Bagpat Engineering Company Case
SUMMARY OF FACTS
1) Bagpat Engineering Company Limitedwas incorporated as a private limited company in March, 1987 with 26 shareholders. 2) In August, 1994, its name was changed to Bagpat Industries Private Limited and it was converted into a public company in the name of M/S Bagpat Industries Limited in October, 1994. 3) The petitioners and the respondents are closely related family membersThe petitioners are illiterate living in a small village 4) Therespondent gained some experience in paper technology while working in Germany, induced the petitioners to invest huge sums of money in the proposed company giving rosy promises 5) the petitioners invested a sum of Rs.13,34,000 of which shares were allotted for Rs. 5,61,000 and a sum of Rs. 3,61,518 was kept as share application money, the balance was spent by the petitioners' group for the benefit of the company 6) the 2nd respondent and his family members did not have any funds to contribute towards share capital, the 1st petitioner accommodated them by permitting the 2nd respondent to withdraw money from the company's account and invest the same in the share capital of the company. 7) There was an agreement between the 1st petitioner and the 2nd respondent that the former would continue as the Chairman of the company and the later as the Managing Director of the company and that the profits of the company would be divided equally among the shareholders in the proportion of the amount invested by both the groups with 24% interest on the loans. 8) disputes arose between the parties and on intervention of one late Shri Ram Kumar Sharma, Principal of a College, it was decided that all the directors would hand over him the resignation letters and accordingly, the 1st petitioner also did so. Before the disputes could be sorted out, Shri Ram Kumar Sharma expired and the 2nd respondent somehow obtained the resignation letter of the 1st petitioner from the wife of late Shri Ram Kumar
1) Bagpat Engineering Company Limitedwas incorporated as a private limited company in March, 1987 with 26 shareholders. 2) In August, 1994, its name was changed to Bagpat Industries Private Limited and it was converted into a public company in the name of M/S Bagpat Industries Limited in October, 1994. 3) The petitioners and the respondents are closely related family membersThe petitioners are illiterate living in a small village 4) Therespondent gained some experience in paper technology while working in Germany, induced the petitioners to invest huge sums of money in the proposed company giving rosy promises 5) the petitioners invested a sum of Rs.13,34,000 of which shares were allotted for Rs. 5,61,000 and a sum of Rs. 3,61,518 was kept as share application money, the balance was spent by the petitioners' group for the benefit of the company 6) the 2nd respondent and his family members did not have any funds to contribute towards share capital, the 1st petitioner accommodated them by permitting the 2nd respondent to withdraw money from the company's account and invest the same in the share capital of the company. 7) There was an agreement between the 1st petitioner and the 2nd respondent that the former would continue as the Chairman of the company and the later as the Managing Director of the company and that the profits of the company would be divided equally among the shareholders in the proportion of the amount invested by both the groups with 24% interest on the loans. 8) disputes arose between the parties and on intervention of one late Shri Ram Kumar Sharma, Principal of a College, it was decided that all the directors would hand over him the resignation letters and accordingly, the 1st petitioner also did so. Before the disputes could be sorted out, Shri Ram Kumar Sharma expired and the 2nd respondent somehow obtained the resignation letter of the 1st petitioner from the wife of late Shri Ram Kumar