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TMI Blog1995 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... any in the strict sense of the term, nor is it a commercial venture. It was founded on March 28, 1930, by the late Kowtha Surya-narayana Rao as a company limited by shares. Subsequently, in the year 1957, licence was obtained from the Central Government under section 25 of the Act on the ground that it is a non-profit sharing firm for promoting religious and charitable activities. The late K. S. Rao founded the Sangha and also three other business companies, viz ., ( a )Indian Commerce and Industries Co. Pvt. Ltd. ( b )Kowtha Business Syndicate Pvt. Ltd. ( c )Beehive Engineering and Allied Engineering Industries Pvt. Ltd. The first petitioner in C. P. No. 12 of 1982 was the only son of the late K. S. Rao. The third petitioner in C. P. No. 12 of 1982 is the son of the first petitioner and the grandson of late K. S. Rao. The second respondent in C. P. No. 12 of 1982 is also the grandson of late K. S. Rao through the daughter Parameswari. The third respondent in C. P. No. 12 of 1982 is the daughter of the first petitioner and the grand-daughter of late K. S. Rao and sister of the third petitioner. She is the wife of the. second respondent B.V.S.S. Mani. The fourth respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of the properties by a deed of settlement dated March 20, 1957. It was at that time when the licence under section 25 of the Act was expected from the Government. Only after settling the properties in favour of his only son, Mohanram Sastri, and grandson, K. L. Manohar, and alter giving certain properties to his daughters, the late K. S. Rao made the first gift of immovable property to the Sanga on March 28, 1957. It is in evidence that section 25 of the Act licence was obtained on July 5, 1957. In August, 1960, K. S. Rao executed a will giving the balance of his properties to the Sanga. It is admitted that none of the parties ever questioned the action of K. S. Rao till his death on September 23, 1964, and all his directions were implicitly obeyed by one and all. It is seen that Mohanram Sastri and C. Srinivasan were also directors of the Sanga in 1956-57 for different periods and they were in the know of things. It is on record that C. A. Chettiar, father of C. Srinivasan, was also a director of the Sanga till his death on February 7, 1976. K. L. Manohar became a shareholder of the Sanga on August 13, 1957. In C. P. No. 13 of 1982, three resolutions dated January 15, 1956, Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in paragraph 23 of the petition that a sum of Rs. 4,44,486.93 was incurred by the Sanga for the construction of the compound wall at Gunatala during the period ending May 31, 1977. The complaint is, that it is an exaggerated figure and wasteful expenditure. On behalf of the respondents it is submitted that an obvious mistake had been made by the petitioners when a wrong reading of the balance-sheet was done by them, viz ., exhibit R-33 series. The report of the auditor and the balance-sheet for the year ending May 31,1977, would mention only about the additions during the year regarding the fixed assets which come to Rs. 4,44,486.93. P.W.-1 in his chief examination has talked about this compound wall. On behalf of the respondents, R.W.-1 has spoken about the same. According to Mr. T. Raghavan, P.W.-1 has deposed that the said amount has been included in the balance-sheet under the heads "additions during the year" and "fixed assets". P.W.-1 has stated in his evidence about this. He queried about the construction of the compound wall by the second respondent. However, it is contended that the second respondent has cleverly manipulated under the guise of a donation given by on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister will show that only a sum of Rs. 2,54,329.25 had been spent. Exhibit R-147 series are the bills giving the details regarding the expenses incurred in the sum of Rs. 4,44,486.93 and these bills had been duly verified and countersigned by the auditors. No questions had been asked regarding the genuineness or the authenticity of these bills in the cross-examination while R.W.-1 was in the witness box. At no point of time, the second respondent ever contended that the expenses involved for the construction of the compound wall was Rs. 4,44,486.93. On the other hand, it was only Rs. 2,54,329.25. The engineer examined as P.W.-2 had valued the compound wall and there has not been much of a difference in value. In fact, P.W.-1 himself had said that he had not made any estimate and according to his engineer's valuation, the value of the compound wall was only Rs. 1.5 lakhs. But, he would admit that he had discussed with the auditor on this issue. It is submitted that the expenses involved for the construction of the compound wall were only Rs. 2,54,329 25, which had not only been accepted by the auditor after duly vouching the bills, but the board of the Sanga had also passed the reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to the Sanga on July 4, 1978, by the bank. Thus, it is very clear that B. Suryanarayana was himself having the funds by means of fixed deposits and it was these amounts that were transferred to the Sanga on July 4, 1978, as per the directions of B. Suryanarayana to the bank on July 2, 1977, itself. Therefore, the argument of Mr. T. Raghavan, learned counsel for the petitioners, that the said B. Suryanarayana had no means falls to the ground. It is also pointed out that the first ever misunderstanding commenced only on June 10, 1978, when the third petitioner addressed a letter to the second respondent and the second petitioner as per exhibit P-84 and long prior to it, on July 2, 1977, itself B. Suryanarayana, the donor, had funds in the form of fixed deposits with Bank of Baroda and has also given instructions to have the amounts transferred to the Sanga on maturity. Even P.W.-1 had conceded about the aforesaid fixed deposit amounts as donations to the Sanga. I am, therefore, of the opinion, that there is no merit in the argument of Mr. T. Raghavan on item No. 3 and, therefore, the same is rejected. Item No. 4 : Under this item, the petitioners question the annual general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted board, it is necessary for this court to interfere and supersede the so-called board, which is functioning today, and appoint one or more administrators to take charge of the affairs of the Sanga. In view of the conduct of the second respondent, his wife and children, Mr. T. Raghavan would urge that it is essential to ensure a broad-based board and for this purpose, this court should direct amendments to the articles by providing for appointment of responsible persons on the board and to ensure representation to all the groups of shareholders on the basis of the proportional representation. In support of the above contentions, Mr. T. Raghavan invited my attention to the decisions in Balasundaram ( V. G. ) v. New Theatres Carnatic Talkies P. Ltd. [1993] 77 Comp. Cas. 324 , wherein this court has followed the earlier decision of this court in Veeramachineni Seethiah v. Bode Venkatasubbiah [1949] 19 Comp. Cas. 107 (Mad) and Promode Kumar Mittal v. Southern Steel Ltd. [1980] 50 Comp. Cas. 555 (Cal). It is also not correct to state that the board of the Sanga only consists of P.W.-1 and R.W.-1, according to Mr. T. Raghavan. There were other directors on the board an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the respondents that the delay in holding the annual general body meetings for the years 1979 and 1980 was solely because of the non-co-operative attitude and the negative approach of the third petitioner from Secunderabad. It is in evidence that the accounts relating to the printing press, Kalyan Mantap and Vidya Mandir from Secunderabad were to be sent only by the third petitioner to the Madras head office, without which the accounts could not be finalised. The accounting year of the Sanga is from June 1, to May 31, every year and the annual general body meeting of 1979 should have been held on or before November 30, 1979, and the annual general body meeting of 1980 on or before November 30, 1980. According to Mr. V. R. Gopalan. the evidence on record would clinchingly show that it was the third petitioner who was the real cause for the delay and it is unfortunate that the petitioners should still accuse the respondents for the delay. Exhibit R-48 dated November 3, 1979, is the letter written by the Sanga's auditor to the third petitioner pointing out the various lapses on his part regarding the audit for the year ending May 51, 1979, which was mainly responsible for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuary 24, 1980, pleading inability to attend the meeting on January 25, 1980. Only the second petitioner and the second respondent were present and since there was no quorum, the meeting was adjourned to January 31, 1980. Exhibit R-56 is yet another telex message received from the third petitioner pertaining to the annual general body meeting 1979, wherein he would urge the second respondent to hold the adjourned the annual general body meeting 1979 without him but with the second petitioner. It is the evidence of the second respondent as R.W.-1 that he did not want to proceed with the meeting without the third petitioner who had by now started giving trouble, and the second respondent was very particular that the third petitioner attends the annual general body meeting 1979. Hence, the annual general body meeting was not conducted on January 31, 1980. A note to that effect was made in exhibit R-56 itself. A fresh notice dated June 16, 1980 (exhibit P-3), was again sent giving notice for the conduct of the annual general body meeting 1979 on July 9,1980. On July 9,1980, again the third petitioner was absent and as there was no quorum, the meeting was adjourned to July 16, 1980. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody meeting for 1980 is concerned, the same old history was repeated. Exhibit R-59 dated September 12, 1980, is a memo to the third petitioner at Secunderabad asking for the accounts relating to the annual general body meeting 1980. Exhibit R-60 dated December 31, 1980, is yet another memo sent to the third petitioner. Exhibit R-61, dated November 8, 1980, is the reply from the third petitioner stating that the trial balance with available figures was getting ready. Exhibit R-62 is the telex message issued to the third petitioner by the second respondent on November 15, 1980, asking for accounts from Secunderabad, followed by another telex message, exhibit R-63, dated November 21,1980, complaining that the accounts were not forthcoming from Secunderabad. Exhibit R-64 dated November 21, 1980, is the reply telex message from Secunderabad requesting the Sanga's auditor to come on Monday to take up the audit work at Secunderabad. Exhibit R-65 is a telex message of the auditor to the third petitioner dated December 19, 1980. Exhibit R-66 is again a telex message received from the Secunderabad office asking for postponement of the auditor's meeting. Exhibit R-57 dated December 30, 1980, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laration that all the proceedings of the board after January 21, 1981, are void and inoperative. However, no specific allegation had been made regarding the illegality or otherwise of the meeting dated January 21, 1981, as such. But, evidence was adduced and arguments advanced on this issue also. Article 78 of the memorandum and articles of association deals with the election of the directors every year. Admittedly, the second petitioner was only a co-opted director on August 10, 1979, and unless and until he was re-elected in the next meeting, he ceases to be a director as per article 82. So far as the third petitioner is concerned, his term had expired and he did not stand for re-election. It is, therefore, submitted by learned counsel for the respondents, that both petitioners Nos. 2 and 3 are no longer directors of the Sanga. So far as the election of the third respondent is concerned as a director in the meeting held on January 21, 1981, it is argued by Mr. V. R. Gopalan, the same cannot be questioned. A technical objection has been taken as to the election of the second respondent as a director on January 21, 1981, and this objection is raised only at the time of argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the number of votes secured is not challenged or disputed. There was nothing to be decided by the chairman except to declare the results of the poll. ( e )The second respondent had to necessarily chair the meeting since there was no other alternative left. While replying to the rulings cited by Mr. T. Raghavan in Nagappa Chettiar ( N. V. R. ) v. Madras Race Club [1949] 19 Comp. Cas. 175 ; AIR 1951 Mad 831, Mr. V. R. Gopalan contended that the above decision has no application to the facts of the case and the said judgment was rendered on October 5, 1948, before the advent of the Indian Constitution. The facts and circumstances of the said case are entirely different and the said decision will not apply to the facts of this case because in the instant case, there are only about 14 members of the Sanga, out of which 12 are relations and family members, the remaining two being close associates and family friends. It is conceded that the respondents are in the majority having majority shareholdings whereas the petitioners are in minority. No decision was called upon to be taken by the chair excepting announcing the results of the poll. No quasi-judicial function was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company Petition No. 12 of 1982, the petitioners question the travelling expenditure and other expenditure incurred by the second respondent as well as the donations given for and on behalf of the Sanga. The second respondent as R.W.-1 has given answers to these allegations. The petitioners in paragraph 22 of the petition have set out in detail about the proposal initiated by the second respondent to form a. trust in or about 1970. Admittedly, the Sanga has accumulated its income from time to time. Sometime in February; 1970, the second respondent mooted out the proposal in exhibit P-69 dated November 16,1970, that the Sanga should promote a new trust for satisfying the income-tax requirements. This was followed by a draft deed given to the petitioners on December 3,1970, and on that day the second respondent persuaded the other directors that the Sanga will be associated in the management of the said trust. However, the trust deed, as finalised, does not make any such provision. According to learned counsel for the petitioners, the trust deed was executed by Visweswara Rao on November 9, 1970, and registered on December 16, 1970. The substantial amount of Rs. 15 lakhs was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is management, could not meet expenses in regard to the education, medical and cultural activities and, therefore, it has borrowed and spent. It is further urged that during the pendency of the company petition proceedings, the second respondent has sold 3 acres of land belonging to the Sanga for Rs. 3.67 lakhs as per the evidence of RW-1. According to the petitioners, there is no necessity for the Sanga to borrow funds and spend and as on to-day, the Sanga is in debts. The financial position of the Sanga is not known to anyone except the second respondent, and that the second respondent has been treating the Sanga as a sole proprietary concern and has made the Sanga to borrow and spend from time to time beyond its capacity. The Sanga is a charitable trust and a non-profit organisation and there is no necessity to sell its immovable properties and spend the same for charitable purposes. As on March 31, 1990, the Sanga owes to Sri Ramalingeswaradu Trust Rs. 11.5 lakhs and none is aware of the financial position of the Sanga as on date. In answer to the above allegations, Mr. V. R. Gopalan invited my attention to the answers given by the second respondent as RW-1. He had given ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly and specifically against the tenth respondent, which is a separate legal entity and such a relief cannot be asked for in a company proceedings. It is further submitted that this court sitting in company jurisdiction cannot deal with a totally different legal entity and grant any relief against it. It is no doubt true that a corpus donation of Rs. 15 lakhs was given by the Sanga to the tenth respondent Trust in 1970. A question is raised as to the competence of the Sanga to give such a donation and it is argued that it is ultra vires . It is submitted that clause III, sub-clauses 10 and 24 of the memorandum of association of the Sanga are very clear and specific. According to Mr. V. R. Gopalan, clauses 10 and 24 give ample powers to the Sanga to organise, promote, establish and maintain, aid in the promotion, establishment, maintenance of the Sanga or associations with objects similar to those of the Sanga in all parts of India and elsewhere and that the Sanga can subscribe or guarantee money for any national, charitable, benevolent, religious, public, general and useful objects. It is contended that the Sanga had all the legal competence to donate, aid or subscribe and the tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second respondent and that he was an elderly person having no means. In fact, the said P. Visweswar Rao was also a shareholder of the Sanga till 1978 and he died on May 19, 1979. It is in evidence that the formation of the tenth respondent trust and regarding the details which were worked out, the same took place in October, 1970, during Navarathiri celebrations in Vijayawada when P. Visweswar Rao also took part. R.W.-1 speaks about the same. After the modalities were worked out, the trust was formed by P. Visweswara Rao on November 9, 1970, and Visweswara Rao wrote exhibit R-119 letter to the Sanga on November 10, 1970. Along with that letter, he enclosed a copy of the trust deed, which copy has been marked as exhibit R-159. Exhibit R-159 is a carbon copy of the original trust deed exhibit R-160. It will be seen that the original trust deed was registered on December 19, 1970 and in the Sanga's files, in exhibit R-159, an endorsement to that effect had been made on the top portion of the document. Exhibit R-159 has been on the files of the Sanga from November, 1970, onwards till this date. It is stated that the same was seen by everyone and it is an open secret. As already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and the suit claim was for Rs. 24,94,293.27. That suit was decreed by this court on September 2, 1983. The present company proceedings had been filed one year after the filing of the above suit against the business company, wherein petitioners Nos. 2 and 3 are directors. Similarly, the other business company, Indian Commerce and Industries Co. Pvt. Ltd., also run by petitioners Nos, 2 and 3 herein, had availed of a loan of Rs. 12 lakhs from the tenth respondent earlier in September, 1977, vide exhibit R-162. The said amount was repaid by them subsequently and again borrowed by the very same petitioners for and on behalf of Beehive Engineering and Allied Industries Pvt. Ltd. It is submitted that both the above transactions took place in the year 1977 and that petitioners Nos. 2 and 3 were fully aware of the existence of an independent management for the tenth respondent, and at no point of time, they treated the tenth respondent as forming part of the Sanga. There is yet another resolution passed by the Sanga on December 29, 1971, vide exhibit R-2( i ) which will show that certain shares and securities of the Sanga had been sold to the tenth respondent and the said meeting wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are his nephews. There is nothing wrong in the action of P. Visweswar Rao for inducting the fifth respondent on May 13,1979, nearly nine years after the formation of the trust, especially when his only son was dead. It is also to be noticed that an attempt was made by the petitioners to implicate the tenth respondent and wanted the documents of the tenth respondent to be produced in court in this company proceeding but the said request was negatived by this court on August 28,1986, in Application No. 221 of 1983. The same was challenged before a Bench of this court in 0. S. A. No. 179 of 1983. The Bench by order dated September 11, 1983, dismissed the said appeal and confirmed the order of the company court. Having regard to the above, I am of the view, the present proceedings initiated implicating the tenth respondent is not legally maintainable. If really any fraud was practised by the second respondent in 1970 at the time of the formation of the tenth respondent trust, nothing prevented the petitioners from taking any action immediately. On the other hand, they recognised the independent functioning of the trust when they chose to borrow moneys from the trust. Only when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned counsel for the respondents that in the case of a section 25 company, the shareholders do not have a proprietary right in the sense it is understood in a commercial company. In my opinion, this argument is well founded. In the case of Five Minute Car Wash Service Ltd., In re [1966] 36 Comp. Cas. 566 (Ch. D.) it has been held that the matters complained of must affect the person alleged to be oppressed in his or their character as a member or members of the company ; harsh and unfair treatment to the petitioner cannot entitle him to any relief. A member or a director will have no personal interest in the case of a section 25 company since the object of the company is wholly charitable and no member or director can complain that he was ignored while doing the charity. Mr. V. R. Gopalan, learned counsel for the respondents, would submit that in the instant case, it is the petitioners/minority who are oppressing and even giving pressure on the respondents/majority and it is a reverse case. It is also not in dispute that most of the properties belonging to the Sanga are tenanted to the three business companies run by petitioners Nos. 2 and 3. It is also alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en functioning as directors all through. They were parties to the board's resolutions and the general body resolutions. Still, they would disown their responsibility and try to put the blame only on the second respondent. The evidence adduced would clearly show that the petitioners have been parties to all the transactions and they were fully aware of the same. There is absolutely no evidence to show that they were ignorant of the transactions. Sanga, a charitable institution in the nature of trust, is not commercial. It is argued that there is no question of any oppression of the petitioners' right as members of company especially in a section 25 company. According to Mr. V, R. Gopalan, the scope of section 397 of the Act is very limited in a case of this kind. On the ground of mismanagement, no specific instances have been spelt out, On the other hand, the six items of complaints levelled against the respondents have been well met and answered. The right of the petitioners under section 25 of the Act is only to ensure the performance of a charitable trust and certainly the personal benefits of the petitioners do not come into the picture. Hence, I am of the view, that in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had gone to the corpus fund of the trust founded by P. Visweswar Rao in the year 1970 itself and it is in evidence that P. Visweswar Rao had been in charge of the tenth respondent for nine years till his death in 1979 utilising the amount for the trust. No action was taken against P. Visweswar Rao or against the tenth respondent during the said period of nine years. Only in the year 1979, after a gap of nine years, the fifth respondent had been co-opted as a trustee by P. Visweswar Rao, and the fifth respondent has come into the scene as a co-trustee of the tenth respondent only in the year 1979. Simply because the fifth respondent is a shareholder or director of the Sanga also, whether the petitioners can file proceedings belatedly after the long lapse of time asking for the return of the amount, is the question. In my view, the same cannot be done either in law or on facts. The other case cited by Mr. T. Raghavan viz ., Manvalal Khetav v. Kedar Nath Khetav [1977] 47 Comp. Cas. 185 (SC), relating to section 108 of the Act, also has no application to the facts of the present case. It is not the case of the respondents in this proceeding that there are no proper instruments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Andhra Pradesh High Court. Many instances have been placed before this court to demonstrate as to how the minority has been oppressing the majority endlessly and would still complain and level charges against the respondents about the loan taken by the Sanga to meet its commitments especially because all the funds that should be regularly flowing to the treasury of the Sanga have been deliberately blocked by the petitioners, who happened to be the lessees of most of the Sanga's properties. On a careful consideration of all the materials placed on record it is clearly seen that the petitioners have come to this court with an untrue case. There has been no oppression and mismanagement on the part of the respondents as alleged by the petitioners. It, therefore, follows that Company Petition No. 12 of 1982 is highly misconceived and has been filed without any basis or merit and above all, there is inordinate delay and laches in seeking remedies, which are discretionary in nature. As pointed out earlier, discretionary relief cannot be granted if there is inordinate delay and laches. Prayer ( a ) seeking for a declaration, therefore, cannot be granted, as, in my view, no case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be dismissed, and is hereby dismissed with costs. Before parting with this case, I may direct both the parties, who are kith and kin and a closely knit family, to sink their difference of opinion and unite together in the interest of the trust, which was created by the founder with an avowed object, at least from now onwards. The suggestion made by the petitioners' counsel for appointment of an administrator, in my view, is unwarranted and quite unnecessary. Instead, the parties may consider the appointment of some eminent persons who are interested in public social and religious activities on the board. Now, I will take up Company Petition No. 13 of 1982. In this petition filed under section 155 of the Act, the petitioners pray for rectification of the share register, of the Sanga by deleting the names of respondents Nos. 2 and 3 in respect of the shares said to have been transferred by virtue of the resolution of the board dated January 15, 1955, August 11, 1957, and October 4, 1970. The first respondent is the Sanga, the second respondent is B.V.S.S. Mani and respondents Nos. 3 to 7 are the wife, sons and daughter of the second respondent. According to the petitioners, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eror and the transferee and stamped in accordance with the mandatory requirement of the Act and articles of association of the Sanga. But, instead, mere entries have been made in the statutory registers of the company deleting the names of several members, who; were either deceased or who were not taking any interest in the activities of the Sanga and entries made in the name of the second respondent or his wife as holders of the said shares. In paragraph 13 of the petition, it is alleged that the second petitioner K. L. Manohar made an inspection of the Sanga's records in 1981 and the complaint is that the second respondent was effectively avoiding making the records of the Sanga available to the petitioners, When the inspection took place on August 5, 1981, of the Sanga records, the file containing the share transfer applications of the company from its inception was shown to K. L. Manohar and he noted serious infirmities in several of the applications which related to the transfer of shares to respondents Nos. 2 and 3. In the counter-statement filed on behalf of respondents Nos. 1 and 2, the following defences were taken: ( a )This petition is clearly barred by limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to the share applications was inspected. Since the late C. A. Chettiar, father of the first petitioner, was in sole custody of the Sanga's records during his lifetime, the first petitioner must have removed the same with the connivance of the second petitioner K. L. Manohar, and both of them have now joined together to put the blame on the second respondent with ulterior motive. Only the petitioners are responsible to make available the file containing the share transfer forms which is not available in the custody of the second respondent. In paragraph 16 of the counter, it is contended that all the transfers of shares were done in accordance with law but unfortunately the file containing the share transfer applications is obviously in the custody of the petitioners and now they want to take advantage of the same. At no point of time any specific demand was ever made by either of the petitioners for the production of the share transfer application file and no occasion arose to any one to look into the said file all these years. With reference to October 4, 1978, meeting, in paragraph 17 of the counter affidavit, the respondents would submit that all the share transfers were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fatal. Therefore, according to Mr. T. Raghavan, the petitioners are entitled to the relief as prayed for. The point that arises for consideration in Company Petition No. 13 of 1982 is :. Whether the board's resolutions dated January 15, 1956, August 13, 1957, and October 4, 1978, are true and genuine regarding the shares transferred in these meetings and legally valid ? Point : As already pointed out, the late K. S. Rao, the founder of the Sanga, was a self-made man and a man of independent thinking. He always took final decisions in the matter relating to the Sanga as well as his three business companies. K. S. Rao was acting as the managing director of the Sanga till his lifetime, which is not disputed. Articles 86 to 90 of the articles of association deal with the powers of the managing director. As already discussed, 1956 and 1957 were crucial periods for the Sanga, in that, K. S. Rao applied for a licence under section 25 of the Act from the Central Government, which he got eventually on July 5, 1957. He did not gift or donate any property to the Sanga before 1956-57. In fact, he did his duty to his only son, Mohanram Sastry, and his son's son, K. L. Manohar, by set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. V. Subba Rao, an employee of Indian Commerce and Industries Co. Pvt. Ltd., was in charge of the Sanga's records till his death in 1950. The minutes book maintained by him had been marked as exhibit R-134. After his lifetime, the minutes books were maintained either in the handwriting of C. A. Chettiar till his death in 1976 or by A. K. Balasubramaniam, accountant of Indian Commerce and Industries Co. Pvt. Ltd., till his death in 1970. At the time when the two board meetings were held on January 15, 1956, and August 13, 1957, it is conceded that A. K. Balasubramaniam was maintaining the minutes in his own handwriting and certainly not B.V.S.S. Mani. Exhibit R-1 is the minutes book and exhibit R-1( a ) is the pasted resolution dated January 15,1956. Exhibit R-1( a ) is the underneath writing in the handwriting of A. K. Balasubramaniam dated January 15, 1956. Exhibit R-1( h ) is the photo copy. Exhibit R-1( b ) is the pasted resolution dated August 13,1957. Exhibit R-1(bb) is the underneath writing on August 13, 1957. Exhibit R-1( f ) is the photo copy. The only witness examined on behalf of the petitioners is K. L. Manohar as P.W.-1. He would say that he was only 19 years of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohanram Sastry and C. A. Srinivasan were also directors of the Sanga in the years 1956 and 1957, and the two impugned resolutions took place only when they were directors of the Sanga. It is worthwhile to see the background and the reasons as to how and why the share transfers were effected by the late K. S. Rao on January 15, 1956, and August 13, 1957, respectively. It is true that the late K. S. Rao founded the organisation originally as a company limited by shares and even issued share certificates to about 50 persons, the value of the shares being Rs. 100 and Rs. 10 each respectively. Already it has been discussed as to how a stalemate was created in the year 1948 and how originally K. S. Rao wanted to have a broadbased board of directors and how those persons did not come up to the expectation of the late K. S. Rao and did not even pay the subscription amount with the result their names were struck off. The evidence would clearly disclose that in the years 1956 and 1957, there was thinking and re-thinking in the mind of the late K. S. Rao when he wanted to consolidate his position when he applied for the licence under section 25 of the Act. Naturally, he wanted to restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated January 15, 1956, and August 13, 1957, which are very much in their favour since they got transfer of shares in their favour. But, they would attack only that part of the resolutions in favour of Mr. B.V.S.S. Mam and his wife. No explanation if forthcoming from the petitioners as to why they had chosen to attack only part of the resolutions dated January 15, 1956 and August 13, 1957. It is not the case of the petitioners that the writing underneath subsequently found out from the report of the Forensic Library was true and genuine. In fact, the petitioners had not said either in the pleadings or in the oral evidence, that only the writing underneath prevails and that it was true and genuine. Their objection was only to the effect that both the resolutions were pasted resolutions. Here again, they would attack only part of the resolutions. The evidence of P.W.-1 is most unimpressive, very vague and very meagre too. In fact, P.W.-1 has not come out with a clear case. But, he would say that he was fully aware of the fact that there was writing underneath the two pasted resolutions, He would even add that the pasting was done only at the top portion. If that were so, the writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted January 15, 1956, it is clearly seen that [the writing underneath is incomplete and the matter itself is not complete and does not make sense. Ac explained by R.W. 1 in his evidence A. K. Balasubramaniam, the scribe, could not complete the resolution for want of space and that was the reason why the pasted resolution gives a complete and full picture and as such, the same came to be affixed. There being no contra evidence on this the evidence of R.W. 1 is to be accepted. By no stretch of imagination it could be said that the writing underneath and the incomplete matter dated January 15, 1956, was ever acted upon by the parties and it is nobody's case either. If the incomplete writing underneath goes out of picture, what survives is the pasted resolution exhibit R-1( a ), which is full, complete and meaningful. The writing underneath stopped abruptly with the word 'and . Another special feature is that we do not find any change or difference or contradiction between the writing underneath and the pasted resolution dated January 15, 1956, excepting that the writing underneath makes a full sense only when we read the pasted resolution. RW-1 also had clearly stated that the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pencil writing as 10 + 1. This is reflected fully in the pasted resolution exhibit R-1( b ), wherein the share certificate numbers, the name of the transferor and the name of the transferee had been clearly given. ( e )So far as the third respondent Lalitha Rathnam is concerned, the evidence of R.W.-1 would disclose that initially K. S. Rao wanted to transfer 100 shares of Rs. 10 each but immediately decided to transfer 10 more shares of Rs. 10 each belonging to Kadiyalau Suryanarayana Rao, which is reflected in pencil writing as + 10 of 10. The pasted resolution exhibit R-1( b ) reflects the said position. ( f )So far as K. L. Manohar is concerned, in the writing underneath initially K. S. Rao was intending to transfer 125 shares of Rs. 10 each to him, which was also his thinking when the pasted resolution exhibit R-1( b ) was typed. But, eventually when K. S. Rao put his signature in the final resolution, he restricted the share transfer retaining and not touching the 50 shares of Sella Lakshmana Sastry of Varanasi. The reason for retain ing Lakshmana Sastry's shares and not disturbing the same had been well explained by R.W.-1. ( g )By restricting the share transfer on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been easily resolved beyond any doubt. Unfortunately, K. L. Manohar has not chosen to produce the original share certificates transferred in his name on August 13, 1957. It is in evidence that C. A. Chettiar, C. Srinivasan and Mohanram Sastry were directors of the Sanga during 1956-57 and they being the directors, they are bound to be having full knowledge and details about the share transfers. It is unfortunate that no questions were ever raised until the death of the late K. S. Rao or during the lifetime of C. A. Chettiar. The persons now complaining were directors of the Sanga. They ask B. V. S. S. Mani alone to explain the events that took place in 1956-57. In fact, both of them had recognised all the share transfers made by the late K. S. Rao without raising any protest till 1982. The share register of the Sanga had been filed as exhibit R-124. The shareholdings of each and every one had been clearly mentioned in that book in the handwriting of A. K. Balasubramaniam himself. Only the two pasted resolutions dated January 15, 1956, and August 13, 1957, figure in that book and not the writing underneath. The annual returns as on December 19, 1956, addressed to the Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp, signature, etc., knowing full well that R.W.-1 would not be in a position to produce into court the share transfer file with a view to meet those selections. Even under exhibit P-110, said to be the notes prepared by K. L. Manohar, and exhibit R40, acknowledgment of K. L. Manohar to the Sanga, it has been clearly mentioned that the official inspection made by K. L. Manohar was only with reference to the share application file and not the share transfer file. The allegations levelled against B. V. S. S. Mani that he manoeuvred the shares transferred in his name as per the resolutions dated January 15, 1956, and August 13, 1957, with a view to get at the properties of the Sanga at a future date, have absolutely no legs to stand and those allegations have been made mischievously and wantonly for the first time in this company proceeding. On a careful analysis of both the oral and documentary evidence adduced, I am of the view that the request for rectification of the share register cannot be granted since it is highly belated and time barred. Only the two pasted resolutions have been acted upon fully and effectively by the members and directors of the Sanga right from 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain shares belonging to dead persons had been transferred in that meeting to and in favour of B. V. S. S. Mani without observing all the legal formalities. K. L. Manohar as P.W.-1 has given evidence on this aspect. B. V. S. S. Mani has given evidence as R.W.-1. The share transfers in the meeting held on October 4, 1978, relate to P. Visweswar Rao. Stephen, C. Lakshmana Sastry, A. V. Jagannathan and P.E. Ethirajulu Chetty. Out of the five, Lakshmana Sastry, P. Visweswar Rao and A. V. Jagannathan were alive at that time and the other two were dead. It is the positive evidence of RW-1 that due letters had been addressed to the shareholders Stephen and P. E. Ethirajulu Chetty to the addresses mentioned in the Sanga's records and only after complying with the legal formalities as laid down under articles 35(A) and (B), the transfers were effected. He would further state that the notices sent to dead persons were returned and they were all kept in the share transfer file, which is now missing. In respect of the other three shareholders, all the formalities had been observed by getting the transfer of shares and the transfer documents were also kept in the said missing file. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners had stealthily removed the share transfer file kept in the cupboard at No. 29, Broadway, Madras-1, by using the alternate set of keys. The evidence of R.W.-1 would disclose that it must have happened sometime after December 24,1979. Hence, we cannot expect the transfer deeds, the returned covers, etc., pertaining to the meeting dated October 4, 1978, kept in the file, be made available by B. V. S. S. Mani in this proceeding since the entire file is missing from the Sanga's custody. R.W.-1 would assert that only after removing the file, all the allegations have been deliberately made by the petitioners knowing full well that he cannot produce the file and meet the queries. There is considerable force in the explanation given by B. V. S. S. Mani in this regard. The same is quite convincing and has to be accepted. Per contra, K. L. Manohar has given evidence as P.W.-1 regarding the meeting dated October 4, 1978. In the cross-examination he has given prevaricating answers, which will show that he has not come out with true and real version. His answers are very evasive and most unimpressive. Further, even in the counter statement the second respondent would clearly stat ..... 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