Judgment G. S. Chaube, J. 1. This company petition purporting to have been filed under Sec.107 read with Sec.10 of the Companies Act, 1956 (hereinafter referred to as "the Act"), was filed by the petitioner Girish Kumar Kharia, one of the holders of the equity shares of the opposite party company, the Industrial Forge and Engineering Company Limited, having its registered office in the town of Jamshedpur in the district of East Singhbhum for cancellation of variation of equity shares from 1,50,000 having face value of Rs.10 each to 2,30,500 without notice to and prior knowledge of the petitioner ; and restraining the opposite parties from giving effect to such variation and holding further meeting until such cancellation. The case of the petitioner is that the said company which has been arrayed as opposite party No.1, was established on June 5, 1980, and registered under the provisions of the Act as a company limited by capital of equity shares. The company has its own memorandum and articles of association. As on November 10.1998, the issued paid-up capital of the company was 22,50,000 divided into 1,50,000 issued capital of equity shares of Rs.10 value and 7,500 preferential shares of the value of Rs.100. Out of the total number of issued equity shares, the petitioner jointly with his wife Smt. Geeta Kharia was holding 25,000 shares worth Rs.2.50 lakhs. However, on December 18, 1998, he received a notice dated December 16, 1998, issued by opposite party No.1 under the signature of its managing director (opposite party No.2) informing him about the holding of a meeting on January 12, 1999, for resolving with or without modification for enhancement of the paid-up capital of the company from Rs.23,50,000 to Rs.30,55,000 by issue of 75,000 equity shares of Rs.10 each at par. On receiving such notice he came to know for the first time that the number of equity shares of the company had been increased to 2,30,500 from 1,50,000 without any information to him. According to him, such increase or variation in the number of equity shares was illegal and in complete violation of the constitution of the company as also the provisions of the Act. According to him, such increase or variation in the number of equity shares was illegal and in complete violation of the constitution of the company as also the provisions of the Act. Consequently, he presented the petition in this court on January 6, 1999, and simultaneously filed an application under Sec.151 of the Code of Civil Procedure read with Sec.10 of the Act for restraining the opposite parties from holding the meeting scheduled on January 12, 1999, or even on any subsequent date for taking any decision on the agenda mentioned in the notice dated December 16, 1998. 2. When the petition was presented on February 2, 1999, there was a direction for issuing notice of the application for injunction to opposite parties Nos.1 and 2. In the meantime, the said opposite parties were directed not to proceed on the notice (annexure 5) if the meeting pursuant thereto had already not been held. After service of the notice opposite parties Nos.1 and 2 appeared and filed a counter-affidavit to the main petition and the application for vacating the interim order of restraint passed on February 2, 1999. Consequently, with the consent of learned counsel for the parties, the matter was listed in chambers on March 26, 1999, for admission of the petition and appropriate order on the application for vacating the interim order dated February 2, 1999. It may be mentioned that in the meantime opposite parties Nos.1 and 2 filed a supplementary counter-affidavit and the petitioner has filed replies to the counter-affidavit, supplementary counter-affidavit and the application for vacating the stay. 3. Learned counsel for opposite parties Nos.1 and 2 has submitted that the petition purporting to have been filed under Sec.107 of the Act itself is not maintainable inasmuch as issuance of further equity shares does not amount to variation of the right or rights of the shareholders within the meaning of Sec.106 of the Act. He has further contended that, as a matter of fact, 80,500 equity shares of Rs.10 each had been issued by the board of directors pursuant to the resolution adopted at an extraordinary meeting of the members held on November 10, 1998, to the son and heir of one late B. K. Jain, former director of the company, who had given an unsecured loan of Rs.8.5 lakhs. As the company was not in a position to repay that loan, at a meeting of the board of directors held on October 10, 1998, it had been decided to issue equity shares to his son Sanjay Jain worth Rs.8.5 lakhs. Information of allotment of such shares was given to the Registrar of Companies (opposite party No.3) in due course and entered into the book. It has further been contended on behalf of opposite parties Nos.1 and 2 that, as a matter of fact, D. P. Kharia, father of the present petitioner was a party to the decision taken by the board of directors on October 10, 1998, as he had acted as the chairman at the meeting. Therefore, it has been contended that the main petition is barred by limitation having been filed much after 21 days from the date of allotment of the shares to Sanjay Jain. Therefore, the petition is fit to be dismissed. On the other hand, learned counsel for the petitioner has submitted that the equity shares worth Rs.8,05,000 were allotted to an outsider depriving him of his right to receive proportionate share therein in terms of Sec.81 (1) of the Act. Therefore, it has materially varied and affected his right to manage the affairs of the company. In the reply to the counter-affidavit, it has been stated that earlier the petitioner and other members of his family had 49 per cent, of the total shares but by surreptitiously increasing the number of the equity shares and allotting the same to Sanjay Jain and subsequently purchasing them from him, the percentage of shares of opposite party No.2 and other members of his family has considerably increased from 47 per cent. Thus, the balance of power has now tilted in favour of opposite party No.2 and members of his family. 4. It is well-settled that a variation which affects the enjoyment of right without modifying the right itself is not a variation within the meaning of Sec.106. Increase in the number of shares of any kind/category for raising capital or otherwise, though affects the voting power of existing mem bers by diminishing it in number, in no way amounts to variation of their right as envisaged by Sec.106. Increase in the number of shares of any kind/category for raising capital or otherwise, though affects the voting power of existing mem bers by diminishing it in number, in no way amounts to variation of their right as envisaged by Sec.106. It has been held by a single judge of the Karnataka High Court in the case of State of Karnataka V/s. Mysore Coffee Curing Works Ltd. [19841 55 Comp Cas 70 that secs. 106 and 107 of the Act provide for a particular class of shareholders to move the court whenever the rights attached to that class of share were sought to be altered by the company, and in no other circumstances. The rights attached to ordi nary equity shares include a right to vote, right to receive dividends, right to maintain its face value, and the right to transfer freely without restriction the shares to another. Unless such rights are altered or varied by the company by resolution of the shareholders in accordance with the provisions of Sec.106 of the Act, no action lies under Sec.107. Merely because the company decided by a resolution or otherwise to increase the number of its capital share within the limit of authorised capital and thereby the voting power of the existing shareholders is diminished, it does not amount to variation of the rights of the shareholders as envisaged under Sec.106 of the Act. In this connection, Article 17 of the articles of association of the company (annexure 2-A) is very pertinent. According to this article, the rights conferred upon the shareholders of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of the issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. According to this article, the rights conferred upon the shareholders of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of the issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. In the present case, what opposite party No.1 is alleged to have done is that by special resolution dated November 10, 1998, passed at an extraordinary meeting of its members it decided to issue 80,500 equity shares in favour of one Sanjay Jain whose father, the late B. K. Jain, had earlier advanced an unsecured loan to the company as one of its directors and pursuant to that resolution by their resolution dated November 18, 1998, the board of directors of the company allotted that much of equity shares in lieu of the unsecured loan of Rs.8.5 lakh which the company owed to the father of the allottee. 5. Learned counsel for the petitioner has, however, urged that such allotment was contrary to the provisions of Sec.81 of the Act. Sub-section (1) of Sec.81, no doubt, provides that if at any time after the expiry of two years from the date of formation of the company or at any time after the expiry of one year from allotment of shares in that company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the company by allotment of further shares, such further shares shall be offered to the persons who at the date of the offer are holders of equity shares of the company in proportion to the capital paid up on those shares on that date. However, Sub-section (1a) of the said section permits allotment of further shares to any persons, whether or not those persons include persons referred to in Sub-section (1) in any manner whatsoever, if a special resolution to that effect is passed by the company in a general meeting. 6. In the present case, the contention of opposite parties Nos.1 and 2 is that 80,500 equity shares of Rs.10 each, had been allotted to Sanjay Jain pursuant to the special resolution adopted at the general meeting of the company on November 10, 1998. Therefore, it was perfectly valid. 6. In the present case, the contention of opposite parties Nos.1 and 2 is that 80,500 equity shares of Rs.10 each, had been allotted to Sanjay Jain pursuant to the special resolution adopted at the general meeting of the company on November 10, 1998. Therefore, it was perfectly valid. In spite of notice/knowledge, the petitioner chose not to participate in that meeting which was incidentally held on the same day when the annual general meeting of the company has been held after due notice to the shareholders. The decision to allot equity shares to Sanjay Jain had been taken at a meeting of the board of directors on October 10, 1998, presided over by the father of the petitioner himself. Documents annexed with the counter-affidavit support this contention of opposite parties Nos.1 and 2. At the time of hearing, learned counsel for the petitioner disputed the correctness of the copy of the resolution which has been annexed with the counter affidavit. Therefore, on my direction, the original books containing the minutes of the proceedings of the general body meeting of the company as also of the board of directors thereof together with the attendance book showing the attendance of the directors and members who attended those meetings were produced. On their perusal, I find that actually such resolutions were passed and the meeting of the board of directors held on October 10, 1998, had been presided over by the father of the petitioner. 7. At one stage, learned counsel for the petitioner also disputed the existence of the alleged unsecured loan in lieu of which 80,500 equity shares were allotted to Sanjay Jain on November 18, 1998. However, annexure D to the supplementary counter-affidavit discloses the existence of such unsecured loan. The document is a projected balance-sheet furnished before the Board for Industrial and Financial Reconstruction (BIFR) when the company went to the said Board sometime in 1994. It means that there are unimpeachable documents to show that the company owed to its ex-director B. K. Jain a sum of Rs.8.5 lakhs on account of unsecured loan. 8. The document is a projected balance-sheet furnished before the Board for Industrial and Financial Reconstruction (BIFR) when the company went to the said Board sometime in 1994. It means that there are unimpeachable documents to show that the company owed to its ex-director B. K. Jain a sum of Rs.8.5 lakhs on account of unsecured loan. 8. Learned counsel for the petitioner also contended that even if it is accepted that 80,500 equity shares were allotted to Sanjay Jain in view of the special resolution of the company, such resolution could not have been given effect to unless approved by the BIFR in view of the fact that the company was under rehabilitation scheme of the BIFR. My attention was drawn to Clause (b), of Sub-section (2) of Sec.22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SIC Act), according to which no resolution passed at any meeting of the shareholders of a company shall be given effect to unless approved by the BIFR when the management of that company is taken over or changed in course of implementation of a sanctioned scheme for its rehabilitation. It is manifest that such rider is applicable only to resolutions of a company whose management is either taken over or changed under the scheme sanctioned by the BIFR under Sec.18 of the said Act. Sub-section (1) of Sec.18 of the Sick Industrial Companies (Special Provisions) Act enumerates the scheme/schemes which an operating agency appointed by the BIFR can prepare for sanction by the latter, and they include, inter alia, (a) reconstruction, revival or rehabilitation of the sick industrial company, and (b) proper management of the sick industrial company by change in, or takeover of, the management of the sick industrial company. If the scheme so prepared and sanctioned is for reconstruction, revival or rehabilitation only of the company without change in, or takeover of, the management thereof, the restriction imposed by Clause (b), of Sub-section (2) of Sec.22 aforesaid is not applicable. In the instant case, what is stated is that for the rehabilitation of opposite party No.1, a scheme sanctioned by the BIFR is under implementation. There is nothing to suggest that for that purpose its management has also been changed or taken over. In the instant case, what is stated is that for the rehabilitation of opposite party No.1, a scheme sanctioned by the BIFR is under implementation. There is nothing to suggest that for that purpose its management has also been changed or taken over. Therefore, for giving effect to the resolution dated November 10, 1998, of opposite party No.1 for enhancing the paid-up capital by Rs.8,05,000 by issuing 80,500 equity shares and allotting the same to Sanjay Jain, approval of the BIFR was not required. Therefore, on no account, the increase in the paid-up capital of the company by issuance of 80,500 equity shares in favour of Sanjay Jain can be said to be illegal or violative of either the constitution of the company or the provisions of the Act or of the SIC Act. 9. In view of what I have discussed above, I find that the present petition is not maintainable and is fit to be dismissed in limine. Apart from the fact that the present petition is not maintainable for the reasons stated above, I find that the conduct of the petitioner in approaching this court under the provisions of the Act is not bona fide. In his reply to the counter-affidavit of opposite parties Nos.1 and 2, the petitioner has himself admitted that earlier his father D. P. Kharia had instituted Title Suit No.96 of 1998 in the District Court at Jamshedpur challenging the allotment of shares to Sanjay Jain and sought an injunction restraining opposite party No.2 from giving effect to such increase in the equity shares and allotment thereof. On notice, the defendants in the suit including the present opposite party No.2 appeared and contested his prayer with the result that the prayer for injunction was not granted by the trial court in that suit. It was, thereafter, that the petitioner came to this court suppressing this material fact in the original petition and obtained the order of stay. In the original petition as well as in his rejoinders the petitioner has also tried to convey an impression that everything" respecting that transaction was done behind his back without knowledge thereof to him. It was, thereafter, that the petitioner came to this court suppressing this material fact in the original petition and obtained the order of stay. In the original petition as well as in his rejoinders the petitioner has also tried to convey an impression that everything" respecting that transaction was done behind his back without knowledge thereof to him. It has been contended that simply because his father was the chairman at the meeting of the board of directors held on October 10, 1998, and resides with him in the same building, no knowledge of such transaction can be imputed to him. Thereby the petitioner purports to say that he had nothing to do with the affairs of his father and vice-versa. However, in paragraph 10, he has tried to claim majority of paid-up issued shares prior to the increase and allotment of November 18, 1998, on the ground that he and other members of his family held 49 per cent, of the shares issued prior to November 10, 1998, The very fact that he has tried to club his interest with the interest of other members of his family shows that all the members of his family including the petitioner and his father are hand in glove and the present petition has been filed only with a view to obstruct raising of further capital as proposed by the board of directors as per notice dated December 16, 1998, in view of the decision taken at a joint meeting of the managing director of the B. S. F. C. , the Director of Industries, Government of Bihar, and others on October 3, 1998, for consideration of the rehabilitation package in terms of the order of the Board for Industrial and Financial Reconstruction (annexure E ). According to this decision, the company was required to raise the equity worth Rs.5,00,000 each year out of which equity worth Rs.1.25 lakh was to be raised during the current financial year ending in March, 1999. 10. In the result, this company petition is dismissed and interim stay granted on February 2, 1999, stands vacated.