9911796707
TMI Blog1999 (3) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed under sections 397 and 398 of the Companies Act, 1956 ( the Act ) by the majority shareholders praying, inter alia, for supersession of the board of directors on the ground of oppression and mismanagement (CP No. 448 of 1980). On 12-11-1980 Mr. Sunil Mukherjee, an advocate of this court, was appointed as special officer over the company. CP No. 448 of 1980 was disposed of on 6/7-6-1984. The board of directors of the company was superseded. The order dated 6/7-6-1984 further provided : "The special officer already appointed is directed to call a meeting of the shareholders of the company on the basis of the shareholding as on 31st March, 1979 as recorded in the relevant annual return for constitution of a new Board of directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the application. 6. The meeting was held on 21-9-1984. The special officer s report gives the particulars of the persons who attended the meeting and voted. At the meeting Mr. Timirari Bhattacharjee, Mr. Lokenath Battacharjee and Mr. P G Shah were appointed as directors of the company and resolutions were passed to this effect. The special officer s report states that the meeting was duly held in terms of the orders of the court and a new board of directors of the company was elected but in view of the order of the appellate court that no effect should be given to the resolution, the special officer did not hand over charge to the board of directors nor did he file any report. 7. The application of the respondent in the pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before the company court in the sections 397 and 398 proceeding, praying that he may be appointed as a receiver in respect of the company and that he may be authorised to institute a suit against the company s tenants. The allegation in the application against the special officer was that he was not in the know of the affairs of the company and was not acquainted sufficiently to be able to take any effective step to safeguard the interest of the company. The respondent was, however, not successful in being appointed as receiver as prayed for by him. 11. The majority of the shareholders ( the applicants ) then made an application in the pending suit for leave to conduct the defence of the company on 20-4-1998. It was claimed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose orders would be judgments which decide the matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned." 15. This principle was followed in Calcutta Chemical Co. Ltd. v. Krishna Das Pal [1985] 57 Comp. Cas. 503 (Cal.) where an order refusing leave to a company to file a supplementary affidavit in aid of its defence was held to be appealable. It was held that the defence of the company had been seriously prejudiced by the order and that : ". . . The seriousness of the prejudice or injustice caused to an aggrieved party by an interlocutory order is the guiding factor for the decision of the question as to whether such an order is a judgment within the meaning of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a shareholder whose name appeared in the annual reports of the company in respect of the year ended on 31-3-1979. 19. It is also submitted that the Board never took charge of the affairs of the company. Therefore, the special officer continued. It is also submitted that the appeal was dismissed in 1990 but no step had been taken by the board of directors to take over charge from the special officer in terms of the order dated 6/7-6-1984. According to the respondent, this appeal was mala fide to further defer a decision on the suit filed by the respondent. 20. As far as the board of directors is concerned, there can be no doubt in the light of the report of the special officer that three directors were appointed. But reading sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers and their personal interest is in conflict with their duty in such a way that they cannot or will not take steps to seek redress for the wrong done to the company, the majority of the shareholders must in such a case be entitled to take steps to redress the wrong. There is no provision in the articles of association to meet the contingency, and, therefore, the rule which has been laid down in a long line of cases that in such circumstances the majority of the shareholders can sue in the name of the company must apply. . . ." (p. 137) 23. There is, therefore, no one to defend the company in the suit. Where the right to defend is an issue, in the light of the law laid down by the Supreme Court in Shah Babulal Khimji s case ( supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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