TMI Blog1974 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... y. On August 27, 1952, respondent 5 resigned as Managing Director and in his place two Directors C.V. Krisbnamurthi respondent 2 and M. Ganpatram respondent 3 were appointed Directors. These two new Directors were the employees and Directors of a concern known as Industrial Agricultural Engineering Company (Bombay) Ltd.-hereinafter called the Bombay Company'. Respondent 4 T. K. Shamu is the cousin of respondent 1 Raghawa Desikachar. There was also a partnership firm consisting of respondent 1 and some others. The office of this partnership was located in the office of the Bombay Company. After August 27, 1952, respondent 5 having resigned the office of Managing Director was only a shareholder and it transpired that as the Company was not making profits, the Directors called a meeting of the shareholders of the Company on July 29, 1954, in order to obtain a Special Resolution for voluntary liquidation of the Company. Even before this meeting took place, respondent 5 as share-holder of the Company filed an application on July 26, 1954 in the District Court at Nagpur against the Company, respondents 1 to 4 and other parties praying for an order for compulsory winding up of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; Rs.2,686-3-0 (6) Commission on the sale of' a boiler manufactured by Stein-Muller to M. P.Electricity Board for Itarsi Power House through the instrumentality of the Nagpur Company. ₹ 1,30,000-0-0 TOTAL ₹ 2,48,686-3-0 Thereafter the Official Liquidator applied for certain amendments to the application and for impleading respondents 1 to 4-Directors of the Company in liquidation. The District Judge by his order dated December 7, 1967 allowed the application and accordingly the application dated July 11, 1956 was amended. Respondents 1 to 4 by their reply dated December 27, 1957, showed cause against the said application of the Official Liquidator and requested that they may be allowed to lead evidence in connection with the charges mentioned in the application of the Official Liquidator. They also requested that they be allowed to cross-examine respondent 5 Managing Director of the said Company. The District Judge, however, by his order dated September 4, 1958, rejected the application of respondents 1 to 4 and on October 9, 1958, he passed a decree ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y respondents 1 to 4 under 0. 41 r. 27 Code of Civil Procedure. This Court has, in several decisions, laid down the circumstances in which an Appellate Court will be justified in directing additional evidence to be recorded for the disposal of the appeal. Order 41 r. 27 Code of Civil Procedure under which additional evidence could be called for states thus : (1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if- (a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have beep. admitted,. or (b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment,or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced,. or witness to be examined. (2) Wherever additional evidence is allow to produced by an Appellate Court, the Court shall record the reason for its admission. It is apparent that by the terms of the above rule, it is only where the Court has improperly refused to admit evidence or where the Appellate C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n person, appeared before the District Judge. The order made in those proceedings is as follows: Mr. Amin for the respondents wanted that the petitioner should be put into the witness box so as to enable him to cross-examine the petitioner on the point of alleged misfeasance. From the record it appears that the petitioner was under cross-examination for a great length of time and it is on the material elicited in his evidence, as also on the record otherwise available here, that the charge of misfeasance is made. Mr. Amin's contention (1) [1951] S.C.R. 258. (2) [1958] S.C.R. 533. (3) [1965] 1 S.C.R. 542 at 548. is that when the petitioner was cross-examined by Mr. Mani, Mr. Mani represented the four different companies and not these respondents. This may be so, but I do not think now I should allow another cross-examination of the petitioner when from the record it appears that a detailed and searching cross- examination was made of the petitioner Besides, there was no question of leading any evidence, since the case was fixed for argument from 21-1-58. The only part which the parties had to play was to point out the documents on which each relied for proving or disprov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any other documents, nor did respondent 5 who was instrumental in initiating the misfeasance case against respondents 1 to 4 lead any evidence. In our view, there was no justification whatsoever for the District Court to reject the evidence which the respondents had intended to lead or to disallow the production of documents other than those already produced, and for that reason the High Court rightly ordered that additional evidence be recorded in this case. Now coming to the merits of the appeal. The first challenge is to the disallowance of ₹ 1,30,000/-. This amount represented the commission on the sale to M. P. Electricity Board of a Stein-Muller Boiler for Itarsi Power House through the instrumentality of the Nagpur Company. The reason why the High Court disallowed this amount is because the Official Liquidator failed to establish that there was any connection with the Nagpur Company and the sale of this Boiler to the Itarsi Power House of the M. P. Electricity Board. On the admitted facts of the case itself this conclusion is amply justified. It appears that there was a partnership firm known as Industrial and Agricultural Engineering Company hereinafter called the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Bhopal was within the area allotted to the Nagpur Company and, therefore, it was entitled to the commission. This was denied by Directors. The Official Liquidator failed to establish that the Nagpur Company was entitled to the whole or part of the infringement commission by reason of the fact that it was a sole selling agent of the General Motors parts in that particular area or it had an exclusive sub-agency from the Bombay Company. The High Court considered that the evidence in the case was not sufficient to establish either of these claims. We have not been persuaded to hold otherwise. In so far as item (2) for ₹ 36,000/- is concerned, here again the Nagpur Company was being paid 15 per cent and 20 per cent commission in respect of machinery and spare parts respectively by the Bombay Company which Company was retaining 5 per cent of the commission in respect of the orders placed by the Nagpur Company. According to the Official Liquidator the Bombay Company was only entitled to retain 2 per cent and consequently the Nagpur Company would be entailed to a further 3 per cent which had been wrongly withheld. Here again the High Court considered that there was not sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim any additional commission. Ins ofar as item (4) is concerned, it has reference to four amounts, namely ₹ 7,689/12/- ₹ 2,184/-; ₹ 9,827 and ₹ 2,100/-. Nothing has been shown as to why these claims were not properly allowed. The appellant, however, challenges the item for ₹ 9,827/- as not being the correct amount. In fact the book value is ₹ 39,309/4/9. The High Court took the difference between the book value and the stock purchased by the Bombay Company after August 23, 1952, since the date of resignation of Shantilal Shah. Accordingly it took the opening stock as per the balance sheet dated March, 31, 1953 at ₹ 53,574-4-0, The closing stock as per audit report dated March, 13, 1953,reduced to the extent of 7/9 was ₹ 24,092-0-0 leaving an amount of ₹ 29,482-4-9. This amount was transferred to the Bombay office and the difference between the above amounts amounted to ₹ 9,827 /-. Shantilal Shah was questioned about this but he did not know how it was made up of. No explanation was also given on behalf of the Official Liquidator as to how the item was made up of. For this reason this item was not allowed. Similarly no exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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