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Issues:
1. Whether the Agreement of July 27, 1954, was acted upon and binding on the Company. 2. Whether the conduct of the rival groups in the allotment of 39,000 new shares amounted to oppression and mismanagement. 3. Whether such oppression and mismanagement were sufficient grounds for winding-up the Company under the "just and equitable" rule. 4. What reliefs, if any, can be given on the present petition. Issue-wise Detailed Analysis: 1. Agreement of July 27, 1954: The Agreement dated July 27, 1954, signed by representatives of the three groups, was crucial in the formation of the Company during its financial crisis. The petitioner argued that this Agreement, which included terms for equal representation and shareholding among the three groups, was binding and acted upon. The rival groups, however, described it as a "mere scrap of paper." The court found ample evidence indicating that the Agreement was indeed acted upon, as evidenced by the correspondence between the parties and the changes in the Company's management structure. 2. Alleged Oppression and Mismanagement: The petitioner claimed that the rival groups' conduct in the allotment of 39,000 new shares amounted to continuous oppression and mismanagement. The court noted that the normal practice of offering new shares to existing shareholders was not followed. The notice for the extraordinary general meeting on March 29, 1958, was misleading, and the resolution passed at that meeting excluded existing shareholders from the new shares. The court found that the rival groups' actions were intended to oust the minority shareholders and gain control of the Company. The allotment of shares on July 30, 1958, was done with undue haste and without proper disclosure, which further evidenced the oppressive conduct. 3. Grounds for Winding-Up: The court held that the continuous oppression and mismanagement by the rival groups could justify winding up the Company under the "just and equitable" rule. However, winding up would unfairly prejudice the petitioner and other minority shareholders. Instead, the court considered the alternative remedy under Section 397 of the Companies Act, 1956, to bring an end to the oppression and allow the Company to continue operating. 4. Reliefs Granted: The court provided comprehensive reliefs to address the issues of oppression and mismanagement: - Removal of the current Board of Directors, except representatives from the Government of Orissa and the Industrial Finance Corporation of India. - Reconstitution of the Board with equal representation from the three groups. - Declaration that the resolutions passed on March 29, 1958, and July 30, 1958, were null and void. - Directions for the respondents to sell the 39,000 shares to the petitioner and/or his nominees. - Restraint on the Company from increasing share capital before complying with the court's order. Result: The petition was allowed, and the court ordered the reconstitution of the Board of Directors, the sale of 13,000 shares to the petitioner, and set aside the resolutions that led to the oppressive allotment of shares. The court ensured that the interests of the Industrial Finance Corporation of India and the Government of Orissa were protected. Each party was directed to bear its own costs.
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