TMI Blog1996 (10) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no substance in Dubey's appeal. - CIVIL APPEAL NO. 1974 OF 1986 - - - Dated:- 8-10-1996 - S.P. BHARUCHA AND S.B. MAJMUDAR, JJ. H.K. Puri for the Appellant. A.N. Pareekh, Sushil Kr. Jain, Pradeev Agarwal and A.P. Dhamija for the Respondent. JUDGMENT Bharucha, J. These are cross-appeals against the judgment and order of a Division Bench of the High Court of Madhya Pradesh. 2. The appellant in Civil Appeal No. 1975 of 1986, Shekhar Mehra (Mehra), and the second appellant in Civil Appeal No. 1974 of 1986, R.K. Dubey (Dubey) promoted Kilpest (P.) Ltd. (the company) and were its first Directors. Dubey was the managing director and Mehra was the joint managing director. The two fell out and Mehra did not attend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of the company. While this might be a ground for winding it up, Mehra sought relief under sections 397 and 398. The petition also set out various alleged acts of mis-management by Dubey. The petition was contested. The learned single Judge found it appropriate to try the petition as a winding-up petition. The company appealed. The Division Bench allowed the appeal, set aside the order of the single Judge and dismissed the petition. Mehra then filed an appeal to this Court, which was allowed and the matter was remanded. 4. Upon remand the parties went to trial on the basis of affidavits. The single Judge dismissed the petition, whereupon Mehra filed the appeal upon which the order under challenge was passed. The Division Bench came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 6. The learned counsel for the Mehra sought to challenge the findings of fact reached by the Division Bench in the judgment under appeal. We find that the Division Bench assessed the evidence before it and came to a conclusion thereon. The conclusion has not been challenged as being perverse or such as could not reasonably have been reached upon the record, as, indeed, it could not have been. We, therefore, proceed upon the basis of the findings of fact recorded by the Division Bench. 7. The principal argument on behalf of Mehra was based upon the judgment of the House of Lords in Ebrahimiv. Westbourne Galleries Ltd [1972] 2 All. ER 492. It was submitted that inasmuch as there were only two promoter Directors, who held, alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders were directors sharing the profits equally as remuneration and no dividends were declared. (3)One of the shareholders' son acquired shares from his father and from the second shareholder, Ebrahimi, and joined the company as the third shareholder - director with two hundred shares (one hundred from each). (4)After that, there was a complete ouster of Ebrahimi from the management by the votes of the other two directors, father and son. (5)Although Ebrahimi was a partner, Nazar had made it perfectly clear that he did not regard Ebrahimi as a partner but regarded him as an employee in repudiation of Ebrahimi's status as well as of the relationship. (6)Ebrahimi through ceasing to be a director lost his right to share i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r active participation of members who are sought to be excluded from management, the principles of dissolution of partnership cannot be liberally invoked. Besides, it is only when shareholding is more or less equal and there is a case of complete deadlock in the company on account of lack of probity in the management of the company and there is no hope or possibility of smooth and efficient continuance of the company as a commercial concern, there may arise a case for winding-up on the just and equitable ground. In a given case the principles of dissolution of partnership may apply squarely if the apparent structure of the company is not the real structure and on piercing the veil it is found that in reality it is a partnership. On the alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quitable in all the circumstances of the case; ( e )the termination, setting aside or modification of any agreement between the company and any person not referred to in clause ( d ) , provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provid-ed further that no such agreement shall be modified except after obtaining the consent of the party concerned, ( f )the setting aside of any transfer, delivery of goods, payment, execu-tion or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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