TMI Blog1961 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... the company is deliberately shown less by excessive expenditure and many items of such expenditure are not properly vouched or receipted. The other allegation is that there is mismanagement of the affairs of the company attributable to the fact that the head office of the company is at 'Calcutta whereas business of the company is in Hazaribagh and that passengers are travelling without tickets or at prices below the scheduled rates, that buses are purchased at high cost and after heavy depreciations sold to friends and relatives of the managing agents and/or their employees, and that the consumption of petrol as reported by the running staff of the company from Hazaribagh is not properly checked by the staff of the managing agents and the result is that a great loss is suffered by the company. There are other allegations such as that dividends are not properly being declared or that they are being declared at too low 'a figure, that she was not given access to and inspection of the books of account of the company. The main defect of this application is that the facts alleged are not proved. It is essential to remember that under section 397 of the Companies Act, the court has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning of section 397 of the Act. This argument cannot have any force because a shareholder has no such right recognised by the Companies Act. Mr. Choudhury on behalf of the appellant realised this difficulty and, therefore, took up the position that although she had no legal right, it was a proper act of company management and she having more than thirty per cent, of the shares, should have been given such access and inspection. That argument also cannot succeed because to concede such a right will be to permit the directors to do something which the law does not permit them to do or which might be objectionable in law; besides then every shareholder will claim such right and to allow some and deny others will lead to discrimination and confusion. Lastly, this argument must, in my view, fail on the simple ground that this cannot be an act of oppression within the meaning of section 397 of the Companies Act. The words of section 397 of the Companies Act material for this purpose are, "the affairs of the company are being conducted in a manner oppressive to any member or members". One single and solitary instance of any act does not seem to answer the oppressive continuity of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a company should be wound up, it would be just and equitable to prevent such a company from being pushed into this position by the use or misuse of section 397 of the Companies Act. One single instance will prove what the fact is. The appellant purchased these shares only for Rs. 14,238. The value of these shares thereafter rose to Rs. 80,000 and soon thereafter to Rs. 1,00,000. A company could not be said to be fit for winding up in such circumstances as are proved in this case. The next ground about ticketless travel or travelling at low fares or consumption of petrol forming acts of oppression, has no basis on the facts proved. In fact, the learned judge dismissed the affidavits attempted to be used for these purposes as frivolous. A person who was supposed to have travelled in 1951 is making affidavit in 1959 showing how after the travel he returned the ticket to the bus conductor. If failure of conductors of buses to charge proper fares or to take return of tickets from passengers without the slightest proof that the board of directors or those in charge of conducting the affairs of the company are implicated in the complaint, was to be a ground for this court taking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents of the company for a renewed period. It was, therefore, contended that this explanatory note did not show that these two persons were all the partners or that each one of them had eight annas, share. Therefore, it is argued that this explanatory note does not satisfy section 173(2) of the Companies Act. Before proceeding to answer this question, it may be mentioned that this particular section was amended by the Amendment Act LXV of 1960 which came into force on December 28, 1960, introducing the words "the nature of the concern or interest" in place of the words "the nature and extent of the interest". The Amendment Act of 1960 does not apply to this case because the annual general meeting for which this explanatory note was submitted was held on September 30, 1959, long before the amendment came into force. Here again there are two complete answers to the argument advanced by Mr. Choudhury on behalf of the appellant. The first answer is on the facts and the second answer is on the law. The first answer on the facts follows from the proposition that if a shareholder is aware of the facts, it is not for him or her to complain of insufficiency of notice of a meeting. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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