meeting in which the election was held, was invalid. The High Court held that the meeting was not adjourned for the day or sine die, but was only postponed, to be held as soon as peace was restored on the very day and upheld the election of Respondents 1 to 8. Against the judgment of the High Court, the petitioner has filed the present special leave petition. Dismissing the petition, HELD:
- A properly convened meeting cannot be postponed. The proper course to adopt is to hold the meeting as originally intended, and then and there adjourn it to a more suitable date. If this course be not adopted, members will be entitled to ignore the notice of postponement, and, if sufficient to form a quorum, hold the meeting as originally convened and validly transact the business thereat. Even if the relevant rules do not give the chairman power to adjourn the meeting, he may do so in the event of disorder. Such an adjournment must be for no longer than the chairman considers necessary and the chairman must, so far as possible, communicate his decision to those present. 2.1 In the instant case, the High Court was right in holding that the first meeting of the Municipal Corporation fixed by the Municipal Commissioner for May 6, 1988 was not 'adjourned for the day' or 'adjourned sine die' but had only been put off to a later hour i.e. the proceedings had only been suspended, to re-commence when peace and order were restored. If the contention that the meeting having been adjourned without specifying a definite point of time were to prevail, it would give rise to a serious anomaly. The effect of adjourning the first meeting to another day would imply the coming into existence of another deemed date under s. 6(2) of the Act for commencement of the term of the Councillors. The fact that the Municipal Commissioner did not leave the House or vacate the seat lends support to the version that he had merely suspended the proceedings till order was restored. Madhusoodan v. Kerala Kaumudi Notice and prerequisites of valid meeting Facts:
- There were 4 brothers owned the family business. There were other family concerns other than Keralal Kaumudi but the main subject matter of litigation is Kerala Kaumudi which is into publishing newspaper.
- Various disputes ensued and two agreements to divide the business among them — Kerala Kamudi’s control was given to Madhusoodan. Later a third agreement entered into where Mani and children transferred all shares to Madhu and children.
- Later- two board resolutions were passed — in first, Madhu ousted as MD, and issuance of further shares to two of the brothers.
