A. N. RAY, J. ( 1 ) THE petitioners, Raghunath Prasad Jhunjhunwala and Phoolchand Jhunjhunwala made an application for winding up of Hind Overseas (Private) Limited. The other applications in regard to this Company are an application for stay of winding up and an application for the appointment of Provisional Liquidator and an application for injunction. All the four applications were heard from time to time because of the inconvenience of Counsel to have the hearing concluded. The final hearing was concluded in the month of March 1967. In the meantime an application for contempt was made. Because of that application the judgment could not be delivered inasmuch as if it appeared that a party was guilty of contempt he should have to purge himself of the contempt first. The application for contempt was heard in the last week of May, 1967. For all these reasons the judgment could not be delivered earlier. ( 2 ) I must at the outset state that Counsel for the petitioner argued with industry in this matter and was of great assistance to the Court. Counsel for the respondents also gave considerable assistance to the Court. The reason why I refer to this assistance is because some of the principles involved in this application are of importance and the application of these principles in reported decisions is to be viewed with care. ( 3 ) THE company was incorporated in the year 1956. Raghunath Prasad Jhunjhunwala and Anil Chandra Dutta were subscribers to the memorandum of the company and they became the first Directors. Vishnu Dayal Jhunjhunwala and Mahabir Prasad Jhunjhunwala were co-opted as Directors in the year 1956. IN the month of November, 1957 Dutta resigned. R. P. Jhunjhunwala was then appointed the Director-in-charge. Phoolchand Jhunjhunwala was co-opted as Director in place of Dutta. In the month of November 1957 V. D. Jhunjhunwala vacated his office of Director for not having attended three consecutive meetings of the Board and he was thereafter reappointed. The Board of Directors thus constituted consisted of R. P. Jhunjhunwala, P. Jhunjhunwala, V. D. Jhunjhunwala and M. P. Jhunjhunwala. M. P. Jhunjhunwala vacated his office in the month of January 1959. No one was appointed Director in his place. In the year 1960 at a General Meeting the remuneration of R. P. Jhunjhunwala was fixed at Rs. The Board of Directors thus constituted consisted of R. P. Jhunjhunwala, P. Jhunjhunwala, V. D. Jhunjhunwala and M. P. Jhunjhunwala. M. P. Jhunjhunwala vacated his office in the month of January 1959. No one was appointed Director in his place. In the year 1960 at a General Meeting the remuneration of R. P. Jhunjhunwala was fixed at Rs. 1000/- per month with effect from 1 August, 1960 and that was done by a special resolution. In the month of November 1960 V. D. Jhunjhunwala again vacated his office of Director for not having attended three consecutive Board meetings and he was again coopted as Director. In the month of September 1961 at a General Meeting the remuneration of R. P. Jhunjhunwala was increased to Rs. 1250/- per month and it was agreed that P. Jhunjhunwala, the other Director, would be paid Rs. 750/- per month. These matters of remuneration of R. P. Jhunjhunwala and P. Jhunjhunwala were not proposed or passed as special resolution. R. P. Jhunjhunwala was also granted an allowance of Rs. 350/- per month for maintenance of guest house. Again in the month of March 1963 V. D. Jhunjhunwala vacated his office for not having attended three consecutive Board Meetings and he was reappointed as a Director. ( 4 ) IN the month of July 1963 P. Jhunjhunwala proposed at a meeting of the Board that Vinode Kumar Jhunjhunwala be sent to the United States. In the month of September 1963 at an extraordinary general meeting a special resolution was passed sanctioning the expenses payable to Vinode Kumar Jhunjhunwala. This extraordinary general meeting of 2 September 1963 was followed by an agreement between the company on the one hand and Vinode Kumar Jhunjhunwala on the other. In the year 1964 Hariram Modi, brother-in-law of R. P. Jhunjhunwala was appointed to an office of profit. On 30 August 1964 the remuneration of R. P. Jhunjhunwala was increased to Rs. 2000/- per month and that of P. Jhunjhunwala to Rs. 1500/- per month. Neither of these increments was passed as a special resolution. In the year 1965 Vinode Kumar Jhunjhunwala was appointed a Technical Director at a salary of Rs. 1500/- to Rs. 2500/- per month with effect from 1 October 1965. At the meeting of the Board where Vinode Kumar Jhunjhunwala was appointed Technical Director the two petitioners, R. P. Jhunjhunwala and P. Jhunjhunwala were present. In the year 1965 Vinode Kumar Jhunjhunwala was appointed a Technical Director at a salary of Rs. 1500/- to Rs. 2500/- per month with effect from 1 October 1965. At the meeting of the Board where Vinode Kumar Jhunjhunwala was appointed Technical Director the two petitioners, R. P. Jhunjhunwala and P. Jhunjhunwala were present. It may be stated here that Vinode Kumar Jhunjhunwala did not in fact draw any salary. ( 5 ) IN the month of October 1965 troubles started with Vishnu Dayal Jhunjhunwala. In the months of February and March 1966 the factory of the company was closed. The allegations are that the Jhunjhunwala petitioners could not get access to the registered office of the factory since about 23 May, 1966 up to the date of the petition for winding up, namely 7 June, 1966. On 23 May 1966 some shareholders of the company requisitioned an extraordinary general meeting of the company inter alia to remove the petitioners from the position as Directors. On 24 May notice of a Board meeting was issued by V. D. Jhunjhunwala for the meeting to be held on 27 May 1966. at the meeting of the Board on 27 May 1966 Nirmal Kumar Jhunjhunwala was appointed a Director of the company. The allegations are that thought the petitioners through their Solicitor served a notice not to hold a meeting, yet the meeting was held. On 28 May, 1966 V. D. Jhunjhunwala pursuant to the requisition of shareholders received on 23 May 1966 called an extraordinary general meeting of the company to be held on 22 June 1966. On 3 June 1966 the petitioner's Solicitor's letter was acknowledged and it was stated that the letter would be placed at the meeting of the Board. On 3 June, 1966 a meeting of the Board was called to be held on 4 June, 1966 and notice was served on the petitioners. On 4 June, 1966 a meeting of the Board was held and the letter dated 27 May, 1966 sent by the petitioners' Solicitor was considered and it was resolved that no reply need be sent as the reply already sent covered the question raised in the letter. On 4 June, 1966 a meeting of the Board was held and the letter dated 27 May, 1966 sent by the petitioners' Solicitor was considered and it was resolved that no reply need be sent as the reply already sent covered the question raised in the letter. On 7 June 1966 the winding up petition was presented and an application was also made for the appointment of provisional Liquidator and interim order was obtained for the appointment of the Receiver to prepare the inventory of the company and initial the same. On 22 June 1966 an extraordinary general meeting was held pursuant to the notice dated 28 May 1966 but no effect has been given to the resolution pursuant to the order of this Court. ( 6 ) THE allegations in the petition for winding up can be broadly stated under three heads. First, that the company is in the nature of a partnership and therefore the principles of dissolution of partnership should apply. Secondly, that the principal business of the company failed for all practical purposes and therefore the substratum of the company is gone. Thirdly, the state of feelings between the parties is such that there is loss of confidence, mismanagement and oppression. In support of these three grounds the facts alleged are as follows. ( 7 ) THE nominal capital of the company is Rs. 5,00,000/- divided into 2,500 equity shares of Rs. 100/- each and 2,500/- unclassified shares of Rs. 100/- each. The entire nominal capital has been issued and fully paid up. The petitioners, namely R. P. Jhunjhunwala and P. Jhunjhunwala and the members of their family hold 1875 shares in the company. V. D. Jhunjhunwala and the members of his family hold the remaining 3125 shares. R. P. Jhunjhunwala and P. Jhunjhunwala hold 450 and 325 shares respectively. 100/- each. The entire nominal capital has been issued and fully paid up. The petitioners, namely R. P. Jhunjhunwala and P. Jhunjhunwala and the members of their family hold 1875 shares in the company. V. D. Jhunjhunwala and the members of his family hold the remaining 3125 shares. R. P. Jhunjhunwala and P. Jhunjhunwala hold 450 and 325 shares respectively. ( 8 ) THE objects of the company are inter alia to deal in as importers exporters, wholesalers, retailers, iron and steel, copper, brass, fin and every other metal and alloy of metals, to carry on business of mine owners, to carry one the business of mechanical engineers, to carry on the business of founders, to execute contracts for works involving supply or use of the products dealt with by the company, and to carry out ancillary or other works, to acquire, erect, construct, establish, controlling and working of water works, reservoirs, tanks canals, aqueducts, wharves, factories, rolling mills, refineries, to buy, sell, manufacture, import and export commodities, substances, apparatus, articles and things of all kinds including metals in raw, semi-finished or finished stage. ( 9 ) THE relevant articles are that the Board shall consist of not less than two and not more than five Directors. The qualifications of a Director shall be the holding of at least one share in the company. The Board may elect a Chairman and determine the period for which he is to hold office. If no Chairman is elected or if at any meeting the Chairman is not present, the Directors present may choose one of their number to be Chairman. ( 10 ) IT is alleged that the company is in substance a partnership and the entire share capital is held by the petitioners and V. D. Jhunjhunwala and the members of his group in proportion already mentioned namely 1875 shares belonging to the group of the petitioners and 3125 shares belonging to the D. V. Jhunjhunwala group. It is said that in or about the month of May 1956, R. P. Jhunjhunwala and V. D. Jhunjhunwala agreed to start a new business of iron and steel. V. D. Jhunjhunwala was then carrying on business under the name and style of "chimanram Motilal" with one Mahabir Prasad Jhunjhunwala. It is alleged that an account was opened in the name of "radhunath Prasad Jhunjhunwala Ke Sir Khata" in the books of "chimanram Motilal". V. D. Jhunjhunwala was then carrying on business under the name and style of "chimanram Motilal" with one Mahabir Prasad Jhunjhunwala. It is alleged that an account was opened in the name of "radhunath Prasad Jhunjhunwala Ke Sir Khata" in the books of "chimanram Motilal". The petitioners allege that the parties agreed that R. P. Jhunjhunwala would have -/6/- annas share and V. D. Jhunjhunwala along with M. P. Jhunjhunwala would have -/10/- annas share in the proposed partnership business. It is alleged that before the proposed business could be started V. D. Jhunjhunwala changed his mind and it was suggested that a limited company be formed. The petitioners alleged that V. D. Jhunjhunwala agreed to provide for and/or arrange along with M. P. Jhunjhunwala for the entire finance that might be necessary for the purpose of the business and the petitioners, R. P. Jhunjhunwala and his group would look after the day to day business of the company. It is said that accordingly the company was formed in the month of August 1966. ( 11 ) AFTER the incorporation of the company in the year 1956 the petitioners allege that the company carried on the business of controlled stockists of iron and steel since the end of the year 1958 until recently. The company also carried on the business of the manufacture and supply of railway sleepers in execution of Government contracts. In paragraph 14 of the petition it is alleged that originally the company started its business as controlled stockists in iron and steel subsequently the company decided to manufacture railway sleepers and for that purpose a foundry was set up at Lilooah. The foundry started production towards the end of the year in 1958. It is alleged in paragraph 14 of the petition that since 1958 until the month of February, 1966 practically the entire business of the company has been the manufacture and supply of railway sleepers in execution of the Government contracts. The petitioners allege that the business policy was under the supervision and guidance of V. D. Jhunjhunwala and the petitioner R. P. Jhunjhunwala acted as Director-in-charge since his appointment in the month of November 1957. It is alleged that the petitioners gave V. D. Jhunjhunwala daily and/or working reports of the factory. The petitioners allege that the business policy was under the supervision and guidance of V. D. Jhunjhunwala and the petitioner R. P. Jhunjhunwala acted as Director-in-charge since his appointment in the month of November 1957. It is alleged that the petitioners gave V. D. Jhunjhunwala daily and/or working reports of the factory. In paragraph 16 of the petition it is alleged that although the production started in the year 1958 the factory worked much below its production capacity till the month of May 1959. From 1959 onwards the factory commenced its regular production of railway sleepers of both Board Gauge and Metre gauge. The further allegations are that for the year 1960 to 1965 the company made profits every year except for the year 1961 when there was a loss of Rs. 12,809/ -. Though the profit in 1964 is alleged to be about Rs. 5 lakhs the profits in the profits in the year 1965 are alleged to be Rs. 1,63,000/ -. The loss in the year 1961 is explained because of the expansion programme and under utilization because of non-availability of sufficient orders. As for the decline in profit in the year 1965 it is alleged that the company made a working profit of about Rs. 1,63,000/- without providing for depreciation and the decline in profit is explained by the fact that there was a sudden fail in Government orders for railway sleepers. It is alleged that the company has at present no outstanding orders in hand for want of which it was compelled to close down the factory since the month of February, 1966 the further allegations are that though tender has been asked for in the year 1966 the finalization of such tender would take sometime and even if the company received the tender the production would be much less than the previous figures. ( 12 ) THE petitioners allege that since the month of October, 1965 V. D. Jhunjhunwala started series of wrongful and illegal acts in relation to the affairs of the company with a view to oust and exclude the petitioners and their groups from management and to make personal gains and profits for himself and the associates or nominees. ( 12 ) THE petitioners allege that since the month of October, 1965 V. D. Jhunjhunwala started series of wrongful and illegal acts in relation to the affairs of the company with a view to oust and exclude the petitioners and their groups from management and to make personal gains and profits for himself and the associates or nominees. The allegations are that V. D. Jhunjhunwala sent his son Vinod Kumar Jhunjhunwala to the United States for study and the entire expenses of his study and living abroad were borne by the company and paid out of funds although the company did not derive and it is not likely to derive any benefit from the employment of V. K. Jhunjhunwala as a Chemical Engineer. It is next alleged that since V. K. Jhunjhunwala returned his father procured his appointment as a Technical Director at a monthly remuneration of Rs. 1,500/- up to Rs. 2,500/- although the company is not likely to derive any benefit from his employment. It is said that V. K. Jhunjhunwala was appointed though he did not possess any technical knowledge. The further allegation is that although V. K. Jhunjhunwala held an office or place of profit under the company as Technical Director carrying a monthly remuneration of more than Rs. 500/- per month, no previous consent of the company by a special resolution was obtained before his appointment as Technical Director as required by the provisions of the Companies Act and he did not declare in writing before or at the time of his appointment that he was connected with and related to V. D. Jhunjhunwala and therefore the appointment is an infraction of the provisions contained in Section 314 of the Companies Act and is illegal. In paragraph 21 following it is alleged that on or about 23 May, 1966 V. D. Jhunjhunwala asked from the petitioner No. 2 for inspection the Directors' minute books and minute books of the General meeting of the Company and the petitioner No. 2 in good faith handed over the books. It is alleged that V. D. Jhunjhunwala refused to return the books to the petitioner No. 2. It is alleged that V. D. Jhunjhunwala refused to return the books to the petitioner No. 2. It is also alleged that V. D. Jhunjhunwala with the help of his group members took away the keys and other statutory books and documents from the company's registered office and one Kissen Gopal at the instance of V. D. Jhunjhunwala assaulted the petitioner No. 2 Phoolchand Jhunjhunwala and drove him out of the office of the company and the said Kissen Gopal thereafter started criminal proceedings against the petitioners. ( 13 ) THE other wrongful acts of V. D. Jhunjhunwala as alleged in the petition are that he purported to call a meeting of the Board by a notice dated 24 May, 1966. It is said that the notice was signed by V. D. Jhunjhunwala as a Director though he is deemed to have vacated his office as a Director from the month of October, 1965 because of the appointment of his son as Technical Director in infringement of the provisions contained in Section 314 of the Companies Act. The petitioners allege that they through their Solicitor's letter dated 27 May called upon V. D. Jhunjhunwala to desist from holding the meeting. It is alleged that no satisfactory reply to the letter was received but the petitioners were informed that the letter dated 27 May 1966 would be placed at the meeting of the Board to be held on 4 June 1966. The petitioners allege that V. D. Jhunjhunwala did not pay any heed to the petitioners' Solicitor's letter. The petitioners alleged that by Board resolution V. D. Jhunjhunwala and his son purported to remove Raghunath Prosad Jhunjhunwala as the Director-in-charge of the company and they further appointed one Nirmal Kumar Jhunjhunwala as an additional Director. It is alleged that the appointment is illegal. It is alleged that both V. D. Jhunjhunwala and his son are deemed to have vacated their office and therefore the proceedings of the Board are bad. ( 14 ) THE further allegations are that the petitioners have been deprived of their power to operate the banking account and advertisements have been issued in the newspapers that powers of the petitioners have been cancelled. ( 14 ) THE further allegations are that the petitioners have been deprived of their power to operate the banking account and advertisements have been issued in the newspapers that powers of the petitioners have been cancelled. It is alleged that V. V. Jhunjhunwala and his group caused a requisition dated 23 May, 1966 to be issued for calling an Extraordinary General meeting with a view to remove the petitioners and to appoint other person as Directors. It is alleged that the notice is illegal. The explanatory statement which alleges that there is a loss of about Rs. 8 lakhs is criticized by the petitioners to be false as the audited balance sheet is not yet ready. The petitioners allege that V. D. Jhunjhunwala caused another notice to be issued on 30 May, 1966 for calling a meeting of the Board on 4 June 1966. The petitioners allege that V. D. Jhunjhunwala is deemed to have vacated his office and if resolutions are passed the petitioners are not bound by the same. ( 15 ) THE petitioners allege in paragraph 31 following that the financial position of the company has sharply deteriorated and since about February, 1966 and the company has been forced to retrench labourers. The monthly expenditure of the company is alleged to be Rs. 30,000/ -. The shareholders, it is alleged by the petitioners, are not willing to start any new venture. The petitioners alleged that they suggested to V. D. Jhunjhunwala that the company should start steel-rolling business but V. D. Jhunjhunwala and his group were not willing to advance any money for such new ventures although it had a tremendous prospect. The petitioners allege that the company received cast iron scrap from the Railway Board for manufacture of sleepers at Rs. 400/- per metric tonne although the market price would not exceed Rs. 240/- per metric tonne. Similarly it is alleged that the company received pig iron at a rate of Rs. 335/- per metric tonne although the market price would not exceed Rs. 300/- per metric tonne. It is alleged that large sums are due on account of income-tax and sales tax liabilities. It is alleged that the liabilities of the company would exceed the assets and the company is not commercially solvent. It is also alleged that the company has large prospects and if properly utilized the shareholders would deprive immense benefit. 300/- per metric tonne. It is alleged that large sums are due on account of income-tax and sales tax liabilities. It is alleged that the liabilities of the company would exceed the assets and the company is not commercially solvent. It is also alleged that the company has large prospects and if properly utilized the shareholders would deprive immense benefit. It is also alleged that if the goodwill properties were preserved and sold the assets would be far in excess of liabilities. ( 16 ) THE other allegations in paragraph 36 following are that V. D. Jhunjhunwala and his group have without authority removed books, papers and documents and his acts are intended to injure the petitioners and the minority shareholders. It is alleged that serious disputes and differences have arisen and there is a complete deadlock in the management of its affairs. The petitioners allege that they have lost confidence in the group of V. D. Jhunjhunwala. The other allegations are, it is impossible for the company to manage its affairs honestly and fairly. The petitioners allege that there is a justifiable lack of confidence in V. D. Jhunjhunwala and his group who are the majority shareholders. ( 17 ) THE opposition will appear in the affidavit of V. D. Jhunjhunwala affirmed on 16 June, 1966 in answer to the affidavit of the Jhunjhunwalas affirmed on 8 June, 1966 in the application for appointment of Provisional Liquidator. There is also an affidavit of V. D. Jhunjhunwala affirmed on 23 July, 1966 in answer to the summons dated 11 July 1966 taken out by the petitioners' Solicitor, inter alia, for orders that an injunction be granted restraining the respondents, namely, V. D. Jhunjhunwala and his group from running the factory and for other orders. The affidavit affirmed by V. D. Jhunjhunwala allege that there was no partnership with the petitioners. The accounts on which the petitioners rely in regard to the entry in Sri Khata are alleged to be in relation to moneys received by or paid by the firm of Chimanram Motilal and have been debited to Hind Overseas Private Ltd. , to square up the account. It is also denied that the company had anything to do with the alleged account. The further allegations are that V. D. Jhunjhunwala gave a personal guarantee to Punjab National Bank for a sum of Rs. 47 lakhs for overdraft facilities. It is also denied that the company had anything to do with the alleged account. The further allegations are that V. D. Jhunjhunwala gave a personal guarantee to Punjab National Bank for a sum of Rs. 47 lakhs for overdraft facilities. It is denied that there was any agreements that the petitioners would look after the business and V. D. Jhunjhunwala would go on financing the business. R. P. Jhunjhunwala it is alleged was an employee of the firm of Kamlapat Motilal, a firm of which V. D. Jhunjhunwala was the Managing partner. Dutta was the stenographer of V. D. Jhunjhunwala. The various increments in the remuneration of R. P. Jhunjhunwala and P. Jhunjhunwala at the meetings held on 22 September, 1961 and 30 August, 1964 are impeached by V. D. Jhunjhunwala to be violative of the provisions of the Companies Act because there was no special resolution. With regard to the business of the company it is alleged that though the petitioners allege a working profit of Rs. 1,63,000/- for the year 1965 it is misleading and false to say so. It is alleged that the petitioners caused entries to be made in writing off certain claims which according to them are not recoverable and which amount to Rs. 1,42,468/- and Rs. 4,121/- respectively. It is therefore alleged by V. D. Jhunjhunwala that profits will not be more than Rs. 20,000/- It is also alleged that the other figures of profit shown in the petition are misleading. In paragraph 17 of the affidavit V. D. Jhunjhunwala alleges that in February 1966 he noticed that the petitioners had fraudulently withdrawn a sum of Rs. 1,25,000/- from the bank account. It is alleged that the petitioners made false credit entry in the books of the company in the names of Patni Trading Company Private Ltd. and Raj Kumar Jain and Co. A sum of Rs. 1,25,000/- and a further sum of Rs. 1,50,000/- have been shown to be paid to Patni Trading Co. , and Raj Kumar Jain and Co. V. D. Jhunjhunwala alleges that no moneys were due to these parties. It is alleged that V. D. Jhunjhunwala told the petitioners that moneys of the company had been wrongfully kept undisclosed and credited in false names and the petitioners were called to bring back the money. , and Raj Kumar Jain and Co. V. D. Jhunjhunwala alleges that no moneys were due to these parties. It is alleged that V. D. Jhunjhunwala told the petitioners that moneys of the company had been wrongfully kept undisclosed and credited in false names and the petitioners were called to bring back the money. ( 18 ) AS to the education of V. D. Jhunjhunwala's son it is alleged that at an extra-ordinary, general meeting of the company held on 2 September 1963 a resolution sanctioning the payment of expenses for higher studies of V. K. Jhunjhunwala was proposed by P. Jhunjhunwala. The resolution was passed because of the presence of R. P. Jhunjhunwala and P. Jhunjhunwala. It is denied that the payment would not be in the interest of the company. It is said that no payment has been made to V. K. Jhunjhunwala and no question of holding of his office or place of profit arises. It is said that the disqualification does not apply to a Technical Adviser. V. D. Jhunjhunwala alleges that the petitioners appointed one Hariram Modi at a remuneration of Rs. 500/- per month and the said Hariram Modi is the brother of the wife of the petitioner R. P. Jhunjhunwala and material uncle of petitioner P. Jhunjhunwala. The appointment of Hariram Modi is also alleged to be violative of provisions contained in section 314. ( 19 ) THE further allegations in the opposition are that the petitioners did not refund Rs. 1,50,000/- misappropriated by them. The meetings convened by V. D. Jhunjhunwala and his group are justified by V. D. Jhunjhunwala. It is denied that the company is insolvent. V. D. Jhunjhunwala said that the company has still a sum of Rs. 13 lakhs procured by him besides advances obtained from the bankers against his guarantee and share capital. The petitioners allegations in the affidavits in reply should not be grounds. ( 20 ) ON these allegations it is apparent that troubles started in the month of May, 1966. The petitioners allege that up to 1965 there is profit. But V. D. Jhunjhunwala in his affidavit impeachment that profit and charges the petitioners with manipulation of accounts. The expenses incurred in connection with the education of V. D. Jhunjhunwala's son also appear to be the subject-matter of extra-ordinary resolution. The petitioners suppressed that extra-ordinary resolution in the petition. The petitioners allege that up to 1965 there is profit. But V. D. Jhunjhunwala in his affidavit impeachment that profit and charges the petitioners with manipulation of accounts. The expenses incurred in connection with the education of V. D. Jhunjhunwala's son also appear to be the subject-matter of extra-ordinary resolution. The petitioners suppressed that extra-ordinary resolution in the petition. The appointment of Vinod Kumar Jhunjhunwala is not at an extra-ordinary general meeting nor is there a special resolution. That appointment is said by Counsel for the petitioners to be invalid and if it is invalid, the other director V. D. Jhunjhunwala is said to be no longer fit to act as a director. As to substratum of the company having gone it is said on behalf of the petitioners that the main business was supply of railway sleepers in that business, the main object is gone. Counsel for the respondents, on the other hand, rightly contends that the power of the company and the purposes for which the company works are different concepts and in any event the objects of the company are manifold and the substratum of the company is not gone. The entire affidavit evidence brings in the forefront two broad features. First, that there are disputes between the petitioners and the respondents regarding appointment of Vinod Kumar Jhunjhunwala and Hari Ram Modi. It is said on behalf of the petitioners that these appointments in breach of articles and in breach of the provisions of the Companies Act are adequate grounds for winding up. It is, on the other hand, said by the respondents that the allegations of breach of Articles and provisions of the Act are denied and these are subject-matter of remedy by suit and are not the subject-matter of wind-up. The other feature is that the respondents charge the petitioners with misappropriation. The petitioners also charge the respondents with having utilized the funds of the company. ( 21 ) IN this state of evidence it is necessary to examine the first contention as to whether the company is in the nature of a partnership and whether the principles of dissolution of partnership should really apply. Certain facts are to be borne in mind. First, the petitioners and the respondents do not hold shares in equal proportions. The petitioners and their group hold 1875 shares, the respondents and their group hold 3125 shares. Certain facts are to be borne in mind. First, the petitioners and the respondents do not hold shares in equal proportions. The petitioners and their group hold 1875 shares, the respondents and their group hold 3125 shares. Secondly, there are 19 shareholders and there is no allegation of benamdar or that beneficial interest is held by any one. Thirdly, the parties are not members of the same family. Fourthly, the domestic company on the pattern of a partnership is not to be found as a feature in the present case. ( 22 ) THE cases cited at the Bar are : in re. (1) Furriers' Alliance Limited, reported in 51 Solicitor's Journal, 172, In re. (2) Yenidje Tobacco Co. , reported in (1916) 2 Ch. 426, (3) American Pioneer Leather Co. , reported in (1918) 1 Ch. 556, In re. (4) Davis and Collett, reported in (1935) 1 Ch. 693, In re. (5) Cuthbert Cooper and Sons, reported in 1937 Ch. 392, (6) Anglo Continental Produce Co. 's case, reported in (1939) 1 AER 99, (7) Charles Forte Investments Ltd. , reported in (1664) 1 Ch. 240, the case of (8) Lundie Brothers Ltd. , reported in (1965) 2 AER 692, the case (9) Expanded Plugs Ltd. , reported in (1966) 1 AER 877. The other decisions which were cited at the Bar were the decisions of this Court reported in I. L. R. 47 Cal. 654 and I. L. R. 58 Cal. 716. These are the decisions on the question of application of the principles of dissolution of partnership of companies. ( 23 ) IN the case of (1) Furriers' Alliance Ltd. , (51 Solicitors' Journal, 172) the company was incorporated with a nominal capital of ?27,000 divided into 25000 ordinary and 2000 preference shares. No preference shares had been issued. 12005 ordinary shares had been issued of which 6000 were held by the petitioners or by person who were trustees for him and the other 6000 were held by Mr. Firedberg. They were the first directors. The remaining 5 shares were held by certain persons in single shares and two persons holding one share each supported the petition to wind up and the other three shareholders said that they would in an emergency support the opposition to the petition but they did not appear. Warrington. Firedberg. They were the first directors. The remaining 5 shares were held by certain persons in single shares and two persons holding one share each supported the petition to wind up and the other three shareholders said that they would in an emergency support the opposition to the petition but they did not appear. Warrington. J. , said that the directors were unable or unwilling to get together in managing the affairs of the company. To that extent there was what might be called a deadlock between the two. It was clear that unless the directors adopted a more reasonable frame of mind it was impossible that they would manage the company satisfactorily. It was said that assuming the Court was justified in extending the words "just and equitable" to the extent that it was not reasonably practicable for the business of a private partnership to carry on the affairs of the partnership should be dissolved, the court would have to find out where two directors could not agree whether there was an authority which could be invoked, namely, the authority of the majority of the shareholders of the company. Warrington, J. , further said that when one director held substantially one-half and his co-director the other half, there was an authority to which both had agreed by the constitution of the company to submit, namely, the authority which might only be one vote. It was, therefore, said that there was no deadlock and it was a temporary deadlock and it was possible under the article to appoint an additional director and then there would be no deadlock. The winding up order was refused. ( 24 ) IN the case of (2) (2) Yenidje Tobacco Co. , reported in (1916) 2 Ch. 426, the Court of Appeal consisting of Lord Cozens-Hardy, M. R. , Pickford, L. J. and Warrington, L. J. , dealt with an application for winding up the company on just and equitable grounds. W. and R. traded separately as tobacconists and cigarette manufacturers and they formed a private limited company in which they were the only shareholders and directors. W. and R. had equal voting powers, one director was to form a quorum, and if any dispute or differences would arise, the matter was to be referred to arbitration. Differences arose. One difference was referred to arbitration. There was an award. W. and R. had equal voting powers, one director was to form a quorum, and if any dispute or differences would arise, the matter was to be referred to arbitration. Differences arose. One difference was referred to arbitration. There was an award. R. declined to give effect to the award. R. brought an action for fraudulent misrepresentation against W. The parties were hostile, neither would speak to the other, W. presented a petition alleging complete deadlock and that the substratum of the company had gone. The decision of Astbury J. was affirmed that if this was a case of partnership there would normally be grounds for dissolution and that the same principle ought to be applied where there was in substance a partnership in the guise of a private company. The position amounted to a complete dead-lock. It must be borne in mind that Yenidje's case was on where two members had equal voting rights, there was no casting vote and it was not possible to solve the deadlock in any other manner. Lord Cozens Hardy, M. R. said that having regard to the fact the only two directors would not speak to each other and no business which deserved the name of business could be carried on, the company should not be allowed to continue. Warrington, L. J. said that where there were only two persons interested, where there were no shareholders other than those two and where there were no means of overruling by the action of a general meeting of shareholders the trouble which was occasioned by the quarrels of the two directors and shareholders, the company ought to be wound up. In substance the two directors were held to be really two partners and the company was also said to be in substance a partnership in the form or the guise of a private company. ( 25 ) THE (3) American Pioneer Leather Company's case reported in 1918 1 Ch. 566, also related to an application for winding up on the ground that it was just and equitable to do so. In that case the private company consisted of three shareholders only. They were the original allottees and held all the issued shares in equal proportions. Of these three one was resident in America and the two others were the present directors. In that case the private company consisted of three shareholders only. They were the original allottees and held all the issued shares in equal proportions. Of these three one was resident in America and the two others were the present directors. Owing to dissensions between them the affairs of the company were at a deadlock and there were pending actions between the shareholders and the company. The articles provides that the shareholder desirous of withdrawing from the company should offer his shares to the others and in the event of neither of them purchasing the same the shareholder desirous of withdrawing should be entitled to have the company wound up. One of the directors offered his shares pursuant to the clause to the other shareholders respectively, but neither of them purchased them. He then presented the petition for compulsory winding up of the company. The petition was opposed by the two other shareholders. It was held that in the circumstances it was just and equitable that the company should be wound up. Neville J. said that having regard to position into which the affairs of the company had drifted and the intention of shareholders was that the in such circumstance the shareholders who were left in the cold should be entitled to put an end to the company, it seemed just and equitable to make an order for the compulsory winding up of the company. The American Pioneer Leather Company Limited is not a decision on the analogy of partnership or on the extension of the principle of a company being a partnership in the guise of a company. Naville J. emphasized that a contingency was foreseen when the articles were framed and the parties arranged to proved against the contingency that the two should on notice being given take over the interest in the company of the third of if that was not done then the company should come to an end. ( 26 ) THE decision in (4) Davis and Collett Ltd. reported in 1935 Ch. 693 also related to an application for winding up on the ground that it was just and equitable that the company should be wound up. The company had a capital of ?200. Davis and Collett were the first Directors. Davis was also appointed the Chairman of the company. 693 also related to an application for winding up on the ground that it was just and equitable that the company should be wound up. The company had a capital of ?200. Davis and Collett were the first Directors. Davis was also appointed the Chairman of the company. Collett resigned his directorship and his one share was transferred to another person who became a Director. The third person who become a Director resigned and thereafter Davis and Collett became the sole Directors. It will appear from arguments recorded at page 695 of the report that of the two Directors, two were owners of the capital substantially in equal shares. Crossman, J. said that the company was a private company interest he fullest possible sense and that the petitioner and the respondent held the capital substantially in equal shares. It was contended that the petitioner in that case should be left in a position in which he was turned out substantially from anything to do with the management of the company and that he had no remedy in the matter. Crossman J. said that it would be regrettable to have to find that the position in law was that a person could be treated as the petitioner had been treated there and should have no remedy at all. The appointment of the Directors was not valid and thereafter the respondent treated the petitioner as not being entitled to take any part in the management of the company though he was in fact a Director. A winding up order was made because the parties were not prepared to come to arrangement between themselves by which the winding up could be prevented and if it was a case between the partners there could have been a dissolution of partnership. ( 27 ) IN the case of (5) Cuthbert Cooper and Sons, reported in 1937 Ch. 392 an application was presented for winding up the company on the grounds that it was just and equitable to wind up the company. A private company was formed with a capital of ?10,000 in ?1 shares, half of which belonged to C. C. and half to his two elder sons. C. C. and his two elder sons were first Directors of the company. C. C. died leaving his two elder sons sole Directors. A private company was formed with a capital of ?10,000 in ?1 shares, half of which belonged to C. C. and half to his two elder sons. C. C. and his two elder sons were first Directors of the company. C. C. died leaving his two elder sons sole Directors. By his will C. C. appointed his three younger sons, who were employed in the business but were not members of the company, executors and bequeathed his 5000 shares equally between them. The articles of the company provided that the Directors might in their absolute discretion refuse to register transfer of shares and without assigning any reason for such refusal and that this power should extend to the registration of personal representatives of a decision shareholder. The directors refused to register the executors in their capacity of beneficiaries under the will as members of the company. Subsequently the Directors dismissed the executors from their employment with the company and refused to supply them with copies of balance sheet and accounts. The executors presented a petition for winding up. Simonds J. said that the executors of a deceased shareholder holding fully paid up shares were contributories within the meaning of the Section of the Act which authorized the presentation of an application for winding up. The refusal of the Directors to register the petitioners as members was held to be an improper exercise of the discretion of the Directors. That improper exercise of the discretion was held not to be a ground to wind up the company. It was said that there would be disputed questions of fact and an action in the ordinary way in the Chancery Division would be appropriate. Simonds J. said that it would not be just and equitable to wind up the company on any ground of improper exercise of discretion because of disputed questions of fact. It was said that the refusal of the Directors to supply with copies of balance sheet would not be a reason for winding up. The allegations of ill-faith in regard to employment were not gone into because of the absence of such allegations in the petition. It was said that the petition was misconceived and there should be no winding up order. ( 28 ) THE decision in (6) Anglo-Continental Produce Co. The allegations of ill-faith in regard to employment were not gone into because of the absence of such allegations in the petition. It was said that the petition was misconceived and there should be no winding up order. ( 28 ) THE decision in (6) Anglo-Continental Produce Co. , reported in (1939) 1 A. E. R. , 99 also related to an application for winding up a company on the ground that it was just and equitable that it should be wound. The majority of shareholders desired in that case to have repaid to them the money which they had tied up in the company as it was not earning any interest or dividend and it was alleged that there was a state of deadlock and friction which made it impossible for the business of the company to be carried on. It was said that the Court ought not to exercise the jurisdiction of winding up unless some wrong had been done to the company and the company was deprived of its remedies in respect of it by proper use of voting power of the shareholders, or that the substratum of the company had gone, or that it was impossible owing to the way in which the voting power was held and to the feelings of the Directors towards one another for the business of the company to be carried on. In that case the petition was presented pursuant to a resolution at an extraordinary general meeting carried by the votes of 12 shareholders who had 6599 votes against the votes of 3 shareholders who had in respect of their shares 2875 votes, the shareholders voting in favour of the resolution of having majority sufficient to enable them to pass a special resolution. Since the petition was presented there had been a slight change in the voting but that was held not to amount to any substantial difference. Bennett, J. , said that the observations of Lord President in (10) Laird v. Lees, 1924, SC 83 as to the meaning of just and equitable clause should be borne in mind. Those observations are as follows: "i have no intention of attempting a definition of the circumstances which amount to a "just and equitable" cause. But I think I may say this. A shareholder puts his money into a company on certain conditions. Those observations are as follows: "i have no intention of attempting a definition of the circumstances which amount to a "just and equitable" cause. But I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of member and official of the company who wields an overwhelming voting power and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Company Acts would provide them with then there does arise, in my opinion, a situation in which it may be just and equitable for the Court to wind up the company. " benett, J. said that so far as friction between the Directors or between the shareholders was concerned which made it impossible for the business of the company to be carried on none had been proved and on the articles as they stood the governing directors had upon the true construction of the articles, the power if he wanted to exercise it to overrule the views of those who at the moment were associated with him in the direction of the company. The articles in the Anglo Continental case provided that there would be two governing directors and they were H and R. The mere wish of the majority of the shareholders not being a three-fourths majority, to be repaid the money which had been advanced by them to the company was held to be no ground for making a winding up order on the footing that it was just and equitable so to do. ( 29 ) THE decision in (7) Charles Forte Investment's Limited v. Amanda, reported in (1964) Ch. ( 29 ) THE decision in (7) Charles Forte Investment's Limited v. Amanda, reported in (1964) Ch. 260 related to a suit for an injunction to restrain the defendant from presenting a petition for winding up on the grounds that the refusal of the directors to register the three transfers of shares constituted an abuse of the director's fiduciary powers justifying the defendant in presenting a petition for winding up of the company. The reason why reference was made to this decision was because of the discussion of Cuthbert Cooper case at page 257 of the report. Simonds, J. refused to assume that discretion had been improperly exercised and refused to exercise jurisdiction of winding up of a company on the ground that directors has refused to rectify the share register. Wilner, L. J. , said that even if the allegations contained in the petition could be substantiated having regard to the existence of an alternative remedy, the petition for winding up should not be allowed. ( 30 ) THE decision in (8) Lundie Brothers Limited, reported in (1965) 2 AER 692 related to an application for winding up under Section 210 of the Companies Act, 1948 or for an order under Section 222 for winding up. The capital of the company was ?1,000 divided into 15000 shares of 1s. each designated "a" shares, which carried full voting and dividend rights, and five thousand shares of 1s. each designated "b" shares, which ranked pari passu with the "a' shares so far as voting rights were concerned but carried no rights to dividend. C. and R. who were brothers and the petitioner each held 5000 of the "a' shares but the petitioner held all 5000 "b" shares. The chairman had a casting vote. The petitioner who was then the chairman was ousted and R. became chairman in his place. The petitioner's employment as working director was terminated. Instructions were given to the bank or cheques signed by any two directors to be honoured thus rendering the petitioner's signature to be unnecessary. It was decided that all directors' fees should be ?2 weekly. Control of the business of S. Limited, customers of L. Limited, the subject-matter of that application, was acquired by C and R's wife and the petitioner alleged that he was excluded from the business of S. company though it was in substance amalgamated with L. Company's business. It was decided that all directors' fees should be ?2 weekly. Control of the business of S. Limited, customers of L. Limited, the subject-matter of that application, was acquired by C and R's wife and the petitioner alleged that he was excluded from the business of S. company though it was in substance amalgamated with L. Company's business. Since the purchase of s. company, C. had devoted most of his time to business of S. company. The petitioner's main complaints were first that he had been forced out of his position as a working director and secondly, with regard to the business of S. company. It was held that the petitioner was entitled to a winding up order as being just and equitable, the case being in substance a partnership case though no element of lack of probity or fair dealing to the petitioner had been established. As to the three persons each of whom held 5000 of "a" shares, the position was that in substance a partnership existed between those three people. It was found that if it were a partnership and not a company, an order for dissolution on the ground that the termination of employment as a working partner was an unjustified exclusion from the partnership business would justify an order for dissolution. There three persons were found to have come to blows and there was incompatibility of temperament and there were disputes between them. A winding up order was made. As to lack of probity or fair dealing, it was said that he had to make out a case in his capacity as a shareholder of the company. This distinction is of significance that the element of lack of probity or fair dealing that is to be established in a case of winding up has to be done by a person in his capacity as a shareholder in the company. In the case of Ludie Brothers Limited (Supra), it was said that the complaint of reduction of remuneration related to his status as a director and not to his status as a shareholder. It was said that no case had been established for concluding that the company's failure to pay dividend was oppressive to the shareholders. ( 31 ) THE decision in re. (9) Expanded Plugs Limited, reported in 1966 Ch. It was said that no case had been established for concluding that the company's failure to pay dividend was oppressive to the shareholders. ( 31 ) THE decision in re. (9) Expanded Plugs Limited, reported in 1966 Ch. 877 also related to an application for winding up on the ground that it was just and equitable to do so. The respondent company there was incorporated with 1000 shares of ?1 each of which the petitioner held 500, L. held 498 and two shares of which L. was the beneficial owner were held by W. and H. who were employees of L. The petitioner and L. were at all times directors of the company. The articles provided for the appointment of a chairman who was to have a casting vote. The petitioner terminated the licence for breach in failing to pay the minimum royalty. At an extraordinary general meeting which the petitioner did not attend, W. and H. were appointed additional directors, as L. was going abroad. The company having been sued by another company for passing off by selling plugs under the name Expanded, and having submitted to an injunction issued a writ against the petitioner claiming damages for alleged breach of the licence agreement. At a board meeting at which the petitioner was represented and made no objection, W. was appointed chairman of the board. The appointment was made in accordance with the advice of the company's Solicitors for the purpose of passing the company's annual accounts. Then an application by the petitioner to strike but the company's action against him on the ground that it was not duly authorized was adjourned pending the calling of an extraordinary general meeting to ratify the action. Resolutions ratifying it were passed with the aid of the chairman's casting vote. On two other occasions resolutions opposed by the petitioner were passed with the aid of the chairman's casting vote. The petitioner as contributory, sought a compulsory winding up of the company on just and equitable grounds. The evidence showed that there would be no surplus available for distribution among shareholders. On two other occasions resolutions opposed by the petitioner were passed with the aid of the chairman's casting vote. The petitioner as contributory, sought a compulsory winding up of the company on just and equitable grounds. The evidence showed that there would be no surplus available for distribution among shareholders. It was not disputed that the company was in substance a partnership between the petitioner and L. It was held that the petitioner had no locus standi to present a petition as a contributory since there was no surplus available for distribution, and analogy with a partnership did not confer on the petitioner the locus standi that he lacked by company law. It was also said that the constitution of the company was not a matter of which, in the circumstances, the petitioner was entitled to complain and as all relevant matters had been carried out within the frame work of the articles of association, the petition must fail in the absence of proof of a lack of probity in the conduct of the company's affairs. ( 32 ) THE other decisions which were cited at the Bar the Bench decision in (11) Murlidhar Roy v. Bengal Steamship Co. Limited, reported in ILR 47 Cal. 654 and the decision of Panckridge, J. , in re. (12) Janbazar Manna Estate Ltd. , reported in ILR 58 Cal. 716, the decision in (13) Veerama Chineni Seethiah v. Bode Venkatasubbiah and others, reported in (1949) 1 MLJ 269 , the case of (14) Great Indian Motor Works, reported in 57 CWN 220, (15) the unreported decision dated 20 February 1953 in Appeal from Original Order No. 146 of 1952 Anna Sundari v. Haralal Harendralal. In the Bench decision in the Bengal Steamship Company case where there had been suspension of business of a company, it was said that if the suspension was accounted for and appeared to be due to temporary causes and if there was a fair indication that there was an intention to carry on the business the winding up order would not be made. It is also said that where there was ample indication that it was possible to carry on the business, it was not possible to hold that there was a complete deadlock. It is also said that where there was ample indication that it was possible to carry on the business, it was not possible to hold that there was a complete deadlock. It was said that as between shareholders unless a clear case was made out, the court would be slow to draw from the domestic tribunal the decision whether the company's business shall or shall not be carried on. If it appeared that the objects of the company could be fulfilled in other ways or by the employment of other agencies, it could not be held that the substratum was gone. In the Bengal Steamship Co. case the grounds as to deadlock were considered that though the three brothers formed themselves into a firm and subsequently there was disagreement, the principle in Yenidje Tobacco Co. , case could not be applied because if there were means of overruling the action by a general meeting, the company should not be wound up and a new managing agent could be appointed and therefore, it was said that there could not be a complete deadlock to occasion a winding up. ( 33 ) IN the case of (11) Janbazar Manna Estate, there was a deadlock and it was impossible to carry on the business. It was a private company. The application for winding up was on the ground of failure to comply with a statutory notice demanding payment. The contention was advanced that it would be just and equitable to wind up the company. It was said that the formation of the family company did not prove a successful solution but it was also said that that of itself was no reason for winding up. It was said that either the substratum of the company would have to go or a deadlock would have to arise in the sense of it becoming impossible for the company to carry on the business. The decisions in (2) Yenidje Tobacco Company Ltd. , (1916 2 Ch. 426), (3) American Pioneer Leather Company Ltd. . , (1918 1 Ch. It was said that either the substratum of the company would have to go or a deadlock would have to arise in the sense of it becoming impossible for the company to carry on the business. The decisions in (2) Yenidje Tobacco Company Ltd. , (1916 2 Ch. 426), (3) American Pioneer Leather Company Ltd. . , (1918 1 Ch. 556), and (16) Loch v. John Blackwood Ltd. , (1924 A. C. 783), were referred to, and it was said that if one party or the other held a majority of the shares, although it was a private company, and the transfer of shares was restricted to members of the family, the ordinary principle of company law should be observed, namely that the dissatisfied shareholder's remedy would be no obtain a majority in favour of their views and through such majority elect a new directorate. The winding up petition was dismissed in the case of Janbazar Manna Estate. It may be said that this decision was an anticipation of the Cuthbert Cooper principle that Articles should prevail. ( 34 ) THE decision in (13) Veeramachineni Seethiah v. Bode Venkatasubbiah, reported in 1949, 1 M. L. J. 269, related to an application for winding up. The appellant in that case claimed to be the Managing Director. The respondent were shareholders and directors. The application was in essence based on the ground that the directors were far from working in harmonious cooperation and were at loggerheads. The charges were denied and it was stated that the company was carrying on business. It was said that in the absence of evidence of misappropriation and misfeasance of funds a company could not be wound up merely on the ground of difference of views between majority directors and the minority directors. ( 35 ) THE other two Bench decisions of this court which were cited at the Bar are the decision in (14) Great Indian Motor Works Company Ltd. , reported in 57, CWN 220, and the unreported Bench decision dated 20 February 1953 in Appeal from Original Order No. 146 of 1952, Anna Sundari v. Haralal Herendralal Estates Ltd. and Ors. In the Great Indian Motor Works Company has there was an application for winding up on the ground that it was not possible for the directors who were 2 partners and who held all the shares to carry on the business in harmony. In the Great Indian Motor Works Company has there was an application for winding up on the ground that it was not possible for the directors who were 2 partners and who held all the shares to carry on the business in harmony. It was a case of domestic company of Nandi Brothers. It was a partnership of two brothers converted into a private company. Kartick Chandra Mullick who was a director was described to be "kestodas's man". Kesto Das Nandi and Chandi Das Nandi were the two partners and two equal shareholders. It was found that the properly and Kesto Das Nandi had so arranged that he had a majority and that majority was being used not for the benefit of the company but for Kesto Das Nandi. That is quite a different matter to sustain an order for winding up. In regard to application of the principle of dissolution of partnership to cases of domestic or private companies it was found that Kesto Das Nandi in an affidavit explained that the company paid no profits because it was really owned by the 2 partners of old partnership and as they received handsome payment from the company it was unnecessary to pay any dividend. The ratio in the decision of Great Indian Motor Works case is explained first by the affairs of the company being conducted in a manner prejudicial to the interest of the company, secondly by breach and violation of statutory provision of articles and illegal introduction of shareholders as was conceded by Counsel for the appellant company, thirdly the undertaking Court as to the management of the company had been violated. The affairs of the company were being conducted to the detriment and prejudice of the company. ( 36 ) THE unreported decision in the case of (15) Haralal Harendralal also related to an application for winding up. There were two other applications in that case, one for stay of winding up and another for rectification of the share register. The share capital of the company was divided into 300 shares of Re. 1000 each. Harendralal possessed 288 shares and the remaining 12 shares were distributed between the member of his family. The first permanent directors of the company were Harendralal Roy himself, his 3 sons Syamendra, Birendra and Ranendra as also Brojorama, the widow of the deceased son Sarajendra. The share capital of the company was divided into 300 shares of Re. 1000 each. Harendralal possessed 288 shares and the remaining 12 shares were distributed between the member of his family. The first permanent directors of the company were Harendralal Roy himself, his 3 sons Syamendra, Birendra and Ranendra as also Brojorama, the widow of the deceased son Sarajendra. Ranendra predeceased his father Harendralal leaving his widow Rama Sundari who was described by Chakravartti, C. J. , as a lonely tragic figure in the case. Syamendra's son Rabindra was taken in adoption as Ranendra's son. At the time of adoption Rabindra was a minor and during his minority Rama Sundari acted as the guardian of her adopted son. When Rabindra attained majority he joined the group of his natural father. The background was emphasized in the judgment. The facts found were first, that the company was a trading concern, secondly, that 2 groups were formed, thirdly that the voting strength of each group was equally balanced, fourthly, directors' meetings were not held, fifthly, dividends were not declared, sixthly, accounts were not audited, seventhly, complete deadlock arose out of disputes and differences between the directors and the members of the company. The trial court attempted to remove the deadlock of equality of voting strength of the 2 groups by rearrangement of shareholding. The actual management of the company was in the hands of Syamendra's group which consisted of Arabindra, Jagadindra and Purushottam and Rabindra as an ally though Rabindra was the adopted son of Rama Sundari and Ranendra. Chakravartti, C. J. , referred to the statement of law in Halsbury's Laws of England, Hailsham Edition, Volume 5, page 608 in support of the proposition that where it is impossible to carry on business of a company owing to internal disputes which produced a state of deadlock or where in a case of a private company one director treats the business of the company as his own and does not carry on the business as that of the co, it is just and equitable to wind up the company. Chakravartti, C. J. , also emphasized on oppression to a section of shareholders and reckless and irresponsible management in addition to stalemate or deadlock as grounds to wind up a company. The decision in Cuthbert Cooper and Sons Limited, reported in 1937 Ch. Chakravartti, C. J. , also emphasized on oppression to a section of shareholders and reckless and irresponsible management in addition to stalemate or deadlock as grounds to wind up a company. The decision in Cuthbert Cooper and Sons Limited, reported in 1937 Ch. 392 was cited and discussed in the unreported decision of Hirilal Harendralal. Chakravartti, C. J. , said that the decision in Cutherbert Cooper and Sons was a case where allegations were entirely foreign to the rights of members arising out of the articles of members arising out of the articles of association and had nothing to do with their contractual rights. It might be remembered that the facts in Cuthbert Cooper and Sons turned on the question as to whether the refusal to register the names of persons related to management of the company or to contractual rights arising out of the articles of association. In the case of Haralal Harendralal Roy the appellate court restated the principles of complete deadlock, mismanagement, lack of probity and applied the principles of dissolution of partnership where the company had equal holding and there was a complete deadlock. ( 37 ) THE decision in (16) Loch v. John Blackwood, reported in 1924 Appeal Cases 783 is of classic importance and the observations of Lord Clyde in the case of (10) Baird v. Lees, 1924 SC 83, which were referred to by Lord Shaw in the judgment in the case of Lock v. John Blackwood acquired celebrity and may be quoted even at the risk of repetition: "i have no intention of attempting a definition of the circumstances which amount to a 'just and equitable' clause. But I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which proved some guarantee of commercial probity and efficiency. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which proved some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Act would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the court to wind up the company. " in the case f (16) Loch v. John Blackwood, a public company carried on business and the managing director had a preponderating voting power. There was a petition for winding up by shareholders. It was found that the director had omitted to hold general meeting, or to submit accounts or recommend dividend and that they had laid this open to the suspicion that their object in so omitting was to keep the petitioners in ignorance of the company's position and affairs and to acquire the petitioner's shares at an under-value. Lord Shaw said that at the foundation of application for winding up on the just and equitable rule there must lie a justifiable lack of confidence in the conduct and management of the company's affairs, but this lack of confidence must be grounded on conduct of the directors, not in regard to their private life of affairs, but in regard to the company's business. Lord Shaw further said lack of confidence must spring not from dissatisfaction of being outvoted on the business affairs or on what is called domestic policy of the company but the lack of confidence should rest on a lack of probity in the conduct of the company's affairs. ( 38 ) THE other decision which was relied on is (17) Elder and Others v. Elder and Watson Limited, reported in 1952 SLT 112. In that case a petition at the instance of 5 shareholders disclosed difference of opinion between the petitioner and another director. ( 38 ) THE other decision which was relied on is (17) Elder and Others v. Elder and Watson Limited, reported in 1952 SLT 112. In that case a petition at the instance of 5 shareholders disclosed difference of opinion between the petitioner and another director. The grievances of the first and the second petitioners were that they were forced to retire as Secretary and Factory Manager. The other grievances were rejection of an offer of some of the petitioners to sell their shareholdings to Board of Directors. It was held that three petitioners suffered no apparent prejudice or oppression and the two petitioners who suffered grievances in regard to retirement or dismissal did not suffer any grievance in their character as members as contemplated by Section 210 of the English Companies Act, 1948. It may be stated here that Section 210 dealt with oppressive management. In Elder's case there was no cause to apprehend mismanagement of the business to the detriment of shareholders. There was no allegation that the petitioners suffered in their character as members of the company. In Elder's case it was said that Section 210 of the English Companies act, 1948 could be invoked by a member if the company's affairs were being conducted in a manner oppressive to some members or if the affairs of the company would justify the making of a winding up order under just and equitable clause. Lord President Cooper referred to the decision in Yenidje Tobacco Company's case and said that the dissolution of partnership principles might be applied in case where a partner so conducted himself in matters relating to the business that it was not reasonably practicable for the other partner or partners to carry on the business in partnership. The partnership principle was by Lord President Cooper to be viewed in one way when applied for in relation to a large public company and in a different way when applied for in relation to domestic concerns. In the deadlock cases, the small company types of cases are treated on the one hand and the large public companies are considered on the other hand in order to give full weight to the circumstances of each case. In the deadlock cases, the small company types of cases are treated on the one hand and the large public companies are considered on the other hand in order to give full weight to the circumstances of each case. In Elder's case Lord President Cooper assumed up that there was no cause of apprehension from anything in the averments of the petitioner that the business was being mismanaged to the detriment of shareholders and that on the contrary the figures suggested its position and prospects to be commercially sound. In the same case Lord Keith said that where difference of opinion arose between the directors and removal or exclusion from office as directors arose there was nothing designed to injure their rights as shareholders, and secondly, there was nothing to suggest that the company was not being conducted efficiently and it would not be relevant ground for winding up under the just and equitable clause. ( 39 ) IF there is equal shareholding and if there is complete deadlock and if there is lack of probity and if there is mismanagement of the company the application of the just and equitable clause is of importance. The emphasis is on equal holdings which are not capable of solution, secondly, there must be exclusion from management, thirdly there should be exclusion from any benefit as shareholders, fourthly, there must be persistent, illegal and wrongful acts for long continuous period. In such a structure of domestic disharmony it is often said that no redress is possible except by destruction of the structure itself. That is why in the case of Loch v. John Blackwood (Supra), oppression, breach of confidence, lack of probity, prejudice to the business of the company, acts prejudicial to the rights of shareholders weighed with the court. On the other hand mere ouster from the Board or curtailment of power as members of the Board in the words of Lord President Cooper in the case of Elder v. Elder and Watson did not figure as a ground for winding up. The decision in Cuthbert Cooper and Sons upholds the principles that the provisions of articles of association will govern the rights between the parties and if the deadlock is one which can be solved under the articles it would not be a complete deadlock. The decision in Cuthbert Cooper and Sons upholds the principles that the provisions of articles of association will govern the rights between the parties and if the deadlock is one which can be solved under the articles it would not be a complete deadlock. The directors in the case of Cuthbert Cooper refused to rectify the share register under the articles. It was said that appropriate orders under the Act or under the articles could be asked for but though the holding was equal in Cuthbert's case the partnership principle was not applied to dissolve the company. ( 40 ) IN the present case emphasis was placed by Counsel for the petitioner on the application of dissolution of partnership principle to domestic concern. ( 41 ) THE four broad grounds are first whether this is a case where the partnership principle should apply, secondly, whether the facts and circumstances show continuous and persistent mismanagement, thirdly, whether the substratum is gone and fourth is gone and fourthly whether the violation of the provisions of Section 314 of the Companies Act will be ground for winding up. ( 42 ) THE decisions which were cited at the Bar have been referred to and in my opinion the partnership principle cannot be applied in the present case. This is not a case of equal shareholding. The origin of partnership which was alleged in the present case was on the entry described as "sir Khata" entry. The affidavit evidence is that there was some idea of financing and upto the year 1962 the company did not make much substantial progress. Subsequent to the year 1962 the company made progress and there was real business and profit from the year 1963 until the year 1965. The trouble started in the year 1965. The centre of the trouble is the entry of the son of V. D. Jhunjhunwala. Subsequent to the year 1962 the company made progress and there was real business and profit from the year 1963 until the year 1965. The trouble started in the year 1965. The centre of the trouble is the entry of the son of V. D. Jhunjhunwala. It may not be lost sight of the fact that the persons who themselves were present at the extraordinary general meeting of the shareholders of the company on 2 September 1963 were R. P. Jhunjhunwala, P. C. Jhunjhunwala and P. C. Jhunjhunwala himself proposed and it was unanimously resolved that the expenses payable to V. K. Jhunjhunwala who was then going to the United States for higher education were approved by the company and those persons immediately after the return of the son agreed to the proposal of the son to join the company. On 11 October 1965 there was a meeting of the Board of Directors where V. D. Jhunjhunwala, R. P. Jhunjhunwala and P. C. Jhunjhunwala were present and it was resolved that in accordance with the terms of agreement dated 2 September 1963 V. K. Jhunjhunwala was appointed as Technical Director of the company at a grade of Rs. 1,500-200-2,500 and he would be entitled to a salary from 1 October 1965. The persons who themselves voted later turned round. They may do so and the court is entitled to know the reasons for such change of attitude. The reasons are not far to seek. It is true that disputes and differences have arisen and it is in the ultimate analysis a scramble for power. The respondents on the side of V. D. Jhunjhunwala are in a majority. They hold larger shares and the stake that the respondents have in the company is about Rs. 63 lakhs as opposed to the stake of the petitioners amounting to Rs. 1. 87 lakhs. The interest amounting to Rs. 63 lakhs is represented by shares f the respondents valued at Rs. 3 lakhs, guarantee given by the respondents for the Bank overdraft for Rs. 47 lakhs, and value of secured loans amounting to Rs. 13 lakhs. These things have to be kept in view inasmuch as V. D. Jhunjhunwala and his group have asserted and are asserting that substratum of the company is not gone. The name "overseas" is not decisive as to the objects of the company. 47 lakhs, and value of secured loans amounting to Rs. 13 lakhs. These things have to be kept in view inasmuch as V. D. Jhunjhunwala and his group have asserted and are asserting that substratum of the company is not gone. The name "overseas" is not decisive as to the objects of the company. The objects are inter alia import and export, there are objects that the company can do the business of foundry. The company did business in sleepers. The business in sleepers has undergone change and decline. It cannot be predicated that the substratum of the company is gone. There are so many objects of the company. If the company was State up for a particular business and that declined, the shareholders can resort to the main or paramount business which is the basis of incorporation. In the present case the essence of the trouble is not that substratum of the company is gone or that there is no business but that there is challenge by one group of the Board to the authority of the other group. V. D. Jhunjhunwala's son sent abroad to qualify himself to look after the business. He came back and he was appointed as the Technical Director. It may be stated as the fact is that the son of V. D. Jhunjhunwala has not drawn any salary. The infraction of provisions of Section 314 of the Companies Act is contended to be that no prior sanction or approval was taken and that it was an ordinary resolution and therefore the director is deemed to have vacated the office. The rival contentions on behalf of the respondents are that remuneration has not been received and it is a provision which should be strictly construed. The infraction of Section 314 without going into the validity of invalidity of the appointment is not in my opinion a ground in the facts and circumstances of the present case of decisive importance in regard to winding up. This is a matter which is capable of being remedied. This is a matter which is capable of being subject-matter of an action in order to have the rights and liabilities decided. ( 43 ) THE affidavit evidence in the present case contains allegations and counter allegations of payments having been made without justification. This is a matter which is capable of being remedied. This is a matter which is capable of being subject-matter of an action in order to have the rights and liabilities decided. ( 43 ) THE affidavit evidence in the present case contains allegations and counter allegations of payments having been made without justification. As far as the petitioners are concerned it is alleged against the respondents that security deposit has been withdrawn and unsecured creditors have been made secured creditors. The respondents, on the other hand, allege against the petitioners that the petitioners withdrew by three cheques from a cheque book which had not been used since the month of November, 1964 over a lakh of rupees. The respondents allege that they guaranteed finance by the bank and the petitioners increased such liability. The respondents also allege that the amounts which were withdrawn by the petitioners were paid to Patni Trading Co. and Raj Kumar Company. These rival allegations do not, in my opinion, amount to grounds for winding up. The petitioners do not have financial stake in the company of the same magnitude as the respondents. Withdrawal of security deposit is not a ground for winding up. The Sir Khata entry on which great reliance was placed by Counsel for the petitioners suggests that a sum of Rs. 8,160-2-0 was credited to Hind Overseas' and preliminary expenses are shown at Rs. 1,909/1/3. An account with Chairman was called upon to be produced but that was not produced and it was said by respondents that that would prove that R. P. Jhunjhunwala had separate transactions with Chimanram. Such disputed facts about the inception of the alleged partnership supplemented by the affidavit evidence of the respondents that there was never any partnership indicate in my opinion that the present disputes originated not out of any disputes as to partnership but because of the attempt of the petitioners to oust the respondents who have a larger financial stake and interest in the company. The respondents having invested greater amount are interested in the affairs of the company. The respondents arranged bank overdraft for the sum of Rs. 47 lakhs. The respondents are the owners of shares valued at Rs. 3 lakhs. The respondents are also answerable for secured loan amounting to Rs. 13 lakhs. The allegations of the petitioners that the unsecured debt of the company is Rs. The respondents arranged bank overdraft for the sum of Rs. 47 lakhs. The respondents are the owners of shares valued at Rs. 3 lakhs. The respondents are also answerable for secured loan amounting to Rs. 13 lakhs. The allegations of the petitioners that the unsecured debt of the company is Rs. 65 lakhs is not supported by any evidence. On the contrary, the respondents' evidence is that secured loans apart from the bank guarantee is about Rs. 13 lakhs. ( 44 ) THERE were allegations of the company not being commercially solvent. But the affidavit evidence of the respondents is that the company has large prospects and if utilized would derive profit. As I have already indicated such bald allegations of commercial insolvency of the company are not of any moment in the present case. ( 45 ) IT was alleged in the petition that some time after 23 May, 1966 there was a notice dated 24 May calling a meeting of the company on 27 May, 1966. The affidavit evidence of the respondents is that the petitioner's Solicitor's letter dated 27 May was received by the company at 4. 15 p. m. after the meeting had been held at 3 p. m. It was said on behalf of the respondents that the fact as to the time of receipt of notice was suppressed from the court. This meeting was challenged by the Solicitor's letter. The respondents rightly contend that even if there is any alleged act regarding appointment of director, that is no reason for winding up. Reliance is placed in support of that proposition on the decision of the Judicial Committee in Ripon Press v. Gopal Chetty, 36 CWN 54 and the observations at pages 55, 56, 62, 67 and the observations of the House of Lords in Loch v. Blackwood, (1924) AC 783, 790, and the decisions in (18) Amalgamated Syndicate, (1897) 2 Ch. 600 and the decision in ex parte Fox, LR 6 Ch. 176. It has also been held that ouster from the board or cancellation of banking accounts or any challenge to one's rights as a director and not affecting rights as a shareholder does not enter the arena of winding up. Further, the respondents relied on Articles 75 and 77. I have already referred to the decision in Elder v. Watson, 1952 SLT 112 in support of that proposition. Further, the respondents relied on Articles 75 and 77. I have already referred to the decision in Elder v. Watson, 1952 SLT 112 in support of that proposition. The Madras decision reported in (1949) 1 MLJ 269 and the English decision in Anglo Continental case and Lundie case and Expanded Plug case lend support to that proposition. Further as I have already indicated there are many disputed facts and the petitioners suppressed facts with regard to the question of expenses of study and appointment of V.K. Jhunjhunwala and in any event in my opinion it is not a just and equitable ground for winding up because of the existence of other remedies. The rights of shareholders should not be allowed to be imperiled because of friction between directors or because of conflict between directors or because of competition for power between directors. It will be wrong use of power vested in the court to wind up companies on grounds of friction and disputes between directors which are of internal quality and character in regard to the members of the board. ( 46 ) THE dissolution of partnership principle has been applied to companies either on the ground of complete deadlock or on the ground of domestic or family companies. The complete deadlock is where the Board has two real members or the ratio of shareholding is equal. The (2) Yenidje Tobacco Company case, (1916) 2 Ch. 426 and Loch v. Blackwood, 1924 Act 783, illustrate these types. In the domestic or family companies Court have applied the dissolution of partnership principle where shareholdings are more or less equal and there is ousting not only from management but from benefits as shareholders. Lack of probity has to result in prejudice to Company's business affecting rights of complaining parties as shareholders and not as directors. The Cuthbert Cooper case (1937) 1 Ch. 392 illustrates that if deadlock can be resolved by the Articles there is no deadlock to bring in winding up and if there are alternative remedies the company should not be wound up. In regard to substratum of a company shareholders are the best judges as will be illustrated by the decision of the Judicial Committee in (19) Davis and Co. Ltd. v. Brunswick Australia Ltd. , reported in AIR 1936 Privy Council 114 and the observations at pages 121 and 122. In regard to substratum of a company shareholders are the best judges as will be illustrated by the decision of the Judicial Committee in (19) Davis and Co. Ltd. v. Brunswick Australia Ltd. , reported in AIR 1936 Privy Council 114 and the observations at pages 121 and 122. I have already indicated my opinion that I am unable to hold that substratum of the company is gone. This is not a case of application of the partnership principle and I have expressed the reasons therefor while dismissing the cases. The principal disputes appears to have grown within a short time after 23 May 1966. In the months of February and March 1966, it is alleged by the respondents that the petitioners withdrew a sum of Rs. 1,25,000/- from the company's amounts by using old discontinued cheuqe book which had been used upto Diwali 1964. This amount together with the sum of Rs. 25000/- was paid in cash to Patni Trading Co. Pvt. Ltd. and Rajkumar and Co. an associate of the said company. Patni Trading Co. went into voluntary liquidation pursuant to resolution dated 7 August 1961. It is alleged that these sums were lent by the respondents in these benami names and the said sums were paid back to Patni and Rajkumar Companies. The respondents allege that the withdrawal of Rs. 1,25,000/- by the petitioners was in breach of Trust Receipts facilities available with Punjab National Bank and the respondents had to furnish other securities. The petitioners charge the respondents with manipulation and fabrication of accounts but no particulars as given. It was alleged that the respondents removed the books but the Receiver found the books at the registered office. There are allegations of defrauding without particulars. There are allegations of withdrawal of banking account. The respondents have provided facilities with the Bank and the respondents have denied allegation of the petitioners. As I have indicated these charges and counter charges raise disputed questions of facts between two contesting parties for power. The petitioners desire that they should be in power and the respondents would go on financing. This was said to be the heart of the matter by Counsel for the respondents. This comment is not without foundation. As I have indicated these charges and counter charges raise disputed questions of facts between two contesting parties for power. The petitioners desire that they should be in power and the respondents would go on financing. This was said to be the heart of the matter by Counsel for the respondents. This comment is not without foundation. I am unable to hold that there is any mismanagement or misapplication either as regards shareholders are not grounds for winding up in the facts and circumstances of the present case. ( 47 ) THE other applications were for injunction, appointment of provisional liquidator and stay of winding up. It was said that the appointment of provisional liquidator as also the order for injunction would be in aid of winding up. The application for stay, on the other hand, was to resist the destruction of the company. These three applications must follow the result of the main applications for winding up. There are no special features which merit further consideration in those three applications and no separate contentions were advanced. ( 48 ) COUNSEL for the petitioner invoked the application of the partnership principle. I have already expressed my opinion on that question. In view of my conclusion that this is not a case where the partnership principle can be applied, that there is no evidence to establish continuous and persistent mismanagement and further that the substratum of the company is not gone, the application for winding up must fail. ( 49 ) BEFORE I conclude I should record here the able, learned and fair arguments advanced by Mr. Sen for the petitioner and Mr. Chaudhuri on behalf of the respondents. The case went on for a few days because of the various decisions on which reference was made at the Bar. These decisions have been principles which should be applied to the facts and circumstances of this case. ( 50 ) FOR all these reasons indicated above, the application for winding up is dismissed. The respondent is entitled to costs. The application for the appointment of provisional liquidator is also dismissed. The application for injunction is also dismissed. In view of my conclusion that there should not be any winding up and the dismissal of the application for winding up the only order on the application for stay is stay of winding up proceedings. The respondent is entitled to costs. The application for the appointment of provisional liquidator is also dismissed. The application for injunction is also dismissed. In view of my conclusion that there should not be any winding up and the dismissal of the application for winding up the only order on the application for stay is stay of winding up proceedings. The applicant in the stay application is entitled to costs of this application. Certificate for two Counsel. Mr. Dutt Gupta who was appointed Receiver of certain books took possession of books. His remuneration has been fixed at Rs. 2000/ -. All interim orders are vacated. Application dismissed.