JUDGMENT V.G. Sabhahit, J.—This appeal is filed by respondents Nos. 1 to 4 in Company Petition No. 17 of 2006, on the file of the Company Law Board, Additional Principal Bench, Chennai, being aggrieved by the order dated February 15, 2008 (B.V. Reddy v. Legend Technologies (India) P. Ltd. (2009) 147 Comp Cas 81), wherein, the Company Law Board has allowed the application filed by respondent No. 1 herein filed under sections 397 and 398 read with section 402 of the Companies Act (hereinafter called as "the Act" for short) with a view to regulate the conduct, of the company's affairs and passed the following order (page 129): (i) The transfer of 28,500 shares by the petitioner in favour of the second respondent is hereby set aside and the company shall appropriately rectify its register of members by substituting the name of the petitioner in the place of the second respondent, in respect of the impugned shares, within thirty days of the receipt of the order and file an affidavit of compliance, within ten days thereafter; (ii) N. Nityananda and Co., Chartered Accountants, Bangalore-560 004, (mobile No. 9844022328) are appointed to determine the price of each share in the company as at March 31, 2006, being the date approximate to the company petition, after verifying the books of account and other records of the company and on considering the submissions of the contesting parties on valuation of the shares of the company. The valuer shall submit his report within thirty days, under copy to the parties, upon which each group shall quote in sealed cover before the Company Law Board, the competitive price of each share in the company at the price higher than the price determined by the valuer, agreeing to buy or sell the shares of other group at the aforesaid higher price, within fifteen days thereafter. The parties are directed to be present on April 25, 2008, at 2.30 p.m., for consequential directions in furtherance of the offers which may be submitted by them and no seisin is retained over any of the other contentious issues involved in the main petition. The company will bear the remuneration of the valuer. With the above directions, the main petition and the company applications stand disposed of. In view of this, all the interim orders are vacated. No order as to costs. The company will bear the remuneration of the valuer. With the above directions, the main petition and the company applications stand disposed of. In view of this, all the interim orders are vacated. No order as to costs. The material facts of the case leading up to this appeal with reference to the rank of the parties before the Company Law Board are as follows: It is averred in the petition that the petitioner and the second respondent are the promoter shareholders of the first respondent-company (hereinafter called as "company" for short) which was incorporated on May 6, 1998, with Registration No. 23703, having its registered office at No. 26/A, Doddenakundi Industrial Area, Bangalore-560 048, Karnataka. 2. The petitioner subscribed for 50 per cent. of the capital at the time of incorporation and the balance 50 per cent. was subscribed by the second respondent. The authorised share capital of the company is Rs. 65,00,000 (rupees sixty five lakhs only) divided into 6,50,000 (six lakhs fifty thousand) equity shares of Rs. 10 (rupees ten only) each. The issued, subscribed and paid-up capital of the company as at March 31, 2005, was Rs. 28,40,000 (rupees twenty eight lakhs forty thousand only) comprising of 2,84,000 (two lakhs eighty four thousand) equity shares of Rs. 10 (rupees ten) each fully paid-up. The main object of the company is to carry on the business of manufacture and dealing in design, develop, manufacture, assemble, repair, maintain and service aerospace vehicles, their structures, systems, accessories, tooling, ground equipment. 3. It is further averred that though the first respondent-company is incorporated under the Companies Act, in substance it is a quasi-partnership which was functioning on the basis of mutual trust and confidence just as in the case of a partnership and the relationship between the parties was that as partners with all members taking an active role in the management and administration of the company. The petitioner is holding 98,500 (ninety eight thousand five hundred) equity shares representing 34.68 per cent. (thirty four and sixty eight decimal percentage) of the paid-up equity share capital of the company. Besides holding the shares, the petitioner is one of the two directors of the company. The petitioner and the second respondent are the only "first directors" named in the articles of association of the first respondent-company. (thirty four and sixty eight decimal percentage) of the paid-up equity share capital of the company. Besides holding the shares, the petitioner is one of the two directors of the company. The petitioner and the second respondent are the only "first directors" named in the articles of association of the first respondent-company. The petitioner is also authorised to represent the company as well as to operate the bank account of the company. 4. It is further averred that the petitioner was given to understand that company has appointed additional directors during 2004 and since then some of them got resigned and some others got inducted. There was no dispute about the shareholding pattern of the company in the beginning stages. The petitioner and the second respondent were managing the company in a harmonious manner for more than a decade. There were no differences during that time. From June, 2005 onwards the differences between the petitioner and the second respondent arose, particularly in consolidating his position and the holding in the company against all cannons of law. The first respondent is the company in respect of the affairs of which the petition has been filed. The petitioner and the second respondent are inseparable friends since 1980, did AMIE course together, passed out in 1984, and did PG course together for the next two years till 1986. The second respondent joined HAL, Bangalore and the petitioner joined Hyderabad Allwyn during 1987. In 1989, the petitioner had some offers from USA but the second respondent prevailed on him to stay in India, so that they can do some business together. During early 1992, both the petitioner and the second respondent resigned their jobs and got together to do business in the line of designing and assembling aerospace vehicles. The business got commenced, initially by formation of a partnership firm at Mysore on May 21, 1992, by the name and style of Legend Designers. The terms of partnership is on equal basis between the petitioner and the second respondent. The wife of the respective partners were inducted as partners in the firm. Thus, the entire family of the petitioner and the second respondent commenced business together and worked for each other and grown together. The terms of partnership is on equal basis between the petitioner and the second respondent. The wife of the respective partners were inducted as partners in the firm. Thus, the entire family of the petitioner and the second respondent commenced business together and worked for each other and grown together. In order to expand the activities of the firm, it was mutually agreed between the petitioner and the second respondent that a private company be incorporated under the name and style "Legend Technologies India P. Ltd.", on equal terms and as a sequel the petitioner and the second respondent got the first respondent-company incorporated on May 6, 1998. The second respondent is a promoter shareholder along with the petitioner, each of them subscribed to 100 equity shares. Like the petitioner, the second respondent was named as first director in the articles of association of the first respondent-company. The, shareholding was at all point of time is on equal basis, save and except the illegal tactics adopted by the second respondent to enhance the same as explained in the petition, in the recent past. The third respondent was not a shareholder of the company at all. Prior to commencement of practice, the petitioner was given to understand that he was employed as a bank officer and presently he is a financial wizard and advising on strategic partnerships, joint ventures, takeovers, mergers and has leading clientele list. Besides, being a professional, he got inducted as director of the company on August 11, 2004 and for reasons best known to him, he ceased to be a director from September 30, 2005. During the period of his holding the office of director, the petitioner was given to understand that the third respondent had certified compliance certificate for the year 2001 onwards as required under section 383A of the Act, including the two years during which time he happened to be a director of the first respondent-company, perhaps, without disclosing therein that he also holds the position of director of the very same company, whose affairs he had certified. The third respondent had indulged in certain acts of oppression in collusion with the second and fourth respondents as detailed out in the petition. 5. It is further averred that the fourth respondent is a politically influential person at Mysore and is a Lions Club member. The third respondent had indulged in certain acts of oppression in collusion with the second and fourth respondents as detailed out in the petition. 5. It is further averred that the fourth respondent is a politically influential person at Mysore and is a Lions Club member. The fourth respondent is one of the close friends of the second respondent. The holding of shares of the fourth respondent in the company was noticed by the petitioner only recently and at no point of time, the first respondent-company had either allotted any shares or transferred any shares to the fourth respondent. 6. It is further averred that the fourth respondent has been shown as a member of the company, allegedly holding 6,500 equity shares, representing 2.29 per cent. of the paid-up equity share capital of the company, even by assuming but not admitting that the fourth respondent is the shareholder of the first respondent-company. The second, third and fourth respondents have acted in collusion, prejudicial to the interest of other members and prejudicial to the interest of the company as set out in the petition. The fifth respondent is the company's bankers at Bangalore. Initially, from the date of incorporation, the company's current account was maintained with State Bank of India, HAL Branch, and the accounts was operated by any one of the directors, viz., the petitioner and/or the second respondent. The third respondent influenced the company to open a new account with Vijaya Bank and accordingly the new account got opened with the said fifth respondent. The company has availed working capital limits from the said fifth respondent and the petitioner had given personal guarantee for the said facilities as a collateral security, which still continues. 7. It is further averred that as an expansion of the business carried on by the family members of the petitioner and the second respondent in the name and style of "Legend Designers" at Mysore, the first respondent-company was promoted by the petitioner and the second respondent got incorporated the company under the provisions of the Act. While, the firm was established in the year 1992 (May 21, 1992), the company was established in the year 1998. Both the firm and the company were carrying on the same activity, identical in all aspects. Both the firm and the company were started by the two technocrats, viz., the petitioner and the second respondent. While, the firm was established in the year 1992 (May 21, 1992), the company was established in the year 1998. Both the firm and the company were carrying on the same activity, identical in all aspects. Both the firm and the company were started by the two technocrats, viz., the petitioner and the second respondent. The first respondent-company was incorporated with an idea of setting up the manufacturing plant at Bangalore in addition to the one set up by the firm at Mysore, with an initial subscription of Rs. 1,000 each by the petitioner and the second respondent and have subscribed to the memorandum and articles of association of the said company and obtained a certificate of incorporation dated May 6, 1998. Both the firm and the company has been continuously managed as a family concern by the petitioner and the second respondent, both located at Mysore. The petitioner always treated the second respondent with utmost respect and looked up to him as a godfather. The petitioner never questioned the second respondent's authority nor did he dispute the second respondent's actions as the petitioner was of the firm belief that the second respondent would always act, bearing in mind the interest of the petitioner and the second respondent would never commit any act of commission or omission to the detriment of the petitioner and or his family members. The first respondent-company has been functioning in a progressive manner, propagating and achieving its aims and objects enumerated in the memorandum of association since from the day of its inception and after facing the teething troubles, is now running in a profitable manner. In order to concentrate on the growth of the business, the second respondent desired that the petitioner could look after the firm and the second respondent could take care of the company. Despite the petitioner and the second respondent belong to two different families, the petitioner would always abide by the second respondent's decisions and religiously and obediently carry out the instructions and wishes of the second respondent. The petitioner had no reason to believe at any point of time that the second respondent would act in a manner so as to defeat or prejudice the petitioner's interest. The petitioner had no reason to believe at any point of time that the second respondent would act in a manner so as to defeat or prejudice the petitioner's interest. However, in the recent past, it came to light that the second respondent was only interested in promoting and encouraging the growth of his interest at the cost of the petitioner, in an illegal manner. The petitioner can have no grievance against the second respondent coming up in his life with name and fame, the petitioner felt aggrieved and justifiably so, when what was sought to be achieved by the second respondent was at the cost of the petitioner and other members of his family, all of them being the members of the company, especially when the petitioner has all along been so actively involved in and toiled for the family business ever since 1992. 8. It is further averred that though the firm and the company has been carried on as a family business on equal ownership basis, the second respondent, perhaps based on the advice and the help of the third and fourth respondent, had altered the ownership pattern, management control and had even resorted to removal of the petitioner from the director's position. 9. It is further averred that as far as the company's growth is concerned, the share capital was enhanced from Rs. 2,000 in the year 1999 to Rs. 10,00,000 in the year 2000, by issuing 49,900 shares each to the petitioner/his family members and the second respondent/his family members in an equal manner. The holding/ownership pattern was maintained on equal basis between the petitioner and the second respondent. At that point of time, the second respondent got himself shifted from Mysore to Bangalore for permanent settlement at Bangalore with his family members, keeping in view the establishment of the manufacturing facilities at Bangalore and to concentrate on the commencement of production from the works at Bangalore. In 2001, the second respondent, being one of the partners of the firm, called upon the petitioner to part with about Rs. 5,00,000 as hand loan to his friends and assured that they would return the same later. Not having any doubts in any manner whatsoever, as per the instructions of the second respondent, the petitioner had arranged the amounts from the firm to the second respondent/his nominees. 5,00,000 as hand loan to his friends and assured that they would return the same later. Not having any doubts in any manner whatsoever, as per the instructions of the second respondent, the petitioner had arranged the amounts from the firm to the second respondent/his nominees. The petitioner right from the date of incorporation had been holding 50 per cent. of the controlling interest and the relatives of the petitioner had invested moneys in the company, for which the petitioner would become answerable to either return back the amounts or to allot them shares. During 2002, to meet the fund requirements of the company, the second respondent informed that he had brought in an amount of Rs. 9,90,000 from his side and about Rs. 5,70,000 through his friends and expressed that the petitioner should bring in an additional contribution of up to Rs. 14,00,000. As a sequel, the petitioner had contributed Rs. 9,90,000 from his side and requested his relatives abroad to invest in the company. In terms of such requests, the petitioner could mobilise an amount of US$ 10000 (Rs. 4,50,000 approx) as a direct remittance to the company during August, 2001, from his relative, Mr. M. Jeetendra Reddy of USA. The petitioner was assured by the second respondent that the amounts would be returned by the company to the respective investors as and when they demand it back. In order to meet the project cost and the working capital requirement, the company had been sanctioned term loan and cash credit loan secured against the assets of the company. Besides the above, the petitioner and the second respondent had given a personal guarantee in respect of all the loans obtained by the company, the second respondent obtained signatures of the petitioner and his family members on blank share certificates as well as in certain blank transfer deeds and stated that they would be pledged with the TDB and banks as security for the loan. During 2002, the second respondent informed the petitioner that the shares had been allotted to the family members of the petitioner and the second respondent in an equal manner and the entire securities and blank transfer deeds have been pledged as security with the TDB/KSFC, who granted term loan to the company. During 2002, the second respondent informed the petitioner that the shares had been allotted to the family members of the petitioner and the second respondent in an equal manner and the entire securities and blank transfer deeds have been pledged as security with the TDB/KSFC, who granted term loan to the company. In May 2002, the registered office of the company, functioning from a rented premises at Bangalore got shifted to the factory premises at Whitefield, Bangalore. In September, 2002, the second respondent instructed the petitioner to bring in additional amount of about Rs. 2,00,000 for meeting the working capital needs and accordingly the petitioner had arranged for the same. The bank account maintained with State Bank of India, was closed and the account with the fifth respondent has been operated by the second respondent, though the petitioner was also one of the authorised signatory. In January, 2004, the petitioner was approached by the relative from USA who had remitted US$ 10,000 earlier, to return the said sum since the same was required to meet his sister's marriage. Accordingly, he requested the second respondent and the second respondent had arranged to return from the funds of the company a sum of Rs. 3,65,000 on January 28, 2004, to the credit of NRI account of Mr. M. Jeetendra Reddy. 10. It is further averred that at no point of time, the said relative of the petitioner was informed that the first respondent-company had allotted certain shares to him. The petitioner reliably understands that the second, third and fourth respondents have schemed to allot certain shares to the said relative of the petitioner and later on when the company had returned the said amount partially, they had got the said shares transferred to either one of them or to one or more of them. In any event, the petitioner states that the first respondent-company never allotted any shares in favour of the said relative of the petitioner, in respect of the said remittance of US$ 10,000. During 2004, the third respondent was introduced to the petitioner by the second respondent stating that he is the practicing company secretary, who had been certifying the compliance report since 2001 as required under the Companies Act and he had introduced the fifth respondent and helped the company to obtain cash credit facilities from the fifth respondent. During 2004, the third respondent was introduced to the petitioner by the second respondent stating that he is the practicing company secretary, who had been certifying the compliance report since 2001 as required under the Companies Act and he had introduced the fifth respondent and helped the company to obtain cash credit facilities from the fifth respondent. The second and the third respondent informed the petitioner that the company should have to broad base the board of directors and had invited certain person of eminence to join the board. The petitioner had enquired about the need for such addition to the board, the second respondent informed him that in order to remain in business and to have good track record of performance, the expansion of the board becomes eminent. 11. It is further averred that till such time, the company was confined only with the petitioner and the second respondent and in fact there was no formal board meeting or any general meeting at all since incorporation. The petitioner got fascinated to be formally invited for a board meeting of the first respondent-company during August, 2004, for the first time in his life. Though the company was incorporated during May 1998, till August, 2004 no notice of any board and/or general body meeting of the company, whatsoever was received by the petitioner and officially no resolutions were proposed in any manner, whatsoever at any point of time and the petitioner had total faith and belief in the second respondent that he is taking care of the company's interests as per law. 12. It is further averred that the third respondent arranged the first formal meeting of the directors on August 11, 2004 and at the said meeting the petitioner was introduced to Mr. M. Shanmugam, a retired executive of HAL, Mr. K.S. Shetty, ex-managing director of Vijaya Bank, Mr. P.V. Menon, an industrialist at Bangalore and Mr. S. Shiva Raman, as additional directors of the company, who would guide the future growth of the company. On August 21, 2004, the petitioner was asked to come to Bangalore and on that date, additional set up friends of the second respondent were introduced to the petitioner and later on that day the petitioner was informed that the annual general meeting of the company would be held on that day, a first of its sort attended by the petitioner. When enquired about the need for the presence of the friends of the second respondent at that meeting, the petitioner was informed that they represent the new shareholders of the company, who along with their family members hold miniscule number of shares, as a formality in the company. The third respondent also explained the need for holding of nominal shares by close associates and relatives by outsiders, besides the promoters, to take away the wrong image that the company is an extended arm of the two family. Keeping the interest of the company's growth in mind and the faith and confidence reposed in the second respondent that all actions would be taken solely for the betterment of the company's interest, the petitioner did not question the action of the respondents for induction of additional directors and issue of shares to outsiders, at that point of time. 13. It is further averred that while running the day to day affairs of the company by the second respondent, the petitioner came to know that some occurrence of mismanagement of the affairs of the company under the leadership of the second respondent while conducting the business of the first respondent-company and in order to safe guard the interest of the company, the petitioner requested the second respondent to forward all bank statements to the petitioner and the second respondent replied that the same would be decided at the next board meeting. The respondent-company formally convened a board meeting on September 30, 2005 and the third respondent was present and dominated the said meeting. The petitioner raised the legal issue regarding the appointment of the second respondent as the chairman and managing director and for all the queries the third respondent replied that no illegality or infirmity had happened in such appointment. When the petitioner confronted the third respondent as to what capacity he could conduct the meeting, he replied that he is one of the directors. The petitioner then questioned the third respondent as to whether a practicing professional who is certifying the compliance report of a company could be appointed as director of the very same company, the third respondent replied that the Companies Act does not prohibit such appointment. However, since he was questioned, he expressed that he would no longer be a director of the said company from that day onwards. However, since he was questioned, he expressed that he would no longer be a director of the said company from that day onwards. The petitioner took some time to come to normalcy and approached a practicing company secretary to conduct inspection of the documents in the office of the Registrar of Companies, Bangalore and report the status. The search report was conducted on October 17, 2005, which revealed total scheme and illegal plan of the second, third and fourth respondent in making allotment of shares without convening any board meeting, making appointment of directors without following due process of law, making transfer of shares, which was first of all not allotted at all and assuming but admitting the same, even without following the mandatory requirements of law. The petitioner obtained statement from the fifth respondent in respect of the company's operations. The petitioner found that the second respondent had indulged in financial irregularity and mismanaged the affairs of the company as well as the firm. The shareholding pattern as held out in the annual return revealed that the petitioner's holding had been made at around 40 per cent. instead of being at 50 per cent. Immediately, the petitioner approached the second respondent and made enquiries. Thereafter, the fourth respondent called on the petitioner and requested him not to raise any issues as otherwise, the petitioner would come to streets and thereafter resorted to certain illegal acts, to remove the petitioner from the directorship of the first respondent-company and even approached the KSFC, who had financed the firm to take all efforts to close the unit. The petitioner further learnt that the second respondent is resorting to usurp the company by removing the petitioner from the directorship of the board of the first respondent-company without convening any meeting of the directors of the company. Apprehending certain illegal action from the respondents, the petitioner wrote a letter to the Registrar of Companies vide letter dated November 11, 2005, requesting him not to take any of the documents on record. Apprehending certain illegal action from the respondents, the petitioner wrote a letter to the Registrar of Companies vide letter dated November 11, 2005, requesting him not to take any of the documents on record. In order to protect the interest of the company and to ensure that the company's funds are not misused by the second respondent, the petitioner wrote to the fifth respondent that all cheques of the company should be honoured only if it is signed by the second respondent jointly with the petitioner and not to allow the operation of the account to be operated by a single signatory. 14. It is further averred that on December 3, 2005, the petitioner received a letter from the first respondent-company along with a draft of Circular resolution No. 1 of 2005 dated December 2, 2005, for passing a resolution solely by the second respondent. Immediately on receipt of the same, the petitioner on December 3, 2005, sent a reply to the same to the respondents with a copy to the others as mentioned therein. The petitioner received a notice dated December 7, 2005, from the first and second respondents, convening a board meeting on December 15, 2005, along with agenda for the same, inter alia, for obtaining fresh mandate for operating the bank account as item No. 7 of the agenda. On December 15, 2005, at the board meeting the petitioner's letter sent to a customer was hotly debated and the meeting got adjourned in view of the confrontation attitude exhibited by the second respondent against one of the directors, viz., Mr. K.S. Shetty, tendered his resignation. At the adjourned meeting held in the afternoon on the same day, only the resignation of Mr. K.S. Shetty got approved and the agenda in respect of fresh mandate for banking operation with the second respondent to operate the bank account solely, got rejected. 15. It is further averred that the petitioner received a notice dated January 3, 2006, from the first and second respondent, convening board meeting on January 12, 2006, which, contained agenda regarding discussion on special notice from the shareholder and removal of the petitioner from the post of director of the first respondent-company. 15. It is further averred that the petitioner received a notice dated January 3, 2006, from the first and second respondent, convening board meeting on January 12, 2006, which, contained agenda regarding discussion on special notice from the shareholder and removal of the petitioner from the post of director of the first respondent-company. The petitioner attended the said board meeting of the company convened on January 12, 2006 and it was resolved that Devi Prasad, a member of the company, gave notice, pursuant to section 284(2) of the Companies Act, of his intention to propose the following resolution as an ordinary resolution at the extraordinary general meeting of the company to be held on January 30, 2006, as under: To consider and, if thought fit, to pass the following resolution as ordinary resolution. Resolved that pursuant to section 284 of the Companies Act, 1956, Mr. B.V. Reddy be and is hereby removed from his office of the director of the company. At the board meeting, the second respondent placed a transfer deed for transfer of 28,500 shares from the petitioner to the second respondent. Apart from that no other business was discussed at the board meeting held on January 12, 2006. Strangely and surprisingly, Form 32 filed by the company, a copy of which is sent to the petitioner on February 9, 2006, the name of the fourth respondent, has been shown in the said Form 32 as if he had been appointed as additional director at the board meeting held on January 12, 2006. Without having discussed the item of business, the fourth respondent had been shown as though he had been appointed as director of the company, perhaps to sub-serve the illegal interest of the second, third and fourth respondent to usurp the company. 16. It is further averred that the petitioner received notice of extraordinary general meeting convened on January 30, 2006, inter alia, for removal of the petitioner from the position of director of the first respondent-company, based on the purported notice received from Mr. M.V. Devi Prasad, a purported shareholder of the said company. 16. It is further averred that the petitioner received notice of extraordinary general meeting convened on January 30, 2006, inter alia, for removal of the petitioner from the position of director of the first respondent-company, based on the purported notice received from Mr. M.V. Devi Prasad, a purported shareholder of the said company. Thereafter, keeping in view the investment made in the company and also the guarantees given as a collateral security for the loan sanctioned to the company still continuing, the petitioner prepared a common reply to the letter of clarification of the second respondent and the notice of extraordinary general meeting sent by the first respondent, expressing his inability to move out of Mysore due to health reasons, but however, sought copies of documents to be furnished by the said company and also to postpone the meeting by about 3 weeks, to enable the petitioner to put forth his answers, to the queries as well as to the notice of extraordinary general meeting. The petitioner received a letter dated February 9, 2006, from the said company, informing the petitioner that at the extraordinary general meeting held on January 30, 2006, the resolution for removal of the petitioner from the directorship of the company had been passed and a copy of Form 32 dated January 30, 2006, filed with the Registrar of Companies had been enclosed along with the said letter. 17. It is further averred that on the basis of the above said grounds which amounts to oppression of the petitioner who holds equal share along with the second respondent and as the conduct of the business of the first respondent-company by the second respondent in collusion with respondents Nos. 17. It is further averred that on the basis of the above said grounds which amounts to oppression of the petitioner who holds equal share along with the second respondent and as the conduct of the business of the first respondent-company by the second respondent in collusion with respondents Nos. 3, 4 and 5 is not conducive to the interest of the company and members of the company, the petition was filed seeking for the following reliefs: (i) declare that the first respondent-company is quasi-partnership and the petitioner have a right to participate in the management of the company; (ii) declare that the alleged resolution passed at the extraordinary general meeting held on January 30, 2006, vide notice dated January 12, 2006, regarding removal of the petitioner from the first respondent-company is illegal, mala fide and oppressive and quash the same; (iii) declare that the fourth respondent is not a director appointed at the board meeting held on January 12, 2006; (iv) declare that Form 32 filed with the Registrar of Companies vide receipt No. 473457 dated January 31, 2006, by the first respondent-company is null and void; (v) declare that the alleged circular resolutions passed on December 16, 2005, authorising the second respondent as the sole authority to operate the first respondent-bank account as null and void, illegal, mala fide and oppressive and quash the same; (vi) order investigation or inspection into the affairs of the company and for fixing responsibilities for various acts of mismanagement by the second respondent and to order restoration of all funds received and used by the second respondent and/or his agents, not relating to the business of the company; (vii) remove the second respondent from the office of director of the first respondent-company for having indulged in acts of mismanagement and oppression; (viii) direct the first respondent-company to buy-back shares of the second respondent at a fair value to be determined by this hon'ble Board and consequently order reduction of the share capital of the first respondent-company; (ix) order initiation of suitable action under section 406 of the Companies Act for breach of trust, misfeasance, misappropriation, frauds, falsification, fraudulent conduct of business of the company by second, third and fourth respondents; (x) declare that the transfer of 28,500 shares from the petitioner in favour of the second respondent as allegedly approved at the board meeting held on January 12, 2006, is null and void, illegal, mala fide and oppressive and quash the same; (xi) grant costs of this petition; (xii) to pass such other and further orders as may be just and appropriate. 18. Respondents Nos. 1 to. 4 have filed statement of objections to the petition averring that averments made in the petition regarding the fact that the petitioner and the second respondent had started the firm and the same was incorporated and that respondents Nos. 2 to 5 are guilty of the conduct amounting to oppression of minority and interest of the company and the shareholders, is false. The averment made in the petition regarding shareholding, non-convening of board or general meetings and non sending of notices to the board or general meetings. The contention that the company was in fact a quasi-partnership and further averment regarding appointment of the second respondent as the chairman and managing director and fixation of his remuneration, appointment of additional directors, operation of the bank account solely by the second respondent, financial irregularities at the instance of the second respondent, diversion of funds as well as business orders of the partnership firm to the company, allotment of shares to outsiders, transfer of 15,000 shares of MJR and 28,500 shares of the petitioner in favour of the second respondent and removal of the petitioner by the second respondent is illegal, have been denied. 19. It is further averred that the conduct of respondents Nos. 1 to 4 is in accordance with law and they have been managing the affairs of the company in accordance with law. The petitioner was present at the general body meeting wherein the third and fourth respondent have been appointed as directors as the company wanted the technocrats as directors of the company. The petitioner has signed the share certificate issued in the name of MJR who is the relative of the petitioner and legally transferred 28,500 shares in favour of the second respondent which was standing in the name of the petitioner. It is averred that the petitioner was looking after the firm which had independent entity and the company was established not for the purpose of carrying on the same business for which the firm was established. The petitioner was not able to run the firm as he is not a technocrat and the proceedings were initiated by the Karnataka State Financial Corporation from whom loan had been obtained. 20. The petitioner was not able to run the firm as he is not a technocrat and the proceedings were initiated by the Karnataka State Financial Corporation from whom loan had been obtained. 20. It is further averred that all the acts have been done in accordance with law after passing resolution in the general body and extraordinary general body meeting and the averments made in the petition are false and no ground is made out for allowing the petition as sought for in the petition for granting any of the reliefs sought for in the petition and accordingly sought, for dismissal of the petition. 21. The Company Law Board after considering the contention of counsel appearing for the parties and scrutinising the material on record held that so far as shareholding, non-convening of the board or general meeting and non sending of notices to board or general meetings, appointment of second respondent as chairman and managing director and fixation of his remuneration, appointment of additional directors, operation of the bank account solely by the second respondent, financial irregularities at the instance of the second respondent, diversion of funds as well as business orders of the partnership firm to the company, had not been proved as the petitioner was a party and has participated to the proceedings and has participated in the general body meeting, wherein the directors and additional directors were appointed. He has also signed the share certificate issued to MJR who is a relative of the petitioner who had lent money to the company. He has also signed the share certificate issued to MJR who is a relative of the petitioner who had lent money to the company. Further, the Company Law Board held that alleged transfer of 28,500 shares of the petitioner in favour of the second respondent, removal of the petitioner from the office of the director, is illegal and unfounded and the contention of the respondents that the petitioner had transferred 28,500 shares allotted in his name in favour of the second respondent in accordance with law, had not been substantiated and has assigned detailed reasons as to why the said transfer is void and also held that once it is held that transfer of 28,500 shares belonging to the petitioner in favour of the second respondent has not been made in accordance with law and the same is held to be void, removal of the petitioner from the post of director cannot also be sustained as the same is not in terms of the provisions of the Companies Act. Wherefore, accordingly held that the petitioner being a prudent technocrat engaged in the affairs of the partnership as well as the company for over a decade is not found to be diligent in reportedly signing blank annual reports, balance-sheets, transfer deeds, statutory returns and other business papers relating to the company, on account of the blind faith reportedly reposed in the second respondent. The petitioner even though carried out a search of charges of the company from the records of the Registrar of Companies as early as in October 2005, he never raised the plea of blank signature affixed to the records of the company at any point of time till initiation of the present proceedings before the Company Law Board and therefore no credentials can be attached to such belated contentions raised by the petitioner and further held that the petitioner does not hesitate to be in the joint management, while the respondents have no objection for the petitioner continuing to be a shareholder but not as a director of the company. Nevertheless, the petitioner with a view to severe his business connections, thereby ending the on going disputes with the respondents offered either to sell his shares for a consideration of Rs. Nevertheless, the petitioner with a view to severe his business connections, thereby ending the on going disputes with the respondents offered either to sell his shares for a consideration of Rs. 3.5 crores or purchase the shares of the respondents for the very same amount on the basis of the prevailing market value of the landed property owned by the company, which was not acceptable to the respondents. The Company Law Board having regard to the facts proved, held that in exercise of the powers under sections 397 and 398 read with section 402 of the Act and with a view to regulate the conduct of the company's affairs passed the following order (page 129 of 147 Comp Cas): (i) The transfer of 28,500 shares by the petitioner in favour of the second respondent is hereby set aside and the company shall appropriately rectify its register of members by substituting the name of the petitioner in the place of the second respondent, in respect of the impugned shares, within thirty days of the receipt of the order and file an affidavit of compliance, within ten days thereafter; (ii) N. Nityananda and Co., Chartered Accountants, Bangalore-560 004, (mobile No. 9844022328) are appointed to determine the price of each share in the company as at March 31, 2006, being the date approximate to the company petition, after verifying the books of account and other records of the company and on considering the submissions of the contesting parties on valuation of the shares of the company. The valuer shall submit his report within thirty days, under copy to the parties, upon which each group shall quote in sealed cover before the Company Law Board, the competitive price of each share in the company at the price higher than the price determined by the valuer, agreeing to buy or sell the shares of other group at the aforesaid higher price, within fifteen days thereafter. The parties are directed to be present on April 25, 2008, at 2.30 p.m., for consequential directions in furtherance of the offers which may be submitted by them and no seisin is retained over any of the other contentious issues involved in the main petition. The company will bear the remuneration of the valuer. With the above directions, the main petition and the company applications stand disposed of. In view of this, all the interim orders are vacated. The company will bear the remuneration of the valuer. With the above directions, the main petition and the company applications stand disposed of. In view of this, all the interim orders are vacated. No order as to costs. 22. Being aggrieved by the above said order passed by the Company Law Board dated February 15, 2008, respondents Nos. 1 to 4 have preferred this appeal. It may be noted here itself that the petitioner has not filed any appeal against the finding given against him in respect of transfer of shares which, has been set aside. 23. We have heard learned counsel appearing for the appellants and learned counsel appearing for the respondents. 24. Learned counsel appearing for the appellants submitted that the Company Law Board has not given a finding that a ground is made out for dissolution of the company on equitable ground. Wherefore, the Company Law Board has no jurisdiction to pass the order in exercise of the power under sections 397 and 398 read with section 402 of the Act. The transfer of 28,500 shares by the writ petitioner/first respondent herein in favour of the second respondent--second appellant herein, is justified and does not suffer from any error or illegality and the finding of the Company Law Board is contradictory as the Company Law Board having held that the petitioner had not shown bona fides in approaching the Company Law Board, could not have passed an order to value the shares and to auction the same among both the groups, which is contrary to law. Wherefore, the order passed by the Company Law Board may be set aside and the petition filed by the first respondent herein may be dismissed. 25. Learned counsel appearing for the respondents argued in support of the order passed by the Company Law Board and submitted that the finding of the Company Law Board that transfer of 28,500 shares by the petitioner in favour of the second respondent which is held to be void, is unassailable as the same has not been made in accordance with law and the order passed by the Company Law Board is justified and does not suffer from any error or illegality as to call for interference in this appeal. 26. 26. Having regard to the contention of learned counsel appearing for the parties, the point that arises for determination in this appeal is: Whether the impugned order passed by the Company Law Board dated February 15, 2008, is justified or calls for interference in this appeal ? 27. We answer the above point for determination by holding that the impugned order is justified and does not call for interference in this appeal for the following. Reasons 28. We have given careful consideration to the contention of learned counsel appearing for the parties and scrutinised the material on record. 29. The scrutiny of the material on record would show that the Company Law Board has held that the petitioner has proved that the alleged transfer of 28,500 shares by him to the second respondent is void and inoperative and is liable to be set aside as it is not in accordance with law and the petitioner has never transferred the said 28,500 shares in favour of the second respondent. Further, removal of the petitioner from the post of directorship of the first respondent-company is also illegal and unsustainable. Wherefore, the impugned order has been passed to regulate the conduct of the affairs of the company. 30. The scrutiny of the material on record would clearly show that so far as the finding given by the Company Law Board regarding transfer of 28,500 shares in favour of the second respondent which is seriously challenged by the petitioner, as illegal and never executed by the petitioner. It is the contention of the petitioner that blank instruments of transfer had been got signed while availing financial assistance from TDB and such blank instruments of transfer have been misused for transferring 28,500 shares of the petitioner in favour of the second respondent. 31. The material on record would clearly show the date of transfer of 28,500 shares in favour of the second respondent as June 11, 2002. However, the said 28,500 shares includes 10,000 shares comprised in the share certificate No. 18, which even according to the respondents, stood pledged in favour of TDB as early as on July 21, 2001 and said shares could not have been included in the instrument of transfer among 28,500 shares by the respondent. However, the said 28,500 shares includes 10,000 shares comprised in the share certificate No. 18, which even according to the respondents, stood pledged in favour of TDB as early as on July 21, 2001 and said shares could not have been included in the instrument of transfer among 28,500 shares by the respondent. Further, in respect of 4,500 shares, share certificate No. 44 has been issued subsequent to the date of transfer, on September 30, 2002, which is subsequent to the date of transfer. Wherefore, the said shares also could not have been the subject-matter of transfer. That having regard to the strained relationship between the parties and also the above said facts which would clearly show that transfer of shares is not in terms of section 195 of the Act as 14,500 shares were not available for transfer and the petitioner has clearly proved that he never intended to transfer 28,500 shares and the material on record would clearly probabilise the case of the petitioner that the respondents have misused the blank instrument of transfer executed by the petitioner at the time of availing the financial assistance from TDB, and fabricated the same for transfer of 28,500 shares in favour of the second respondent. Wherefore, the finding of the Company Law Board that the said transfer of 28,500 shares by the petitioner in favour of the second respondent is liable to be set aside and the company shall appropriately rectify its register of members by substituting the name of the petitioner in the place of the second respondent in respect of the said shares, is justified and unassailable and does not suffer from any error or irregularity as to call for interference in this appeal. 32. The material on record would further show that removal of the petitioner from the post of director on the basis of the notice issued by respondent No. 4, is clearly unsustainable in law, being contrary to the provisions of section 284(2) of the Act. 32. The material on record would further show that removal of the petitioner from the post of director on the basis of the notice issued by respondent No. 4, is clearly unsustainable in law, being contrary to the provisions of section 284(2) of the Act. It is clear that the fourth respondent, being a member of the company gave a notice dated December 26, 2005, to the chairman and managing director pursuant to section 284(2) of the Act, of his intention to propose a resolution for removal of the petitioner from the office of director, as an ordinary resolution at the extraordinary general meeting of the company and further requested for convening an extraordinary general meeting of the company at the end of January, 2006 and the said notice was issued properly under section 169 of the Act. The said notice dated December 26, 2005, has been followed by another notice dated January 12, 2006, given by the fourth respondent under section 284(2) of the Act proposing for ordinary resolution to remove the petitioner from the post of director at the extraordinary general meeting of the company to be held on January 30, 2006. It is well-settled that, it is the prerogative of the board and not of the fourth respondent to decide the date of meeting and in view of section 169 of the Act an extraordinary general meeting may be called on requisition of the members holding at least one-tenth of the paid-up share capital of the company and having a right to vote at the date of deposit of the requisition on the matter to be discussed at the meeting and therefore, it is contrary to the provisions of section 169 of the Act as admittedly the fourth respondent did not hold one-tenth of the paid-up share capital of the company and it is well-settled that though the other shareholders of the company has the right, subject to statutorily prescribed procedural and numerical requirements to requisition an extraordinary general meeting requirement, is found lacking in this case. No doubt, it is the admitted position that the fourth respondent did not possess one-tenth of the paid-up share capital of the company as on the date of lodgment of his requisition convening an extraordinary general meeting. No doubt, it is the admitted position that the fourth respondent did not possess one-tenth of the paid-up share capital of the company as on the date of lodgment of his requisition convening an extraordinary general meeting. That is why the second notice issued on January 12, 2006, conspicuously does not contain any request for convening the extraordinary general meeting of the company, thereby avoiding the embargo contained in section 169 of the Act. Sub-section (2) of section 284 stipulates that special notice shall be required of any resolution to remove a director under this section. In view of this, when any special notice is required of a resolution, notice of the intention to move the resolution, as contemplated in section 190(1), shall be given to the company not less than 14 days before the meeting at which it is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of the meeting. At the board meeting held on January 12, 2006, the directors resolved to convene an extraordinary general meeting on January 30, 2006, for removing the petitioner from the post of director of the company and on January 12, 2006, informed the petitioner regarding the special notice of a resolution received from the fourth respondent for removal of the petitioner from the office of director at the extraordinary general meeting held on January' 30, 2006. The special notice dated December 26, 2005 and wherefore, contrary to the provisions of sections 284(2) and 169 of the Act. The minutes of the board meeting dated January 12, 2006, would reveal that the second respondent placed before the board, the requisition received from the fourth respondent to move an ordinary resolution at the extraordinary general meeting to be convened not later than January 30, 2006, the date convenient for him to attend the meeting seeking removal of the petitioner, upon which the directors present resolved to call for an extraordinary general meeting on January 30, 2006, in order to remove the petitioner from his office as director of the company. The petitioner in response to the notice dated January 12, 2006, convening an extraordinary general meeting of the members of the company on January 30, 2006, for the purpose of removing the petitioner from directorship, requested the managing director to postpone the meeting on the ground that the doctor had advised him to take rest at least for four days and not to travel at least for fifteen days. In the case of the proof of ailment of the petitioner, the same was offered to be sent after hearing from the second respondent. However, the request was wrongly rejected and resolution has been passed removing the petitioner from the post of director of the company. The respondents have not denied the genuineness of the reasons put forth by the petitioner for the postponement of the meeting. In the absence of the same, holding of the meeting on January 12, 2006 and January 30, 2006 and removing the petitioner from the post of director, would clearly show that the petitioner has been wrongfully removed from the post of director. 33. The material on record would further show that the petitioner and the second respondent started the partnership firm which later on converted into a company. They have got equal shareholding in the company. In view of the fact that the transfer of 28,500 shares of the petitioner in favour of the second respondent at the instance of the fourth respondent who did not even have requisite number of shareholding as required under section 284(2) of the Act, the petitioner could not have been removed from the post of director, after rejecting the prayer for postponement of the meeting as sought for, though the genuineness of the reason assigned therein was not challenged. Wherefore, finding of the Company Law Board that the removal of the petitioner from the post of director of the first respondent-company without affording adequate opportunity of being heard as envisaged in section 284 of the Act, is bad in law, is also justified and does not suffer from any error or irregularity as to call for interference in this appeal. 34. 34. The material on record would further show that the petitioner expressed before the Company Law Board that he does not hesitate to be in the joint management, while the respondents have no objection for the petitioner continuing to be a shareholder but not as a director of the company. Nevertheless, the petitioner with a view to sever his business connection, thereby ending the on going disputes with the respondents offered either to sell his shares for a consideration of Rs. 3.5 crores or purchase the shares of the respondents for the very same amount. However, the Company Law Board found that the said offer could not be accepted as the petitioner did not have the financial capacity to pay the amount of Rs. 3.5 crores to purchase the shares of the second respondent and other directors and in the circumstances, it is clear that a ground has been made out for winding up of the company due to oppression and mismanagement in effecting transfer of shares, which is clearly illegal and removal of the petitioner from the post of director which is not in the interest of the company or the shareholders. However, having regard to the provisions of sections 397 and 398 read with section 402 of the Act the Company Law Board has passed the following order (page 129 of 147 Comp Cas): (i) The transfer of 28,500 shares by the petitioner in favour of the second respondent is hereby set aside and the company shall appropriately rectify its register of members by substituting the name of the petitioner in the place of the second respondent, in respect of the impugned shares, within thirty days of the receipt of the order and file an affidavit of compliance, within ten days thereafter; (ii) N. Nityananda and Co., Chartered Accountants, Bangalore-560 004, (mobile No. 9844022328) are appointed to determine the price of each share in the company as at March 31, 2006, being the date approximate to the company petition, after verifying the books of account and other records of the company and on considering the submissions of the contesting parties on valuation of the shares of the company. The valuer shall submit his report within thirty days, under copy to the parties, upon which each group shall quote in sealed cover before the Company Law Board, the competitive price of each share in the company at the price higher than the price determined by the valuer, agreeing to buy or sell the shares of other group at the aforesaid higher price, within fifteen days thereafter. The parties are directed to be present on April 25, 2008, at 2.30 p.m., for consequential directions in furtherance of the offers which may be submitted by them and no seisin is retained over any of the other contentious issues involved in the main petition. The company will bear the remuneration of the valuer. With the above directions, the main petition and the company applications stand disposed of. In view of this, all the interim orders are vacated. No order as to costs. 35. It is clear that having regard to the above said facts and circumstances of the case and law on the subject-matter that in view of the proof of mismanagement and oppression of minority shareholders and the conduct of respondents Nos. 2 to 4, respondent No. 2 in particular being against the interest of the company and the shareholders, it was necessary to make an arrangement with a view to regulate the conduct of the company's affairs. The material on record would prove that the company is prospering and is also making good profit. Having regard to the facts and circumstances of the case, we find that the arrangement made by the Company Law Board as referred to above, is justified and does not call for interference in this appeal. Accordingly, we hold that the appeal is devoid of merit and pass the following: ORDER Appeal is dismissed. The order passed by the Company Law Board in C.P. No. 17 of 2006, dated February 15, 2008, is confirmed. However, since the date fixed by the Company Law Board for compliance of order (i) and (ii) has expired, the came is extended by 30 days from the date of receipt of this order or production of the certified copy of the order, whichever is earlier. In respect of compliance of order (ii) the date fixed by the Company Law Board is modified as December 15, 2011, at 2.30 p.m.