TMI Blog1998 (12) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted 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 oppressor 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. Before proceeding further, it would, however, be convenient to advert briefly to the factual matrix of the matter under consideration. 2. The Deccan Enterprises P. Ltd., being the respondent-company, was incorporated under the provisions of the Act on 15-4-1966 with the registered office at Secunderabad. The authorised capital of the company was Rupees Ten lakhs of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respondent No. 3 did apply to the addressee as above for the purpose of obtaining necessary approval of the name of the company in regard to the business of manufacture in rubber and rubber goods upon payment as is required for the purpose. Mr. Mukherjee contended that the third respondent being one of the five brothers, including the ninth and seventh respondents, has in fact taken all necessary steps to promote the company, though, however, the signature of Shri O.P. Jalan is significantly absent in the articles and memorandum of association. As an explanation thereto Mr. Mukherjee contended that during February, 1966, the marriage of Shri O.P. Jalan was fixed at Calcutta and as such he was required to go to Calcutta. But, since the printer could not deliver the printed copy of memorandum and articles of association before Shri O.P. Jalan left for Calcutta and in order to avoid any delay in the incorporation of the company, Shri R.N. Jalan, being the elder brother of Shri O.P. Jalan, was requested to sign the memorandum of association along with Shri R. Khemka, who was working as a deputy to Shri R.N. Jalan. Be it noted that while deposing Shri O.P. Jalan in no uncertain te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 2265 5660 5660 11320 M. Khemka 50 75 185 185 370 K.D. Khemka 783 1043 2483 2483 4966 Savita Khemka - - 25 25 25 Sunita Khemka - - 25 25 25 Hemlata Khemka - 25 25 125 R.D. Khemka - - 25 25 50 2533 3383 8428 8428 16881 (33.77 per cent) (33.83 per cent) (33.71 percent) (33.71 percent) (33.76 per cent) O.P. Jalan Family O.P. Jalan 1100 1465 3515 3515 7080 Sudha Jalan 867 1157 2577 2577 5154 K. Jalan - - 25 825 1650 V. Jalan - - 25 25 50 1967 2622 5142 6942 13934 (26.23 per cent) (26.22 per cent) (24.57 per cent) (27.77 per cent) (27.87 per cent) S.K. Jalan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it has been alleged that there are steady and defined methods adopted by Shri O.P. Jalan to oust and totally exclude the Khemka group and it all happened after return of Shri Mahesh Khemka from Saudi Arabia where he was inducted as a General Manager of Amiant Rubber Industries Limited with Shri R. Khemka and Shri O.P. Jalan as the directors of the foreign company in Saudi Arabia and Shri Mahesh Khemka, it has been alleged, did shift completely his residence to Saudi Arabia till up to 1982. Obviously, after coming back to the country, there was an expectation that he would be absorbed in the company at Hyderabad 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 allega-tions 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. 6. The learned single Judge, in spite of the matter being rather voluminous, has dealt with the same and scrutinised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted at that meeting including the appointment or reappointment or removal of the Directors. viii. Appoint a special officer or officers to take charge of the business and affairs of the company and to arrange for running the same till the Board is duly reconstituted. ix. A scheme be framed by this Court for administration of the company with proportionate representation of the petitioners on the Board in the alternate the Special Officer be directed to convene and hold and conduct an extra-ordinary general meeting of the company for the purpose of appointment of directors. x. Give such other directions as this Hon'ble Court may deem neces-sary to put an end to the matters of mismanagement and oppress- sion 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. 1 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." Before proceeding further, one redeeming feature transpired during the course of hearing before the Appellate Court th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Company for the years 1984-85, 1985-86 and 1986-87 as alleged in the petition and reply affidavit? 6. Whether the alleged resolution of the Board of the 1st respondent company dated 21 -8-1984 withdrawing the nomination of respon-dent No. 1 from the Board of Directors of joint venture foreign company is valid and binding on the 1st respondent company and R-11 ? 7. Whether the affairs of the 1st respondent company are mismanaged and its assets and profits misappropriated and not duly accounted for by R3 and members of his family and associates on the Board of the 1st respondent company 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?" It is on this score, however, that certain other factual details as has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the principal participants in the disputes are Shri R. Khemka and Shri R.N. Jalan on one side and Shri O.P. Jalan on the other, as such question of oppression of Jalan s against the Khemkas, strictly speaking, may not arise since R. N. Jalan and R. Khemka have grouped themselves under one head and opposed O.P. Jalan. 10. It has been the definite case of the appellant that during the year 1984 no notice of the Board Meetings were sent to Shri R. Khemka and as a matter of fact no annual general body meeting was held, neither any notice of the annual general body meeting was sent. Mr. Sarkar, appearing in support of the appeal, strongly contended that the statutory require- ment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember, 1984 and was signed by all the Directors present at the said meeting. A copy of the said Annual Report and the balance sheet of the company is enclosed. As you are aware we had discontinued the practice of despatching monthly reports to each of the directors individually. Save and except as stated herein we deny each and every allegation made in your letter under reference. Sd/- O.P. Jalan." Before proceeding further in the matter, it is convenient to note, however, that both the complainants viz., Shri R.K. Khemka and Shri R.N. Jalan are residents of Hyderabad and are locally available. The letter dated 25-3-1985 (Exhibit A-21) 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 R.N. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oke a reply being Ex. A. 25, which reads as follows: "Board of DirectorsDt. 26-6-1985 Deccan Enterprises Pvt. Ltd. 6-2-175/1, Rashtrapathi Rd., Secunderabad - 500 003. Dear Sirs, This has reference to your notice dated June 13, 1985 and June 18, 1985 informing me that a meeting of Board of Directors of the Company will be held at the Registered Office of the Company on 27th June, 1985 at 11.00 A.M. I regret my inability to attend the above meeting since I will be away from Hyderabad on this date. I, therefore, 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. A. 27, 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 28, 1985 informing me that a meeting of the Board of Directors of the company will be held on 8th July, 1985 at 11.00 A.M. Due to pre-occupation, I am unable to attend the above meeting and, therefore, request yo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of Shri Mahesh Khemka from Saudi Arabia started two several separate competitive business concerns viz., Andhra Polymers P. Ltd., and Ramak Enterprises P. Ltd., and it is on this score that Mr. S.B. Mukherjee appearing for the respondents contended that by reason of the commencement of the business as above there has been an utter neglect on the part of Shri R. Khemka to get himself involved in administration in any way whatsoever. The two letters referred to above, dated 26-6-1985 and 6-7-1985, Exs. A. 25 and 27 respectively, lend credence to such 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 shareholder 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 Ltd. a customer of some magni-tude by reason of the special efforts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Court under section 397 includes Shri R.N. Jalan as an oppressor as well, but during the course of hearing there is a definite shift of the stance as noted above, and Mr. S. Ravi, appearing for Mr. R.N. Jalan did lend concurrence to each of the submissions of Mr. Sarkar, appearing in support of the petitioner being the appellant herein. 17. At this juncture it would be convenient to note that the spark-off came from both Shri R.N. Jalan and Shri Khemka as regards the issue of further share capital of Rs. 5 lakhs; whereas Mr. Mukherjee contended that in the Board meeting held on 26-11-1994, it was decided to issue further share capital of Rs. 5 lakhs to meet its capital requirement: Mr. Sarkar and Mr. Ravi were very emphatic in disputing the same and as a matter of fact were extremely vocal on this count and contended that by reason of the manipulation and adaptation of financial jugglary, 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 conten-tion on capital requirement, contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of fact Mr. Mukherjee contended that a number of employees, supposed to be experts were made to resign and join the competitive firm of Andhra Polymers Pvt. Ltd., These are the acts which Mr. Mukherjee complained and stated that it is a deliberate attempt to crush the respondent No. 1 company in order to sub-serve the individual gain and promote the growth of Andhra Polymers P. Ltd. 18. Incidentally, another company in which the parties were interested was Nucon Enterprises P. Ltd., but since Nucon Enterprises P. Ltd., was making heavy losses Shri R.N. Jalan thought it prudent to devote his whole time and energy to revive Nucon Enterprises P. Ltd., and by reason wherefore he did resign from Hyderabad Industries Ltd., 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 P. Ltd., as well but the amounts were not returned by Nucon Enterprises. Similar is the situation with regard to the Secunderabad Commercial Corpn. The break up value of the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.B. No. Hyderabad-500 170. Telegram: 'Circletop' Secunderabad. SIB. No. 845 Dated 16th June, 1981. Dear Sir, Small Scale Industries Credit Facilities With reference to your application dated 11-6-1981, seeking renewal and enhancement of working capital facilities, we observe that a stipulation was made by us while sanctioning the existing limits to you during May 1980, that the Company would immediately initiate steps to increase the paid up capital from Rs. 2.50 lacs to Rs. 10 lacs 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 Rs. 10 lacs 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 reminder was sent by the State Bank of India on 14-7-1981 (Ex. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital is purely an internal administration of the Company and Courts do not interfere in the normal course. When the resolution was held to be valid, it would not be in the fitness of things to construe that there was no genuine requirement. It cannot also be said that R. 1 company could have taken a decision to go for loan from the financial institutions or sold some of its assets rather than increasing the capital because, the decision vested with the Board of Directors which cannot be scrutinised when it is found that valid resolution was passed 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 P.1 and R. 9, the shares were allotted to R.3 and his family members. Therefore, it cannot be said that subscription of additional capital in mala fide." 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m you that Mr. R. Khemka has started a separate competitive business and as such he is not actively participating in our Company. Since he is still holding shares in this Company, he continues to remain as a Director. Under the circumstances, Mr. R. Khemka will not be extending a personal guarantee against our working capital limits which please note." Subsequent correspondence from the Bank itself suggest, however, that on his own showing Shri R. Khemka has not been participating in the business of the company and as such he wanted to withdraw the guaran- tee. This runs counter to the case made out that there has always been an endeavour on the part of the appellant No. 1 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. 23. There is yet another aspect of the matter, which, of course, the learned single Judge did not feel expedient to deal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms as they mutually agree. It is further agreed that M/s. Deccan Ent. ARIL, M/s. Golconda, M/s. Kohinoor Jalan, Com. Industrial Corp. Sanjay Comm., Anand Trading, Pramod Com. will go to Group I and M/s. Nucon, Sec Com Co., Hyd. House to Group III and D/Polymer, JCC, Prakash Trading to Group II. The difference in the assets will be made good by payment by each group to the other group. It is further agreed that Mr. R. Khemka's share in D/E, D/P, ARIL, Secunderabad Com., will be determined and settled with him by Mr. SKJ and RNJ and any sum so 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 quoin 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 completio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement taken away by him. It is not true that Ex. B. 157B is not in the handwriting of Mr. R.N. Jalan. I am the brother of Mr. R.N. Jalan and I can identify Mr. R.N. Jalan's handwriting. I confirm that Exb. B. 157B is in the handwriting of Mr. R.N. Jalan. Exb. B157 was presented by my father before the Division Bench in O.S.A. No. 3 of 1990. Since Mr. S.K. Jalan could not find the third page at that time and the O.S.A. No. 3/1990 was already ordered, the additional paper later on found could not be produced at that time. Later on when my father found Exb. B157 A 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 Exb. B 157A 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 valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led in August, 1996 during the pendency of the appeal by Shri S.K. Jalan, the father of the two brothers being Shri R.N. Jalan and O.P. Jalan and the relevant extract is set out herein below. Shri S.K. Jalan stated: "In accordance with the Family Settlement in 1984-85, my second son R.N. Jalan took charge of all business falling to his share, issued additional capital in these companies and appointed his nominees as Directors and removed me and my youngest son O.P. Jalan from the Board of these companies. I would not have objected 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 settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntributing to DEPL new capital issue and stopping of APPL Rubber business. In your family separation, DEPL has gone to Om Prakashji's share, and it will not be personally possible for me to work with him. Further in view of present strained relationship between yourself and Babuji, it is not possible for us to retrace our steps and also to contribute to the new capital. I, however, suggest that our share in DEPL, Nucon, DPL and SCC may be settled immediately. With best regards. Yours sincerely, Sd/- (MAHESH KHEMKA)" 27. This document again reflects on two counts: First of all the disinclina-tion to contribute from Khemka's side and on the second count the family settlement, since it records 'DEPL has gone to Om Prakashji's share'. The first aspect has already been dealt with by us hereinbefore and as such we need not got 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. Sark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that R-3 acted in a manner oppressive to other shareholders. Normally oppression is alleged against majority shareholders by the minority shareholders. But, in the instant case, it is turned to be otherwise. The oppression is now being alleged by majority shareholders (prior to additional share capital) namely P-1 and R-9. As already stated the genesis appears to be not that the meetings were not being conducted, notices were not being issued, but P-3 was not properly accommodated after his return in 1982 from Saudi Arabia. Even this was confirmed by R-9 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 R-1 company in each and every issue, but it can only interfere when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence adduced for posting ? The document in support of posting negates the same, since the same was issued by the postal authorities themselves. The facts further depict that Shri R. Khemka without any hesitation prays for leave of absence from attending the meetings. The facts further depict Mahesh Khemka's letter recording therein strained relationship and his disinclination to contribute to the increase in share capital - It further records R.N. Jalan's inability to contribute to further share increase by reason of the 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 depiciting burdensome, 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 join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 34. The expression 'just and equitable' has come up for consideration before the English Courts far too frequently, though, however, the Scottish case in Elder v. Elder Watson Ltd. [1952] SC 49 is one of the most oft-cited decision in that regard 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 S. 165 with such stronger expressions as 'intent' to 'defraud', 'fraud', 'misfeasance' or 'other misconduct', and the essence of the matter seems to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n vested in the Court under section 34 has been exercised by the trial Court the appellate Court should be slow to interfere with the exercise of the said discretion. In dealing with the matter raised before it at the appellate stage the appellate Court would normally not be justified in interfering with the exercise of discretion 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned single Judge to be so capricious or unwarrant-ed so as to warrant intervention. We do not repeat ourselves to avoid prolixity and we do feel it expedient to record our concurrence with the observations and findings of the learned single Judge. 37. Before coming to the 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, more so 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-examina- tion and re-examination. Not a whisper of any objection has been raised at any point of time pertaining to the documents being tendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Directors in their capacity as shareholders. We must, therefore, reject Shri Seervai's argument that in the instant case, the Board of Directors abused its fiduciary power in deciding upon the issue of rights shares." 38. 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. 39. 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 shareholders 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by the parties in the interest of the company, it is also open for the Court to pass appropriate orders. The Company has been running throughout by R-3 and after Company Petition has been filed, for some time by the Interim Administrator and now it is again being run by R-3 as Managing Director. Though the P-1 did not ask for direction for selling of shares of R-3 to him, it is only after filing of affidavit by R-3 reply to the counter affidavit of R-9, a further affidavit was filed by P-1 in which he had stated that P-1 was ready and willing to purchase the shares so as to save R-1 company from the clutches of R-3. R-9 also in his counter did not say that he was willing to purchase the shares, but only in his rejoinder to the counter of R-3, he stated that direction may be issued to R-3 and his family members to share their shareholding at a price as may be determined by the Court. Thus, P-1 and R-3 never expressed their readiness to purchase the shares. R-3 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 R-3 by passing appropriate directions." 40. It is on these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 10 each. ( vi )The shares held by P-3 shall not be disturbed as the matter relating to withdrawal of his nomination is sub-judice before the Calcutta High Court. 111. For the purpose of carrying out the directions as passed by this Court, this Court appoints Special Officers. 112. Accordingly, I appoint Sri P.S. Raju, Advocate and Smt. E. Urmila, Advocate to carry out the directions. R-3 shall make available necessary files/documents and information as may be required by the Special Officers for the purpose. 113. The Special Officers shall first refer the matter regarding the assessment of value of the shares of P-1, R-9 and R-3 and their respective groups as indicated above to the competent Chartered Accountant before offering to the parties. It is also open for the Special Officers to move this Court for further directions. 114. P-1, R-9 and R-3 shall deposit a sum of Rs. 15,000 each in R-1 company for meeting the expenses and also the remuneration of Special Officers. Out of the said sum a sum of Rs. 10,000 each shall be paid to the Special Officers towards their remuneration tentatively. The fee of Chartered Accountants and other expenses including the minist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame ought to be taken note of in the matter of valuation of assets and in that perspective we do lend concurrence that while it is true that the value of the shares normally ought to be reckoned on the date 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. 44. Before we conclude, the observations of A.N. Sen, J., in Tea Brokers P. Ltd.'s case ( supra ) 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 shareholders, in my opinion, should never be ordered or directed to sell their shares to the minority group of shareholders. An order directing the majority group of shareholders to sell his shares to the minority group of shareholders will not redress the wrong done to the majority group of shareholders 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 mi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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