The Company Law Board (CLB) has directed Neelkanth Ratnakar Dongre to return 12,936 General Sales shares to the company following a petition filed by Lala Charat Ram and others. General Sales, which is a 51:49 joint venture between Dongre and Lala Charat Ram, holds a controlling 30 per cent stake in Shriram Pistons & Rings.
In July 1999, the company had floated a rights issue of 26,400 shares with a face value of Rs 100 each. The entire issue was picked up by Dongre on the grounds that Lala Charat Ram did not participate in the issue. Lala Charat Ram had moved the CLB against it. The Charat Ram group now has the option to pick up the shares CLB has asked Dongre to return.
Dongre, however, said that he is moving an appeal in the Delhi High Court against the order. "It is a wrong judgement," he told Business Standard.
In his defence, Dongre had mentioned that the rights issue was done on the insistence of General Sales bankers who wanted an increase in share capital given the losses on the company's books.
The proposal for the issue was cleared by the General Sales board in two meeting held on June 3, 1999 and July 12, 1999, in the presence of Lala Charat Ram. Further, he had added, letters containing the offer to subscribe to the issue were despatched to all shareholders in May 1999.
The CLB has noted in its judgement that the banks had not asked the company to raise its share capital, Lala Charat Ram did not attend the two meetings and the letters sent to the shareholders did not carry the offers. "In view of the above, no offers were made to the petitioners," the CLB judgement handed out on September 21 says.
The Lala Charat Ram camp had also pleaded that since the whole affair amounted to acts of oppression against them, it warranted winding up of the company on just and equitable consideration. The CLB has said in its judgement that though the act does amount to an oppression, such an order is not possible in view of a case pending in the Delhi High Court regarding the ownership of 11 per cent General Sales shares. These shares are held by Manisha Beneficial Trust. While Dongre is the trustee of the trust and the voting rights of the trust were transferred to him by an irrevocable power of attorney in 1992. But this is disputed by Lala Charat Ram and family.
Lala Charat Ram and Dongre had come together to form the Charat Ram-Dongre group. The two fell out some years ago and filed a slew of legal cases against each other.
