Judgement: This petition is a composite petition under section 397 and section 398.

Under section 398, there is no such stipulation of forming an opinion regarding the winding up of the company on the just and equitable ground. One of the main allegations in the petition relates to non-payment of dividend for the year 1994-95. Since non-payment of dividend due to a shareholder could be rightly termed as an act of oppression/mismanagement. The stand of the petitioner is that the amount of Rs. 78 lakhs did not include the dividend and it was only for payment of service charges and that cheque was dishonoured. The company declared dividend for 1994-95 on May 29, 1995. But the date of payment of the dividend is shown as July 1, 1995, while the pay order issued to the petitioner-company is dated June 12, 1995. Taking all these aspects into consideration, the amount of Rs. 78 lakhs represented only the service charges. Therefore, we find that the petitioner has substantiated the allegation regarding the non-payment of the dividend and a shareholder can definitely claim oppression/ mismanagement. However, we are not giving any directions as to the time frame within which the same should be paid, as the company is in financial difficulties and we are not stipulating payment of interest. In regard to the allegation is about non-issue/delayed issue of notices for the board/general body meetings. In view of our directions later in this regard, we are not elaborately dealing with this allegation. The next allegation relates to the financial management of the company. We note that the petitioner has not alleged either siphoning off of funds or misapplication of funds. The reasons given by the company for the downfall in the turnover during the year 1995-96, have not been rebutted by the petitioner. The petitioner being a joint venture partner, having two nominees on the board, should have taken a more active part in the management of the company. It is on record that the second respondent has been asking the petitioner to have two nominees in the executive committee without any positive response from the petitioner. Therefore, the petitioner cannot put all the blame only on the other directors, more particularly, the second respondent. The petitioner has asked for directions for investigation into the affairs of the company in terms of section 237 of the Act and since this prayer is without particulars we are not considering the same, more so because the Bombay High Court has already directed the Commissioner of Police in this regard. Considering the state of affairs of the company, it is necessary that there should be proper monitoring of the affairs of the company. Accordingly, in exercise of our powers under section 402 (a) of the Act, we direct the Department of Company Affairs and the Securities and Exchange Board of India, to appoint a person with legal experience and accounts experience respectively, as directors on the board of the company for a period of three years from the date of appointment. We also direct that notices for board meetings should be sent to all the directors including the nominees of the petitioner by registered post at least seven days before such meetings along with agenda. We also direct the petitioner, being a public sector undertaking, to

ensure that its nominees attend the board meetings without fail. The directors appointed by the Central Government and the Securities and Exchange Board of India will submit a joint quarterly report to the Central Government on the affairs of the company. We dispose of this petition in the above terms without any order as to costs.