TMI Blog1959 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-12-1952. (4) By 1954 the petitioners 1 to 4 on the one hand and respondents on the other hand fell out and the management reached an impasse. (5) Thereupon these petitioners filed O. S. No. 451 of 1954 on the file of the District Munsif's Court, Tiruchirapalli, for a declaration that the first respondent T. A. Mani had been validly removed from the office of the Managing Director and for an injunction restraining the first respondent from interfering with the management and administration thereof on the ground that a meeting was convened on 31-10-1954 (in the absence of T. A. Mani) and a resolution was passed removing him from the office of the Managing Director and one K. Narasimha Ayyangar was appointed as Managing Director and making other allegations which have been repudiated in the present application and the earlier applications 678 to 681 of 1959 in this Court. (6) The first respondent filed a written statement in O. S. No. 451 of 1954 questioning the validity of the alleged meeting and contending that under the Articles of Association he (first respondent) alone could convene the meeting of the company and that he had convened a meeting to take place on 21-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore me have started giving trouble saying that the terms of the compromise have not been kept up and that the compromise has become non est. Therefore, the two parties have taken their grievances to two different forums. The respondents have filed a suit O. S. 85 of 1959 on the file of the Sub Court, Tiruchirapalli, for specific performance of the compromise and for directing the applicants to transfer the shares to T. A. Mani as agreed to by them. The applicants have filed this application under Sections 397 and 398 of the Indian Companies Act, 1956, Chapter VI of Part VI, Prevention of oppression and mismanagement . (9) In spite of opportunities given by this Court, it is found that the management of this company has entered into an impasse by reason of the fact that both sides accuse each other of various infractions under the Indian Companies Act and the only solution for ending this impasse in regard to this going solvent concern is for the minority sharers being purchased by the majority sharers, thereby restoring unanimity and harmony in the management. (10) Sections 397 and 398 of the Indian Companies Act 1956, deal with the powers of the Court and of the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 397 or 398 or it can file both the petitions. Section 397 provides for a remedy for the oppression of minority on the lines of S. 210 of the English Act and S. 398 provides for remedy in cases of mismanagement of a company's affairs in a manner prejudicial to the interests of the company. The similar provisions in the English Act were enacted on the basis of the recommendations of the Cohen Committee. Sub-section (2) of S. 397 gives wide discretion to the Court as to the order to be made in the circumstances. The detailed provisions in the English section as to the various modes in which an order can be made are omitted in this Section presumably because the Court's discretion in passing any order it likes is intended to be left unfettered and kept as wide as possible. Section 398 corresponds to S. 153(C)(1)(a) of the old Act. The previous section dealt with a case of oppression of minority. This section deals with a case where the company as a whole is affected by the manner of conduct of its affairs. Section 402 deals with the powers of Court on application under S. 397 or 398. Under S. 404 the Court has also power to make alterations in the Memorandum of Articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmendations will be found on page 95. (13) Buckley on the Companies Acts, 13th Edition, at page 422-423 has the following to say: If, on the other hand, the oppressed minority consider that to wind up the company would not relieve them, they may petition the Court for an order under this Section 210. If they can satisfy the Court that they are being oppressed and that they would be unfairly prejudiced by a winding up, the court may impose a solution on the disputants. The section gives a wide discretion to the Court as to the manner in which this power may be exercised, and even includes provision for the purchase of shares by other members or by the company. Apparently no order has ever been made under this section (S. 210) by the High Court in England otherwise than by consent. In the case of a purchase by the Company of any of its shares and a consequent reduction of its capital, the Court presumably take care to see that the interests of creditors are not prejudicially affected and might for this purpose adopt a procedure analogous to that indicated by S. 67. The 'oppression' complained of must be suffered by the petitioners in their character as members, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be expected in every case to find and impose a solution, it was thought that its discretion must be unfettered, for it is impossible to lay down a general guide to the solution of what are essentially individual cases. But unfortunately, as Gower emphasises, our High Court procedure is ill-adapted for the exercise of the inquisitorial and salvationist role thus imposed upon the Judges. Nevertheless the remedy is of undoubted value and has already been extensively and effectively invoked as a threat to induce those in control to behave reasonably towards all interests; as a weapon in the shareholder's armoury it will probably always prove more potent when brandished in terrorem than when actually used to strike. But though the Court may make such an order as it thinks fit, the nature of the relief is conditioned by the words with a view to bringing to an end the matters complained of. The words 'or otherwise' are not however to be construed ejusdem generis with those preceding it (Re Hannetta Ltd; Re Edgware Manufacturer's Ltd., cited in Mangum and Estrin Companies--Law and Practice Third Edition (1957) p. 221 and 222). (15) There are as yet few English ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
