SURESH KUMAR SANGHI v. SUPREME MOTORS — 1981 DIGILAW 203 (DEL)

B. N. Kirpal ( 1 ) THIS is a petition u/ss. 397, 398, -103 and 403 of the Companies Act, 1956 filed by a shareholder of M/s. Supreme Motors Limited (hereinafter called the respondent-Company) alleging, inter alia that there has been oppression on. the petitioner - group (here in after REFERRED TO to as Suresh Group) by the t: Group led by respondent No. 2 (hereinafter REFERRED TO to as mrit Group) and certain reliefs should he it-anted u/s. 402 of the Companies Act. ( 2 ) IT is an admitted case of the parties hat Suresh Group and Amrit Group have equal shares in the Company. Both the Groups own 500 shares each. Each share is of the face value of Rs. 1000. 00. The petitioner and the respondents are closely related. They are cousins. According to the averments made in the petition Amrit Group has been acting to benefit itself at the cost of Suresh Group. It has been alleged that the Company was in the nature of a partnership between the rnembers of the two groups and that Amrit Group is conducting the affairs of the Company in a manner which is unlawful and highly prejudicial to the petitioner and his family. Instances of illegal and arbitrary acts have been set out in the petition. It is contended that there is lack of probity in the conduct of the affairs by the Amrit Group and that there is a state of complete deadlock which has been created in the business. The reliefs which have been prayed for include the relief of the appointment of a Committee of Management, removal of respondent No. 2 from the Board of Director or restraining him from acting as Managing Director, appointing the petitioner as Managing Director in place of responent No. 2 or directing that the Board of Directors should not implement any decision without the concurrence of the petitioner and some other ancilliary reliefs. ( 3 ) ON behalf of the respondents the allegations set out in the petition have been denied. It is contended by the respondents that the petitioner has not come with clean hands and has concealed some material facts. It is admitted by the respondents that the Company was more like a partnership firm in which the two groups had equal shares. It is contended by the respondents that the petitioner has not come with clean hands and has concealed some material facts. It is admitted by the respondents that the Company was more like a partnership firm in which the two groups had equal shares. It is also stated by the respondents, and not denied by the petitioner, that there is a partnership firm known as M/s Sanghi Motors in which again the groups have equal shares. There is now a dispute going on with regard to the said firm which is pending on the Original Side of this Court. It is contended in the reply affidavit that, by mutual arrangement amongst the two groups the business of the respondent-Company has since its inception been managed by respondent No. 2 who was appointed as its managing Director while the business of Sanghi Motors, the partnership firm, was being managed by the petitioner as Managing partner. The petitioner admits that respondent No. 2 lias been the Managing Director since the inception and that the petitioner has been a Managing Partner of Sanghi Motors but the petitioner does not agree that there was any such mutual arrangement between the two groups. . The respondents have also contended that the petitioner has been guilty of ads of misfeasance and non-feasance and is also guilty of breach of trust reposed in him in the performance of his duties as Managing Fanner of the aforesaid firm thereby causing huge loss. It is also alleged that the petitioner has been abusing his position as a Managing Partner and has started two business units in the name of "sanghi Aviation and sanghi Travels . It is alleged that the expenses with regard to these two units are being borne by the partnership firm and in fact these two units are also using the business premises of M/s Sanghi Motors. Just as the petitioner lias alleged that the respondents have ousted him from the affairs of the Company, the respondents in turn have alleged that they have been ousted from the affairs of the aforesaid firm. ( 4 ) IT is further contended by the respondents that the petitioner has started interfering with the working of respondent No. 2 in the affairs of the respondent-Company and has been trying to create a deadlock. ( 4 ) IT is further contended by the respondents that the petitioner has started interfering with the working of respondent No. 2 in the affairs of the respondent-Company and has been trying to create a deadlock. The respondents have also denied and/or explained the averments of petitioner, with regard to the illegalities which are alleged to have been committed by the respondents. ( 5 ) THE petitioner filed a rejoinder to the reply. This rejoinder was filed after the petitioner had, with the help of a Court order, inspected the records of the Company. After the petition was admitted and the pleadings were completed, by order dated 2nd December, 1980 it was directed that the parlies may file affidavits by way of evidence and documents within four weeks. Admission and denial of documents was to take place before the Deputy Registrar. The Central Government was given liberty to file a representation and parties were given an opportunity o! filing affidavits in reply to the representation, if filed. By the said order liberty was also given to the parties to summons oral evidence, if necessary. The parties were also entitled by the said order to take steps to cut short the trial by service of interrogatories, notice to admit and deny documents, notice to produce documents etc. It was further directed that if the said steps were not taken by, the parties, the case would be notified by the Deputy Registrar and listed for hearing. Reference has been made by me to the aforesaid order by for the reason that, though some documents were filed by the parties, no affidavits by way of evidence have been filed and nor did the parties take any steps to summon any oral evidence and nor were any interrogatories served. The result is that the petition and the various averments made by the parties have to be decided merely on the basis of the pleadings and the admitted documents on the record. During the course of arguments averments were made by the respective counsel but in so far as they go beyond the pleadings, no notice need be taken of them. ( 6 ) ON behalf of the petitioner three contentions were raised. It was contended that the petitioner group had been completely execluded. During the course of arguments averments were made by the respective counsel but in so far as they go beyond the pleadings, no notice need be taken of them. ( 6 ) ON behalf of the petitioner three contentions were raised. It was contended that the petitioner group had been completely execluded. The second contention was that there was lack of probity on the part of the Management and thirdly it was contended that there were persistent contravention of the provisions of the Company Law by the respondents. I These allegations have, of course, been denied by the respondents who, in turn, have alleged that the petitioner has not come to the Court with clean hands and, further, because of laches and past conduct the petitioner has disentitled himself to any relief. ( 7 ) BEFORE referring to the rival contentions it is necessary to analyse the relevant provisions of the Companies Act. Any application under section 397 can be made by the requisite number of persons and relief obtained only if the affairs of the Company are being conducted in a manner prejudical to public interest or in a manner oppressive to any member and, though the facts would justfy the making of a winding up order on the ground that it is just and equitable to do so, it would unfairly prejudice such members in winding up the Company. ( 8 ) RELIEF u/s 398 can be obtained only if (1) the affairs of the Company are being conducted in a manner prejudicial to public interest, (2) if the affairs are being conducted jn a manner prejudicial of the Company, or (3) if there is a material change which has taken place in the Management or control of Company, in the manner set out in the said sections, and that by reason of such change it is likely that the affairs of the Company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the Company. ( 9 ) THE powers of the Court while deciding a petition u/s - 9. 7 or 398 are very wide. Apart from the powers which can be exercised under these sections the Court h;is further been given powers to pass orders in terms of section 402 of the Act. ( 9 ) THE powers of the Court while deciding a petition u/s - 9. 7 or 398 are very wide. Apart from the powers which can be exercised under these sections the Court h;is further been given powers to pass orders in terms of section 402 of the Act. One thing is clear, however, that no orders under section 402 can be issued or relief granted u/s 397 or 398 unless and until the case can be brought by the petitioner within the ambit of sec. 397 or 398 of the Act. ( 10 ) THE aforesaid three contentions of Mr. Ved Vyas were urged with a view to establish that in the present case the provisions of section 397 to 398 are attracted, He has sought to argue that there lias been an oppression on the petitioner and members of his group and, further, (he respondents have acted in a manner which is prejudicial to the interests of the Company. The respondents, of course, have denied (he aforesaid allegations of the petitioners. ( 11 ) THE specific instances which were pointed out by Mr. Ved Vyas with regard to the ailed contraventii;n of the provisions of the Company Law by the respondents ware as follows : ( ) ( 12 ) IT is not necessary to deal with the aforesaid allegations for l!;e purpose of finding out whether the provisions of section 397 are attracted or not. The provisions of section 397, which are similar to llie provisions of section 210 of llie English Companies Act have been interpreted by the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tube s Ltd. , etc. , AIR 1965 S. C. 1535. After referring to the cases decided in England with regard to si:c:ion 210 of the English Act the Supreme Court observed as follows : "these observations from the four cases REFERRED TO above apply to S. 397 also which is almost in the same as words s. 210 of the English Act, and the question in each case is whether the conduct of the affairs of a company by (he majority share-holders was oppressive to the minority. share-holders and that depends upon the tacts proved in a particular case. share-holders and that depends upon the tacts proved in a particular case. As has already been indicated, it is not enough to show that (here 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 share-holders 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 majoriry share-holders, continuing upto 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 spring 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 or fair dealing to a member in the matter of his proprietory rights as a share-holder (Emphasis added ). In a later portion of the jugdement the Supreme Court further observed, while referring to section 398, as follows : "this section only comes into play as (he marginal note show?, when (here is actual mismanagement or apprehension 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. s (emphasis added ). ( 13 ) FROM the reading of "the aforesaid passages it is clear that section 397 would he applicable only in the case of oppression by majority share-holders on the minority shareholders. Section 397 does not come into play in the case of wrongful acts being done by the management, That may be a ground for wind- In that very case it was also observed that the action of the directors, if it is illegal or invalid, may be challenged in a Court of law by an appropriate action. The learned judge held that challenge to such action was not appropriate u/s 397 or 398 of the Comapnies Act. The learned judge held that challenge to such action was not appropriate u/s 397 or 398 of the Comapnies Act. It was, of course, held that u/s 397 or 398 action of the directors could be challenged if that action was oppressive to the minority shareholders or prejudicial to the interests of the Company. In Kalinga Tubes case also it was held by the Supreme Court that in order to constitute oppression within the incaning of section 397 "there must be continuous acts on the part of the majority shareholders, continuing upto the date of petition, showing that the affairs of the Company were being conducted in a manner oppressive to some part of the members". From the aforesaid judgments it clearly follows that (1) past acts which have come to an end cannot be challenged under section 397 or 398, (2) the relief under section 397 and 398 would be available only if there are continuous acts or oppression by the majority shareholders, (3) illegal acts committed by the directors, unless they are oppressive on the minority shareholders, cannot be challenged in a petition u/s 397 of the Act. The instances of violations of the provisions of the Companies Act, which were REFERRED TO to by the learned counsel for the petitioner, cannot be complained of in the present proceeding u/s 397 or 398 of the Act. Whether the provisions of sections 292 or 314 have been violated or not is not the matter which is to be gone into in these proceedings. What has to be seen is whether there has been any action taken, legal or illegal, which has resulted in the oppression of the minority shareholders. It will be seen that respondent No. 2 has been the Managing Director of the Company since its very inception. If there was any illegality or irregularity in the convening of the meeting in March, 1980 wherein respondent No. 2 was reappointed as a Managing Director that cannot amount to an act of oppression. By the said resolution the existing state of management of the Company was permitted to continue. No change was brought about by any resolution which was purported to be passed in that annual general meeting. By the said resolution the existing state of management of the Company was permitted to continue. No change was brought about by any resolution which was purported to be passed in that annual general meeting. If the meeting was illegally held it may be that the petitioner may have a cause of action for challenging the s;ime in other appropriate proceedings, but such an allegedly illegal meeting did not to my mind result in any oppressive act being committed on the petitioner. The decisions which have been REFERRED TO to by Mr. Ved Vyas, namely, Loch V. John Blackwood Limited (1924) appeal Case 783 Ebrahimi V. Westbourne Galleries Ltd and others (1972) 2 All. E. R. 492, Hind Overseas Pvt. Lid V. Raghunath AIR 1976 S. C. 565, C. P. 39 of 1973 decided by this Court on 30m April 1975 and CP 8 of 1975 decided on 18th March 1977 by this Court, are relevant for deciding as to whether it is just and equitable to wind up the Company or not. For the purposes of this petition I am assuming that the principles laid down in Ehrahimi s case apply and that it may be just and equitable to wind up the Company. It might here be stated that this contention is controverted by the learned counsel for the respondents. Nevertheless, merely because grounds or circumstances may justify a winding up order being passed that is not enough to entitle the petitioner to obtain relief u/s 397. The petitioner has not proved or shown that there has been any continuous acts of oppression by the majority on the minority shareholders. No relief can, therefore, be granted to the petitioner u/s 397 of the Act. The allegation that the petitioner has not been given access to the books of account and has not been given information which he had asked for at the time of the annual general meeting are also not such which would fall within the ambit of section 397 or 398 of the Act. The alleged ouster of the petitioner from the Management of the Company may be ground for winding up but that is not a ground for seeking relief u/s 397 or 398 of the Act. The alleged ouster of the petitioner from the Management of the Company may be ground for winding up but that is not a ground for seeking relief u/s 397 or 398 of the Act. In fact the petitioner has failed to prove that he has been ousted from the management of the Company It is an admitted case of the parlies that the respondent Company has four directors. Each of the group has two of its nominees on the Board. The petitioner and his brother are directors along with respondents 2 and 3. The shareholding of the two groups being equal and the number of directors on the Board being equal and none of the directors having been removed by the respondents, Ifail to see how it can be contended by the petitioner that he has been ousted from the Company s Management, ( 14 ) IN view of the fact that the shareholding is divided amongst the two groups equally, and also for the reason that both the groups have equal number of directors on the Board there is a possibility that this may lead to a deadlock in the working of the Company. Whether it has already led to a deadlock or not is a different question One thing, however, is clear that both the groups of shareholders are at each other s throats. The infighting amongst the groups has affected not only the business of this Company but also the business of the partnership linn known as Sanghi Motors. The disputes between the parties are not confined only to this Company. The disputes amongst the families are with regard to all the business concerns in which both of them have interests. The disputes reached such a pitch that actions were taken by the parties which were completely detrimental to the interests of the Company. On 29th August, 1979 respondent No. 2 wrote letters to the Company s Bankers indicating that there were disputes between the two groups. It was stated in the said letters that the Banks should not honour any cheques issued by any of the directors of the Company including respondent No. 2 himself. On 29th August, 1979 respondent No. 2 wrote letters to the Company s Bankers indicating that there were disputes between the two groups. It was stated in the said letters that the Banks should not honour any cheques issued by any of the directors of the Company including respondent No. 2 himself. It was alleged in the said letters that this step was being taken by respondent No. 2 as one of the two groups of shareholders was acquiring the management of the Company in its hands forcibly and illegally and was hampering the day to day conduct and running of the Company s businees. The allegation made in the petition has not been denied by respondent No. 2. It lias, however, been stated that the petitioner had been abusing his position as Managing Partner of the firm Sanghi Motors and had started to quarrel and interfere with the working of respondent No. 2 in the affairs of the Company and thereby trying to create a deadlock. According to the said respondent, he was left with no alternative but to write a letter to the Banks to stop the operation of the account of the Company as well as of the partnership firm M/s. Sanghi Motors. It is also admitted by respondent No. 2 that letters were written to M/s Mahindra and Mahindra Ltd. , from whom Sanghi Motors had obtained Agency to distribute their vehicles, and to Telco Limited whose vehicles were being sold by the Company. In the said letters it was stated that supply of vehicles should be temporarily suspended in view of the differences which liad arisen between the two groups. Though the first stone, in this regard, was thrown by respondent No. 2 the petitioner was not far behind. The petitioner also wrote similar letter for stopping iiic bank operation of the Company and for withdrawing [he guarantee submitted by the petitioner s group with tlie Company s Bankers. It is admitted by the petitioner in the rejoinder that such letters were written but it is contended that they never wrote for the withdrawal of ihe guarantees. Good sense apparently prevailed upon the groups thereafter. The disputes were apparently resolved and an agreement dated 21st September, 1979 was entered into between the parties. The said agreement, inter alia, provide-d ( ) ( 15 ) THE said agreement, however, was not carried out. Good sense apparently prevailed upon the groups thereafter. The disputes were apparently resolved and an agreement dated 21st September, 1979 was entered into between the parties. The said agreement, inter alia, provide-d ( ) ( 15 ) THE said agreement, however, was not carried out. Each group blames the other. According to the petitioner his group exercised the option to purchase the premises at Jhandewalan, It is stated that the respondent-Company was not in a position to transfer absolute title of the said property as there was some dispute or cloud with regard to the title of one of the two plots at Jhandewalan. It is not denied by the respondents that with regard to one of the plots a!. Jhandewalan the Company does not have ;m absolute title which could be conveyed. The respondents, however, contend that it is tlie petitioner who broke the agrement, inter alia, for the reasonthat the properties had to be transferred, under the said agreement, to M/s. Sanghi Motors and the petitioner had not supplied the names of all the partners of Sanghi Motors. On 5. 1. 80 the petitioner sent a notice to the effect that the aforesaid agreement dated 21. 9. 79, was no longer binding as it has to be completed by, 31. 12. 79 and this had not been done. ( 16 ) AFTER the agreement of 21. 9. 79. liad been entered into, a meeting of the Board of Directors was held on 21. 9 79. All the four directors, including the petitioner, were present. According to the minutes of the meeting the Chairman, nemaly Shri N. K. Sisnghi, explained, the circumstances under which letters for suspension of operation of the accounts had been written to the Bankers by the Managing Director and other Directors of the Company. It is further noted in the minutes that in view of the changed circumstances it was agreed that the operation of the bank accounts should be recommenced. A resolution was passed unanimously authorising the Managing Director to write appropriate letters to the Bankers to the effect that the letters written earlier for suspension of the operation of the accounts should be treated as cancelled and that the banking operations should be permitted to be resumed. These letters were apparently written and the banking operation resumed. A resolution was passed unanimously authorising the Managing Director to write appropriate letters to the Bankers to the effect that the letters written earlier for suspension of the operation of the accounts should be treated as cancelled and that the banking operations should be permitted to be resumed. These letters were apparently written and the banking operation resumed. Letters were apparently written and to the principals, namely, Telco also and the dealership was not cancelled. It appears that the petitioner approached Telco for transfer of the dealership of Supreme Motors to him. Whether the petitioner approached Tdco before or after the filing of the petition on 4. 8. 80 is not clear. A letter dated 15. 9. 80 written by Shri D. S. Narayanan of Telco to the petitioner has, however, been placed on record The relevant portion of the said letter reads as follows : ( 17 ) THE aforesaid letter clearly shows that, contrary to the interests of the Company, the petitioner tried to have the dealership transferred in his favour. In the said letter it was specifically stated that the dispute between the parties should be settled. Far from settling the disputes the same apparently aggravated which resulted in the filing of the present petition. A letter dated 9th April, 1981 received by the Company from Telco has been placed 0-1 record. In the said letter it has been slated that due to the differences in the members of the family and directors of the Company legal proceedings had been instituted by some members of the family which involved the dealership of Telco. It was, inter alia, stated in the said letter as follows : ( ) ( 18 ) BY the said letter Telco informed the respondent-Company that 90 days notice of termination was being given to the said Company and that the dealership shall stand terminated on the expiry of 90 days from tlie date the Company received the said letter. ( 19 ) AS already noticed, it is a an admitted case of the parties that the only business of the Company is the dealership of Telco. That business of the Company is now under notice of termination, as is evident from the afore said letter dated 9th April, 1981. The only business of the Company has been jeopardised and closure is threatened because of the disputes amongst the shareholders and th management. That business of the Company is now under notice of termination, as is evident from the afore said letter dated 9th April, 1981. The only business of the Company has been jeopardised and closure is threatened because of the disputes amongst the shareholders and th management. Earlier when the disputes wen not settled there was termination of dealershipin l979. After the settlement of the dispute by the drawing up of the agreement dated 21sl September, 1979 the dealership was restored This restoration Was done by Telco s letter dated 5th October, 1979. This letter reads a; follows : (- - ) ( 20 ) TELCO having now come to know the litigation between the parties, which would include the filing of the present petition, have issued tlie notice of termination. As already observed the fust step towards the cancellation of the dealership was taken when letter dated 29th August 1979 was written by respoundents No. 20 Telco. That lctu;r was written because it was alleged thai the Managing Director had not been able to reconcile into differences with the petitioner. Whether there was any justification in writing that letter or not need not be gone into but one thing is clear that the disputes and litigation between the two groups has led to the proposed cancellation of the dealership. It is !he duty of the Board of Directors to sec that the affairs of the Company are not carried out in a manner prejudicial to the interests of (he Company. It is evident that litigation amongst the shareholders and amongst the management would amount to carrying on the affairs of the Company in a manner prejudicial to the interests of it, if the said litigation results in harm being done to the Company. The affairs of the respondent-Company are in the hands of the shareholders and the Board of Directors. The shareholding between tlie two groups is equal and both the groups have equal representation on the Board. The company docs not have any Chairman. If in a Company where the management between the two groups is equally shared and the affairs of the Company are carried out in a manner which is prejudicial to its interests then both the groups have to be blamed for it. The company docs not have any Chairman. If in a Company where the management between the two groups is equally shared and the affairs of the Company are carried out in a manner which is prejudicial to its interests then both the groups have to be blamed for it. It is evident that unless and until a permanent solution is reached whereby the disputes between the shareholders are brought to an end either by compromise or otherwise, the dealership of Telco would be completely lost and the business of the Company brought to an end. The infighting amongst the directors of the company has resulted in serious prejudice being caused to the Company. To my mind, on this ground aline, the provisions of section 398 of the Companies Act are attracted. With a view to bring an end to the disputes amongst the shareholders and the management, which disputes are to the prejudice of the Company, it is necessary that appropriate orders be passed by this court. ( 21 ) THE petitioner has contended that Amrit Group should be directed to sell the shares to his group. Numerous attempts were made by me during the course of these proceedings to try and have the disputes between the parties amicably settled. It is most unfortunate that no settlement could be arrived at. I have to see as to whether it is just, fair and equitable to direct the sale of shares to the Suresh Group or to direct sale of shares to the Amrit Group. I cannot think of any third alternative, which can possibly resolve the disputes between the parties or result in saving the franchise of Telco. It is evident that the two groups of shareholdres lack complete confidence and trust in each other. The two groups cannot run the Company together. In an effort to destroy each other they will not only destroy themselves but also the Company. The only course which is open to me under these circumstances is to direct the sale of shares by one group to the other. ( 22 ) THE question which arises is as to which group should be given the first option to buy the shares of the other. It will be seen that the Company was originally a private Limited Company. ( 22 ) THE question which arises is as to which group should be given the first option to buy the shares of the other. It will be seen that the Company was originally a private Limited Company. The appointment, initially, of respondent No. 2 as the Managing Director of the Company was for an indefinite period. He was appointed as a Managing Director since the inception of the Company. Even after the Company was deemed to be a Public Limited Company by virtue of the applicability of provisions of section 43a of the Companies Act, respondent No. 2 continued to be appointed and re appointed as the Managing Director. Even in the agreement dated 21st September, 1979 all the parties had agreed that the shares in the respondent Company belonging to the petitioner s group would be transferred in favour of the Amrit Group. I further find that Telco does not appear to like having business dealings with the petitioner. This I deduce from Telco s letter dated 15 September, 1980 whereby the request for the transfer of dealership from the respondent Company to the petitioner was specifically declined. 1 cannot also lose sight of the fact that admittedly the Company is in the nature of a partership. The two main concerns in which the members have interest, and equal shares, are the respondent Company and in the firm known as M/s Sanghi Motors. It is an admitted fact that the petitioner has been the Managing Partner of Sanghi Motors whereas respondent No. 2 has always been the Managing Director of the respondent Company and the petitioner became a director of the respondent-Company only in the year 1979. In my opinion, therefore, in view of the aforesaid circumstance, the first option of purchasing the shares should be given to the Amrit Group. My decision to give them the first option would remain unchanged even if it be assumed that it is that group which has acted in a manner prejudicial to the interests of the Company. It is not unknown that the Court does the purchase of the shares of the petitioners by the majority shareholders even though-majority shareholders have been guilty of acts of oppression (See K. R. S. Narayana V. T. A. Muni AIR 1960 Madras 338 ). the -. It is not unknown that the Court does the purchase of the shares of the petitioners by the majority shareholders even though-majority shareholders have been guilty of acts of oppression (See K. R. S. Narayana V. T. A. Muni AIR 1960 Madras 338 ). the -. ; conducting of the affairs prejudcial to the interests of the Company by the persons who are in the control of the management gives the Court jurisdiction to pass appropriate orders to bring to an end the matters complained of. Neither section 398 nor section. 402provides that only such orders can be passed which will result in handing over the management of the Company to the agrieved persons. In granting relief under sections 398 and 402 not only is the interest of the Company to be kept in view but other equitable considerations have to be taken into account. The Managing Director of the respondent-Company has always been respondent No. 2. Persumably it is he who has been having dealings with Telco. It is evident that Telco has rejected the proposal of transfer of dealership from the respondent-Company to the petitioner. Earlier when after the agreement dated 21st September, S979 Telco had been informed that Amrit Group has become tlie full owner of the respondentcompany they, namely, Telco took note of this fact and by their letter dated 5th October, 1979, withdrew the termination letter which had been issued by them. This shows thai they had no complaint against Amrit Group and were willing to have business dealings with the respondent-Company of which Amrit Group were to be sole owners. Whether they will revoke the notice dated 9th April, i981, of termination of the dealership if they me told that Amrit Group is to be divested of its shareholding in the Company is extremely doubtful. In view of the fact that the partnership firm of Sanghi Motors is bring managed by the petitioner it will be inequitable to deprive the Amrit Group of the control and management of the respondent-Company At this stage it may be noted during the lalks of compromise it was suggested by respondent No. 2 that he and members of his group were prepared to take over the business which were to go to the petitioner s group as per the agreement dated 21st September, 1979. In other words he was prepared to switch the lots. In other words he was prepared to switch the lots. The petitioner did not agree. Even though if it is assumed that respondent No. 2 and members of his group had performed certain acts which were not in accordance with the provisions of the Company Law or it is they who were responsible for the proposed cancellation of the dealership it is still not equitable, just or proper to oust them from the Company by giving the first preference of the purchase of shares to the petioner s group. Moreover giving of the first option to purchase the shares to the Amrit Group would also be in keeping with the spirit of the agreement dated 21 September, 1979 which had been entered into by the parties. ( 23 ) THE next question which arises is as to what is the value at which the shares are to be transferred. During the course of arguments the respondents had offered to buy the shares of the petitioner s group at the rate of Rs. 6000. 00 per share. This offer was not accepted. From the evidence on record it is not possible for me to value the shares. The only alternative which is open is that some outside agency should value the shares. I enquired from the counsel, during the hearing of the petition, as to whether a Chartered Accountant should be appointed to value the shares or some other mode would be acceptable. Mr. Ved Vyas suggested that either the Court should value the shares, on valuation reports being submitted by either parties or the Court might appoint a retired Judge to value the shares wi (h the assistance of valuers or on the basis and help of valuation reports which might be submitted by both the parties. I think the later course which has been suggested by Mr. Ved Vyas for the purpose of valuing the shares, namely, the valuation of the shares by a retired Judge would be more r;jr. The Couri then appointed Sin i. S. N. Andley, retd. C. J. for valuation and Shri P. N. Khanna, J. (retd.) as Director for Smooth Working]