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TMI Blog1962 (4) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, was incorporated on 27th October, 1946, under the Indian Companies Act, 1913, as applied to the former Pudukottai State. The nominal capital of the company is Rs. 30,000, divided into 300 shares of Rs. 100 each; 203 out of the 300 shares have been issued and are fully paid up. Swamikannu Pillai an Indian Christian, was the promoter of this concern and he owned 50 shares. Thangaswami and Ratnam, the son and brother respectively of Swamikannu Pillai, owned 20 shares each; 113 shares stood in the names of the employees of the press owned and conducted by the company. It is, however, claimed on behalf of the respondents, the heirs of Swamikannu Pillai who died on 18th November, 1956, that these shares were held by the employees onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gitanjali Press. While the suits filed by Ratnam were pending in the trial court, the son and the widow of Swamikannu Pillai, respondents to this appeal, filed a company application No. 77 of 1960 for the winding up of the company under section 433 of the Companies Act, 1956. Substantially two grounds were alleged in support of the petition. The first was that the company was unable to pay its debts in that it had not discharged a liability of Rs. 21,747.77 due to the estate of the deceased, Swamikannu Pillai, in spite of demands. The second was that it was just and equitable that the company should be wound up, the reason being that there was a deadlock in the management in that a minor shareholder was oppressing the majority of sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wind up the company. The learned judge has declined to accept the respondents' case that there was a deadlock in the management of the company or that there was a disappearance of the substratum of the company. While accepting the case of Ratnam, that the business of the company was being carried on as before, he held that Ratnam was exercising a dominating influence in the matter of the management of the press and was oppressing the petitioners even though they possessed major number of shares in the company. Adverting to the losses incurred by the company during the two previous years the learned judge held that they were incidental to the business and that if the business were allowed to continue it would be possible not merely to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned judge we cannot see how this circumstance can be regarded as indicative of oppression of the majority of the shareholders by the person in management. But there is a more fundamental objection to the order of the learned judge, namely, his jurisdiction to appoint an administrator to carry on the affairs of the company along with the managing director. But before considering that question it is necessary first to advert to a preliminary objection taken on behalf of the respondents to the maintainability of the appeal. The direction given by the learned judge has undoubtedly the effect of introducing a stranger, though an officer of court, to conduct the affairs of the company. That certainly affects the rights of the parties and would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... none of the conditions specified in the two sections is in existence. The general rule is that courts will not intervene at the instance of the shareholders in matters relating to the internal administration of the company where directors act within their powers. But where circumstances exist which justify a winding up order different considerations will arise. If the court is of the opinion that the company should be salvaged, it can pass an order under Chapter VI of the Companies Act, 1956, provided the conditions prescribed by sections 397 and 398, etc., have been satisfied. But the jurisdiction of the court in such a case for intervening in the internal management of the company could be invoked only by an appropriate application under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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