1977 (5) TMI 89 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the sister's appointment as a Director.
2. State of mind and mental capacity of the mother.
3. Misuse of company premises by the fifth respondent.
4. Maintainability of the petition under Sections 397/398 of the Companies Act.
5. Appointment of a guardian-ad-litem for the mother.

Detailed Analysis:

1. Validity of the sister's appointment as a Director:
The petitioner contended that the sister was appointed as an ad hoc Director 14 years ago and ceased to be a Director after her term expired. On the other hand, the respondents argued that she was appointed as a permanent Director and has continued in that capacity. The court noted that the sister has been drawing a salary during her tenure on the Board, and there is controversy regarding her right to receive arrears of salary and her liability to refund the amount already received.

2. State of mind and mental capacity of the mother:
The petitioner alleged that the mother, who held a balancing influence between the brothers, has been of unsound mind since the middle of 1975, leading to her inability to function as Chairman or protect her interests. This alleged incapacity has resulted in a deadlock between the brothers. The respondents vehemently denied these allegations. The court recognized the importance of determining the mother's mental state, as it significantly impacts the deadlock between the brothers.

3. Misuse of company premises by the fifth respondent:
The fifth respondent, the son of the sister, was alleged to be misusing part of the company premises for his personal business with the connivance of the other brother and the sister. The petitioner sought to restrain the fifth respondent from carrying on business in the company's premises and to prevent the respondents from using the premises for purposes other than the company's business.

4. Maintainability of the petition under Sections 397/398 of the Companies Act:
The petitioner invoked Sections 397/398 for various directions, including a declaration that the sister ceased to be a Director, restraining her from acting as a Director, and refunding the salary received by her. The petition also sought to restrain the fifth respondent from using the company's premises and to address the state of the mother's mind. The respondents raised preliminary objections regarding the jurisdiction of the court and the maintainability of the petition. The court deferred the decision on the maintainability of the petition until the question of the state of mind of the third respondent (mother) was determined.

5. Appointment of a guardian-ad-litem for the mother:
The petitioner filed an application under Order 32, Rule 3 read with Rule 15 and Section 151 of the Code of Civil Procedure, seeking the appointment of an independent and proper person as guardian-ad-litem for the mother. The petitioner argued that the mother was incapable of protecting her interests due to unsoundness of mind and mental infirmity. The respondents opposed this application, asserting that the mother was capable of protecting her interests. The court, referencing an earlier order by D.K. Kapur, J., decided to first determine the state of mind of the mother through a composite enquiry before proceeding with the petition.

Conclusion:
The court concluded that the question of the state of mind of the third respondent (mother) must be determined before considering the maintainability of the petition. The court deferred the decision on the maintainability of the petition until the composite enquiry regarding the mother's mental state was completed. The court also emphasized the mandatory duty to ensure proper representation for persons incapable of protecting their interests due to mental infirmity. The matter was listed for further consideration to allow the respondents to exercise their option regarding the preliminary enquiry.