JUDGMENT 1. THIS is an application under section 397. 398 etc. of the Companies Act, 1956 for appointment of a Special officer and/or Administrator and/or receiver to carry on management of the respondent No. 1 Brahmaputra Fertilisers and Distributors (Private) Limited, hereinafter' referred to as the Company and for various orders restraining the Respondent Nos. 2 to 5 from acting as Directors for investigation and for various ether orders which are usual in these type of applications. 2. THE facts of this case is very interesting and clearly show how companies are being formed for utilizing official positions, permits for essential commodities, to serve as a source of additional income for persons in position under the garb of a mere share-holder and apparent innocence and absence in the company's affairs on the records and asking the Court to ignore ordinary human nature or character and to suspend common sense and experience to examine the facts and circumstances of a case and to rely solely on technical law of pleading and apply the literal meaning of the statutes and various authorities and decisions of Courts dealing with the principles regarding 397, 398 applications and principles analogous thereto. Although the matter is really confined to very short campus, it was argued at length, which to my mind appeared to be mostly unnecessary and has been advanced solely for the purpose of diverting the Court's mind from the real issue and the undisputed facts in the background of the nature of the business for which the company was incorporated and how it was conducted and the obvious purpose and intention of the so-called share-holders and particularly the Respondent No. 5, pratap Kumar Sen Gupta. The petition is of frightening volume containing about 160 pages of annexure being the correspondence showing the background in which the company came into existence and the "brain Power" behind the control. In order to appreciate the said correspondence, it should be noticed that the nick name of the persons which have been used in the correspondence only to show that the promoters of the company were close relations and hailed from the same part of the country and was very much intimate with each other without any apprehension at the beginning of being deprived or deceived by each other. Here, the petitioner's nick name is Nasu, the Respondent No 5, pratap Kumar Sen Gupta's nick name is "habul" and Abhrangsu Sen Gupta, the younger brother of the petitioner is called as "haru". It is not necessary for me to go into such voluminous correspondence but it is sufficient to note that the company was incorporated on the 19th of February, 1959, and a few "tell tale" correspondence crystallizing the desire, intention and purpose of promotion, formation and inception of the company. These letters are dated the 21st of december, 1957, 19th of July, 1958, 29th of July, 1958, two letters of 5th of November, 1958, 5th of December, 1958, 13th of December 1958, 15th of december, 1958, 2nd of February, 1959, and 3rd of May, 1971. Those letters are set out hereunder and they are at pages 121, 124, 99, 104, 126, 105, 107, 109, 129 and 154 of the petition. [letters are not printed-Ed. ] I have set out some of those correspondence only with a view to give the background in which the company has come into existence, that is originally Brahmaputra Fertilisers and distributors, hereinafter referred to as the said "firm", was a partnership in which the petitioner and his brother, abhrangsu Sengupta, the Respondent no. 6, were the partners. The said firm used to carry on business as agents and sellers of fertilisers mainly in Assam. It was registered in the State of Assam at Shil-long on the 3rd of March, 1956, and both the petitioners and his brother, the two partners of the said firm were residents of Assam. In the year 1956, the said firm was appointed by the Government of India as distributors of fertilisers to the Tea Industries in North East India. As most of the tea Company had their registered office at Calcutta or managed by managing agents who had their offices at Calcutta, both the partners of the said firm being residents of Assam found it difficult to carry on the said firm's business activities in Calcutta. It is alleged that the Respondent No. 5, P. K. Sen Gupta, who was known to the petitioner from his student life, was then a responsible and influential government officer in the State of West Bengal, offered to render his assistance to the said firm in his activities at Calcutta. It is alleged that the Respondent No. 5, P. K. Sen Gupta, who was known to the petitioner from his student life, was then a responsible and influential government officer in the State of West Bengal, offered to render his assistance to the said firm in his activities at Calcutta. It is further alleged that from the beginning of the said business of the partnership firm at Calcutta, the Respondent no. 5, looked after the same and initially an office was opened at Calcutta which was originally at No. 34, ganesh Chandra Avenue, and thereafter, shifted at No. 2, Church Lane, calcutta. It is further alleged that on the recommendation of the Respondent no. 5, various persons who are now deceased were appointed managers at the Calcutta office and later on, the respondent No. 3, Arun Gopal Bagchi, was introduced by Respondent No. 5, to look after the affairs of the said firm at Calcutta and the over-all control of the said firm at Calcutta rested with the respondent No. 5. It is further alleged that the petitioner and his brother only two partners of the firm, had implicit faith and confidence in Respondent No. 5 and they were very intimate with each other so as to correspondence and call each other in their respective nick name which has been set out before. 3. IT is further alleged that due to paucity of fund, the said firm was unable to meet its obligations and commitments as distributors of fertilisers to the Tea industry and as such, the Respondent no. 5 introduced the Respondent No. 2, khitish Chandra Saha, as the financier to the said firm as the business of the said firm at Calcutta was under complete control and management of the Respondent No. 5, who appointed his own nominee and financier of the said firm and being an influential government official in Calcutta and connected with persons or concerns dealing with fertilisers, suggested to convert the said firm into a Private Limited Co. as would appear from the said correspondence winch I have set out before. It was originally proposed as would appear from the said correspondence that the petitioner would be allotted 40% in the proposed company and out of the balance shares, 40% would go to the said Respondent No. 5, and the balance 20% would be distributed amongst others. as would appear from the said correspondence winch I have set out before. It was originally proposed as would appear from the said correspondence that the petitioner would be allotted 40% in the proposed company and out of the balance shares, 40% would go to the said Respondent No. 5, and the balance 20% would be distributed amongst others. The shares to be allotted to the petitioner would be in lieu of the value of the assets of the good will of the said firm but others would subscribe shares by payment in cash. It is alleged that under these circumstances an agreement was entered into between the said firm and the company which came into existence whereby and where under the company acquired and took over the right title and interest of the petitioner and his brother in the said firm. Initially, the petitioner was allotted 500 shares and his brother, the Respondent No. 6, was allotted 300 shares and the Respondent No. 2 was allotted 300 shares and the Respondent No, 3 was allotted 100 shares and the Respondent no. 5 was allotted 500 shares and all of those persons became the promoters of the said Private limited company and as such signed the Memorandum of Association of the Company. It was further alleged that whenever the Respondent no. 6. the brother of the petitioner would like to transfer his shares, the said shares would be sold and/or transferred to the petitioner. However, the petitioner and the Respondent No. 2, Khitish chandra Saha, the Respondent No. 3 arun Gopal Bagchi, and one Prafulla kanti Ghosh, became the first Director of the Company. It may be mentioned that the said Prafulla Kanti Ghosh is the present Minister-in-Charge, Food and supplies Department, State of West bengal. It is alleged that the petitioner and his brother having business interest in Assam were unable to take part in the management of the company at Calcutta and it is further alleged that due to the failing health of the petitioner's wife, he was compelled to stay mostly in Shil-long. The petitioner's wife's disease ultimately was diagnosed as cancer. The petitioner alleged to have become mentally disturbed and there was no question of looking or participating in the affairs of the company. It is further alleged that the Respondent no. The petitioner's wife's disease ultimately was diagnosed as cancer. The petitioner alleged to have become mentally disturbed and there was no question of looking or participating in the affairs of the company. It is further alleged that the Respondent no. 5, P. K. Sen Gupta, was managing the affairs of the company and the other directors being the Respondent Nos. 2 and 3, who were introduced by the Respondent No. 5 acted according to the directions and instructions of Respondent No. 5. In these circumstances, it is alleged that the Respondent No. 5 as the de-facto director of the company, as in fact the Board of Directors of the company, was accustomed to act and in fact, acted in accordance with his directions. Thereafter, it is alleged that taking advantage of the said helpless position of the petitioner's trust and confidence reposed, the respondent No. 5 in collusion and conspiracy with Respondent Nos. 2 and 3 and Indrajit Roy, the Respondent No. 4, committed various wrongful acts which are detrimental to the interest of the company and prejudicial to the public interest in a manner oppressive to the petitioner. The particulars of the said acts of oppression, mismanagement and mis-appropriation are set out in paragraph 20 and various sub-paragraphs there under, which I would summaries subsequently. It is alleged that the petitioner protested against the wrongful and illegal acts ousting the petitioner from the management and affairs of the company to the respondent No. 5 who paid no heed to such challenge. In these circumstances, it is alleged that the petitioner by his letter dated the 22nd of August, 1970, tendered his resignation from the Board of Directors which was accepted by the company on or about 23rd of February, 1971. It is further alleged that the petitioner having not attended the board meetings of the said company since its inception, the petitioner by operation of law has ceased to be a director of the company. On the 19th of August, 1971, the petitioner made a complaint to the Regional Director, company Law Board, with a copy to the Registrar of Companies, West bengal and prayed for examination of the books and records of the said company. On the 19th of August, 1971, the petitioner made a complaint to the Regional Director, company Law Board, with a copy to the Registrar of Companies, West bengal and prayed for examination of the books and records of the said company. It appears that the Registrar of companies has examined the books and records of the said company under the provisions of section 209 of the Companies Act, 1956, and an inspection report has been made out which was produced before me at the time of hearing of this application. I will have the occasion to deal with the inspection report later. It is further alleged that the Respondent No. 5 was taken into police custody under the Defence of India Rules in view of his illegal activities relating to purchase and sale of wheat barn while acting in his official capacity in the Directorate of Food and supplies holding a responsible position, and he was subsequently released on bail. The petitioner's wife died on the 25th of February, 1971, and thereafter, one of the petitioners brother, bunangsu Sen Gupta, was shot dead by the Pakistan Army in Bangladesh and after coming to know of the said incident, the petitioner on or about 5th of june, 1972, was away to Bangladesh and shil-long. Further the petitioner's only son and only, daughter were involved in political activities and charged with various alleged offences and criminal proceedings were pending against them. Due to all these facts the petitioner could not take any step or interest in the affairs of the company and thereafter, by a letter dated the 8th of march, 1974, written to the Regional director, Company Law Board, the petitioner enquired about the results of his said complaint lodged by him on or about 19th of August, 1971. By a letter dated the 12th of March, 1974, which was received by the petitioner on the 14th of March, 1974, the petitioner was informed by the Regional Director, company Law Board, to seek relief in a Court of Law if so advised and under these circumstances, the petitioner thereafter filed this application under section 397, 398, etc. of the Companies act, 1956, and applied for an interim order. 4. of the Companies act, 1956, and applied for an interim order. 4. THE petitioner has made various charges against the Respondents particularly against Respondent No. 5 which may be summarized as follows : - (1) The Respondent No. 5 was the de-facto Director of the company and the petitioner never actively participated in the management of the affairs of the company. (2) Illegal, malafide, allotment of 6,300 shares to the Respondent no. 5 in pretended adjustment of his claim of Rs. 47,370 for financing commission whereas the petitioner arranged for financing the respondent Company of its banker, central Bank of India, by making a fixed deposit to the extent of. Rs. 88,000 and the petitioner was not paid any commission in respect thereof. (3) 300 shares belonging to the petitioner's brother the Respondent no. 6 was wrongfully and illegally, transferred to the Respondent No. 5 in violation of the provisions of the Articles of Association of the company and the agreement that whenever the petitioner's said brother being Respondent No. 6 would like to transfer his shares, the said shares would be sold and/ or transferred to the petitioner. (4) No notice of any Board meeting nor any information of the affairs of the company was given to the petitioner during the period he was a Director of the company. (5) Balance-sheets of the company were not sent to the petitioner on the plea of non-availability of petitioner's address. It is only after the receipt of the balance-sheets for the year ending 31st of march, 1970, sometime in November, 1970, the petitioner came to know for the first time about the increase in capital of the company by allotment of said shares. (6) Net profit of the company was manipulated by payment of commission and correct financial position is not reflected in the manipulated books of account of the company between the years 1966-71. (7) No dividend has been declared though the company was running at a profit. (8) No notice of General meeting was served on the petitioner or other shareholders. (9) Share Certificates were not issued in terms of section 313 of the Companies Act, 1956. (7) No dividend has been declared though the company was running at a profit. (8) No notice of General meeting was served on the petitioner or other shareholders. (9) Share Certificates were not issued in terms of section 313 of the Companies Act, 1956. (10) The Respondent No. 3, arun Gopal Bagchi, has vacated his office of Director under Section 314 of the Companies Act, 1956, as no approval of payment of remuneration was passed at the First annual General Meeting following the appointment of the Respondent no. 3. (11) The Respondent No. 2 khitish Chandra Saha, vacated his office under Section 283 (1) (i) of the Companies Act, 1956, as disclosure of interest under Section 299 was not made by him as partner of Bhagirati Fertilisers which was supplying fertiliser to the company and he is also liable to return the director's allowance of Rs. 100 per month received from the company. (12) The Funds of the company being diverted by payment of: rent to Bijoy Iron the Charges of the telephone in the residence of respondent No. 3 is paid by the company although he did not belong to the company. (13) Statutory Books are not maintained properly. (14) The petitioner protested against mismanagement and the respondents did not take any notice; of the same and particularly, the Respondent No. 5 challenged the petitioner whatever steps he may feel. (15) In August, 1971, the petitioner complained to the Registrar of Companies who got the books examined but no report was made available to the petitioner who was advised to move Court for redress of grievances. (16) The Respondent No. 5, P. K. Sen Gupta, has not obtained sanction and/or approval for participating in the management of the company. The Respondents in their affidavits have denied the charges made by the petitioner in the petition. The substance of the charges seems to be that the Respondent No. 5, P. K. Sen gupta, who is really the person responsible for the whole affairs from the beginning to end. It is he who conceived the idea of promoting the company whose business is mainly to supply fertilisers to Tea Industry in the Eastern region, having regard to the fact that the Respondent No. 5 was a highly placed Government officer under the state of West Bengal having influence and sources available to him for getting necessary permits, license, quota, orders etc. for the business of the company. The correspondence between the petitioner and the Respondent No. 5 prior to the formation of the company which are annexed to the petition leaves no doubt in any one's mind that the petitioner and his brother were very intimate with the Respondent No. 5 who was a close associate and friend and on whom the petitioner has implicate faith and confidence. The tone, language, advice, directions, ideas requests and suggestions contained in those correspondence inevitably lead to that conclusion and it appears that ultimately the petitioner was persuaded to accept the suggestion of the Respondent no. 5, P. K. Sen Gupta, for forming and promoting the Respondent Company. In the Memorandum of Association of the company under the object clause being clause 3 (1) it is clearly stated that the said firm of Brahmaputra Fertilisers and Distributors belonging to the petitioner and his brother respondent No. 6, was acquired and taken over by the company. It will be convenient of set out the said Clause hereunder:- "1. To acquire and take over from the below named Partners : (a) Sri Sahasrangsu Sen "cleve cottage" Shil-long, Assam. (b) Sri Abhrangsu Sen Gupta, mawkhar, East Road, Shil-long, assam, their sole proprietary rights title and interest including the goodwill of the firm known as "brahmaputra Fertilisers Distributors" with its office establishment at 2, Church, lane, Calcutta and also at Cleve cottage, P. O. Malki, Shil-long, assam, since carrying on business in Fertilisers and acting as Distributors of Fertilisers to Tea Estates and Agricultural Fertilisers together with whatever stock-in-trade, stores, equipments, benefits of all pending contracts and other assets (including the Central Govt. 's quota) and all its One thousand nine hundred fifty eight. " And from the documents before me which were filed in this application including the affidavits, I am of the view that it is Respondent No. 5, who was in de-facto management and control of the affairs of the company and the other Respondents were mere-tools in his hand. Admittedly, as the matter stands now the Respondent No. 5 is the majority share-holder of the company having originally 500 shares. Admittedly, as the matter stands now the Respondent No. 5 is the majority share-holder of the company having originally 500 shares. Thereafter, 3,600 shares alleged to have been allotted to him by way of adjustment of his alleged claim for commission payable by the company to him and a further 300 shares acquired by him which was standing in the name of the respondent No. 6, the brother of the petitioner. Therefore, the Respondent no. 5 is now the holder of 4,400 shares of the company and undisputedly the largest number of shares of the company are held by him and, therefore, as an ordinary human being he is expected to be vitally interested in the company. It is true that after the company was incorporated, there is nothing in writing showing his active participation in the management of the affairs of the company, as it cannot be expected having regard to the fact that the respondent No. 5 is a high government official of the State of West Bengal and as such, officially or in writing he cannot be shown to have taken any part in the management of the affairs of the company. But circumstances is such that in Court having any commonsense cannot but come to a conclusion that it is respondent No. 5 who is the heart and soul of the company from its beginning to end and is a person vitally interested in the affairs of the company and cannot be expected to be absolutely indifferent in the conduct of the business of the company as a mere ordinary share-holder. The matter was argued at length for several days and all technical objections which can be raised in sections 397-98 application and all the leading cases as to pleadings, proof and relief in sections 397-98 applications and also decisions laying down the principles under-lying the said conclusion and for granting relief in appropriate cases have been cited but, in my view, every cases has to be decided on the particular facts and material evidence before the Court and on correct appreciation of the same in the peculiar circumstances of each case. I must observe that this is a very interesting case which discloses how official position can be utilized for personal benefit of the officers simply setting up a company through his friend and associate and carrying on the business in controlled essential commodities which in substance becomes a monopoly concern. This is not a case of mere suspicion or surmise but inevitable conclusion exercising commonsense, experience taking into notice ordinary human conduct under similar circumstances only. The report of the inspector of the company law board which has been disclosed in this proceeding pursuant to leave given by me being supplementary affidavit of Prosanta Kumar Mallik affirmed on the 3rd of July, 1975, is very significant and tell-tale and in my view, prima facie, establishes the case of the petitioner in respect of the main charges in the petition. The said report is dated the 3rd of March, 1973, and annexed to the said supplementary affidavit. It appears to be an inspection report under section 209 (4) of the companies act, 1956, in respect of the Respondent Company. 5. IT appears from the summary of the report made by S. Bandopadhyay, Deputy Director (Inspection)which was submitted after inspection of the Books of Account and other papers of the Respondents Company which was ordered by the Company Law board in pursuance of a complaint made by the petitioner as one of the shareholders of the company. The said report is under section 209 (4) of the Companies Act, 1956, as hereinbefore stated. Although the actual inspection was done by one S. K. Hazra, assistant Inspecting Officer, but the report was made by the said Deputy director (Inspection. In the said report it is made clear that the company was incorporated with the object of taking over the said partnership firm of Messrs. Brahmaputra Fertilisers and distributors with all its assets and liabilities and to carry on the business of manufacturers and distributors of Fertilisers. The assets and liabilities of the company is set out in Clause (2. 1)of the said report. The background of the company is also set out in paragraphs (2. 2) which is culled out of the correspondence between the petitioner and the Respondent No. 5, P. K. Sen gupta, and the paragraph (2. The assets and liabilities of the company is set out in Clause (2. 1)of the said report. The background of the company is also set out in paragraphs (2. 2) which is culled out of the correspondence between the petitioner and the Respondent No. 5, P. K. Sen gupta, and the paragraph (2. 3) of the said report at page 9 of the annexure to the supplementary affidavit of Prasanta Kumar Mallick, affirmed on the 3rd of July, 1975, is very illuminating and "i am in full agreement with the said report being a correct summary of the correspondence and inevitable conclusion to be arrived at by any person with commonsense. " I like to adopt the said observation in the report as I fully agree with the same. "the idea of converting this partnership business into a private limited company was given by Sri p. K. Sen Gupta. In his letter dated 22. 11. 57 and 21. 12. 57 (annexure-C and D) he made this proposal to Sri S. Sen. His idea was to remain "simply a shareholder" with 25% interest and "not a director for obvious reason. " But he proposed that a few solvent persons should be taken in that company in order to make overdraft arrangements with the bank, with their guarantee. A glance through the copies of the personal letters exchanged between S/sri P. K. Sen Gupta and S. Sen, would show that the company inspected came into being mainly through dogged perseverance and personal drive of Sri Sen Gupta. He has shown is shrewdness not only in organizational matter, but also in matters relating to accounting and taxation. On 13. 9. 58, (annexure E) he wrote as follows: - ". . . . if the work goes on well we will not only make a profit but will establish a good relation with all-is which will be of great help in flute. I do not, however, want to show any profit in order to avoid income-tax. Hence the seasoned Government office Mr. Sen Gupta has shown his capability and competence in the field of running a business organization successfully with aptitude for evasion and avoidance of tax incidence. I do not, however, want to show any profit in order to avoid income-tax. Hence the seasoned Government office Mr. Sen Gupta has shown his capability and competence in the field of running a business organization successfully with aptitude for evasion and avoidance of tax incidence. " Thereafter, the involvement of P. K. Sen Gupta to whom 500 shares were allotted and the share-holding at the incorporation of the company by the signatories to the Memorandum of Association of the company is set out in paragraph (2. 4) of the said report which I am also setting out here-under: -"any-way, the company came into existence on 19. 2. 59 with the following signatories in the Memorandum of Association : shares-taken : 1. Sri S. Sen 500 2. Sri A. Sen Gupta 300 3. Sri P. K. Sen Gupta 500 4. Sri K. C. Saha 300 5. Sri P. K. Ghosh (now Minister for local Bodies, Govt. of West Bengal 300 6. Sri A. G. Bagchi 100 2,000 Thereafter, the involvement of Mr. P. K. Sen Gupta in the company by way of bank guarantee against his fixed deposit of Rs. 50,000/- for the overdraft account of the company and acquisition, of further shares by P. K. Sen gupta and others have been set out in the said paragraph (2. 4) at Pages 10 and 11 of the said supplementary affidavit when a further 3,600 fully paid shares were issued by the company in a board Meeting held on 29th of August, 1962, and the position as on the date of the report is set out at page 11 of the said report. It is observed in the said report and in respect of the transfer of the share-holding of the company belonging to the Respondent no. 6, Subbrangsu Sen Gupta, to P. K. Sen Gupta, being 300 shares which was alleged to have been approved in the board Meeting held on the 23rd of february, 1960, does not appear to be in compliance with article 11 of the articles of Association of the company. There is further observation in the re port that whether there was violation of section 113 (1) of the Companies Act 1956, relating to shares certificate by the company is a doubtful matter. Regarding the management of the company by the Board of Directors in paragraph (3. There is further observation in the re port that whether there was violation of section 113 (1) of the Companies Act 1956, relating to shares certificate by the company is a doubtful matter. Regarding the management of the company by the Board of Directors in paragraph (3. 1) of the said report at pages 12 and 13 of the said supplementary affidavit filed by P. K. Sen Gupta is set out hereunder which are relevant for the purpose of this application. "the real man, who looks after the entire affairs of the company is sri A. G. Bagchi who holds the position of Director-cum-Secretary. As already indicated in para 2. 2 of this report, he was brought in by sri P. K. Sen Gupta the principal share-holder of the company inspected because being a government officer he could not directly take part in the management. At present, therefore, the company seems to be a one man show and that of sri P. K. Sen Gupta. In that context it is hardly surprising that the affairs of the company would be it will not be out of place to mentions here that the special resolution passed on 12. 10. 59, as mentioned above, was not also oriented to sub-serve his personal interest. " It is further noted in the said report at page 14 that there was contravention of section 314 (1) and section 192 (4a) of the Companies Act, 1956, and the relevant portions are quoted hereunder : -"in the extra-ordinary general meeting held on 12-10-59 special resolutions were passed authorizing payment of an allowance of Rs. 200/- per month to Sri S. Sen, Director and a salary of Rs. 750/- plus conveyance allowance of Rs. 100/-per month to Sri A. G. Bagchi, director-cum-Secretary. From the year 1966-67 however the remuneration of Sri Bagchi was increased but this was not authorised by another special resolution as required by sec. 314 (1) of the Act. The date of next A. G. M. after holding the office of profit at a higher remuneration, was 30. 9. 66. Sri A. G. Bagchi will, therefore, be deemed to have vacated his office from 1. 10,66. Sums drawn by him from the year 1968-67 to 1970-71 are mentioned below by way of information : Year Salary & Allowance Bonus Commission on sales. Total 1966-67 Rs. 11,450 1,500 1,906-11 14,856-11 1967-68 13,500 1. 9. 66. Sri A. G. Bagchi will, therefore, be deemed to have vacated his office from 1. 10,66. Sums drawn by him from the year 1968-67 to 1970-71 are mentioned below by way of information : Year Salary & Allowance Bonus Commission on sales. Total 1966-67 Rs. 11,450 1,500 1,906-11 14,856-11 1967-68 13,500 1. 600 2,915-40 18,215-40 1968-69 12,000 2. 250 - 14,250-00 1969-70 12,000 1. 400 - 13,400-00 1970-71 12,000 900 - 12,900-00 filed in the office of the R. O. C., West bengal, as required by sec. 192 (4) (a) of the Act. There is therefore, another contravention on this account also. " it is also observed in the said report that there was also violation of section 303 (2) and 314 (2) of the Companies Act, 1956, by payment of fixed remuneration to the Respondent Nos. 2 and 4 at the rate of Rs. 100 per month from and consequent vacation of their offices as Directors of the company from 27. 9. 68 and 23. 10. 71. Regarding the financial arrangement and commission paid to share-holders and others at page 17 of the said report, there is an interesting observation after setting out the capitals structure and arrangement in paragraph (4. 2) of the said report which is set out hereunder : "it is interesting to note that considerable benefits by way of commission/interest was passed on to Sri P. K. Sengupta and Smt. Roma Maitra though for identical service no such benefits were given to the other guarantors. This once again goes to indicate that the policy of the company is oriented to sub-serve the interests of Sri sen Gupta and A. G. Bagchi. This has kept the company in a state of perpetual sickness from the financial point of view and has prevented it from attaining solvency. The possible reasons for such a policy is that the management does not want to show profits, in the books of the company in order to avoid incidence of tax (vide annexure-F) again. But there is no doubt that this had a beneficial effect on the company as an entity". It is further observed in paragraph (5. 4) of the said report at page 18 of the said supplementary affidavit that the company was not maintaining any register of Directors, Share-holders as required under section 307 of the Companies Act, 1956. But there is no doubt that this had a beneficial effect on the company as an entity". It is further observed in paragraph (5. 4) of the said report at page 18 of the said supplementary affidavit that the company was not maintaining any register of Directors, Share-holders as required under section 307 of the Companies Act, 1956. The report states that the Respondent No. 2 must be deemed to have vacated his office of director of the Respondent Company under Section 299 (3) (b) of the Companies Act, 1956, by operation of section 299 read with section 283 (1) (I) of the Companies Act, 1956. The same is set out in paragraph (6. 1) of the said report. It is further stated in the report that there was diversion of fund of the company by payment to Bijoy iron Private Limited by way of rent for office accommodation of the company and also payment of bill for telephone in the name of other company and paid by the company. Then working of the company is summarised in paragraph (6. 4) of the said report at page 20 of the said supplementary affidavit which is set out hereunder: -"in most of the year, business of the company did result in losses the main reason of which is payment of heavy interest and commission the latter being paid mostly to persons having close connection with Sri P. K. Sen Gupta, and Sri a. G. Bagchi. From the current year the management is reported to be trying for expansion of its business by. taking dealership of implements and also agricultural insecticides. If the company is successful in getting these new lines of business it may proper but the main problem is the question of finance. The management seems to have no concrete idea for increasing the capital base of the company. And then at page 26 of the said supplementary affidavit at paragraph (9. 1) relevant portion of conclusion is set out hereunder; "it appears that the complaint from Sri S. Sen one of the Share holders, prompted the order of inspection of the books of accounts and other papers of the company. And then at page 26 of the said supplementary affidavit at paragraph (9. 1) relevant portion of conclusion is set out hereunder; "it appears that the complaint from Sri S. Sen one of the Share holders, prompted the order of inspection of the books of accounts and other papers of the company. The most important findings of this inspection is that Sri P. K. Sen Gupta, a high officer of the Government of west Bengal, came to control a overwhelming majority of the issued shares of the company inspected to the detriment of the other share-holders, including the complainant in a manner not very commendable perpetrated by him primarily against the complainant who along with his brother was the real owner of this business before its take over by the company inspected". Relying on those observation in the said inspection report and also on the correspondence leading to the formation of the company, the petitioner after having failed to get any redress from the Company Law Board and the registrar of Companies, West Bengali, institute this proceeding on the 8th of april, 1974, and thereafter, the matter was come up for hearing after completion of the affidavits and supplementary affidavit as directed by this Court. Mr. S. B. Mukherjee, appearing with Mr. S. N. Chowdhury, for the petitioner after placing before me the correspondence between the petitioner and the Respondent No. 5, P. K. Sen gupta, and also the other annexure to the petition submitted that from the background and the relationship between the petitioner and the said P. K. Sen gupta, it is quite clear that it is the idea of the said P. K. Sen Gupta, the Respondent No. 5 to convert the said partnership firm of the petitioner and his brother into a private limited company and carry on the business of the company at Calcutta by utilizing the official petition of the Respondent No. 5 in getting quota, licenses, permits for fertilisers and securing orders for Tea companies in the Eastern India. Mr. Mukherjee submitted that although the said P. K. Sen Gupta originally appeared to be only a share-holder to the extent of Rs. Mr. Mukherjee submitted that although the said P. K. Sen Gupta originally appeared to be only a share-holder to the extent of Rs. 500 ordinary shares in the company but he gradually garbed the entire company by clandestine means by getting the said further 3,600 allotted to him in alleged adjustment of his claim against the company on account of financing commission and also purchasing the said 300 shares of the respondent No. 6, the younger brother of the petitioner by irregular and illegal manner. Mr. Mukherjee, solely relied on the correspondence annexed to the petition and the inspection report of the company law board and the observation and conclusion made thereunder, after referring to the charges made against the respondents regarding mismanagement, misappropriation and oppression which I have summarised before. Mr. Mukherjee submitted that the allotment of the said 3,600 shares in favour of the Respondent No. 5 should be struck down as that is illegal and void. Further the said purchase of 300 shares by the Respondent No. 5 should also be declared invalid in view of violation of the provisions of Article of the company. He further submitted that there was no valid board and the company due to the violation of section 314 (a) of the Companies Act, 1956, read with section 283 of the Companies Act, 1956, as would appear from the said inspection report. He further submitted that no notice of the meetings of the board of Directors and share-holders were addressed to the petitioner. He also submitted that the. petitioner admittedly did not and could not attend three consecutive meetings of the Board of directors of the Respondent Company and as such by the operation of section 282 (e)of the Companies Act, he ceased to be a director and therefore, the said letter of resignation with the petitioner has no effect as the same one issued by him after he ceased to be a Director of company by operation of law and therefore, there is no question of resigning from the directorship of the company when he was in law not a Director at all and ceased to be a Director. Mr. Mukherjee referred to the principles governing the grant of relief under section 397-98 etc. Mr. Mukherjee referred to the principles governing the grant of relief under section 397-98 etc. of the Companies Act, and relied on the well-known decision in (1) Re : H. R. Harmar 1958 (3) A. E. R. 689, (2)Fbrahimi v. West Bourne Galleries and ors. 1972 (2) A. E. R. 492 (500) in those two decisions, it is inter alia laid down, that in dealing with a case, the Court should look at the business realities of a position and should not be confined itself to a narrow legalistic view and the just and equitable grounds that winding up court is to apply the equitable principles to enable it to give relief in respect of exercise of legal rights to equitable considerations ; considerations, i. e. of a personal character arising between the one individual and another, which may make it unjust or inequitable, to insist on legal rights or to exercise them in a particular way. The application of the just and equitable clause in cases of expulsion, "the question is, as always, whether it is equitable to allow one (or two) to make use of his legal rights to the prejudice of his associate (s)". Relying on those principles laid down in the said two decisions Mr. Mukherjee submitted that the fact of this case which are more or less undisputed having regard to the background in which the company has come into existence and the manner and mode of its business being conducted, the irresistible conclusion and the finding should be that the Respondent No. 5 is the de-facto director and the person vitally interested in the co's business having regard to his overwhelming majority share-holding and also having regard to the official position of the Respondent No. 5 which was utilized in the carrying out of its business of the company. It is quite clear from the said investigation report that the whole purpose of the company was not to show profit but to utilize its income for the personal benefit of the respondents particularly the Respondent No. 5 by way of financing commission and payment of remuneration to the other Respondents and not keeping the books of Accounts showing the real business of the company. Mr. Mukherjee also referred to the decision in (3) Mohta bros. (F) Ltd. and Ors. v. Calcutta Landing and Shipping Co. Ltd. and Ors. Mr. Mukherjee also referred to the decision in (3) Mohta bros. (F) Ltd. and Ors. v. Calcutta Landing and Shipping Co. Ltd. and Ors. 73 c. W. N. 425 at 432 paragraph 13, 2nd column that the Court may direct investigation into the affairs of the company if the Court is satisfied that the materials before it as to the manner and mode of conduct of the company which gives rise to legitimate suspicion as to the bonafide and apparent mode of business as appeared to have been carried on by the company not being the real business. Thereafter, Mr. Mukherjee relying on the provisions of section 35 of the evidence Act and a decision in (4) S. Ramakrishna Pillai v. Tirunarayana pillai and Others A. I. R. 1932 Madras 198 submitted that the said inspection report is admissible in evidence and is, prirma facie, proof of the facts which are alleged by the petitioner as grounds of this application. The said report is made by a Public Officer in the usual course of its Official Duties and as such, unless otherwise proof, there is a presumption as to the correctness of the facts stated in the said report. Mr. Mukherjee also fair enough to refer to an English decision in (5) A. B. C. Coupler and engineering Co. Limited. (2) 1962 (3) A. E. R. 68 where it was observed that the inspectors report which was annexed to the board of Trades application for winding up of a company on just and equitable ground was held to be hearsay evidence and was not sufficient proof where charges of fraud or grave misconduct were made and the said petition was dismissed. But the said decision was not followed in a subsequent English decision in (6) Re : Travel and Holiday clubs Ltd. 1967 (2) A. E. R. 606 in which it was held that the Court was entitled to look at the inspector's report and being satisfied from the report, in the absence of any evidence to the contrary adduced by the company, that on the basis of the findings in the report, the company was insolvent and that it was just and equitable for it to be wound up, the Court would make the winding up order. That case was an application of the Board of Trade on just and equitable ground and the Inspector's report was relied on as evidence thereof. Relying on the said decisions and principles, Mr. Mukherjee submitted that the Inspector's report should be held to be admissible in evidence and to have established the allegations of the petitioner of the various charges of illegality and mis-management of the company and the respondents have failed to contradict the said findings in the Inspection report either on fact or law and therefore, it must be held that the said charges of the petitioner as made in the petition have been substantiated and established to enable the court to grant appropriate relief in the present application. Mr. Mukherjee also relied no a Supreme Court decision in (7) Puromeswari Prasad Gupta v. Union of India A. I. R. 1973 S. C. 2389 at 2390 paragraph 10 where it has been held that, any resolution passed in a Board of director's meeting terminating the service of a General Manager of the company was held to be invalid as no notice of the said meeting in which the impugned resolution was passed was given to all the Directors of the company. It was held that in order to pass a valid resolution in a Board of Director's meeting, notice to all the directors was essential for the validity of any resolution to be passed in a meeting. Therefore, Mr. Mukherjee, submitted that admittedly no notice of any meeting of the Board of Directors were given to the petitioner who was admittedly a Director of the company since its inception and therefore, the various resolutions passed in the board meetings were invalid and void and of effect. Mr. Mukherjee, dealing with the contentions of the respondent as to the scope of the application and the Court's power to grant relief referred to section 406 and schedule 11 Sections 542,543 of the companies Act, 1956, and also to a guzarat High Court decision in (8)Kolaba Land Mills Co. Ltd. v. V. J)Pilany and Ors. Mr. Mukherjee, dealing with the contentions of the respondent as to the scope of the application and the Court's power to grant relief referred to section 406 and schedule 11 Sections 542,543 of the companies Act, 1956, and also to a guzarat High Court decision in (8)Kolaba Land Mills Co. Ltd. v. V. J)Pilany and Ors. (1971) 41 Company cases 1078 and submitted that the court has ample power to grant relief in the facts and circumstances of this case which is clearly established particularly by the inspection report under section 209 of the Companies Act, 1956, which is before the Court and produced by the Company Law Board being annexure to the Supplementary affidavit of Prasanta Mukherjee affirmed on the 3rd of July, 1975. Mr. Mnkherjee thereafter, submitted that there is no question of the present application being barred by limitation as the bar of limitation has no application to the Companies Act. He referred to prayer "f" of the petition and also to the decisions in (9) Techno Metal india (P) Ltd. v. Prem Nath Anand 77 c. W. N. 957 and (10) Shaligram Jhajharia v. National Company Limited and ors. 1965 (1) C. L. J. 112 and submitted that delay in making this application assuming there is any cannot be a bar when illegality is the question for consideration of the Court and brought to its notice for appropriate relief. He further rightly submitted that in the supreme Court decision in (11) Shanti prasad Jain v. Kalinfa Tube Ltd. A. I. R. 1975 S. C. 1535 the scope of section 406 of the Companies Act, 1956, was, not considered and the same was before the 1963 amen dent of the companies Act, 1956. Mr. Mukherjee also referred to the principles in the house of Lords decision in (12) Scottish co-operative Whole Sale Associate Ltd. v. Meyer and Another 1958 (3) A. E. R. 66 and also the Division Bench decision of this Court in (13) Ramasankar Prasad and Ors. v. Sindhri Iron and Foundry Ltd. and Ors. A. I. R. 1966 Calcutta 512 pages 531, 532 paragraphs 65 and 66. Mr. v. Sindhri Iron and Foundry Ltd. and Ors. A. I. R. 1966 Calcutta 512 pages 531, 532 paragraphs 65 and 66. Mr. Mukherjee also rightly submitted that considering the decisions and also the principles applicable in a particular case the Court has always the jurisdiction to consider the subsequent events which has happened since the date of the institution of the proceeding before the court and upto the date of the trial. He submitted that the Respondent No. 5 has been charged with various illegal and criminal acts in respect of the wheat bran case is such a notorious fact, that the Court is bound to take judicial notice of the same, and, therefore, Mr. Mukherjee submitted that having regard to the facts of this particularly the manner and conduct in which the Respondent No. 5 and his stooges being the respondent Nos. 2, 3 and 4 have acted in the management and control of the company's affairs, if leaves no doubt in the minds of any reasonable person that the Respondent No. 5 is the defacto, Director who has utilized the company for his personal benefit by abusing or mis-using his official position and thereby deprived the company and the share-holder of the real profit of the company. He further rightly submitted that carrying on business of the company in the manner as disclosed by the facts which cannot be disputed in any way particularly from the inspection report made under section 209 of the Companies Act is certainly against public interest and unless relief is granted in this application, the whole object and purpose of the companies act under section 397-98 of the Companies act, 1956, would be frustrated and set at naught. Mr. Mukherjee, therefore, submitted that relief should be granted as asked for. 6. MR. Bikash Sen, appearing with mr. P. N. Chatterjee, for the Respondent Nos. 1, 2, 3, 4, submitted that the petitioner for all practical purposes knew that he was a Director of the company. Mr. Sen referred to section 290 of the Companies Act, 1956, and submitted that the present application is not a bonafide one as the petitioning creditor made no complain about the working of the company for about 12 years. 1, 2, 3, 4, submitted that the petitioner for all practical purposes knew that he was a Director of the company. Mr. Sen referred to section 290 of the Companies Act, 1956, and submitted that the present application is not a bonafide one as the petitioning creditor made no complain about the working of the company for about 12 years. The said allotment of said 3,600 shares in favour of Respondent No. 5 was made in 1962, when the claimed the said respondent No. 5 against the company was going to be barred. In any event, the petitioner had knowledge of the alleged acts of mis-management and other wrongful acts complained off by him as far back on the 16th of November, 1970. Mr. Sen referred to page 150 of the petition where in paragraph 20 of the letter of the petitioner dated the 19th of April, 1971, addressed to the Respondent No. 5 drawing his attention to various irregularities and complaining about the mismanagement and conduct of the affairs of the company inter alia alleged that he has obtained a balance-sheet of the company for the year ending 31st of march, 1970, on the 16th of November, 1970, from which he came to know about the allotment of the said 3,600 shares to the Respondent No. 5. Thereafter Mr. Sen have drawn my attention to various paragraphs of the petition and the annexure thereof and submitted that the real reason behind the taking over of the said firm of Brahmaputra Fertilisers and Distributors and converting the same into a limited company was the fight between the two brothers that is the petitioner and the respondent No. 6. He further submitted that there is not a scrap of paper to show that the Respondent No. 5 was a director of the company or a de-facto director of the company. Mr. Sen submitted that it is the duty of the director to look after the affairs of the company and the petitioning creditor admittedly a Director of the company until he resigns had no excuse for not knowing the affairs of the company or looking after his management. Mr. Sen referred to the resignation letter of the petitioning creditor. Further mr. Sen submitted that it is the duty of the director to look after the affairs of the company and the petitioning creditor admittedly a Director of the company until he resigns had no excuse for not knowing the affairs of the company or looking after his management. Mr. Sen referred to the resignation letter of the petitioning creditor. Further mr. Sen after drawing my attention to various letters and the affidavit-in-opposition of Bagchi that the respondent No. 3, submitted that the petitioning creditor knew about the affairs of the company and in fact, he also received commission in respect of transaction made by the company. Mr. Sen submitted that the application is barred by delay and latches. Mr. Sen referring to the inspection report, submitted that there were various irregularities as pointed out in the said report and all such irregularities were ratified before the present application was moved. Mr. Sen submitted that no ground has been made out in the petition, Mr. Sen further submitted that the petitioning creditor was never prevented or oppressed as a share-holder or a Director of the company. Mr. Sen submitted that a decision in 20, 1972 (2) A. E. R. 500 cited by Mr. Mukherjee, for the petitioning creditor, was a case of expulsion and not; case of resignation of a Director. As such, it has no application to the present case. Mr. Sen referred to the supreme Court decision in Santi prasad Jain's case A. I. R. 1965, S. C. 1535 paragraphs 13 to 19 and paragraph 32 where the principle regarding the power of Court to grant relief under Sections 397-98 and the essential conditions for the same has been laid down. Mr. Mr. Sen referred to the supreme Court decision in Santi prasad Jain's case A. I. R. 1965, S. C. 1535 paragraphs 13 to 19 and paragraph 32 where the principle regarding the power of Court to grant relief under Sections 397-98 and the essential conditions for the same has been laid down. Mr. Sen also referred to Buckley Company Law 13th Edition Page 1871, 2nd paragraph 43 Company Cases 382 and submitted that the petitioning creditor having knowledge of the affairs of the company and in fact, he also furnished security for loan advanced by the bank to the company and the petitioning creditor also signed vouchers at the registered office of the company up to 23rd of august, 1969, as would appear from the affidavit of Arun Gopal Bagchi, and having not made any complain till 19th of April, 1971, it must be presumed that the petitioner was well aware about the management of the company and took part therein and there was no illegality, mis-management or oppression as now sought to be alleged by the petitioner in this application. Mr. Sen submitted that section 314 of the Companies Act, 1956, has no application in respect of increase of the remuneration of Directors and also it does not apply to managing Director. In any event, Mr. Sen submitted that in 1973, all irregularities or wrong, if any, was set right. He further submitted that the petitioning creditor had knowledge of the working of he company at all materials and if there is any irregularity, he must be deemed to be a party to that. He submitted that there is no illegality but at best it could be said to be some irregularity in the management of the company. Mr. Sen after drawing my attention to affidavit-in-opposition filed by the Respondent No. 3, Arun Gopal bagchi, and submitted that the Respondents are majority share-holders and all the acts complained of have been ratified and there is no apprehension of any management and therefore, no relief can be granted in this application. He further submitted that the Inspector's report made under Section 209 (4)of the Companies Act, 1956, cannot be relied on. He further submitted that the Inspector's report made under Section 209 (4)of the Companies Act, 1956, cannot be relied on. He also referred to sections 235, 237, of the Companies Act, 1956, and submitted that inspection and enquiry as envisaged under the said sections have already been done under section 209 (4) of the Companies Act, 1956, and therefore, no further relief can be granted by allowing inspection and enquiry into the affairs of the company as prayed for. Mr. Sen submitted that the purchase of 300 shares by P. K. Sen Gupta, Respondent No. 5, from respondent No. 6, the brother of the petitioning creditor, was made after offer was made to all the share-holders of the company according to the articles of the company for purchasing those shares and as no else purchased the same, it was duly purchased by the respondent No. 5. He submitted that there is no real or genuine ground or grievance of the petitioning creditor. Mr. Sen after placing a chart summarizing the charges against the respondents and answers thereto, submitted that the allegations of the petitioning creditor are incorrect and false as would appear from the petition and there is suppression of material facts and on this ground the petition should be rejected. He also submitted that inconsistent cases have been made out by the petitioning creditor in respect of his Directorship, that is, he ceased to be a Director under section 283 (e) of the Companies Act, 1956, and also he resigned from the Directorship of the company. He referred to paragraphs 23 and 29 of the petition and page 141 paragraph 30 thereof. He referred to russian Princess Case regarding suppression of material facts which renders the application liable to be dismissed. Thereafter, Mr. Sen Summarized his submissions and contended that co-operation was always extended to the petitioner and the petitioner had knowledge all through of the affairs of the company and as such, the application is barred by delay. He submitted that the real motive of making this application is to get the said 3,600 shares and 300 shares cancelled and refund of the money under section 314 of the companies Act. He cited the decision in (3) Mohta Bros. Pvt. Ltd. and Ors. vs. Calcutta Landing and Shipping Co. and Ors. He submitted that the real motive of making this application is to get the said 3,600 shares and 300 shares cancelled and refund of the money under section 314 of the companies Act. He cited the decision in (3) Mohta Bros. Pvt. Ltd. and Ors. vs. Calcutta Landing and Shipping Co. and Ors. 73 C. W. N. 425 at 428, 432 and 433 and also (14) The Ripon Press and Sugar mill Co. Limited Bellary Vs. V. Gopal chetti and Others. A. I. R. 1932 Privy council and submitted that the just and equitable ground is defined as is required for winding up. He also referred to the decision in (15) Stemmed Pvt. Ltd. and Ors. v. Khestra Mohan Saha and Ors. 72 C. W. N. 610 page 615 paragraph 29 as to the principles on which Court grants relief in application under section 397-98 of the Companies Act, 1956. He submitted that there must be continuous mis-management and mis-appropriation which is not the case here. Relying on those principles and contentions, Mr. Sen submitted that the present application should be dismissed. Mr. Ajit Sen Gupta, appearing for the Respondent no. 5 P. K. Sen Gupta, admitted that there were correspondence which are annexed to the petition and submitted that those are letter were prior to the incorporation of the company and cannot in any way, prove the fact that the Respondent No. 5, is a de-facto director of the company and took part in the management of the affairs of the company in any way. Mr. Sen Gupta, after referring to pages 83, 87, 99, 104, 108, 116, 118 121 130 133 134 and various other pages submitted that none of the said letter relate to the period after the incorporation of the company. Mr. Sen Gupta submitted that if the said Respondent No. 5 had any intention to control the affairs of the company from behind, he would not have purchased the shares in his own name, but in the name of some nominee or Benamdar. He submitted that the said Respondent No. 5 merely rendered friendly services, having regard to the cordial relationship and mutual confidence and faith in each other between the petitioner and the said Respondent. Mr. Sen Gupta submitted that the present action is merely blackmailing one and there is no merit or substance in the same. He submitted that the said Respondent No. 5 merely rendered friendly services, having regard to the cordial relationship and mutual confidence and faith in each other between the petitioner and the said Respondent. Mr. Sen Gupta submitted that the present action is merely blackmailing one and there is no merit or substance in the same. The Respondent No. 5 in good faith and with his own money purchased the shares of the said company with a view to invest the same and also rendered financial assistance to the company by furnishing security to the banker of the company against the loan granted to the company for the purpose of its business. The said 3,600 shares were allotted to Respondent No. 5 for valuable consideration by the company and the said 300 shares belonging to the Respondent No, 6 were duly purchased by the Respondent No. 6 after the same were offered to other share-holders in terms of the relevant clause of the Articles of Association of the company. Mr. Sen Gupta, submitted that there is no ground whatsoever made out in this application and instead of repeating, he adopted the contentions of Mr. Bikash Sen, appearing for the Respondent Nos. 1 to 4. 7. MR. Bharati Shet, appearing for the Central Government, submitted drawing my attention to sections 209, 234 and 614 of the Companies Act, 1956, that the said inspection report is an official act in the usual course of official duties of the Officer concern and as such, it is admissible in evidence and all the facts stated therein should be deemed to be correct. He submitted that Court can rely on the said report in order to determine the present case. Considering the matter very carefully I am of the view that from the facts and circumstances of the case, it is quite clear that the Respondent No. 5 is the de-facto Director of the company and the person in virtual control of the management and affairs of the company at the relevant date. It is true that after the company came into existence there is nothing in writing to show that the Respondent No. 5 P. K. Sengupta, acted as a Director of the company or anything to do with the management and control of the affairs of the company. It is true that after the company came into existence there is nothing in writing to show that the Respondent No. 5 P. K. Sengupta, acted as a Director of the company or anything to do with the management and control of the affairs of the company. But if the background in which the company has come into existence and the official position, shareholding and the financial interest of the Respondent No. 5 in the company, are carefully weighed, assessed and examined, it will reveal and unveil the real person behind the whole show that is the Respondent No. 5. It is not always necessary that a direct evidence must be produced or proved but there are cases where it is not possible when the circumstantial evidence gives out the clue to a problem when it is looked at from a practical point of view and exercising the common-sense and experience of an ordinary prudent person. 8. IN this case the relationship, mutual faith and confidence between the petitioning creditor, his younger brother, the respondent No. 6, on the one hand and the Respondent No. 5 on the other as disclosed in the correspondence annexed to the petition makes it abundantly clear that originally the petitioner and his younger brother, the respondent No. 6, carried on the partnership business in the firm name of brahmaputra Fertilisers and Distributors company and for expansion of the business and carry on the same from calcutta with the assistance of the respondent No. 5 by utilizing his official position which can provide the motive force for carrying on the business of the company. It was the Respondent No. 5 who conceived proposed and executed the said scheme of converting the partnership firm into a private limited company. Thereafter, when the company came into existence on the 19th of February, 1959, the petitioner and the Respondent No. 5, P. K. Sengupta, were allotted 500 ordinary shares each in the company out of the total 2000 shares originally allotted to its six shareholders being the largest number of shares. Thereafter, the Respondent no. 5 acquired a further block of shares of 3,600 in purported adjustment of his financial commission due and payable by the Respondent Company and also purchased the 300 shares belonging to the Respondent No. 6. Thereafter, the Respondent no. 5 acquired a further block of shares of 3,600 in purported adjustment of his financial commission due and payable by the Respondent Company and also purchased the 300 shares belonging to the Respondent No. 6. Therefore, at the date of the present application, the respondent No. 5 undisputedly holds the largest block of shares in the Respondent Company being 4,400 shares and as such, it cannot be denied that he is the most vitally interested person in the management of the affairs of the company. Regarding the contentions of the petitioner that he was completely unaware of the affairs of the company till he obtained the balance-sheet of the company for the year upto 1970. On the 16th of November, 1970 only, cannot be accepted. It is highly improbable having regard to the requisitions made by the petitioner from time to time for payment of commission in respect of the transaction of the company as disclosed in the affidavit-in-opposition of Arun gopal Bagchi that the petitioner was not in a position to know about the affairs of the company. But in my view, whatever the motive or the reasons of the petitioner with which he has come out with this application is not so much material unless the factual basis of the application is not established and the petitioner is guilty of suppression of material facts which are necessary to empower the Court to grant relief under sections 397-98 of the Companies Act, 1956. In this case I do not thing that any grounds have been made out or there is sufficient material before me to hold that there is any oppression of the petitioning creditor as alleged and as such, no case has been made out to bring it strictly under the provisions of section 397 of the Companies Act, so that the Court can grant any relief to the petitioner. But, in my view from the facts proved or which can hardly be disputed, the petitioner has sufficiently made out a case for intervention of the court in this matter as it comes within the provisions of section 397-93 of the companies Act, 1956, as the affairs of the company are being conducted in a manner prejudicial to the public interest and the Court with a view to bringing to an end and preventing the matter complained of grant suitable relief in this application under section 397-98 read with section 402 of the companies Act, 1956. I may here summarily dispose off the charges regarding illegal and malafide allotment of 3,600 shares of respondent No. 5 and purchase of 300 shares belonging to the Respondent no. 6 by the Respondent No. 5 on the ground, firstly, that the said allotment of 3,600 shares have been made in 1962 that is on the 28th of August, 1962, and as such, it cannot be said to be a matter which can be agitated after such a long time. Secondly, it cannot be said that the petitioner had no knowledge of the same as it is very unlikely that the petitioner who himself also guaranteed the loan taken by the company from its banker and had no knowledge of the terms on which the Respondent No. 5 also guaranteed the banker's loan to the respondent company. Thirdly, the said allotment prima facie, cannot be said to be against the interest of the company and lastly, it must be deemed that the company and its Directors and shareholders including the petitioner acquired and agreed to the same and the said allotment cannot be set aside or challenged at this stage after such a long time when all parties have acted on it for more than 12 years. Regarding the 200 shares purchased by the Respondent No. 5 which originally belongs to the Respondent No. 6, the younger brother of the petitioning creditor, that is, also in my view, cannot be said to be without the knowledge of the petitioning creditor when it appears from the correspondence and record produced before me in this case. Regarding the 200 shares purchased by the Respondent No. 5 which originally belongs to the Respondent No. 6, the younger brother of the petitioning creditor, that is, also in my view, cannot be said to be without the knowledge of the petitioning creditor when it appears from the correspondence and record produced before me in this case. Admittedly it appears that the Respondent No. 6 was not at all interested in the company and as such, the disposal of its shares in this background and circumstances seems to be very likely and the petitioner must have been aware of the same. It is true that the petitioner has disputed the Board Meeting of the company alleged to have been held on the 23rd of February, 1960, and 8th of march, 1960 approving the said transfer of 300 shares belonging to the respondent No. 6 to the Respondent No. 5 out that cannot establish that the provisions of the Article regarding the sale of the share of company by a shareholder has been violated. It is also highly improbable that the petitioning creditor has not been given any notice of the Board Meeting or had no information about the affairs of the company during the period he was a Director of the company. It is the petitioner Who himself alleges that he was not in a position to look after the affairs of the company and discharge his duties as a director due to the illness of his wife and family trouble and other personal affairs, makes it quite clear that there was no deliberate act on the part of the respondent to keep the petitioner in tike dark regarding the affairs of the company. 9. REGARDING the prima facie violation of various provisions of the companies Act, and the Respondent No. 5 being the de-facto Director of the Company, in my view the petitioner has established the charges and the report under section 209 of the Companies Act, copy of which was filed along with the supplementary affidavit of Prasanta kumar Mallick affirmed on the 3rd of july. 1975, on behalf of the Central government, i. e., in my view, are statements in public document made by public officers discharging their functions in due course of their official duty and as such, not only admissible in evidence but the truth of the contents are also established as would appear from the said report. In this connection, I may refer to a recent decision of the Court of Appeal in England in (16) R. v. Halpin 1975 (2)A. E. R. 1124 where the question of proving that an accused had been a Director of the company at all material times in a prosecution case charging fraud and conspiracy, arose, the admissibility of returns filed by the company and the register kept under the English Companies Act, 1948, of those returns as public document and the necessary conditions to make those documents as admissible as evidence of the truth of their contents was affirmed. It was held that those public documents are admissible in evidence although the probity value of the same may be a question for consideration of the Court having regard to the proximity of time of such return and the date of offence. Gooffery lene LJ, after dealing with various authorities regarding the admissibility in evidence of public document particularly register kept by persons in official position observed at page 1128 as follows : - "there is no doubt that in a case such as the present the official in the companies register has no personal knowledge of the matters which he is putting on the file or recording. There is equally no doubt that it would be most convenient if the identity of directors and so on could be established simply by production of the file from the companies register containing the return made by the company. We do not, however, feel that convenience on its own is an adequate substitute for precedent, tempting though such a solution might be. We do not, however, feel that convenience on its own is an adequate substitute for precedent, tempting though such a solution might be. The common law as expressed in the earlier case which have been cited were plainly designed to apply to an uncomplicated community where those charged with keeping registers would, more often than not, be personally acquainted with the people whose affairs they were recording and the vicar, as already indicated, would probably himself have officiated at the baptism, marriage or burial which he later recorded in the presence of the church wardens on the register before putting it back in the coffers. But the common law should have with the times and should recognize the fact that the official charged with recording matters of public import can no longer in this highly complicated world, as like as not. have personal knowledge of their accuracy. What has happened now is that the function originally performed by one man has had to be shared between two: the first having the knowledge and the statutory duty to record that knowledge and forward it to the register, the second having the duty to preserve that document and to show it to members of the public under proper conditions as required. Where a duty is cast on a limited company by statute to make accurate returns of company matters to the registrar, so that those returns can be filed and inspected by members of the public, the necessary conditions, in the judgment of this court, have been fulfilled for that document to be admissible. All statements on the return are admissible as prima facie proof of the truth of their contents. " 10. IN my view, the above principle regarding the admissibility of the document (in this case the inspection report) as prima facie proof of the truth of their contents is equally applicable as under section 209 of the companies Act, 1956, it is enjoined on every company to keep various books at its registered office and branch office in the manner specified therein and such books of accounts and other books and papers shall be opened to inspection inter alia by the officer of government authorized by the Central Government in its behalf. Therefore, the inspection report in this case which is made by an officer authorized by the Central Government under the Companies Act under section 209 (4) (b) (ii) is admissible. Section 35 of the evidence Act, also makes such inspection report which is produced in this case, relevant as there is a statutory duty on the part of the company to maintain the books and corresponding duty on the part of the officer of the Central government to make and report after inspection of such books. The decision in (4) Ramkrishna v. Tirunarayana a. I. R. 1932 Madras 198 cited by Mr. Mukherjee, on behalf of the petitioning creditor, is an authority on the question where it has been held that a report submitted by Collector to the Board of revenue on the question whether an estate should be taken over by the Court of Wards under the Court of Wards Act, and Rules made there under. It was observed by Curgenven J. at page 207 of a. I. R, 1972 Madras as follows: - "but where there is a statutory duty laid upon public officer to investigate and report facts, I cannot doubt that a report of the facts elucidated by their investigation is an official record within the meaning of the section. " In a recent Supreme Court decision in (17) Shikar Chand Jain v. Digambar 'prasad Karini Shava and Ors. A. I. R. 1974 s. C. 1178 at page 1180 paragraph 5 where it has been held that entries in a record of right shall be presumed to be correct unless contrary is shown. Therefore, the inspection report in this case according to the provisions of the Companies Act, raises a presumption of correctness of the contents therein and the burden of proof otherwise is on the respondent which, in my view, the Respondent has not been able to discharge. Therefore, the inspection report in this case according to the provisions of the Companies Act, raises a presumption of correctness of the contents therein and the burden of proof otherwise is on the respondent which, in my view, the Respondent has not been able to discharge. Therefore the said inspection report produced by the Central Government in this application which was made "in due course of official duty of the inspector of the statutory records of the company under the Companies Act, it prima facie proof of the facts recorded therein and as such, in my view, the facts appearing from them should receive great weight for the purpose of examining the affairs of the company and to see whether the petitioner's charges are substantiated as far as it appears from the said report. 11. THEREFORE, taking into consideration the background in which the company has come into existence and the mode and manner of the company of. his business, particularly, the acquisition of shares by the Respondent No. 5 and financial assistance given by him. in the company and also taking into. Account his official position which obviously was utilized for the purpose of carrying on the business of the company makes it clear that although the respondent No. 5 is not shown as director on the records of the company but he is the person who is most vitally interested in the affairs of the company and appears to be a de-facto Director of the Respondent Company. In this type of cases, it is difficult to get direct evidence but Court has to rely on circumstantial and indirect evidence for the purpose of weighing and appreciating the materials before it and to come to a finding by examining the facts of this case in its proper perspective, I have no hesitation to come to the conclusion and finding that the Respondent no. 5 is a De-facto Director of the company and there are various breaches of statutory duties committed by the Respondents in course of management of the company as has been recorded in the said inspection report. 5 is a De-facto Director of the company and there are various breaches of statutory duties committed by the Respondents in course of management of the company as has been recorded in the said inspection report. It is true that some of the said breaches being rectified after being called upon by the Company Law board but that cannot take away the jurisdiction of the Court to grant relief under section 397-98 read with section 402 of the Companies Act, 1956, if the circumstances of a case so warrants. Now the question arises as to what is the duty of the Court in a case like this and what is the relief the Court can grant. The principles on which court exercise its discretionary power under section 397-98 read with section 402 of the Companies Act, 1956 is now well established by the Supreme Court decision in (11) Santi Prasad Jain's case in A. I. R. 1965 S. C. 1535 and various decision of this Court and several decisions of the House of Lords in england. 12. IN (11) Santi Prasad Jam's case Supreme Court, after considering the facts of the case and the principles laid down in English decision dealing with section with section 210 of the english Companies Act, 1948 correspondent to section 397-98 of the Indian companies Act, 1956 observed at 1543 of (11) A. I. R. 1965 paragraph 10 as follows : - "these observations from the four cases referred to above apply to Sec. 397 also which is almost in the same words as Sec. 210 of the English Act, and the question in each case is whether the conduct of the affairs of a company by the majority share-holders was oppressive to the minority shareholders and that depends upon the facts proved in a particular case. As has already been indicated, it is not enough to show that there is just and equitable cause for winding up the company, though that must be shown as preliminary to the application of S. 397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this requires that events have to be considered not in isolation but as a part of a consecutive story. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members and this requires that events have to be considered not in isolation but as a part of a consecutive story. There must be continuous acts on the part of the majority shareholders, continuing up to the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority share-holders and the minority share-holders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of the company's affairs, and such oppression must involve at least an element of lack of probity of fair dealing to a member in the matter of his proprietary rights as a shareholder. It is in the light of these principles that we have to consider the facts in this case with reference to S. 397. " Thereafter, Supreme Court examining the facts of that particular case held that there was no oppression of the minority by the majority and there was no lack of probity or fair dealing on the part of the majority to get control of the company in the facts and circumstances of that case nor such conduct could be said to be oppressive to a minority share-holder. Thereafter, again at page 1548 paragraph 32 of a. I. R. 1965 S. C. the ambit and scope of section 398 of the Companies Act, was laid down by the following observation : "we now come to the case under S. 398. It provides that any members of a company who have rights to apply in virtue of S. 399 may complain (i) that the affair of the company are being conducted in a manner prejudicial to the interests of the company, or (ii)that a material change has taken place in the management or control of the company and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to the interest of the company. On such application being made, if the court is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the matter of management or control of a company, it is likely that the affairs of the company will be conducted as aforesaid, the Court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. This section only comes into play as the marginal note shows, when there is actual mismanagement or aspersion of mismanagement of the affairs of the company. It may be contrasted with S. 397 which deals with oppression to the minority share-holders, whether there is prejudice to the company or not. " And applying the principle to the fact of that case Supreme Court held that there is acts complained of were not prejudicial to the interest of the company so as to call for any action under section 398 of the Companies act, 1956. In my view, it is not necessary for me to refer to any other decision as the guiding principle is an application under section 397-98 of the companies Act, 1956, and granting relief there under is finally settled try supreme Court in the said decision and it depends on facts and circumstances of each particular case having regard to the human ingenuity, rapid economic and social changes in the society, cases at different time and different stages would present verities and complexities of diverse kind. But Court is to weigh, appreciate, assess and examine very carefully and cautiously taking all the facts together and applying its common sense and experience and come to a finding or conclusion which will commensurate with the situation arising in a particular case and thereafter, if it calls for any action, the Court would grant the same according to the need of a particular case. Therefore, the whole thing boils down to this, as to whether the facts of this case as proved and established before the Court comes within the said two sections i. e. 397-98 of the Companies Act, 1956 and justifies an action to be taken by Court. Therefore, the whole thing boils down to this, as to whether the facts of this case as proved and established before the Court comes within the said two sections i. e. 397-98 of the Companies Act, 1956 and justifies an action to be taken by Court. I may here mention the supreme Court decision in Santi Prasad jain's case although laying down the guiding principles for granting relief by court in applications under section 397-98 of the Companies Act, 1956 the question of the acts being prejudicial to the public interest do not and could not come up for consideration as the said supreme Court decision was before the amendment of the Companies Act, 1956 made in 1963, introducing the words "in a manner prejudicial to the public interest" in the said two sections. Therefore, the present case, which, in my view, is an example where the Respondents particularly the Respondent No. 5, P. K. Sengupta, the holder of the largest block of shares in the Respondents Company and most vitally interested in the affairs of the company, prima facie, appeared to have conducted the affairs of the company "in a manner prejudicial to the public interest. " Firstly, it is quite clear from the correspondence between, the petitioner and the Respondent No. 5, P. K. Sengupta, prior to the incorporation of the respondents Company on the 19th of february, 1959, that the idea of promotion, formation and incorporation of the Respondents Company by taking over the partnership firm the petitioning creditor "and his brother was the brain child of the Respondent No. 5, P. K. Sengupta, who was a close family friend, associate of the petitioner and his brother, the Respondent No. 6. Secondly, in those correspondence the bent of mind and the proposed moralities of the company which was to come into existence clearly indicated the plan in which it was to be worked out regarding matters of its business and accounting so as to avoid income-tax. I agree with the observation in the said report which seems to be the correct conclusion to be arrived at from such correspondence and I propose to adopt the remark in the said report regarding the role played by the respondent No. 5, P. K. Sengupta, in the formation and working of the company which is as follows:- "hence, the Government Officer, Mr. Sengupta has shown his capability and competence in the field of running a business organization successfully with aptitude for evasion and avoidance of tax incidence. " the said remark would appear at page 7 of the Supplementary affidavit of P. K. Mallick affirmed on the 3rd of july, 1975, at the concluding portion of paragraph 2. 3 of the said inspection report. Thirdly, it appears that this balance sheet for the first year of the company up to 31st of March, 1960, showed net profit of Rs. 8,997. 71 but from the next year the Respondent No. 5, P. K. Sengupta, furnished a guarantee to the Co. 's banker against his faxed deposit of Rs. 50,000/- and by this process he earned Rs. 5 per ton of fertilizer sold by the Respondent Company as commission and also earned the interest in his fixed deposit with the bank and in this process during the year 1960-61 and 1961-62, a sum of Rs. 47,370 became due and payable by the company to the said Respondent No. 5, P. K. Sengupta, by way of commission and in the part satisfaction of the said dues 3,600 fully paid up shares were allotted to him in a Board Meeting of the company held on the 29th of August, 1962, attended by Sri Prafulla Kanti Ghosh, k. C. Saha and Arun Gopal Bagchi. Therefore, within a period of two years of the company coming into existence, the shareholding of the Respondent No. 5 rose to from 25% to 79%. In these circumstances, it can hardly be doubted that the Respondent No. 5 attended a position of exercising absolute control over the company by acquiring overwhelming majority in the shareholding of the company by swelling the turn over of the company by way of commission. As would appear from the inspection report at pages 12 and 13 of the said supplementary affidavit of P. K. Mallick and paragraph 3. 1 that the real person looking after the entire affairs of the company is the Respondent No. 3, Arun Gopal Bagchi, who holds the position of Director-cum-Secretary and was brought in by the Respondent No. 5, P. K. Sengupta as henchman and the company seem to be of one man show and that of the said P. K. Sengupta. 1 that the real person looking after the entire affairs of the company is the Respondent No. 3, Arun Gopal Bagchi, who holds the position of Director-cum-Secretary and was brought in by the Respondent No. 5, P. K. Sengupta as henchman and the company seem to be of one man show and that of the said P. K. Sengupta. I also accept the remark in the said report bring the only legitimate conclusion to be drawn from the manner and mode of conducting the affairs of the company which is as follows :-"in that context, it is hardly surprising that the affairs of the company would be oriented to sub-serve his personal interest. " Thereby, meaning the personal interest of the Respondent No. 5 P. K. Sengupta. Fourthly, from the analysis of the financial arrangements of the company in the inspection report it is rightly remarked at page 17 of the said supplementary affidavit which is as follows : - "it is interesting to note that considerable 'benefits by way of commission interest was passed on to Sri P. K. Sengupta and Srimati rama Maitra, though for indentical service no such benefits were given to the other guarantors, this once goes to indicate that the policy of the company was oriented to sub-serve the interests of Sri Sengupta and Sri Arun Gopal Bagchi. This has kept the company in a state of perpetual sickness from the financial point of view and has prevented it from attaining solvency. The possible reason for such a policy is that the management does not want to show profits in the books of the company in order to incidence of tax. There is no doubt that this had baneful effect on the company as an entity. The possible reason for such a policy is that the management does not want to show profits in the books of the company in order to incidence of tax. There is no doubt that this had baneful effect on the company as an entity. " Lastly, I fully agree with the conclusion arrived at in the said inspection report which is at page 26 of the said supplementary affidavit which is as follows ; -"the most important findings of this inspection is that P. K. Sengupta, a high officer of the government of West Bengal, came to control an over whelming majority of the issued shares of the company inspected to the detriment of the other shareholders including the complainant (meaning the petitioner)in a manner not very commend able, perpetrated by him primarily against the complainant (meaning the petitioner) who, along with his brother was the real owner of the business before it was taken over by the company inspected. " from the above findings, in my view, more than a prima facie case has been established by the petitioner in this application for directing an inspection of the Co. 's affairs with a view to bringing to an end the matter complained of. 13. REGARDING the other contra ventions which would appear from the said inspection report the company is alleged to have rectified the said after being served with the show cause notice by the Registrar of Companies, West, bengal. Prima facie, there were contraventions as complained of but at this stage no further steps required to be taken. 14. 13. REGARDING the other contra ventions which would appear from the said inspection report the company is alleged to have rectified the said after being served with the show cause notice by the Registrar of Companies, West, bengal. Prima facie, there were contraventions as complained of but at this stage no further steps required to be taken. 14. AS I have held that the facts of this case reveal a dismal state of affairs of the company In which I am afraid, I must also hold that the petitioner if not an actively but a passively a party but be that as it may this is a case where the affairs of the company are conducted in a manner prejudicial to the public interest having regard to the position and manner in which the respondent No. 5, P. K. Sengupta, conceived the idea of forming, promoting and incorporating the company by taking over the partnership firm the petitioner and his brother and thereafter, acquiring overwhelming majority of the respondent company's shares and diverting the profits of the company to serve his personal interest in the manner indicated above and putting the company in perpetual state of insolvency being unable to earn any profit which was a pre-planned and pre-mediated course coming from the brain of the Respondent No. 5, P. K. Sengupta who admittedly holds a very high official position in the Government of west Bengal and who is also involved in the Wheat-barn case which is such a notorious fact that the Court can take judicial notice of it, and, therefore, in my view, solely on the ground of public interest as contemplated within the meaning of both the said sections 397-98 of the Companies Act, 1956, is prejudicially affected by the manner in which the affairs of the company is being conducted through the said Respondent No. 5, P. K. Sengupta, relief must be granted by way of directing inspection as to the affairs of the company. It is also clear from the inspection report that various statutory breaches have been committed and the business of the company is carried on in a manner not to show profit and eat up all its earnings by way of payments of commissions to the shareholders and their nominees. It is also clear from the inspection report that various statutory breaches have been committed and the business of the company is carried on in a manner not to show profit and eat up all its earnings by way of payments of commissions to the shareholders and their nominees. Therefore, in my view, with a view to bringing to an end the mismanagement of the affairs of the company which is clear from manner in which the affairs of the company is being conducted which is not only prejudicial to the Share holders and the company including the petitioner. It is undoubtedly prejudicial to public interest and it is also likely that the affairs of the company will be conducted as it has been done in the past since its inception unless suitable order is made and directions given in the matter under section 397 -98 read with section 402 of the Companies Ad, 1955. 15. THEREFORE, I am making the following order: - "the Board of the Company is hereby superseded. Mrs. Majula Bose, barrister-at-Law is appointed the Administrator of the Company, who will discharge all the functions and shall have all the powers of the Board of directors of the Company and manage the affairs of the Company according to the provisions of the Companies act, 1956. The Administrate will be advised by a Board of Advisors constituted by the petitioner on the one hand and Aran Gopal Bagchi on the other. The Administrator will manage the affairs of the company and carry on its business until further order of this court. Remuneration of the Administrate would be 40 G. Ms, per month until further order of this Court. " 16. IT is further declared that the affairs of the company ought to be investigated by an Inspector appointed by the Central Government under section 237 (a) (ii) of the Companies Act, 1958, and the Central Government is to furnish a copy of the report of this court within six months from date or within such extended time as may be ordered by this Court, After such report is received by this Court, the matter would appear in the list for further direction. The Central Government, the administrate and all parties to act on 3 signed copy of the minutes on the petitioner's Solicitor undertaking to complete and file this order. The Central Government, the administrate and all parties to act on 3 signed copy of the minutes on the petitioner's Solicitor undertaking to complete and file this order. Having regard to the inordinate delay and the petitioner's not bringing the matter to the notice of the Court earlier, there will be no order as to costs. Operation of this order is stayed till 18. 12. 75.