TMI Blog2002 (5) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... g with S. Sounder, the second appellant and one Nalini Chandrasekar were holding shares in the said company and all of them were holding 990 shares each. Later on, Nalini Chandrasekar transferred her shares equally to the second appellant Sounder and the respondent Senthamarai Munusamy with the result the second appellant Sounder was holding 1485 shares out of 2970 shares initially allotted by Microparticle Engineers (P.) Ltd. 3. The respondent Senthamarai Munusamy approached the Board stating that on perusal of the records of the Registrar of Companies, she found that further shares were alleged to have been allotted on 16-4-1997 to the close relatives of the second appellant, Sounder. According to the respondent Senthamarai Munusamy, the allotment was ex facie illegal and invalid, and, hence, she approached the Board for oppression of her rights as a member of company. 4. Before considering the issues raised in the appeal, it is relevant to mention here that Microparticle Engineers (P.) Ltd., as already observed, was incorporated on 13-1-1992 under the provisions of the Act and having its registered office at 298, 4th Floor, Khaleel Shiraji Estate, Fountain Plaza, Panth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d R. Velayutham and induction of appellants 4 and 5 as directors on 1-5-1998 and the removal of the respondents Senthamarai Munusamy and Munusamy as directors on 2-5-1998 which, according to the Board, constituted a chain of acts of oppression against the respondents. The Board took the view that in the Board meetings held on 18-4-1998 and 25-4-1998 to consider the induction of additional directors and to accept the resignation of the respondents from directorship of the companies, there was no quorum and, hence, the decision to convene extraordinary general meeting on 1-5-1998 was invalid. The Board took the view that the decision taken in the extraordinary general meeting was invalid and the quorum was maintained in the extraordinary general meeting only as a result of allotment of shares to appellants 3 to 5. The Board held that the allotment of shares to appellants 3 to 5 was invalid and the decision taken to accept the resignation of the respondents in the Board meeting held on 2-5-1998 was also invalid as there was no quorum for the meeting. As far as the letter of resignation of one of the respondents is concerned, it was not valid and the Board took the view that the allotm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the removal of the respondents from the directorship on 2-5-1998 was invalid and these would constitute a chain of acts of oppression against the respondents herein. The Board held that by the act of the second appellant the respondents have been reduced to minority shareholders and excluded from the management and control of the companies and only the relatives of the second appellant were benefitted by the allotment of shares. In this view of the matter, the Board has passed the following order : "( a )setting aside the allotment of shares impugned in these petitions in favour of respondents 3 to 5 and rectify the register of members of the companies; ( b )setting aside inclusion of the respondents 4 and 5 as directors of the companies; ( c )setting aside the resolutions dated 2-5-1998 removing the petitioners from the office of director of the companies; and ( d )reconstituting the board of directors of the companies with immediate effect with the petitioners and the 2nd respondent as directors of the companies." The Board ultimately held that appropriate order that would be passed in the case would be that the second appellant herein should take one company and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar of Companies, but the respondents have not challenged the resolutions dated 24-2-1997 and 20-3-1997. The learned senior counsel submitted that the resolution dated 14-4-1997 was passed bona fide and the presumption under section 195 would operate. As regards the payment of share moneys, even assuming that there are certain discrepancies that would not make the resolutions invalid. According to the learned senior counsel, the mere alleged discrepancies in the resolution would not make the resolutions invalid attracting the provisions of sections 394 and 395 of the Act. His submission is that the allotment of shares in favour of respondents 3 to 5 was bona fide and within the jurisdiction of the directors and it cannot be regarded as an act of oppression. As regards the balance sheet, the learned senior counsel submitted that non-signing by one of the directors is not a matter of oppression, but, however, it is an isolated act and not an act of oppression. 8. The learned senior counsel referred to section 53 of the Act and submitted that as per the requirement of section 53, notice was sent by certificate of posting. He submitted that Munusamy has been attending the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 397 and 398 are fully attracted on the facts of the case as there was continuous course of action of conduct to oppress the respondents and, therefore, the provisions of sections 397 and 398 are fully attracted. He submitted that the respondents have trusted the second appellant and permitted him to operate the company s bank accounts in the interest of the company but the moneys were diverted for other purposes. He referred to the resolutions passed, the date of filing of resolutions with the Board and the notice and reply by the counsel, and submitted that only from the reply, the respondent came to know that there was allotment of shares illegally and only from the reply it was found that the allotment of shares was made by resolution dated 16-4-1997 to the kith and kin of the second appellant. The learned counsel submitted that no certificate of posting was produced in respect of meeting held on 14-4-1997 and it was found as a fact that notice was not given to the respondent. He also referred to the terms of the resolution and submitted that the resolution ex facie clearly shows that no meeting was held and the return of the allotment was also not filed within 30 days fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company which would constitute oppression of the management. As far as the relief granted by the Board is concerned, the Board has very wide power and in exercise of the power the Board directed one party to sell the shares of one company to the other party and when the Board found that there are two companies, it directed the appellants to take one company and directed the respondent to take another company. As far as the pendency of the civil suit is concerned, the learned counsel submitted that the respondents were aware of the civil suit only after the filing of the petition before the Board and the petition was filed before the Board only in 1998 and only after the fling of the petition, the respondent came to know of the institution of the civil suit. The learned counsel submitted that the Board has jurisdiction under sections 397 and 398 and the pendency of the suit is not a bar for the Board to consider the matter. The learned counsel submitted that the second appellant has used the dubious method to exclude the respondents from the company to put them in financial loss and various acts of the second appellant clearly show that the second appellant has indulged in the act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclined to go into the merits of the submissions. 11. As far as the powers of the Court under sections 397 and 398 are concerned, the Supreme Court in the case of Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 51 Comp. Cas. 743 has discussed the powers of the Court and reiterating its earlier decision in the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] AIR 1965 SC 1535, 1545 laid down the law as under : "The fact that by the issue of shares the directors succeed, also or incidentally, in maintaining their control over the company or in newly acquiring it, does not amount to an abuse of their fiduciary power. What is considered objectionable is the use of such powers merely for an extraneous purpose like maintenance or acquisition of control over the affairs of the company. If the shares are issued in the larger interest of the Company, the decision to issue shares cannot be struck down on the ground that it has incidentally benefited the Directors in their capacity as shareholders. The mere circumstance that the Directors derive benefit as shareholders by reason of the exercise of their fiduciary power to issue shares, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, I am not able to accept the submissions of Mr. T.V. Ramanujam that on the basis of the resolutions dated 24-2-1997 and 20-3-1997, the directors have decided to increase the share capital by the issue of further shares and the further issue of shares was made in pursuance of earlier resolutions. Though in the arguments, the learned counsel appearing for the appellants before the Board has referred to the resolutions dated 24-2-1997 and 20-3-1997, the Board has not referred to the resolutions at all as no plea was raised in the counter affidavit filed before the Board regarding the two resolutions. Therefore, I hold that since the appellants have not relied upon the resolutions dated 20-3-1997 and 24-2-1997 in the counter affidavit filed before the Board, it is not now open in the appeal to contend that the shares were allotted in pursuance of the two resolutions. As already observed, the validity of the resolutions or genuineness of the resolutions was not tested or decided and it is a pure question of fact and, therefore, it is not open to the appellants to contend that on the basis of the earlier resolutions the shares were further allotted. 13. It is also relevant to ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable and pages therein were numbered consecutively. However, the appellants have not produced the same before the Board and, hence, it is impermissible for them to rely upon the provisions of section 195. His submission is that had the respondents raised objection against the presumption before the Board, the appellants would have an opportunity to produce the same before the Board. However, when the appellants are relying upon the entries in the minutes book for the allotment of shares and to show that the meetings were validly held, the onus is on them to produce the original minutes book before the Board. I hold that since they have failed to discharge the burden, the burden does not shift to the respondents, though they question the resolution. 16. Mr. T.V. Ramanujam, the learned senior counsel submitted that it is not open to the respondents to rely upon one portion and to question another portion of the minutes book. The submission of the learned senior counsel is not acceptable as it is for the appellants who rely upon the resolutions to produce the original minutes book before the board and establish that shares were validly allotted in favour of other appellants. Ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings have been arrived at on that basis. It is always not essential that oral evidence should be taken to substantiate the case of fraud. It was also held in Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 51 Comp. Cas. 743 it was held in that case that if there is ample material on the record in the case in the form of affidavits, correspondence and other documents on the basis of which proper and necessary inference can be safely drawn, oral evidence is not necessary. In the same case, at paragraph 52, it was held that the person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes prejudice to him in the exercise of his legal and proprietary rights as shareholder. If this act is proved, the power of the Company Law Board to invoke section 397 of the Companies Act will be justified." (p. 889) 20. One of the submissions of Mr. T.V. Ramanujam, the learned senior counsel is that the Board has committed a serious error in not construing the resolutions dated 20-3-1997 and 24-2-1997. I have already dealt with the matter. In my vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory evidence from the side of the defendant to shift the burden on the plaintiff and the defendant must place convincing material to discharge the burden of proof placed on the defendant. I am of the view that that decision has no application at all to the facts of the case as it is the duty of the second appellant herein to discharge the burden when he relies upon the resolutions. 23. Another decision relied upon by Mr. T.V. Ramanujam, the learned senior counsel is the decision of this Court in C.R. Priyachandrakumar v. Purasawalkam Parmanent Fund Ltd. [1995] 83 Comp. Cas. 150 1 wherein this Court held the minutes are prima facie evidence under section 193 read with section 195 and the onus of dislodging the presumption is on the person who has challenged the resolution on the ground of malpractice or misdeed. In my view, the decision has no application as in that case proper minutes were produced before the Court and in that context, it was held that that the burden is on the person who is challenging the minutes. 24. On the other hand, in V.G. Balasundaram v. New Theatres Carnatic Talkies (P.) Ltd. [1993] 77 Comp. Cas. 324 (Mad.), A.R. Lakshmanan, J. (as His ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit before the Board shows that shares were allotted out of the amount lying to their credit in the company books and the same was adjusted against allotment of shares. The above contradictory stand was probably taken as the appellants were not in a position to place before the Board any evidence for generation of additional funds by the issue of shares to the allottees. The appellants have also not produced any evidence as regards the receipt of money by the company. It is also significant to notice that the appellants have not produced account books before the Board to show that certain amounts were lying to the credit of the allottees which were duly adjusted. The apparent conflict between the resolution dated 14-4-1997 and the stand taken by the appellants before the Board clearly discloses that the resolution dated 14-4-1997 is not a valid resolution at all. Moreover, under section 75 of the Act, whenever allotment of shares is made, the company shall, within 30 days thereafter file a return stating allotment number, nominal amount of shares comprised in the allotment, etc., and under the proviso, the company shall not show in such a return any shares as having been allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question whether there is a chain of events which led the Board to draw an inference that there is an act of oppression. 30. The learned senior counsel for the appellants submitted that under section 75, there is a power to condone the delay and when all earlier resolutions prior to the impugned resolution were filed in May, 1998, the delay is not a vitiating factor. No doubt, if considered in isolation, the delay may not be material, but when considered in association with attendant circumstances of the case, the delay in filing the impugned resolution with the Registrar of Companies assumes much importance. 31. It is also relevant to notice the minutes of the Board meeting dated 22-9-1997. The statement of the minutes dated 22-9-1997 reads as if the balance sheet of the company, Micromeritics Engineers (P.) Ltd. was approved and signed by the second appellant as well as the respondent. The balance sheet for the company produced before the Board does not show that it was signed by the respondent in the appeal. The same is the position in the case of the other company, Microparticle Engineers (P.) Ltd. As already held by me, it is not open to the appellants to draw presum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Calcutta High Court in Jadabpore Tea Co. Ltd. v. Bengal Dooars National Tea Co. Ltd. [1954] 55 Comp. Cas. 160 wherein the Calcutta High Court held that the question whether presumption of receipt of letter under certificate of posting could be drawn or not would depend upon the facts and circumstances of the case. 34. The learned senior counsel referred to the decision of the Madhya Pradesh High Court in Parmanand Choudhary v. Smt. Shukla Devi Mishra [1990] 67 Comp. Cas. 45 where the Madhya Pradesh High Court held that the notice sent under certificate of posting is a proper service and members wishing to be served notice by registered post must deposit sufficient sum therefor with company and if they fail to deposit the sum, the members cannot claim that the notice must be served on them by registered post. The decision has no application as the second appellant has not proved that the notice of the meeting was sent by post and in the absence of any proof of posting, the decision is not applicable. 35. A Division Bench of this Court in Maleswara Finance Investments Co. (P.) Ltd. s case ( supra ), after referring to the provisions of section 53(2) l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k fit call for extraordinary general meetings. ( c )An annual general meeting may be called by giving not less than 21 days notice and any other general meeting may be called by giving not less than 7 days notice provided that any general meetings may be called after giving shorter notice than the notice required above, if consent thereto is accorded in the case of an annual general meeting, by all members entitled to vote thereat and in the case of any other meeting, by members of the company holding not less than 95 per cent of that part of the paid up share capital which gives the right to vote on matters to be considered at the meeting." ( d )****** According to the above clause of the articles of association, extraordinary general meeting of the company, Microparticle Engineers (P.) Ltd. may be called by giving not less than 7 days notice. The articles of association are the same in the case of other company, viz., Micromeritics Engineers (P.) Ltd. Under the above clause of the articles of association, the extraordinary general meeting should be convened after giving not less than 7 days notice. As far as the meetings held on 18-4-1998 and 25-4-1998 are concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not merely of all the members entitled to vote and present in person or proxy at the meeting. It requires therefore an agreement of all the members of the Club in order to dispense with the requirement of 21 days notice. The proviso in other words indicates the intention on the part of the Legislature that the provision in sub-section (2) is mandatory and that it can be dispensed with only by the agreement of all the members. It is not enough that the members present at the meeting indicated either expressly or impliedly they consented to or acquiesced in shortening the period of notice. An express consent of all the members to waive the notice has not been established in this case. Even if the members present agreed to waive the defect in the notice the meeting would not be a valid meeting. The plaintiffs therefore are not precluded from raising the contention that the notice contravened the provision of sub-section (2) of section 81." (p. 840) 40. Mr. T.V. Ramanujam, the learned senior counsel referred to the decision in Shailesh Harilal Shah v. Matushree Textiles Ltd. AIR 1994 Bom. 20 where a Division Bench of the Bombay High Court held that the provisions regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting was held on 16-4-1997 and then only the respondents came to know that shares have been allotted to the second appellant s wife, brother and father-in-law. It is the case of the respondents that only after the receipt of reply from the second appellant s counsel, the respondents came to know about the alleged resolution dated 14-4-1997. Hence, it cannot be stated that there was a delay on the part of the respondents in approaching the Board. It is also significant to notice that the extraordinary general meeting was held on 1-5-1998 and thereafter the resolution passed in the meeting held on 14-4-1997 was sent to the Registrar of Companies, and after exchange of notices, the respondents have approached the Board. 44. Another submission of Mr. T.V. Ramanujam, the learned senior counsel is that when the Board has found that the second appellant has not diverted the money, there is no act of oppression. The learned senior counsel referred to the Board s resolutions dated 30-1-1992 and 17-11-1986 and submitted that the resolutions empower the second appellant to operate the bank accounts of the company. According to the learned senior counsel, the company is a running concern. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnation does not arise. The Board has given an additional reason that the letters of resignation are stated to have been received in the month of April, 1997. The Board in summary proceedings has rightly held that the resignation letters of the respondents were not validly accepted as there was no valid meeting on 2-5-1998 and there was no quorum for the meeting held on 2-5-1998 when the resignation letters were said to have been accepted. 47. The other submission of Mr. T.V. Ramanujam, the learned senior counsel is that the second appellant has already filed civil suit in June, 1998, but the respondents evaded service and filed the petition before the Board in November, 1998. He, therefore, submitted that when the matter is before the civil court, the Board should await and abide by the decision of the civil court. I am unable to accept the submission of the learned senior counsel as in V.M. Rao v. Rajeswari Ramakrishnan [1976] 1 MLJ 393, the Division Bench consisting of Ramaprasada Rao and S. Ratnavel Pandian, JJ. held that the civil court functioning under the normal common law cannot usurp the powers of a company court whose jurisdiction springs from an enactment of Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased share capital and not for the court to suggest what would have been better for the company. The jurisdiction of the court to interfere in the ordinary administration is restrictive in nature and unless it is shown that there are mala fides involved, the question of any interference would not arise. ****** . . . that although the appellant complained of not having received notices of board meetings for over 18 months, it could not be expected in the normal course of events that he would allow 18 months to elapse before lodging a complaint to that effect. Moreover the company s letter to the appellant categorically recorded that all notices, agendas and other documents in connection with the meetings of the board of directors and the shareholders of the company held during the period mentioned in the letter dated March 25, 1985, were duly sent to each of the directors of the company including the appellant. The records depicted that from March, 1983, the appellant never attended any of the meetings of the company, and had prayed for leave of absence. The facts showed that the appellants had started a competing business and diverted orders there." (p. 212) 49. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company to approach the Board in the case of any material change taking place in the management and control of the company by alteration in the Board of directors or managers or ownership of the company shares, and by such conversion or change, the affairs of the company were conducted in the manner prejudicial to the interest of the company. 52. In my view, on this point, the Supreme Court in Shanti Prasad Jain s case ( supra ) has laid down the law. The Supreme Court after referring to the relevant provisions of the Act, held that the Court has the power to make such orders under section 397 read with section 402 of the Act, as it thinks fit, if it comes to the conclusion that the affairs of the company are being conducted in the manner oppressive to any member or members and that to wind up the company would unfairly prejudice such member or members but that otherwise the facts might justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up. The Supreme Court held that the law has not defined the expression, oppression for the purpose of section 397 and unless the Court decides on the facts of each case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been present, no complaint of oppression could be entertained merely on the ground that the failure to give notice of the Board meeting was an act of illegality. The true position is that an isolated act, which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which the object is to cause or commit the oppression of persons against whom those acts are directed. This may usefully be illustrated by reference to a familiar jurisdiction in which a litigant asks for the transfer of his case from one judge to another. An isolated order passed by a judge which is contrary to law will not normally support the inference that he is biassed; but a series of wrong or illegal orders to the prejudice of a party are generally accepted as supporting the inference of a reasonable apprehension that the judge is biassed and that the party complaining of the orders will not get justice at his hands. **** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further find from the records in C.P./C.M.P. No. 92 of 1992 in this case that Malleswara to whom the additional shares were pledged, is a company controlled by the fifth respondent. From the above facts, it is clear that the eighth respondent and his employees who are the directors of the fifty respondent-company did not act in good faith, and their action was detrimental to the company, and the same has affected its proper management and also the rights of the shareholders, and a case for winding up is proved." (p. 886) 55. In my view, in the light of the above legal principles, the question has to be decided whether there are acts of oppression by the second appellant. As observed by the Supreme Court in Needle Industries (India) Ltd. s case ( supra ), it is not the law that the power to issue shares can be used only if there is a need to raise additional capital and it is clear the power to issue the additional shares can be used for other reasons. For example, to create a sufficient number of shareholders to enable the company to exercise statutory powers or to enable it to comply with legal requirements, the fiduciary power given to the director can be exercised for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re co-operating and attending the office which is contrary to the minutes of the meetings held on 18-4-1998 and 25-4-1998, which were signed by the second appellant stating that the respondents are not co-operating. In this connection, it is also relevant to notice the observation made by the Board regarding the minutes of the Board meeting said to have been held on 2-5-1998, wherein the Board has recorded the invaluable services rendered by the respondent in C.M.A. No. 924 of 2000, Senthamarai Munusamy during her tenure as director of the company, but whereas the specific allegation in the counter affidavit is that the said respondent never entered the company premises and never took active part in the affairs of the company which are contradictory with one another and, hence, both cannot be true. Further, following the meeting dated 25-4-1998, there was a hurriedly convened extraordinary general meeting on 1-5-1998 wherein the appellants 4 and 5 were appointed as additional directors. The second appellant has misused his fiduciary power as a director solely for the purpose of destroying the existing majority and creating a new majority which did not previously exist. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der was passed. 59. The learned senior counsel also submitted that the view of the Board is not correct as the Board instead of allotting one company to each party, should have granted option to the appellants to purchase shares. The learned senior counsel referred to the decision of the Karnataka High Court in Devaraj Dhanram v. Firebricks Potteries (P.) Ltd. [1994] 79 Comp. Cas. 722, where it was held that majority shareholders are to be given option to purchase shares of the minority shareholders. He also referred to the decision of the Company Law Board in D. Ramakrishna Rao v. L.R.R. Hatcheries (P.) Ltd. [2000] 99 Comp. Cas. 327 where the Principal Bench of the Company Law Board directed purchase of the petitioner s shareholdings by the respondent at a value to be determined by an independent valuer. Yet, another decision relied upon by the learned senior counsel, is the decision of the House of Lords in Scottish Co-operative Ltd. v. Meyer [1958] 3 All. ER. 66 where the House of Lords ordered for the purchase by majority shareholders of minority shareholders shares. The other decisions relied upon by the learned senior counsel are all cases decided by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the court s direction is conferred on the Court. 62. The Bombay High Court in Bennet Coleman Co. s case ( supra ) has held as under : ". . . sections 397 and 398 are intended to avoid winding up of the company if possible and keep it going while at the same time relieving the minority shareholders from acts of oppression and mismanagement or preventing its affairs being conducted in a manner prejudicial to public interest and, if that be the objective, the court must have power to interfere with the normal corporate management of the company, and to supplant the entire corporate management, or rather, mismanagement, by resorting to non-corporate management which may take the form of appointing an administrator or a special officer or a committee of advisers, etc., who would be in charge of the affairs of the company. The Court could even have a truncated form of corporate management if the exigencies of the case required it, and any truncated form of corporate management can never conform to all the provisions dealing with corporate management. It will all depend on the facts and circumstances of each case as to how, in what manner and to what extent the court should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. Hence, I hold that the Board has the necessary power to pass such an order and there are no reasons to interfere with the discretion exercised by the Board in directing division of the companies among the parties on the basis of lot. 65. Mr. T.V. Ramanujam, the learned senior counsel for the appellants referred to the decision of this Court in Ashoka Betelnut Co. (P.) Ltd. v. M.K. Chandrakanth [1997] 1 LW 616 1 and submitted that there is no scope for invoking the principle of lifting the corporate veil, and relied upon the following passage : ". . . It must also be noted that regarding the requirements of section 397 or 398, there must be specific pleas by the petitioner. The Supreme Court has also held in the above referred to 46 CC 91 itself that in an application for winding up of the company under the just and equitable clause, allegations in the petitioner are of primary importance. The same observation will apply even to the present company petition. 10. In many decisions, it has been held that both conditions in clause ( a ) or clause ( b ) of sub-section (2) of section 397 must exist before the Court can entertain an application under that section. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68. Yet, another decision that was relied upon by Mr. T.V. Ramanujam, the learned senior counsel is the decision of the Punjab and Haryana High Court in Niranjan Singh v. Edward Ganj Public Welfare Association [1977] 47 Comp. Cas. 285 where the Punjab and Haryana High Court was dealing with the question of maintainability of the suit filed for declaration regarding the election of director. The Punjab and Haryana High Court held that the civil court has jurisdiction to entertain the suit and the petition under section 257 read with sections 629A and 171 of the Act is not competent. The decision is distinguishable as the respondents have approached the Board on the ground of oppression of their rights. A Division Bench of this Court in V.M. Rao s case ( supra ) has held that the Company Court has the widest power which springs from an enactment of Parliament and that power cannot be usurped by a civil court functioning under the normal common law. Further, it is also relevant to mention here that it is not the respondents who instituted the suit, but, on the other hand, the second appellant instituted the suit for declaration that the respondent Munusamy is not a director ..... 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