9911796707
TMI Blog1998 (12) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... being conducted in a manner oppressive to some members of the Company. Be it noted that isolated act of indiscipline or indifference or even deprivation by itself would not bring home the charge of oppression - there shall have to be a continuity of a burden-some, harsh and wrongful conduct. As a matter of fact, the conduct of the oppression towards oppressed shall have to be such so as to evince an existing element of absence of fair dealing or lack of probity. The observations of the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes AIR 1965 SC 1535, lends support to the above. The discretion spoken of earlier and as is available within the meaning of the statute, however, knows no fetters by reason of specific language used, to wit, make such order as it thinks fit , by the law makers in Section 397 of the Companies Act. 2. Before proceeding further, it would, however, be convenient to advert briefly to the factual matrix of the matter under consideration. 3. The Deccan Enterprises Private Ltd., being the respondent-company, was incorporated under the provisions of the Companies Act on 15-4-1966 with the registered office at Secunderabad. The authorised cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to have conceived the project of manufacturing rubber rings as ancillary unit of Hyderabad Industries Limited and by reason of their active involvement in the day to day management in the Hyderabad Industries Limited, Respondent No.3, Sri O.P. Jalan, who was in jute business at Calcutta was asked to look after the day to day management of the project and it is in pursuance thereof that the Company Deccan Enterprises Private Limited, being respondent No.1, comes into existence. There is, however, some evidence on record which runs counter to the state of affair as noted above and as contended by Mr. Sarkar appearing in support of the appeal. Mr. Mukherjee for the respondents contended that it is not true that the third respondent was brought on the Board for looking after day to day affairs of the Company and strong reliance was placed on the application for availability of the name to the Registrar of Companies and the draft Memorandum and Articles of Association. The application dated 6-1-1966, signed by Sri Om Prakash Jalan, being respondent No.3, and addressed to the Director of Research and Statistics, Government of India, through the Registrar of Companies, Hyderabad as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e involvement of the petitioner No.1, respondent No.3 and respondent No.9. Tin's aspect of the matter, however, on the basis of the documentary evidence can be concluded with an observation that the petitioners' involvement as regards the promotion of the Company may not be such as is sought to have been projected before the Court. It is at this juncture, the pattern of share-holding upto the period ending on 31-12-1984 or as of 1-1-1985 ought to be noticed, since the same has a definite bearing in the matter in dispute. 30-9-70 30-9-74 30-9-76 24-9-79 1-1-85 R.N. Jalan Family R.N. Jalan 1100 1485 3515 3515 7030 S.D. Jalan 800 1085 2345 2345 4690 Hemani Jalan - - 25 25 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6942 13934 (26.23%) (26.22%) (24.57%) (27.77%) 27.87%) S.K. Jalan Family S.K. Jalan 1100 1465 3685 2855 5730 A.D. Jalan - - 355 355 710 1100 1465 4020 3220 6440 (14.67%) (14.65%) (16.08%) (12.88%) (12.88%) Miscellaneous - - 500 500 925 (2.00%) (2.00%) (1.85%) Total 7500 10000 25000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but as the records depict Mahesh Khemka was not inducted as a Director on the Board of the Company at Hyderabad - as a matter of fact, the first seed of discontentment was sown on account of the same and since then allegations and counter-allegations are being levelled pointing to, however, one particular event, that is to say, management being retained in the hands of Shri O.P. Jalan culminating, however, in filing of the petition under Section 397 of the Companies Act. 9. The learned single Judge, in spite of the matter being rattier voluminous, has dealt with (he same and scrutinised every minor detail. In his order, the learned Judge did record the reliefs claimed in the Company Petition and we Set out the same in seriatum : (i) Declare the induction of the Respondent No.7 as additional Director onto the Board purported to have been made at the Board meeting held on 15-1-1987 as void and illegal and injunct the said respondent No.7 from exercising any power or authority as a Director of the Respondent No. 1 Company. (ii) Declare that there were no Annual General Meetings held on 18-12-1985 or 18-10-1986 and the Board Meeting held on 9-11-1985, 1 l-l 1-1985 and 20-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Give such other directions as this Hon'ble Court may deem necessary to put an end to the matters of mismanagement and oppression referred above and to ensure the appropriate conduct of the affairs of the company in accordance with the understanding of the joint participation and management of the affairs of the respondent No. I and the foreign joint venture company and in accordance with the provisions of the Act and the Articles of Association of the respondent No. 1-Company. 10. Before proceeding further, one redeeming feature transpired during the course of hearing before the Appellate Court that the issue is not between Khemkas and Jalans but the issue is between Khemkas together with Shri KN. Jalan, being the elder brother of Shri O.P. Jalan on one side, and the other Jalans on the other, including Shri Shubhkaran Jalan, being the father of Shri R.N. Jalan and O.P. Jalan. 11. At this juncture it would be convenient to note that during the course of hearing before the learned single Judge, voluminous documents and oral evidence were pressed into service in support of the respective contentions of the parties and the learned single Judge as noted above, did take very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany or otherwise, in the years 1983-84, 1984-85 and 1986-87 as alleged in the petition? 8. Whether all or any, if so, which of the reliefs sought for in the petition, are allowable? What is the effect of the proceedings pending in Calcutta High Court on these proceedings? 9. Whether there exists just and equitable ground for winding up of the 1st respondent company? 10. Whether any other or further relief of direction is just, equitable and necessary to be ordered by the Court in the circumstances of the case? 13. It is on this score, however, that certain other factual details as has been recorded by the learned single Judge ought to be noted herein. The learned Judge recorded the following: ..... However, the issues were reduced in subsequent proceedings when certain appeals were filed against Interlocutory orders. The Division Bench in OSA SR. No.24892 of 1994 on the basis of the submissions made by the learned Counsel for the petitioner observed as follows: Mr. K. Srinivasa Murthy, learned Counsel for the petitioners in Company Petition No.27 of 1987, has stated that the only issue, if at all the same can be called an issue, to be decided in the proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Body Meeting was sent. Mr. Sarkar, appearing in support of the appeal, strongly contended that the statutory requirement of having the Annual General Body Meeting has been given a quiet departure by Shri O.P. Jalan. Mr. Sarkar has been very emphatic as regards the service of notices and the evidence as is available on record, according to Mr. Sarkar, lacks probity and as a matter of fact on a total consideration of the entire evidence, it has been contended, there is no manner of doubt as regards the user and adaptation of unfair means and conduct of the business of the Company in a manner prejudicial to the interest of Khemka group. Two of the letters dated 25-3-1985 and 30-4-1985 were taken recourse to by Mr. Sarkar in support of his contention. It is on this count, however, that Shri R.N. Jalan also joins the appellant/ petitioner in the matter of lodgment of a complaint as regards receipt of notices of the Board Meetings for the years 1984-85. For convenience sake, the letter dated 25-3-1985 from R. Khemka to Shri O.P. Jalan, being the Managing Director of Deccan Enterprises IM. Ltd., and being Exhibit A21 is set out herein below: The Managing Director, M/s. Deccan E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri R.N. Jalan are residents of Hyderabad and are locally available. The letter dated 25-3-1985 (Exhibit A21) recorded non-receipt of the monthly reports as also non-receipt of notice of the Board Meetings 'for the last 18 months'. If any credence to the appellant-petitioner's case is to be effected, to wit, that Shri O.P. Jalan was inducted into the company for the purpose of day-to-day administration of the business under the guidance of both Shri UN. Jalan and Shri R.K. Khemka, then and in that event, the allegations in the letter cannot be said to be of any significance since, obviously, guidance was available for one and half years. If it is otherwise allegations are deemed to be correct, then and in that event the case of guidance and Shri O.P. Jalan being inducted as an administrator of the Company looses its efficacy. It shall have to be noted that the period involved is of 18 months i.e., to say this grievance of non-availability is existing since the middle of the year 1983 - then why this delay? If otherwise, one is active in management : and one participates in the management and/or one acts as a guide to the administration and management of the company - Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request you to please grant me leave of absence from the same and oblige. Thanking you, Yours faithfully, Sd/- (R. Khemka) Similar is the situation for the Board Meeting dated 8-7-1985 being Ex.A27, and which is also, for convenience sake, set out herein below: 6th July, 1985 Board of Directors, Deccan Enterprises Pvt. Ltd., 6-2-175/1, Rashtrapathi Rd., Secunderabad-500 003. Dear Sirs, This has reference to your notice dated June, 28th 1985 informing me that a meeting of the Board of Directors of the Company will be held on 8th July, !985 at 11-00 a.m. Due to pre-occupation, I am unable to attend (he above meeting and, therefore, request you to please grant me leave of absence from the same. Thanking you, Yours faith fully, Sd/- (R. Khemka). 20. On the factual score, Mr. Sarkar, further contended that induction of the respondent No.7, being Shri Srinarain Jalan as a Director was wholly unauthorised, illegal and unwarranted and this act of induction is stated to be an element of systematic oppression of Shri O.P. Jalan since long prior to induction unauthorised and wrongful allotment of shares were effected and which was objected to by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a submission. Mr. Mukherjee contended that despite a definite bar and a restriction in the Articles of Association of the respondent No.1 Company to the effect that no share-holder directly or indirectly concerned or interested in or associated with the company shall carry on the business in the competition of the company, the appellant-petitioner started identical business and, as a matter of fact, diverted orders meant for the respondent No. 1 company to be supplied to the International Airport Authority to the detriment of the company, the Hyderabad Industries Limited, a customer of some magnitude by reason of the special efforts of Shri Khemka stopped placement of orders with the respondent No. 1 company, but commenced the same with Andhra Polymers Pvt. Ltd., and it is on (his score that Mr, Mukherjee heavily commented upon the conduct of the petitioner in the matter of ascribing oppression by Sri O.P. Jalan against the Khemkas. 22. Significantly, Hyderabad Industries Limited is the organisation wherein both Sliri R. Khemka and Sri R.N. Jalan were involved in high positions and by reasons of their association with the company (Hyderabad Industries Limited) there was, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs; whereas Mr. Mukherjee contended that in the Board meeting held on 26-11-1994, it was decided to issue further share capital of ₹ 5 lakhs to meet its capital requirement: Mr. Sarkar and Mr. Ruvi were very emphatic in disputing the same and as a mailer of fact were extremely vocal on this count and contended that by reason of the manipulation and adaptation of financial jugglery, a so-called capital requirement was made to appear but the intent of the same was to deprive Shri R.N. Jalan and Shri Khemka to be in the majority (shares of both and their nominees taken together). Mr. Mukherjee, in support of his contention on capital requirement, contended that the notice of the meeting was sent to all the Directors and there is ample evidence to that effect. The Board in its meeting held on 26-11-1984 did resolve to issue further share capital of Rs,5 lakhs and the notices for the said meeting were sent to all the shareholders asking them to send their applications along with the application money before 30-12-1984. Mr. Mukherjee relying upon the minutes of the Board meeting contended that the Board again met on 5-1-1985 and granted extension of time up to 15-2-1985. All not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Nucon Enterprises Pvt. Ltd., was making heavy losses Shri R.N. Jalan thought it prudent to devote his whole time an energy to revive Nucon Enterprises Pvt. Ltd., and by reason wherefor he did resign from Hyderabad Industries Limited sometime in March/ April, 1985, but unfortunately, however, this attempt has brought about a strained relationship between two brothers Shri R.N. Jalan and Shri O. P.Jalan. But, as noticed above, there was substantial investment of the respondent No.1 company in Nucon Enterprises Pvt. Ltd., as well but the amounts were not returned by Nucon Enterprises. Similar is the situation with regard to the Secunderabad Commercial Corporation. The break up value of the shares was indicated at - 59% and it is at this juncture some amount of controversy arose which was eventually settled between the parties. The learned single Judge while dealing with the matter observed that the respondent No.9 being Shri R.N. Jalan did participate in the meetings and that he was aware of the increase in the share capital and intentionally did not contribute. The learned Judge went on to observe: ..... R9 also accepted that after resignation from IIIL he started devoting his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 10 lakhs within three months from the date of sanction of the enhanced working capital limits by converting part of the accumulated reserves and surplus or otherwise. But no steps seem to have been taken by you, to increase the capital of sanctioning the existing facilities. We shall, therefore, be glad if you will please take immediate steps for increase of the paid up capital to ₹ 10 lakhs without further delay. We note to proceed further in the matter of processing the proposal after receipt of your confirmation in this regard. Yours faithfully, Sd/- P. Manager Subsequently a remainder was sent by the State Bank of India on 14-7-1981 (Ex.B30) recording, inter alia, the following: State Bank of India, SS SB Banking Division, Hyderabad Main Branch. M/s. Deccan Enterprises (P) Ltd., Rashtrapathi Road, Secunderabad. SlB/SSR/No.1059 dated 14th July, 1981. Dear Sirs, Small Scale Industries Credit Facilities' In continuation of our letter No. SIB/SSR 900 dated the 25th June, 1981, we have to advise having received a letter dated 17-6-1981 from the Export Credit and Guarantee Corporation, indicating therein that your shipments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in accordance with the provisions of the Companies Act and also the Articles of Association. It was found by me that proper notices were given for Board meetings and minutes were properly drafted. When there was no response for the offer for additional shares from PI to R9, the shares were allotted to R3 and his family members. Therefore it cannot be said that subscription of additional capital is mala fide. 28. In the contextual facts, we do not find any reason to record a contra-note since documentary evidence galore are available to that effect and we also feel it expedient to render concurrence to the observations of the learned single Judge and thus reject the contentions raised by the appellant and respondent No.9 in regard thereto. The matter is going on since the year 1981. It was within the knowledge that here is an unconditional assurance to the Bank that the share capital shall have to be raised to ₹ 10 lakhs and in terms of the finding of the learned single Judge that the notice was given to both the appellant No.l and respondent No.9, we do record our concurrence as well on perusal of the documentary evidence in regard thereto that there was in fact parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. This runs counter to the case made out that there has always been an endeavour on the part of the appellant No.l so as to be involved in the affairs of the company at all times, but by reason of the machination engineered by Shri O.P. Jalan there has been total deprivation of the exercise of right as a member of the company and as such the appellant No.1 was oppressed. There is, however, no factual justifiability of such a case being made out. On the contrary the factual score depicts otherwise. 30. There is yet another aspect of the matter, which, of course, the learned single Judge did not feel expedient to deal in detail, excepting recording that the same is not of much relevance for deciding the issue. But we do feel it inclined to refer to the same, more so by reason of the presence of the father of Shri R.N. Jalan and Shri O.P. Jalan before the appellate Court by way of a separate representation and detailed submissions made on that score. 31. Mr. P. Chatterjee, appearing for Respondent No.8, Shri S.K. Jalan, brought forth certain documentary evidence in support of the contention pertaining to a family settlement and special reference in that context has been made to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined to be payable to him will be contributed equally by each member. It is further agreed that no issues shall be raised by any member during the proceedings and it shall not be taken into account. It is further agreed that the status quo in respect of any companies, firms, etc., changed during the course of such arbitration and transfer of assets proceedings, will be valid, legal. Each member shall be entitled to go to the Court and take help of this agreement along with annexure. It is further agreed that all liabilities incurred by any member after 31-7-1984 will be that of such member. The arbitration and completion of transactions will be completed by 15th April 1985. 32. It would be pertinent, however, to narrate sonic portion of the evidence, more so by reason of the fact that this aspect of the matter has not been delved into by the learned single Judge on the ground of not being relevant. But we do feel it inclined for the reasons noted above, since judicial ethics prompt us to discuss the subject in slightly more greater detail. The evidence of Shri O.P. Jalan records: Thereafter, all the members of Jalan group sat together for valuing the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound Ex.B157A and 157B, he had given it to me to file the same in the Court. Mr. S.K. Jalan has become very old and is aged about 85 years and my mother aged about 79 years is seriously sick with a stroke of paralysis and my father is solely looking after her. My father therefore, could not come to Hyderabad to file Rx.B157A and 157B and therefore had given me this paper to file in this Hon'ble Court. Although the arbitration by Sri Rajaram Musaddy could not fructify due to Mr. R.N. Jalan not signing the arbitration agreement, repeated efforts were made by my father, other relatives and friends to settle the dispute regarding valuation of shares, but Mr. UN. Jalan did not agree to any independent and reasonable valuation. In August, 1986, Mr. R.N. Jalan, his wife Mrs. Sutyabhama Jalan and his son Mr. Hemanl Jalan had sent me three separate letters along with bills for selling DIZPL's shares at an exorbitant price of ₹ 445/- per share Exb.B240 to 242 are the three letters along with bills written to me as above. I could not agree to the exorbitant price of DEPL's share as mentioned by Mr. R.N. Jalan and his family members, In the bills enclosed along with exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the same if the matter ended here. However, later on my second son R.N. Jalan started demanding higher valuation of the shares of companies falling to the shares of other brothers and very low valuation of the shares of companies falling to his share. I tried to mediate regarding the valuation of the shares and assets but, unfortunately, my second son did not agree to my mediation on this matter. Number of other persons also tried to mediate in respect of Hyderabad Group, but unfortunately, my second son did not agree. In fact, if the disputes relating to business at Hyderabad consisting of myself and my two sons R.N. Jalan and O.P. Jalan are settled, the same settlement can be binding on the other two brothers and settlement at Calcutta between myself and my other two sons S.G. Jalan and S.N. Jalan can be binding on the Hyderabad Group. As a father and at this old age it is my only ambition to see that during my life time my sons live in harmony. 1 shall be grateful to this Hon'ble Court, if my desire comes true by appointment of Court appointed arbitrator to settle the disputes between myself and my two sons R.N. Jalan and O.P. Jalan at Hyderabad. 35. Two other doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts on two counts: First of all the disinclination to contribute from Khemka's side and on the second count (he family settlement, since it records DEPL has gone to Om Prakashji 's share . The first aspect has already been dealt with by us herein-before and as such we need not go into the same issue afresh, excepting recording that this piece of evidence ought not to be ignored as regards the increased share capital resolution and the total ignorance thus feigned by Khemka cannot be said to be a justifiable stand. The second aspect as noted above pertains to the family settlement as well. The defence as pointed out by Mr. Sarkar again is the same, viz., blank document signed by Mr. Mahesh Khemka kept with Shri O.P. Jalati and for the serf-same reason as noticed above, we are not inclined to accept the same, though, however, record our concurrence that, strictly speaking, nothing turns on this issue pertaining to the matter, excepting, of course the credibility of the witnesses. The learned single Judge while dealing with the matter recorded: But one thing is clear that PI had reconciled to settle his accounts and PI and Jalan family submitted to the mediation and arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodated after his return in 1982 from Saudi Arabia. Even this was confirmed by R9 in his counter as extracted earlier. 99. The Company has been running right from 1987 after the company petition has been filed and the issue of lack of probity has not been established by any proper evidence. It is also not established that the company has been not functioning in accordance with the provisions of the Companies Act and that the situation warranted the winding up of the company on just and equitable ground. As already noticed by me that it is not open for this Court to interfere with the management and administration of the Rl company in each and every issue, but it can only interfere when the Company has been acting to the detriment of the interest of the share-holders in general. Further, it has to be seen whether R3 has acted in a manner detriment to the interest of the other share-holders or he changed the setup of administration after he became the majority share-holder. Admittedly, PI and R9 continued to be the Directors even after the majority share-holders and they are being invited to participate in all the meetings and affairs of the Company. It is not as if they are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontribute to further share increase by reason of (he financial stringency being expressed by Nucon and as evidenced in the letter to the father: can any justifiable reason be put-forth for recording oppression on these counts? Our answer cannot but be in the negative. There must be cogent evidence depicting burden-some, harsh and wrongful conduct. We, in the present context, however, do not find such an evidence, which can justly be described as oppressive, however, extended meaning one would like to attribute to the word. Situation is rather peculiar in the facts of the matter under consideration, since prior to the increased share capital, O.P. Jalan was not in majority rested with R.N. Jalan and R. Khemka jointly. ft is true, however, that by reason of this increased share capital, the majority position shifts and clothes O.P. Jalan as majority rendering R.N. Jalan and R. Khemka as the minority and it is on this context that the judgment of the Calcutta High Court in Appeal No. 186 of 1971 (Tea Brokers Private Ltd. v Hemandra Prasad Barooah) was relied upon and Mr. Sarkar has been very emphatic to the effect that the Calcutta High Court in the appeal has observed that a single a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd Lord Cooper in the Elder's case (supra) observed: Where the 'just and equitable' jurisdiction has been applied in cases of this type, the circumstances have always, I think, been such as to warrant the interference that there has been, at least, an unfair abuse of powers and an impairment of confidence in the probity with which the company's affairs are being conducted, as distinguished from mere resentment on the part of a minority at being outvoted on some issue of domestic policy. The phrase 'oppressive to some part of the members' acquires a certain colour from its collocation in Section 165 with such stronger expressions as Intent' to defraud', 'fraud' 'misfeasance' or 'other misconduct', and the essence of the matter seems to be that the conduct complained of should at the lowest involve a visible departure from the standards of fair dealing, and a violation of the conditions of fair play on which every share-holder who entrusts his money to a company is entitled to rely. This, broadly speaking, was the class of case which the draftsman of Section 210 evidently had in mind, and the question is whether the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken different view may not justify interference with the trial Court's exercise of discretion. As is often said, it is ordinarily not open to the appellate Court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the appellate Court that in exercising its discretion the trial Court has acted unreasonably or capriciously or has ignored relevant facts and has adopted an unjudicial approach then it would certainly be open to the appellate Court - and in many cases it may be its duty - to interfere with the trial Court's exercise of discretion. In cases falling under this class the exercise of discretion by the trial Court is in law wrongful and improper and that would certainly justify and call for interference from the appellate Court. These principles are well established; but, as has been observed by Viscount Simon L.C. in Charles Osenlon Co. v. Jolmst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he area of grant of relief, two short issues may be dealt with -the first being the objections pertaining to reliance on the documents. Mr. Sarkar contended that these documents have not been properly proved and as such question of placing any reliance thereon does not arise. Admittedly, all the documents contain signatures without there being any dispute. It is in regard to contents, however, that Mr. Sarkar submitted that the Court would not be pleased to look into the same. We are, however, unable to record our concurrence with the same, moreso by reason of the fact that a detailed trial did take place before the learned single Judge with witnesses being examined-in-chief by way of affidavit-evidence and thereafter making the witness available for cross-examination and re-examination. Not a whisper of any objection has been raised at any point of time pertaining to the documents being tendered and marked as exhibits and as such the submission cannot, thus, be accepted. In this context, reference may be made to the decision of the Privy Council in the case of Padman v. Hanwanta AIR 1915 PC 111, wherein the Privy Council at page 112 of the Report observed: The defendants have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding upon the issue of rights shares. 50. In that view of the matter and having come to a conclusion as above, question of mal-user of fiduciary position does not and cannot arise. The submission of Mr. Sarkar cannot, thus, be sustained and therefore fails. 51. As to the relief, the learned single Judge in paragraphs 108 and 109 observed: Section 402 has been engrafted with wide discretionary powers to ensure smooth functioning of the Companies. The Court is entitled to grant the relief as it thinks fit in the interest of the share-holders and Company. That is the reason for both ailments under Sections 397 and 398, the treatment is common under Section 402. The Court is empowered to pass order both as a curative and preventive measures if it finds that the affairs of the Company are being conducted detrimental to the interest of the Company, for bringing an end or for preventing the matter complained of or apprehended. This Court is interested in the affairs of the Company as a whole and the personal quarrels are wholly irrelevant. The interest of the Company cannot be at the altars of bickerings among the Directors for their personal ends. Moreover the ad infinitum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for some time by the Interim Administrator and now it is again being run by K3 as Managing Director. Though the PI did not ask for direction for selling of shares of R3 to him. it is only after filing of affidavit by R3 reply to the counter affidavit of R9, a further affidavit was filed by PI in which lie had stated that PI was ready and willing to purchase the shares so as to save RI company from the clutches of R3. R9 also in his counter did not say that he was willing to purchase the shares, but only in his rejoinder to the counter of R3, he stated that direction may be issued to R3 and his family members to share their share-holding at a price as may be determined by the Court. Thus, PI and R3 never expressed their readiness to purchase the shares. R3 has been managing the Company for several years and also presently he is managing the Company, it is desirable to offer the management of the Company to R3 by passing appropriate directions. 52. It is on these observations, that Mr. Sarkar very strongly commented that a Chief Executive has been given an element of permanency which by no stretch can be claimed by Sliri O.P. Jalun. We, however, do not lend any concurrence to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, this Court appoints Special Officers. 112. Accordingly, I appoint Sri P.S. Raju, Advocate and Suit. E. Urmila, Advocate to carry out the directions. R3 shall make available necessary files/documents and information as may be required by the Special Officers for the purpose. 113. The Special Officer shall first refer the matter regarding the assessment of value of the shares of PI, R9 and R3 and their respective groups as indicated above to the competent Chartered Accountant before offering lo the parties. It is also open for the Special Officers to move this Court for further directions. 114. P1, R9 and R3 shall deposit a sum of ₹ 15,000/- each in Rl company for meeting the expenses and also the remuneration of Special Officers. Out of the said sum a sum of ₹ 10,000/- each shall be paid to the Special Officers towards their remuneration tentatively. The fee of Chartered Accountants and other expenses including the ministerial assistance shall be paid by R3 from the amount so deposited on intimation by the Special Officers. 54. We do record or concurrence to the above, more so having regard to the Bench Judgment of the Calcutta High Court in Sindri I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of presentation of the petition, but in the facts of the matter under consideration, the respective dates, viz., 30-6-1986 and 31-7-1986 ought to be taken in for assessment of the value of the shares. 56. Before we conclude, the observations of A.N. Sen, J., in Tea Brokers Private Ltd v. Hemendra Prasad Barooah, seem to be rather apposite in the matter of grant of relief as well. A.N. Sen, J., observed: Except in unusual circumstances the majority group of share-holders, in my opinion, should never be ordered or directed to sell their shares to the minority group of share-holders. An order directing the majority group of share-holders to sell his shares to the minority group of shareholders will not redress the wrong done to the majority group of share-holders and will not give him sufficient compensation or relief against the acts of oppression complained of by him, and, on the other hand, may add to his suffering and grievance and cause him, greater hardship. Such an order, to my mind, will not further the ends of justice an indeed the cause of justice may be defeated. The decision of the House of Lords in the case of Scottish Co-operative Wholesale Society v. Meyer and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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