JUDGMENT 1. - This company petition has been filed under sections 397 and 398, Companies Act, 1956 (hereinafter to be called 'the Act'), with the prayers that a scheme be framed for management and control of the affairs of the Lake Shore Palace Hotel (P) Ltd., Udaipur (hereinafter to be called 'the company'), to divest the respondent No. 2, Arvind Singh Mewar, with his powers as its managing director; he should be removed from the Board of directors and an independent director be appointed in his place; it may be declared that (1) the allotment of 1,408 shares in favour of the respondent No. 2 is void, and (2) the executors of the will of late His Highness Maharana Bhagwat Singhji (for short 'Maharana') were not competent to represent the estate of Maharana; a committee of the trustees of the Maharana Mewar Institution Trust (in short, 'the trust') be constituted for the exercise of all the rights in respect of the shares in the company; a new additional director be appointed in place of resigning director, Shri Ashwini Kumar Chaturvedi; respondent No. 2 be directed to recoup the funds siphoned off by him from the company and misutilised for his personal use and gain; the respondent No. 2 be restrained (1) from holding or attending any meeting of the Board of directors, (2) from issuing/allotting further shares beyond 3,027 shares already allotted, (3) from exercising any right of voting in respect of 1,409 shares which were originally offered to the executors, (4) from appointing any one as a director of the company, and (5) from operating bank accounts of the company; to appoint a receiver or special officer to take the custody of all the books of accounts and records of the company; to permit the petitioner to inspect and to take their copies and to pass such other orders as may be deemed fit and just with a view to bring to an end the matters complained of. 2. It has been averred in the company petition in short, as follows. The company was promoted by Maharana; it was incorporated on 27 May, 1972, and he leased out one of his palaces, namely, Shiv Niwas Palace, to the company for the purpose of running a hotel. Its registered office is situated at City Palace, Udaipur. Its nominal capital is Rs. 50 lakhs divided into 5,000 equity shares of Rs. The company was promoted by Maharana; it was incorporated on 27 May, 1972, and he leased out one of his palaces, namely, Shiv Niwas Palace, to the company for the purpose of running a hotel. Its registered office is situated at City Palace, Udaipur. Its nominal capital is Rs. 50 lakhs divided into 5,000 equity shares of Rs. 1,000 each. Objects of the company are set forth in its memorandum of association (Annexure 'A'). Articles of association is Annexure 'B'. Petitioner is a registered holder of 615 equity shares; they are fully paid up and (she) is entitled to move this petition. Maharana died on 3 November, 1984, leaving behind two sons : Maharaj Kumar Mahendra Singh and Maharaj Kumar Arvind Singh (respondent No. 2), and one daughter, namely, Maharani Yogeshwari Kumari (petitioner). She was introduced as a shareholder in the company in the year 1979. Maharana died leaving behind his will dated 15 May, 1984. Under the said will, Shri Arvind Singh Mewar [respondent No. 2 and also 3(a)] and Shri A. Subramaniam [respondent No. 3(b)] were appointed as its executors. They moved an application in this court for grant of probate. By order dated 13 November, 1987, probate was granted. A copy of the will is annexed as Annexure 'C'. By his said will, Maharana has created a trust. The shares of the company were given to the members of his family and it was always his intention that the company should always remain a close-knit family concern. It was the intention and desire of the Maharana that, gradually and ultimately, the trust was to hold the shares of the company in place of family or any of its individual members. Maharana held majority shares in the company and the company in turn held majority shares in another company, namely, Lake Palace Hotels and Motels (P) Ltd., Udaipur. On the death of Maharana, the respondent No. 2 acquired the dual capacity in the company, one as a shareholder and another as an executor of the said will. He exercised domain (dominion) and control over the shares of Maharana as an executor. The executors are purposely delaying the administration of the will to continue to retain their control and domain (dominion) over the shares of Maharana. He exercised domain (dominion) and control over the shares of Maharana as an executor. The executors are purposely delaying the administration of the will to continue to retain their control and domain (dominion) over the shares of Maharana. Through this mode of operation and by cleverly and dubiously utilising his dual capacity, the respondent No. 2 has managed to comer substantial chunks of the shareholdings of the company with the sole purpose of acquiring total control over the affairs of the company and has conducted its affairs to the detriment of her interest as a shareholder. On 11 March, 1986, the respondent No. 2 appointed his friend, Shri Ashwini Kumar Chaturvedi, as an additional director of the company. In the said meeting of the Board of directors dated 11 March, 1986, she was not present and only respondent No. 2 was present. He increased his personal shareholding in a very clever manner by ostensibly offering shares of the estate of Maharana pro rata to the existing shareholders, refusing to accept the pro rata offer as an executor of the will and accepting the same in his personal capacity. The ostensible reason for the increase in the share was the improvement of debt-equity ratio, but the real reason was to get complete and lasting control over the company. By resolution of the Board of directors dated 5 July, 1985, it was decided to increase the subscribed and paid-up capital of the company from Rs. 10 lakhs to Rs. 20 lakhs by a fresh issue of 1,000 equity shares of Rs. 1,000 each. Fresh shares were to be offered to the existing shareholders on pro rata basis. Accordingly, 700, 200 and 100 shares were offered to the executors of the will, to her and to the respondent No. 2, respectively. She and the respondent No. 2 accepted the shares. The executors refused to accept 700 shares. In the meeting of the Board of directors held on 20 January, 1986, it was decided to offer 700 equity shares declined by the executors to the remaining members in proportion of their existing shareholding. She and the respondent No. 2 accepted the shares. The executors refused to accept 700 shares. In the meeting of the Board of directors held on 20 January, 1986, it was decided to offer 700 equity shares declined by the executors to the remaining members in proportion of their existing shareholding. In the note enclosed with the notice of the meeting to be held on 4 March, 1986, it was stated that the said decision of offering 700 shares to the remaining members was taken as a consequence of the letter dated 14 December, 1985, of the Bank of India, Udaipur, to improve the debt-equity ratio in order to satisfy the objection raised by the Industrial Development Bank of India (IDBI) for eligibility for re-finance. She believed it as she had reposed faith and confidence on her brother Arvind Singh (respondent No. 2). In fact, this was not the reason for the said offer. The financial position of the company was never such as to warrant fresh issue of shares. It was done to deceive her. She came to know (of) the design of the respondent No. 2 subsequently. A copy of the said note is enclosed as Annexure U. She received letter dated 28 January, 1986 (Annexure 'E'), from the company secretary, A. Subramanium [respondent No. 3(b)], offering her 467 equity shares out of 700 equity shares which were originally offered to the executors of the will. For some reason or the other, the allotment of said 700 shares did not materialise. She received another letter dated 8 April, 1987 (Annexure'F'), from the company secretary informing her that it has been decided to increase the subscribed and paid-up capital from Rs. 13 lakhs to Rs. 20 Iakhs by issuing fresh 700 equity shares of Rs. 1,000 each. 700 shares were offered on pro rata basis to all the existing shareholders, the executors refused. Thereafter, 700 shares were offered to her and the respondent No. 2, respectively. She accepted 215 shares offered to her. The respondent No. 2 also accepted 108 shares offered to him. The executors refused to accept 377 shares. The respondent No.2 requested her to allow him to purchase the shares refused by the executors. Being unaware of his ulterior motive, she permitted him to purchase 377 shares in his personal name. On 1 June, 1987, the respondent No. 2 had greater shareholding for the first time. The executors refused to accept 377 shares. The respondent No.2 requested her to allow him to purchase the shares refused by the executors. Being unaware of his ulterior motive, she permitted him to purchase 377 shares in his personal name. On 1 June, 1987, the respondent No. 2 had greater shareholding for the first time. In the 'extra-ordinary' general meeting of the company held on 1 September, 1989, it was decided to raise authorised share capital of the company from Rs. 20 lakhs to Rs. 50 lakhs divided into 5,000 equity shares of Rs. 1,000 each. By resolution dated 6 November, 1989, of the Board of directors, it was decided to increase the subscribed and paid-up capital of the company from Rs. 20 lakhs to Rs. 50 lakhs by issue of 3,000 equity shares of Rs. 1,000 each. Thereafter, she received a letter dated 10 November, 1989 (Annexure'G'), requesting her to give her acceptance of the offer to subscribe 923 equity shares of Rs. 1,000 each. In her reply dated 26 November, 1989 (Annexure'H'), she, inter alia, stated that she had not received the notice dated 26 October, 1989, of the meeting of the Board to beheld on 6 November, 1989; it was received on 9 November, 1989; she did not learn about agenda of the meeting; it was not proper and fair to act upon the decisions taken at the meeting held on 6 November, 1989, and she requested that the said decisions be not acted upon till the next meeting of the Board. Thereafter, she sent letter dated 29 November, 1989 (Annexure I), conveying her willingness to accept 923 shares and they were, however, not allotted to her. On the other hand, 1,027 shares offered to the respondent No. 2 have been allotted to him on or about 15 January, 1990. As a result thereof, the respondent No. 2 became a virtual dictator. He can pass and adopt any resolution which he wants at any meeting of the Board of directors. The respondent No. 2 is now proposing to take in his name 1,050 shares. If he is permitted to do so, he will thereby increase his shareholding to 3,685 shares, i.e., 73.3% of the total share- holding. He can pass and adopt any resolution which he wants at any meeting of the Board of directors. The respondent No. 2 is now proposing to take in his name 1,050 shares. If he is permitted to do so, he will thereby increase his shareholding to 3,685 shares, i.e., 73.3% of the total share- holding. The position of the shareholdings on various different dates is as follows : Name of share-holder 28.12.79 5.1.80 18.3.82 24.6.83 30.5.84 20.1.86 1.6.87 15.1.90 Maharana/Estate of H.H.(Executors) 75 175 775 700 700 700 700 Shakti Singh 25 25 25 25 Nil Nil Nil Nil Petitioner 25 100 200 200 200 400 615 615 Respondent No. 2 Nil Nil Nil 75 100 200 665 1,712 Total 125 300 1,000 1,000 1,000 1,300 2,000 3,027 3. The company is holding majority shares in the Lake Palace Hotel and Motels (P) Ltd., Udaipur. By controlling the company, the respondent No. 2 would be able to exercise his total control over the Lake Palace Hotel and Motels (P) Ltd., also. In the Explanatory Note dated 9 August, 1989, it was stated that the company needed to increase its authorised share capital from Rs. 25 lakhs to Rs. 50 lakhs with a view to improve the debt-equity ratio. It was 4.75 : 1 and, as such, the ratio fell far short of the accepted norm of 2 : 1 in the banking business. This ratio of 4.75: 1 was calculated by including unsecured loans advanced to the company by her, her children and the Lake Palace Hotel and Motels (P) Ltd, which could not be included for the purpose of calculating debt-equity ratio. In fact, the debt-equity ratio on 30 June, 1988, was 2:1 within the accepted norm. There was no need for the increase in the share capital of the company. The motive of the respondent No. 2 behind it was to gain total control over the company and to oust other shareholders. Smt. Vijayraj Kumari, wife of the respondent No. 2, had also deposited' Rs. 5,00,000 in the company. It was paid to her on 31 March, 1990, despite claim of the respondent No. 2 that the company was in need of the finance. The amounts of the petitioner and her children were not repaid. Smt. Vijayraj Kumari, wife of the respondent No. 2, had also deposited' Rs. 5,00,000 in the company. It was paid to her on 31 March, 1990, despite claim of the respondent No. 2 that the company was in need of the finance. The amounts of the petitioner and her children were not repaid. In the year 1985-86, the company further acquired 710 shares in the Lake Palace Hotel and Motels (P) Ltd. at the cost of Rs. 8,87,500. The source of this amount was additional subscription to the share capital, funds provided by the directors and their relatives and the accrued dividend received from the shares of the Lake Palace Hotel and Motels (P) Ltd. The petitioner was led to purchase 415 shares of the company at the cost of Rs. 4,15,000 and this amount was utilised by the respondent No. 2 for acquiring shares in the Lake Palace Hotel and Motels (P) Ltd., and to pay loan taken from his wife. On 13 February, 1991, the petitioner came to know that the meeting of the Board of directors was going to be held on 15 February, 1991. She did not receive its notice. She immediately sent telegram (Annexure 'J') requesting for adjournment. On 14 February, 1991, she learnt about the death of her father-in-law and sent letter Annexure 'K' to the Company Secretary intimating about the said death. On 23 February, 1991, the petitioner received notice (Annexure 'M') for the meeting of the Board on 9 March, 1991. She requested for adjournment on account of 'Shradha' ceremony of her father-in-law. No reply was received and she does not know about the fate of this meeting It is reliable learnt that the respondent No 2 is bent upon (a) appointing another additional director of his choice; (b) withdrawing the petitioner as a nominee director in the Board of the Lake Palace Hotel and Motels (P) Ltd.; and (c) allotting 1,973 shares to himself. From the agenda of the meeting, dated 23 February, 1991, it appears that Mr. Ashwini Kumar Chaturvedi has sent his resignation letter. If his resignation is accepted, there will be only two directors of the company-petitioner and the respondent No. 2. Since no chairman has been elected in terms of article 76 of the articles of association, the meeting of the Board of directors can only result in a dead-lock. Ashwini Kumar Chaturvedi has sent his resignation letter. If his resignation is accepted, there will be only two directors of the company-petitioner and the respondent No. 2. Since no chairman has been elected in terms of article 76 of the articles of association, the meeting of the Board of directors can only result in a dead-lock. The petitioner feels that no useful purpose will be served by attending adjourned meeting unless the respondent No. 2 is removed as a director and another independent person is appointed. The only way out of this impasse is by granting the reliefs prayed for in the company petition and by removing the respondent No. 2. The ostensible reason for issuing further 3,000 shares has also gone. The debt-equity ratio has substantially improved and there is no need for issuing further shares. According to the balance sheet of the year ending on 31 March, 1990, the secured loans are to the extent of Rs. 20,03,000 and the equity share is Rs. 30,27,000, giving debt-equity ratio of 8.6 : 1. The balance sheet for the years 1983-90 are enclosed and have collectively been marked as Annexure 'N'. Even according to the directors' report dated 3 September, 1990, regarding financial position of the company, there is no immediate need for issuing/allotting any further shares as is being proposed by the respondent No. 2. The entire debt of the bank of Rs. 20,00,000 has been repaid. Rs. 2,00,000 have also been paid to the Lake Palace Hotel and Motels (P) Ltd., against advances received from them for providing common facilities. The net profit during the year was Rs. 16,07,000 as against Rs. 11,97,000 in the previous accounting year. All along, the petitioner was kept in dark from the working of the company. The respondent No. 2 has misused his position both as her younger brother and also as a co-director. Towards end of the year 1989, she realised that she was being eased out from the affairs of the company by the respondent No. 2 in a very clever and devious manner. She was all along kept in dark. She started enquiring into the affairs of the company and wished to see various documents. She had to make formal requests by her letter dated 13 January, 1990, (Annexure 'O'). She has been refused access to the important documents of the company. She was all along kept in dark. She started enquiring into the affairs of the company and wished to see various documents. She had to make formal requests by her letter dated 13 January, 1990, (Annexure 'O'). She has been refused access to the important documents of the company. She wrote letters on 2 September, 1990 (Annexure 'R'), on 8 September, 1990 (Annexure 'S'), and in third week of September, 1990 (Annexure 'T') for supplying copies of the documents and minutes, but with (of) no avail. The respondent No. 2 was conducting the affairs of the company to her detriment. She has not received any return of her investments. The company has not declared dividends. On the contrary, the respondent No. 2 is enjoying all the benefits and is utilising the funds of he company for his private gain and comforts. He is living with his family in the company premises free of costs. He has indulged in excessive expenditures under various heads and has also inflated the figures. A comparative study with the figures of other hotels will reveal it. The comparative study of the accounts of the company relating to the period before and after the death of Maharana reveals the excessive and exorbitant expenditure under various heads. Huge expenditures have been shown for maintaining an office at Bombay, but no such office exists at Bombay. The so-called office is a residential flat at Pedder Road, Bombay. It was the personal property of Maharana. It has been taken under the control by the respondent No. 2 as an executor of the said will. The said flat does not belong to the company. The respondent No. 2 has also spent money of the company for the renovation of another property of Maharana, and it is now in possession of respondent No. 2 as an executor. The respondent No. 2 has now realised that his game plan has been exposed; she has come to know about his misconduct and misutilisation of the funds of the company and, for this reason, he is not prepared to show the accounts to her. On examination of the account books, all the misdeeds of the respondent No. 2 will be exposed. The respondent No. 2 and his associates are siphoning (off) the funds of the company. They have indulged in excessive expenditures. On examination of the account books, all the misdeeds of the respondent No. 2 will be exposed. The respondent No. 2 and his associates are siphoning (off) the funds of the company. They have indulged in excessive expenditures. The respondent No. 2 had dealt with the company as if it was his personal property. She believes that the funds used for the purpose of purchasing shares in the name of the respondent No. 2 were in fact funds obtained from the Maharana. There was no reason for the executors of the will to refuse to accept the shares offered to them from time to time. The movable and immovable properties bequeathed to the trust by the Maharana as per his will are themselves very valuable. The affairs of the company are being conducted in a manner oppressive to the petitioner and in the manner prejudicial to the interest of the company itself. Winding up of the company will prejudice the petitioner. 4. In its reply, the company (respondent No. 1) admits the following facts. It was incorporated on 25 May, 1972, with the nominal share capital of Rs. 50,00,000 divided into 5,000 equity shares of Rs. 1,000 each. Maharana leased out his Shiv Niwas Palace to the company for running a hotel and he died on 3 November, 1984, leaving behind two sons and one daughter. The position of shareholding is as shown above. On 15 March, 1982, authorised share capital was raised from 5,000 to 25,000 and 7,000 fresh shares were issued. Out of them, 600 shares were subscribed by Maharana and 100 by the petitioner. Maharana transferred his 75 shares to the respondent No. 2. The company was holding 1,500 shares out of total 3,140 shares of Lake Palace Hotel and Motels (P) Ltd., Udaipur, at the time of death of Maharana. Resolution was passed for appointing Shri Ashwini Kumar Chaturvedi as an additional director of the company and he was so appointed only after confirmation by the members of the company. He assumed office of 1 January, 1987. 700 shares standing in the name of Maharana were transmitted to the executors of the will. Resolution was passed on 5 July, 1985, to increase the subscribed capital of the company from Rs. 10 lakhs to Rs. 20 lakhs by issuing 1,000 fresh equity shares of Rs. He assumed office of 1 January, 1987. 700 shares standing in the name of Maharana were transmitted to the executors of the will. Resolution was passed on 5 July, 1985, to increase the subscribed capital of the company from Rs. 10 lakhs to Rs. 20 lakhs by issuing 1,000 fresh equity shares of Rs. 1,000 each in order to put the financial status of the company on the sound basis and to get sound debt-equity ratio. Fresh shares were offered to the existing shareholders on pro rata basis. Petitioner and respondent No. 2 accepted 200 and 100 shares respectively. Shares offered to the executors [respondents No. 3(a) and (b)1 were not accepted as the estate was not in a position to subscribe the same. In the meeting held on 4 March, 1986, decision was taken to offer said 700 shares to the remaining shareholders in pursuance of the letter dated 14 December, 1985, of the Bank of India, Udaipur, to improve the debt-equity ratio to satisfy the objections raised by the Industrial Development Bank of India for eligibility for re-finance. Petitioner was offered 467 equity shares and the allotment did not materialise. Thereafter, it was decided that share capital be increased from Rs. 13 lakhs to Rs. 20 lakhs and 7,000 equity shares of Rs. 1,000 each be issued to the members on pro rata basis. Petitioner and respondent No. 2 accepted 215 and 108 shares offered to them, Executors refused to accept 377 shares. They were personally taken by the respondent No. 2 in his name with the consent of the petitioner. It was resolved in the meeting of the Board of directors held on 6 November, 1989, to increase the subscribed and paid up capital of the company by issue of 3,000 equity shares of Rs. 1,000 each and they were offered on pro rata basis. Petitioner's telegram saying that notice of the meeting of 6 November, 1989, was received late and she was unable to attend the meeting was duly received. Letter of the petitioner dated 29 November, 1989, accepting to purchase 923 shares offered to her was also received. The said 923 shares were not allotted to her. 1,027 shares offered to the respondent No. 2 were accepted by him. On 15 January, 1990, the position of the shareholding amongst the executors, petitioner and respondent No. 2 was 700, 615 and 1,712 respectively. The said 923 shares were not allotted to her. 1,027 shares offered to the respondent No. 2 were accepted by him. On 15 January, 1990, the position of the shareholding amongst the executors, petitioner and respondent No. 2 was 700, 615 and 1,712 respectively. The loan of Rs. 5 lakhs of respondent's wife, Vijayraj Kumari, was repaid. The loans of the petitioner and her children were not repaid as it was not possible to do so when their demand for payment was raised. In 1985-86, the company acquired 710 shares of Lake Palace Hotel and Motels (P) Ltd., at a cost of Rs. 8,87,500. Meetings of the Board of directors were held on 15 February, 1991, 22 February, 1991, 9 March, 1991, and 16 March, 1991; the petitioner did not attend them due to death of her father-in-law and letters and telegram of the petitioner were received requesting for holding meeting on or after 8 March, 1991. The debt-equity ratio subsequently improved even including unsecured loans in the figures of debt. The company repaid Rs. 2,00,000 to the Lake Palace Hotel and Motels (P) Ltd., Udaipur, and also Rs. 20,00,000 to the Bank of India, Udaipur. No dividend has been declared so far. The expenditures of the company have increased from the time of the Maharana due to escalating prices and increase in business. Bombay flat was let out by Maharana to the company from 1 April, 1984, on monthly rent of Rs. 1,200. Company spent some money on its repairs and maintenance. It is in the control of the company. The respondent No. 2 stays there whenever he visits Bombay for company's work as its managing director. The remaining averments of the company petition have been denied. 5. It has further been averred by the company in its reply as follows. The petitioner has utterly failed to make out a case under sections 397 and 398 of the Act. The affairs of the company are being conducted in its best interest and also in the best public interest. The action of the Board of directors cannot be subject matter of a petition under sections 397 and 398 of the Act. This court cannot allow the petitioner to compel the majority to accept her dictates, particularly when the company is being honestly managed. The action of the Board of directors cannot be subject matter of a petition under sections 397 and 398 of the Act. This court cannot allow the petitioner to compel the majority to accept her dictates, particularly when the company is being honestly managed. The petitioner cannot be allowed to raise her personal grievance against the executors of the will as well as against the trust in this company petition. The allegations made in the company petition are most vague and bald. Particulars of the oppression and mismanagement have not been given. Many material and important facts have been concealed and have also been distorted. The remedy under sections 397 and 398 of the Act is equitable and the petition deserves to be dismissed. The petitioner has not come with clean hands. She was herself a party to all the decisions and actions taken by the company. She has always been actively associated with the management of the company and its decisions. She is estopped from raising any grievance. She has an effective and specific alternate remedy under sections 408 and 409 of the Act. She cannot be permitted to rely upon events which took place three years prior to the filing of the petition as article 137, Limitation Act, applies to such petitions. Any change in the share capital and appointment of new directors cannot be questioned in a petition under sections 397 and 398 of the Act. The petitioner has failed to show as to how action complained of are burdensome, harassing and wrongful. In the meeting of the Board of directors held on 6 March, 1982, no objection was raised by the petitioner against the. increase in the share capital to Rs. 25,00,000. The trustees of the trust, namely, Maharaj Kumar Raj Singh Dungarpur and Maharaj Kumar Samar Singh Dungarpur were duly consulted in connection with the appointment of Shri Ashwini Kumar Chaturvedi as an additional director and they approved his name. It was resolved in the extraordinary general meeting held on 7 April,1986, that Shri Chaturvedi would assume office only after approval of his appointment by the petitioner. The petitioner did not intimate her approval. The matter was put before the annual general meeting held on 26 December, 1986. In it, the petitioner was present and the resolution was passed for appointing A.K. Chaturvedi as an additional director of the company. The petitioner did not intimate her approval. The matter was put before the annual general meeting held on 26 December, 1986. In it, the petitioner was present and the resolution was passed for appointing A.K. Chaturvedi as an additional director of the company. He assumed charge w.e.f. 1 January, 1987. Resolution was passed in the meeting held on 5 July, 1985, in which the petitioner was also present that in order to put the company in a better financial position and also to maintain a reasonable debt-equity ratio, subscribed equity capital be increased from Rs. 10 lakhs to Rs. 20 lakhs by issuing 1,000 fresh equity shares of Rs. 1,000 each. A meeting of the Board of directors was called for on 6 April, 1987; it was held and the letter of the Bank of India, Udaipur, dated 2 March, 1987 (page 232), was placed in the meeting. The petitioner duly attended the meeting. A resolution was passed for increasing the subscribed capital of the company from Rs. 13 lakhs to Rs. 20 lakhs by issuing 700 fresh equity shares and offering the same to the existing members in proportion of their existing shareholding (page 234). It was resolved that 377 shares which were offered to the executors and refused by them, be now offered to the other shareholders in proportion of their existing shareholding. The offer was accordingly made. The petitioner declined to subscribe 251 shares offered to her. The respondent No. 2 offered to take 251 shares refused by the petitioner and also his 126 shares, The petitioner was present in the meeting dated 1 July, 1987. In the meeting of the Board of directors, dated 2 August, 1989, the chairman explained to the Board that the officers of the Bank of India, Udaipur, have been pointing out that the overall financial position of the company was not to their satisfaction and requested to improve the same. The total debts amounted to over Rs. 95 lakhs as against the equity share capital of Rs. 20 lakhs. On 30 June, 1988, the debt equity ratio was 4.75: 1. The bank has been pressing for rectifying this anomaly. It was also pressing for the payment of the two instalments of Rs. 10 lakhs each in respect of the secured loans. The managing director also explained to the Board the necessity for the early repayment of the balance of Rs. The bank has been pressing for rectifying this anomaly. It was also pressing for the payment of the two instalments of Rs. 10 lakhs each in respect of the secured loans. The managing director also explained to the Board the necessity for the early repayment of the balance of Rs. 55 lakhs taken from Lake Palace Hotel and Motels (P) Ltd., for which Shri Mahendra Singh (elder son of Maharana) had taken a very serious view and made the bone of contention in his Company Petition No. 7 of 1983. It was resolved to increase authorised share capital from Rs. 25 lakhs to Rs. 50 lakhs and to issue fresh shares to the members of the company in accordance with the articles of association. The petitioner was present in this meeting. In the extraordinary general meeting held on 1 September, 1989, resolution was placed for approval, and after some modifications, it was passed. A meeting of the Board of directors was held on 6 November, 1989, to consider the matter of increasing the subscribed share capital of the company from Rs. 20 lakhs to Rs. 50 lakhs; the petitioner did not attend this meeting. The managing director explained the necessity to increase the authorised share capital of the company, After deliberations, it was decided to increase the subscribed share capital of the company from Rs. 20 lakhs to Rs. 50 lakhs. 3,000 shares were accordingly offered to the members on pro rata basis. In compliance thereof, the petitioner, respondent No. 2 and the executors were offered 923, 1,027 and 1,050 shares, respectively, on pro rata basis. Respondent No. 2 only accepted the offer and deposited the amount of 1,027 shares. The executors refused to accept the shares. The petitioner initially made inquiry and subsequently sent letter intimating that she would accept the shares for better safety. However, the amount of Rs. 9,23,000 was not deposited by her. In the meeting of the Board of directors held on 15 January, 1990, it was resolved that the shares be issued to the persons who have made payment. Thereafter, the shareholding was as follows : Executors 700 23.10% Petitioner 615 20.30% Respondent No. 2 1,712 56.60% As per sound principles of financial management, debts of the company, whether secured or unsecured, have to be considered for the purpose of calculating the debt-equity ratio. Thereafter, the shareholding was as follows : Executors 700 23.10% Petitioner 615 20.30% Respondent No. 2 1,712 56.60% As per sound principles of financial management, debts of the company, whether secured or unsecured, have to be considered for the purpose of calculating the debt-equity ratio. The petitioner and her daughter themselves withdrew the letters requesting the company to refund their deposits. The decision to purchase the shares of the Lake Palace Hotel and Motels (P) Ltd. was taken on 20 January, 1986, in the meeting of the Board of directors in which the petitioner was present. The company paid Rs. 11,11,250 to the Lake Palace Hotel and Motels (P) Ltd. for purchasing 889 shares. Rs. 3 Iakhs were raised by the company as additional share capital. Rs. 10 lakhs were received from Smt. Vijayraj Kumari, wife of respondent No. 2, as a temporary loan. Lake Palace Hotel and Motels (P) Ltd. allotted 710 shares to the company and refunded Rs. 2,23,750. As a result of the purchase of 710 shares of the Lake Palace Hotel and Motels (P) Ltd., the financial status of the company vastly improved. Even after the bequest of the shares of the Lake Palace Hotel and Motels (P) Ltd. as per the will of Maharana. the supreme position of the respondent No. 1 was not going to be affected. The petitioner purchased 200 shares in January, 1986, and 215 shares in June, 1987, out of her own sweet will and pleasure. She was a party to all the decisions and resolutions relating to the increase of paid up equity share capital of the company from Rs. 10 lakhs to Rs. 20 lakhs. According to past practices, notices were being sent to the members under certificate of posting. Notice for the meeting of the Board of directors of 15 February, 1991, was sent to the petitioner through registered A.D. post. There was no practice of sending the copy of the minutes to any of the directors though they were entitled to inspect the same and take note thereof. The copies of the balance sheet were always sent to her. She had been a signatory to the balance-sheets. No dividend has so far been declared. They are issued only when there are profits. The company is a new company. It is still in the process of growth. Continuous escalating costs of operation is leaving no margin of profit. The copies of the balance sheet were always sent to her. She had been a signatory to the balance-sheets. No dividend has so far been declared. They are issued only when there are profits. The company is a new company. It is still in the process of growth. Continuous escalating costs of operation is leaving no margin of profit. The Lake Palace Hotel and Motels (P) Ltd, which has world-wide reputation has more rooms, better occupancy ratio, and it took more than 12 years to declare a modest dividend. As per the terms of the loan granted by the bank, the company cannot declare any dividend during the currency of the loan. Conditions and cost of operation today are not what they were 10 years ago. With the increase in business, expenditure is bound to increase. The cost of repairs and maintenance was negligible in the earlier years as the hotel was newly renovated and constructed and plant, machinery and furniture were also new. Since the flat was not repaired and properly maintained for several years, the company had to spend some money in its repairs and maintenance. The flat is in the control of the respondent No. 2 as managing director and not as an executor of the will. She is in possession of the audited accounts including profit and loss accounts and balance-sheets and she had signed them. There is absolutely no ground for appointment of a receiver and the demand made by her shows the extent to which she can go for stalling the functioning of a progressing company. No excessive expenditure has been incurred and no fund of the company has been siphoned off. The Company Court has no jurisdiction to decide the grievance of the petitioner against the executors of the will. The company is being efficiently and honestly managed in the best interest of the shareholders, company and the public. Necessary particulars of the oppression have not been given. Mere bald and vague allegations cannot entitle her to maintain the petition. In the meeting held on 16 March, 1991, the resignation of Ashwini Kumar Chaturvedi was accepted w.e.f. 31 March, 1991. Shri K.R. Kantawala and Shakti Singh were appointed as additional directors and they participated in the proceedings after they were so appointed. Mere bald and vague allegations cannot entitle her to maintain the petition. In the meeting held on 16 March, 1991, the resignation of Ashwini Kumar Chaturvedi was accepted w.e.f. 31 March, 1991. Shri K.R. Kantawala and Shakti Singh were appointed as additional directors and they participated in the proceedings after they were so appointed. Resolution was also passed revoking with immediate effect the nomination of the petitioner as a representative of the company on the Board of directors of Lake Palace Hotel and Motels (P) Ltd.; Shakti Singh was nominated in her place and the latter was accordingly intimated by a letter. In compliance with the order of this court, dated 22 March, 1991, Lake Palace Hotel and Motels (P) Ltd. has been intimated that the petitioner will continue to be' the nominee director on the Board of the directors and the nomination of Shri Shakti Singh has been kept in abeyance. The matter regarding subscribing of 1973 shares was also considered in this meeting and the respondent No. 2 declined to subscribe them. All the prayers made in the company petition are preposterous, unpractical and legally not sustainable, and it deserves to be dismissed with costs. The petitioner is not entitled to any relief. 6. In his reply, the respondent No. 2, Shri Arvind Singh, has stated in the beginning that he fully concurs with and reiterates all that is said in the written reply of the company and denies the allegations to the contrary contained in the company petition. He has further averred as follows. The desire expressed by Maharana in his will that the company should always remain a closely-knit family concern and (that), gradually and ultimately, trust should hold the shares in place of the family, cannot be legally binding to (on) the company. It cannot prevent any member of the family from acquiring fresh shares or transfer(ring) his shares to another member of the family. The trustees are not debarred from selling its share to the member of the family. No shareholder can dictate his terms or enforce his wishes and will on the company. The company is governed by the provisions of the Companies Act and its memorandum and articles of association. By the said will, the petitioner and the respondent No. 2 have been appointed as chairman and managing trustee of the trust, respectively. No shareholder can dictate his terms or enforce his wishes and will on the company. The company is governed by the provisions of the Companies Act and its memorandum and articles of association. By the said will, the petitioner and the respondent No. 2 have been appointed as chairman and managing trustee of the trust, respectively. The post of the managing trustee carries more responsibilities and duties than that of the chairman. The petitioner was at full liberty to subscribe to the shares offered to her, but she has chosen not to do so while the respondent No. 2 accepted the shares offered to him. The acquisition of shares was perfectly legal. The petitioner is trying to play fraud on the conscience of the court by seemingly displaying a 'holier than all' attitude. The conduct of Mr. Ashwini Kumar Chaturvedi throughout has never been in consonance with the desires of the respondents No. 2. The reason of appointment of Ashwini Kumar Chaturvedi as additional director is given in the minutes of the meeting of the Board of directors held on 11 March, 1986. It took almost one year to put through his appointment. The petitioner herself admits in para 20 of her company petition that she reposed great trust and faith in Mr. Chaturvedi. The financial situation of the estate was from the beginning and even today is so precarious that it was not possible then or even today, to subscribe any share of the company. It has not been possible to pay the estate duty, arrears of other taxes and current tax liabilities. If the respondent No. 2 had any evil intention as alleged by the petitioner, he could have easily achieved the goals without sinking his own personal huge sums of money in acquiring shares of the company. In fact, he has not only sunk his huge sums of money in the form of share capital in order to save the company from financial distress after distress in its formative years, but he also persuaded his wife, Smt. Vijayraj Kumari, to advance a huge sum of Rs. 10 lakhs to the company to enable it to acquire majority of shares of the Lake Palace Hotel and Motels (P) Ltd. which has immensely improved its financial position. The petitioner has suppressed many material facts from her company petition. 10 lakhs to the company to enable it to acquire majority of shares of the Lake Palace Hotel and Motels (P) Ltd. which has immensely improved its financial position. The petitioner has suppressed many material facts from her company petition. Full facts have been given by the respondent No. 1 in its reply. The respondent No. 2 has always been taking pains to keep the petitioner in touch with the affairs of the company. Letters dated 27 November, 1989 (page No. 352), 5 December, 1989 (pages No. 355-356), 8 January, 1990 (page No. 359) and 17 January, 1990 (page No. 360), written to the petitioner, go to demolish her case that she is being eased out of the affairs of the company, (that) he was treating the company as his personal property and he avoided to show her relevant and important documents. All the desired documents and account books were made available to her and also to her advocate, Mr. Parijat Singa. Copies were also supplied. Comparison can only be made between equally placed in similar circumstances. The petitioner has not said as to how she has come to know about the game plan of the respondent No. 2 and his siphoning off of the funds of the company. The petitioner has failed to see things in proper perspective. During the period from November, 1984, to December, 1986, the petitioner and the respondent No. 2 were the only directors of the respondent company. From January, 1987, several meetings of the Board of directors were adjourned on account of the absence of the petitioner. The respondent No. 2 was always keen that the petitioner's wishes should be respected and no major decision should be taken in respect of the affairs of the company in her absence. This is clear from various letters exchanged in between the petitioner and respondent No. 2. While the petitioner and her advocate, Shri Parijat Sinha, were at Udaipur, respondent No. 2 met them and had long discussions. Mr. Sinha wanted copies of the documents relating to other matters; they could not be produced in such a short time and the respondent No. 2 assured the petitioner that he would get prepared the copies and send them. When the petitioner visited Udaipur on 23 September, 1990, copies of the available documents were handed over to her personally, but they did not relate to the company. When the petitioner visited Udaipur on 23 September, 1990, copies of the available documents were handed over to her personally, but they did not relate to the company. The petitioner is a party in all the family litigations and she could have obtained the copies herself. Expenses of the Shriniwas Palace Hotel which is still in the formative years cannot be compared with the other established hotels. The Bombay flat is used partly as an office and partly as residence of the managing director when he visits Bombay in connection with the company's work. 7. The respondents No. 3(a) and 3(b) (executors of the will) admit in their joint reply that Maharana died on 3 November, 1984, leaving behind the will Annexure 'C' (pages 86-95); they were appointed as executors of it and he created a trust of the name of Maharana Mewar Institution Trust on which his properties devolve. The intention and desire of Maharana that the company [Lake Shore Palace Hotel (P) Ltd.] should always remain a closely-knit family concern cannot be legally binding on the company. The trust is also not debarred from selling its shares to the members of the family. The executors are not authorised to transfer any movable or immovable property even to the trust. In proceedings under section 146, Cr. PC, Shambhu Niwas Palace (ground floor), residence of Maharana, was attached and remained under the protection of the police from 24 November, 1984. Resources available for meeting out liabilities were meagre as compared to the huge liabilities of income-tax, wealth-tax, estate duty, gift-tax. Maharana was well aware of them. He made a note in his will in his own handwriting that estate duty would be paid by each beneficiary pro rata. The current income of the estate was not sufficient to meet the above liabilities as most of the properties have very meagre income. The executors have made payment to the extent of Rs. 21,86,281 upto 31 March, 1991, towards the arrears of income-tax, wealth- tax, gift-tax, estate duty and land and building tax and are trying their best to dis- charge remaining liabilities. The respondent No. 2 personally arranged to advance Rs. 11,00,000 to the estate for payment of the estate duty. This was done to save the estate and the reputation of the family. The respondent No. 2 personally arranged to advance Rs. 11,00,000 to the estate for payment of the estate duty. This was done to save the estate and the reputation of the family. In such a situation, it was not possible for the executors to accept 700 shares offered to the estate in the year 1985 and also of 2,100 shares offered subsequently. The petitioner has not suggested as to how the directions of Maharana can be carried out and implemented. She herself did not insist that the shares offered to the executors may be offered to the trust as she was well aware of the financial position of the estate. 8. In her rejoinder affidavit to the counter affidavit of the company (pages 388 to 433), she has stated that she reiterates the contents of her company petition, denies and disputes all statements, submissions and contentions contained in the reply of the company petition except those statements, submissions and contentions which have specifically been admitted. She has further averred as follows. A.C. Jain has filed reply on behalf of the company alongwith his affidavit. In it, it is not mentioned that he is authorised by the company to make such affidavit and, on this ground alone, the said reply should not be taken on record. The respondent No. 2 has treated the company as his personal property and has conducted the affairs in a like manner. The devious scheme of respondent No. 2 was unfolded only after she has been tricked into it. The principles of estoppel do not apply. It is denied that she has acquiesced in all decisions. Oppression and mismanagement came to light only recently. After the death of Maharana, the respondent No. 2 assumed the charge of the company in dual capacity as a managing director and also as an executor of the will. Through the said 700 shares of the estate, the respondent No. 2 acted in concert with respondent No. 3(b) and managed to corner large chunks of shareholdings. The respondent No. 2 did not make any declaration regarding public trustee as required under section 153B of the Companies Act. In complete disregard of section 150B, respondents No. 2 and 3(b) still exercise power in respect of these shares. The financial position of the company was never such as to warrant fresh issue of shares. The respondent No. 2 did not make any declaration regarding public trustee as required under section 153B of the Companies Act. In complete disregard of section 150B, respondents No. 2 and 3(b) still exercise power in respect of these shares. The financial position of the company was never such as to warrant fresh issue of shares. The letters of the bank were not serious and they were arranged by respondent No. 2 to create a false impression as regards the financial position of the company. The petitioner never intentionally stayed away from the meetings of the Board of directors. Several notices were received by her after the meetings were held. She-had gone abroad on 2 June, 1986, and returned to India on 1 July, 1986. After her return, she stayed at Delhi till 10 July, 1986. The respondent No. 2 was well aware of it and despite it, the meeting of the Board of directors was fixed on 30 June, 1986, or that she may not attend it. Debt-equity ratio never deteriorated to such an extent as has been shown. To determine the debt-equity ratio, unsecured loans are not taken into consideration. The debt-equity ratio was within the accepted norms. The notice of the meeting scheduled to be held on 6 November, 1989, was purposely delayed. The respondent No. 2 was also well aware that the petitioner was busy in making arrangement of her daughter's wedding. Initially, she wrote a letter for accepting 923 shares offered to her. Subsequently, she did not accept them as no prudent person could be expected to invest further amount in a company in which such person had no say and also for the reason that dividend was not declared so far. The respondent No. 3(b) is one of the two executors of the will and he works entirely under the instructions of the executor [respondent No. 3(a)], Arvind Singh. Thus the respondent No. 2 effectively controls 79.7% shareholding. The petitioner does not trust him. This mistrust is the result of the mala fides, unfair, illegal and harsh wisdom and onerous conduct on the part of the respondent No. 2. The payment of the amounts deposited by the petitioner and her children was not made on the ground of tight financial position of the company and, on the other hand, payment of Rs. 10,00,000 was made to the wife of the respondent No. 2. The payment of the amounts deposited by the petitioner and her children was not made on the ground of tight financial position of the company and, on the other hand, payment of Rs. 10,00,000 was made to the wife of the respondent No. 2. Shri Raj Singh Dungarpur requested the petitioner not to press for the return of her loans temporarily. The respondent No. 2 behaved in a most unreasonable manner with the petitioner. As a matter of fact, no meeting was held on 16 March, 1991, and, even if it was held, it was a void and non est meeting. The petitioner was allowed inspection of the documents by the respondents only after she obtained an order of the court. There is no office of the company in the Bombay flat. It is being used as his residence by the respondent No. 2. 9. In her rejoinder affidavit (pages 434-461) to the reply to respondent No. 2, the petitioner has averred thus. A.C. Jain was not duly authorised by the company to file his affidavit on its behalf. The respondent No. 2 is mis-utilising the corporate entity of the company (respondent No. 1) for his private gain and benefit. The very fact that the respondent No. 2 delayed the administration of the estate of Maharana makes his said intention clear. Shri A.K. Chaturvedi acted in consonance with the desire of respondent No. 2 and not in the interest of the trust or the company. There was no need to raise the share capital of the company. The alleged weak financial position of the company and the alleged poor debt-equity ratio were nothing but sham design to deceive the petitioner. The respondent No. 2 has utilised the company's funds for his personal expenses, tours and pleasure trips. His high life style has been maintained through the funds of the company. The expenses under various heads have been inflated. Despite tremendous increase in the gross receipts, the profit has been meagre. This is indicative of the gross mismanagement of the company. The petitioner and her daughter asked for the withdrawal of their loans as they needed funds for the purchase of a flat for the petitioner's daughter. On one pretext or the other, the respondent No. 2 avoided it. At the same time, he paid off the amounts of the loans extended by him and his wife. The petitioner and her daughter asked for the withdrawal of their loans as they needed funds for the purchase of a flat for the petitioner's daughter. On one pretext or the other, the respondent No. 2 avoided it. At the same time, he paid off the amounts of the loans extended by him and his wife. He wrote to Mr A.K. Chaturvedi to dissuade her from pressing for the withdrawal of her loans. Thereupon, Shri Raj Singh Dungerpur and Shri A.K. Chaturvedi met the petitioner and they requested her to withdraw her letter dated 11 March, 1990, asking for the payment of her amounts in the interest of the company. Accordingly, she wrote letter dated 6 April, 1990, not pressing for the return of her amounts. As a result of the non-payment, she has undergone great inconvenience and has to take loans at high rate of interest. The petitioner and her family have invested huge sums in the company and, naturally, she would like the company to prosper. The respondent No. 2 refused to show papers to her and her advocate, Shri Parijat Sinha, and told that the documents may be seen either in the Office of the Registrar of Companies, Jaipur, or in the court. The respondent No. 2 has indulged in excessive expenditure under various heads. No effective business of the company is being carried on in the said Bombay flat. During the year 1989-90, the telephone and communication expenses were to the tune of Rs. 1,11,540 and Rs. 20,284 and the total expenditure was to the tune of Rs. 3,69,924 on the Bombay flat. In the year 1990-91, amounts of Rs. 1,38,311 and Rs. 29,126 have been spent towards the telephone and communication. The respondent No. 2 has been going abroad on the company's funds in the guise of promotional tours. No business benefits whatsoever have been derived out of these tours. During the period from 12 May, 1990 to 15 July, 1990, the company has been saddled with the expenses of Rs. 1,49,000. On 20 April, 1991, physical checking of the cash was not allowed. A jeep has been purchased on 19 May, 1990, for Rs. 1,83,390 for the personal use of the respondent No. 2 from (with) the funds of the company. 10. Another rejoinder has been filed by her to the joint reply of respondents Nos. 1,49,000. On 20 April, 1991, physical checking of the cash was not allowed. A jeep has been purchased on 19 May, 1990, for Rs. 1,83,390 for the personal use of the respondent No. 2 from (with) the funds of the company. 10. Another rejoinder has been filed by her to the joint reply of respondents Nos. 3(a) and 3(b) traversing almost all the averments made in it. It has been averred that the executors were required to make declaration under sections 153A and 153B of the Act but have failed to comply with. 11. The company has filed the affidavit of its chief accountant and principal officer, A.C. Jain, in reply to the said rejoinder affidavit of the petitioner. He has averred in it that, by resolutions dated 26 November, 1984, and 20 May, 1991, he has been authorised by the company to file replies and affidavits for and on its behalf. The share capital of the company was increased in the interest of the company and, consequently, its shareholding. It was also commercially expedient. Such increase was essential to strengthen the financial position of the company. In his book, Cost and Management Accounting S.L. Maheshwari has given the formula of debt-equity ratio as external equities/internal equities. External equities refer to total outside liabilities, long-term or short-term loans and internal equities refer to shareholdings or net worth. The petitioner herself was a party in the increase of the shareholdings from time to time. Dividend was not declared as it was one of the terms of the term loan. It was declared after the entire loan was repaid to the Bank of India, Udaipur. 12. The respondent No. 2 has filed his affidavit in reply to the said rejoinder affidavit of the petitioner averring that there is no question of respondent No. 3(b) acting under his dictates and desires. He (respondent No. 2) is working in the best interest of the company and the shareholders. He has never misused his position and never utilised the funds of the company on his personal tours and pleasure trips. During the year 1989-90, the net profit of the company was Rs. 16.07 lakhs and not Rs. 1.58 lakhs. There were several reasons in the decline of profits during the said period. On account of Ram Janma Bhumi Babri Masjid riots, the Gulf War and anti-reservation agitations, the gross receipts substantially declined. During the year 1989-90, the net profit of the company was Rs. 16.07 lakhs and not Rs. 1.58 lakhs. There were several reasons in the decline of profits during the said period. On account of Ram Janma Bhumi Babri Masjid riots, the Gulf War and anti-reservation agitations, the gross receipts substantially declined. For the promotion of hotel business, it is necessary to undertake business promotion tours. The jeep purchased by the company is meant for its hotel business. Two Videocon VCPs and one Videocon VCR have also been purchased by the company for its business purpose. They have been installed in the Bombay office. 13. Respondent No. 3(b), A. Subramaniam, has also filed his affidavit in reply to the petitioner's rejoinder affidavit. He has averred in it that the executors are not trustees and, as such, they are not under any obligation to submit declaration under section 153B of the Act. The executors have already deposited Rs. 43,863 as probate fee in the High Court on 7 March, 1991. The petitioner is a party to the special appeal filed by her mother and brother against the judgment of the learned single Judge dated 13 November, 1987, directing the grant of probate of the will in favour of the executors. The Shambhu Niwas Palace remained under the receiver from November, 1984, to December, 1988, in proceedings under section 145 Cr. P.C. A commissioner was also appointed for preparing the inventory of the articles lying in the ground floor of the Shambhu Niwas Palace. This inventory has also been submitted by the commissioner. Until and unless, the tax liabilities outstanding against the estate are fully discharged, the administration of the will cannot proceed further in terms of the directions contained therein. The respondent No. 2 advanced Rs. 11 lakhs in March, 1991, to the estate of Maharana in order to save the reputation of the family and protect the estate. The executors have paid total amount of Rs. 6,85,999 towards the arrears of income-tax, wealth-tax, gift-tax, land and building tax payable by Maharana and his estate. The executors filed appeal against the assessment order of the Controller, Estate Duty, levying estate duty to the tune of Rs. 27,06,530 and they were successful in getting it reduced to Rs. 11,95,835 in the appeal. On account of complaint, the assessment order has been reopened. The executors filed appeal against the assessment order of the Controller, Estate Duty, levying estate duty to the tune of Rs. 27,06,530 and they were successful in getting it reduced to Rs. 11,95,835 in the appeal. On account of complaint, the assessment order has been reopened. After depositing the said amount of estate duty, he has been able to obtain probate on 16 May, 1991. The will did not authorise the executors to invest funds of the estate in the shares of the company. 14. In surrejoinder, the petitioner has stated at the outset that she reiterates the contents of her company petition and rejoinder affidavit and denies and disputes all statements, submissions and contentions contained in the affidavits in reply to her rejoinder affidavit purportedly filed on behalf of the company which are contrary to and/or inconsistent with what has been stated in the company petition and other affidavits/pleadings by her save and except those statements, submissions and contentions which have specifically been admitted. She has further stated that the Bombay flat is used as a residence by the respondent No. 2; his wife, Smt. Vijay Raj Kumari, resides in it alongwith her two children, namely, Padmaja Kumari and Lakhraj Singh who are studying in Bombay. 15. In surrejoinder to the affidavit filed in reply by the respondent No. 2 to the petitioner's rejoinder, similar averments have been made. It has further been averred in it that the Bombay flat is not an office of the company; no work of an official nature is done therein; the respondent No. 2 has not stated as to how many foreign tourists have visited the hotel of the company in pursuance of his purported promotional foreign tours. Release of the foreign exchange by the Reserve Bank of India does not in any way establish that the foreign tours of the respondent No. 2 were promotional tours and were necessary in the interest of the company. The jeep purchased by the respondent company is for the personal use of the respondent No. 2. The VCR/VCPs/TV are also for the business of the company. They have admittedly been installed in the Bombay flat. 16. In the surrejoinder to the reply filed by respondent No. 3(b), similar averments have been made. It has further been averred that no inventory has been filed by the executors in the probate case. The VCR/VCPs/TV are also for the business of the company. They have admittedly been installed in the Bombay flat. 16. In the surrejoinder to the reply filed by respondent No. 3(b), similar averments have been made. It has further been averred that no inventory has been filed by the executors in the probate case. The probate certificate has been obtained on 16 May, 1991. She was deceived by the respondent No. 2 in allowing him to take the shares refused by the estate of Maharana, and, at that point of time, she did not realise his ulterior motive. 17. On 26 July, 1991, learned counsel for the parties requested that the case be listed on 4 September, 1991, for its final disposal as it involves a short point in bet- ween the brother (respondent No. 2) and sister (petitioner) vide order sheet of this date and, accordingly, 4 September, 1991, was fixed for hearing arguments for the final disposal of the company petition. Thereafter, the case was adjourned from time to time on the request of either party. At the commencement of final hearing on 26 August, 1992, Mr. M. Mridul, Senior Advocate, appearing alongwith Mr. Sangeet Lodha, submitted that he has been instructed to appear in this case for and on behalf of the company by its director, Smt. Yogeshwari Kumari (petitioner), and requested for adjournment. The learned counsel for the petitioner moved four applications with different prayers. The same day, it was ordered that in view of the various applications and documents filed and very lengthy and contentious arguments raised, it could not now be said that a small point is involved in this company petition and 23 September, 1992, was fixed for hearing arguments on all pending applications. Accordingly, arguments on the interlocutory applications were commenced; they were continued on different dates, but were not concluded. During arguments, the learned counsel for the parties were requested to let the company petition be finally decided on the basis of the detailed and thorough arguments which were being made for the disposal of the various pending interlocutory applications. On 4 July, 1994, adjournment was again sought and was granted on the condition that arguments would be advanced for the final disposal of the company petition itself and 2 August, 1994, was fixed accordingly. On 4 July, 1994, adjournment was again sought and was granted on the condition that arguments would be advanced for the final disposal of the company petition itself and 2 August, 1994, was fixed accordingly. On 2 August, 1994, learned counsel for the parties submitted that arguments for the final disposal of the company petition be heard on the basis of the material on record; the order dated 26 August, 1992 (para No. 10), be accordingly modified and the parties would file their affidavits to this effect. The parties filed their affidavits stating that the company petition itself be heard for the final disposal on the basis of the material on record and arguments were advanced for the final disposal of the company petition. 18. Following points arise for determination in this company petition : (1) Whether conditions precedent for invoking the jurisdiction under sections 397 and 398 of the Act are non existent ? If so, to what effect ? (2) Whether the action of the Board of directors can be subject matter of a petition under sections 397 and 398 of the Act ? (3) Whether the petitioner's grievance against the executors of the will of Maharana can be subject matter of the company petition ? (4) Whether the minutes of the meetings were not recorded faithfully and the minute books have not been maintained in accordance with law ? If so, to what effect ? (5) Whether the adjourned meetings of the Board of directors of the company in which the respondent No. 2 was only present were void and non est ? (6) Whether A.C. Jain had no authority to represent the company ? (7) Whether the respondent No. 2 and late A. Subramaniam (Executors) purposely and intentionally caused delay in obtaining the probate of the will and in the administration of the estate of Maharana in order to continue to have a hold over the company by virtue of 700 shares of the estate ? (8) Whether the respondents No. 3(a) and 3(b) have shed their character as executors and have adorned the role of trustees ? (9) Whether the petitioner cannot rely upon instances of the oppression and mismanagement on the part of the respondent No. 2 which were prior to three years of the date of institution of the company petition ? (8) Whether the respondents No. 3(a) and 3(b) have shed their character as executors and have adorned the role of trustees ? (9) Whether the petitioner cannot rely upon instances of the oppression and mismanagement on the part of the respondent No. 2 which were prior to three years of the date of institution of the company petition ? (10) Whether the petitioner is not entitled to challenge the various decisions taken in the meetings of the Board of directors and meetings of the company on account of acquiescence, waiver and estoppel ? (11) Whether the expenses incurred by the company in the foreign tours of the respondent No. 2, in Bombay flat, in litigation, and in making payments to Central Office (Palace Organisation) were not in its interest ? (12) Whether the share capital of the respondent company was increased and also proposed to be further increased to improve the debt-equity ratio at the instance of the Bank of India, Udaipur, or to reduce the shareholding of the petitioner and to enhance the shareholding of the respondent No. 2 ? (13) Whether the petitioner is guilty of concealment of many material facts ? If so, to what effect ? (14) Whether the affairs of the company are being conducted by respondent No. 2 in a manner oppressive to the petitioner or prejudicial to the interest of the company within the meaning of sections 397 and 398 of the Companies Act? (15) Relief ?POINT No.1Whether the conditions precedent for invoking the jurisdiction under sections 397 and 398 of the Act are non existent ? If so, to what effect ? 19. It was contended by the learned counsel for the respondents that the petitioner has failed to show that she is being oppressed in her capacity as a member of the company and such acts of oppression justify the winding up of the company under the just and equitable clause. They relied upon Maharani Lalita Rajya Lakshmi, M.P. v Indian Motor Co. They relied upon Maharani Lalita Rajya Lakshmi, M.P. v Indian Motor Co. (Hazaribagh) Ltd. AIR 1962 Cal 127 (DB) : (1962) 32 Comp Cas 207 (Cal) , Scottish Co-operative Wholesale Society Ltd. v Meyer (1958) 3 All ER 66: (1958) 29 Comp Cas 1 , Re H.R. Harmer Ltd. (1958) 3 All ER 689 , Re Jermyn Street Turkish Baths Ltd. (1971) 3 All ER 184 (CA) : (1971) 41 Comp Cas 999 , Shanti Prasad Jain v Kalinga Tubes Ltd. (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 , Re Thakur Hotel (Simla) Company (P) Ltd. (1963) 33 Comp Cas 1029 , Raghunath Swarup Mathur v Har Swarup Mathur (1970) 1 Comp LJ 35 (All) : (1970) 40 Comp Cas 282 (All) and Mohta Bros. (P) Ltd. v Calcutta Landing and Shipping Co. Ltd. (1970) 40 Comp Cas 119 (DB) (Cal), 123 . They further contended that the petitioner being one of the directors of the company and has (having) signed profit and loss accounts and balance-sheet, she cannot say that the company is being mismanaged. They relied upon Shanti Prasad Jain v Kalinga Tubes Ltd. (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 and Raghunath Swarup Mathur v Har Swarup Mathur (1970) 1 Comp LJ 35 (All) : (1970) 40 Comp Cas 282 (All). 20. In reply, it was contended by the learned counsel for the petitioner that all necessary ingredients of sections 397 and 398 of the Act are clearly spelt out from the averments made in the company petition and the company court has jurisdiction to entertain and decide it, and it cannot be thrown out simply on the ground that conditions precedent for invoking the jurisdiction under sections 397 and 398 of the Act do not exist. It is entirely a different matter if the petitioner fails to prove her case as set up in her company petition. 21. Following are the requirements of section 397: (1) That the affairs of the company are being conducted (i) in a manner oppressive to any member or members; or (ii) in a manner prejudicial to the public interest; and (2) That the facts would justify making of a winding up order on a 'just and equitable ground'. (3) But that such winding up would unfairly prejudice such member. 22. (3) But that such winding up would unfairly prejudice such member. 22. Section 398 of the Act can be invoked in either of the two circumstances :that the affairs of the company are being or are likely that they will be conducted in a manner which is- (a) prejudicial to public interest; or (b) prejudicial to the interest of the company due to a material change that has taken place in the management or control of the company. 23. Para Nos. 56 and 57 of the company petition run as under : "56. In these circumstances, the petitioner submits that the affairs of the company are being conducted in a manner oppressive to a part of the members of the company including the petitioner and that while it would be just and equitable that the company should be wound up to dm,so would unfairly prejudice the petitioner and that part of the members. 57. The petitioner further states that the affairs of the company are being conducted in a manner prejudicial' to the interest of the company and that a material change has taken place in the management and control of the company and that by reason of such change, the affairs of the company are being conducted and will be conducted in a manner prejudicial to the interests of the company." 24. The condition precedent for invoking the jurisdiction of the court under sections 397 and/or 398 is clearly spelt out from the averments of the company petition, particularly, above quoted paras and paras Nos. 32, 33, 34, 39, 49 and 50. It is entirely different matter whether the petitioner has been successful or not. This aspect of the case has been discussed under point No. 14. The point is accordingly decided in favour of the petitioner.POINT No. 2Whether the action of the Board of directors can be subject matter of a petition under sections 397 and 398 of the Act ? 25. It is not in dispute that the petitioner and the respondent No. 2 are the only shareholders of the company and they are also its director and managing director, respectively. It is clear from the averments of the company petition that the oppression and mismanagement complained of adversely affect the petitioner in her capacity as a member of the company also. As such, the petition is quite maintainable under section 397 of the Act. It is clear from the averments of the company petition that the oppression and mismanagement complained of adversely affect the petitioner in her capacity as a member of the company also. As such, the petition is quite maintainable under section 397 of the Act. Her complaint as director of the company is beyond the scope of sections 397 and 398 of the Act. These provisions cannot be invoked to resolve the inter se disputes in between the directors. Reference of V.M. Rao v Rajeshwari Rama-krishnan (1986) 1 Comp LJ 1 (Mad) : (1987) 61 Comp Cas 20 (Mad) may be made here. Actions of the Board of directors can well be challenged by a shareholder in such a petition. The point is accordingly decided.POINT No. 3Whether the petitioner's grievance against the executors of the will of Maharana can be subject matter of the company petition ? 26. The petitioner has averred in pars No. 54 of her company petition that the funds used for the purpose of purchasing shares in the name of the respondent No. 2 were in fact the funds of Maharana. In para No. 55, she has further averred that there was no reason whatsoever for the executors of the will to refuse to accept the shares offered to them from time to time. Prayer No. 5 of the company petition runs as under : "(5). It be declared that the present executors of the will (respondent No. 2 and Shri A. Subramaniam) shall not be competent to represent the interest of the estate of H.L.H. Maharana Bhagwat Singh of Mewar in the company and a committee comprising of the trustees of the Maharana Mewar Institution Trust be constituted for the exercise of all rights in respect of the shares in the company transmitted to the said executors;". The petitioner's grievance against the respondents No. 3(a) and 3(b) is in the capacity of their (being the) executors of the will of Maharana. Section 402 enumerates powers of the Company Court in granting reliefs on applications moved under sections 397 and 398 of the Act. The above-quoted prayer cannot be granted under section 402 of the Act. Section 302, Indian Succession Act, 1925, runs as under : "302. Directions to executor or administrator. Section 402 enumerates powers of the Company Court in granting reliefs on applications moved under sections 397 and 398 of the Act. The above-quoted prayer cannot be granted under section 402 of the Act. Section 302, Indian Succession Act, 1925, runs as under : "302. Directions to executor or administrator. Where probate or letters of administration in respect of any estate has or have been granted under this Act, the High Court may, on application made to it, give to the executor or administrator any general or special direction in regard to the estate or in regard to the administration thereof." On an application, direction may be issued by the High Court to an executor or administrator. Under section 301, Indian Succession Act, 1925, the High Court has power to remove an executor or administrator and to appoint another executor or administrator. Such a power cannot be exercised in a petition moved under sections 397 and 398 of the Act. The point is accordingly decided against the petitioner.POINT No. 4Whether the minutes of the meetings were not recorded faithfully and the minute books have not been maintained in accordance with law ? If so, to what effect ? 27. Following are the four minute books of the company : (1) Minutes of the meetings of the Board of directors from 27.5.72 to 24.11.84 (Book No. 1). (2) Minutes of the meetings of the Board of directors from 26.11.84 to 16.3.91 (Book No. 2). (3) Minutes of the meetings of the Board of directors from 20.5.91 onwards (Book No. 3). (4) Minutes of the meetings of the shareholders (ACM & EGM) from 21.11.73 onwards (Book No. 4). 28. The following objections have been raised in respect of these minute books by the learned counsel for the petitioner : Book No. Objection 1. In the end, pages No. 18 to 187 are blank. 2. (a) In the end, 49 pages have been left blank, and (b) paging has been done as late as on 8.10.91 and they have recently been initialled. 3. Pages 90 onwards are blank. Papers containing the suggestions of the petitioner have been pasted at page Nos. 67, 68, 69 and 70. Type written minutes of the meetings held on 28.6.93 have been pasted at page Nos. 77, 79, 81 and 83. Page Nos. 78, 80, 82 and 84 have been crossed out. 4. Page Nos. 3. Pages 90 onwards are blank. Papers containing the suggestions of the petitioner have been pasted at page Nos. 67, 68, 69 and 70. Type written minutes of the meetings held on 28.6.93 have been pasted at page Nos. 77, 79, 81 and 83. Page Nos. 78, 80, 82 and 84 have been crossed out. 4. Page Nos. 1 to 30 are not initialled and page Nos. 31 to 55 have been initialled after the direction dated 8.10.91. 29. It has been contended by the learned counsel for the petitioner that the said minute books have not been maintained in accordance with the provisions of section 193 of the Act and presumption of genuineness cannot be raised. Section 193(1)-of the Act requires that pages of a minute book are to be consecutively numbered. Section 193(6) provides penalty of Rs. 50, if default is made in maintaining minute book. Section 193(1 A) requires that each page of a minute book is to be initialled or signed and the last page of the record of the proceedings of each meeting shall be dated and signed. Section 193(1B) requires that in no case the minutes of the proceedings of a meeting shall be attached to a minute book. Section 193(2) further requires that minutes of each meeting shall contain a fair and correct summary of the proceedings. He relied upon A.K. Mookerji v Clarion Advertising Service, 1980 TLR 2043, Re Gluco Series (P) Ltd., (1987) 61 Comp Cas 227 (Cal) and S. Narayanan v Century Flour Mills (1987) 1 Comp LJ 25 (Mad) , paras 28 and 29. 30. In reply, it has been contended that no such objection has been taken in the company petition; a good part of the minutes of these minute books have been relied upon by the petitioner herself; the defects noted in them are insignificant and minor; petitioner's suggestions were simply pasted in the minute book, in the subsequent meetings; these minutes were confirmed in the presence of the petitioner and this cannot constitute a ground of oppression and mismanagement. 31. 31. Section 195 provides that if a minute book has been kept in accordance with the provisions of section 193, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held and all proceedings thereat to have duly taken place and, in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid. Section 193 does not provide that minutes should be written upto the last page of minute book. Book No. 1 shows that the minutes of the meeting held on 24 November, 1984 were recorded in the end. It was the first meeting after the death of Maharana, and it was a condolence meeting. There- after, a new minute book was started. In the start, it records the minutes of the meeting of the directors of the Board dated 26 November, 1984. This book contains the minutes of the meetings held upto the date of the filing of this company petition. The third minute book commences from 20 May, 1991, recording the minutes of the first meeting held after the company petition was filed. It is not the case of the petitioner that the minutes were not written faithfully or in time. Section 194 of the Act enshrines that the minutes of the meeting kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein. At the risk of repetition, it may be mentioned that on 2 August, 1994, the learned counsel for the parties stated that the arguments for the final disposal of the company petition may be heard on the basis of the materials on record and petition be accordingly decided vide order sheet of this date. As such, these minute books can be taken into consideration for deciding this company petition. At the most, the said presumption in favour of the minutes in respect of which said defects have been noticed may not be taken into consideration. This point is accordingly decided against the petitioner.POINT No. 5Whether the adjourned meetings of the Board of directors of the company in which only the respondent No. 2 was present were void and non est? 32. This point is accordingly decided against the petitioner.POINT No. 5Whether the adjourned meetings of the Board of directors of the company in which only the respondent No. 2 was present were void and non est? 32. It has been contended by the learned counsel for the petitioner that article 74 of the articles of association of the company (page 78 of the company petition) provides that two directors shall constitute a quorum for a meeting of the Board of directors. Section 287(2) of the Act also provides that the quorum for the meeting of the Board of directors shall be one third of its total strength, or two directors, which is higher and section 288(1) further provides that if a meeting of the Board of directors could not be held for want of quorum, then, unless the articles otherwise provide, the meeting shall automatically stand adjourned till the same day in the next week at the same time and place. He also contended that there is no provision regarding quorum for an adjourned meeting of the Board of directors as is provided under section 174(5) of the Act for an annual general meeting or an extraordinary general meeting and, as such, the quorum for an adjourned meeting of the Board of directors will be the same as for a meeting of Board of directors. He further contended that the meetings contemplate the presence of atleast two persons, in the eye of law, there cannot be any meeting with one person only and as such the resolutions passed and decisions taken in the meetings of the Board of directors in which respondent No. 2 only was present were void and non est. He relied upon Sharp v Dawes (1876) 2 QBD 26 , East v Bennett Bros. Ltd. (1911) 1 Ch 163 , Re Alma Spinning Company (1880) 16 Ch.D 681-689 , Needle Industries (P) Ltd. v Needle Industries Newer (India) Holdings Ltd. (1982) 1 Comp LJ I (SC) : AIR 1981 SC 1289, para 112 , Amrit Kaur Puri v Kapurthala Flour, Oil and General Mills Ltd. (1984) 56 Comp Cas 194 (P&H), at page 204 , M. Moorthi/v Drivers and Conductors Bus Services (P) Ltd. (1991) 1 Comp LJ 266 (Mad) : (1991) 71 Comp Cas 136 (Mad) , Rajan Nagindas Doshi v British Burma Petroleum Co. Ltd. (1972) 42 Comp Cas 197 (Born) and the meaning of 'meeting' given in Black's Law Dictionary and Stroud's Legal Dictionary. 33. In reply, it has been contended by learned counsel for respondents No. 1, 2 and 3(a) as follows. No such case has been put forward in the company petition. The petitioner deliberately did not attend the meetings of the Board. She cannot now turn round and say that the meetings of the Board of directors held in her absence were void and non est. At the most, it can simply be said that such meetings were irregular. No complaint was made by the petitioner in respect of such meetings. Minutes of such adjourned meetings were confirmed at the subsequent meetings in which she was present and she has thus acquiesced with (in) the alleged irregularity; she had waived her right and she is now estopped from challenging the same. Neither any provision of the Act and rules and regulation framed thereunder nor any articles of association of the company require quorum for an adjourned meeting of the Board of directors. There is no statutory provision which makes an adjourned meeting of the Board of directors without quorum non est or void. There is also no provision in the Act providing that the resolution passed or decision taken in an adjourned meeting of the Board of directors in which only one director is present would be voidable or punish- able. Contravention of the provisions of section 283(1) is punishable under its sub- section (2). Non-compliance of the provisions of section 270(1) regarding share qualification by a director within two months of his appointment renders his action taken after two months punishable. Non-compliance of the sub-section (1) or (2) of section 303 or sub-section (1) or (2) of sections 307 and section 308 is punishable with fine. Contravention of the provisions of sections 312 and 376 of the Act renders the action void. Violation of section 416 renders the action voidable and also punishable. It has also not been shown that any of the decisions taken at any of the adjourned meetings of the Board of directors was prejudicial to the company. A party can waive mandatory procedure. The Companies Act, 1956, itself contemplates that there can be legal and valid meeting of one member only vide Explanations of sections 167(1) and 186(1). It has also not been shown that any of the decisions taken at any of the adjourned meetings of the Board of directors was prejudicial to the company. A party can waive mandatory procedure. The Companies Act, 1956, itself contemplates that there can be legal and valid meeting of one member only vide Explanations of sections 167(1) and 186(1). They relied upon Shachelton on Law and Practice of Meeting (8th Edition), page 225, and Dhirendra Nath Gora v. Sudhir Chandra Ghosh (1964) 6 SCR 1001 . 34. Sections 285 to 290 (both inclusive) deal with the meeting of Board of directors. Section 285 requires that Board must meet at least once in every three months and at least four such meetings shall be held in every year. Section 286 deals with notice of meeting. Section 287 contains provisions regarding quorum. Section 288 contains procedure where meeting is adjourned for want of quorum. Section 289 enables passing of resolution by circulation. Section 290 deals with the validity of acts of directors. 35. Section 287(2) states : "(2) The quorum for a meeting of the Board of directors of a company shall be one-third of its total strength (any fraction contained in that one-third being rounded off as one), or two directors, whichever is higher. Provided that where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength, the number of the remaining directors, that is to say, the number of the directors who are not interested present at the meeting being not less than two, shall be the quorum during such time." 36. Section 288 runs as under : "Procedure where meeting adjourned for want of quorum-(1) If a meeting of the Board could not be held for want of quorum, then, unless the articles otherwise provide, the meeting shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place. (2) The provisions of section 285 shall not be deemed to have been contravened merely by reason of the fact that a meeting of the Board which had been called in compliance with the terms of that section could not be held for want of a quorum." There is no specific provision in the Act for an adjourned meeting of the Board of directors like section 174(5) providing that if at an adjourned general meeting, a quorum is not present within half an hour from the time appointed for holding the meeting, the members present shall be a quorum. Section 174(3) provides that if within half an hour from the time appointed for holding a meeting of the company, a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved. Sub-sections (4) and (5) of section 174 deal with the meetings other than (those) called upon the requisition of members. There is no similar provision in section 288. Initial meeting and adjourned meeting of the Board of directors have the same powers; they are required to observe the same formalities and the agenda is same. As already observed above, section 285 requires that Board must meet at least once in every three months and at least four such meetings shall be held in every year. Section 288(2) says that the provisions of section 285 shall not be deemed to have been contravened merely by reason of the fact that a meeting of the Board of directors could not be held for want of a quorum. This contemplates the contingency that even in an adjourned meeting of the Board of directors, quorum may not be present and meeting is not held resulting in the non-compliance of section 285 of the Act and thus punishable under section 629A of the Act. It confirms that a meeting of the Board of directors including an adjourned meeting cannot be held without required quorum. Section 289 enables passing of resolutions by circulation to all the directors present in India and their approval by the majority. For all these reasons, an adjourned meeting of the Board has not been exempted from the requirement of quorum. Instead of providing quorum for an adjourned meeting of the Board of directors, the Act has provided passing of resolution by circulation amongst the directors which is easier and practicable. For all these reasons, an adjourned meeting of the Board has not been exempted from the requirement of quorum. Instead of providing quorum for an adjourned meeting of the Board of directors, the Act has provided passing of resolution by circulation amongst the directors which is easier and practicable. It is not so in the cases of annual general meeting or extraordinary general meeting where members are more. As such, no provision has been made for circulation for such adjourned meetings (AGM & EGM) but specific provisions regarding quorum for an adjourned meeting has been provided. Holding of initial meeting or adjourned meeting of the Board of directors without quorum as required under section 287(2) attracts penal provisions of section 629A of the Act dealing with the contravention of any provision of the Act for which no punishment is provided elsewhere in the Act. It cannot, therefore, be said that an adjourned meeting of the Board of directors without quorum is permissible under the Act. 37. Article 75 of the articles of association (pages No. 62-86) also deal with the quorum for a meeting of the Board of directors. It prescribes that two directors shall constitute a quorum. There is no mention of an adjourned meeting of the Board and also for its quorum in the article of association of the company. Article 49 deals with adjourned general meeting and it provides that members present shall be deemed to be a quorum (if not called on the requisition of members). In case of general meeting called on the requisition, it shall be dissolved if quorum is not present. 38. The commonsense view is also that for a meeting, there must be at least two persons. This commonsense view is also the true view in law. 'Meeting' has been defined in Shorter Oxford Dictionary 'an assembly of a number of people for entertainment, discussion or like'. 39. Stroud's Judicial Dictionary defines 'meeting' as under : "Meeting.-(1) One swallow does not make a summer, nor does the presence of one shareholder constitute a 'meeting' [Re Sanitary Carbon Co. (1877) WN 223]. 'The word 'meeting' implies a concurrence, or coming face to face, of at least two persons' Lper Coleridge C.J., Sharp v Dawes, (1876) 2 QBD 261 . Stroud's Judicial Dictionary defines 'meeting' as under : "Meeting.-(1) One swallow does not make a summer, nor does the presence of one shareholder constitute a 'meeting' [Re Sanitary Carbon Co. (1877) WN 223]. 'The word 'meeting' implies a concurrence, or coming face to face, of at least two persons' Lper Coleridge C.J., Sharp v Dawes, (1876) 2 QBD 261 . There is accordingly and speaking generally, no 'meeting' of shareholders or other bodies, if only one attends; though 'no doubt in a particular statute, the word might be used in a special sense, so that the attendance of one might satisfy it' [per Coleridge C J, Sharp v Dawes , supra]. See East v Bennett Bros. (1911) 1 Ch. 163. See also Companies Act, 1948 (c.38), section 124(c) (two members of a private company and three of a public company are a quorum). (2) 'Meeting' in Companies Act, 1862 (c. 89), Table A, article 35 (see new Companies Act, 1948 Table A, article 49), does not apply to a meeting of subscribers of memorandum of association [ John Morley Building Co. v Barras (1891) 2 Ch. 386] ." 40. Black's Law Dictionary defines it as under : "Meeting.-A coming together of persons; an assembly, particularly, in law, an assembly of a number of persons for the purpose of discussing and acting upon some matter or matters in which they have a common interest, People v Mintz 106 Cal. App. 725, 290 p. 93,100 ." Two exceptions have been provided in the Companies Act, 1956. Explanations of section 167(1) and 186(1) provide that one member of the company present shall be deemed to constitute an annual general meeting and other meeting of the company respectively. No such relaxation or exception has been provided in the Act or in the article of association for an adjourned meeting of the Board of directors. 41. It has been observed in Needle Industries (India) Ltd. v. Needle Industries Newly (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 19&1 SC 1298 at page 1340 para 112 , as follows : "Under section 287(2) of the Companies Act, 1956, the quorum for the said meeting of the Board of directors was two. 41. It has been observed in Needle Industries (India) Ltd. v. Needle Industries Newly (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 19&1 SC 1298 at page 1340 para 112 , as follows : "Under section 287(2) of the Companies Act, 1956, the quorum for the said meeting of the Board of directors was two. There can be no doubt that a quorum of two directors means a quorum of two directors who are competent to transact and vote on the business before the Board." The reported decisions relied upon by the learned counsel for the petitioner support his arguments. 42. The golden rule of construction is that the grammatical and ordinary sense of the words used in a statute should be adhered to unless that would lead to some absurdity or repugnancy or inconsistency with the rest of the statute. Words have to be given their plain, fair and natural meaning unless it is apparent from the scope and intendment of the statute that such a meaning would be inconsistent or would lead to manifold injustice. Nevertheless, the intention to use words in a sense different from their natural and ordinary sense must first be established. It has been observed in Rajan Nagindas Doshi v British Burma Petroleum Co. Ltd. (1972) 42 Comp Cas 197 (Bom), at 209 , "The only validly elected director was Jagdish Kapadia and he alone could not function as the Board of directors." In M. Moorthy v. Drivers and Conductors Bus Services (P) Ltd., (1991) 1 Comp LJ 266 (Mad) : (1971) 41 Comp Cas 136 (Mad) , it has been observed that the meeting of the Board of directors held on 20 May, 1978, which was attended by the respondent No. 2 alone was non est. 43. It is correct that no adjourned meeting of the Board of directors in which respondent No. 2 only was present has been challenged in the company petition and the minutes of the adjourned meeting of the directors held on 10 January, 1986, 13 December, 1988, and 4 April, 1989, in which the respondent No. 2 only was present were duly confirmed in the meetings of the Board of directors held on 20 January, 1986 (paper No. 29, vol. 1), 29 March, 1989 (paper No. 90) and 3 September, 1990 (paper No. 119) respectively. The petitioner was present in all these three meetings. 1), 29 March, 1989 (paper No. 90) and 3 September, 1990 (paper No. 119) respectively. The petitioner was present in all these three meetings. It is also correct that in the minutes of the adjourned meeting held on 4 April, 1990, it is specifically mentioned-'This being an adjourned meeting, no quorum is required' (paper No. 116), and no objection was raised in the meeting of the Board of directors held on 3 September, 1990, in which the minutes of this meeting (4 April, 1990) were confirmed was raised by the petitioner against the said sentence. In this connection, it may simply be observed that the minutes of the meetings or their confirmation can at the most be considered as admissions of the petitioner. It is well settled law that a party is not bound with his admission, if made in ignorance of law or it is erroneous. Reference of Narayan Bhagwant Rao Gosavi v Gopal Vinayak Gosavi AIR 1960 SC 100 , may be made here. As such, the participation of the petitioner in the meetings in which resolutions passed in the earlier meetings of the Board of directors in which the respondent No. 2 was only present were confirmed-is of no consequence. There can be no subsequent validation of a void or non est act. 44. It is correct that this plea has not been taken in the company petition, but it is well proved from the material on record that there had been several adjourned meetings of the Board of directors in which the respondent No. 2 was only present. In her rejoinder, the petitioner has raised such a plea. It may again he mentioned here that the learned counsel for the parties stated on 2 August, 1994, that the company petition may finally be decided on the basis of the material on record. Moreover, facts and not law are required to be pleaded. 45. It may also be mentioned here that till the life-time of Maharana, there had always been not less than three directors in the company. In the minutes of the meeting of the Board of directors held on 11 March, 1986 (page 96 of the company petition) (Annexure 'D'), it is stated in para 3 as follows : "3. 45. It may also be mentioned here that till the life-time of Maharana, there had always been not less than three directors in the company. In the minutes of the meeting of the Board of directors held on 11 March, 1986 (page 96 of the company petition) (Annexure 'D'), it is stated in para 3 as follows : "3. After the demise of his late Highness Maharana B.S. Mewar, there are only two directors on the Board, and, therefore, difficulties arise in the day-to-day working of the company on account of non-availability of directors to be present in meetings. As a result, it was considered necessary to appoint at least one more additional director on the Board." Accordingly, Shri A.K. Chaturvedi was appointed as an additional director. He tendered his resignation in February, 1991, and it was accepted w.e.f. 16 March, 1991, in the meeting held on 16 March, 1991. In the minutes of the said meeting, it is stated- "With the resignation of Mr. A.K. Chaturvedi, there are only two directors on the Board of whom, one, Maharani Yogeshwari Kumari, has not been very regular in attending the meetings. Therefore, the need for appointing some additional directors has become more urgent, so that the working of the company may not suffer." In the same meeting, Shri K.R. Kantawala, Advocate, and Shri Shakti Singh were appointed as additional directors. If an adjourned meeting of the Board of directors attended by one director only would have been legal and valid, the respondent No. 2 would not have appointed Shri A.K. Chaturvedi previously and, after his resignation, Shri Kantawala and Shri Shakti Singh, as additional directors. This supports the view that there cannot be one-man meeting. 46. The provisions relating to quorum for meetings are mandatory. Meetings of Board of directors not having required quorum are non est and void. Resolutions passed and decisions taken in such meetings are void. From the fact that resolutions passed and decisions taken are non est and void, it cannot ipso facto be said that they were oppressive to the petitioner or prejudicial to the public interest. Each such resolution and decision has to be examined for this purpose which will be discussed in Point No. 14. It has been observed in (Sheth) Mohanlal Ganpatram v Shri Sayaji Jubilee Cotton and Jute Mills Co. Each such resolution and decision has to be examined for this purpose which will be discussed in Point No. 14. It has been observed in (Sheth) Mohanlal Ganpatram v Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. (1964) 1 Comp LJ 326 (Guj) : AIR 1965 Guj 96 , at pages 103 and 104, (at page 327 of Comp LJ), as follows : "It may be that a resolution may be passed by the directors which is perfectly legal in the sense that it does not contravene any provision of law, and yet it may be oppressive to the minority shareholders or prejudicial to the interests of the company. Such a resolution can certainly be struck down by the court under section 397 or 398. Equally a converse case can happen. A resolution may be passed by the Board of directors which may in the passing contravene a provision of law, but it may be very much in the interests of the company and of the shareholders. Such a resolution may be attacked as invalid in a suit or other appropriate proceeding but not being oppressive to the minority shareholders or prejudicial to the interests of the company, it cannot be challenged in a petition under section 397 or 398. I do not subscribe to the proposition that every action of the directors which is in contravention of a provision of law must necessarily be prejudicial to the interests of the company. These two represent different angles of view and one may exist without the other. I am, therefore, of the opinion that it is not open to the petitioners in this petition to attack the validity of the resolution dated 8th December, 1957, on the ground that it was passed by the Board of directors with-out a quorum and in contravention of the provisions of sections 299 and 300." The point is accordingly decided in favour of the petitioner. POINT NO. 6Whether A.C. Jain had no authority to represent the company ? 47. POINT NO. 6Whether A.C. Jain had no authority to represent the company ? 47. It has been contended by the learned counsel for the petitioner that the chief accountant of the company had no authority to make and affirm affidavits and to engage advocates, for and on behalf of the company and in his affidavit dated 24 July, 1991 (papers No. 197 and 310), it has not been stated on whose behalf the same was made, who had authorised him to make affirmation and under whose instructions it was filed. It was also contended that the purported resolution passed in the meeting dated 26 November, 1984, did not authorise him to represent the company in this company petition; in the meeting held on 20 May, 1991, no resolution was passed authorising him to represent the company in this litigation; no meeting in fact was held on 20 May, 1991, and the petitioner never concurred for his authorisation. It was further contended that the minutes of the meetings held on 26 November, 1984, and 20 May, 1991, have both been written in the new minute books; there were several blank pages available in the previous minute books (8 pages and 49 pages) and these minutes have been fabricated. He relied upon liwi Bai v Ramkunuvr AIR 1947 Nag 17, para 30 . 48. In reply, it was contended by the learned counsel for the respondents that by resolution dated 26 November, 1984, the Board of directors authorised A.C. Jain to deal with all legal matters for and on behalf of the company and to sign applications, affidavits, petitions and documents in connection thereof. They further contended that in this meeting and also in the meeting held on 22 December, 1984, in which the minutes of the said meeting dated 26 November, 1984, were confirmed, the petitioner was present. It was also contended that in the meeting of the Board of directors held on 20 May, 1991, A.C. Jain was specifically authorised by way of abundant caution; the minutes of this meeting were read and confirmed in the meeting dated 22 August, 1991, in which the petitioner was present; no objection was then raised by her about his authority and pleadings; applications and affidavits have been signed by A.C. Jain under the instructions of the respondent No. 2 having the support of majority of the shareholders. It was lastly contended that such an objection has been taken for the first time by the petitioner on 26 August, 1992. 49. Para No. 7 of page 10 of the minutes dated 26 November, 1984 (pages 3 to 10) runs as under : "The Board considered the activities, particularly, his activities after the demise of His late Highness Maharana Bhagwat Singh Mewar. Unfortunate incident in the Palace on 19.11.84 and the subsequent notice issued by the City Magistrate, Udaipur, dated 22.11.84 were also considered. The Board felt that the company may be drawn in long and costly litigation. In this connection, it was felt necessary to authorise a senior officer of the company to sign various documents and file them in the court. After deliberations- 'Resolved that Shri Ajay Chand Jain, son of Pannalal Jain, accountant of the company be and is hereby duly authorised to deal with all legal matters for and on behalf of the company, and to sign any applications, petitions, appeals, revisions, affidavits, submissions and any other documents in connection with such legal matters'." 50. Learned counsel for the petitioner contended that the words 'with such legal matters' appearing in the end of the above quoted resolution mean legal matters connected with Shri Mahendra Singh. There is no force in this contention. The words 'legal matters' have also appeared in the fourth line of this resolution. 'Such' does not appear with them (all legal matters), but 'all' is prefixed with 'them'. The resolution as it stands is of very wide amplitude. 'Such' appearing in the last line of the resolution prior to 'legal matters' relates to 'legal matters' appearing in the fourth line of the resolution. It is not confined to Shri Mahendra Singh's litigation. It is correct that by resolution, dated 20 May, 1991 (pages 142-151 at page 150 para 6), A.C. Jain, Chief Accountant was again authorised to sign on behalf and for the company applications, submissions, replies and rejoinders in connection with the present company petition No. 1/91, The case of the company is that this resolution was passed as a measure of abundant caution. Admittedly, even prior to passing of the said resolution on 20 May, 1991, A.C. Jain executed power (of attorney) in favour of Shri L.R. Mehta, Shri Rajendra Mehta and Shri Arun Bhansali, Advocates, and filed it in this court along-with the caveat two days prior to the filing of the company petition. Applying the principle of ut res magis valeat quam pereat (such meaning should be given which carries out and effectuates to the fullest extent the intention of parties), it will also include all other litigations and cases. Earlier clause overrides the later clause and not the vice versa ( AIR 1959 SC 24 , at page 30 para 13). For the first time, this objection was raised by the petitioner as late as on 26 August, 1992. 51. There is yet another aspect of the matter. The company has ratified the acts of A.C. Jain as provided under section 196 of the Contract Act. Ratification relates back to the act ratified. Moreover, A.C. Jain, Chief Accountant, being also the principal officer of the company, was empowered to sign affidavits, applications and pleadings as provided under order 29 rule 1, C.P.C. In any litigation concerning a company, the advocate for the company must derive his authority either under a resolution of the Board or under authorising support by a majority shareholder or under the vakalatnama signed by the principal officer of the company [ P. S. Offshore Inter Land Services v Bombay Offshore Suppliers and Services Ltd. (1994) 2 Comp LJ 407 (Bom), at page 417: (1992) 75 Comp Cas 583 (Bom), at page 593] . The facts of Jiwi Bai v Ramkunwar AIR 1947 Nag 17 , are quite different and distinguishable. This decision does not help the petitioner. This point is accordingly decided against the petitioner.POINT No. 7Whether the respondent No. 2 and late A. Subramaniam (executors) purposely and intentionally caused delay in obtaining the probate of the will and in the administration of estate of Maharana in order to continue to have a hold over the company by virtue of 700 shares of the estate ? 52. This point is accordingly decided against the petitioner.POINT No. 7Whether the respondent No. 2 and late A. Subramaniam (executors) purposely and intentionally caused delay in obtaining the probate of the will and in the administration of estate of Maharana in order to continue to have a hold over the company by virtue of 700 shares of the estate ? 52. It has been contended by the learned counsel for the petitioner that the respondent No. 3(a), Shri Arvind Singh, and 3(b), Shri A. Subramaniam, executors of the will, purposely and intentionally delayed the issuance of the probate of the will in order to continue to have their hold over 700 shares of the estate of Maharana as executors as after the administration of the estate of Maharana, 700 shares were to go to the trust as per the will. 53. In reply, it was contended by the learned counsel for the respondents that the D,B. Civil Special Appeal No. 24/88 was filed against the order of the learned single Judge dated 13 November, 1987, granting probate; it was decided on 12 May, 1993; Shri Mahendra Singh filed special leave petition before the Hon'ble Supreme Court; it was dismissed on 9 May, 1994 and probate was obtained on 15 February, 1992 after filing required no due certificate' from the Controller, Estate Duty, Udaipur; the amount of estate duty was very heavy and it was personally paid by the respondent No. 2 as the estate left by Maharana had no cash. It was further contended that on the complaint of Shri Mahendra Singh, the order of assessment was reviewed; estate duty was enhanced to the extent of about Rs. 6 crores and, on appeal, the case has been remanded. It has also been contended that in the suit for partition filed in the court of District Judge, Udaipur, during the life-time of Maharana, order was passed on 2 December, 1985, restraining the respondent No. 2 from disposing of or alienating or otherwise dealing with the suit properties till the decision of the suit. Inventory was filed on 15 August, 1992, and accounts were submitted on 13 November, 1992. It was also contended that this complaint cannot be subject matter of proceedings under sections 397 and 398 of the Act. 54. Inventory was filed on 15 August, 1992, and accounts were submitted on 13 November, 1992. It was also contended that this complaint cannot be subject matter of proceedings under sections 397 and 398 of the Act. 54. It is not in dispute that the Estate Duty Act, 1953, was in force when Maharana died on 3 November, 1984, and, as such, estate duty was payable on the estate left by him. He left his will (Annexure 'C' of the company petition) appointing respondents No. 3(a), Shri Arvind Singh, and respondent No. 3(b), A. Subramaniam, as its executors. They moved an application for obtaining its probate. Order was passed for its grant by learned single Judge of this court on 13 November, 1987. Probate could be issued only after filing 'no due certificate from the Controller, Estate Duty, and on payment of probate fee of Rs. 43,863. Clause (b) of sub-section (1) of section 56 of the Estate Duty Act ran as under: "(1) In all cases in which a grant of representation is applied for- (a) ... (b) no order entitling the applicant to the grant of representation shall be made upon his application until he has delivered the account prescribed in clause (a) and has produced a certificate from the Controller under sub-section (2) of section 57 or section 67 that the estate duty payable in respect of the property included in the account has been or will be paid, or that none is due as the case may be." 55. It is stated in the affidavit of A. Subramaniam, dated 1 January, 1992 (papers No. 522-536), that the estate duty to the extent of Rs. 27,06,530, was assessed; the executors got it reduced to Rs. 11,95,835 in appeal and 'no due certificate' was obtained after this amount was deposited. In the said partition suit, the District Judge, Udaipur, passed order (Annexure R3/A3) (papers No. 537-570 and page 568) on 2 December, 1985. Its relevant portion runs asunder: "The defendant No. 4, Shri Arvind Singh, his agent, officers or servants are further restrained from disposing of and/or alienating or otherwise dealing with the suit property till the decision of the suit." This order was confirmed by this court on 6 June, 1993, in miscellaneous appeal filed against it. Special leave petition by Shri Mahendra Singh was dismissed on 20 August, 1993. Special leave petition by Shri Mahendra Singh was dismissed on 20 August, 1993. In the suit properties, (the) said 700 shares were also included. In view of this order, the respondent No. 2, Arvind Singh, could not dispose of or alienate these 700 shares. Much was argued that he did not take any step for the modification of this order. The petitioner was also a party in the suit as defendant No.1 /1A and she could also move an application for the modification of the said order. It is not her case that the amounts of estate duty and probate fees could easily be paid from the estate of Maharana. She has not denied in her counter affidavits that these amounts were paid by the respondent No. 2 personally. Under the facts and circumstances, it cannot be said that the respondent No. 2 intentionally and purposely delayed the issuance of the probate with a view to continue to have his control over the said 700 shares left by Maharana. There is also a great force in the contention of the learned counsel for the respondents that such a grievance cannot be raised in proceedings under sections 397 and 398 of the Act. Probate court has exclusive jurisdiction in such matters Chiranjilal Srilal Goenka v Jasjit Singh (1993) 2 SCC 507 . The point is accordingly decided against the petitioner.POINT No. 8Whether the respondents Nos. 3(a) and 3(b) have shed their character as executors and have adorned the role of trustees ? 56. It has been contended by the learned counsel for the petitioner thus. The respondents Nos. 3(a) and 3(b) (executors) are not the ultimate holders of 700 shares; they held them by virtue of the will for the trust (beneficiary) till the administration of the estate was complete. They were required under section 153B of the Act to make a declaration to the public trustee (appointed under section 153A) in the prescribed form within prescribed time. They, admittedly, did not do so, and they have thus rendered themselves liable for punishment under section 153B(3) of the Act. By virtue of the provisions of section 187B of the Act, the executors could not have exercised the rights and powers exercisable at any meeting of the company in respect of said 700 shares which they held in trust, but they continued to exercise rights and powers in respect thereof. By virtue of the provisions of section 187B of the Act, the executors could not have exercised the rights and powers exercisable at any meeting of the company in respect of said 700 shares which they held in trust, but they continued to exercise rights and powers in respect thereof. A person may accept the office of a trustee expressly or implicitly. 57. In his written reply, the respondent No. 2 has expressly assented and, at pages 316 and 317, he says 'he is in no less degree conscious of his responsibilities and duties towards the trust'. Again at page 324, he says 'the respondent No. 2 is an executor of the will and also a managing trustee of the Maharana Mewar Institution Trust. As managing trustee, he is/will be mainly responsible for the proper management and administration of the trust.' Will (Annexure 'C') specifically states : "All my movable and immovable properties which I may be owning at the time of my demise, of whatsoever description, I give to and place in a trust which shall be known as Maharana Mewar Institution Trust with direction hereinbelow contained .... (page 87). I direct my executors and trustees to pay out of my estate in the first instance for my funeral obsequies (page 89) .... I direct my executors and trustees that for the purpose of discharging .... (page 89)." The executor may assume the character of a trustee even before all debts and legatees are paid. Reliance was placed upon CIT v Estate of late Ramaswami Pillai (1962) 46 ITR 666 (Mad) , Court Receiver v CIT (1964) 54 ITR 189 (Bom), at pages 207 and 211 , M. Thirunwni Mudaltar v CIT (1974) 96 ITR 152 (Mad), at pages 156-157 , KP. Narayanan v CIT (1975) 98 ITR 130 (Ker), at page 141 , CIT v Estate of V.L. Ethiraj (1979) 120 ITR 271 (Mad), at pages 277-278 , CWT v S. Prakasham (1980) 125 ITR 172 (Mad), at pages 774- 775 , and CIT v K. Balakrishna Rao (1983) 143 ITR 651 (Mad), at page 657 . 58. In reply, it has been contended by the learned counsel for the respondents that no such case has been pleaded in the company petition. On the contrary, the petitioner has impleaded respondents Nos. 58. In reply, it has been contended by the learned counsel for the respondents that no such case has been pleaded in the company petition. On the contrary, the petitioner has impleaded respondents Nos. 3(a) and 3(b) as executors and not as trustees and other trustees of the said trust, namely, Maharaj Kumar Rajsingh, Maharaj Kumar Samar Singh and Shri A.K. Chaturvedi, have not been impleaded. They further con- tended that the order for the grant of probate was passed in 1987, requisite probate fee was paid on 16 March, 1991, and probate was obtained in 1992 and the assent of the executors is necessary to divest their interest as executors under section 333, Indian Succession Act. They relied upon Navneet Lai Sarkarlal v CIT (1992) 193 ITR 16 (SC) , New Bank of India v Union of India (1981) 51 Comp Cas 375 (Del) : Kissondas Premchand v fivatlal Pratapshi and Co. AIR 1936 Bom 423 , Raghavelu Naidu v CIT AIR 1950 Mad 790 , Estate of Chockalingam Chettiar v CIT (1960) 40 ITR 429 (Mad) and Estate of I.A.T. Warde v CIT (1961) 43 ITR 219 (MP) . 59. Admittedly, the company petition is silent on this point. On the contrary, its paras No. 19, 21, 23, 24, 25, 26, 31 and 55 have specific reference of the respondents No. 3(a) and 3(b) as executors of the will. It would be relevant to quote here the following portion of these paras : "19. Upon the death of HLH Maharana Bhagwat Singh Mewar, the respondent No. 2 acquired a dual capacity. On the one hand, he was a shareholder in the company and on the other hand being an executor of the said will, he exercised dominion and control over the shares which had till then stood in the name of HLH Maharana Bhagwat Singh of Mewar. Being an executor of the said will, the respondent No. 2 along with his co-executor, Shri A. Subramaniam should have followed the direction of HLH Mahayana Bhagwat Singh of Mewar. However, the respondent No. 2 and his co-executor are purposely delaying the administration of the will thereby continuing to retain control and dominion over the shares which were in the name of HLH Maharana Bhagwat Singh of Mewar. 21. However, the respondent No. 2 and his co-executor are purposely delaying the administration of the will thereby continuing to retain control and dominion over the shares which were in the name of HLH Maharana Bhagwat Singh of Mewar. 21. Earlier on 22.12.84, the 700 shares standing in the name of HLH Maharana Bhagwat Singh of Mewar were transmitted to the executors of the will dated 15.5.84. Thus from this day onwards, the executors of the will exercise control in respect of the said 700 shares. The respondent No. 2 being an executor of the will, therefore, exercised domination and control over these 700 shares also, apart from the 100 shares which stood in his name. 23. However, the respondent No. 2 acting as an executor refused to accept the 700 shares offered to the executors of the said will. It may be pertinent to state that the other executor Shri A. Subramaniam is an associate of respondent No. 2 and is loyal to him and has throughout worked as per the directions, instructions and dictates of the respondent No. 2. 31. The petitioner has come to know that (as was expected) the 1,050 shares offered to the executors of the will of HLH Maharana Bhagwat Singh of Mewar have been refused by the respondent No. 2 and Shri A. Subramaniam being executors of the will.... 55. HLH Maharana Bhagwat Singh of Mewar had substantial properties and upon his demise, the respondent No. 2 and Shri A. Subramaniam (Company Secretary) being executors of his will came upon all those properties. There was no reason whatsoever, for the executors of the will to refuse to accept the shares offered to them from time to time." 60. Article 92 of the articles of association (page 80) recognises executors/administrators only. It would be best to quote it here in extenso. It runs as follows : "92. There was no reason whatsoever, for the executors of the will to refuse to accept the shares offered to them from time to time." 60. Article 92 of the articles of association (page 80) recognises executors/administrators only. It would be best to quote it here in extenso. It runs as follows : "92. On the death of any member (not being one of two or more joint holders of a share) the executor or administrator of such deceased member shall be the only person recognised by the company as having any title to such share provided nevertheless that in special cases and in such (cases) only it shall be lawful for the directors to dispense with the production of probate or letters of administration or such other legal representation upon such terms as to indemnity or otherwise as the directors may deem fit." 700 shares were transmitted in the names of the executors and were entered in the register of shareholders in presence of the petitioner. Share certificates issued in the names of the executors were under her signature. 61. Learned counsel for the respondents have rightly contended that the petitioner herself has impleaded the respondents No. 3(a) and 3(b) as executors and not as trustees and remaining trustees, namely, Maharaj Kumar Raj Singh Dungarpur and Samar Singh Dungarpur or public trustees have not been impleaded. 62. The will Annexure 'C' contains the following directions at its page 4: "Directions (1) I direct my executors and trustees to pay out of my estate in the first instance, for my funeral obsequies and testamentary expenses. I further direct my executors and trustees to pay out of my estate in the first instance, duty if any, estate duty and other taxes, debts and other liabilities. (2) I direct my executors and trustees that for the purpose of discharging the above expenses on funeral obsequies and testamentary expenses and to pay the estate duty and other duties, taxes, dues, debts and other liabilities, they should first use the cash in hand and cash in banks in my name and cash due to me, and if necessary, other movable articles and my shares in Indian companies, in their absolute discretion, to one of the existing share- holders preferably and to the extent required to discharge the aforesaid liabilities." 63. In the will, there is a further direction at its page 9. In the will, there is a further direction at its page 9. It runs as under : "I appoint Maharaj Kumar Arvind Singh, my son, and Shri A. Subramaniam, as the executors of this will of mine. These executors shall take charge of my properties - movable or immovable, on my death, meet my funeral expenses, pay of all my liabilities and then carry out the directions as contained in this will immediately commencing on my death." It is clear from the above-quoted directions of the will that the respondents No. 3(a) and 3(b) were to take charge of all the properties of Maharana immediately on his death. They were further required as executors of the will to meet his funeral expenses, to pay off all his liabilities and then to carry out the above-quoted directions. The pro- bate was obtained by the executors on 15 February, 1992, after the filing of the company petition. As already observed in Para 53 (supra), the estate duty case has been reopened on the complaint of Shri Mahendra Singh; demand of Rs. 6,70,96,102 was created; appeal has been filed by the executors; the appellate authority reduced the amount to Rs. 88,91,419 after adjusting the said amount of Rs. 11,85,834 and adding the amount of interest of Rs. 98,000 and the balance of the amount of estate duty comes to Rs. 75,97,585. The executors, Revenue and Maharajkumar Mahendra Singh have filed appeals against the order of the appellate tribunal dated 30 June, 1994, and the matter has been remanded by it. Wealth-tax and income-tax cases have not finally been decided as appeals are pending. The executors have paid Rs. 12,93,843, 6,80,759 and 23,83,461 towards estate duty, wealth-tax and income-tax, (respectively). The liabilities of the estate of Maharana have not as yet been discharged in toto and the administration of the estate is still going on. Assent of the executors is necessary to divest their interest as executors and to transfer the subject of the bequest to the legatee. The assent maybe verbal and it may be either express or implied from the conduct of the executor vide section 333, Indian Succession Act, 1925. The respondent No. 2 has not specifically averred in his replies and sur-rejoinder that he has shed his character as a co-executor and has started acting as the managing trustee of the said trust. The assent maybe verbal and it may be either express or implied from the conduct of the executor vide section 333, Indian Succession Act, 1925. The respondent No. 2 has not specifically averred in his replies and sur-rejoinder that he has shed his character as a co-executor and has started acting as the managing trustee of the said trust. In his letter dated 6 March, 1990 (paper No. 385), the respondent No. 2 says, "As per will of HLH dated 15.5.1984, the net assets of the estate have not and cannot be handed over to the trust for their administration until all liabilities are settled ... ". It cannot be inferred from his replies and sur-rejoinder that he has shed his character as a co-executor. He continues to be the co-executor of the will. The said trust has not come into existence as yet. It has been observed in V.M. Raghavalu Naidu and Sons v ITO (1950) 18 ITR 787 (Mad), at page 805: AIR 1950 Mad 790 , at page 797, para 19 , as follows : "The decision in Lord Sudeley v. Attorney General (1897) AC 11 is authority for the position that even if the trustees and executors happen to be the same persons, until the claims of the testator's estate for his debts and testamentary expenses and the pecuniary and specific legacies have been satisfied, the residue does not come into actual existence. It is a non-existing thing, until that event has occurred. The probability that there will be a residue is not enough, but it must be actually ascertained." Dealing with the trust of the residuary estate, Lord Halsbury, L.C., observed- "Even if the trustees and executors happen to be the same persons, until the estate is fully administered until the thing has been ascertained, until the trust fund has been constituted, the thing of which the trustees are trustees has not been ascertained. Till then, the right of the residuary legatee is to require the executors to administer the estate completely." This passage has been quoted with approval by their Lordships of Supreme Court in Navnit Lal Shakarlal v Commissioner of Income-tax AIR 1992 SC 466 . It is clear from this judgment of the Hon'ble Supreme Court that the trust will not come into existence unless the estate of the deceased Maharana is fully administered by the executors. It is clear from this judgment of the Hon'ble Supreme Court that the trust will not come into existence unless the estate of the deceased Maharana is fully administered by the executors. It has been observed in Estate of Chockalingam Chettiar v Commissioner of Income-tax (1960) 40 ITR 429 (Mad), at page 442 , as follows : "The office of an executor is distinct from that of a trustee, though in some sense, he may be a trustee or accountable as trustee. So long as he is an executor, he holds the property of the deceased in his own right, as his legal representative and not on behalf of the beneficiaries. He would continue to hold in that capacity till the estate is cleared by the payments of debts, testamentary expenses and specific legacies. In other words, after clearing the debts and paying the funeral and testamentary expenses, the specific legacies have to be paid and the surplus ascertained, and then when there is assent to the vesting of the residue, the executor would be held to have shed his character as executor and would hold the property as a trustee for the legatees, etc. In Taran Singh Hazari v Rantratan Tewari (1903) ILR 31 Cal 89 , the learned judges observed at pages 92 and 93: 'The position and duties of an executor in this country are not very well under- stood, and considerable confusion exists as to duties of the executor in administering the estate. The duties of the executor are to administer the estate of the deceased only so far and so long as to enable him to carry out the terms of the will of which he is executor. After the property has ceased to be the estate of the deceased and has become the property of the residuary legatee under the will, the executor as such has no authority to manage the estate on his behalf." Reference of Estate of IAT Warde v. Commissioner of Income Tax (1961) 43 ITR 219 (MP) and New Bank of India v. Union of India (1981) 51 Comp Cas 375 (Del) may also be made here. The facts and circumstances of the reported decisions, relied upon by the learned counsel for the petitioner, are quite different and distinguishable. In view of the above noted facts and circumstances, they are not applicable in this case. The facts and circumstances of the reported decisions, relied upon by the learned counsel for the petitioner, are quite different and distinguishable. In view of the above noted facts and circumstances, they are not applicable in this case. Accordingly, the point is decided against the petitioner.POINT No. 9Whether the petitioner cannot rely upon instances of oppression and mis-management on the part of the respondent No. 2 which were prior to three years of the date of institution of the company petition ? 64. No limitation for moving an application under sections 397 and 398 of the Act is provided in the Act. Article 137, Limitation Act would, therefore, apply [ Kerala State Electricity Board, Travencore v T.P. Kunhaliuntma] AIR 1977 SC 282 . According to it, an application should be moved within three years from the right to apply accrues. It has been observed in Shanti Prasad fain v Kalinga Tube Ltd. (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 at page 1543, para 19, (page 204 of Comp LJ) as follows : "There must be continuous acts on the part of the majority shareholder, continuing upto the date of petition showing that the affairs of the company are being conducted in a manner oppressive to some part of the members." 65. In Needle Industries (India) Ltd. v Needle Industries Newey (India) Holding Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 1981 SC 1298 at page 1320 para 49 (page 29, para 51, of Comp LJ) , it has been observed as under : ... an isolated act, which was contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which the object is to cause or commit the oppression of persons against whom those acts are directed.... .." The events which occurred three years prior to the date of filing of the petition can well be looked into if those events form continuous acts complained of continuing upto the date of the petition. The facts and circumstances of the reported decisions, relied upon by the learned counsel for the respondents, are quite different and distinguishable. .." The events which occurred three years prior to the date of filing of the petition can well be looked into if those events form continuous acts complained of continuing upto the date of the petition. The facts and circumstances of the reported decisions, relied upon by the learned counsel for the respondents, are quite different and distinguishable. In Maharana Mahendra Singh v Maharaj Arvind Singh (1993) 2 WLC 397 , question of limitation under section 20, Contempt of Courts Act, was involved. The act complained of was a solitary act. In (Sheth) Mohanlal Ganpatram v Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. (1964) 1 Comp LJ 36 (Guj) : AIR 1965 Guj 96 , Raghunath Swarup Mathur v Har Swarup Mathur (1970) 1 Comp LJ 35 (All) : (1970) 40 Comp Cas 282 (All) and V.J. Thonws Vettom v Kuttanad Rubber Co. Ltd. (1984) 56 Comp Cas 284 (Ker) (DB) , past and concluded transactions were involved. The point is accordingly decided.POINT No. 10Whether the petitioner is not entitled to challenge the various decisions taken in the meetings of the Board of directors and meetings of the company on account of acquiescence, waiver and estoppel ? 66. 'Acquiescence' is used in two sense. Firstly, to denote conduct which is evidence of an intention of a party, conducting himself, to abandon an equitable right. Secondly, to denote conduct from which another party would be justified in inferring such an intention. It means assent, after the party has come to know of his rights. There can be no acquiescence or waiver in a case where both the parties are unaware of their rights in the disputed property. Unless both are cognizant of their right, the parties cannot be said to acquiesce in the claim of the other. 67. 'Waiver' is an intentional relinquishment of a well-known right. There can be no waiver (unless the person) against whom the waiver is claimed has full know- ledge of his rights and all facts enabling him to take effectual action for the enforcement of such rights. 68. 'Estoppel' is a principle of equity. Waiver differs from estoppel in the sense that it is contractual. It is an agreement to release or not to assert a right. Estoppel, on the other hand, is a rule of evidence. 69. On 9 February, 1986, the petitioner addressed a letter (paper Nos. 68. 'Estoppel' is a principle of equity. Waiver differs from estoppel in the sense that it is contractual. It is an agreement to release or not to assert a right. Estoppel, on the other hand, is a rule of evidence. 69. On 9 February, 1986, the petitioner addressed a letter (paper Nos. 224-225) to the respondent No. 2. It is in her own handwriting. It runs as under : "My dear Ch. Bhai, I have been trying to get in touch with you ever since I have received Subramaniam's letter regarding the increase of subscribed equity shares of L.S.P.H. The telephone line always seems to be out of order hence have not been able to talk to you. I was quite surprised to go through the contents of the letter. Except for the circulation of the bank's letter amongst the directors, no other decision was taken during the meeting on the 20 January. How come Subramaniam has jumped to this conclusion and taken the decision on his own and has offered the 700 equity shares to both of us, I do not agree with it. If there is any such decision to be taken, we will do it in the next meeting. So I request you to withdraw this letter No. LSPH : 39 : 85-86, dated 28 January, 1986. Please make Shri Subramaniam write to me withdrawing this letter and please send the reply with the bearer of this letter. Rest is all fine here. Hope, everything is alright in Udaipur. My love to every- one. With love." In pursuance thereof, notice (paper No. 226) was issued to the directors for the meeting held on 4 March, 1986. One of the items of the agenda was to discuss this letter. On 4 March, 1986, the meeting was adjourned and on 11 March, 1986, adjourned meeting was held. Extraordinary, general meeting (EGM) was held on 7 April, 1986, and it was resolved (paper No. 186) that the matter regarding the issue of 700 equity shares be deferred for the present. It was also resolved that the petitioner would inform the Board about the confirmation of the appointment of the additional director, A.K. Chaturvedi, by the end of April, 1986. In this meeting, the petitioner was present. It was also resolved that the petitioner would inform the Board about the confirmation of the appointment of the additional director, A.K. Chaturvedi, by the end of April, 1986. In this meeting, the petitioner was present. In the meeting of the Board of directors held on 29 March, 1989, in which the petitioner was present, the minutes of the last meeting held on 13 December, 1988, were confirmed in which various resolutions were passed. In this meeting of 29 March, 1989, working results of the company were reviewed and it was resolved that the documents regarding debts and securities which are being sought by the Bank of India, Udaipur, would be executed by the directors. No protest of any kind was lodged against the resolution passed in the meeting of 13 December, 1988, or in the meeting dated 29 March, 1989. 70. A meeting of the Board of directors was held on 3 September, 1990 (papers No. 119-127). In this meeting, the petitioner was also present. The secretary placed before the Board audited profit and loss account for the year ending on 31 March, 1990, along with balance sheet with notes, schedules and director's report. The matter regarding the remaining unsubscribed 1,973 shares was discussed; the petitioner suggested that this matter be deferred till 31 December, 1990, and the Board accepted her suggestions. As already observed above, the petitioner has not mentioned in her company petition that she participated in various meetings of the Board of directors, annual general meetings and extraordinary general meetings of the shareholders and various decisions were taken in them. The resolutions passed in these meetings have not been challenged in the company petition. From the above noted facts and circumstances, she is estopped to challenge them except those passed in the meetings of the Board of directors attended by only one director, being void and non est. The principles of acquiescence and waiver also apply. The point is accordingly decided.POINT No.11Whether the expenses incurred by the company in the foreign tours of the respondent No. 2, in Bombay flat, in litigation and in making payments to Central Office (Palace Organisation) were not in its interest ? 71. The principles of acquiescence and waiver also apply. The point is accordingly decided.POINT No.11Whether the expenses incurred by the company in the foreign tours of the respondent No. 2, in Bombay flat, in litigation and in making payments to Central Office (Palace Organisation) were not in its interest ? 71. A preliminary objection has been raised by the learned counsel for the respondents that necessary particulars relating to these items have not been given in the company petition and the case has to be decided on the basis of the averments made therein. There is no great force in these contentions for more than one reason. Firstly, it has clearly been averred in the company petition that the petitioner was neither allowed to inspect the documents of the company nor were copies given despite requests. Admittedly, she inspected the documents after order of this court. Secondly, the learned counsel for the parties gave joint statement that the company petition be finally decided on the basis of the materials on record vide order sheet dated 2 August, 1994. Thirdly, it is well settled law that relief may be granted to the plaintiff on the basis of the pleadings and evidence of the defendant even if he otherwise fails. Reference to Sriniwas Ram Kumar v Mahabir Prasad AIR 1951 SC 177 , may be made. Fourthly, it is also well settled law that subsequent events can well be taken into consideration. Reference to Chandavarkar Sita Ratna Rao v Ashalata S. Guram AIR 1987 SC 117 and Amarjeet Singh v Khatoon Quarmaria AIR 1987 SC 742 , may be made there. Thus the events which took place in the company after the institution of the company petition can well be taken into consideration for moulding the relief accordingly. The respondents had enough opportunity to meet them. They are also proved from the documents filed by the respondents. 1. Foreign Tours 72. Thus the events which took place in the company after the institution of the company petition can well be taken into consideration for moulding the relief accordingly. The respondents had enough opportunity to meet them. They are also proved from the documents filed by the respondents. 1. Foreign Tours 72. It has been contended by the learned counsel for the petitioner that the respondent No. 2 has been travelling in and out of the country at the cost of the company; I V he has taken foreign tours under the guise of promotional tours without getting any resolution passed by the Board of directors; no business benefits have accrued to the company as a consequence of these tours and, in this way, huge amounts of the company have been spent to its detriment and consequently to (that of) the shareholders. He further contended that respondent No. 2 has not even furnished the names and places of the tourist offices of the various foreign governments and names and addresses of the various tourist agencies who were contacted by him during these foreign visits, particulars of the publicity of the company (Lake Shore Palace Hotel) made there, and there is also nothing on the record to indicate that as a result of his foreign visits the number of foreign tourists staying in the company's hotel increased. He lastly contended that these foreign tours were simply pleasure trips of the respondent No. 2 alongwith his family, always made during summer vacation. 73. In reply, it has been contended by the learned counsel for the respondents that these business promotional tours have immensely benefited the company; 90 per cent of the total occupancy was on account of the foreigners; the Reserve Bank of India sanctioned requisite foreign exchange for promotional tours and respondent No. 2 duly apprised the Board of directors in this regard. They further contended that the respondent No. 2 is also the managing director of the Lake Palace Hotel and Motels (P) Ltd., Udaipur, while undertaking business promotion tours of Lake Palace Hotel also, it has partly shared the expenses incurred in his foreign tours and the increase in the expenditure is on account of the increase in prices, inflation and devaluation of the rupee. 74. 74. According to the balance-sheets of the company, it has been saddled with the following expenditures on account of the foreign tours of the respondent No. 2. S.No. Year Amount spent 1. 1990-91 Rs. 1,51,670 2. 1991-92 Rs. 2,79,212 3. 1992-93 Rs. 4,39,777 Admittedly, necessary particulars of the tourist offices of the foreign governments and of the various travelling agencies of the countries visited by the respondent No. 2 during the aforesaid years have not been furnished. Necessary particulars of the publicity of the company made have also not been given. It is also not the case of the respondent No. 2 that he gave reports to the company after his return from the foreign tours. It has also not been averred in any reply or affidavit filed by the respondents No. 1 and 2 that the amounts of commissions which were being paid to the travel agents for bringing customers after the said foreign tours declined. Rs. 1,20,066, Rs. 1,39,945, Rs. 2,47,955, Rs. 3,22,130, Rs. 3,03,656, Rs. 4,35,190 and Rs. 2,61,781 were paid as commission to travel agents earlier vide pages 4, 31, 71, 83, 103, 120 and 153 (Volume 1). After the foreign trips, Rs. 9,27,819 were paid as commission during the year 1992-93 only vide Annexure RI/A of Misc. Application No. 15/94. The balance- sheet of the other years is not on record. If the foreign tours would have been for the aforesaid purpose, the amount of commission paid would not have increased to the said extent. Commission is not required to be paid in respect of the passengers coming to the hotel directly. It is also not the case of the respondents that commission was paid to foreign tourist agencies who were contacted during foreign trips. It has also not been shown that as a result of the foreign trips made by the respondent No. 2, so many foreign tourists stayed in the company's hotel. No resolution of the company was shown authorising the respondent No. 2 to take foreign tours at the cost of the company. The minutes of the meeting of the Board dated 4 April, 1990 (pages 116-118), simply shows that the respondent No. 2 disclosed that he intended to make a business promotional tour abroad for about six weeks. Such a disclosure cannot be said to be a resolution. Even in this meeting, respondent No. 2 was only present. The minutes of the meeting of the Board dated 4 April, 1990 (pages 116-118), simply shows that the respondent No. 2 disclosed that he intended to make a business promotional tour abroad for about six weeks. Such a disclosure cannot be said to be a resolution. Even in this meeting, respondent No. 2 was only present. It was not a meeting in the eye of law vide point No. 5, The fact that the Reserve Bank of India sanctioned foreign exchange has no material bearing for the purpose of deter- mining whether the expenditure incurred was in fact in the interest of the company or not. On the material on record, it is difficult to say that the amount of Rs. 8,70,659 (1,51,670 + 2,79,212 + 4,39,777) paid by the company to the respondent No. 2 in connection with his said foreign trips was in the interest of the company. 2. Bombay fiat 75. It was contended by the learned counsel for the petitioner that huge amount of the company is being spent every year in connection with the Bombay flat in which the family of the respondent No. 2 is residing and it has not been shown as to how this Bombay flat is conducive or helpful for the business of the company. He further contended that the petitioner is required to make payment of the bill of a cup of tea even when she takes it from the company's hotel. 76. In reply, it was contended by the learned counsel for the respondents that the Bombay flat was let out by the Maharana to the company for its business purpose; it was then not in good condition; Rs. 1,26,000 was spent during the year 1985-86 and, subsequently, nominal amounts were spent in its maintenance and annual repairs. They also contended that as and when the petitioner went to Bombay, she stayed in it as a director of the company. They further contended that foreign tourists visiting Udaipur come through Bombay and, as such, this office is being maintained at Bombay in the interest of the company. 77. According to the balance-sheet of the company, the following amounts were spent by the company in the Bombay flat : S1.No. Year ending on Amount spent Bombay office expenses Telephone expenses Other expenses Total Rs. Rs. Rs. Rs. 1. 30.6.88 13,648 93,974 57,000 1,64,622 2. 31.3.89 17,114 - - - 3. 77. According to the balance-sheet of the company, the following amounts were spent by the company in the Bombay flat : S1.No. Year ending on Amount spent Bombay office expenses Telephone expenses Other expenses Total Rs. Rs. Rs. Rs. 1. 30.6.88 13,648 93,974 57,000 1,64,622 2. 31.3.89 17,114 - - - 3. 31.3.90 16,004 1,11,540 2,58,384 3,85,928 4. 31.3.91 16,009 1,38,311 29,126 1,83,446 5. 31.3.92 14,870 figures not available 6. 31.3.93 1,58,904 figures not available (From minutes of meeting dated 22.9.93 filed by respondents.)It has not been shown as to how the Bombay office is helping the business of the company and what type of work of the company is being carried therefrom. Their particulars have not been given despite the fact that the petitioner was asserting from the beginning that the flat is being used as a residence by the respondent No. 2 and not as an office of the company. In the absence of necessary particulars relating to the aforesaid huge expenditure incurred after 1987-88, they cannot be justified particularly when Rs. 71,605 and Rs.1,26,355 had already been incurred during the years ending on 30 June, 1985, and 30 June, 1986, respectively, even if the flat was being used as an office. 78. Even the pleadings of the respondents regarding the use of the Bombay flat are not consistent. It has been averred in Para No. 50 of the company petition that the respondent No. 2 has shown huge expenses in respect of the so-called Bombay office; in fact, there is no such office and it is a residential flat. In para 37 of the reply of the company, it has been averred that the respondent No. 2 stays in this flat whenever he goes to Bombay for company work. In para 20 of the reply of the respondent No 2, it is averred that the flat is partly used as office and partly as the managing director's residence when he visits Bombay on company's work: In para 30 of her rejoinder, the petitioner says that there is no office at Bombay and the flat is used by the respondent No. 2 for the purpose of residence whenever he visits Bombay. In para No. 11 of the sur-rejoinder, the company has averred that this flat is the office of the company and is not the personal residence of the respondent No. 2. In para No. 11 of the sur-rejoinder, the company has averred that this flat is the office of the company and is not the personal residence of the respondent No. 2. In para No. 9 of his sur-rejoinder, the respondent No. 2 has stated that the Bombay flat is being used as an office and the company's work is being carried on front it. In para No. 9 of her reply to the sur-rejoinder of the company, the petitioner says that the Bombay flat is used as residence by the respondent No. 2 and his family and his wife, Mrs. Vijayaraj Kumari, resides there alongwith her two children, Padmaja Kumari and Laksh Raj Singh who study in schools in Bombay. (sic). In view of these facts and circumstances, it can safely be held that the Bombay flat is not being used in connection with the company's work but is being used by the respondent No. 2 for the purpose of residence of his family and the aforesaid amounts spent in this connection were not in the interest of the company. 3. Litigation expenses 79. It has been contended by the learned counsel for the petitioner that the company was a formal party; it was impleaded as a party in the company petition as the prescribed Form Nos. 43 and 44 of the petition required to do so; no prayer has been sought against it and there was no justification on the part of the company for spending huge amount of over Rs. 5,30,000 during one year only under the head of litigation. 80. In reply, it has been contended by the learned counsel for the respondents that the company was bound to defend itself in this case as it was a party and the reliefs sought, if granted, would have materially affected it. 81. There is a great force in the contention of the learned counsel for the petitioner. It is stated in the minutes of the meeting of the Board of directors (respondent No. 2 was only present) held on 20 May, 1991, "Board discussed the company petition filed by Smt. Yogeshwari Kumari ... and the main thrust of the petition is mainly against the managing director personally,....." Relevant portions of the order sheet dated 26 July, 1991, of the case runs as under : "26.7.91 Hon'ble Mr. Milap Chandra, J. Mr. Parijat Sinha and Mr. and the main thrust of the petition is mainly against the managing director personally,....." Relevant portions of the order sheet dated 26 July, 1991, of the case runs as under : "26.7.91 Hon'ble Mr. Milap Chandra, J. Mr. Parijat Sinha and Mr. Vineet Kothari, for the petitioner. Mr. R. Mehta, for respondent No. 1. Mr. D.S. Shishodia, for respondents No. 2 and 3. Mr. M.S. Singhvi, for respondents No. 3A and 3B. Mr. B.L. Porwal on behalf of Ministry of Companies. Learned counsel for the parties request that the case be listed on 4.9.91 for its final disposal as it involves a very short point in between a brother and sister. The case be listed on 4.9.91." It is thus clear that the actual dispute in this company petition is in between the petitioner (sister) and respondent No. 2 (brother). Minutes of the meetings of the Board of directors held on 22 September, 1993, show that during the year 1992-93 alone the company spent Rs. 5,30,355 under the head'Legal and Professional Fees and Expenses'. Subsequent developments in the case were not due to the company. The respondent No. 2 (brother) was hotly contesting the case since the beginning. There was no necessity for the company to separately contest the company petition. As such, the respondent No. 1 (company) had no justification to spend Rs. 5,30,355 during 1991-92 and further amounts subsequently under this head. Amounts spent in this litigation by the company were not at all in its interest. 4. Central office (Palace organisation) 82. It has been contended by the learned counsel for the petitioner that the respondent No. 2 entered into an agreement with the firm M/s Central Office (Palace Organisation) in the year 1986, the company appointed the said firm w.e.f. 1 July, 1986, to advise, co-ordinate and handle managerial, technical and legal matters, to make security arrangements, etc., for the company; a sum of Rs. 6,82,050 has been paid by the company to this firm till 31 March, 1993, in pursuance of the said agreement; the partners of this firm were and are the respondent No. 2 and his wife, Smt. Vijayraj Kumari, and in this way the said amount of the company has been siphoned out for his benefit by the respondent No. 2. 83. In reply, it has been contended by the learned counsel for the respondents as 'follows. 83. In reply, it has been contended by the learned counsel for the respondents as 'follows. The company has greatly been benefited by the said agreement and it has saved much amounts by utilising the services of the said firm. The said firm was formed for effectively, efficiently and economically handling various problems, needs and requirements of organisations associated with the Palace and mostly located therein. The firm renders the service on 'no profit, no loss' basis. In the absence of the said firm, each unit including the company had to engage necessary staff and experts to meet its own requirements, entailing huge expenditure. Even during the time of Maharana, all such services were being rendered through an agency, namely, 'Master of His Highness' Household'. Integrated approach and efforts are being continued for achieving those very basic objects by the aforesaid firm in which there is no outsider as a partner. Their details have been given in Schedule 'A' attached with the reply filed in the Misc. Application No. 22/93. Its perusal shows the enormity of the problems/requirements met by the said firm. At the relevant time, the respondent No. 2 duly disclosed his interest as partner in the said firm. A resolution was passed in a meeting of the Board of directors for renewing this agreement in the presence of the petitioner and she did not oppose its renewal. Since the year 1986, each partner of the said firm received his/her share of profit ranging from Rs. 1,800/2,900 only per year. It is not the case of the petitioner that such services were neither required by the company nor were (they) rendered to the company by this firm. 84. It is not in dispute that an agreement took place in between the respondent No. 2 as managing director of the company and M/s Central Office (Palace Organisation) for the said purpose; Rs. 6,82,050 have been paid to the firm by the company upto 31 March, 1993 and the partners of the firm are the respondent No. 2 and his wife, Vijayraj Kumari. In his reply dated 22 October, 1993, to the petitioner's Miscellaneous Application No. 22/93, the respondent No. 2 has stated in para No. 16 as follows : "That since 1986 each partner of the firm [M/ s. Central Office (Palace Organisation)] has received his/her share of profit ranging from Rs. 1,800 to Rs. In his reply dated 22 October, 1993, to the petitioner's Miscellaneous Application No. 22/93, the respondent No. 2 has stated in para No. 16 as follows : "That since 1986 each partner of the firm [M/ s. Central Office (Palace Organisation)] has received his/her share of profit ranging from Rs. 1,800 to Rs. 2,900 per year subject to income-tax." No rejoinder has been filed by the petitioner despite receiving its copy as early as on 27 October, 1993. Thus the aforesaid averments have gone unrebutted and unchallenged. There is no option, but to believe them. 85. It has also been stated in the reply that M/s. Central Office (Palace Organisation) look after all other units associated with the palace and, mostly located therein, it carries on its activities on no loss no profit' basis, and if the company would not have entered into the said agreement with this firm, it would have had to spend much larger amount for the services rendered by it. Calculations given in the statement (pages 48-50) enclosed with the reply to the Misc. Application No. 22 of 1993 duly support the respondent No. 2. In view of these facts and circumstances, it cannot be said that the amounts paid to the said firm were not in the interest of the company. The point is accordingly decided.POINT No. 12Whether the share capital of the respondent company was increased and also pro- posed to be further increased to improve the debt-equity ratio at the instance of the Bank of India, Udaipur, or to reduce the shareholding of the petitioner and to enhance the shareholding of the respondent No. 2 ? 86. It has been contended by the learned counsel for the petitioner as follows. Immediately after the death of Maharana, estate of Maharana, petitioner and the respondent No. 2 had 700, 300 and 200 shares, (respectively). Being the executors of the will, the respondents No. 3(a) and 3(b) had control over 700 shares. On 20 January, 1986, 1,000 shares were offered pro rata to the shareholders, petitioner and respondent No. 2 accepted 200 and 100 shares respectively to maintain a reasonable debt- equity ratio as desired by the Bank of India, Udaipur, for introducing fresh capital to strengthen the debt equity ratio, but the executors refused to accept 700 shares offered to them. On 20 January, 1986, 1,000 shares were offered pro rata to the shareholders, petitioner and respondent No. 2 accepted 200 and 100 shares respectively to maintain a reasonable debt- equity ratio as desired by the Bank of India, Udaipur, for introducing fresh capital to strengthen the debt equity ratio, but the executors refused to accept 700 shares offered to them. 700 shares refused by the executors were again offered to the shareholders on pro rata basis, i.e., 377 to the estate, 215 to petitioner and 108 to the respondent No. 2. The executors again refused to accept the offer of 377 shares and they were taken by the respondent No. 2. The position of the shareholding on 1 June, 1987, was thus : Estate - 700 Petitioner - 200+200+215 = 615 Respondent No. 2 - 100+100+108+377 = 685 In the year 1989, it was decided to issue 3,000 fresh equity shares with the same object of maintaining the debt-equity ratio. The petitioner conveyed her willingness to accept 923 shares offered to her, the respondent No. 2 accepted 1,027 shares the executors declined the offer. In March, 1991, the company proposed to offer 923 shares not allotted to the petitioner and 1,050 shares refused by the executors. If the proposal had materialised, the position of shareholding would have been thus : HLH - 700 (14%) Petitioner - 615 (12.3%) Respondent No. 2 - 3,685 (73.7%) When the Bank of India, Udaipur, sanctioned Rs. 50 lakhs as loan to the company in the year 1982, there was no stipulation for maintaining the debt-equity ratio and at the time the share capital of the company was Rs. 10 lakhs only. Even in the letter dated 26 October, 1989, of the Bank of India, Udaipur, rescheduling the repayment of the term loan, there was no reference of the debt-equity ratio. Even in its letter dated 14 December, 1985 (page 98A of the company petition and also page 222 of the reply), the bank simply suggested to improve the debt-equity ratio. The Industrial Development Bank of India's objection is not mentioned in any of the minutes of the meetings of the Board of directors. Rs. 3 lakhs received from 3,000 shares issued to the petitioner and respondent No. 2 were utilised in purchasing the shares of Lake Palace Hotel and Motels (P) Ltd., Udaipur. The Industrial Development Bank of India's objection is not mentioned in any of the minutes of the meetings of the Board of directors. Rs. 3 lakhs received from 3,000 shares issued to the petitioner and respondent No. 2 were utilised in purchasing the shares of Lake Palace Hotel and Motels (P) Ltd., Udaipur. The words 'debt' and 'equity' have not been defined in the Companies Act, 1956. They are defined in 'Guidelines' for issuing of debentures and right debentures by public limited companies. According to the guidelines for issuing debentures and right debentures by public limited company, guidelines for floatation of public sector bonds, 1986 series, guidelines for floatation of bonds by public sector undertakings in the telecommunications and power sectors and guidelines for venture capital, the debt equity ratio should not normally exceed 2:1, 2:1, 4:1, 4:1 and 1.1:5, respectively. None of these guidelines apply to the present case. There is no stipulation for any debt-equity ratio in respect of the company. It is further clear from the above guidelines that the debt-equity ratio is not an inflexible ratio even in cases to which the guidelines are applicable. While calculating the debt- equity ratio, short-term bank borrowings, advances, unsecured loans and deposits from the public, shareholders and employees and unsecured loans or deposits from others are not taken into account. After excluding them, the debt-equity ratio of the company was never alarming as is the case of the respondent No. 2. In the year 1988, the debt-equity ratio had dropped to 2 : 1. The entire story of debt-equity ratio put forward by the respondent No. 2 is sham. The real reason behind the repeated increase in the share capital was the desire of the respondent No. 2 to corner more and more shares in his own name so that he may have more than 75% shares in his own right. The Bank of India, Udaipur, could not dictate for maintaining a particular debt-equity ratio as there was no stipulation regarding it when the term loan was sanctioned by it. The Bank of India, Udaipur, could not, and in fact, did not compel the company for increasing the share capital. A higher debt-equity ratio is more beneficial to a company than a lower one. Creditors in order to reduce the risk on their loans prefer and favour a lower debt equity ratio. The Bank of India, Udaipur, could not, and in fact, did not compel the company for increasing the share capital. A higher debt-equity ratio is more beneficial to a company than a lower one. Creditors in order to reduce the risk on their loans prefer and favour a lower debt equity ratio. A lower debt equity ratio may be in the interest of the bank and not necessarily in the interest of a company. The Bank of India, Udaipur, could not recall the loan even if the debt-equity ratio was high. Reliance was placed on Needle Industries (India) Ltd. v Needle Industries Newey (India) Holdings Ltd. (1982) 1 Comp LJ I (SC) : AIR 1981 SC 1289 , Re H.R. Harmer Ltd. (1959) 29 Comp Cas 305 (CA) , Clemens v Clemens Bros. Ltd. (1976) 2 All ER 268 , Gajarabai Patny v Patny Transport (P) Ltd. (1965) 2 Comp LJ 234 (AP) : (1966) 36 Comp Cas 745 (AP) , Kumar Exporters (P) Ltd. v Naini Oxygen and Acetylene Gas Ltd. (1986) 60 Comp Cas 984 (All) and R.N. Jalan v Deccan Enterprises (P) Ltd. (1992) 75 Comp Cas 417 (AP) . 87. It has been contended by the learned counsel for the respondents as follows. In the meeting of the Board of directors held on 5 July, 1985 (attended by the petitioner), it was resolved that the paid up capital of the company be increased from-Rs. 10 lakhs to Rs. 20 lakhs by issuing 1,000 shares. In pursuance thereof, 700, 200 and 100 shares were offered to the executors, petitioner and respondent No. 2 in proportion of their shareholdings in terms of article 38 of the articles of association. The petitioner and the respondent No. 2 accepted the shares offered to them, but the executors declined to accept the same. By letter dated 14 December, 1984 (Annexure D/1 of the reply of the respondent No. I (page 221), the Bank of India, Udaipur, asked the company to raise its capital to improve the debt-equity ratio. This was done by the bank to improve the debt-equity ratio to satisfy the Industrial Development Bank of India's conditions for its eligibility for re-finance. In the Board's meeting held on 20 January, 1986, it was resolved to offer 700 shares declined by the executors to the remaining members. This was done by the bank to improve the debt-equity ratio to satisfy the Industrial Development Bank of India's conditions for its eligibility for re-finance. In the Board's meeting held on 20 January, 1986, it was resolved to offer 700 shares declined by the executors to the remaining members. Accordingly, 467 and 233 shares were offered to the petitioner and the respondent No. 2 in proportion of their shareholdings of 400 and 200 shares as on 20 February, 1986. This offer did not materialise. The Bank of India, Udaipur, again wrote letter dated 2 March, 1987 (page 232). Thereupon, the Board passed resolution on 6 April, 1987, for increasing paid up capital from Rs. 13 lakhs to Rs. 20 lakhs by issuing 700 equity shares. 377, 215 and 100 shares were respectively offered to the executors, petitioner and respondent No. 2. The executors and petitioner declined the offer made to them. The respondent No. 2 accepted the offer. The petitioner agreed to renounce her shares in favour of respondent No. 2. Accordingly, 377 shares were allotted to the respondent No. 2 with the consent of the petitioner (page 66 of Vol. 1). The position of shareholding as on 6 April, 1987 was as under : Executors 700 Petitioner 615 Respondent No. 2 685 The petitioner has not raised any dispute about the aforesaid shareholdings in the company petition or otherwise. By resolution dated 2 August, 1989 (page 94 Vol. 1), the Board further decided to increase the share capital. At the general meeting of the shareholders held on 1 September, 1989 (attended by the petitioner), it was resolved to increase authorised share capital of the company from Rs. 25 lakhs to Rs. 50 lakhs (pages 249-250). Accordingly, the executors, petitioner and respondent No. 2 were offered 1,027, 923 and 1,050 shares, respectively. The petitioner accepted the offer but she did not make payment of the share money. Accordingly, these shares were not allotted to her. The executors declined the offer. The respondent No. 2 was allotted 1,027 shares. Thus on 15 January, 1990, the position of shareholding was- Executors 700 Petitioner 615 Respondent No. 2 1,712 The resolution dated 30 September, 1990 (pages 119-127) refers about refusal of 923 shares by the petitioner. Accordingly, these shares were not allotted to her. The executors declined the offer. The respondent No. 2 was allotted 1,027 shares. Thus on 15 January, 1990, the position of shareholding was- Executors 700 Petitioner 615 Respondent No. 2 1,712 The resolution dated 30 September, 1990 (pages 119-127) refers about refusal of 923 shares by the petitioner. It is clear from the aforesaid facts and circumstances relating to the increase in share capital that there was no ulterior motive on the part of the respondent No. 2 in increasing the share capital and it was done on the request of Union Bank of India, Udaipur, to increase the debt-equity ratio. No fault can be found in it. The business of the company has expanded and, naturally, it needed more money. From time to time, she was offered shares on the pro rata basis like other shareholders. She did not subscribe 923 shares offered to her and this resulted in the decrease in the percentage of her shareholding. The minutes of the meetings of the Board undoubtedly reveal that the increase in the share capital was in the petitioner's knowledge and consent. The petitioner has not raised any grievance in her company petition against the increase effected upto 1 June, 1987, in the share capital of the company. By this date, the respondent No. 2 came to hold 685 shares against the petitioner's shareholding of 615 shares. The increase in the business necessarily needs more finance, and it could only be raised in accordance with the established norms, business efficiency and efficacy. Equity basis has to be raised to obtain necessary finance in terms of accepted norms. In determining debt-equity ratio, the net worth of the company is looked into, reserves and surplus are added and unsecured debts, loans and short term borrowings are also taken into consideration. They relied upon Mohta Brothers (P) Ltd v Calcutta Landing and Shipping Co. (1970) 40 Comp Cas 119 (DB) and Needle Industrial (India) Ltd. v Needle Industries Newey (India) Holding Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 1981 SC 1298 and Nagavarapu Krishna Prasad v Andhra Bank Ltd. (1983) 53 Comp Cas 73 (AP) . The debt-equity ratio is much less than the required ratio of 2 : 1. Various guidelines relied upon by the learned counsel for the petitioner are not applicable to private companies. The debt-equity ratio is much less than the required ratio of 2 : 1. Various guidelines relied upon by the learned counsel for the petitioner are not applicable to private companies. Moreover, the ratio varies from situation to situation. 88. For the first time, the petitioner raised protest on 9 February, 1986, for offering unsubscribed 700 shares to the petitioner and respondent No. 2; she wanted a meeting; extraordinary general meeting of the company was held on 7 April, 1986; the matter was deferred; it was again taken up on 6 April, 1987 and the Board decided to offer 700 shares. It is stated in the minutes (pages 199-200) of the meeting of the Board of directors held on 6 March, 1982, as under : "The Chairman informed the Board that he has been contacting various banks and financial institutions for financial assistance in order to meet the cost of construction, renovation, alteration, modernisation, interior decoration, installation of machinery and plants, etc., for Shrinivas Palace Project. The response from the banks are very encouraging. However, the banks have advised the company that in order to entitle itself for a financial assistance as required, it is very essential that the company's share capital should be raised. If the company would require a financial assistance of, say, Rs. 50 lakhs, the subscribed, issued and paid up capital of the company should atleast be Rs. 10 lakhs, and there should be sufficient cushions at the authorised share capital for raising further capital by issue of further equity shares, if necessary. Thus, the company's authorised capital will have to be raised to Rs. 25 lakhs." By its letter No. UPR:ANG:8/624, dated 30 July, 1982 (page 500), the Bank of India, aipur, intimated the terms under which the term loan of Rs. 50 lakhs was sanctioned on 3 May, 1982. It provided that the interest before availment of IDBI refinance would be 15% per annum and, after its availment, it would be 12.5% to 13% per annum. It is also stated in it that the company will furnish all necessary informations/papers including approval of the hotel by the Tourism Department to facilitate the obtention (obtaining) of IDBI re-finance by the bank as early as possible. It further provides that a stamped undertaking from the company that approval from the Rajasthan Tourism Department will be obtained and conveyed to the bank to facilitate IDBI refinance. 89. It further provides that a stamped undertaking from the company that approval from the Rajasthan Tourism Department will be obtained and conveyed to the bank to facilitate IDBI refinance. 89. On 15 March, 1982, Maharana, Shakti Singh and the petitioner were holding 775, 25 and 200 shares and on 24 June, 1983, the respondent No. 2 got 75 shares from the 775 shares of the Maharana. By letter No. LSPH/23/85-86, dated 13 December, 1985 (page 220), the company intimated the Bank of India, Udaipur, with reference to the objection by the IDBI regarding inadequate debt-equity ratio and several reminders from the bank that the Board of directors have decided on 5 July, 1985 (page 22 of Vol. 1), to raise the paid up share capital of the company from Rs. 10 lakhs to Rs, 20 lakhs. In this meeting of the Board of directors, the petitioner was present. All the shareholders including the petitioner except the estate subscribed to the full extent WTI the shares offered to them as per their entitlement. The next day, the bank by its letter (paper No. 221), suggested (to) the company that the shares which have not been subscribed by the estate be subscribed by the remaining two shareholders with a view to improve the debt-equity ratio further. This matter was discussed in the meeting of the Board of directors held on 20 January, 1986 (paper No. 222). It was resolved that the said 700 fresh equity shares be allotted to other shareholders in proportion of their shareholdings in accordance with article 38 of the articles of association (paper No. 222). The petitioner was present in this meeting. In pursuance of the resolution, letter No. 39/85-86 dated 28 January, 1986 (paper No. 223), was issued to the petitioner offering 467 equity shares of Rs. 1,000 each to her. By her letter, dated 9 February, 1986 (paper No. 224), the petitioner protested against this and stated that no such decision was taken in the said meeting. It may be mentioned here that in this letter, there was no protest against the improvement of the debt-equity ratio. 1,000 each to her. By her letter, dated 9 February, 1986 (paper No. 224), the petitioner protested against this and stated that no such decision was taken in the said meeting. It may be mentioned here that in this letter, there was no protest against the improvement of the debt-equity ratio. Thereafter, notice dated 21 February, 1986, for the meeting to be held on 4 March, 1986 (paper No. 226), was issued to the petitioner and the respondent No. 2, enclosing following explanatory note (paper No. 227) : "The Board of directors in their meeting held on 20.1.1986 decided to offer 700 equity shares declined by the executors of the will of His late Highness Shreeji Maharana B.S. Mewar, to the remaining members in proportion to their existing shareholding as per article 38(1) of the articles of association of the company. This decision was taken as a consequence of the letter No. UPR/OPG/11/2478, dated 14.12.1985 received from the Bank of India, Udaipur. It is in the interest of the company to increase its debt-equity ratio in order to satisfy the objections raised by IDBI for eligibility to refinance. This refinance would result in relief in ratio of interest on borrowings from Bank of India. The urgency to comply is, therefore, of the company. It. is, therefore, the company which stands to gain and not the bank. Any action contrary to the decision taken would financially harm the company." This meeting was adjourned to 11 March, 1986. It was resolved in the aforesaid meeting that the matter regarding the allotment of 700 equity shares to the remaining share-holders was in the right direction, and in the best interest of the company; and it was referred to the members in an extraordinary general meeting (paper No. 228). The extraordinary general meeting of the company was held on 7 April, 1986, and the matter was deferred. The petitioner was present in this meeting. 90. The company received letter No. UPR: OPG:1 3:225, dated 2 March, 1987 (paper No. 232), from the Bank of India, Udaipur. It would be best to quote it here in extenso. It runs as under : "BANK OF INDIA Udaipur Branch Ref. No. UPR:OPG:13:225 The Company Secretary, The Lake Shore Palace Hotel (P) Ltd. City Palace, Udaipur. Date 2.3.1987 Dear Sir, Re : Your term loan A/c-Declining net worth of your company. It would be best to quote it here in extenso. It runs as under : "BANK OF INDIA Udaipur Branch Ref. No. UPR:OPG:13:225 The Company Secretary, The Lake Shore Palace Hotel (P) Ltd. City Palace, Udaipur. Date 2.3.1987 Dear Sir, Re : Your term loan A/c-Declining net worth of your company. This has reference to our letter No. UPR : OPG:11:2478, dated 14.12.1985, and subsequent discussions with you. Time and again, we have been requesting you to make concerted efforts to arrest the decline in the net worth of your company and resultant fall in the debt- equity ratio. Among other things, we had also suggested to you to introduce fresh capital in the company with a view to strengthen the equity base. Please advise us about the steps taken by you in this regard, without further delay. Thanking you, Yours faithfully, Signed ...................Manager"Thereupon, a meeting of the Board of directors was called on 6 April, 1987, to discuss and to take suitable action on this letter (paper No. 232). Para No. 2 of the minutes (paper No. 234-236) runs as under : "The Board discussed the letter No. UPR:OPG:13:225, dated 2nd March, 1987, from the Bank of Iritlia, Udaipur, regarding the maintaining of net worth of the company and also introducing fresh capital in the company with a view to strengthen the equity base. *The Chairman brought to the notice of the Board that the Bank of India had been repeatedly pressing for action in this direction for the last 3 years, and, as a result of this, the Board has already resolved in its meeting of 5th July, 1985, to increase the subsclibed equity capital of the company from Rs. 10 lakhs to Rs. 20 lakhs. However, the subscribed equity capital could be increased to only Rs. 13 lakhs, since the executors of the will of HLH Maharana B.S. Mewar had expressed their inability to subscribe to the 700 equity shares offered to them, The Chairman explained to the Board the imperative necessity to raise subscribed equity capital of the company to at least Rs. 20 lakhs, if not to the full extent of authorised capital of Rs. 25 lakhs." The resolution was accordingly passed. In this meeting, the petitioner was present. The minutes of the meetings were confirmed in the meeting of the Board of directors dated 1 June, 1987. 20 lakhs, if not to the full extent of authorised capital of Rs. 25 lakhs." The resolution was accordingly passed. In this meeting, the petitioner was present. The minutes of the meetings were confirmed in the meeting of the Board of directors dated 1 June, 1987. The petitioner was present in this meeting also. A meeting of the Board of directors was also held on 2 August, 1989, in which the petitioner, respondent No. 2 and Shri A.K. Chaturvedi, Additional Director, were present. The relevant portions of the minutes of this meeting (papers No. 237-244) run as under : "The Chairman reported to the Board that although the working of the company so far has been satisfactory, the officers of the Bank of India, during their various meetings with him, have been pointing out that the overall financial position of the company is not to their satisfaction and requires to be improved. For example, they expressed their dissatisfaction on the grounds : (i) The investment of the company in shares of another company was even more than the entire paid up capital of the company. (ii) The total debts amounted to over Rs. 95 lakhs as on 30 June, 1986, as against the equity share capital of Rs. 20 lakhs, which amounted to a debt-equity ratio of 4.75: 1. This was not a very happy position, and fell far short of the accepted norms of 2: 1. The bank has been pressing that this anomaly must be rectified. The managing director also pointed out that it is necessary to upgrade and modernise the various extra facilities in Shriniwas Palace Hotel to bring them up to a standard commensurate with the status of the hotel as a Five Star Deluxe Hotel. Considering all these demands for further funds in the near future, the Chairman explained to the Board that the only possible way is to raise the share capital of the company. He, therefore, proposed that the authorised share capital of the company be raised from Rs. 25 lakhs to Rs. 50 lakhs. Further equity capital can be subscribed by the shareholders as and when required to meet the demands." These minutes were duly confirmed in the meeting of the Board of directors held on 1 September, 1989 (paper No. 102, Vol. 1). The petitioner was present in this meeting. 25 lakhs to Rs. 50 lakhs. Further equity capital can be subscribed by the shareholders as and when required to meet the demands." These minutes were duly confirmed in the meeting of the Board of directors held on 1 September, 1989 (paper No. 102, Vol. 1). The petitioner was present in this meeting. These proposals were also approved in the extraordinary general meeting of the company held on 1 September, 1989. The petitioner was present in it (paper No. 249). 91. On 26 October, 1989, notice (paper No. 255) was issued for holding meeting of the Board of directors on 6 November, 1989, to consider the matter of increasing the subscribed share capital of the company from Rs. 20 lakhs to Rs. 50 Iakhs by issuing 3,000 equity shares of Rs. 1,000 each in pursuance of the resolution passed in the extraordinary general meeting of the company held on 1 September, 1989. In this meeting, it was resolved that 3,000 equity shares be issued and offered to the members in proportion of their shareholdings as required under article 38(1) of the articles of association (papers No. 257-258). On 29 November, 1989, the petitioner addressed letter (paper No. 264) to the company secretary intimating her willingness to accept 923 equity shares offered to her. In her letter dated 1 March, 1990 (paper No. 383), the petitioner writes to the respondent No. 2, "In view of the above, I request you that whenever LSPH raises its subscribed share capital and offers shares to the executors of the will for the MMIT, those shares must be accepted and necessary means found to pay them." No protest has been raised for increasing the share capital. On the other hand, there is implied consent for it. It is clear from the aforesaid letters and resolutions that at no point of time till the year 1990, the petitioner pointed out that the debt-equity ratio was not required to be improved or the share capital of the company was not required to be enhanced or loan can be taken from other financial institutions. It is clear from the aforesaid letters and resolutions that at no point of time till the year 1990, the petitioner pointed out that the debt-equity ratio was not required to be improved or the share capital of the company was not required to be enhanced or loan can be taken from other financial institutions. It has been observed in Needle Industries (P) Ltd. v Needle Industries Newey (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC), para 121, page 56: AIR 1981 SC 1298 , at page 1340, para 111 , as follows : "Whether one looks at the matter from the point of view expressed by this court in Nanalal Zaver v. Bombay Life Assurance Co. Ltd. (1950) 20 Comp Cas 179 (SC) ] or from the point of view expressed by the Privy Council in Howard Smith Ltd. v Ampol Petroleum Ltd. (1974) AC 8211 , the test is the same, namely, whether the issue of shares is simply or solely for the benefit of the directors. If the shares are issued in the larger interest of the company, the decision to issue shares cannot be struck down on the ground that it has incidentally benefited the directors in their capacity as shareholders. We must, therefore, reject Shri Seervai's argument that, in the instant case, the Board of directors abused its fiduciary power in deciding upon the issue of rights shares." It has been observed in Maharani Lalita Rajya Lakshmi, MP v Indian Motor Co. (Hazaribagh) Ltd. AIR 1962 Cal 127 , at page 129, para 8 , as follows : "There are two complete answers to this argument. The first answer is that to attempt to get a majority by lawful means is not a fact or a circumstance which justifies winding up of the company. If any authority is needed for that proposition, one need only refer to the Privy Council decision of Ripon Press and Sugar Mills Co. The first answer is that to attempt to get a majority by lawful means is not a fact or a circumstance which justifies winding up of the company. If any authority is needed for that proposition, one need only refer to the Privy Council decision of Ripon Press and Sugar Mills Co. Ltd., Beliary v V Gopal Chetti 58 Ind App 416: AIR 1932 PC 1 , where Lord Blanesburgh at page 422 (of Ind App) : (at page 6 of AIR) made this significant observation : 'The fact that Venkata Rao had a preponderating voice in the company by reason of his owning or controlling a large number of shares was of itself no reason for winding up the company; the allegation that dividends had not been paid regularly was no ground for winding up....." Reference of Mohta Bros (P) Ltd. v. Calcutta Landing and Shipping Co. Ltd. (1970) 40 Comp Cas 119 (Cal) , may also be made here. It cannot, therefore, be said that share capital of the respondent company was increased to reduce the shareholding of the petitioner and to increase the shareholding of the respondent No. 2 and not to improve the debt-equity ratio as desired by the Bank of India, Udaipur.92. Out of the 3,000 shares issued, 1,050 and 923 shares were offered to the executors and the petitioners and they declined to accept the same. It is stated in para 31 of the company petition that the respondent No. 2 has proposed to take in his name 1,050 and 923 shares; if he is permitted to do so, his shareholding would then be to the extent of 3,685 of the total shareholding of 5,000 shares and would thereby achieve the goal of having total control over the company in his own right. The minutes of the meeting of the Board of directors held on 16 March, 1991, shows that the respondent No. 2 declined to subscribe these shares (paper No. 141 of Vol. I). It has also been so stated by the respondent No. 2 in para No. 2 of his reply.93. It is correct that the company refunded the amount of loan of Rs. 5 lakhs to the wife of the respondent No. 2, but loans advanced by the petitioner and her children were not paid. I). It has also been so stated by the respondent No. 2 in para No. 2 of his reply.93. It is correct that the company refunded the amount of loan of Rs. 5 lakhs to the wife of the respondent No. 2, but loans advanced by the petitioner and her children were not paid. The petitioner and her daughter, Vindhyeshwari Kumari, wrote letters (papers No. 350-351) in April, 1990, to the respondent No. 2 stating that letters written for withdrawal of their deposits be treated as cancelled. The petitioner herself admits in para 34 of the company petition that the respondent No. 2's wife advanced a loan of Rs. 5 lakhs for acquiring shares of the Lake Palace Hotel and Motels (P) Ltd. A resolution was passed in the meeting of the Board of directors held on 20 January, 1986, for accepting the offer of 889 shares of Lake Palace Hotel and Motels (P) Ltd., Udaipur, and in this meeting, she was present. Out of Rs. 3 lakhs advanced by the petitioner, Rs. 2 lakhs were paid to her to enable her to purchase 200 equity shares of the company and only Rs. 1 lakh remained with the company (page 174). By acquiring 710 shares of Lake Palace Hotel and Motels (P) Ltd., the financial position of the company was greatly improved.94. It is correct that in various letters, the Bank of India, Udaipur, suggested to the company for improving the debt-equity ratio, and there was no threat on its part for this purpose. Admittedly, the Bank of India, Uadipur, was/is in occupation and possession of a portion of the palace as a tenant and was having business dealings with the Maharaja and thereafter with the respondents. Being a banking company, letters were written by it in polite language suggesting (not ordering) for the improvement of the debt-equity ratio. The Bank is not like a Government office or a court where orders are passed; use of polite language is considered below dignity and suggestions are rarely given and entertained. If the debt-equity ratio is not improved, the Bank stops advancing further loan. Initially, Bank of India, Uadipur, sanctioned a loan of Rs. 50 lakhs to the company and made payment of the first instalment of Rs. 25 lakhs. If the debt-equity ratio is not improved, the Bank stops advancing further loan. Initially, Bank of India, Uadipur, sanctioned a loan of Rs. 50 lakhs to the company and made payment of the first instalment of Rs. 25 lakhs. If the company would not have cared to improve the debt-equity ratio, the Bank could have refused to pay the second instalment of Rs. 25 lakhs. The company further required loan for the expansion of its business and for achievement of some of its objects.95. It is not disputed that the aforesaid guidelines referred to by the learned counsel for the petitioner during arguments do not apply to the company. It is clear from these guidelines that the debt-equity ratio is not an inflexible ratio and it varies from situation to situation. The Bank of India, Udaipur, was always insisting for improving the debt-equity ratio. This cannot be doubted. In Needle Industries (P) Ltd. v Needle Industries Newey (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC), para 105-109 pages 52-53 of Comp LJ, AIR 1981 SC 1289 paras 105-109 , it has been held that the issue of shares merely for an extraneous purpose like maintenance or acquisition of control over the affairs of the company is objectionable and is oppressive. Such was not the case here. The facts and circumstances of the other cases, relied upon by the learned counsel for the petitioner, are quite different and distinguishable.96. Earlier, the learned counsel for the petitioner contended that an adverse inference should be drawn against the respondents for not filing letters of the Bank of India, Udaipur, dated 7 June, 1983, and 11 November, 1983, referred to in its aforesaid letters and also the IDBI's letter dated 10 February, 1983. When the copies were filed by the company along with its supplementary written arguments on 16 September, 1994, the learned counsel for the petitioner seriously opposed to take them on record. These documents were duly taken on record and it was also ordered that they would be read in evidence vide order sheet dated 29 September, 1994. After thorough and full discussions of the entire materials on record which was on 2 August, 1994, the above conclusion was arrived at (without taking these documents into consideration). They also support the above conclusion. After thorough and full discussions of the entire materials on record which was on 2 August, 1994, the above conclusion was arrived at (without taking these documents into consideration). They also support the above conclusion. Accordingly, it is held that the share capital was increased and shares were allotted as said above with a view to increase the debt-equity ratio and not with the object of increasing the shareholding of the respondent No. 2. It is also held that there was no need of increasing the share capital of the company after the repayment of the loan to the Bank of India, Udaipur.POINT NO. 13 Whether the petitioner is guilty of concealment of many material facts ? If so, to what effect ? 97. The learned counsel for the respondent No. 2 contended that the petitioner has concealed many material facts from her company petition and on this ground alone, it deserves to be dismissed. In reply, preliminary objection was raised that such a plea has not been taken in the replies by the respondents. To this contention, it was urged by the learned counsel for the respondents that the respondent No. 1 has categorically stated in pars 9 of its preliminary objections that the petitioner has concealed various important facts; she has distorted several facts and she has made misrepresentations in her company petition. In pars No. 1 of his reply, the respondent No. 2 has stated 'the respondent No. 2 fully concurs with and reiterates all that is said in the written reply of the respondent No. 1.' Thus the preliminary objection raised by the learned counsel for the petitioner has no substance.98. Now it is to be seen what material facts have been concealed, distorted and misrepresented by the petitioner in her company petition and their effect.99. It was contended by the learned counsel for the respondent No. 2 that the petitioner was offered 200 shares in the year 1982; she accepted only 100 shares; she renounced remaining 100 shares in favour of Maharana and this fact has not been disclosed in the company petition. This fact has no material bearing with the dispute raised in the company petition. At that time, the respondent No. 2 was not even a shareholder of the company. This fact has no material bearing with the dispute raised in the company petition. At that time, the respondent No. 2 was not even a shareholder of the company. Actual dispute in this company petition is in between the sister (petitioner) and brother (respondent No. 2) vide the statement of the learned counsel for the parties recorded in the order sheet dated 26 July, 1991.100. It was next contended by the learned counsel for respondent No. 2 that, in para 28 of the company petition, it has simply been averred that the respondent No. 2 being the younger brother of the petitioner pleaded with her to allow him to purchase the shares (307) refused by the executors and she permitted him to purchase the same; in fact, the petitioner declined to subscribe 251 equity shares offered to her out of 377 shares refused by the executors and renounced the same in favour of the respondent No. 2 and these material facts have not been averred in the company petition. It is correct that 'renouncement' has not been used in para 26, but it is clear from the averments made therein that the petitioner refused to accept 251 shares offered to her out of 377 shares and renounced in favour of the respondent No. 2. There is no material concealment.101. It was next contended by the learned counsel for the respondent No. 2 that paras 1, 2 and 3 of the minutes of the meeting dated 11 March, 1986, were suppressed while other paragraphs were reproduced at page 19 of the company petition. Annexure 'D' (pages 96 and 97) of the company petition contains paras 2 and 4 of the minutes of the meeting of the Board of directors held on 11 March, 1986, and para No. 1 is missing. The respondent No. I has filed copies of minutes of this meeting (vide pages No. 230-235). Para No. 1 is missing from these minutes also. It cannot, therefore, be said that the petitioner has deliberately concealed paras Nos. 1, 2 and 3 of the minutes dated 11 March, 1986, from her company petition.102. It was next contended that the petitioner was supplied all documents six months prior to the institution of the company petition and, despite it, she stated in para No. 44 of her company petition that she was refused access to important documents. 1, 2 and 3 of the minutes dated 11 March, 1986, from her company petition.102. It was next contended that the petitioner was supplied all documents six months prior to the institution of the company petition and, despite it, she stated in para No. 44 of her company petition that she was refused access to important documents. In reply, it has been contended that it is not correct that the important documents, i.e., documents relating to bank loan, correspondence, minute books and balance-sheets of 1983 onwards were not supplied and the documents supplied did not relate to the company. List of the documents demanded is at page 127 and the list of documents shown is at page 129. It is clear from a comparative study of these two lists that documents and correspondence relating to bank loan, minute books and the balance sheet from 1983 were not supplied. As such, the petitioner cannot be held guilty of concealment of material facts.103. It was next contended that the meetings of the trust was held at Taj Mahal Hotel, Bombay, and this fact is not mentioned in the company petition. Under the facts and circumstances of the case, this fact was not relevant and material. The Trust did not come into existence when the company petition was filed and the trustees have not admittedly been impleaded in it. More reasons are mentioned in point No. 8, para 59-63, supra.104. It was next contended by the learned counsel for the respondent No. 2 that in para 29 of the company petition, it has been averred that the petitioner sent her letter dated 29 November, 1989, conveying her willingness to accept 923 shares offered to her and, in para 30, it has simply been stated that 923 shares have not been allotted to her, concealing the fact that allotment was not done as she did not make payment of the amount of the shares. In her rejoinders, the petitioner does not deny the fact about non-payment of the share money. It can simply be said that the petitioner did not disclose the said reason for non-allotment of the shares in her company petition.105. In her rejoinders, the petitioner does not deny the fact about non-payment of the share money. It can simply be said that the petitioner did not disclose the said reason for non-allotment of the shares in her company petition.105. It was further contended by the learned counsel for the respondent No. 2 that the petitioner has neither referred to her letter dated 1 March, 1990 (page 383), in her company petition, nor has he filed its copy and so also its reply (paper No. 385) given by the respondent No. 2 despite the fact that they were very relevant and material. There is no force in the contention. Pleading is to state material facts and not evidence. Moreover, they relate to the trust. As already held in point No. 8, the trust did not come into existence till the company petition was filed. As such, their disclosure was not necessary.106. It was next contended by the learned counsel for the respondent No. 2 that the petitioner was a party in the Partition Suit No. 63 of 1983 and Civil Miscellaneous Application No. 80/93 filed in it, presently pending in the Court of Additional District Judge No. 1, Udaipur, and despite being aware of the order, dated 2 December, 1985, passed in it, she stated in para No. 15 of her rejoinder affidavit (pages 472-489) that they are matters of record and the executors are put to strict proof thereof. Be that as it may, this cannot be said to be concealment or distortion of facts.107. It was next contended by the learned counsel for the respondent No. 2 that the petitioner suppressed the fact that the executors never exercised their voting rights qua 700 shares. It has been averred in para 23 of the company petition that 700 shares standing in the name of Maharana were transmitted to the executors and the latter exercised their domain (dominion) and control over these 700 shares. It is not in dispute that on several occasions, the executors were offered shares on pro rata basis as they were under the control of the estate. In para 7 (page 527) of his affidavit, the executor, A. Subramaniam, [respondent No. 3(b)] states that the executors were rightly and lawfully exercising their votes and other rights in respect of these shares as members of the company. In para 7 (page 527) of his affidavit, the executor, A. Subramaniam, [respondent No. 3(b)] states that the executors were rightly and lawfully exercising their votes and other rights in respect of these shares as members of the company. It cannot, therefore, be said that the petitioner concealed some material particulars if she did not also plead that the executors never exercised their voting right in respect thereof.108. It was contended by the learned counsel for the respondent No. 2 that, in para No. 8 of her affidavit dated 4 November, 1993 (pages 602-615), the petitioner has stated that no inventory has been filed in the probate case by the executors and it is not correct. The executors are required to file inventory and accounts within 6 months from the grant of probate or within such further time as the court which granted the probate may extend, vide section 317, Indian Succession Act, 1925. It has been stated in the affidavit of the executor, A. Subramaniam [respondent No. 3(b)] that inventories have been prepared in compliance with the order of the District Judge, Udaipur, dated 2 December, 1985, and also in compliance with the order of this court passed in D.B. Contempt Petition No. 78/90, Maharana Mahendra Singh v Maharaj Arvind Singh . It has not specifically been averred by the executor, A. Subramaniam [respondent No. 3(b)] in his affidavit (page 529) that compliance of the provisions of section 317, Indian Succession Act, was fully done. As such, it cannot be said that the petitioner's affidavit dated 4 November, 1993 (page 607) to the effect that the executors have not given a complete inventory of the estate and have also not rendered accounts in the probate case, is not correct.109. It was next contended by the learned counsel for the respondent No. 2 that the petitioner was seriously pursuing the partition suit filed by her elder brother, Shri Mahendra Singh, and probate proceedings commenced by her younger brother, Shri Arvind Singh (respondent No. 2), and these facts were suppressed. In reply, it was contended that the partition suit was being contested by the Maharana during his life-time and, thereafter, by the respondent No. 2, the petitioner was simply supporting him (respondent No. 2) and in probate proceedings for the first time, she put her appearance in January, 1992, through her advocate, Shri Vineet Kothari, Advocate. In reply, it was contended that the partition suit was being contested by the Maharana during his life-time and, thereafter, by the respondent No. 2, the petitioner was simply supporting him (respondent No. 2) and in probate proceedings for the first time, she put her appearance in January, 1992, through her advocate, Shri Vineet Kothari, Advocate. Under the facts and circumstances of the case, they were not material facts in the company petition filed under sections 397 and 398 of the Act.110. It was also contended that the respondent No, 2 was appointed as managing director of the company on 29 March, 1985, and petitioner suppressed this fact. In reply, it has been contended that copies of the minutes were not sent to her. There is no force in this contention also. The question of suppression of fact assumes importance if it is material and relevant to the point in controversy. It has not been shown as to how the petitioner has gained by not disclosing this fact and how the date of the said appointment was material.111. There is no force in the contention of the learned counsel for the respondent No. 2 that the petitioner was actively participating in the affairs of the company and this fact was suppressed by her in her company petition. The respondents have failed to show' as to how the petitioner was actively participating in the management and affairs of the company except attending the meetings of the company- and the Board of directors. If it would have been so, she would not have written several letters inquiring about the affairs of the company We her letters dated 13 January, 1990 (page 123), 31 August, 1990 (page 125), 2 September, 1990 (page 126), 8 September, 1990 (page 128), 9 February, 1986 (pages 224-25), 4 January, 1990 (pages 357-358) and 1 March, 1990 (pages 361-362) and the respondents would not have written to her letters dated 17 January, 1990 (page 124), 5 December, 1989 (pages 355-56), 8 January, 1990 (page 359), dated 17 January, 1990 (page 360) and dated 6 December, 1990 (page 385). Thus there is no question of suppression of this fact.112. Thus there is no question of suppression of this fact.112. It was next contended by the learned counsel for the respondent No. 2 that the petitioner suppressed the letter No. UPR : OPG : 11 /2478 dated 14 December, 1985, issued by the Bank of India, Udaipur, to the company suggesting that the shares not accepted by the executors be got subscribed by the remaining two shareholders for improving debt equity ratio and its particulars find mention in her letter dated 9 February, 1986, addressed to the respondents. There is no substance in this contention also. The petitioner's case is that this letter was procured from the Bank by the respondent No. 2 with the object of increasing share capital and purchasing shares in his name to have his absolute control over the company. This letter finds mention in para 24 of the company petition. As such, there arises no question of suppression of this letter.113. It was net contended that the details of the four meetings held in the year 1989-90 in which the petitioner was present were not disclosed in the petition. The petitioner attended all the meetings held in the year 1989 except the meetings of the Board of directors held on 6 November, 1989. In the year 1990, the petitioner attended the meeting of the Board of directors held on 3 September, 1990, only. The respondent No. 1 admits in para No. 35 (paper No. 187) of its reply that there was no practice of sending copies of the minutes to any director. When the petitioner was not in possession of the copies of the minutes, there was no question of disclosing the details about the meetings. 114. It was next contended by the learned counsel for the respondent No. 2 that the petitioner did not disclose that the executors declined the shares in the meeting of the Board dated 16 October, 1985. It is stated in para No. 23 of the company petition that in the meeting dated 5 July, 1985, it had been decided to increase the subscribed and paid up capital of the company from Rs. 10 lakhs to Rs. 20 lakhs and the executors refused to accept 700 shares offered to them. It was not necessary to plead as to when and where the executors refused the offer. They are not material facts.115. 10 lakhs to Rs. 20 lakhs and the executors refused to accept 700 shares offered to them. It was not necessary to plead as to when and where the executors refused the offer. They are not material facts.115. It was next contended that all the meetings of the company and Board of directors do not find mention in the company petition. There is no substance in this contention. It was not necessary to mention about each and every meeting of the company as well as of the Board of directors.116. It has been contended that the petitioner has not disclosed in her company petition that the extraordinary general meeting held on 1 September, 1989, was called at her instance. This meeting finds mention in para 27. It was not necessary to mention that it was called at her instance.117. It was also contended that the petitioner did not disclose that the dividends could not be declared till the loan was repaid to the Bank of India, Udaipur. In reply, it has been contended that a copy of the Bank's letter dated 30 July, 1982, wherein this stipulation was mentioned was not with the petitioner and its copy was given to her only after company petition was filed. Thus there is no great force in this contention.118. It was lastly contended that the petitioner suppressed the reasons for delay in the administration of the estate of Maharana by the executors. There was no question of her giving the reasons for the delay when her case itself is that the executors are themselves causing delay in obtaining probate and also in administering the estate of Maharana.119. The humanist rule is that procedure is the 'handmaid' and not the 'mistress'. It is well settled law that a petition under sections 397 and 398 of the Act cannot be thrown away on mere technicalities. Reference of Needle Industries (P) Ltd. v Needle Industries Newey (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 1981 SC 1298 , para 171 may be made here. Accordingly, the point is decided in favour of the petitioner.POINT No.14Whether the affairs of the company are being conducted by respondent No. 2 in a manner oppressive to the petitioner or prejudicial to the interest of the company within the meaning of sections 397 and 398 of the Companies Act?120. Accordingly, the point is decided in favour of the petitioner.POINT No.14Whether the affairs of the company are being conducted by respondent No. 2 in a manner oppressive to the petitioner or prejudicial to the interest of the company within the meaning of sections 397 and 398 of the Companies Act?120. On the basis of the above-noted arguments (Points No. 1 to 11) advanced by him, the learned counsel for the petitioner contended that the petitioner as a share-holder of the company has been successful to prove her case of oppression and mis-management and the company petition deserves to be allowed in toto with costs. He placed reliance upon Ebrahimi v Westbourne Galleries Ltd. (1977) 2 All ER 492 at pages 492 and 493 , S. Narayanan & Ors. v Century Flour Mills Ltd. and Ors. (1987) 1 Comp LJ 25 (Mad), at page 69 , Re H.R. Harmer Ltd., (1958) 3 All ER 689: (1959) 29 Comp Cas 305. at page 307 , Clemens v Clemens Bros Ltd. (1976) 2 All ER 268, at pages 268 and 269 , Needle Industries (P) Ltd. v Needle Industries Newey (India) Holdings Ltd. (1982) 1 Comp LJ 1 (SC) : AIR 1981 SC 1289, at pages 1300 and 1301 , Gajarabai Patny v Patny Transport (P) Ltd. (1965) 2 Comp LJ 234 (AP) : (1986) 66 Comp Cas 745 (AP) , Kumar Exporters (P) Ltd. v Naini Oxygen & Acetylene Gas Ltd. (1986) 60 Comp Cas 984 (All) , R.N. Jalan v Deccan Enterprises (P) Ltd. (1992) 75 Comp Cas 417 (AP) , Shanti Prasad lain v Kalinga Tubes Ltd. (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 , Tata Engineering and Locomotive Cu. Ltd. v State of Bihar, (1964) 1 Comp LJ 280 (SC) : AIR 1965 SC 40 and Bhubaneshwar Singh and ors. v Kanthal India Ltd. (1986) 59 Comp Cas 46 (Cal) at page 89 .121. Similarly, on the basis of the arguments advanced by them, the learned counsel for respondents contended that the petitioner has utterly failed to prove necessary ingredients of sections 397 and 398 of the Act and, as such, the company petition deserves to be dismissed with costs. v Kanthal India Ltd. (1986) 59 Comp Cas 46 (Cal) at page 89 .121. Similarly, on the basis of the arguments advanced by them, the learned counsel for respondents contended that the petitioner has utterly failed to prove necessary ingredients of sections 397 and 398 of the Act and, as such, the company petition deserves to be dismissed with costs. They placed reliance upon Re H.R. Harmer Ltd., (1958) 3 All ER 689 : (1959) 29 Comp Cas 305 , Scottish Co-operative Wholesale Society Ltd. v Meyer (1959) AC 324 : (1958) 3 All ER 66 , Re lermyn Street Turkish Bath Ltd. (1971) 3 All ER 184 , Maharani Lalita Rajya Lakshmi v Indian Motor Co. (Hazaribagh) Ltd., AIR 1962 Cal 127 (DB) , Shanti Prasad Jain v Kalinga Tubes Ltd. (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 , Thakur Hotel (Simla) Company (P) Ltd., (1963) 33 Comp Cas 1029 , Raghunath Swarup Mathur v Har Swarup Mathur (1970) 1 Comp LJ 35 (All) : (1970) 40 Comp Cas 282 (All) , Mohta Bros (P) Ltd. v Calcutta Landing and Shipping Co. Ltd. (1970) 40 Comp Cas 119 (DB) (Cal) , Smt. Abnash Kaur v Lord Krishna Sugar Mills Ltd. (1974) 44 Comp Cas 390 (Del) .122. From the aforesaid findings (Points No. 1 to 13), it is clear that the petitioner has been successful to prove the following : (1) The company petition as filed is maintainable. (2) Actions of the Board of directors can well be challenged by a shareholder in such a petition. (3) Adjourned meetings of the Board of directors of the company in which the respondent No. 2 was only present were void and non est. (4) Events which occurred three years prior to the filing of the company petition can be looked into if those events form continuous acts complained of and continuing upto the date of the petition. (5) Below noted amounts spent by the company were not in its interest : (i) Rs. 4,39,777 spent in the foreign tours of the respondent No. 2. (ii) Rs. 9,24,884 spent in the Bombay flat vide table given on page 81. (iii) Rs. 5,30,355 spent in litigation during the year 1992-93 only. 123. (5) Below noted amounts spent by the company were not in its interest : (i) Rs. 4,39,777 spent in the foreign tours of the respondent No. 2. (ii) Rs. 9,24,884 spent in the Bombay flat vide table given on page 81. (iii) Rs. 5,30,355 spent in litigation during the year 1992-93 only. 123. In the adjourned meetings of the Board of directors held on 10 January, 1986 (page 27 of volume 1), 11 March, 1986 (page 40), 7 July, 1986 (page 44), 25 November, 1986 (page 47), 13 December, 1988 (page 82), 4 April, 1990 (page 116), 22 February, 1991 (page 129) and 16 March, 1991 (page 131), the respondent No. 2 was only present. Important decisions were taken in the meetings held on 25 November, 1986, 13 November, 1988, 4 April, 1990 and 16 March, 1991. It may be mentioned here that the company petition was filed on 20 March, 1991. In the adjourned meeting held on 16 March, 1991 itself, resignation of the additional director, Shri A.K. Chaturvedi was accepted, Shri K.R. Kantawala and Shri Shakti Singh were appointed as additional directors, the respondent No. 2 was authorised to consult architects and got plan and estimates prepared for company's hotel, savings bank account in the name of the company's employees' gratuity fund was to be opened, respondent No. 2 was authorised to obtain bank guarantee, nomination of the petitioner as nominee director of Lake Palace Hotel and Motels (P) Ltd. was to represent the company on the Board of directors of Lake Palace Hotel and Motels (P) Ltd.124. The company moved application No. 15/94 with the prayers (1) to direct the petitioner to sign and execute personal guarantee bonds as per requirements of the Bank of India, Udaipur, to enable the company to avail already sanctioned term loan facilities; (2) to remove her from the position of a director; and (3) to appoint another director/directors. Relevant portions of para 6 of the reply of the petitioner (pages 44-51) (at page 48-49) run as under : "Therefore, before talking about the petitioner's obligations, the respondent No. 2 must first perform his duties as managing director correctly, honestly and fairly, which he is consistently failing to do. Relevant portions of para 6 of the reply of the petitioner (pages 44-51) (at page 48-49) run as under : "Therefore, before talking about the petitioner's obligations, the respondent No. 2 must first perform his duties as managing director correctly, honestly and fairly, which he is consistently failing to do. The attitude of the respondent No. 2 qua the petitioner with regard to fixing the meetings of the respondent No. I and his attitude in general towards suggestions/views/objections raised by the petitioner as well as the treatment meted out to the petitioner by the respondent No. 2 will be apparent from the letters dated 17.10.1992, 25.6.1992, 18.5.1992 and 24.10.91 and hills raised on the petitioner and the statement of account indicating that the bills raised on the petitioner have been debited in her account. Copies of the said letters, the bills and statement are annexed hereto and marked as Annexure X. (Colly)" Alongwith the reply, the petitioner has filed bills (pages 61-69), forwarding letter (page 60), outstanding statement (page 59) and statement of account of the petitioner (page 70) relating to the year 1.4.91 to 31.3.92. In para No. 7 of the rejoinder affidavit (page 75) filed by the Chief Accountant and officiating Company Secretary, Ajay Chandra Jain, it has been stated as follows : "The bills have been raised as per the desire of the petitioner and that too in respect of her advisers who stayed in the hotel for inspection of the records. The petitioner did not stay in the hotel and all bills only relate to her representatives/ advisors or relate to food, etc., served." It is thus clear that the bills, statement of account and outstanding statement filed by the petitioner alongwith her reply are admitted by the company. It has not been correctly stated in the said reply that the bills have been raised in respect of her advisors and representatives who stayed in the hotel for inspection of the record. The relevant portion of the forwarding letter No. SNP/0115/91-92, dated 30 January, 1991 (page 60), addressed to the petitioner to her Indore address runs as under : "Sir/ sirs, We are forwarding herewith our bill/bills in respect of accommodation/ services provided to your guest/guests as detailed below : Bill No. Date Particulars Amount (Rs.) 2862 23.4.91 Self bill 1,068.48 2863 20.4.91 Mr. Parijat Sinha 2,521.20 2864 22.4.91 Mr. A.K. Suri/Mr. Parijat Sinha 2,521.20 2864 22.4.91 Mr. A.K. Suri/Mr. Des Raj 4,550.40 Total 8,140.08 (Total rupees eight thousand one hundred forty and paisa eight only.)" Item No. 1 of the above-quoted forwarding letter relates to Bill No. 2862, dated 23 April, 1991, for Rs. 1,068.46. The details are mentioned in the bill (paper No. 69). It is clearly mentioned in the column of particulars that it personally relates to the petitioner. The details of the bills (paper No. 69) shows that no room rent was charged and all the items relate to food and beverages and sales-tax thereon. Bill Nos. 2863, dated 20 April, 1991, and 2864, dated 22 April, 1991, relate to Mr. Parijat Sinha, and Mr. A.K. Suri/Desh Raj. If the Bill No. 2862, dated 23 April, 1991, would have related to some guest or representative of the petitioner, the words 'self bill' would not have been mentioned in the column of particulars and the name of the representatives/advisors would have been mentioned as has been mentioned in respect of two other bills. Further details of Rs. 1,068.48 are mentioned in the bills (pages 61 to 68). This affidavit of the petitioner (in her reply) and the documents greatly support the contention of her learned counsel that the petitioner was charged by the company even for taking tea from the respondent's (dining hall) despite the fact that she was a share- holder and director of the company and only real elder sister of the managing director, Shri Arvind Singh (respondent No. 2). When the company was so particular in realising the amount from the petitioner, it had no justification for spending lakhs of rupees in the Bombay flat, in foreign trips and litigation as discussed in point No. 12.125. It has been observed in Shanti Prasad lain v. Kalinga Tubes Ltd., (1965) 1 Comp LJ 193 (SC), at page 203: AIR 1965 SC 1535 at page 1542, para 15(4) , as follows : "(4) Although the word 'oppressive' is not defined, it is possible, by way of illustration, to figure a situation in which majority shareholders, by an abuse of their predominant voting power are 'treating the company and its affairs as if they were their own property' to the prejudice of the minority shareholders-and in which just and equitable grounds would exist for the making of a winding up order ..... but in which the 'alternative remedy provided by section 210 by way of an appropriate order might well be open to the minority shareholders with a view to bringing to an end the oppressive conduct of the majority." 126. It has been observed in re H.R. Harmer Ltd. (1958) 3 All ER 689 : (1959) 29 Comp Cas 305 at 307 , as follows: "Wherein a father's autocratic manner of functioning in a 'family' company comprising of himself, his wife and sons was held to be oppressive, his conduct was held to be oppressive even though there was no pecuniary benefit to the oppressor, but simply because it was due to the 'controlling' shareholders' over- whelming desire for power and control." 127. As regards three English decisions cited by the learned counsel for the respondents, it may be stated that the Privy Council observed long ago in Ramanandi Kuer v Kalawati Kuer AIR 1928 PC 2 , at page 4 as follows" "It has been pointed out by this Board that where there is a positive enactment of the Indian legislature, the proper course is to examine its proper meaning un-influenced by any consideration derived from the previous state of law - or of the English law upon which it may be founded." There cannot be any quarrel with the principle laid down in the cases cited by the learned counsel for the respondents, but their facts and circumstances are quite different and distinguishable. In none of those cases, resolution was passed and decisions taken in the meetings of the Board of directors in which only one director was present and huge amounts were not spent by the companies as has been spent in the instant case.128. Under the facts and circumstances of the case, it can well be said that the conduct of the respondent No. 2 was highly oppressive to the petitioner; it was pre-judicial to the interest of the company and he mismanaged the company within the meaning of sections 397 and 398 of the Act.129. First para of page No. 3 of the letter No. LSPH/89-90/107, dated 27 November, 1989 (pages 265-267), written by the respondent No. 2 to the petitioner runs as under : "Be it as it may, I find, since the past one year your attitude towards me personally and the company is non-co-operative. First para of page No. 3 of the letter No. LSPH/89-90/107, dated 27 November, 1989 (pages 265-267), written by the respondent No. 2 to the petitioner runs as under : "Be it as it may, I find, since the past one year your attitude towards me personally and the company is non-co-operative. The more we want to run our business in the oven. the more suspicious you seem to Let. When I request you at the Board of directors meetings whether there are any further clarification that you want, the answer is always in the negative. Immediately after, you follow up such occasions with an expression of discontent and non-co-operative attitude. This is not conducive to the healthy existence of the company, and functioning in such circumstances is not only frustrating, but almost impossible." Under the facts and circumstances of the case, particularly, the above-quoted portion of the letter of the respondent No. 2 himself justify the winding up of the company on the just and equitable ground. However, winding up of the company would not be in the interest of any party as it is now a profitable concern. Thus the second ingredient of section 397 of the Act is also proved. This point is accordingly decided in favour of the petitioner.POINT NO.15 Relief130. In view of the findings recorded on point No. 5, the petitioner is entitled for the declaration that the resolutions passed and decisions taken by the Board of directors in which the respondent No. 2 was only present were void and non est and there is urgent need for the appointment of more directors. Maharana appointed Maharaj Kumar Raj Singhji, son of HH Maharana Laxman Singhji and Maharaja Samar Singhji, son of late Maharaja Veerbhadra Singhji, both residents of Dungarpur, as trustees of the trust created by him through his will along with the petitioner, respondent No. 2 and Shri Ashwini Kumar Chaturvedi who already resigned from the Board of directors. Under the facts and circumstances of the case, Maharaj Kumar Raj Singhji and Maharaj Kumar Samar Singhji may be appointed as directors of the company.131. Section 406 of the Act provides that in relation to an application under section 397 or 398, sections 541 to 544, both inclusive, shall apply in the form set forth in Schedule XI. Section 543, as given in Schedule XI of the Act, runs as under : "543. Section 406 of the Act provides that in relation to an application under section 397 or 398, sections 541 to 544, both inclusive, shall apply in the form set forth in Schedule XI. Section 543, as given in Schedule XI of the Act, runs as under : "543. Power of Company Law Board to assess damages against delinquent directors etc.-(1) If, in the course of proceedings on an application made to the Company Law Board under section 397 or 398, it appears that any person who has taken part in the promotion or formation of the company, or any past or present director, managing agent, secretaries and treasurers, manager or officer of the company- (a) has misapplied or retained or become liable or accountable for any money or property of the company; or (b) has been guilty of any misfeasance or breach of trust in relation to the company : the Company Law Board may, on the application of any creditor or member, examine into the conduct of such person, director, managing agent, secretaries and treasurers, manager or officer aforesaid, and compel him to repay or restore the money or property or any part thereof respectively, with interest at such rate as the Company Law Board thinks just or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the Company Law Board thinks just. (2) this section shall apply notwithstanding that the matter is one for which the person concerned may be criminally liable." 132. In view of the findings recorded on Point No. 11, the respondent No. 2 is liable to repay the amounts spent by the company in connection with (the) Bombay flat after 1 April, 1988, in the foreign tours of the respondent No. 2 and the present litigation with interest @ 15% p.a. The statement of account of the petitioner from 1 April, 1991 to 31 March, 1992 (paper No. 70 of the Misc. Application No. 15/94) shows that the company pays interest @ 15% p.a. to the petitioner on her deposits. The amounts so payable to the company by the respondent No. 2 may be adjusted by it in the account of dividends payable to him.133. Now, the question is about the cost of this case. Admittedly, the company has shown that it spent Rs. The amounts so payable to the company by the respondent No. 2 may be adjusted by it in the account of dividends payable to him.133. Now, the question is about the cost of this case. Admittedly, the company has shown that it spent Rs. 5,30,355 during the year 1991-92 on4y. Senior Advocate, Shri M.L. Verma, and the assisting lawyers Shri Bader Ahmed, Advocate, and Shri Parijat Sinha, Advocate, came on various dates of hearing from Delhi and stayed at Jodhpur for a number of days during which the hearing took place. On the first date of hearing, i.e., on 22 March, 1991, Shri Kapil Sibal, Senior Advocate, New Delhi, appeared on her behalf. Under these facts and circumstances, the petitioner should get atleast Rs. 50,000 as costs from the respondent No. 2. 134. In the result, following orders are passed : (i) Company petition is partly allowed with costs which are assessed at Rs. 50,000 (Rupees fifty thousand only) payable by the respondent No. 2 only. (ii) All resolutions passed and decisions taken by the Board of directors of the company in its meetings in which the respondent No. 2 only was present, are declared void and non est. (iii) Maharajkumar Ram Singhji, son of HH Maharaja Laxman Singhji and Maharajkumar Samar Singhji, son of late Maharaja Veerbhadra Singhji, both residents of Dungarpur, are appointed as directors of Lake Shore Palace Hotel (P) Ltd. with immediate effect. In case they or any of them do not/does not wish to act so, any of the parties may move this court for appointment of any other person as director/directors. (iv) The respondent No. 2, Arvind Singh, is directed to repay the company all amounts spent by it in connection with his foreign tours, Bombay flat (spent after 1 April, 1988) and present litigation, with interest @ 15% per annum. The amounts of dividends payable to the respondent No. 2 will not be paid to him till the aforesaid amounts with interest stand fully paid to the company, if not paid earlier. *******