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TMI Blog1970 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... intiffs in the suit, the first Plaintiff being Asiatic Oxygen and Acetylene Company Ltd. The other Plaintiffs were Surajmull Nagarmull, Howrah Trading Company Pvt. Ltd. and Deokinandan Jalan. On behalf of Asiatic Oxygen and Acetylene Company Ltd., which was originally the Plaintiff No. 1, the plaint was signed by Deokinandan Jalan as partner of Surajmull Nagarmull, the Managing Agents of Asiatic Oxygen and Acetylene Company Ltd. Subsequently by an order made, the name of Asiatic Oxygen and Acetylene Company Ltd. was deleted from the category of the Plaintiffs and the said company was transposed to the category of the Defendants. The firm of Surajmull Nagarmull, which was originally the Plaintiff No. 2, has now become the first Plaintiff in the suit. Howrah Trading Company Pvt. Ltd. is now the second Plaintiff and Deokinandan Jalan, who happens to be the real Plaintiff, is the third and the last of the Plaintiffs. On behalf of Surajmull Nagarmull, now the first Plaintiff in the suit, the plaint has been signed by Deokinandan Jalan as partner of the said firm. On behalf of Howrah Trading Co. Pvt. Ltd. the plaint has been signed also by Deokinandan Jalan as Director of the said compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the said Articles of Association and that one of them as shall be named by the said Plaintiff Surajmull Nagarmull would be the Chairman of the Board of Directors of the said Defendant No. 13. ( 7. ) It is stated in para 4 of the plaint that at all material times one Baijnath Jalan, father of the Plaintiff No. 3 Deokinandan Jalan, since deceased was the registered share -holder of the Defendant No. 13 to the extent of 350 equity shares of ₹ 10 each and was a partner of Surajmull Nagarmull, and the said Baijnath Jalan died intestate in the year 1954 leaving him surviving the Plaintiff Deokinandan Jalan as his only son. It is stated that since long prior to the death of the said Baijnath Jalan the Plaintiff Deokinandan Jalan was a partner of Surajmull Nagarmull, and after the death of the said Baijnath Jalan the Plaintiff's firm Surajmull Nagarmull was reconstituted and the Plaintiff Deokinandan Jalan in his individual capacity became a partner to the extent of 2 as. 9 pies share in the Plaintiff firm. ( 8. ) It is averred in para 5 of the plaint that prior to the alleged and impugned transfer of shares the Plaintiffs Surajmull Nagarmull and Howrah Trading Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Articles of Association of the Defendant No. 13 at all material times provided that minimum number of Directors of the Defendant No. 13 would be three and the maximum number of Directors would be eight. ( 12. ) It is alleged in para 9 of the plaint that qualification shares required to be held by a Director of the Defendant No. 13 under the Articles of Association thereof at all material times were 500 equity shares. ( 13. ) It is alleged in para 10 that at all material times and in any event since long prior to the year 1959 the Defendant No. 1 Shew Bhagwan Jalan was and still is a partner and associate of the Plaintiff No. 1 Surajmull Nagarmull and in para 11 it is averred that the Defendant No. 2 Shyamsundar Jalan is the son of Babulal Jalan, the Defendant No. 5 who is also a partner and associate of the Plaintiff No. 1 Surajmull Nagarmull and, as such, the Defendant No. 2 at all material times was and still is an associate of the Plaintiff No. 1. ( 14. ) In para 12 of the plaint reference is made to the employment of Gopalkrishna Jalan under the Defendant No. 13 at a monthly remuneration of more than ₹ 500 and it is alleged that the said Gopalkrishna Jalan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The alleged notices of the said alleged general meeting of the company are alleged to have been despatched on September 6, 1962. (e) No consent of the Defendant No. 13 appears to have been accorded either by, a special resolution or otherwise with regard to the appointment of the said Gopalkrishna Jalan as an assistant of and or holding an office of profit under the Defendant No. 13 upon payment of remuneration of over ₹ 500 per month. . (f) Sometime in June 1962 the Defendant No. 4 appears to have allotted 6,650 equity shares, 1,900 equity shares and 1,900 equity shares in the Defendant No. 4 in favour of the Defendants Nos. 1, 2 and 3 respectively in exchange of all the equity shares held by the said Defendants Nos. 1, 2 and 3 in the' Defendant No. 13 at the rate of 38 equity shares in Defendant No. 4 for 10 equity shares in the Defendant No. 13. In the circumstances it further appears that the said Defendants Nos. 1, 2 and 3 cease to hold any equity shares in the Defendant No. 13. ( 16. ) It is alleged in para 14 of the plaint that each of the said alleged notices of each of the said alleged. general meetings of the Defendant No. 13 and each of the said all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the plaint that thus the only Director of the Defendant No. 13 between the middle of 1961 and middle of 1962 was the Defendant No. 3 who alone could not validly act as Director nor transact any business of the Defendant No. 13 and, furthermore, the Defendants Nos. 1, 2 and 3 having in the circumstances hereinbefore stated ceased to hold the qualification shares, they and each of them ceased to be the Directors of the Defendant No. 13 with effect from, their ceasing to hold of such qualification shares. ( 19. ) The Plaintiffs allege in para 17 of the plaint that the Defendants Nos. 1, 2 and 3 are wrongfully alleging that at all material times they were and still are the Directors of the Defendant No. 13 and the said Defendants are also wrongfully and illegally continuing to act and hold themselves out as Directors of the Defendant No. 13 although they have no right to do so. ( 20. ) It is averred in para 18 of the plaint that at all material limes the Plaintiff Surajmull Nagarmull was and still is the holder and/or owner of practically all the shares in the Defendant No. 10 Coochbehar Trading Company Pvt. Ltd.; and the Plaintiff No. 3 Deokinandan Jalan is the holder, and ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fs Nos. 1, 2 and 3. ( 25. ) In para 23 the Plaintiffs refer to the announcement in the prospectus of the proposal to appoint the Plaintiff No. 1 as the Managing Agent of the Defendant No. 4 for a period of ten years and to the obtaining of the necessary approval of the Government sometime in January. 1962 and that upon such appointment the Plaintiff No. 1 would resign from the Managing Agency of the Defendant No. 13. ( 26. ) In para, 24 the Plaintiffs state that the Plaintiff No. 3 Deokinandan Jalan in his capacity as a partner of the Plaintiff No. l Surajmull Nagarmull had expressly prohibited all other partners of the, said firm and the Defendants Nos. 1, 2, 3, 5 and 7, the original Defendant No. 8. and the Defendants Nos. '9, 10, 11 and 12 from transferring any share of the Defendant No. 13 standing in the name of the Plaintiff No. 1 and/or in the name of the said Defendants; and the Plaintiff No. 3 in his capacity as a Director of the Plaintiff No. 2 had also expressly prohibited the Defendant No. 1 who at all material limes was and still is the only other Director of the Plaintiff No. 2 from transferring among others any share of the Defendant No. 13 standing in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 each. According to the alleged exchange of shares of the Defendant No. 13 the share -holders of the Defendant No. 13 are alleged to have been allotted 2,66,000 equity shares of ₹ 10 each in Defendant No. -4,. and in this way all the share -holders of the Defendant No. 13 would be having a voting power only to the extent of 16 -62 % in the Defendant No. 4 and the Defendant No. 13 will be reduced to the position of a subsidiary company of the Defendant No. 4 and the share -holders of the Defendant No. 13 will be reduced to a hopeless minority in the Defendant No. 4 and would practically have no controlling power in the Defendant No. 4. ( 29. ) In para 26(b) it is alleged that in the premises the said alleged arrangement for transfer and/or transfer of shares in the Defendant No. 13 in favour of the Defendant No. 4 was and is in fraud of the Defendant No. 13 and its share -holders and in any event in fraud of the Defendant No. 4. ( 30. ) The Plaintiffs state in para '27 that the reasonable and the market value of the shares, of the Defendant No. 13 at all material times was and still is worth 'over ₹ 70 lakhs and according to the alleged arrangement and/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant No. 13 and as such was and is invalid, void, illegal and of no effect and it should be declared as such... ( 33. ) In para 30 the Plaintiffs allege that the Defendant No. 13 had in order to extend their business acquired and obtained from the Government of India the licence No. L/9/N -3.8/59 for manufacture, of 9,000 units of regulators, 7,500 units of torches and 150 units of oxy -cutting machines per annum ; and the Defendants Nos. 1, 2 and 3 purporting to act as the Directors Of the Defendant No. 13 and the Defendants Nos. 4 and 5 in collusion and conspiracy with each other having also wrongfully and illegally purported to transfer and /or agreed to transfer the said most valuable licence to the Defendant No. 4 without any advantage or benefit to the Plaintiff's and to the Defendant No. 13 resulting in the prevention of further expansion of business activities and consequential profits to the Plaintiffs and to the Defendant No. 13. ( 34. ) The Plaintiffs state in para 31 that the Defendant No. 13 had also procured an import licence from the Government of India for import of cylinders of the value of over ₹ 4,48,000 out of which cylinders worth about ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fendant No. 13, the Plaintiff No. 1 and/or its partners and in any event the Plaintiff No. 3. ( 38. ) In Para 35 the Plaintiffs state that, assuming but not admitting in any way the factum or validity of the alleged transfer of shares, the Plaintiffs allege that such, alleged transfer of shares, if any, must have been made on the basis of the statements contained in the prospectus issued by the Defendant No. 4 which as hereinbefore stated were false and were appeared to have never been intended to be implemented nor have the same been implemented and, in the premises, the said alleged transfer of shares, if any, is void and/or voidable and the Plaintiff for self and on behalf of the Defendant No. 3 and the Defendant No. 13 have avoided the same and the Plaintiffs hereby avoid the same. ( 39. ) In para 35,(a) the Plaintiffs refer to the death, of the original Defendant No. 8 Nandkisore Jalan and to his heirs and legal representatives who have been brought on record. ( 40. ) In Paras 38, 39, 40, 41 and 42 of the plaint, introduced by way of. further amendments, the Plaintiffs refer to earlier proceedings between the parties in this suit and contend that in view thereof none ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining the Defendant No. 4, its agents and servants from using or in any way utilising the manufacturing licence mentioned in para 30. (11) Permanent injunction restraining the Defendants Nos. 1, 2 and 3, their servants and agents from charging and/or creating any mortgage in respect of any of the assets or properties of the Defendant No. 13. either in favour of the Industrial Finance Corporation of India or otherwise. (12) A decree in favour of the Defendant No. 13 directing the Defendants Nos, 1, 2 and 3 to refund or restore all monies or advantages received by them as Directors of the Defendant No. 13. (13) A decree for ₹ 1,00,00,000 or alternatively an enquiry into damages. (14) A decree in favour of the Defendant No. 13 against the Defendants Nos. 1, 2, 3 and 4 directing refund of all promotional expenses mentioned in paras. 13 and 14. (15) Receiver. (16) Injunction. (17) Costs. (18) Leave under Order 2, Rule 2 of the Code of Civil Procedure. (19) Further and/or other reliefs. ( 42. ) Three separate written statements have been filed on behalf of the Defendants. One joint written statement was filed on behalf of the Defendants Nos. 1 to 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Plaintiff No. 3 as his only son. This Defendant further states that no application has been made to this company for transmission of the said shares which stood in the name of the said Baijnath Jalan nor has this company been informed of the issue of any succession certificate or any other representation in respect of other properties or the said shares left by the said deceased. In para 4 this Defendant, dealing with the allegations made in para 5 of the plaint, denies that the Plaintiff No. 3 ever Was or still is a share holder of this Defendant and this Defendant craves reference to its register of members. ( 46. ) In para 5 this Defendant denies each and every allegation made in para 6 of the plaint. In para 6 of the written statement this Defendant denies that on and from July 18, 1962, the qualification shares required to be held by a Director of this Defendant under its Articles were and are 500 equity shares as alleged or at all. ( 47. ) In para 7 this Defendant, dealing with the allegations made. in para 13(a) of the plaint, states that the meeting referred to therein was duly held upon due notice to the members and the appointment of the Defendant No. 2 as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plaint. ( 53. ) In para 12 this Defendant, dealing with the allegations made in para 13(f) of the plaint, denies that the Defendant No. 1 acquired 6,650 or any equity shares in the share capital of the Defendant No. 4 in exchange of any equity shares held by the Defendant No. 1 in the share capital of this Defendant;. and this Defendant states that the Defendants Nos. 2 and 3 acquired, at all material times, held and still holds one equity share in this Defendant and the Defendant No. 1 at all material times, held and still holds 1,751 equity shares in this Defendant. This Defendant denies that the Defendant No. 1 or 2 or 3 ceased, at any material time, to be holder of any equity shares in this Defendant. ( 54. ) IN para 13 of the written statement this Defendant denies each and every allegation made in para 14 of the plaint. ( 55. ) In para 14 of the written statement this Defendant deals with the various sub -paragraphs of para 14 of the plaint and this Defendant states as follows: 14. (a) Re: Special Resolution dated December 21,1959: (i) This Defendant states that notice calling the general meeting or of the intention to move the resolution as a special resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rotation from the Board of Directors of this Defendant and have been duly re -elected as Directors of this Defendant and the said Defendants Nos. 1, 2 and 3 have , at all material times, been and still are the Directors of this Defendant. ( 59. ) In paras. 17 and 18 of the written statement this Defendant denies and disputes each and every allegation made in paras. 16 and 17 of the plaint and, in particular, this Defendant denies that the Defendant No. 1 or 2 or 3 ceased to hold the requisite qualification shares for the directorship so long as such qualification was necessary or that the said Defendants have ceased to be Directors of this Defendant, at any material times, as alleged or at all and this Defendant states that the Defendants Nos. 1, 2 and 3 have, at all material times, been and still are the Directors of this Defendant. ( 60. ) In dealing with the allegations contained in para 18 of the plaint this Defendant states that save that the Plaintiff No. 1 held and still holds shares in the Defendants Nos. 10, 11 and 12 and the Plaintiff No. 3 holds shares in Plaintiff' No. 2, this Defendant makes no admission of any of the allegations contained in the said paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained therein and denies the allegation of any collusion and conspiracy and this Defendant states that, in any event, this Defendant has no notice of the allegations made in para 24 of the plaint, and the Plaintiff No. 3 never gave any notice of the same at any material time to this Defendant, and this Defendant was bound by law to register the transfers referred to in the said paragraph. This Defendant denies that the Plaintiff can challenge the validity or legality of the transfer or allotment or exchange of shares or are entitled to maintain the suit in connection with the same. ( 65. ) In para 26 this Defendant denies each and every allegation made in para 25 of the plaint. ( 66. ) In para 27 of the written statement this Defendant deals with the allegations made in para 26(a) of the plaint and this Defendant states that save what would appear from the books of the Defendant this Defendant does not admit any of the allegations contained in para 26(a) of the plaint, and this Defendant states that the public have subscribed to the share capital of the Defendant No. 4 to the extent of ₹ 67 lakhs and the Defendant No. 4 has been floated in collaboration with a fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute the legality or validity of the said acts and agreements for creating charge or mortgage of the fixed assets of this Defendant, and, in any event, the said agreement was made and the said charge or mortgage was created upon notice to the share -holders of this company at the general meeting, of the share -holders of this company, and the same had been duly approved or ratified by the members of this company and the Plaintiffs are estopped from challenging the legality and validity thereof. ( 70. ) This Defendant in para 32 of the written statement in answer to the allegations made in para 30 of the plaint denies that the Defendant No. 1 or 2 or 3 or any of them acted in collusion or conspiracy with each other or have wrongfully or illegally proposed the transfer and/or transferred in favour of the Defendant No. 4, the licence referred to in the said paragraph or that the said transfer was without any advantage or benefit to this Defendant or that the Defendant has thereby been prevented from making further extension of business activities or consequential profits. This Defendant has been, at all material times, acting and is still acting as a subsidiary of the Defendant No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral, meeting of this company, and the same were duly approved and ratified by the members of this Defendant and the Plaintiffs are estopped from challenging the legality and validity of the same. ( 72. ) In paras. 34, 35 and 36 of the written statement this Defendant deals with the allegations made in paras. 32, 33 and 34 of the plaint and denies the allegations contained therein. ( 73. ) In answer to the allegation made in para 35 of the plaint this Defendant in para 37 denies that the statements contained in the prospectus issued by the Defendant No. 4 were or are false or were not intended to be implemented or that the transfer of shares was made on the basis as alleged in the said paragraph or that the same is void or voidable or that the same has been avoided or that the Plaintiffs are entitled to challenge the said transfer or to claim any alleged relief in respect thereof. ( 74. ) In para 38 of the written statement this Defendant dealing with the allegation made in para 35(b) of the plaint states that M/s. Leslie and Khettry had no authority to act and this Defendant craves leave to the order dated June 12, 1969, and save as appearing therein this Defendant does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answer the allegations introduced in the plaint by way of amendment for raising the question as to the contention. of the Defendants as to the maintainability of the suit of the Plaintiffs being barred by res judicata or principles analogous thereto. In the additional written statement filed, this Defendant craves reference to the said earlier proceedings and orders made and denies and disputes the claim and contention of the Plaintiffs as to the question of res judicata. In the written statement filed on behalf of the Defendants Nos. 1 to 10, including the original Defendant No. 8, the claim and contention of the Plaintiffs in the suit are denied and disputed. Similarly, in the written statement filed on behalf of the Defendant No. 11 the case of the Plaintiffs as made in the plaint and the claim of the Plaintiffs have been denied and disputed. The averments in the written statement filed on behalf of these Defendants are more or less on the same lines adopted in the written statement filed on behalf of the Defendant No. 13. As I have already dealt at length with the written statement filed on behalf of the Defendant No. 13 and as the said written statement happens to be the most ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consent or approval of the partners of the Plaintiff No. 1 as alleged in paras. 24 and 25 of the plaint ? (d) Are the Plaintiffs entitled to dispute the validity and legality of such transfers, allotments and exchanges of shares? 10. (a) Was the agreement between the Defendant No. 13 and the Industrial Finance Corporation of India to secure loans to the Defendant No. 4 invalid or void or illegal or ineffective or without sanction of the Board of Directors of the Defendant No. 13 as alleged in para.29 of the plaint? (b) Has the agreement been approved and ratified by the members of the Defendant No. 13 as alleged in para 31 of the written statement of the Defendant No. 13 ? (c) Are the Plaintiffs estopped from challenging the legality and validity of: the said agreement as alleged in the written statement of the Defendant No. 13 ? 11. Was the manufacturing licence transferred to the Defendant No. 4 wrongfully or illegally or in collusion and conspiracy or without any advantage or benefit to the Plaintiffs or the Defendant No. 13 ? 12 (a) Did the Defendants Nos. 1, 2 and 3 act in collusion and conspiracy with the Defendants Nos. 4 and 5 in selling or agreeing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel appearing on behalf of the other Defendants had also suggested certain issues. ( 81. ) As , in my opinion, the aforesaid issues sought to be raised on behalf of the Defendant No. 13 and the other issues which are suggested on behalf of the other Defendants were not very material for adjudication of the real disputes in suit and the issues relevant and material for proper and effective determination of the real disputes in suit have been raised and settled, I did not consider it necessary to raise specifically any of the said other issues suggested. I, however, made it clear to the parties that, although no specific issues had been raised as suggested, the parties would be entitled and at liberty to lead such evidence as they might consider proper on any of the aforesaid questions. ( 82. ) Evidences , oral and documentary, have been adduced. The Plaintiffs have called one Hariram Chamaria, and Hariram Chamaria was the only witness on behalf of the Plaintiffs. Through this witness the Plaintiffs sought to prove and tender certain documents. The documents which the Plaintiffs tendered through this witness are photostat copies of certain returns. filed with the Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndan Jalan as Director of Howrah Trading Company Pvt. Ltd. prohibited S.B. Jalan, who happens to be the other Director of Howrah Trading Company Ltd., from transferring the shares registered in the name of Howrah Trading Company Pvt. Ltd. in the Defendant No. 13, Asiatic Oxygen and Acetylene Company Ltd.; (iv) The books of accounts, records and documents of Surajmull Nagarmull are in the possession of other partner than D.N. Jalan ; and (v) That the ratio of exchange of 10 shares of Asiatic Oxygen and Acetylene for 38 shares of Asiatic Oxygen Company Ltd., the Defendant No. 4 herein, is improper. In course of his examination in chief this witness has stated that he goes very frequently to 61 Mahatma Gandhi Road where Deokinandan Jalan resides and it is his evidence that since 1960 when Deokinandan Jalan started residing at the said premises he had been to 61 Mahatma Gandhi Road many times. It is his evidence that he had to go to the residence of Deokinandan Jalan for taking instructions in regard to the work of the Tea companies as Mr. Deokinandan Jalan was the Chairman and Director of the three companies (see Qs. 7, 8 and 9). This witness speaks of dissolution of the firm of Suraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had asked me to tell him that the shares of Asiatic Oxygen and Acetylene Company Ltd. standing in the name of Howrah Trading Company Pvt. Ltd should not be transferred with the shares of Asiatic Oxygen Ltd. without the approval of the Board of Directors. (See Qs. 39 and 40). A copy of the letter addressed by Deokinandan Jalan along with four receipts has been tendered and is marked as Ex. B. This witness states that the exchange ratio of Asiatic Oxygen and -Acetylene Company Ltd. shares should have been approximately 256 shares of Asiatic Oxygen Ltd. for 10 shares of Asiatic Oxygen and Acetylene Co. Ltd. This witness has sought to prove photostat copies of documents lying at the office of the Registrar of Companies, West Bengal, filed by Asiatic Oxygen and Acetylene Company Ltd. with the Registrar of Companies. These documents which the witness has exhibited are photostat copies of some Form No. 23 filed by Asiatic Oxygen and Acetylene Company Ltd. with the Registrar of Companies setting out various resolutions as required under the provisions of the Companies Act. These photostat copies tendered by the Plaintiffs are Exs. D, E, F and G. This witness has also exhibited a certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Surajmull Nagarmull or of Howrah Trading Company Pvt. Ltd. This witness is also not in the personal employ of Deokinandan Jalan. He was in the employment of McLeod Co: Ltd. of which Mr. D.N. Jalan was the Dy. Chairman, and he calls himself a senior executive of the three Tea companies of which Deokinandan Jalan is the Chairman. Though this witness is not in the personal employment of Deokinandan Jalan, this witness states that he is looking after the legal affairs of D.N. Jalan and also this litigation on his behalf. Why this witness who is not in the personal employment of Deokinandan and is in the pay of the three Tea companies of which Deokinandan Jalan is the Chairman should look after the personal litigation of Deokinandan Jalan leaving aside his duties for which he is paid by the companies, passes my comprehension. I also see no valid reason why this witness, who calls himself a senior executive of the company of which there is a Managing Director, will call at the residence of Deokinandan Jalan, the Chairman of the Tea companies off and on to obtain instructions from Deokinandan Jalan with regard to the affairs of the three companies. It is normally to be expected that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Ltd. for 38 shares of Asiatic Oxygen Ltd: is wholly incompetent, unreliable and without any substance. ( 88. ) The evidence of this witness that he personally carried the letter addressed by Deokinandan to Shew Bhagwan, Babulal, Kisorilal and Nandkisore dated May 25, 1962, (Ex. B) and handed over the said letter personally to the said Jalans and he further orally conveyed to the said Jalans the instructions of Deokinandan Jalan, seems to be incredible. That Deokinandan Jalan had addressed the letter dated May 25, 1962, to the said Jalans and the said letter was received at the receiving Sec. of Surajmull Nagarmull is not disputed and is, in any event, established by the four receipts granted by the receiving Sec. of Surajmull Nagarmull. To my mind, this evidence of the witness of himself having carried the letter and delivered the same personally to the four Jalans, has been sought to be given only for the purpose of introducing the story of the oral prohibition alleged to have been communicated by this witness to the said four Jalans on instructions of Deokinandan Jalan. I see no reason why Deokinandan Jalan should ask this witness to make any oral communication to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 4 herein, in the Hindusthan Standard of May 22,. 1962 (Ex. 4). The second document tendered is the letter dated May 22, 1962, by Deokinandan Jalan to Babulal Jalan, Shew Bhagwan Jalan, Nandkisore Jalan and Kisoriial Jalan and the receipts granted in respect thereof. This letter along with the four receipts have been marked as Ex. B. Prospectus of the Defendant No. 4, Asiatic Oxygen Ltd., was also tendered through this witness (Ex. C). This witness has exhibited photostat copies of Form No. 23 filed by Asiatic Oxygen and Acetylene Company Ltd., the Defendant No. 13 herein, with the Registrar of Companies containing resolutions passed by the said Defendant No. 13 and the said photostat copies have been certified by the Asst. Registrar of Companies to be true copies of Form No. 23 filed by Asiatic Oxygen and Acetylene Company Ltd. These photostat copies of these forms containing the resolutions filed with the Registrar of Companies in From No. 23 have been marked as Exs. D, E, F and G. Another document exhibited on behalf of the Plaintiffs through this witness is a certified true copy of the list of share -holders of Asiatic Oxygen, and Acetylene Company Ltd. as on September 27, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Acetylene Company Limited has been carrying on business of the manufacture of industrial gases since 1942. It has a factory at Calcutta for the manufacture of oxygen and dissolved acetylene gases to which has recently been added a new single unit with a capacity of 7,000 eft. per hour of oxygen and corresponding acetylene gases. It has another factory at Bhilai for the manufacture of dissolved acetylene gases to which it has proposed to add an oxygen unit. It is now also engaged in certain engineering and construction work. It undertook the sub -contract for the Indian portion of the work relating to the Dugda Coal Washery in Bihar for Hindusthan Steel Ltd., the erection of which has since been completed. It has also entered into a similar sub -contract for another coal washery being set up at Pathardih for Hindusthan Steel Limited. The unit firm of Surveyors, Talbot Company of Calcutta, made a valuation of the assets, of the Asiatic Oxygen and Acetylene Company Limited. Based on their report and on the accounts of that company for the preceding three financial years, Singhi Company Chartered Accountants, made a valuation of the shares of that company. A majority of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that since 51% shares in the new company, viz. Asiatic Oxygen Limited, will be held by S.N. or their nominees, the new company for all purposes will belong to the firm of S.N. as is the present Asiatic Oxygen and Acetylene Company Limited and, as such, there is no breach, of oath. I, however, did not agree to this contention of theirs and said that since according to promises status quo should be maintained during the period of oath and as transfer of sale of shares has been a matter of serious differences, any sale or transfer of shares during the period of oath would be change of status quo and, as such, your action in transferring the shares of one company for that of the other company would amount to breach of oath. I also said that since differences have taken place on this point and the same would be referred to Sri N.D. Bangur for his decision according to oath and that, till such decision is. received any further progress in the matter must be held in abeyance to observe the oath. Your issuing of the prospectus in complete disregard of even this part of the oath to refer the matter to Sri Bangur and get his decision is a further breach of oath and you are fully respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lative of the partners of Messrs. Surajmull Nagarmull, the Managing Agents of the company, be and is hereby made or approved as required by the' provisions of the said section. Resolved that the company hereby approves and consents to the tenancy arrangement with Messrs. Surajmull Nagarmull, the Managing Agents of the company, for Occupying premises 57/1 Ballygunge Circular Road, Calcutta, lower flat by the company belonging to the said Managing Agents on a rent of ₹ 750 per month with effect from 1st April, 1959. The said document also mentions that the date of despatch of notice as November 30, 1959, the date of passing the resolutions as December 21, 1959, and also records - - At a general meeting of the members of the said company duly convened and held in the town of Calcutta on December 21, 1959. The said document has been signed for and on behalf of the company by Surajmull Nagarmull, the Managing Agents. ( 95. ) Exhibit E is a similar document which records that - - At a general meeting of the members of the company duly convened and held in the town of Calcutta on the 21st of May, 1961, the following special resolutions were passed. Resolved that: Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Asiatic Oxygen and Acetylene Company Ltd. ( 97. ) Exhibit G is also a photostat copy of another form No. 23 filed by Asiatic Oxygen and Acetylene Company Ltd. with the Registrar of Companies. This document records - - At the general meeting of the company duly convened and held in the town of Calcutta on the 27th of September, 1962, the following special resolutions were passed. Resolved that: '(i) that the advance of a sum of ₹ 2,95,883 -40 to meet the promotional expenses q Asiatic Oxygen Limited during the year ended on 31st March, 1962, be and is hereby confirmed': '(ii) that a payment of a sum of ₹ 10,065 -68 to Sri G.K. Jalan who is an associate of the Managing Agent and an assistant. of the company on account of medical expenses be and is hereby, confirmed'. The date of despatch of notice is stated in this document to be September 6, 1962, and the date when the resolution is passed is September 27, 1962. This document, filed on behalf of the Asiatic Oxygen and Acetylene Company Ltd., is also signed by the Managing Agents Surajmull Nagarmull. ( 98. ) Exhibit H is a photostat copy of the list of share -holders of Asiatic Oxygen and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny serious attempt to prove the case made in the plaint, as many as fifteen witnesses have been called and a huge mass of documents have been exhibited on behalf of the Defendants. On behalf of the Defendants, evidence has been led mainly through the Defendant No. 13, Asiatic Oxygen and Acetylene Company Ltd., with which the other contesting Defendants have made common cause. The Defendant No -13 has in fact called all the witnesses and the witnesses examined on behalf of the Defendant No -13 may be conveniently divided into four classes: (i) Persons in the employment of the Defendant companies, (ii) Auditors of the Defendant companies, (iii) Two Solicitors and two persons who had been employed by the firm of Sandersons Morgans, and (iv) Others. ( 102. ) The first witness called on behalf of the Defendant No. 13 is one Mr. Sachindranath Kar. Mr. Kar, who is the Secretary of the Defendant No. 13 and also of the Defendant No. 4, had been the Secretary of the Defendant No. 13 and also of the Defendant No. 4, had done the secretarial work of these companies before his formal appointment as such Secretary and he had also done the secretarial work of various other compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndant No. 4. This witness had been working with Surajmull Nagarmull since 1944 and has been in the employment of Asiatic Oxygen and Acetylene Company Ltd. since 1956. This witness refers to the scheme of expansion of Asiatic Oxygen and Acetylene Company Ltd., the collaboration arrangement, in the first instance, with a French company which failed and the ultimate collaboration with Air Products of U.S.A. and the formation of the company Asiatic Oxygen Ltd. on the basis of agreement with Air Products of U.S.A. This witness had himself visited France and America and had participated in the negotiations for collaboration. This witness created a very favourable impression on me. I am inclined to accept his testimony and, in my opinion, this witness satisfactorily explains as to under what circumstances the company Asiatic Oxygen Ltd. came to be formed and the licence and the cylinders were transferred by Asiatic -Oxygen and Acetylene Company Ltd. to Asiatic Oxygen Ltd. ( 104. ) Mr . M.E. Roy, another officer in the employ of Surajmull Nagarmull now drawing his salary from Asiatic Oxygen Ltd., was called to prove essentially the exchange ratio on the basis of which the shares of Asia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been acting as the Auditors of Howrah Trading Company Pvt. Ltd. since its inception. This witness has testified to the books of Howrah Trading Company Pvt. Ltd., the balance -sheet prepared by the Auditors and the physical existence of the shares mentioned in the balance -sheet of the company. Ram krishna Venkatarama Iyer is the Auditor of Coochbehar Trading Company Pvt. Ltd., Orient Trading Company Ltd. and Raigarh Trading Co. Ltd. He has been Auditor of these companies for years, practically from the very beginning. He has proved the balance -sheets of these companies and he has also stated about the shares which are referred to in the balance -sheet of these respective companies as the holdings of these companies were in actual possession of these companies and were held by these companies. I have no hesitation in accepting the testimony of these two witnesses. ( 108. ) Two Solicitors, Satyendra Nath Ganguli who at the material time was an assistant in Sandersons and Morgans in charge of the suit on behalf of the clients of Sandersons and Morgans and now a partner of Fowler Co., and Mr. Auddy, a Solicitor of Sandersons 8c Morgans, now in charge of the case, were called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s - -Is the Plaintiff No. 3 a share -holder of the Defendant No. 13 as alleged in para 5 of the plaint ? ( 114. ) It is not disputed that the Plaintiff No. 3 D.N. Jalan does not hold any share in Defendant No. 13 (which is also referred to as the company) in his. own name and the name of D.N. Jalan is not registered as the share -holder or member of the company and his name does not appear in the share register of the company. The said Plaintiff No. 3 claims to be a share -holder of the Defendant No. 13 on the basis that Surajmull Nagarmull is a share -holder of the company and the Plaintiff No. 3 is a partner of Surajmull Nagarmull. It is contended that as the firm of Surajmull Nagarmull is a shareholder of the Defendant No. 13, all the partners of the said firm must be considered to be share -holders of the company. It has been argued on behalf of the Plaintiffs that the firm of Surajmull Nagarmull is not a legal entity and is only a convenient mode of describing all the partners of the said firm and is the compendious name for all of them. It is the contention of D.N. Jalan that as Surajmull Nagarmull is admittedly a share -holder and the shares of Surajmull Nagarmull are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company. ( 118. ) Under the provisions of the Companies Act a share -holder or a member of a company, entitled to the rights and privileges of a member, is the person whose name appears in the share register of the company and the person whose name appears in the share register is the only person to be recognised by the company as its member, for all purposes. So far as the company is concerned, Surajmull Nagarmull, therefore, must be considered to be the share -holder of the company. It is true that Surajmull Nagarmull is not an individual and is only a firm. The firm may not have a corporate or juristic personality and may be a convenient mode of describing all the partners who constitute the firm and a compendious name for all of them. The validity of the existence of the firm as a firm apart form the existence of the partners constituting the firm, is, however, recognised in law and it is well -settled that a firm enjoys a legal status for various purposes. A firm is entitled to enter into a contract and it is common knowledge that firms frequently do so. A firm is entitled to own properties and to open banking accounts and operate on the same. The Judicial Committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing their relationship with the company and the rights and privileges of such joint share -holders and also of the company are regulated accordingly. ( 120. ) The firm of Surajmull Nagarmull became a member of the company by virtue of provisions contained in Article 16 which provides - - Shares may be registered in the name of Managing Agents' firm (but not other) or of any limited company or other body corporate or individual. Not more than four persons shall be registered as joint share -holders of any share. ( 121. ) A firm is not usually made a member of any company for avoiding the unnecessary complications which may arise because of the nature of the legal position of a firm. In the instant case, specific provision was made in Article 16 with regard to the membership of Surajmull Nagarmull making an exception only in its favour ; and by virtue of the specific provision contained in the said Article 16 Surajmull Nagarmull became a share -holder or member of the company. The said Article 16 which makes provision for membership of Surajmull Nagarmull itself further provides that not more than four persons shall be registered as joint share -holders of any share. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The number of votes which a firm may have in respect of this holding in any company will necessarily get multiplied by the number of persons constituting the firm; and the individual persons, if they are treated as individual members of the company, will each be entitled to claim the amount of dividend to be paid on the shares held by the firm, and the company in respect of the same shares registered in the name of a firm will be liable to pay the dividend as many times over as there are partners of the firm. ( 125. ) In the instant case, the firm has been accepted as the member of the company by virtue of and in accordance with provisions contained in Article 16. The said Article clearly indicates the intention that the firm was to be the member. Only the name of the firm appears on the share register. Under the provisions of the Company Law and also under the Articles of the company, the firm, whose name only is registered as share -holder, alone becomes share -holder and member of the company. The company can only recognise Surajmull Nagarmull which name appears on the share register as its member and it is not open to the company to recognise anybody who may be intereste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship to carry on business, and each person is individually entitled to the benefit of the contract, the partnership was illegal under Sec. 4(2), although the persons represented themselves to be partners of unregistered firms, for the word 'person' in Sec. 4 denotes individuals and does not include bodies of individuals whether corporate or not. The said decision of the Privy Council is of no assistance in the instant case and has no bearing on the question of the status of an individual partner of a firm vis -a -vis the company in respect of any share of the company registered in the name of the firm. ( 127. ) It is only on the ground that D.N. Jalan happens to be a partner of Surajmull Nagarmull and Surajmull Nagarmull is a shareholder of the Defendant No. 13 ; the contention that D.N. Jalan is a share -holder of the Defendant No. 13 has been put forward. B.N. Jalan, the adoptive father of D.N. Jalan, since deceased, held certain shares in the company in his name. No representation has yet been obtained in respect of the said shares and the name of D.N. Jalan or any other person has not been registered in the books of the company in place of the said B.N. Jalan. No co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow and under what circumstances Surajmull Nagarmull comes to be the owner of the shares standing in the names of the original Defendants. It is also interesting to note that Chamaria in his evidence does not even mention that Surajmull Nagarmull is the owner of the shares standing in the name of the Plaintiff No. % Howrah Trading Company Pvt. Ltd. Chamaria also does not state any facts on the basis of which he gave the said answer and he does not choose to say as to how he happens to know that Surajmull Nagarmull is the owner. In the facts of the instant case, I am of the opinion that the said statement of Chamaria is not admissible in evidence. The facts of the case clearly go to indicate that Chamaria at no point of time had anything to do with Surajmull Nagarmull and, therefore, Chamaria cannot possibly have any personal knowledge on this subject. Chamaria's statement must necessarily be based not on his personal knowledge but on what he must have heard from others. The statement of Chamaria, therefore, appears to be hearsay evidence not admissible in law. Even if I consider the statement of Chamaria to be admissible, I have no hesitation in coming to the conclusion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a declaration of benami, that A happens to the real owner and B is only his benamdar in the absence of any other evidence, is not evidence at all of the benami transaction and is really in the nature of opinion and, in any event, is not sufficient evidence on which the Court can rely and act even in an undefended suit. The necessary and relevant facts as to the payment of consideration, custody and possession of the property, nature of, the transaction and the nature of the relationship and the conduct of the parties will have to be satisfactorily established, and on the basis of these relevant facts and materials properly established, the Court may be pursuaded to come to the conclusion that the transaction is really not what it appears to be and the ostensible owner is not the real owner and only a benamdar. ( 131. ) Before any contention can be raised or any argument founded that the evidence on any particular question has to be accepted for want of cross -examination, the Court must be satisfied that the evidence is sufficient, legitimate, proper and satisfactory. In the facts of the instant case, I am of the opinion that the Learned Counsel for the Defendants had acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was certainly controlling and managing the affairs of the company. Surajmull Nagarmull also held a large number of shares in the company in its own name. Others including some partners of Surajmull Nagarmull also held various shares in their names. Various other companies in which Surajmull Nagarmull were interested and of which Surajmull Nagarmull were in -charge are considered and described loosely in common parlance as Surajmull Nagarmull concerns. The fact that a particular company is a Surajmull Nagarmull concern or is under the control and management of Surajmull Nagarmull, does not establish that all the shares of the said company are held by Surajmull Nagarmull and that the other share -holders of the company must necessarily be the benamdars of Surajmull Nagarmull. Mr. Gupta has placed particular reliance on the evidence of Kar in Order 408 and has contended that Kar has there admitted that all the shares of Asiatic Oxygen and Acetylene Company Ltd. were owned by Surajmull Nagarmull. The evidence of Mr. Kar has to be read as a whole and it is not proper, in my opinion, to read the answer in one particular question to find out what the evidence of Mr. Kar is on this asp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd establish that Surajmull Nagarmull was not the owner of the shares referred to in paras. 6 and 19 of the plaint and the persons in whose names the shares stood registered were not the benamdars and nominees of Surajmull Nagarmull. I also fail to understand how a limited company can act as a benamdar for somebody else in respect of any shares registered in its name. I do not think that the memorandum of association and the articles of association of any company will ever permit any company to act as such benamdar. I have only to observe that I have not considered it necessary to refer to the large number of decisions cited by Mr. Mitter on this aspect, as I am clearly of the opinion on the evidence on record that the case of benami has not been established. Issues Nos. 2(a) and 2(b) both must, therefore, be answered in the negative. ( 133. ) The answer to issue No. 3 will depend upon mainly on the findings of issue No. 4 and it will, therefore, be convenient to take up issue No. 3 after considering issue No. 4. I shall now, therefore, take issue No. 4. There are really three issues in issue No. 4 which reads - - 4(a) Are the notices referred to in paras. 13 and 14 of the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -ordinary general meeting amending the articles of association of the Defendant No. 13 and deleting from the articles of association the provisions with regard to share qualification of Director has also been specifically challenged. Two special resolutions alleged to have been passed at the annual general meeting of the Defendant No. 13 on September 27, 1962, one relating to promotional expenses of Asiatic Oxygen Ltd., the Defendant No. 4 herein, and the others relating to payment of medical expenses to Gopalkrishna Jalan have been also specially mentioned and specifically challenged also on the very same grounds. The aforesaid analysis of the charges made in the plaint on the basis of the allegations contained in paras. 13 and 14 of the plaint clearly goes to indicate that the issuing of the notices in respect of the aforesaid meetings of the Defendant No. 13 is not disputed. Surajmull Nagarmull is one of the Plaintiffs and is one of the share -holders of the Defendant No. 13 and there is no averment or charge in the plaint that notices of the aforesaid meetings were not served on Surajmull Nagarmull. The plaint, on the other hand, clearly proceeds on the basis that the notices o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice, mentions due holding of the meeting and the passing of the special resolution appointing S.S. Jalan as a Director of the Defendant No. 13. Apart from this photostat copy there is not an iota of evidence from the Plaintiffs' side on the question of the notice, the meeting held on December 21, 1959, and the proceedings thereof. ( 136. ) Called on behalf of the Defendant No. 13 Mr. Kar has given evidence. He has sought to prove due service of notice and of the holding of the meeting and the resolution passed at the said meeting. He has also produced documentary evidence. He has proved the printed balance -sheet' containing the printed notice (Ex. 003). Original of Ex. D, which happens to be the return filed in From No. 23 filed with the Registrar of Joint Stock Companies, produced from the custody of the Registrar, has also been proved (Ex. 004). From the printed notice it appears that the notice was issued under the signature of Surajmull Nagarmull which happens to be the Plaintiff No. 1 in the suit now and which was the Managing Agent of the Defendant No. 13. From Ex. D, the photostat copy tendered on behalf of the Plaintiff of Ex. 004 and the said Ex. 004, it furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such meeting. He argues that for the purpose of giving an appearance of purported compliance with the provisions of the Companies Act, necessary documents would be prepared and would be submitted with the Registrar of Joint Stock Companies as required under the law, but, in reality, the transactions which would be referred to in such documents would not at all take place. It is his argument that annual returns and returns in Form No. 23 would be filed with the Registrar of Joint Stock Companies in pretended compliance with the provisions of the Companies Act to avoid the consequences of non -filing of the same, but nothing in fact and reality would be done by the company and the company would make appropriate entries in necessary books as and when occasion would arise. Mr. Gupta argues that as the meeting and resolutions were all sham transactions, there was no question of maintaining the statutory books regularly and properly and discrepancies and mistakes had appeared in the statutory books including the minute books, because those books were not regularly written out and they had, in fact, been written out for the purpose of the suit. It is the submission of Mr. Gupta that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive; He contends that if there was no quorum present, then there was in the eye of law no meeting and the proceedings of the purported meeting must be held to be invalid. In support of this contention Mr. Gupta has referred to the decision in the case of Romford Canal Company, (1883) 24 Ch.D. 85. Mr. Gupta has commented that the notice of the meeting, on the Defendants' own showing, was dispatched on November 30, 1959, and the meeting was held on December 11, 1959, and he contends that the notice, therefore, is clearly short as it falls short of 21 clear days as required under Sec. 171 of the Companies Act. He argues that the meeting called on a short notice is illegal and the proceedings of the meeting are, therefore, invalid and of no consequence. In support of his contention that a meeting called at a short notice is illegal and invalid, Mr. Gupta has referred to the decision of the Madras High Court' in the case of N.V.R. Nagappa Chettiar and Anr. v/s. The Madras Race Club by its Secretary Mr. H.L. Raja Urs and Ors., AIR 1951 Mal. 831. Mr. Gupta has also referred to the decision in the case of Young v/s. Ladies Imperial Club, (1920) 2 K.B. 523 for the proposition that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jalan is not necessary as Deokinandan Jalan is not a share -holder of the company and is not entitled to any notice. Mr. Mitter has submitted that if the requirement of Sec. 171 of the Companies Act is that 21 clear days' notice should be given, then the notice in question is short by a day, but if the requirement is not 21 clear days, then the notice will not be a short notice. He has, however,, frankly stated that he cannot seriously contend that 21 days' clear notice is not necessary and he has proceeded to argue on the basis that the notice is short by a day. Mr. Mitter has commented that the evidence of Mr. Kar may be unsatisfactory and the maintaining of the books of the company may not be as happy and satisfactory as desirable, but there cannot be any question about the genuineness of the said books and the correctness of the contents of the same. Mr. Mitter argues that the printed notice along with the balance -sheet and the report of the Directors and Auditors, contained in the booklet exhibited in the proceeding (Ex. 003), could not possibly have been manufactured. He points out that the said balance -sheet, printed booklet containing the notice, the reports and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Plaintiffs in the suit, and Mr. Mitter contends that the said evidence produced and relied on by the Plaintiffs, falsifies the entire case of the Plaintiffs apart from the case of short notice. ( 140. ) It is to be noted that the position is more or less the same with regard to all the meetings and similar submissions on the genuineness of the documents and transactions of the other meetings have been made. ( 141. ) Mr . Gupta's criticism of Mr. Kar's evidence is largely justified. I have already observed that Mr. Kar's testimony is very unsatisfactory and I consider it very unsafe to come to any conclusion merely on the basis, of his oral testimony. There is also some justification for the comments of Mr. Gupta on the manner the statutory books have been maintained by the company. I cannot help observing that the manner in which the statutory books of the company are maintained is rather unsatisfactory and leaves much to be desired. It is essential that the statutory books of the company should be maintained regularly and properly. It is eminently desirable that there should be no rubbing out or erasing of anything written out in any of the statutory books and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.S. Jalan had been appointed on September 30, 1963, notice (Ex. 0033) of the annual general meeting held on September 30, 1966, mentions that S.S. Jalan was appointed Director on January 10, 1964, the date on which the adjourned meeting had taken place and at which S.S. Jalan was not elected at all, having been earlier elected on the first date of the meeting held on September 30, 1963. There appears to be two Board meetings and two Board resolutions, one on August 31, 1964 (Ex. N19) and another on September 15, 1964, (Ex. N23) for calling the annual general meeting on September 30, 1964. There, however, appears to be no Board meeting or resolution for the general meeting on August 13, 1960, (Ex. 001(L), also Ex. Al). Relying on these and other infirmities and the unsatisfactory nature o( Mr. Kar's evidence and explanations, Mr. Gupta, the Learned Counsel for the Plaintiffs, has contended that all the books and documents are fabricated, transactions are all sham transactions which had not in fact taken place, no notices of any meeting were ever issued or served, no meetings had in fact been held and no resolutions were in fact passed. ( 143. ) Notwithstanding the various i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been produced from the Registrar's custody and have been exhibited in this suit. I have already referred to Exs. 003, 006 and 0029, mentioning the dates' on which the said documents had been filed with the Registrar' of Companies, as the validity of the annual general, meetings covered by the notices contained in the said three exhibits is under challenge in this suit. I do not consider it necessary to make any specific mention of the dates when the other printed books were' received at the office of the Registrar of Companies, and may only observe that the other printed books had been duly filed with the Registrar of Companies at or about the time the same should have been submitted. These printed books produced from the custody of the Registrar could never been fabricated by the company and could never have been manufactured for the purpose of this litigation. Various annual returns after the annual general meetings and the returns in Form No. 23 of. all the special resolutions passed at the meetings, the validity of which is challenged in the plaint; had all been filed with the Registrar in time and had all been produced from the custody of the Registrar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tings held pursuant to the said notices, genuineness of which and of the meetings in pursuance thereof is sought to be questioned, had all been acted upon by all concerned. Dividends declared at the said meetings had been paid to the share -holders including Surajmull Nagarmull and Howrah Trading Company Pvt. Ltd. and they had received the same and enjoyed the benefits thereof. The Directors and Auditors appointed at such meetings had functioned acting on the basis of the said resolutions. It is significant to note that there was never any protest or objection from any of the share -holders including Surajmull Nagarmull and Howrah Trading about non -service of notice or not holding any of the meetings in terms of any of the notices. The evidence of the Auditors and the balance -sheets prepared by them clearly establish that the audited accounts and the balance -sheets used to be duly prepared. It was necessary to consider the same at the annual general meeting of the company and the law enjoins that the company must hold its annual general meetings. The printed notices, the genuineness of which though sought to be challenged is, in my opinion, beyond question and clearly establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions at the meetings had all been genuine, there would not have been so many cases of mistakes, discrepancies, corrections, scoring out and rubbing out in the minute books and the documents produced. When asked how could Surajmull Nagarmull suggest that documents prepared by itself in the normal course of its business and duties as Managing Agent of the company were fabricated and not genuine, the only explanation that the counsel could offer was that D.N. Jalan was not a party to these documents and Surajmull Nagarmull represented by S.B. Jalan and his' group had prepared the said documents. The explanation sought to be offered by Mr. Gupta is indeed one of utter despair and is clearly untenable. The Managing Agent of the company was the firm of Surajmull Nagarmull and not S.B. Jalan or D.N. Jalan or any of the other partners of the firm. The firm was appointed as the Managing Agent and had acted as such. How the firm would function as such Managing Agent, whether through any particular partner or partners, or through all of them, was essentially a matter for the firm and its partners and the company had really no concern with the same. If there would arise any dispute am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stimony gave the Learned Counsel the opportunity of seeking to build up some kind of a case and the Learned Counsel naturally tried to make the best of a bad job. In this connection, it is of interest to note that the books of account of Howrah Trading produced by Hansraj Kothari, an employee of Howrah Trading who calls himself to be the principal officer of Howrah Trading, was also challenged by the Plaintiffs which include Howrah Trading, and it was suggested on behalf of the Plaintiffs that the books of Howrah Trading produced by the said witness are not properly maintained. The books of account of Howrah Trading had been produced only to show receipt by Howrah Trading of dividend declared by the company. The receipt of dividend is also clearly established by the balance -sheets of Howrah Trading exhibited in this suit. These books of Howrah Trading have been duly audited by the Auditors of the company, and I have no hesitation in accepting the correctness of the said books of Howrah Trading. These strange and desperate suggestions challenging the genuineness, veracity and correctness of the documents prepared and signed by Surajmull Nagarmull and of the books of Howrah Tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Gupta sought to develop his case on this aspect, starting with mail service at running trains to service at Railway platforms, also indicates that the Plaintiffs have no clear idea on the subject and can give no correct instruction in the matter. It was not necessary for the company to manufacture any of these documents for the purpose of this suit and it was within the absolute power and easy competence, of the company to do all the things necessary without any difficulty whatsoever. Responsibility for most of these documents, now sought to be challenged on behalf of the Plaintiffs, rested, with Surajmull Nagarmull. No evidence has been led on behalf of the Plaintiffs to show that contents of these documents are not true and correct and no notice addressed to B.N. Jalan at the address mentioned was in fact received. Not a single share -holder could be produced to say that the notices covered by Ex. Y were not received by them. From the proceedings of the meeting it appears that many ' of the share -holders had in fact attended and it is abundantly in evidence that the resolutions passed at the meeting have been duly given effect to and have been accepted by all the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual general meetings held on December 21, 1959, on May 31, 1961, and on September 27, 1962, complained of in the plaint, fall short of 21 clear days and must be considered to be short,, if the requirement of the statute is that 21 clear days' notice should be given. The notice in respect of the extra -ordinary general meeting held on July 18, 1962, cannot, however, be considered to be short as it is more than 21 clear days. ( 146. ) Sec . 171 of the Companies Act provides: Section 171. Length of notice of calling meeting - -(1) An annual general meeting of the company may be called by giving not less than 21 days' notice in writing. (2) An annual general meeting may be called after giving shorter notice than that specified in Sub -section (1), if consent is accorded therein - - (i) in the case of an annual general meeting by all the members entitled to vote there, and... (ii) in the case of any other meeting by members of the company.(a) holding, if the company has a share capital, not less than 95 % of such part of the paid -up share capital of the company as gives a right to vote at the meeting, or (b) having, if the company has no share capital, not less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said three annual general meetings held on December 21, 1959, May 21, 1961, and September 27, 1962, were short, is established and the said charge of short notice in respect of the extra -ordinary general meeting held on July 18, 1962, fails. I only wish to add that this charge of short notice in respect of the aforesaid three annual general meetings levelled, by the Plaintiffs could not be seriously disputed by Mr. Mitter, and he has proceeded to make his submissions on the basis that the aforesaid three notices complained of are short. The question that requires consideration is what is the effect of the short notices and whether they are null and void and render the meetings held in pursuance thereto null and void. As already noted, Mr. Gupta has contended that any short notice in breach of the statutory requirement is illegal, null and void, and the meeting held pursuant to any short notice is consequently null and void and of no effect. ( 149. ) Ss . 171 to 186 of the Companies Act apply to meetings of the company and Sec. 170 makes it clear that the provisions contained in these Ss. are to apply with respect to general meetings of a public company and of a private company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be made to the following passage in Halsbury's Lotus of England (3rd ed., vol. 14, Article 1175, p. 637): Waiver is the abandonment of a right and is either express or implied from contract. A person who is entitled to the benefit of a stipulation in a contract or of a statutory provision may waive it and allow the contract or transaction to proceed as though the stipulation or provision did not exist. ( 151. ) Sec . 171(2) provides for shorter notice with the consent of the members of a company, as stated therein. The, said provision as to shorter notice with the consent of the members of the company, as laid down in Sec. 171(2), recognises, to my mind, the power of the members to waive their right or privilege of 21 clear days' notice and is indeed on the footing that it is open to the members to do so. The waiver by any individual member of his statutory privilege or right of receiving 21 clear days' notice by consenting to a shorter notice, is not conditional or dependent on the consent of any other member, unless the member who waives his right chooses to make it so, although the company may or may not acquire the right to call a meeting on a shorter not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such meeting called on short notice without the necessary consent of the members of the company having 50 members, 26 members choose to protest against the shortness of the notice and leave the meeting, protesting that the meeting -has not been lawfully called and the remaining members present proceed with the meeting and pass certain resolutions. It will, undoubtedly, be open to the members who protested against the holding of the meeting to challenge the validity of the resolutions passed on the ground that the meeting has not been lawfully called and held as the notice is short. ( 152. ) These examples, to my mind, show that any short notice in breach of the provisions contained in Sec. 171 is not null and void in the sense that any and every meeting held pursuant to any such short notice necessarily becomes invalid rendering the proceedings thereof illegal, ineffective and void. The provisions contained in Sec. 172(3) to the effect that any accidental omission to give notice to, or the non -receipt of notice by, any member or other person to whom it should be given shall not invalidate the proceedings at the meeting, clearly indicate that the Legislature never intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the necessary consent, will defeat the very object. If such construction of prior consent of the members, before the issuing of the notice calling the meeting, is to be given, Sec. 171(2) will be rendered completely nugatory and the company will not be in a position to get any benefit intended to be conferred by the said Sec. and, it may mean sheer waste of valuable time for the company in an emergency, and it 'will be more businesslike for the company not to seek recourse to the said provision for obtaining prior consent for avoiding further delay in holding a meeting necessary for dealing with an emergency. In my opinion, 'consent' referred to in Sec. 171(2) need not necessarily be obtained before calling any meeting and the consent may be obtained both before or after the calling of the meeting and also at the meeting called. This consent need not be express or in writing and may be implied and inferred from the conduct of the members. ( 153. ) As already noted, these provisions relating to notice have been enacted essentially in the interest of the share -holders to give the share -holders proper and reasonable opportunity of effectively participating in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re had been the requisite notice. Warrington L.J. said,, (1920) 1. Ch. 470: It happened that these 5 Directors were the only share -holders of the company, and it is admitted that the 5, acting together as share -holders, could have issued these debentures. As Directors they could not but as share -holders acting together they Could have made the agreement in question. It was competent to them to waive all formalities as regards notice of meetings etc. and to resolve this into a meeting of share -holders and unanimously pass the resolution in question. If that is true in the case of resolution to issue debentures it seems to me that it is equally true in the case of a resolution to wind up a company voluntarily, such as the resolution in the present case. It is said that in the case of an extra -ordinary resolution the Legislature has made it imperative that the notice required by Section69 should be given in order to give an opportunity for the share -holders to consider whether the resolution should be passed, and that it is not competent to waive that formality. I cannot see any reason why share -holders should not be able to do in that case what they can do in any other case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot but be regarded as mandatory in all its particles. He assumes that the Appellant may be guilty and punished but, says he, the mandatory provision not having been followed according to the letter there can be no resulting valid contract. A large number of ruling on how to distinguish between mandatory and directory provisions of law were cited before us in support of the contention. More cases were cited to show that where a form is prescribed the form alone must be used otherwise there is no contract. We shall only briefly refer to them. The general rule as, to which provision of law can be regarded as mandatory and which directory is stated in Maxwell on The Interpretation of Statute (p. 364): It has been said that no rule can be laid down for determining whether the command (of this statute) has to be considered as a mere direction or instruction involving no invalidating consequence in its disregard or as imperative with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope and object of the enactment. It may, perhaps, be found generally correct to say that nullification is the natural and usual consequence of disobedience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and various rules were laid down for determining when a statute might be construed as mandatory and when as directory. They are well -known and there is no need to repeat them. But they are, all of them, only aids for ascertaining the true intention of the Legislature which is the determining factor, and that must ultimately depend on the context. ( 158. ) The real, if not the only, object of these provisions is to give the share -holders proper and reasonable opportunity for participating effectively in the meetings of the company and, it is with this object in view, these provisions have been enacted in the interest of the share -holders. The length of notice, the contents and manner of the service of notice and the explanatory statement have all been prescribed with this end in view. The Legislature has prescribed 21 days' clear notice in the minimum in the hope that period will be ordinarily sufficient, leaving it to the choice of the share -holders to agree to a shorter period. It cannot possibly be said that any real prejudice must necessarily be caused to share -holders and the real object of the statute cannot properly be served whenever a shorter notice is given. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y directions or instructions to the company, enacted in the interest of the shareholders to enable them to participate effectively at the meetings of the company. Any breach of these provisions or requirements does not necessarily have the effect of invariably invalidating the meeting and nullifying the proceedings thereof. The effect of any breach of these provisions on the meeting and its proceedings will depend on the facts and circumstances of each. case. Any breach of these statutory requirements may in appropriate cases invalidate the meeting and the proceedings thereof; and in proper cases, the meeting and the proceedings thereof may be held to be valid notwithstanding any such breach. In considering the consequence of the breach, the Court is usually guided by the principles of justice. The Court takes into. consideration the nature and effect of the breach complained of and the requirement of justice of the case, and acts in the manner as will serve the ends of justice best, bearing in mind the real object of these provisions and the true intent of the Legislature. Non -compliance with these statutory requirements does not, in my opinion , render the notice or the meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surajmull Nagarmull and its partner S.B. Jalan who had been managing the affairs of the company. In view of this and in this, background the company had functioned with a degree of informality in the matter of these statutory requirements and no objection had been taken by any of the share -holders of the company. Indeed, but for the internecine quarrels among the pari tiers of Surajmull Nagar -IDUI), these breaches would have all remained unnoticed. Not only that any member of the company did not ever protest against any short notice, the members of the company and the company appear to have accepted the same unequivocally and the company and its members adopted the proceedings and acted on the resolutions passed at the said meetings and gave full effect to the same. The Directors and Auditors appointed at the meeting were allowed to act and had in fact acted without any objection from anybody. The dividends declared at the meetings must have been paid to the share -holders - - no share -holders ever protested against not receiving the dividends and it is clearly established that Howrah Trading Company Pvt. Ltd. had received the dividends and enjoyed the benefits thereof. It is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or about the meeting though they were present by proxy at the meeting. Issue 2 raises in a general form the question whether the Plaintiffs were entitled to question the validity of the notices of the meeting or the proceedings of the meetings at the general body of 7. 11.1947 as stated in para 3 of the written statement. As the facts have been pleaded in the written statement, though the point was not specifically raised in the form of waiver, we thought that the Respondents should be allowed to argue the question. The Respondents wanted also to raise a point based on the proviso to Sub -section (2) of Sec. 81 ; but as it was nowhere raised, we refused to grant them permission to raise and argue for the first time in appeal. In 31 Halsbury, ed. 2, at page 559, it is stated that, 'a statutory right which is granted as a privilege may be waived either altogether or in a particular case'. If the Plaintiffs had waived their right to question the legality of the notice, it is urged, that they are precluded from maintaining the suit not only on their behalf but also on behalf of other members. ' Strong reliance was placed on the decision in Burt v/s. British National Life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice has not been established in this case. Even if the members present agreed to waive the defect in the notice the meeting would not be a valid meeting. The Plaintiffs therefore are not precluded from raising the contention that the notice contravened the provision of Sub -section (2) of Sec. 81. ( 161. ) These observations, to my mind, were made in the context of the particular facts of the case and were not intended to lay down a general proposition of law that, a short notice in breach of the provision of the Act, necessarily invalidates the meeting and renders the proceedings void. In my opinion, the said observation should not be construed to mean that the requirement as to notice is imperative and mandatory in the sense that any breach thereof necessarily invalidates the meeting and invariably renders the proceedings thereof null and void. Any such interpretation of the observations will necessarily imply, that any breach of the said requirements of the statute, if considered mandatory and imperative, cannot be waived under any: circumstances except as provided in the statute itself. Such, interpretation, to my mind, is not warranted and will be inconsistent with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e new regulations should lie for inspection at the office and the notice convening the meetings should state the fact; and in some cases it may be deemed expedient to send printed copies of the proposed new Articles with the notices. According to the decision of Kekewich J. in Normandy v/s. Ind. Coope Company, (1908) I Ch 84, the notice should call attention to any material alterations ; and in Baillie v/s. Oriental Telephone Electric Company, (1915) 1 Ch. 503, the Court of Appeal held that a notice of a proposed resolution to alter Articles involving a large increase in the remuneration of the Directors was invalid on the ground that the proposed increase was not fully and frankly disclosed.... The notice should state that a copy of the new Articles is enclosed, or that a copy of the proposed hew Articles may be seen at the company's office. In this case in the notice it was stated that the proposed Articles would be sent shortly and they had been posted within six days from the date of posting of the notice. In the light of the principles stated above we think that there is substantial compliance with this requirement of law and that the notice was not bad on this grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to the whole scope and purpose of the statute for the purpose of determining whether the statute is mandatory or directory. Judged by that test, the conclusion is irresistible that Sec. 173 enacts a provision which is mandatory and not directory. The object of enacting Sec. 173 is to secure that all facts which have a bearing on the question on which the share -holders have to' form their judgment are brought to the notice of the share -holders so that the shareholders, can exercise an intelligent judgment. The provision is enacted in the interest of the share -holders so that the material facts concerning the item of business to be transacted at the meeting are before the share -holders and they also know what is the nature of the concern or interest of the management in such item of business, the idea being that the share -holders may not be deputed by the management and may not be persuaded to act in the manner desired by the management unless they have formed their own judgment on the question after being placed in full possession of all material facts and appraised of the interests of the management in any particular action being taken. Having regard to the whole purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Although it imposes by Sec. 173(2) an obligation that there shall be annexed to the notice of meeting a statement of the type and nature which I have discussed above, the question is, does failure to comply with the details of Sec. 173(2) of the Companies Act make it a case ipso facto of oppression in conducting the affairs of the company within the meaning of Sec. 397(1) of the Companies Act ? I do not see how it can be the kind of oppression which Sec. 397 contemplates because breach of Sec. 173(2) can at best make the meeting called invalid and no more. If such meeting is invalid, then the Companies Act provides procedure for calling valid or regular meetings or for regularising irregular proceedings. These observations do not lay down and, in my opinion, cannot be construed to lay down that any breach of Sec. 173(2) necessarily nullifies every meeting and the proceedings thereof. In appropriate cases, undoubtedly, the breach of these requirements may invalidate the meeting and the proceedings thereof. ( 165. ) The decision of the Privy Council in the case of Pacific Coal. Mines Ltd. and Ors. v/s. Arbuthnol and Ors., AIR 1917 P.C. 52 relied on by Mr. Gupta is not of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 at p. 757, and he quotes from Lord Davey. Lord Sterndale M.R. went on - - It is true that a different question was there under discussion, but I am of opinion that this case falls within that Lord Dayey said. It was said there that the meeting was a Directors' meeting, but it may well be considered a general meeting of the company, for although it was referred to in the minutes as a Board meeting, yet if the five persons present had said, 'we will now constitute this a general meeting', it will have been within their powers to do so and it appears to me that was in fact what they did. ( 167. ) Buckley J. then quotes the following observations of Warrington L.J. (Supra (470 -1)) It was competent to them (the five Corporators of the company) to waive all formalities as regards notice of meetings etc., and to resolve themselves into a meeting of share -holders and unanimously pass the resolution in question. Inasmuch as they could not in one capacity effectively do what was required but could do it in another, it is to be assumed that as businessmen they would act in the capacity in which it appeared to act. In my judgment they must be held to have acted as sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less did apply their minds to the question of whether the drawings by Mr. Elvins and Mr. Hanley should be approved, as being on account of remuneration payable to them as Directors, seems to me to lead to the conclusion that I ought to regard their consent as being tantamount to a resolution of a general meeting of the company. In other words, I proceed on the basis that where it can be shown that all share -holders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company should carry into effect, that assent is binding as a resolution in a general meeting would be. ( 171. ) In this connection the decision in the case of H.L. Bolton (Engineering) Company Ltd. v/s. T.J. Graham and Sons, (1956) 3 All E.R. 624 (629, 630) may also be usefully noted. In this case a question arose whether without the decision of the Directors at a formal meeting, it can be said that the company had properly expressed its intention to occupy the premises for its own business and was entitled to oppose an application of the sub -tenants for a new tenancy on that ground. It was contended that the proper intention had not been est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is had been agreed from time to time. Plans had been framed and submitted to the managers, the business managers of this company, and I think it would be difficult for the Board of this company, after all that had been going on, to meet and say 'we will proceed no further in this business'. They have already made a contract in relation to building and erection of an office block on adjoining land, all in preparation for occupation of the company of this land and, therefore, on the whole I think it is right to find that the intention of the company is to occupy this land and they are entitled, therefore, to succeed in their opposition on the grounds which they set out in their notice of October 1955, namely, on the grounds of para (g). ( 172. ) In the appeal preferred against the said decision Denning L.J., after having quoted' the aforesaid observations of the learned trial. Judge, proceeds to make the following very interesting observations: So the Judge has found that the landlord company, through their managers, intend to occupy the premises for their own purposes. Counsel for the tenants contests this finding and he has referred to cases decided in the last ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intention of the landlord company was to occupy the holding for their own purposes. I am of opinion, therefore, that the Judge's decision, on this point was right. ( 173. ) The English Courts appear to take a realistic view of the working and management of the affairs of the company and consider the problems of a company from a practical business point of view. The approach of the English Courts to the question of; these requirements is not generally a narrow and a legalistic one and is essentially a realistic one from the viewpoint of the actual working of a company in practice bearing, however, in mind the requirements of justice in each case. The approach of the English Courts, to my mind, is eminently reasonable and sound. The said approach serves the purpose for which the said provisions have been made and at the same time promotes the cause of justice and results in effective and proper working of the company. ( 174. ) Apart from the allegations of short notices which do not have the effect of invalidating the meetings and the proceedings thereof in the facts of the instant case, the other charges in the plaint impeaching the validity of the meetings and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions, were advanced by Mr. Gupta, relying on the same grounds, namely, nature of evidence of Mr. Kar, unsatisfactory manner of maintaining the books and discrepancies in the evidence of Mr. Kar in the minutes and in returns filed. I have earlier dealt with this aspect of Mr. Gupta's contention and for reasons already stated, I have come to the conclusion that in spite of various infirmities in the evidence, the minute books of the company are genuine books and the minutes recorded therein are not fabricated and manufactured and the transactions recorded therein are not sham. So far as the meeting of August 20, 1956, (Ex. 001 (j)) is concerned, both Surajmull Nagarmull and Howrah Trading were present and were parties to the resolution. It does not appear that, there was any serious dispute amongst the partners of Surajmull Nagarmull at that time. In the event, D.N. Jalan must have known of the appointment in the company of G.K. Jalan who is a very near relation of him. No protest or objection had at any point of time been raised by any party to the holding of the office of profit by G.K. Jalan and the same only came to be challenged in the suit in 1963 after a lapse of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept with the previous consent of the company, accorded by a special resolution, no Director of a company, no partner or relative of such Director, no firm in which such a Director or a relative is a partner, no private company of which such a Director is a Director or member, and no Director, Managing Agent, Secretaries and Treasurers, or Managers of such private company shall hold any office or place of profit, except that of Managing Director, Managing Agent, Secretaries and Treasurers, Manager, Legal or Technical Advisor, Banker, or Trustee, or the holders of the debentures of the company, - - (a) under the company, or (b) under any subsidiary of the company, unless the remuneration received from such subsidiary in respect of such office or place is paid over to the company or its holding company. (ii) If any office or place of profit under the company or a subsidiary thereof is held in contravention of the provisions of Sub -section (1) the Director concerned shall be deemed to have vacated his office as Director with effect from the first day on which the contravention occurs, and shall also be liable to refund to the company any remuneration received or the monetary ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to comply with the requirements of obtaining previous consent. Mr. Gupta's submission that steps should have been taken in anticipation to obtain necessary consent of the company and consent of the company should have been obtained before April 1, 1956, is clearly unsound. The contention of Mr. Gupta that there has been a contravention of the statute is based on the expression 'shall hold any, office' used in Sec. 314(i) and he contends that as on April 1, 1956, Mr. G.K. Jalan was holding the office without previous consent, S.B. Jalan and S.S. Jalan necessarily go out as Directors by virtue of the provisions contained in Sec. 314(2). ( 178. ) In the case of Budhan Singh and Anr. v/s. Nabi Bux and Anr. : (1970) 2 SCR 10 (15, 16) the Supreme Court had to consider the same expression 'held', of course, in a different context and used in a different statute, namely, U. P. Zamindari Abolition and Land Reforms Act, 1950 (I of 1951). Sec. 9 of the said Act with which the Supreme Court was concerned provided - - All wells, trees in abadi, and all buildings situated within the limits of an estate, belonging to or held by an intermediary or tenant or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 314 will not only operate harshly but will bring about a ridiculous situation of utter chaos and confusion in the administration of the affairs of the company. The Legislature, in my opinion, never intended Sec. 314 to apply to the prevailing state of affairs of any company as existing on April 1, 1956, or to apply the said provision to existing appointments on that date. As a precaution against nepotism and favouritism on the part of the Directors, and by way of reasonable safeguard, the Legislature introduced the provisions contained in Sec. 314 which will apply to all appointments to be made after the said Act came in force. It is to be noted that the said Sec. 314, as originally enacted, has undergone changes by subsequent amendments with which this case is not directly concerned. The subsequent amendments, however, suggest that the Legislature never intended the result contended for by Mr. Gupta. Some indication of the legislative intent may also be gathered from Sec. 261 (4) which does not appear to fit in very well under Sec. 261 and the said Sec. 261(4) reads - - Nothing in this Sec. shall be deemed to prevent any Director from holding any office immediately before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been done by S.S. Jalan as Director thereafter are illegal and void and Sec. 290 of the Companies Act affords no protection to such unlawful acts. Reliance has been placed on the decision of Law J., in the case of In Re: Hindusthan Co -operative Insurance Society Ltd. : 65 CW.N. 68. Mr. Gupta has, further submitted that after S.S. Jalan had ceased to be a Director, having retired by rotation under the statute, there, was no, valid Board' and all acts done by S.S. Jalan or the Board after September 27, 1962, are illegal and of no effect. On behalf of the Defendant it has been argued that in the absence of any such case being made in the plaint, it is not open to the Plaintiffs to raise any such contention and it is the argument of the Defendants that, if any such case had been made, they would have been in a position to meet the same and to adduce necessary evidence to give the real picture of the position and to explain the same. It has been contended that S.S. Jalan must be considered to have been automatically re -elected under Sec. 256(4). It is further submitted that in any event all acts done by S.S. Jalan as Director are valid and protected under Sec. 290 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Plaintiffs to raise this contention that S.S. Jalan had retired by rotation, I would certainly have held in the facts of the instant case, that all acts done by S.S. Jalan were valid and protected by Sec. 290 of the Companies Act. ( 187. ) Sec . 290 of the Companies Act is in the following terms: 290. Validity of acts of Directors Acts done by a person as a Director shall be valid notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in this Act or in the Articles: Provided that nothing in this Sec. shall be deemed to give validity to acts done by a Director, after his appointment has been shown to the company to be invalid or to have terminated. ( 188. ) This Sec. has been enacted in the larger interests of company administration. In the interest of the company and also of persons dealing with the company, the Legislature in its wisdom has enacted this Sec. with the object that acts done by a company and transactions entered into by or with the company, may not be vitiated, if it happens to transpire subsequently for some reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the protection afforded by Sec. 290 on the footing that such termination had been shown to the company which must be presumed to have such knowledge. The company acts and has to act through human agencies and to err is human nature. Normally and usually the company knows and should know which particular Director is to retire by rotation at any annual general meeting and any mistake on the part of the company in this regard is not generally to be expected and, in any event, not to be appreciated and encouraged. Even though any such mistake is not to be normally expected and does not usually occur in a company whose affairs are properly managed, such a possibility cannot be completely ruled out and, through inadvertence or otherwise, the fact may escape the attention of the company and may not be in the mind of the company at the relevant time. If any such mistake is in fact made and a Director, who should have retired by rotation, continues to act without retiring because of the mistake, his act will be covered by Sec. 290 and will be entitled to protection thereof. If, however, it is established as a matter of fact that the termination has been shown to the company at the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature had so intended the Legislature could have easily said so. As I have already observed, the Legislature, in my opinion, intended the scope of Sec. 290 to be sufficiently wide. It may be noted that under the provisions of the previous Act, which corresponded to the English After the scope was indeed narrower, and under the present Act the Legislature must have altered the provisions with the object of enlarging the scope. There is, no provision in the earlier Act protecting the acts done by a person as a Director after termination of the, appointment as such. The provisions in the earlier Act contained in Sec. 86 of the Act of 1913 is in the following terms: The acts of a Director shall be valid notwithstanding any defect that may afterwards be discovered in his appointriient or qualification. Provided that nothing in this Sec. shall be deemed to give validity to acts done by a Director after the appointment of such Director has been shown to be invalid. ( 190. ) The provisions contained in Sec. 86 are substantially the same as contained in the English Act. In view of the language used in Sec. 290 of the present Act widening the scope of the Sec. to cover expressl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent, and does not lay down that Sec. 290 has no application to the case of a Director retiring by rotation. The decision in the case of Morris v/s. Kanssen and Ors. ( Supra) was concerned with the provision of the English Statute. The provisions of the English Statute are materially different and there is no provision in the English Act, according protection to the acts of persons as Directors after termination of the appointment as such under provisions of the Act. The facts of the case of Morris v/s. Kanssen were briefly as follows: Kanssen and Cromie were the two first Directors of the company and held all the shares. Cromie alleged that at a Board meeting Strelitz was appointed a Director. This meeting never took place and the minute recording it was a forgery. At another meeting Cromie and Strelitz, without Kanssen's knowledge, purported to appoint Morris a Director and allotted share to Morris. Morris knew that Kanssen was contending that Strelitz was not a Director and that the issue of shares was invalid, but he made no enquiries. The Court of Appeal held that Morris was put on enquiry and could not rely on the section. Lord Green M.R. in the Court of Appeal (which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 290 of the Companies Act and is not concerned with the question of. acts done by a Director after termination of his appointment and is, therefore, not of any assistance in the instant case. ( 194. ) In the instant case, the facts and circumstances clearly establish that the question of retirement of S.S.Jalan by rotation had escaped the attention of the company through inadvertence or mistake for some reason or other and the fact of such retirement of S.S. Jalan was not present in the mind of the company and was never shown to the company at the material time or at any time thereafter. If this fact had been present in the mind of the company or of S.S. Jalan at the relevant time or had been shown to the company at the material time or at any time thereafter, there would have been no difficulty in getting S.S. Jalan re -elected on such retirement by rotation. The company at the material time and at all times thereafter had been under the control of S.B. Jalan and there was in fact no rival group in the company and S.S. Jalan could easily have been re -elected on retirement by rotation. The fact that S.S.Jalan could easily have been re -elected at the meeting at which thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said Sec. 256(4) which provides for such statutory re -election reads: Section 256(4) (a) If the place of the retiring Director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday at the same time and place. (b) If at the adjourned meeting also, the place of the retiring Director is not filled up and the meeting also has not expressly resolved not to fill the vacancy, the retiring Director shall be deemed to have been re -appointed at the adjourned meeting, unless (i) at the meeting or at the previous meeting a resolution for the re -appointment of such Director has been put to the meeting and lost; (ii) the retiring Director has, by a notice in writing addressed to the company or its Board of Directors, expressed his unwillingness to be so re -appointed; (iii) he is not qualified or disqualified for appointment; (iv) a resolution, whether special or ordinary, is required for his appointment or reappointment by virtue of any provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the vacancy is to be filled up or not, must necessarily depend on the fact of knowledge of such vacancy at the meeting. There cannot be any question of filling up any vacancy and of forming and resolution, either in favour of filling up or against filling up the vacancy, which must necessarily be a deliberate act unless attention of the company and the members thereof has been drawn to the fact of vacancy at the meeting. The further condition as to statutory adjournment of the meeting, as provided under Sec. 256(4)(a), indicates, to my mind, that the Legislature has intended that automatic re -election should only become effective after the share -holders have had sufficient opportunity to consider as to what is to be done as to the vacancy caused. These provisions are not intended to get a snap re -appointment by keeping the company and its members in the dark and lulling them into a kind of sleep over the question. To put any such construction, in my opinion, will possibly throw open the gates of nepotism and corruption in company administration, and the company may be in a position, by suppressing the fact of retirement by rotation at the meeting of any Director whose re -ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid and illegal and H.L. Dey was not and could not be a Director of the company. No such case has been made in the plaint. On the otherhand, the plaint clearly proceeds on the basis that H.L. Dey was a Director of the company.. In para 16 of the plaint the Plaintiff has stated: The Plaintiffs further state that thus the only Director of the Defendant No. 13 between the middle of 1961 and the middle of 1962 was the Defendant No. 3 who alone could not validly act as a Director nor transact any business of the Defendant No. 13. Furthermore, the Defendants Nos. 1, 2 and 3 having in the circumstances hereinbefore stated ceased to hold the qualification share, they and each of them ceased to be the Directors of the Defendant No. 13 with effect from the day of their ceasing to hold such qualification shares. The Defendant No. 3 referred to is H.L. Dey. There is, and naturally could be, no issue on this question. This contention has been put forward relying on some stray answers of Mr. Kar. The evidence of Mr. Kar on this question is not very reliable and his answers to Qs. 379 -380, 3690, 3992 -3999 are very unsatisfactory, and it is not possible to come to any conclusion only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commenced an action on behalf of themselves and all the share -holders of the company against the company and the Directors to compel the Directors to repay to the company the amount of the dividend. Afterwards, the other share -holders were at their own request joined as Defendants. All the Defendants counter -claimed, in the event of the Court holding that the dividend had been illegally paid, for repayment by the Plaintiffs of the portions received by them. Byrne J. in the trial Court held that the payment of the dividend out of capital being an act ultra vires, the Directors were liable to replace the amount, and judgment was given in the action accordingly in favour of the Plaintiffs, the Plaintiffs submitting to judgment against themselves on the counter -claim. On appeal by the Defendants against the judgment of the learned trial Judge, the Court of Appeal set aside the decree in favour of the Plaintiffs and held that the Plaintiffs in the circumstances were not entitled to maintain the action but the judgment on the counter -claim against the Plaintiffs stood. Vaughan Williams L.J. observed ( Supra (567)) ; I think that an action cannot be brought by an individual shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 16, 1920, a resolution was passed purporting to allot all the -shares of the company. At that date the company had not issued a prospectus or filed a statement in lieu thereof. On April 20, 1920, the statement in lieu of prospectus was filed. At a meeting of the Directors held on April 30, 1920, the transfer from Young to Kenworthy came before the Board, and a resolution was passed approving the transfer and directing that a share certificate should be forwarded to Kenworthy. Subsequently, Kenworthy was registered as a member of the company. The certificate dated May 26, 1920, was sent to and was accepted by Kenworthy. At the Board meeting held on April 30, 1920, in which the transfer of shares from Young to Kenworthy was approved, a bonus of 6 d. per share had also been declared and on June 8 the said bonus was paid to and was accepted by Kenworthy. Kenworthy, as purporting to be the owner of the 100 shares, attended a meeting of the share -holders on March 24, 1921. The company subsequently went into liquidation. Kenworthy, on whose shares there was a liability of 10 s. per share, then denied being a share -holder, contending that the allotment of shares to Young was void, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by reason of any irregularity. ( 207. ) In the case of Narayandas Sreeram Sornani v/s. Sanghi Bank Limited (Supra (174)) the Supreme Court held that the validity of allotment of shares could not be challenged by a Director, who was a party to the resolution allotting the shares and who dealt with the shares on the footing that the allottees were the holders of the shares with a clear knowledge of the circumstances, and it was not open to the Director to say that the allotment was void as he being interested in the resolution allotting the shares could not vote. Narayandas was at all material times a Director of the company, He was a Director of the company when a Board meeting of the company was held on May 25, 1916, and at this meeting the Directors resolved to allot 2000 shares to the nominees of Narayandas. This Board meeting of May 25, 1946, was attended by only three Directors of which Narayandas was one. Narayandas was clearly interested in allotment of the shares and notwithstanding the provisions contained in Sec. 91B of the Companies Act, 1913, Narayandas had voted on the said resolution. The validity of the said allotment was challenged and it was contended that the al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral meeting held on July 18, 1962, in which the special resolution amending the Articles of the company and deleting the share qualification clause was unanimously adopted. Surajmull Nagarmull and Howrah Trading were also present at the meeting of August 20, 1956, in which the special resolution according the consent of the company to the holding of the office of profit by G.K. Jalan was unanimously passed. Surajmull Nagarmull had filed necessary returns with the Registrar of Companies, and it may also be noted that at the said meetings various other resolutions, benefits of which have been enjoyed by the members of the company including Surajmull Nagarmull and Howrah Trading, had also been passed. In these circumstances, Surajmull Nagarmull and Howrah Trading having obtained and enjoyed the dividends declared at the annual general meetings and having participated at the other two meetings and having, been' parties to the resolutions which were passed at the said two meetings, are precluded and estopped from challenging the validity of the said meetings and the proceedings thereof. D.N. Jalan is not a member of the company and he cannot be heard to make any grievance about t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. ) No evidence has been adduced on behalf of the Plaintiffs to show the invalidity or illegality of the arrangement as to exchange of shares or to establish that the said arrangement is fraudulent. To my mind, there is even no proper averment of fraud. The issue as framed raises the question of the validity of the arrangement and not the factum thereof. The issue as raised proceeds on the basis that there was the arrangement in fact, but the said arrangement is invalid and illegal. Although in the issue, as framed, the factum of the arrangement does not appear to be in dispute and the validity of the arrangement is only in question. Mr. Gupta has sought to argue that in fact there was no such arrangement at all. Mr. Gupta has contended that the letters of offer and acceptance evidencing the arrangement of exchange of shares are fabricated documents. He has made this statement on the basis of certain mistakes and discrepancies in the letters and some infirmities in evidence relying particularly on the unsatisfactory nature of Mr. Kar's evidence. I have no hesitation in rejecting this contention of Mr. Gupta. Apart from the question that it may not be open to the Plaintiffs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nouncement in the newspaper and in the prospectus and the conduct of the members of the company clearly establish the arrangement and, in spite of mistakes and discrepancies in the letters of offer and acceptance, there could be no question of their genuineness. The validity of the arrangement has been challenged mainly on the ground of the exchange ratio and it has been contended that the ratio of exchange is unjust and unfavourable to the members of the company. In support of this contention, Mr. Gupta has relied on the testimony of Chamaria which, as I have already noted, is wholly unsatisfactory. Mr. M.K. Roy in course of his evidence has explained to my satisfaction how the said ratio came to be fixed. I have no hesitation in accepting the testimony of Mr. Roy on this question. The facts and circumstances of this case and the sanction of the Government corroborate the testimony of Mr. Roy. In any event, the question of the ratio, to my mind, is of no consequence and does not in any way affect the validity of the arrangement. If the members of the company had felt that the ratio of exchange was unfavourable to them, it was open to them not to agree to exchange their shares at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween Khaitan Company, Solicitors for D.N. Jalan, and L. P. Agarwalla, Solicitor of IK.L. Jalan (Ex. J). I have earlier discussed the oral testimony of Chamaria and I have also dealt .with these letters. The oral testimony of Chamaria, I have already observed, is worthless and cannot be relied upon. Exhibit B, which I have analysed earlier, contains no prohibition. The letter of Khaitan Company dated May 8, 1959, (part of Ex. J) mentions - - In any event and without prejudice to what is stated above, our client hereby revokes the authority, if any, of the other partners of the firm, including yourself to deal with the shares standing in the name of the firm. No attempt was made to prove the truth of the contents of this letter which was addressed in 1959, long before the institution of the suit. Exhibit B, which was addressed by D.N. Jalan in May 1962, makes no reference to the revocation of authority and speaks of violation of oath. On this state of evidence, I am unable to come to the conclusion that there was any prohibition by the Plaintiff No. 3. In any event, the purported revocation of authority by D.N. Jalan is of no consequence and I shall deal with this aspect whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the firm. It must necessarily follow that no individual partner can revoke the authority of any partner as, the agent of the firm which happens to be the principal. Sec. 18 of the Indian Partnership Act expressly provides that a partner is the agent of the firm for the purpose of the business of the firm, and in view of the said express provision this agency necessarily continues so long as the firm is in existence, and it is not open to any partner to terminate the said agency created by the statute for smooth functioning and working of partnership business. If any partner is dissatisfied with the conduct of any other partner and has lost confidence in any other partner and does not want any other partner to deal with the business of the firm, the remedy open to such an aggrieved partner is to dissolve the firm. An argument was sought to be advanced on behalf of the Plaintiffs that other partners of Surajmull Nagarmull did not have any such authority as the said firm of Surajmull Nagarmull has been dissolved and a suit is now pending in this Court. No such case has been made in the plaint and, on the other hand, the plaint proceeds only on the basis that in view of the prohibiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my view has not been properly established, is in any event not valid or legal or binding on the Plaintiff No. 1 or its partners or any of the Defendants, and I answer the issue No. 9(b) accordingly. ( 219. ) Issue No. 9(c) is concerned with the legality and validity of transfers, allotments and exchange of shares. The legality or validity is challenged on the grounds stated in paras. 24 and 25 of the plaint and the said grounds taken in the plaint are - - (i) Transactions effected in spite of prohibition by D.N. Jalan as partner of Surajmull Nagarmull and as Director of Howrah Trading. (ii) Transactions by the other members, who are only benamdars, effected in spite of prohibition by D.N. Jalan. (iii) Transactions effected in collusion and conspiracy. ( 220. ) So far as ground No. 1, that is, prohibition by D.N. Jalan is concerned, I have already held that I am not satisfied that there was in fact any such prohibition. None of the letters (Exs. B and J) make any mention or any prohibition by D.N. Jalan as Director of Howrah Trading and the letter of Khaitan .Company dated May 8, 1959, addressed on behalf of D.N.Jalan, as partner of Surajmull Nagarmull, speaks of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any specific plea that question cannot be gone into, as laid down by the Supreme Court in the case of Ram Prasad v/s. The State of Madhya Pradesh and Anr. (Supra) to which I have earlier referred. ( 226. ) In any event, Sec. 108 of the Companies Act deals with the question of registration of transfer of shares in a company in the books of the company by the company and does not affect the question of the validity of any transfer effected. There may be a lawful and valid transfer of shares even if the transfer is not registered in the books of the company. The transferee becomes the owner of any shares as soon as the title to share passes to him by necessary transfer thereof by the transferor and the passing of title in a share from the transferor to the transferee is not dependent on the registration of the transfer by the company. In view, however, of the peculiar nature of property a share in a limited company represents, and the provisions of the Companies Act, a transferee though the lawful owner of the share transferred may not enjoy the benefits of the transfer, as the share -holder or member of the company, so long as the transfer is not registered in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that much of care and attention because of the peculiar composition of the members of the company and as all members happen to be under the control of Surajmull Nagarmull. It may be true that any of these irregularities would never have seen the light of the day but for the internal disputes now going on amongst; the partners of Surajmull Nagarmull. Whatever may be the reasons, I need hardly add that this state of affairs must necessarily be deprecated. ( 228. ) While considering the issue No. 9(c), I have held that it is not open to the Plaintiffs to dispute the validity and legality of the transfers, allotments and exchange of shares; and in view of my aforesaid finding for reasons already given, the issue No. 9(d) must be answered in the negative. ( 229. ) I may further note that after the transfer and exchange of shares, Howrah Trading in its balance -sheet for the year ending on April 30, 1963, (Ex. 0056) has clearly indicated the position and the balance -sheet has been duly approved in the annual general meeting of Howrah Trading Company Pvt. Ltd. The act of transfer and exchange appears to have been ratified by the share -holders of Howrah Trading, and in my view, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. This contention of the Plaintiffs has been dealt with by me at length earlier, particularly while considering the issues Nos. 4(a), 4(b) and 7, and has been rejected by me. In view of my earlier observations and my findings, particularly on the issues Nos. 4(a), 4(b) and 7, this issue No. 10(a) is answered against the Plaintiffs in the negative. ( 234. ) I now take up the issue No. 10(b) which is - - Has the agreement been approved and ratified by the members of the Defendant No. 13, as alleged in para 31 of the written statement of the Defendant No. 13 ? ( 235. ) The minutes of the extraordinary general meeting of the company held on June 14,1963, (Ex. 001 (m)) clearly establish this issue. The said general meeting of the company had been attended by all the existing share -holders of the company excepting the deceased member Baijnath Jalan, and the short notice in respect, of this meeting was also consented to by all the living members. The printed report and balance -sheet of the company for the year ending on March 31,1964, (Ex. 0031) specifically refers to the agreement of mortgage, under the heading 'Notes' (item No. 5), appended to the sch. A of Fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, answered in the negative against the Plaintiffs. ( 240. ) Issue No. 12(a) is - - Did the Defendants Nos. 1, 2 and 3 act in collusion and conspiracy with the Defendants Nos. 4 and 5 in selling or agreeing to sell the cylinders at cost price as alleged in para 31 of the plaint ? ( 241. ) An analysis of the allegation's made in para 31 of the plaint shows that the charges levelled are - - (i) Collusion and conspiracy,, (ii) Requirements of the cylinders by the company for its own uses, (iii) Cylinders not easily available in the market, (iv) Sale at cost price, illegal and wrongful, (v) Market price was higher. ( 242. ) Not any of the aforesaid charges has been established. The Plaintiffs did not in fact make any serious attempt to prove any of the charges preferred. The allegation of collusion and conspiracy is also without any particulars and there is no evidence or material which justifies the allegation. The evidence of Patni, on the other hand, establishes that the transaction was not only bona fide but in the circumstances also in the best interest of the company. The transfer of cylinders at cost was sanctioned by the Government. The fact of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent, the said allegation is not established. It. is beyond dispute that S.B. Jalan and his group are in clear 'majority in the company. The said position was made abundantly clear even at the trial at which most of the members supported S.B. Jalan. Even an officer of Howrah Trading deposed on behalf of the Defendants and nobody on behalf of Howrah Trading came to support the case. To my mind, it appears that there was in fact no rival group in the company; and - -but for certain unfortunate disputes which have arisen amongst the partners of Surajmull Nagarmull and between D.N. Jalan and S.B. Jalan and the other brothers who are also partners - -there would be no occasion for this litigation. The company has been completely under the control of S.B. Jalan. Surajmull Nagarmull as Managing Agent and shareholder of the company has been represented mainly by S.B. Jalan and has been under the control of S.B. Jalan and has always supported S.B. Jalan in the company. Even if I have to consider Surajmull Nagarmull to be opposed to S.B. Jalan simply because Surajmull Nagarmull happens to figure as one of the Plaintiffs in the suit, Surajmull Nagarmull, as a share -holder of the company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have examined again all of the large number of authorities which were cited to me in the course of the argument. Though there are to be found, in one or two instances, observations which at first sight might justify a more liberal view of the extent of the minority share -holders' rights when taken out of their context, I do not think any of the authorities justify any conclusion other than that which I have reached. ( 246. ) This decision in the case of Pavlides v/s. Jenson ( Supra. (523)) was quoted with approval by Harman L.J. in the case of Heyting v/s. Dupont and Anr., (1964).2 All ER 273 (281) In the case of Heyting v/s. Dupont the Court of Appeal in England took a similar view in an action by a minority share -holder who also happened to be a Director of the company against the majority share -holder, who was the other Director of the company, for payment of damages by the majority share -holders to the company for misfeasance as a Director by withholding an asset of the company; and the Court held that the action would, not lie in the absence of any allegation of ultra vires or fraud on the part, of the majority share -holder. On the facts of the case, the Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajmull Nagarmull, who have been made Defendants in this suit, are contesting this suit. Mr. Mitter contends that in any event there can be no dispute to the fact that S.B. Jalan, who controls the company, has undoubtedly a clear support of the majority share -holders, if not of all the share -holders of the company. It is the contention of Mr. Mitter that the relevant allegations which may confer right in appropriate cases on minority share -holders to bring an action in respect of wrong done to company are not even there in the plaint. Mr. Mitter has argued that the facts of the case do not justify any departure from the principle laid down in the case of Foss v/s. Harbottle (Supra). Mr. Mitter has also referred to a large number of other decisions in which the said principles have been followed. Mr. Mitter has relied on the following decisions: Foss v/s. Harbottle, (1843) 2 Hare 461, Mozley v/s. Alston, (1847) 1 Ph. 790, Macdougall v/s. Gardiner, (1875 -6) 1 Ch. 13, Normandy v/s. Incoope Company Ltd., (1908) 1 Ch.D. 84, Pavlides v/s. Jenson and Ors. (Supra), Heyting v/s. Dupont and Anr. (Supra) and Satya Gharan Law v/s. Rameswar Prasad, AIR 1950 F.C. 133. ( 251. ) Mr . Tibrewa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings on the other issued. I do not consider it necessary to deal with the respective contentions on these two issues and to decide the same as these two issues cease to be of any material http://www.the-laws.com/Encyclopedia/SearchResult/GetJudgementte... 153 of 155 30-08-2017, 11:27 consequence. ( 255. ) ISSUES Nos. 16 and 17 have not been pressed. ( 256. ) I have only to note that Mr. Mitter has argued that in any event the Plaintiffs are not entitled to any declaratory decree in this action as the necessary conditions, which entitle a Plaintiff to a declaratory decree of the nature asked for, are not satisfied in the instant case. As, in view of my findings on the issues raised herein, the Plaintiffs are not entitled to any relief, it is not necessary to consider the argument of Mr. Mitter. ( 257. ) In view of my above findings, I must hold that the Plaintiffs are not entitled to any relief in this suit and the issue No. 18 is answered accordingly; ( 258. ) In the result the suit fails. The suit is, therefore, dismissed. It is quite clear that D.N. Jalan, the Plaintiff No. 3, is the real Plaintiff in the suit. Taking advantage of his position as partner of Surajm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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