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TMI Blog1975 (12) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... uggestions which were incorporated by the plaintiffs in the pleadings and reproduced by the learned Judge in his order whereunder certain mandates were set by him in the name of amity and harmony in the family in the case of the management and the affairs of the companies above named. We are here however concerned with the 6th defendant company. One of the terms of the family arrangement said to have been made by Ramakrishna when he was alive in the presence of and with the consent of the parties to the present original action runs as follows. Participation in the management and affairs of V. Ramakrishna Sons Limited, the then Managing Agents of the K.C.P. Limited will be the exclusive entitlement of the two sons, V.M. Rao. (first plaintiff), V.L. Dutt (fifth defendant) and/or their respective branches along with their mother V.R. Durgamba during her lifetime. Similar mandates are said to have been the subject-matter of the above family arrangement made by the late Ramakrishna. The plaintiff's specific case is that that family arrangement which is, no doubt, not incorporated in any instrument in writing was acted upon and agreed to by all the parties to the present action and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed. 2. Mr. Parasaran, Learned Counsel for the appellants touched upon the pleadings and the affidavits in support of the applications in which the injunctions are sought for. In the plaint a reference is made to the fact that a family arrangement was thought of by the late V. Ramakrishna and that he devised such an arrangement set out by the plaintiffs in paragraph 6 of the plaint. We have already excerpted the relevant clause. The defendants-respondents who have had the opportunity to plead only in their counter-affidavit refuted the existence of such family arrangement, in particular respondents 2 to in paragraph 4 of their counter-affidavit would deny that there was any family arrangement as elaborated in paragraph 6 of the plaint. They also deny that they agreed to the same at or about the time when it was conceived by the late V. Ramakrishna. They would only harp on the indention of the porosities who at all times inclined that the two brothers should jointly take over the management of the K.C.P. Limited and that his daughter should take over the management of Jaipur Sugars Limited. Repeatedly however they would characterise the family arrangement as an alleged one an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the plaintiffs exercised their vote through their attorney. It is therefore fairly clear that on 2nd September, 1975 when the first plaintiff expressly referred to the resolution at the annual meeting of the company on 22nd April, 1975 he did not categorically raise any objection against the election of the two directors. He did not even incidentally by necessary implication refer to the family arrangement. He only wanted that certain mistakes in the minutes are to be corrected as suggested by him. Thereafter, he gave another notice on 29th November, 1975 referring to the family arrangement and complaining that the induction of the first and the second defendants to the company as directors was opposed to and contra to the family arrangement. On 3rd December, 1975 the Board once again meets as by then it became necessary for them to pass a requisite resolution under Section 18 of the Companies Act, where by they we e compelled to send one of their representatives to the 34th annual general meeting of the K.G.P. Limited. For this Purpose, a meeting was called for on the 3rd December, 1975. Under items 3 of the agenda therein the 5th defendant failing him R. Prabhu the second def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o find whether he equitable relief of an injunction could be granted or not. 4. Even assuming for argument's sake that the plaintiffs' case is true, it is difficult for us to accept the contention of Mr. Parasaran that a civil Court can in a summary enquiry like the one be fore us restrain the normal flow of the rights which are to follow the resolutions passed by an incorporate d company while dealing with its indoor management. It is well established that there is a dichotomy as between the shareholders and the company and as the Supreme Court said in Bacha F. Guzdar v. Commissions of Income Tax, Bombay [1955]27ITR1(SC) . There is nothing in the Indian Law to warrant the assumption that a shareholder who buys shares buys an interest in the property of the company which is a juristic person entirely distinct from the shareholders. 5. Family arrangements are arrangements made as between the members of the family in order to avoid genuine disputes in general and to promote corporate amity and goodwill. No doubt disputes in present and in future may also be the subject matter of such settlements. The foundation of a family settlement however is to create harmony am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... science is provoked and there is sufficient and ample material to crack the shell of incorporation. But this doctrine cannot be extended so as to substitute the articles of association which is a binding contract as between the members and the company by another contract which in the eye of law and according to the provisions of the Companies Act cannot be adopted, recognised and captioned as articles of association. It is conceded that the articles have not been so far amended so as to prevent the induction of more directions or to divide the Voting rights in a manner as spoken to by the plaintiffs. If the terms of the family arrangement have been incorporated in the articles there would have been no difficulty But so long as regulation 74 of table A is the guideline and the norm which ought to be followed by the present company then to make an inroad into such an agreed prescription something which is effective in the eye of law is necessary and not a vague assertion about the existence of a family arrangement which as we repeated before is not accepted and is disputed. It is also an accepted principle of law that if a special method is prescribed to do a particular act, there ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension entertained by the plaintiffs that they would be oppressed by the majority should take the field and justice and equity should be done by preventing the 5th defendant or the other nominees as per the resolution dated 3rd December, 1975 to participate in annual meeting of K.C.P. Limited. In fact, the first plaintiff while complaining of such oppression would suggest a resolution by himself which was framed by him in his letter dated 21st March, 1975. If that resolution is passed by the company, he would say, that he would have no objection to the first and second defendants being elected as directors. In the light of this concession made by the first plaintiff, we are afraid that the just and equitable rule pleaded by Mr. Parasaran, would be totally inapplicable. The first plaintiff seeks for equity for the furtherance of his own cause No Court would invoke equity in such circumstances. 7. Learned Counsel for the appellants referred to In re Westbourne Galleries (H.L.(E)) (1973) A.C. 360, in which the just and equitable rule was invoked in a cast where a company was sought to be wound up. At page 375 the learned law Lords were told where a limited company, however, small, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract But it is argued that the plaintiff, are injured by the resolution dated 3rd December, 1975 An injury could be projected only if there is a base for complaint The resolution as we expressed already could be passed by the 6th defendant and its Board and it is within their competence. In fact, no relief is asked for by the plaintiffs as against the 6th defendant or even the 5th defendant. It is by virtue of the resolution of the Board of Directors of the 6th defendant that the 5th defendant or the other nominees mentioned in the resolution are going to represent the 6th defendant at the annual meeting of the K.C.P. Limited If no relief is asked as against the 6th defendant, then it passes our comprehension as to how under Rule 2 of Order 39 the plaintiffs may complain of any injury to him Under Order 39, Rule 2, Indian Penal Code also in our view the plaintiff, cannot get an ad interim injunction No property of the 6th defendant is in dispute or is in danger of being wasted, damaged or alienated nor is it pretended that the company or the other defendants intend to defraud the creditors and dispose of unauthorisedly the property of the company. As long as the resolution made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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