TMI Blog1986 (1) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... of the power house in Gorakhpur City. The last annual general meeting of the company was held on December 26, 1981. All the items in the agenda had been taken for consideration in the said meeting, but the last item in the agenda regarding the appointment of Sri Amar Nath Mehrotra as a new director of the company could not be taken. It has consequently been alleged that since the last item in the agenda could not be taken and Amar Nath Mehrotra could not be appointed as a director of the company, he along with other shareholders of the company requisitioned a meeting at a place other than the registered office of the company and, as such, it was alleged that this court should stay the holding of the meeting summoned for December 30, 1982. This petition was filed in this court on December 21, 1982. It was admitted on December 23, 1982. On an application made for grant of an ad interim order, it was directed that the meeting scheduled to be held on December 30, 1982, shall be held, but the resolution passed in the meeting shall not be given effect to until further orders of this court. After this order was passed, the meeting was held on December 30, 1982. The petitioner there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this section, provided such members have a right so to apply in virtue of section 399. The court has been empowered to pass any order as it thinks fit with a view to bringing to an end the matters complained of if the court is of the opinion that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members and also further if the court is of the opinion that to wind up the company would unfairly prejudice such member or members but that otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up. On a reading of section 397 of the Companies Act, it is apparent that it must first be established by the applicant that the affairs of the company are being conducted in a manner prejudicial to public interest and is further oppressive to such a member. Here, as I have already found above, the position is that, in fact, the petitioners are conducting the affairs themselves and they have the management of the company in their own hands. The question, therefore, of the petitioners themselves applying under section 397 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable under section 397 of the Companies Act. The other section on which reliance has been placed is section 398 of the Companies Act and reliance has been placed on sub-section (2) of section 398.Section 398(2) is quoted below : "If, on any application under sub-section (1), the court is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit." The argument is that in the meeting dated December 30, 1982, resolutions have been passed by virtue of which three old directors have been removed and three new directors have been appointed and, as such, the management and control of the company will go to the hands of the opposite parties. The resolution which has been passed on December 30, 1982, has not been given effect to because of the interim order passed by this court. The new directors have not yet taken over charge of the affairs of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held by the learned company judge that it was premature to pass any order either under section 397 or section 398 in regard to the consequences of the proceedings of the meeting dated December 30, 1982, inasmuch as till the new directors who had been appointed in the meeting dated December 30, 1982, conducted the affairs of the company, it in any manner had affected the company or was prejudicial to the public interest or interest of the company. It has been urged by the counsel for the appellant that necessary orders under section 397 could be passed not only in a case where the affairs of the company were being conducted in a manner prejudicial to the public interest but also where they were being conducted in a manner oppressive to any member or members (including any one or more of themselves). According to the counsel for the appellant, even though there may have been nothing to indicate that the affairs of the company were being conducted in a manner prejudicial to the public interest inasmuch as the appellants themselves were in control of the affairs of the company, the learned company judge should have gone into the question as to whether the affairs of the company wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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