Forum pulls up firm for deficient service

Aruna Padival, one of the shareholders of M/s The Karnataka Theatres Ltd, in a letter to the Company had sought certain clarifications with reference to the 63rd annual report of the Company circulated to the shareholders, relating to the joint development of the Company property called ‘Jyothi Talkies’ as well as other related facts on the land owned by the Company situated at the heart of Mangalore city. Earlier to that, she had submitted valid transfer request for transferring 50 shares of the Company into her name well in advance of the book closure and 63rd Annual General Meeting (AGM).

In the complaint, she alleged that non-payment of dividend in respect of 50 shares lodged for transfer in her favour, non-recognition of her voting rights in respect of said shares at 63rd AGM and failure to furnish information and documents sought by the shareholder is illegal and amounts to deficiency of service on the part of the Directors of the Company.

It was argued on behalf of the opposite parties that the complaint is not maintainable in view of parallel proceedings pending before the Company Law Board at Chennai filed against them and several others alleging oppression and mismanagement in the affairs of the Company.

However, the Forum in its order held that the complainant is eligible for dividend as well as information and documents relating to the land belonging to the company as sought by her. It was also observed that without complying with the legal right of the complainant, the opposite parties dragged her for the second time to the court.

Therefore, compensation and cost shall be collected from the Chairman and Directors of the Company, specifically from their personal earnings. The Directors cannot escape their liability under the grab of corporate veil, which needs to be lifted in order to bring to book the persons concerned who are responsible for defrauding the consumers. Accordingly, the Forum directed the Directors of the Company to pay a sum of Rs 3,750 towards dividend, Rs 30,000 towards compensation and Rs 1,000 as cost together with interest at 12% p.a to the complainant within 30 days.