JUDGMENT : N.J. PANDYA, J. 1. This is a petition filed by some of the shareholders of respondent No. 6 company seeking reliefs under sections 397 and 398 read with section 402 of the Indian Companies Act, 1956 (hereinafter referred to as 'the said Act'). 2. Respondents No. 6 company came to be incorporated as a public limited company having name 'Gaekwad Investment Corporation Limited' (GIC for short). In the same year, and probably at about the same time, Baroda Rayon Corporation Limited was also incorporated and was managed by Gaekwad Chinoi and Company (P) Ltd., as managing agents. 3. The GIC right from the beginning had 425 shares of which late Shri Fatesinhrao Gaekwad (FRG for short) held 301 shares and, out of that, 300 were made over to or were owned by J.K. Gorpade Trust. However, FRG was shown in the company register to be the holder of the entire lot of 301 shares. Rest of the shares were held by different family members and so far as the contesting respondents are concerned, respondents No. I and 2, at the relevant time, between them, had only six shares. The details of the shareholding are to be found at pages 412 and 413 of the paper book. 4. More or less, this continued to be the position right upto the year 1987 and to be precise till 10.11.1987 when the Board of directors of GIC mooted a proposal for increasing the share capital of GIC. This was possible as most of the authorised capital remained unissued. 5. Accordingly, in the said meeting of 10.11.1987, the Board of directors recommended holding of extraordinary general meeting of GIC on 17.12.1987 to consider the issue of capital and also to consider other incidental resolutions pertaining to the same. 6. The meeting came to be held on 17.12.1987 chaired by Shri P.U. Rana. The recommendation of the Board was considered and accepted. The Board had recommended increase in the capital mainly in the light of the financial position of GIC. Accordingly, a meeting authorised by the Board of directors was convened, which in turn left the matter to its managing committee. That committee decided to issue a letter of offer. It came to be issued on 12.12.1988. The Board had recommended increase in the capital mainly in the light of the financial position of GIC. Accordingly, a meeting authorised by the Board of directors was convened, which in turn left the matter to its managing committee. That committee decided to issue a letter of offer. It came to be issued on 12.12.1988. The members were informed to convey their acceptance for the number of shares which they would wish to subscribe to and they were to convey their wish within 3 weeks from the date of receipt of the letter. The last date for receipt of the reply was fixed to be 10.3.1988. No reply by that date would result into proceeding on that basis that the non-replying member or non-responding member does not want to subscribe. 7. The said letter dated 12.2.1988 was produced at the Board meeting of 13 February 1988 where said FRG, respondent No. 1, and Mr. P.H. Chinoi were present. 8. By 10th of March, 1988, nothing was heard of from any of the members. This led to a peculiar situation. There were shares offered, but none was ready to subscribe to. This continued to be the position upto 21.3.1988 when, a decision was taken by the managing committee. According to this decision, 8,000 shares were kept apart for FRG, 6,475 shares were kept apart for the first respondent and others, 500 shares were kept apart for respondent No. 12, who supports the petitioners and 25 shares were kept apart for respondent No. 13 who also supports the petitioners. Allotments were to be made as and when the amounts were received. 9. In a Board meeting held on 16.4.1988, respondent No. I and one of the directors, Shri H.A. Shinde, were authorised to sign the share certificates and the company secretary, Mr. M.N. Khade, was authorised to countersign the same. 10. Between March and May, 1988, FRG failed to subscribe to any shares, while respondent No. I and his family members subscribed for 6,475 shares and that is why between April and June, 1988, share certificates signed by respondent No. I and Shri H.A. Shinde and countersigned by company secretary, Mr. Khade, came to be issued to them. Respondent No. 13 also likewise came to be allotted 25 shares. 11. So far as respondent No. 12 is concerned, she requested for 1,000 shares through her secretary and sent 2 cheques. Khade, came to be issued to them. Respondent No. 13 also likewise came to be allotted 25 shares. 11. So far as respondent No. 12 is concerned, she requested for 1,000 shares through her secretary and sent 2 cheques. Accordingly, she came to be allotted 1,000 shares on 30.5.1988. These share certificates, like the other lot, were signed by the first respondent, the said Shri H.A. Shinde and countersigned by company secretary, Mr. M.N. Khade. This happened on or about 30 May, 1988. 12. The 8,000 shares kept apart for FRG remained in tact. Against the request of 1,000 shares of respondent No. 12, to comply with her request out of said 8,000 shares, 500 shares were given to her thereby reducing the shares kept apart for FRG to 7,500. FRG passed away on 1.9.1988. 13. The next important event that took place in respect of respondent No. 6 company is that on 30 September, 1988, its annual general meeting (AGM) was held. Between that date and 16.12.1988, an important development that took place was that GIC was in need of money and, hence, loan was advanced by petitioner No. 1 to the tune of Rs. 15 lakhs as also by respondent No. 12 for the like amount by 11.11.1988. On 6.12.1988, 3,000 shares came to be issued to respondents 4 and 5 and share certificates were signed by the aforesaid persons as such. At that meeting of 16.12.1988, it was noted that by then, 10,500 shares have been issued and for the balance 4,500 shares decision to close the offer was taken. 14. This was followed by a meeting dated 30.9.1989, the 31st AGM of GIC, which naturally reflected the aforesaid position of issued and authorised share capital. Likewise, the balance-sheet also reflected the aforesaid two loans having been advanced to the company. The holding of this meeting was followed by filing of annual return containing all the details, more particularly, with regard to the increase in the share capital and also the names of the shareholders. The annual return came to be signed by Shri H.A. Shinde. 15. The GIC is in a commanding position so far as Baroda Rayon Corporation (BRC) is concerned. The annual return came to be signed by Shri H.A. Shinde. 15. The GIC is in a commanding position so far as Baroda Rayon Corporation (BRC) is concerned. To retain its control over BRC, when occasion arose for purchasing rights issue of BRC, the GIC was very keen and, for that purpose, resources were raised which included the increase in the share capital and raising of loans from different sources including loans from petitioner No. 1 and respondent No. 12. Over and above, GIC having said control over BRC, it happens to have held another private limited company, namely, Alaukik Trading and Investment Corporation Limited (for short 'Alaukik'). In fact, Alaukik happens to be the subsidiary of GIC. On 9th of July, 1990, company secretary, Shri Khade, received a letter dated 17.5.1990 from petitioner No. I informing that Alaukik had ceased to be its subsidiary during the year 1989-90. This led to the filing of a suit in the Court of Civil Judge (SD), Baroda, by GIC, challenging the aforesaid action of Board of directors of Alaukik. This was done as suit No. 675 of 1990 on 1.9.1990. Ad interim reliefs were sought in the said suit and that were granted. The main grievance made in the suit was that majority holding of GIC in Alaukik has been illegally and unauthorisedly diluted by issuing a block of shares to respondent No. 12 of the present petition. 16. Before the filing of the said suit and after closing the said issue of 15,000 shares on 15.12.1988, so far as the contesting respondents 1 to 5 are concerned, an important development that took place was that by way of tax planning, they had floated a private limited company in the name and style of Indrani Holdings (P) Ltd. (for short 'Indrani'). It is an investment company wholly owned and controlled by respondents No. 1 to 5. It came to be floated in the later part of the year 1989. Thereafter, between the month of November, 1989, to 1990 out of their total holdings in GIC, respondents 1 to 5 transferred 9,415 shares to said Indrani. 17. The suit filed in respect of Alaukik by GIC continued to have the position of interim orders operating extended from time to time upto 9.10.1990, on which date, the reliefs granted came to be extended till further orders. 17. The suit filed in respect of Alaukik by GIC continued to have the position of interim orders operating extended from time to time upto 9.10.1990, on which date, the reliefs granted came to be extended till further orders. In between that, time was sought by the learned advocates for the defendants therein for filing written statement and objections to the interim orders. Finally, affidavit came to be filed in that suit on behalf of the defendants therein by 10th of December, 1990. Before the filing of the said written statement or affidavit in reply on 28.11.1990, Smt. Pramila Raje Kachar, one of the shareholders of GIC, filed a suit in the Court of Civil Judge (SD), Rajkot, inter alia for (1) declaration that transfer of 9,415 shares to Indrani was bad and void ab initio and that the shares continued to be the ownership of respondents 1 to 5 of this petition as if no such sale or transfer was ever made ; (2) mandatory injunction directing GIC to offer 9,415 shares to the plaintiff and other shareholders, and (3) an injunction against Indrani from exercising any voting or other rights in respect of 9,415 shares. By way of ad interim relief, Indrani was restrained upto 11th of December, 1990. Notice was not served on respondents 1 to 5 as process fee was not paid. Consequently, the injunction got extended upto 10.1.1991. The injunction came to be served on 16th of December, 1990. 18. On or about 29.11.1990, the petitioners addressed a letter to respondent No. I for the first time claiming entitlement of FRG's 8,000 shares on the grounds that the shares were 'set apart in favour and for' FRG. FRG died intestate and petitioner No. I being his mother and, therefore, falling amongst class I heirs under the Hindu Succession Act, 1956, she would be the only person to get these shares according to her. For this purpose, she or respondent No. 1 may take, out of the remaining loan of Rs. 11,15,000, Rs. 8,00,000 towards issue of 8,000 shares. For this purpose, she or respondent No. 1 may take, out of the remaining loan of Rs. 11,15,000, Rs. 8,00,000 towards issue of 8,000 shares. On the same day, i.e., 29.11.1990, written statement came to be filed in the said Suit No. 675 of 1990 by GIC in respect of Alaukik, wherein a stand was taken that the first petitioner herein has already asked GIC to issue her the share certificate in respect of 8,000 equity shares and thereby projecting a picture of being in any event entitled to a majority share- holding of GIC. 19. By this time, AGM of GIC had become overdue. It had to be held on 31st of December, 1990. Hence, the work of audit finalisation, convening of meeting, etc., was taken and the meeting was to be held on 20th December, 1990. A notice to that effect was sent on 11.12.1990. 20. On 12.12.1990, respondent No. 13 filed Suit No. 867 of 1990 in the Court at Baroda, seeking inter alia a declaration that transfer of 9,415 shares to Indrani was void ab initio. Mandatory injunction directing GIC to offer 9,415 shares to the plaintiffs therein and other shareholders and injunction restraining Indrani from voting or taking any part in any meeting. Ex parte injunction was issued in that suit to operate till 19th of December, 1990. Notice of that suit came to be served to respondents I to 5 or some of them by 15.12.1990. On 17.12.1990, one of the defendants, Indrani, applied for adjournment in the said 867 of 1990 suit. 21. On 19.12.1990, respondent No. 8 filed Suit No. 872 of 1990 in Baroda court seeking declaration and mandatory injunction similar to one asked for in Suit No. 867 of 1990 filed by respondent No. 13. However, caveat was filed in that suit and, therefore, notice was made returnable on 20th December, 1990, and no interim orders were passed. 22. It may be recalled that 20th December, 1990, was the date on which AGM of GIC was to be held. On that very day, respondents 1 to 5 filed their affidavit in reply in Suit No. 872 of 1990 wherein they had taken a stand that the shareholding of respondents 1 to 5 was 9,481 shares (9,415 plus 66) and that the transfer of Indrani stood rescinded. 23. The AGM of GIC was held on 20th December, 1990. On that very day, respondents 1 to 5 filed their affidavit in reply in Suit No. 872 of 1990 wherein they had taken a stand that the shareholding of respondents 1 to 5 was 9,481 shares (9,415 plus 66) and that the transfer of Indrani stood rescinded. 23. The AGM of GIC was held on 20th December, 1990. This was preceded by considerable activity on the part of said H.A. Shinde, one of the directors, inasmuch as having filed caveats in various courts, inter alia, Bombay and Gujarat, to ensure that AGM of GIC is held on 20th December, 1990, and would not be postponed. 24. The meeting, in fact, came to be held. At the meeting, according to respondents No. I to 6, all the items on the agenda as per the notice convening the meeting were carried out without opposition. According to the petitioners and their supporting respondents, contrary was the situation, except for the item on the agenda as to the appointment of an auditor. 25. The version of respondents I to 5, therefore, is that respondents No. 1 and 2 came to be reappointed as directors ; while, according to the petitioners and the supporting respondents, this proposal was defeated and, therefore, respondents No. I and 2 have ceased to be directors of the company. 26. Another event that took place in the corporate life of respondent No. 6 is that EGM was convened on 14.1.1991 by respondent No. 2, i.e., executive director, and that too at Bombay. The meeting was held and the directors, Shri P.U. Rana, Shri H.A. Shinde and others, were till then members of the Board and so far as the parties to the petition are concerned, the persons who were supporting the petitioners, all came to be removed. This meeting is hotly challenged by the petitioners and their supporting respondents. 27. The events so far narrated are just the bare fact of and they refer to the dates on which they have taken place. This is not to suggest that there are no disputes in respect of any of them, nor is it to be understood that the respective sides have accepted this to be the position without reservation. In respect of all or any of them, they do have dispute and reservations which will be detailed out hereafter. This is not to suggest that there are no disputes in respect of any of them, nor is it to be understood that the respective sides have accepted this to be the position without reservation. In respect of all or any of them, they do have dispute and reservations which will be detailed out hereafter. What has become certain is that on or after 1.9.1988 death of FRG and happening of Alaukik in the year 1990 leading to the filing of said suit by respondent No. 6, the transfer to Indrani and filing of suits in that regard by some of the shareholders supporting the petitioner and the holding of AGM on 20.12.1990 followed by EGM of 14.1.1991 have led to the filing of the present petition. It is also certain that though parties may have been arrayed as petitioner or respondent, they form two distinct groups. The petitioners have the support of respondents 7, 8, 12 and 13 and they will, therefore, be hereinafter referred to as petitioners' group. Respondents No.1 to 5 are in the opposite camp and they form other group and shall be referred to as respondents' group hereinafter. Of the remaining respondents, Nos. 9, 10 and 11, have not actively participated in the proceedings. 28. Paragraphs 1 and 2 of the petition are formal. Paragraph 3 gives the particulars as to the registered office of respondent No. 6, paragraph 4 gives the capital structure divided into 75 lakhs preference shares of 100 each and 25 lakh equity shares of the face value of Rs. 100 each. The total authorised capital is, therefore, Rs. I crore. The issued capital as on 31.3.1990 is of Rs. 70,92,500. This comprises of 60,000 preference shares and 10,925 equity shares. Later on, the shareholding particulars are given in the petition itself as per Annexure A-1 and it reflects the position with regard to original 425 equity shares that were held till the fresh issue came to be decided upon at the EGM held in the month of December, 1987. Therefore, if the said original issue of 425 shares are deducted from 10,925 shares, they represent the new issue of 10,500 shares. Paragraph 5 of the petition refers to the object of the company i.e. respondent No. 6 and the gravamen of the petitioners start from para 6.1 onwards. 29. Therefore, if the said original issue of 425 shares are deducted from 10,925 shares, they represent the new issue of 10,500 shares. Paragraph 5 of the petition refers to the object of the company i.e. respondent No. 6 and the gravamen of the petitioners start from para 6.1 onwards. 29. The stand taken by the petitioners is clearly to the effect that the shareholders of respondent No. 6 company are none other than family members of (the) erstwhile Baroda royal family and their close friends and relatives. The history of the formation of the company is traced with regard to respondent No. 6 as well as the said BRC. There is a reference to Alaukik Trading and Investment (P) Ltd., i.e., Alaukik, having been formed in 1971 which subsequently entered into a partnership with Gaekwad Foundation, Messrs Gaekwad Real Estate Traders. As a result of the developments that took place in the subsequent years, the said Alaukik came to be the owners of the entire estate of Gaekwad family, i.e., the erstwhile royal family. 30. The petitioners have, therefore, shown in the petition that the basic object of formation of different entities registered and unregistered was to see that the properties remained with FRG and his family and entirely under his control. 31. So far as respondent No. 6 is concerned, important averments are made in the petition in para 6.4 to 6.6 starting from page 12 ending with page 22. In para 6.4, it has been indicated that, till his death on 1.9.1988, FRG continued as chairman of respondent No. 6. It is claimed that, in his absence, mother, petitioner No. 1, functioned as the chairman of the company. Of the 425 shares, as many as 301 shares were held by FRG while the first petitioner owned 7 shares. Respondent No. 3 owned 5 and respondent No. 12 owned 10 shares. Respondent No. 1 and his wife, respondent No. 2, respectively, held one share and 5 shares. The remaining shares were held by other members of the family of Shri FRG and his friends. 32. Further, it is claimed in the aforesaid para of the petition that FRG having died intestate, his mother, petitioner No. 1, is the sole heir. As mentioned above, the details of shareholding is set out in Annexure A-1, page 99. The remaining shares were held by other members of the family of Shri FRG and his friends. 32. Further, it is claimed in the aforesaid para of the petition that FRG having died intestate, his mother, petitioner No. 1, is the sole heir. As mentioned above, the details of shareholding is set out in Annexure A-1, page 99. It has a second page also which has not been annexed to herein and that has been placed at page 412 along with affidavit in reply by responded No. 1. 33. Paragraph 6.4, at page 14, starts with a reference to the family meeting held on 23.3.1988 where decision to broaden capital base of the company, respondent No. 6, by further issue of 15,000 equity shares of Rs. 100 each was taken. This new issue of 15,000 was dealt with thus : 8,000 equity shares would be allotted to Shri Fatehsinrao Gaekwad, i.e., FRG, 500 equity shares to Smt. Mrunalinidevi Puar, i.e., respondent No. 12 (the sister of FRG), 25 shares to Princess Subhangini Raje, i.e., respondent No. 13, and 6,475 shares to Sangramsinghji Gaekwad, i.e., first respondent herein. It is clearly stated in this paragraph of the petition that formal share certificates were to issue as and when the payment for the shares were made. No date was fixed for payment to be made in respect of the shares. 34. Thereafter, the petitioner had relied on the copies of the draft prepared for the minutes containing the endorsement in the handwriting of one Shri N.K.K. Mohmad, who is the personal secretary of respondent No. 1. The endorsement made by Shri Mohmad is to the effect that chairman (FRG) had okayed the same. It is further averred in this para that by a letter dated 29th March, 1988, Shri M.N. Khade, the secretary of respondent No. 6, sent a copy of the draft of the minutes. Then it is stated that the said note of Shri Mohmad along with the said letter dated 29.3.1988 reflects the agreed basis for allotment of 15,000 equity shares. The letter dated 29th March, 1988, also bears the initials of the first respondent herein. It is also averred in this paragraph that Shri Khade has confirmed the above facts relating to the issue of allotment of 15,000 equity shares, the preparation of draft of the approval thereto of the first respondent. The letter dated 29th March, 1988, also bears the initials of the first respondent herein. It is also averred in this paragraph that Shri Khade has confirmed the above facts relating to the issue of allotment of 15,000 equity shares, the preparation of draft of the approval thereto of the first respondent. (This sentence is taken directly from the petition as it appears at page 15). Thereafter, the covering letter along with those two notes has been annexed to the petition as Annexures B and C, at pages 100, 101 and 102. The last sub-para of para 6.5 refers to the claim of petitioner No. I being entitled to those 8,000 shares which, according to said arrangement, were set apart for Shri FRG because, after the said meeting on 1st September, 1988, FRG died. Her claim is on the basis of she (her) being the sole heir. 35. Paragraph 6.6 of the petition begins with a statement that respondent No. 1 as a member of FRG family (they happened to be real brothers) was managing the affairs of the company. After the death of FRG, respondent No. 1 continued to manage the affairs of the company and the petitioners' group had no reason to doubt his sincerity and honesty. They also took it that respondent No. 1 will continue to run the company as was being done by late FRG and would discharge his obligations to his mother (petitioner No. 1), sisters and other members of the family and his close friends. Therefore, no close attention was being paid either to the accounts or to the running of the company. 36. At page 18, there is a sub-para, which starts with a reference to the months of October and November, 1990, where the petitioners' group came to know about the transfer of holdings of shares by respondent No. 1 and his family members to a private limited company which was an outsider and this is alleged to have been done with ulterior motive. It is at this time that the petitioners' group came to know that over and above the issue of 6,475 shares to himself and to the members of his family, respondent No. 1 had further issued 3,000 equity shares to his son and daughter, respondents 4 and 5, respectively. In the process, his holding is increased to 9,481 equity shares. 37. In the process, his holding is increased to 9,481 equity shares. 37. The rest of the averments relate to what transpired thereafter, i.e., filing of suits and the holding of meeting on 20.12.1990. So far as the last event is concerned, it is the categorical case of the petitioners' group that because of the operation of stay orders and injunction orders of different courts, Indrani was prevented from voting and this left only 66 shares in the hands of the respondents' group and, therefore, all the motions on call being taken were defeated by overwhelming majority. This would certainly be the position if the entire block of shares was transferred in the month of March, 1990, in favour of Indrani and, therefore, not available to the respondents' group. The position is not that simple. 38. Before proceeding further, it may be noted that of the petitioners' group, respondents 12 and 13 were originally not joined as party respondent in the petition. Respondent No. 12 on her own had initiated proceedings under the Companies Act before the Company Law Board at New Delhi being Petition No. 7 of 1992. Another proceedings were started at Bombay before the Company Law Board (CLB) and, simultaneously, efforts were made to withdraw the present petition by filing Company Application No. 97 of 1992. The reason shown was that the petitioners would be filing fresh proceedings before the Company Law Board, New Delhi, and/or for getting themselves impleaded in the said CLB proceedings No. 7 of 1992. Simultaneously, the petitioners No. 1, 2 and 4 applied in Company Petition No. 7 of 1992 before the CLB, Delhi. 39. Company Application No. 97 of 1992 came to be rejected leading to the filing of Appeal No. 22 of 1992 by the petitioners against that. This happened on or about 9 March, 1993. Before that, at the instance of the respondents' group, the Company Law Board, Delhi, stayed Mrunalini Deve Puar of Dhar and another v. Gaekwad Investment Corpn. (P) Ltd. (1993) 1 Comp LJ 89 (CLB) the further proceedings of (Company Petition No.) 7 of 1992 in view of the pendency of the present petition. However, interim reliefs were granted including reliefs in respect of Alaukik Board of directors. (P) Ltd. (1993) 1 Comp LJ 89 (CLB) the further proceedings of (Company Petition No.) 7 of 1992 in view of the pendency of the present petition. However, interim reliefs were granted including reliefs in respect of Alaukik Board of directors. This had the direct result of there being fresh orders in respect of Alaukik after some orders were passed by the Court of Civil Judge (SD) at Baroda, reference to which is already made. 40. The aforesaid order (Mrunalini Deve Puar of Dhar and another v. Gaekwad Investment Corpn. (P) Ltd. (1993) 1 Comp LJ 89 (CLB) )of staying of Petition No. 7 of 1992 was challenged by respondent No. 12 and others by filing Appeal No. 20 of 1992 in this High Court. It seems that respondent group had also filed Appeal No. 12 of 1992 in this High Court against the said order dated 28.9.1992 of CLB. See Mrunalini Deve Puar of Dhar and another v. Gaekwad Investment Corpn. (P) Ltd. (1993) 1 Comp LJ 89 (CLB) 41. Appeal No. 22 of 1992 filed by the petitioner against the dismissal of C.A. No. 97 of 1992 was withdrawn. Amendment application made by the petitioners in respect of the present petition came to be allowed and new prayers came to be added. Thereafter, respondents No. I to 6 filed an application for impleading respondents Nos. 12 and 13 as parties in the present proceeding by filing C.A. No. 270 of 1993. This application came to be allowed. Respondents Nos. 12 and 13 though initially opposed their being impleaded, they accepted the position and filed their replies in support of the petitioners. 42. The situation that has, therefore, finally emerged is that the important portion of the petition set out in the earlier part remained as it is indicating that so far as the allotment of 6,475 shares to respondents' group is concerned, the petitioners do not object. They certainly object to the issue of additional 3,000 shares in favour of respondents Nos. 4 and 5. The reliefs, as they now stand, after amendment go to the extent of challenging the entire allotment over and above 425 shares. They certainly object to the issue of additional 3,000 shares in favour of respondents Nos. 4 and 5. The reliefs, as they now stand, after amendment go to the extent of challenging the entire allotment over and above 425 shares. If his and other analogous reliefs in that regard are granted, the situation will be that respondent No. 6 company, equity capital-wise, will be in the same position as it was at the time when the EGM was convened in the month of December, 1987. It is at this EGM that resolution as to further issue of capital was passed and as a consequence to it, the Board of directors decided to issue 15,000 equity shares in the first instance leaving its managing committee to carry out the mandate. 43. That there was a mandate of EGM of December, 1987, for issue of 25,000 equity shares, there cannot be and there is no dispute. Strictly speaking, arithmetically, it cannot be 25,000 shares, but it has to be the balance left after deducting 425 already issued. This would mean that there was to be an issue of 24,575 shares. This is just for the record. Nothing would turn on it. The reason is that the Board at its meeting held after EGM decided to issue only 15,000 shares. 44. The situation that has arisen, therefore, is that petitioner No. I along with her remaining petitioners has staked a claim to those 8,000 shares set apart for FRG. Body of the petition does not bring about any change so far as allotment of 6,475 shares to respondent No. I is concerned. She continues to object in the body of the petition to the issue of those 3,000 shares to the children of 'respondent No. 1, i.e., respondents Nos. 4 and 5. 45. In the relief clauses, while maintaining earlier reliefs as to the claim of those 8,000 shares, there are reliefs with regard to the entire issue over and above the original issue of 425 shares. 46. The situation thus brought out may initially appear to be quite contradictory and confusing. 4 and 5. 45. In the relief clauses, while maintaining earlier reliefs as to the claim of those 8,000 shares, there are reliefs with regard to the entire issue over and above the original issue of 425 shares. 46. The situation thus brought out may initially appear to be quite contradictory and confusing. However, the moment it is understood that what is objected to is not only gaining of control by respondent No. 1 and his family members, but, viewed either way, the situation that would continue if not corrected is that it is the respondents' group that is in overwhelming majority so far as respondent No. 6 is concerned. That is why, the objection to the issuance of 3,000 shares to the respondents No. 4 and 5. Inclusion of this issue of 3,000 shares only would make the holding of the respondents' group to be 9,481 shares. I have already referred to the fact that there is a grievance as to the transfer of 9,415 shares in favour of Indrani out of the said total holding of 9,481 shares. This transfer had left only 66 shares in the hands of the respondents' group. 47. The latter portion of the petition, therefore, alludes to the position FRG being in charge till his death and, thereafter, a case is sought to be developed in the petition that was the basic feature of the company, i.e., respondent No. 6, and that FRG would continue to control the company and, on his death, it will be so done by petitioner No. 1, being eldest member of the family as well as the sole heir of FRG. That is why the said allotment of 3,000 shares is adversely commented upon and viewed as an attempt on the part of the respondent No. 1 to wrest the control of respondent No. 6 company by acquiring majority therein. 48. This will continue to be the position unless the court sets aside the issuance of those 3,000 shares. 49. The glaring feature of the petition as originally filed along with its reliefs is that no relief is sought with regard to the transfer to Indrani. Challenge to 3,000 shares is definitely there and there is also a prayer for 3,000 shares being allotted to petitioner No. 1. 49. The glaring feature of the petition as originally filed along with its reliefs is that no relief is sought with regard to the transfer to Indrani. Challenge to 3,000 shares is definitely there and there is also a prayer for 3,000 shares being allotted to petitioner No. 1. If the prayer for striking down 3,000 shares is granted, the petitioner' group will not be in majority because, even then, the respondents' group will have 6,475 shares, subject of course to the disputes now raised as to the transfer of Indrani. Unless, therefore, 8,000 shares are issued to petitioner No. 1, the petitioners' group cannot be in majority so far as respondent No. 6 is concerned. I will be referring to that part of the petitioners' case that if the transfer to Indrani is set aside, the shares will not be available to the respondents' group automatically, but the Board of directors having been constituted as an agent for transfer, it will have to offer the shares to the remaining members of the company, who will have a right to buy them, if they so desire. If this prayer is allowed, obviously, again, in proportion to the respective holdings, the petitioners' group will be in a position to acquire majority. 50. The amended prayers leading to the setting aside of the entire issue over and above the original issue of 425 shares, if granted, would bring about the situation that the petitioners' group will be in majority. Same will be the position if the challenge to the transfer in favour of Indrani is upheld, with the consequence of the entire lot being made available for being issued to the remaining members of the company, respondent No. 6, other than the respondent's group. 51. The net result, therefore, is that the burden of the petition, with or without amendment, is to bring back the situation where the respondents' group will lose control and the control of respondent No. 6 will revert to the petitioners' group. 51. The net result, therefore, is that the burden of the petition, with or without amendment, is to bring back the situation where the respondents' group will lose control and the control of respondent No. 6 will revert to the petitioners' group. This is also sought to be made out, as mentioned earlier, on the ground that this was, so to say, the basic feature, or an underlying purpose, for which respondent No. 6 was incorporated and what prevailed to be the situation from 1958, i.e., inception of the company, to 1.9.1988, the death of FRG, should continue to be the position vis-a-vis the petitioner No. 1 and respondent No. 6 company. 52. So far as the issue over and above 425 shares is concerned, there are several contentions, both factual and legal. They will be dealt with at appropriate places. Likewise, there are factual and legal issues involved in respect of the transfer in favour of Indrani. So far as this transfer is concerned, it is also subject matter of a civil litigation both at Rajkot and at Baroda. Reference to those litigation's has already been made. There are several proceedings in the Company Law Board at Delhi and Bombay in respect of respondent No. 6. 53. Coming back to the petition, it may be noted here that the parties have gone to the final hearing on the basis of affidavits, counter-affidavits, replies, rejoinder and surrejoinder either by reference in these proceedings in form of pleadings or by way of documentary evidence ; copies of the Bombay as well as Delhi proceedings are produced before the court in the form of bound volumes having colour code. Delhi proceedings are bound in red coloured jacket and the Bombay proceedings are bound in green coloured jackets. So far as civil litigation's are concerned, the title portion of the plaint and the relief portion thereof have been brought on record. No oral evidence has been led. 54. Now, I will take up the contentions that are raised by respondent No. 1 in his affidavit in reply, page 274 onwards. 55. He has laid emphasis on the fact that he is no stranger either to BRC or GIC. No doubt, both came to be incorporated in the year 1958, but respondent No. 1 came to be inducted in the said managing agent, Gaekwad Chinoi and Co. 55. He has laid emphasis on the fact that he is no stranger either to BRC or GIC. No doubt, both came to be incorporated in the year 1958, but respondent No. 1 came to be inducted in the said managing agent, Gaekwad Chinoi and Co. (P) Ltd. of BRC, as a director in the year 1968. The managing agency came to an end and, therefore, BRC came to be managed by its Board of directors. Respondent No. I came to be appointed as an additional director of BRC from 1.1.1970. In the year 1971, GIC came to be converted into a private limited company. In that very year, Alaukik came to be incorporated. Respondent No. 1 came to be appointed as joint managing director of BRC in the year 1975. He became full-fledged managing director of BRC on and from 3.9.1976 on the death of V.K. Shah, the then managing director. Respondent No. 1 came to be reappointed from time to time on different dates. The first respondent case to be appointed as a director of GIC on 3.5.1978. These details are to be found at page 323 of the reply and 677 of the surrejoinder of respondent No. 1. 56. At pages 294, 295 and 326 to 327, respondent No. I has come out with the position of BRC for the year 1986-87. BRC was passing through a difficult period and could not declare any dividend which had a direct impact on the financial health of GIC. The main asset of GIC is 50,000 equity shares in BRC. No income was earned on this huge investment. GIC itself started feeling financial crunch. It is during this period that respondent No. I felt the need for bringing in funds into GIC and, hence, the aforesaid activity of issuing additional shares. This led to the holding of Board meeting on 10.11.1987 where FRG, respondent No. 1, and Mr. P.H. Chinoi were present. This can be gathered from page No. 414 of the reply and the copies are at Annexure 8. The Board resolved to convene EGM of GIC on 17 December, 1987. The result of that meeting, I have already referred to and they are repeated by respondent No. 1 at page 417 and also Annexure 9. 57. P.H. Chinoi were present. This can be gathered from page No. 414 of the reply and the copies are at Annexure 8. The Board resolved to convene EGM of GIC on 17 December, 1987. The result of that meeting, I have already referred to and they are repeated by respondent No. 1 at page 417 and also Annexure 9. 57. This was followed by Board meeting of 8.1.1988, Annexure 9A, pages 420 to 423, where in the presence of respondent No. 1, Shri P.H. Chinoi, and Shri P.U. Rana, decision was taken to issue 15,000 out of 25,000 equity shares. The managing committee was authorised to issue the shares. 58. The aforesaid meeting of the Board was confirmed by FRG in the subsequent meeting dated 13.2.1988. This last meeting of the Board was preceded by a meeting of the managing committee held on 12.2.1988. Shri Khade, the Company Secretary, was instructed to issue circular letter to all the members. This letter was produced before the Board in its meeting dated 13.2.1988. A copy of that letter is at Annexure 16, page 445. The Board meeting dated 13.2.1988 is minuted as per Annexure 9A, page 425. 59. The time of 3 weeks given by the said letter, Annexure 16, having expired without any response, as per the averments made in the affidavit in reply pages 299, 300, respondent No. 1 met FRG and requested FRG to reconsider the decision of not to subscribe. According to respondent No. 1, the meeting of the managing committee was held on 21.3.1988 where decisions as to the allotment were taken. These decisions are already referred to while setting out in detail paragraphs 6.4 to 6.6 of the petition. 60. The averments made in the petition, if they are recalled with reference to this reply, it can be seen that right upto the holding of what respondent No. 1 calls a managing committee meeting dated 21.3.1988 and what the petitioners call a family meeting dated 23.3.1988, the handling of issue of 15,000 shares has been described to be identical. That is, 8,000 shares FRG, 6,475 respondent No. I and others, 500 shares for respondent No. 12, 25 shares by respondent No. 13. 61. It is, therefore, at once apparent that if at all there could by any dispute, it could be about the subsequent allotment of 3,000 shares to respondents Nos. That is, 8,000 shares FRG, 6,475 respondent No. I and others, 500 shares for respondent No. 12, 25 shares by respondent No. 13. 61. It is, therefore, at once apparent that if at all there could by any dispute, it could be about the subsequent allotment of 3,000 shares to respondents Nos. 4 and 5 and also with regard to 8,000 shares set apart for FRG. 62. So far as those 8,000 shares are concerned, as already noted above, respondent No. 12 having been allotted 509 shares, there would remain only 7,500 shares and if further allotment of 3,000 shares in favour of respondents Nos. 4 and 5 is taken into consideration, there would be left only 4,500 shares. In essence, therefore, the dispute revolves around the handling of those 8,000 shares. 63. In order to put the dispute in proper perspective, it may be recalled that the CLB proceedings No. 7 of 1992 at Delhi have been filed after filing of the reply by respondent No. 1 which he did on 21st of March 1991 or thereabout. The company secretary, Shri Khade, has also filed his affidavit, which forms part of the material produced along with rejoinder of petitioner No. 1. The rejoinder filed on 15.4.1991 is at pages 488 to 562 and the affidavit of Shri Khade is at page 573 running upto 585. It is dated 15.4.1991. 64. At that time, respondent No. 12 was not a party to the petition. Hence, her affidavit is produced along with the said rejoinder and that affidavit is at pages 587 to 590. Another important affidavit is that of Shri P.U. Rana also sworn to on 15.4.1991 and it is at pages 624 to 632. 65. This was followed by filing of surrejoinder by respondent No. 1 at pages 674 to 713 accompanied by documents upto pages 759. The aforesaid rejoinder of the petitioner also accompanied by documents running upto pages 673 including this affidavit. 66. So far as affidavit of respondent No. 12 at pages 587 to 590 is concerned, she being not a party to the petition till then, she confines her comments only to generalities except for the issue of 1,000 equity shares to them. She also particularises the fact of having advanced Rs. 15 lakhs to GIC in November, 1988. 66. So far as affidavit of respondent No. 12 at pages 587 to 590 is concerned, she being not a party to the petition till then, she confines her comments only to generalities except for the issue of 1,000 equity shares to them. She also particularises the fact of having advanced Rs. 15 lakhs to GIC in November, 1988. As regards 1,000 shares in para 4, at page 588, 589, she says that respondent No. I informed her of the necessity of funds for GIC and as he could spare only Rs. 1 lakh at that time, she issued two separate cheques dated 23.3.1988 and 19.5.1988. Share certificates came to be issued to her on or about 30.5.1988 and she does not know whether this allotment of 500 equity shares were given to her out of the said 8,000 shares kept apart for FRG. She claims that she has not made any application for 1,000 shares. 67. Largely, the generality in her affidavit is relating to different concerns or units being treated as that of FRG irrespective of its formal structure and, accordingly, she has indicated her support to the petitioners' group. Later on, on being impleaded, she filed her affidavit in detail which will be adverted to the extent necessary hereafter. In the meantime, it may be recalled that she had moved CLB, Delhi by petition No. 7 of 1992 and there she had challenged the entire issue of 15,000 shares ; to be more precise, whatever shares that were issued over and above the original issue of 425 shares. On referring to petition No. 7 of 1992, it can be seen that it is also under sections 397 and 398 of the said Act. While challenging the issue of 10,500 shares by way of relief in clause A, she has sought declaration that it is null and void and in clause (b) without prejudice to the prayer in clause A, what has been asked for is that allotment of 6,475 equity shares to respondent No. 2 and his family is subject to the simultaneous allotment of 8,000 equity shares to petitioner No. 1, 500 equity shares to respondent No. 12 and 25 equity shares to respondent No. 13. Thereafter, in that very prayer clause, allotment of 3,000 shares to the children of respondent No. 1, namely, Pratapsingh Gaekwad and Priyadarshini Gaekward, are sought to be struck down as null and void. It would, therefore, become clear that attempt throughout has been to bring about a situation either by cancellation of 10,500 shares or by striking down the allotment of 3,000 shares to the children of respondent No. 1, so that the petitioner group can be in a majority and can gain control of GIC. Interestingly, when transfer to Indrani is invoked and sought to be set aside, it could be only on the basis that 3,000 shares allotted to said respondents Nos. 4 and 5 are held to be valid. If they are held to have been transferred, the number of shares transferred in favour of Indrani would not be only 300 shares of the said children, but it will be 9,415 shares as referred to above. This will again bring out a situation where the petitioners' group will be in majority. No doubt, there are prayers (to the effect) that (the) said shares transferred to Indrani, the whole lot of 9,415, be allowed to be purchased by the petitioners' group. No doubt, there are other prayers also, but from the point of view of the present petition, the details with regard to them are not necessary. 68. The petition brought before the Bombay Bench, i.e. Western Region Bench, is Company Petition No. 13/11/CLB/WR/92. Like the Delhi proceedings, these proceedings have been stayed by order dated 6 August, 1993, of the learned members of the Board. 68. The petition brought before the Bombay Bench, i.e. Western Region Bench, is Company Petition No. 13/11/CLB/WR/92. Like the Delhi proceedings, these proceedings have been stayed by order dated 6 August, 1993, of the learned members of the Board. In that petition, while seeking rectification of register of respondent No. 6 company, the details to be gathered from paragraph 36 by way of prayers indicate that allotment of 10,500 additional equity shares is sought to be rectified and further rectification with regard to 15,000 shares as per the resolution of the Board of directors dated 8 January, 1988, and the resolution of the managing committee dated 21 March, 1988, is taken recourse to and, accordingly, 8,000 shares in the name of the sole petitioner before the Board, who happens to be petitioner No. I herein, has been asked for followed by prayer of 500 shares in favour of respondent No. 12, 25 in favour of respondent No. 13 and 6,475 in favour of the remaining shareholders including the petitioner in her personal capacity and other than respondents No. 12 and 13. This petition has been filed on 18 May, 1992. 69. Respondent No. 12, as mentioned above came to be impleaded in the present proceeding on 25.8.1993 and, thereafter, she filed her affidavit at pages 801 to 810 on or about 2 December, 1993. It is for the first time that she has come out with a case that allotment of shares in excess of 425 shares originally allotted to the shareholder of GIC is bad in law and, in any event, liable to be set aside. 70. Till then, as mentioned above, her earlier affidavit filed along with the papers that were submitted by the petitioners by way of rejoinder, speaks of her purchase of 1,000 shares of GIC and that has been already referred to earlier. 71. While dealing with a matter under sections 397 and 398, the question of oppression with or without mismanagement, if any, is required to be considered by the court. In my opinion, such oppression should be subjectively felt and objectively established. The discussion, so far, in my opinion, clearly indicates that the oppression, if any, relates to the control that has slipped into the hands of respondent No. 1 and nothing else. In my opinion, such oppression should be subjectively felt and objectively established. The discussion, so far, in my opinion, clearly indicates that the oppression, if any, relates to the control that has slipped into the hands of respondent No. 1 and nothing else. Otherwise, as the petition, originally filed with unamended prayers and even the trend of documents filed along with the rejoinder till the addition of subject prayers by way of amendment and filing of CLB proceedings at Delhi and Bombay, allotment to respondents' group was not questioned or doubted except probably for 3,000 shares. I am using the word probably because there are prayers to be found in the present petition as well as the other 2 CLB proceedings that the shares transferred to Indrani be offered to the other shareholders except respondents' group as the transfer to Indrani is invalid. This prayer can be granted only and only if the original allotment to respondents No. 1 to 5 is held to be valid. The attempt, therefore, seems to be to put the clock back to December, 1988. The salient features of the event that have taken place have been adverted to so far. Needless to say, they have been commented upon by learned advocates appearing on both the sides from their respective angles and they are thoroughly analysed in the said manner. I will, therefore, take up those submissions one after the other. 72. Submissions were made under following different heads : 1. Implementation of Board resolution of December, 1988, to go ahead with allotment of 15,000 shares : (i) effect of the Board resolution after 10 March, 1988; (ii) allotment of 6,475 shares to respondents' group ; (iii) letter of renunciation dated 11.6.1988 said to have been written at the instance of FRG ; (iv) allotment of 3,000 shares to respondents 4 and 5. II. Transfer in favour of Indrani : (i) Board meeting dated 30 March, 1988; (ii) Board meeting of 13 July, 1990, and 9 August, 1990; (iii) position in the record of the company as to register of members and register of transfer of shares right upto 20 December, 1990. III. Meeting dated 20 December, 1990: (i) profit from petitioners' group ; (ii) tabling of motions and poll being taken ; (iii) result of poll including allegation as to removal of records. IV. Meeting dated 14 January, 1991. 73. III. Meeting dated 20 December, 1990: (i) profit from petitioners' group ; (ii) tabling of motions and poll being taken ; (iii) result of poll including allegation as to removal of records. IV. Meeting dated 14 January, 1991. 73. Position as to the shareholding annexed to the petition, Annexure A-1, page 99, discloses that upto and till the date of resolution of increasing the,issued capital, total number of shares held by different members were only 425. However, this is not the correct picture. Nothing will turn on it, but in order to understand and appreciate the controversy between the parties, the correct position as revealed at page 412 and 413, produced as Annexure A by the respondents' group, is required to be referred to It gives some particulars as to 425 shares at pages 412. Below that there is a mention of the fact that of the above 425 shares, some are held by trustees of private trust, particulars of which are given at pages 413. 331 shares are shown to have been held by different trusts. No doubt, the company would not recognise trusts and, therefore, the shares standing in the name of the company register of the respective members will be treated for the company purposes as their respective holding. At this juncture, one may also refer to page 540 of 3 different volumes pertaining to Special Civil Suit No. 675 of 1990, filed by GIC in respect of Alaukik. Page 540 is to be found in volume No. II. These two pages give the entire history of GIC shareholding, both preference and equity. Interestingly enough, for the year 1988, the shareholding particulars are mentioned in respect of the respondents' group totalling in all to 10,500 shares including issue of 1,000 shares to respondent No. 12 and 25 shares to respondent No. 13. No doubt, as on 30 March, 1990, the position as shown refers to the situation available on transfer of 9,415 shares to Indrani, leaving balance of 66 shares only in the hands of the respondents in their individual capacity. Along with the written statement filed by defendant No. 1, i.e., Alaukik, verified on behalf of said Alaukik by present respondent No. 12, several documents have been produced as per list Exh. 31. The said list is at Exh. 395. Along with the written statement filed by defendant No. 1, i.e., Alaukik, verified on behalf of said Alaukik by present respondent No. 12, several documents have been produced as per list Exh. 31. The said list is at Exh. 395. This list contains at serial No. 24, statement showing detailed share- holding pattern of the plaintiff company, i.e., GIC: This item No. 24 appearing in the said list, Exh. 31, at page 398, is to be found at pages 539 and 540. 74. The submission made is to the effect that the Board could not have exceeded the mandate of the EGM. The resolution passed by the EGM was to the effect that the Board of directors of the company are authorised to issue 25,000 equity shares to any member/members that they deem fit. Thus, power was given to the Board which had promptly decided to exercise as per the meeting dated 8.1.1988, page 425 onwards. The relevant decision of the Board is to be found at page 423 and 425. The Board initially decided to issue 15,000 equity shares out of 25,000 decided upon by the EGM. These shares were to be issued to the members of the company at present. The remaining 10,000 shares (less 425) were to be issued as and when required. There was also a resolution that the managing committee of the company be authorised to issue equity shares to members in such proportion as it deems fit. 75. Now, it may be recalled that the said EGM was preceded by a Board meeting dated 10 of November, 1987, the minutes of which are to be found at Annexure 8, page 14 onwards. The very basis for mooting the idea of additional capital was the financial stringency felt by GIC. This was more particularly noted in view of the non- receipt of any dividend from BRC in which the GIC has large shareholding. The EGM which passed the aforesaid resolution to increase the share capital was informed of the present financial position of the company, in absence of dividend income from the companies in which GIC is a member. This is to be found at page 417. 76. The EGM which passed the aforesaid resolution to increase the share capital was informed of the present financial position of the company, in absence of dividend income from the companies in which GIC is a member. This is to be found at page 417. 76. Coming back to the issue of shares, after the said meeting of the Board held on 8.1.1988, the managing committee met on 12 February, 1988, and reported its action to the members of the Board in the Board meting held on 13 February, 1988, at page 425, Annexure 9A, to the reply of the respondent. Again, the financial position of the company was discussed at length. The Board was informed that letters have been addressed on 12.2.1988 to the shareholders informing that the company has issued 15,000 equity shares of Rs. 100 each to the members and to convey their acceptance on or before 10th of March, 1988. The company would know the amount the company would receive from them. At this meeting, FRG, respondent No. 1, and Shri P.H. Chinoi were present. This was followed by a meeting of the Board dated 16.4.1988, and, at that meting, the Board discussed the issue of 15,000 equity shares of Rs. 100 each of the company. Except for this cryptic reference to the matter, no other reference could, be found in the Board meeting. However, it records transfer of equity shares from different members of the company to FRG. 77. In between this, it may be recalled that virtually the accepted position is of the meeting of the family members either on 21st of March, 1988, or on 23rd of March, 1988. The former is the date referred to by the respondent including respondent No. 12 and the latter is the date referred to by the petitioners in their petition. As a result of this meeting, 8,000 shares were kept apart for FRG, 6,975 for respondent No. 1, 5,000 for respondent No. 12, and 25 for respondent No. 13. These were the or%1y 4 subscribers, it seems. Later on, it developed that FRG never subscribed. As a result of this meeting, 8,000 shares were kept apart for FRG, 6,975 for respondent No. 1, 5,000 for respondent No. 12, and 25 for respondent No. 13. These were the or%1y 4 subscribers, it seems. Later on, it developed that FRG never subscribed. On the contrary, according to the respondents, secretary of FRG, one Shri K.V. Khoth, addressed a letter to respondent No. 1 dated 11.6.1988 where reference is made to the said letter dated 12.2.1988 and the subsequent discussion that respondent No. 1 had with FRG, and the decision of FRG conveyed as per his instruction by the said secretary is that FRG is not interested in subscribing to the additional share capital and he would like to renounce the offer made to him in favour of him and/or his children. Accordingly, respondent No. 1 was to take necessary steps. 78. Under the circumstances, the issue to respondents 3 to 5 would be objectionable to inasmuch as except for respondents 1 and 2, none of the respondents 3 to 5 were members of GIC till allotments were made to them. That is why, it is referred to as an act contrary to the mandate of the EGM as also that of the Board. At this juncture, reference may be made to pages 100 to 193 of the petition. Annexure B, page 100, is the minute referred to by the petitioner in her petition at page 14, para 6.5. In the same paragraph, further reference is made at page 16. Moreover, Annexure B, page 100, as per the petitioners, bears an endorsement of Shri N.K.K. Mohmad to the effect that this has been okayed by the chairman, i.e., FRG. The important part of the minutes so far as the respondents' group is concerned, is 'that shares will be allotted in the names asked for by the above parties'. 79. This is followed by letters signed by Shri M.N. Khade. It bears the initial of respondent No. 1 and copy whereof is sent to the said Shri N.K.K. Mohmad, the secretary of respondent No. 1. Along with it, has been forwarded a draft minute of the committee meeting held on 21.3.1988. The draft meeting, page 102, indicates the presence of FRG, respondent No. 1 and Shri P.H. Chinoi. It shows to be the minutes of the managing committee. Along with it, has been forwarded a draft minute of the committee meeting held on 21.3.1988. The draft meeting, page 102, indicates the presence of FRG, respondent No. 1 and Shri P.H. Chinoi. It shows to be the minutes of the managing committee. The distribution is on the same line as is to be found in the minute page 99 with further note that the shares would be allotted as and when the amounts are received. Another striking feature of the minute at page 102 is that there is no reference to the allotment to be made in the names asked for by the parties mentioned therein. Against the name of respondent No. 1, there is to be found written in hand words 'and others'. 80. In the proceeding before the CLB Delhi, i.e., Petition No. 7 of 1992, at pages 80 and 81, respectively, copies produced in the petition at pages 102 and 99 have been produced followed by a signed minute of the committee meeting dated 21 March, 1988, at page 82. Only two persons are shown to be present and they are respondent No. 1 and Shri Chinoi. The decision recorded therein is 'to issue 5117 additional equity shares to FRG and 49% to be issued to the existing members depending on the offer accepted by them. In case the existing members do not subscribe to the additional share capital offered to them, in terms of the letter of offer dated 12 February, 1988, sent to all the members of the company, it was decided to offer these equity shares remaining un-subscribed to the persons as the committee deem fit'. 81. Obviously, this has generated, lot of arguments and heat on both the sides. Firstly, there is no agreement as to all or any of these minutes being correct. However, the striking feature of all the 3 (these ?) is that the decision was taken after 10th of March, 1988, on the line indicated by pages 99 and 102 of the petition, or on the line indicated by the signed minutes page 82. 82. The forwarding letter, page 100, indicates that page 102 is a draft minute. As against that Annexure-E, page 82, of Delhi proceedings bear signature of the chairman, i.e., respondent No. 1. 82. The forwarding letter, page 100, indicates that page 102 is a draft minute. As against that Annexure-E, page 82, of Delhi proceedings bear signature of the chairman, i.e., respondent No. 1. Assuming that to be correct for the time being, the net result is that to the knowledge of everyone after 10th of March, 1988, the business allotment was attended to. 83. The submission, therefore, made on the basis of the said letter of offer, page 425, filed with the reply of respondent No. 1 and not even alluded to the petitioners is of no consequence. Firstly, the Board has never put any time limit and what was indicated was that the Board will come to know as to the finances received in response to the offer only after 10th of March, 1988, as that was the date indicated in the letter of offer. 84. A very serious attempt was made by the petitioners' group through their learned advocates, Shri S.B. Vakil and Shri Ganesh, to make out that 10.3.1988 was the deadline and, on passing of that, the authority of the managing committee came to an end. However, the Board meeting dated 8.1.1988 had not put any time limit as now sought to be made out, merely on the basis of the letter of offer. As mentioned above, the petitioners in the petition have also not suggested this to be the case. The entire case is sought to be built up only on the basis of the material which is now brought on record by the respective sides and so far as the letter of offer is concerned by the respondents' group. 85. The EGM left the matter to the Board and the Board, in its meeting dated 8.1.1988 referred to above, authorised the managing committee to carry out the task. Had there been a time limit fixed by the Board in its meeting dated 8.1.1988 on the task to be completed by the managing committee, the matter could have been different. 86. The various proceedings referred to above do indicate a clear stand on the part of all concerned that on and after 21st of March, 1988, the question of additional issue of 15,000 shares was to be dealt with on the basis that in fact was dealt with, namely, after keeping apart 8,000 shares for GIC rest were to be issued in different names, as indicated. No doubt, 51`7n referred to in page 82 will work out to 7,650. But this, one may recall, that it is the petitioners' group who have been asking before different fora for allotment of 8,000 shares to petitioner No. 1, Smt. Shantadevi. Therefore, this difference of about 350 shares on the basis of 51% on one side and the round figure of 8,000 on the other, in my opinion, is of no consequence. 87. Learned counsel, Mr. Chagla, had commented with great force as to the suppression of letter of offer dated 12.2.1988 and made serious comments about the attempt now made to make an issue about it, when it was produced by respondents' group, at page 425. He had in this connection also cited an authority Chengalvaraya Naidu (S.P.) (dead) by LRs v. Jagannath (dead) by LRs, AIR 1994 SC 853 , para 7. The Hon'ble Judges of the Supreme Court have negatived the finding of the Hon'ble Bombay High Court that there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence. According to Shri Chagla, when the petitioners are relying on the offer made, they ought to have produced the letter. In this connection, he had read page No. 9 of Bombay proceedings. In the rectification proceedings before the Western Region Bench of the CLB, Bombay, in para 10, petitioner No. 1 herein, the sole petitioner there, has referred to the said letter dated 12.2.1988 and he has described it to be unauthorisedly and purportedly to have been issued even before the holding of the managing committee meeting. If this be the position, obviously, no case can be built up on the strength of that letter, particularly, with regard to the time limit because, in no uncertain terms, petitioner No. 1 in that Bombay proceedings has asserted the letter to be null and void and of no effect whatsoever. The only importance of the letter is fixing of time limit as sought to be made out now by the petitioners' group. That contention having been negatived, I will not make any further comments with regard to that. 88. In my opinion, the Board resolution dated 8.1.1988 continued to hold the field and the business of allotment, as continued all throughout, was done in keeping with it. That contention having been negatived, I will not make any further comments with regard to that. 88. In my opinion, the Board resolution dated 8.1.1988 continued to hold the field and the business of allotment, as continued all throughout, was done in keeping with it. This will automatically cover the allotment of 6,475 shares, as it does, allotment of 25 shares in favour of respondent No. 13 and 500 shares to respondent No. 12. No doubt, respondent No. 12 has also been allotted further 500 shares which will be dealt with hereafter. 89. At this juncture, it may be noted that after the said amendment as to the prayer clause in the petition, respondents No.12 and 13, both in oral and written submissions, have come out with a stand that if the entire issue of 15,000 shares is set aside, which they want, they do not mind losing, respectively, 1,000 shares and 25 shares allotted to them along with allotment of 6,475 shares to respondent No. 1. It is obviously a motivated gesture induced by the fact that this is one of the ways of putting the clock back and gaining control of the company. 90. Respondent No. 12 in her first affidavit when she was not a party has taken the stand that she had never applied, but instead a letter was written. That letter is to be found at page 591, as accompaniment to her first affidavit, Annexure A/5, filed by the petitioner along with the affidavit in rejoinder. Along with that letter dated 19 May, 1988, a cheque for Rs. 20,000 dated 23 March, 1988, and cheque for Rs. 80,000 of the same date as that of the letter is sent and is expressly stated to be the value for purchase of 1,000 equity shares of GIC. Thereafter, request is made to send the said equity shares and acknowledge the receipt of the letter. Shares have, in fact, been issued. 91. It will be apposite at this place to refer to two loan transactions. Petitioner No. I and respondent No. 12, each one of them, advanced a loan of Rs. 15 lakhs to GIC. This happened somewhere in the month of November, 1988. By that time, FRG was no more. The GIC was in need of funds. Therefore, the loan. 91. It will be apposite at this place to refer to two loan transactions. Petitioner No. I and respondent No. 12, each one of them, advanced a loan of Rs. 15 lakhs to GIC. This happened somewhere in the month of November, 1988. By that time, FRG was no more. The GIC was in need of funds. Therefore, the loan. However, while advancing the loan, neither of them thought of buying shares which were still available as per their own stand. In any case, as petitioner No.1 now claims that 8,000 shares set apart for FRG should be given to her, that position was certainly prevailing when she advanced loan and, therefore, he could have bought all of them. No closure was applied by them. She remembers the loan only in the month of November, 1990, calling upon respondent No. I to debit the loan account to the extent of the price of 8,000 shares and allot the same to her. A copy of this letter is produced with the petition as Annexure R, page 160. It is significant to note that, at about the same time, written statement is filed by respondent No. 12, verifying the same on behalf of Alaukik in the said suit, reference to which is already made. In Alaukik suit, therefore, the petitioners have been able to project a possibility, if not actual position, of they being in majority in GIC by virtue of the said letter, page 160, as only transfer entries are to be made in the books of GIC to enable petitioner No. I to get 8,000 shares. If this lot of shares can be had, obviously, the petitioners' group will be in majority in GIC and, therefore, the grievance made by GIC in Alaukik suit will automatically disappear. It may be recalled that Alaukik suit is filed by respondent No. 1 for and on behalf of GIC. 92. Here, we have respondent No. 2 sending cheque of aforesaid two different dates not only after 10th of March, 1988, but even on 19th May, 1988, and that too for Rs. 80,000, though as per the meeting dated 21st or 23rd of Mach, 1988, she was to be given 500 shares. In para 4 of her affidavit, at pages 588 and 589, she refers to her talk that she had with respondent No. 1. 80,000, though as per the meeting dated 21st or 23rd of Mach, 1988, she was to be given 500 shares. In para 4 of her affidavit, at pages 588 and 589, she refers to her talk that she had with respondent No. 1. Respondent No. 1 intimated her that she should send such amount as she can spare as the company was in need of money. Apparently, she could spare only Rs. 1 lakh by the aforesaid dates and she confirms that she was issued share certificates for 1,000 shares that she had paid for. These certificates were received on or about 30 May, 1988. 93. It is, therefore, difficult to believe that she had not applied for purchase of shares. The letter written by her secretary, Shri N.K. Joshi, page 591, read along with the said paragraph 4 of the affidavit, in my opinion, is quite clear on this point. This being a private limited company and, that too, the shares being allotted on the basis of what is referred to as family meeting, one would hardly expect a formal share certificate application and, in other words, this form of request for share cannot be said to be unusual. She may not be aware as to the fact that additional 500 shares are being given to her from what was kept apart for FRG. 94. This will take me to the said letter of renunciation dated 11.6.1988. There is a direct allegation that it is a got up letter. This has been done, according to the petitioners' group with a view to justify the allotment of 3,000 shares to respondents Nos. 4 and 5. This necessarily presupposes that rest of the issue of 7,000 shares to different persons as set out in the said meeting of 21/23.3.1988 was proper. I am not aware of the fact that that issue is also seriously questioned by the petitioners' group. 95. At this juncture, reference may be made to page 102 again because there is a handwritten addition against the name of respondent No. 1 at serial No. 2 and that addition is 'and others'. This has a bearing on the allotment of 300 shares to respondent Nos. 4 and 5 as also respondent No. 3, HUF of respondent No. 1, as none of them were members. 96. This has a bearing on the allotment of 300 shares to respondent Nos. 4 and 5 as also respondent No. 3, HUF of respondent No. 1, as none of them were members. 96. It is true that the EGM as well as the Board meeting do refer to the allotment to be made to members. Members would necessarily mean 'members as such on the date that the various resolution were passed at EGM or at the Board meeting.' Admittedly, respondents 3, 4 and 5 were not members. While considering this aspect, the position as to the articles of association of the company, respondent No. 6, will have to be kept in mind. The articles, as (is) to be expected of a private limited company, do have a restriction clause as to the transfer ; page 88 onwards are the articles of association, preceded by memorandum of association starting from page 77 and ending with page 87. 97. Article 5 indicates that shares of the company are at the disposal of the Board of directors and under their control. The article is very widely worded. The directors have full power to issue the shares of the company to any one they like, subject to the compliance with the provisions of section 79 of the Act. Strictly speaking, therefore, acting for the Board, if the managing committee issues shares to non-members, that action cannot be questioned. At the same time, the mandate of the EGM of December, 1987, has to be borne in mind and the decision was clearly that the fresh issue is to be made to the members. 98. Without agreeing with this proposition, the learned advocate, Shri Chagla, drew my attention to article 14 of the articles of association, which is at page 90. Preceding articles from articles 6 to 13, particularly, article 7, make it obligatory upon the transferor to transfer share to a member only, It can be made to a non-member only if the Board approves it. There is elaborate mechanism for working out the value, if it is not agreed to by and between the transferor and transferee. 99. However, article 14 is an exception to the said embargo on transfer to an outsider. The exception is made in case of near family members. There is elaborate mechanism for working out the value, if it is not agreed to by and between the transferor and transferee. 99. However, article 14 is an exception to the said embargo on transfer to an outsider. The exception is made in case of near family members. The relationship that will be included in this concept has been enumerated starting with child of a member going upto son-in-law and daughter-in-law and bringing in between that all the various shades of relationships. This conforms to the idea of a larger family as understood in our society at large. 100. The submission of Shri Chagla, therefore, was that even if respondent No. 1 or 2 had taken shares and, thereafter, transferred under article 14, if no objection could be taken, there is nothing wrong in directly allotting shares to their family members, i.e., children, respondents Nos. 4 and 5 and the HUF consisting of respondents No. 1, 2, 4, 5, which is respondent No. 3 on record. At best, it is an irregularity which can be cured. Respondents Nos. 4 and 5 along with respondent No. 3 thus being falling in the category of the relationship provided for in article 14, direct issue to them cannot be made a subject matter of contention more particularly, when in the factual background stated so far right upto the date of 21/23.3.1988, there was no response to the offer. 101. Moreover, page No. 99 does indicate a possibility of share being issued to any one nominated by four persons mentioned in that particular draft minute. 102. As against that, page 102 contains against the name of respondent No. 1, those hand written words which Shri S.B. Vakil had, with his keen analytical mind, reduced to being of no consequence at all and, thereafter, had made them to be a very crude attempt on the part of respondent No. 1 to give unto himself a semblance of power and legitimacy or something to hang upon his action of issuing the shares to respondents 3,4 and 5. 103.'Incidentally, page 102, is sent by the secretary of the company with covering letter page 100 and unless, therefore, it is made out that draft minute page 102 as originally sent did not contain these words, but subsequently, they were added, and it is this altered version which the petitioners have been able to procure and produce along with the petition, it is difficult to accept this submission. 104. On the contrary, it is clearly indicated that draft minute, page 102, without those words authorising four persons to nominate the shareholders, did contain right from the beginning words 'and others'. In this connection, learned counsel, Shri Chagla, had relied on (1993) 3 Company Reporter 319, a Bombay case4 relating to rectification of share register. The challenge was that transfer of share is an act of majority riding roughshod over minority. In that Bombay case, as per para 45 of the report, the AGM did not contain any attempt of share increase. In the omnibus clause of any additional item, the proposal was mooted. However, as it was not originally included in the agenda circulated, this increase in share capital was to be rectified at EGM to be convened. The EGM was in fact, convened and the issue was rectified. The initial irregularity was thus corrected. The submission, therefore, on behalf of the respondent group is that respondent No. I could have got share himself transferred and instead has directly given it to respondents No. 3,4 and 5 and till the issue of 3,000 shares, it was within the bound of 6,475 shares as originally agreed to in the said meeting dated 21/23.3.1988. A copy of the minutes of AGM held on 30 September, 1989, is produced by GIC, respondent No. 6, from pages 163 onwards. Shri P.U_ Rana was elected to be the chairman of the meeting. At the meeting, along with him, Shri H.A. Shinde, respondent No. 7, respondent No. 12 and two others were present. Needless to say, at the AGM, the accounts were passed on 31 March, 1989. Pursuant to the meeting, annual returns were also filed as per pages 714 to 726 produced along with the surrejoinder. The position as to the shareholding effected therein is clearly to the effect that as against the previous year, i.e., 1988, the issued capital being 425 equity shares, it had gone upto 10,925 shares. Pursuant to the meeting, annual returns were also filed as per pages 714 to 726 produced along with the surrejoinder. The position as to the shareholding effected therein is clearly to the effect that as against the previous year, i.e., 1988, the issued capital being 425 equity shares, it had gone upto 10,925 shares. That means 10,500 new shares were issued and allotted. The balance sheet, page 452, accurately reflects this position. The annual returns referred to above are also to that effect. They were signed by none other than Shri P.U. Rana. 105. So far as 3,000 shares are concerned, having already become members, their issue to respondents Nos. 4 and 5 cannot be challenged on that count. The challenge is only on the basis that the said 3,000 shares form part of the block of 8,000 shares that were set apart for FRG. Assuming for the time being that the said letter dated 11.6.198 of Shri Khoth, page 430, was not there at all, the situation as on 11.6.1988 was that 7,000 shares out of the lot of 15,000 shares were issued in favour of the respondents' group and respondent Nos. 2 and 13. The last two had received 1,025 shares in all. The rest were given to respondents' group. Again, it may be recalled that this is in keeping with the aforesaid meeting of 21/23.3.1988. 106. The situation, therefore, was that, at the time when these 7,000 shares were issued, FRG, for whom they were set part, did not subscribe. It is nobody's case that he did it till he died on 1.9.1988. So far as the control of GIC is concerned, the situation had already altered radically in favour of the respondents' group, a majority position came to be occupied by them. The share certificates in respect of 3,000 shares came to be issued on 21.1.1989 while the decision to issue them was taken in the meeting of December, 1988, and, after that, it may be recalled that closure was applied in respect of the balance 4,500 shares. 107. Strictly speaking, therefore, unless applied and paid for, the lot of 8,000 shares remained at the disposal of the managing committee. Unless that block was available, the second lot of 500 shares to respondent No. 12 also could not have been given. This has been done prior to the said letter dated 11.6.1988. 107. Strictly speaking, therefore, unless applied and paid for, the lot of 8,000 shares remained at the disposal of the managing committee. Unless that block was available, the second lot of 500 shares to respondent No. 12 also could not have been given. This has been done prior to the said letter dated 11.6.1988. This is indicative of the fact that, by the time the secretary of respondent No. 12 wrote that letter along with cheques, on receipt of the payment, shares came to be issued on 30 May, 1988; FRG not subscribing to the shares kept apart for him had become final. The decision to issue 3,000 shares in the month of December, 1988, irrespective of the letter of 11.6.1988 will, therefore, be clearly in exercise of the power of the managing committee. 108. It is significant to note that till the time FRG was alive and after that upto 31 March, 1989, the closure of the accounting year, none of the directors of the company that are with the petitioners' group had questioned this action and, as if this is not enough, the finalisation of the account having been discussed at AGM of GIC held on 30 September, 1989, clearly had reflected the position as to the allotment of shares and no one had questioned (the same). 109. Neither at the Board meeting or the AGM of 30 September, 1989, was any clarification sought from the members of the managing committee as to what has happened in the new issue. It is only when the fight for the control of GIC has erupted and has divided the members of the company into two groups that microscopic examination is being made of all the previous transactions and whatever material that could be found to support the arguments of allotment being bad or even void, an attempt is made to make use of it. 110. So far as the managing committee is concerned, it was seriously argued that it could not have done the said work and its power would have come to an end after 10.3.1988. I have already dealt with that aspect. 110. So far as the managing committee is concerned, it was seriously argued that it could not have done the said work and its power would have come to an end after 10.3.1988. I have already dealt with that aspect. Now, so far as the provision as to the managing committee is concerned, reference may be made to regulation No. 77 of Table A of the said Act.(*5) The articles of association provides for applicability of Table A except for the provisions referred to in article 2 of the company's articles of association, page 88. Articles 7 to 81 are, therefore, applicable in GIC's case and that is how the committee has functioned and had all the authority. Unless, therefore, it is shown that while delegating its power, the Board has also imposed a time limit upon the committee and it being a regulation which the committee was required to conform as per regulation No. 2 read with regulation No. 77, the petitioners have no case in this regard. *5 Regulation 77, Table A, Companies Act, 1956, read thus namely,- "(1) The Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such member or members of its body as it thinks fit. (2) Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Board. 111. That is why, it was very seriously argued that the meeting dated 13.2.1988, where letter dated 12.2.1988 was placed, can be said to have been approved by the Board and as the letter contained the time limit of 10.3.1988, the time limit can be said to have been imposed by the Board meeting dated 13.2.1988. 112. This is directly in contrast with the resolution of the Board meeting dated 8.1.1988, at pages 420-426, which was immediately after the holding of December 1987 EGM. In my opinion, therefore, the petitioners have no case as to the committee being restricted in point of time with regard to the issue of shares. 113. In that view of the matter, irrespective of the said letter dated 11.6.1988, or irrespective of the handwritten addition of 'and others', the issue of 3,000 shares as sought to be questioned now cannot be done by the petitioners. 114. 113. In that view of the matter, irrespective of the said letter dated 11.6.1988, or irrespective of the handwritten addition of 'and others', the issue of 3,000 shares as sought to be questioned now cannot be done by the petitioners. 114. This takes me to the second important question of transfer in favour of Indrani. The transferee is a private limited company and it was brought into being only as a part of tax planning exercise done by respondent No. 1 for himself and his family. It is the categorical case of respondents' group that this company, i.e., Indrani is closely held by respondents Nos. 1 to 5. In effect, therefore, it is respondents Nos. 1 to 5 alone who have formed themselves into a corporate identity and it is nothing else. So far as GIC is concerned, therefore, except for hyper-technical approach, which understandably can be taken by the petitioners' group, it is not a transfer to an outsider. 115. It is an admitted position that, as per the Board meeting dated 30 March, 1990, shares were transferred to Indrani. The position of this company being as (it is) referred to above, no doubt, its voting power will be controlled entirely by respondent No. 1. It is, therefore, in a commanding position in respect of GIC also. According to the petitioners' group, this continued to be the position upto 20 December, 1990, the date on which the crucial AGM took place. According to the respondents' group, the Board meeting dated 30 March, 1990, was followed by meetings dated 13 July, 1990, and 9 August, 1990. As per the last meeting, transfer in favour of Indrani was rescinded and the shares were re-transferred in the name of respondents Nos. 1 to 5. This exercise was gone through by the respondents' group because it had come to the notice of respondent No. 1 as recorded in the meeting dated 13 July, 1990, that formalities contemplated by articles 8 and 9 of GIC are not completed. The transfer notice is to be served to the Board and the Board is automatically constituted as the agent of the transferor. The Board is to offer the shares to the members and if the price is agreed upon, that will rule the transaction. Otherwise, the auditors of the company may be called upon to fix up the value. The transfer notice is to be served to the Board and the Board is automatically constituted as the agent of the transferor. The Board is to offer the shares to the members and if the price is agreed upon, that will rule the transaction. Otherwise, the auditors of the company may be called upon to fix up the value. As long as member or the members of the company are prepared to purchase, the shares cannot be transferred to a non-member. This is the effect of articles 7 to 11, as per page 89 of the petition. 116. Technically speaking, Indrani is, indeed, an outsider, i.e., not a member of GIC. The formalities, therefore, had to be gone through. What is noticed in the meeting dated 13 July, 1990, is that, though instructed in the meeting dated 30 March, 1990, the notice of transfer of shares by respondents Nos. 1 to 5 was not given to the members. That is why a decision was taken in the meeting dated 13 July, 1990, to refer the matter back to the transferor's and the transferee. Thereafter, decision was taken in the Board meeting dated 9 August, 1990, that notices not having been given to the members of the company, transfers were rescinded. 117. In order to appreciate the aforesaid aspect properly, one has to refer to one more Board meeting minutes, i.e., page 208, where the meeting held on 27 December, 1989, is recorded. At item No. 6, the chairman, i.e., respondent No. 1, placed before the Board report from the secretary of the company about the procedure followed in response to the transfer notices received from the shareholders. Needless to say, these shareholders are respondents 1 to 5. Over and above this, reference may also be made to page 460 which is letter dated 15 November, 1989, signed by Shri M.N. Khade, the secretary, informing to all the shareholders about the intimation received by the company from some of the shareholders about their intention to sell some of their shares of GIC. 118. Shri Khade has filed his affidavit in support of the petitioners' group after respondent No. 1 had filed his reply and, along with it, had produced the said letter, page 460. In his affidavit-in-reply, Shri Khade is silent about this matter. It is the clear stand of respondents that this letter was never sent. 118. Shri Khade has filed his affidavit in support of the petitioners' group after respondent No. 1 had filed his reply and, along with it, had produced the said letter, page 460. In his affidavit-in-reply, Shri Khade is silent about this matter. It is the clear stand of respondents that this letter was never sent. This would mean that in the meeting dated 27 of December, 1989, Shri Khade had reported to the Board of directors a wrong information about the formalities having been completed with regard to the intended transfer. Now transfer to Indrani being challenged, if the transfer is carried out without offers being made to other shareholders, it would certainly be bad. According to the respondents, having realised this situation, they took corrective action and rescinded the transfer by 9th of August, 1990. The situation said to be prevailing as on 30th of March, 1990, was found to be incorrect by 13th of July, 1990. 119. If Shri Khade had in fact sent the letters to the shareholders, and if they did not respond inspite of its receipt, the transfer in favour of Indrani will be valid. The letter has not been sent because it is nobody's case that (that) letter was ever received and, hence, the action of respondent No. I along with his co-directors in subsequent meeting after 30 March, 1990, was therefore, certainly called for. This position apart, the submissions, as made on behalf of the petitioners, may now be considered. 120. Two-fold contentions are raised on behalf of the petitioners' group. Indrani being a stranger, the articles of association enjoin upon the transferor member to be obliged by the notice of the transfer to transfer the shares to all or any of the members who are willing to purchase. Once having approached the Board of directors with a request for transfer, there is no provision to withdraw the same and the transferor shall have to transfer the shares, if a member agrees to purchase. That is why, those prayers as to compelling the respondents 1 to 5 to transfer the shares that they had notified in the Board to be transferred to Indrani to other members of the company in proportion to the respective holdings. 121. That is why, those prayers as to compelling the respondents 1 to 5 to transfer the shares that they had notified in the Board to be transferred to Indrani to other members of the company in proportion to the respective holdings. 121. The second line of his argument is that these minutes of the Board of directors meeting dated 13th July, 9th August, 1990, were not in existence and they were got up subsequently. The minutes are produced by the respondent group along with the reply of respondent No. 1. This aspect will be discussed later on. Coming back to the submission made, according to the petitioners' group, the position of the shareholding as on 20 December, 1990, therefore, continued to be the one as reflected by the Board resolution dated 30 March, 1990. As on 30 March, 1990, the position was that 9,415 shares were transferred to Indrani and respondents' group was left holding only 66 shares. The outcome of the AGM of 20 December, 1990, was, therefore, in favour of the petitioners and that exactly is their stand. 122. The reason for the aforesaid outcome is that Indrani is under injunctions of the different courts, as stated above and, therefore, it could not have voted. It necessarily means that respondent No. I could not have utilised the voting powers of that block of 9,415 shares held by Indrani. All his resolutions at the end of general meeting would, therefore, fail and, accordingly, the respondents' group had in fact failed. 123. Before proceeding further, I would like to consider the aspect that if the transfer as contended by the petitioners' group in favour of Indrani is bad and even claimed to be void ab initio, and, in that background, prayers are sought in different civil proceedings, that block of shares can be availed of by the petitioners' group and if not availed of by them, how can they prevent the respondents' group from drawing upon its voting power ?. The stand of the petitioners' group is clearly that Indrani being an outsider, transfer is bad and against the provisions of articles of association. The shares are already issued. By the action of the respondents' group, as reflected in those two meetings of July, 1988, and August, 1988, the futility of the transfer in favour of Indrani is accepted. The stand of the petitioners' group is clearly that Indrani being an outsider, transfer is bad and against the provisions of articles of association. The shares are already issued. By the action of the respondents' group, as reflected in those two meetings of July, 1988, and August, 1988, the futility of the transfer in favour of Indrani is accepted. The result, therefore, according to the petitioners, is that the holders of the shares, i.e., respondents Nos. 1 to 5 should be bound by the notice of transfer and they should be compelled to transfer. Therefore, unless the petitioners' group can make out a case that, having served the Board with a notice of intended transfer, transferor's ceased to have voting rights because of the notice of transfer. The voting power of the shares intended to be transferred will certainly be available to the intending transferor's. They do not and cannot make out a case on this line in absence of any provision in that regard in articles of association of GIC. 124. The petitioners, whenever they tried to take advantage under the articles of association and, at the same time, challenged the action of respondent No. 1 under those very articles of association, they would, in my opinion, find themselves into a bind. As per their own stand, the shares will be with the respondents' group and, hence, the voting power will also be with them. 125. Coming back to the meeting of 13 July, 1990, and 9 August, 1990, the petitioners assailed them on the strength of affidavit of Shri Khade filed with the affidavit in rejoinder. It is at page 573, as Annexure A-4, going upto page 585. It deals with these two meetings in paragraphs 5 and 6. He affirms that there was a meeting of the Board on 13.7.1990, but categorically asserts that no item regarding transfer of shares to Indrani was discussed. There was no talk according to Shri Khade and not even a remote reference to it. Curiously enough, neither in para 5 or 6 nor anywhere in the affidavit, does he refute the stand of the respondent group that before the Board meeting of 30 March, 1990, no notice of transfer had gone to the shareholders. Mr. Khade could have very well come out with an assertion that such notice, in fact, was issued. Curiously enough, neither in para 5 or 6 nor anywhere in the affidavit, does he refute the stand of the respondent group that before the Board meeting of 30 March, 1990, no notice of transfer had gone to the shareholders. Mr. Khade could have very well come out with an assertion that such notice, in fact, was issued. According to Shri Khade meeting dated 9 August, 1990, was never held. 126. His affidavit bring about one glaring fact of records of GIC being maintained in a casual manner, if not in a negligent manner. He claims that there was a practice of writing minutes of the meeting of the Board of directors only at the end of the concerned financial year before the auditors would start the work of audit. This he has stated in para 4 of his affidavit, at page 576. he further says that these minutes would be written in the minute books much after the end of the concerned financial year. Then he says that he had taken the minute books of the Board meeting to GIC to its auditors for the year 1989-90 in the month of October/November, 1990. Till that time, the last minutes written in the said minute book were of the Board meeting held on 30 March, 1990. He further says that of the bunch of minutes produced by the respondents and shown to him by the petitioners, no minutes of Board meetings held after 30 March, 1990, were written in the minute book till he went on leave on or about 5th of December, 1990. He claims to have proceeded on leave on account of sickness. As the petitioners have produced some of the records from the books of the company, including minute books, affidavit of Shri P.U. Rana, at page 624 onwards, has to be referred to. He is siding with the petitioners' group. The avowed purpose of filing this affidavit is to point out various incorrect and false statements according to him, made by the first respondent in the affidavit in reply. This is the 1st sentence in para 1, ending at page 625. The inspection was given by him to petitioner No. 1 on 10 December, 1990. Apparently, it was given by him because the secretary, Mr. Khade, was not available after 5.12.1990. This is the 1st sentence in para 1, ending at page 625. The inspection was given by him to petitioner No. 1 on 10 December, 1990. Apparently, it was given by him because the secretary, Mr. Khade, was not available after 5.12.1990. It is on the basis of the records thus obtained by the petitioners' group that a case is sought to be made out of records having been fabricated. The further attempt on the part of the petitioners' group is to make out a case of records having been fabricated after the meeting of 20 December, 1990. This submission is made on the basis of the allegation made by the petitioners' group that after the respondents' group was defeated in its design, at the said AGM of 20 December, 1990, in most unseemly and highhanded manner, the respondent No. 1 had carried away the records and materials including the minute books of respondent No. 6 company with him to Bombay. The AGM in question was held at Baroda. 127. However, the short answer to this given by respondents' group is that to the suit filed by respondent No. 8, i.e., Civil Suit No. 872 of 1990, an affidavit in reply was filed by the respondents' group on 20.12.1990 prior to the holding of the AGM. On the same day, after the AGM, a pursis came to be filed, as per Annexure 14, page 439, where it was recorded that respondents No. 1 to 5 had exercised the voting rights at the AGM. In the affidavit in reply, as per page 433, the stand taken by respondents Nos.1 to 5 in the said suit was clearly to the effect that they hold 9,481 shares and that transfer to Indrani stood rescinded. This was their clear stand in the said affidavit. Pursis at page 439 clearly indicates that it was produced in the courts at Baroda on 20.12.1990 at 3.55 p.m. It says that the meeting started at 11.00 o' clock and had concluded at 11.25 and, in that meeting, defendants No. 3 to 7 of that suit, corresponding to respondents No. 1 to 5 in the present proceedings, have exercised their voting rights and that all the resolutions placed at the meeting have been voted upon. This fact was disclosed to the court by way of this pursis. 128. This fact was disclosed to the court by way of this pursis. 128. In the background of the aforesaid submission that the minutes have been concocted after respondent No. 1 had taken away the records of the company at the end of the said frustrating AGM, the situation as disclosed by the said pursis, page 439, is to the contrary. Read with the copy of the affidavit-in-reply filed at page 433 onwards, if at all there is a concoction as suggested by the petitioners' group, it would be between 10th of December, 1990, and 20th of December, 1990. 129. Enough of this aspect, so far as the question of transfer in favour of Indrani is concerned. If necessary, rest of it will be discussed while dealing with the third point as to the meeting dated 20 December, 1990. 130. So far as the position in the register of transfer of shares and the shareholding is concerned, in the surrejoinder, this has been taken care of. Needless to say, it conforms to the stand taken by the respondent group that, as on the date of the meeting, the shares that were transferred to Indrani in the month of March, 1990, were on rescission of transfer appeared(ing) in the company's record in the name of the respective original holders, that is to say, respondents Nos. 1 to 5. 131. Talking of taking away of books, as is now claimed by Shri Khade in his affidavit, somewhere in the month of October/November, 1990, he had taken away the books for audit purpose. His own letter, at page, 431 claims that, as per the telephonic message of N.K.K. Mohmad, the secretary of respondent No. 1, his (Khade's) special messenger, the minute books of the general meeting, minute books of the Board meeting and minute books of the committee meeting were sent to Shri Mohmad. 132. Shri Mohmad confirms receipt of these minute books as per letter dated 22.11.1990, at page 432, but points out that all the 3 books mentioned in the covering letter of Shri Khade, the book pertaining to the management committee minutes was not there. This has not been given to him by Shri Khade and that continues to be the position as per the respondents' group all throughout. 133. This has not been given to him by Shri Khade and that continues to be the position as per the respondents' group all throughout. 133. If the Board minutes were thus handed over to Shri Mohmad by 22 November, 1990, what was available for inspection as per the affidavit of Shri P.U. Rana on 10.12.1990 is indeed, seriously doubtful, atleast with regard to the minute book of the meetings of the Board of directors. Yet, he claims that, in that minute book, no minute was recorded after the minute of the meeting of 30 March, 1990. This could be the position only and only if Shri Mohmad had returned the minute book of Board of directors either to Shri Rana or to Shri Khade, the secretary of the company. That does not seem to be the case of any one. 134. The submission, therefore, made on the basis of the concoction of the minutes of 13 July, 1990, with regard to Indrani transfer and there being no meeting of 9 August, 1990, and, therefore, the entire minutes being a concoction would, in my opinion, be a submission not worthy of acceptance. 135. One more aspect of this particular point is pertaining to the position of the record of the company particularly, with regard to the register of members and register of transfer of shares. 136. So far as the petitioners are concerned, having taken inspection on 10 December, 1990, from the record of the company, which was admittedly lying at Baroda, the transfer in favour of Indrani is reflected. According to the respondents' group, the position as on 20th of December, 1990, is in keeping with the meeting dated 9.8.1990 of the Board of directors. This is stated by respondent No. I in his affidavit-in-reply, para 'Y', at pages 352 and 353. This would mean that on 20 December, 1990, the position in the register of members as well as the register of transfer was to the-effect that. Indrani had ceased to be the holders and the position of respondents Nos. 2 to 5 was the same as it was prior to 30th of March, 1990, Board meeting. Having held in favour of the respondents' group with regard to the aforesaid Board meeting, obviously, there is hardly anything left to be discussed in this regard. Indrani had ceased to be the holders and the position of respondents Nos. 2 to 5 was the same as it was prior to 30th of March, 1990, Board meeting. Having held in favour of the respondents' group with regard to the aforesaid Board meeting, obviously, there is hardly anything left to be discussed in this regard. At best, it can be said that the position upto 10 December, 1990, was against the respondents and position as on 20 December, 1990, was in their favour. 137. Much has been said about the role played by Mr. Khade, the secretary of the company. This is not an inquiry into the conduct of Mr. Khade and I will not dwell upon it. However, the situation of the company's record on 10 December, 1990, and 20 December, 1990, is definitely contrary to each other, but, looking to the time gap, it cannot be said that the position is mutually exclusive. Had I accepted the contention that the Board meeting of 9th of August, 1990, as also that of 13 July, 1990, were concocted, the position as shown by the respondents on 20th of December, 1990, would have been of no consequence for them. The position as on 10th of December, 1990, would have otherwise also then prevailed. 138. Now comes the third important point which is meeting dated 20 December, 1990. Very loudly, it was protested in the course of the submission as to the manner in which notice convening the meeting was allegedly sent by the respondents No. 1, as per the submission of the petitioners' group. It has been pointed out that the meeting was to be held on 20th of December, 1990. The accountants of the company are at Baroda. The accounts were to be scrutinised and finalised by the Board for being circulated amongst the members as the ensuing meeting was the AGM. The petitioners have, therefore, built up a case on the inherent improbability of the accounts having been audited and finalised by the company's auditors at Baroda and scrutinised and accepted for being circulated at the Board meeting held at Bombay and thereafter circulated to the members and all these being done, between 10 December, 1990, and 12 December, 1990. The petitioners have, therefore, built up a case on the inherent improbability of the accounts having been audited and finalised by the company's auditors at Baroda and scrutinised and accepted for being circulated at the Board meeting held at Bombay and thereafter circulated to the members and all these being done, between 10 December, 1990, and 12 December, 1990. This has been explained by the respondents' group in the said affidavit-in-reply as well as surrejoinder and, looking to this explanation, nothing can be made out of this submission. 139. The petitioners have certainly a point when it is argued on that basis that the notice convening the AGM is for a period shorter than what is prescribed. However, the fact remains that they have all participated. Both the groups on the contrary go to the extent of saying that, in view of the aforesaid different litigation's, as Indrani could not vote and the position of the company's record being the same as it was on 10th of December, 1990, namely, the respondents' group had only 66 shares in their name, the petitioners group was able to pass several resolutions and, in the process, it was the respondents Nos. I and 2 who had lost their directorship and that is why respondent No. 1 went away in a huff carrying with him books, etc. If the petitioners want to stick on (to) this story, the event having taken place at the meeting, the convening of which by the notice of a shorter period is sought to be challenged would certainly be given up by them. They would insist upon it only and only if the position as to voting strength of the respective group is not accepted as advanced on behalf of the petitioners. Shri Chagla has cited Shailesh Harilal Shah v. Matushree Textiles Ltd., (1994) 2 Comp LJ 291 (Bom) : AIR 1994 Bom 260 where the question as to the length of calling general meeting was dealt with. It has been held that the period of notice as fixed is directory and not mandatory. In the case before their Lordships, instead of 21 days, notice of 29 days sent. Such a notice cannot be held to be bad unless prejudice to consequential (substantial ?) number of shareholders is shown. It has been held that the period of notice as fixed is directory and not mandatory. In the case before their Lordships, instead of 21 days, notice of 29 days sent. Such a notice cannot be held to be bad unless prejudice to consequential (substantial ?) number of shareholders is shown. Obviously, this is not the case here and, hence, a short period of notice as per this decision can certainly be answered as the provision of the period of notice is directory and not mandatory, and no prejudice is found, hence, the shortness of the notice cannot be held against the respondents. 140. In para 10 of the petition, at page 28, the petitioners' version as to the meeting dated 20.12.1990 is set out at length. It refers to the earlier stand of AGM itself not being valid as the notice was for a shorter period. They proceed to describe what according to them had transpired at the meeting. The details as to the persons present on their own or through proxies have been set out at pages 28 and 29 of the petition. In para 11, oral objection as to the validity of the notice has been referred to. It is significant to note that no written objection as to the notice being for a shorter period seems to have been submitted by any of the petitioners' group, including the persons who are not party to the proceeding but admittedly, they are siding with them ; for example, Shri P.U. Rana. Thus, it is stated in para 11 that the chairman, i.e., respondent No. 1, persuaded the objecting members to participate in the meeting and the objecting members agreed to participate in the meeting under protest and without prejudice to their objections. 141. This curious ambivalence would indicate only one thing : if they carried the day, they would not press for the protest and without prejudice the position would also be given up. Obviously, this did not happen, hence, the loud protest today contrasting this with the written, telegraphic as well as oral objections to the convening of the meeting dated 14 January, 1991, is more than eloquent, much of it at a later stage. 142. Obviously, this did not happen, hence, the loud protest today contrasting this with the written, telegraphic as well as oral objections to the convening of the meeting dated 14 January, 1991, is more than eloquent, much of it at a later stage. 142. Sticking to the position of the voting power as per the stand of the petitioners' group, the result of the poll that were taken has been narrated and after heated discussion as set out in para 12 and 13 of the petition, between pages 30 and 34, in para 14, reference is made to the poll that was demanded and taken at the meeting. According to the petitioners, Shri Ajitsingh Gaekwad, respondent No. 8 and Shri P.U. Rana, one of the directors, were appointed as scrutineers. The result of the voting as given by the scrutineers was in keeping with the voting strength as set out by the petitioners' group. That is why, there is a clear-cut assertion at the end of para 15, at page 37, of all the resolutions proposed in the notice convening the meeting having been defeated by a majority except for the appointment of the auditors. As a result, respondents No. 1, 2, 9, 10 and 11 lost their directorship. This led to the aforesaid outburst of respondent No. 1, etc. 143. The petition does refer to the presence of 3 to 4 outsiders and, more particularly, Shri P.U. Rana in his affidavit in support of the rejoinder filed by petitioner No. I also refers to their presence. His affidavit is at page 624 to 632. His version of the meeting is to be found in para 5, at page 628. This version has been broadly record ed by the deponent in his letter dated 30.1.1991 addressed to the first respondent and the copy of that letter is produced along with the petition at page 150. It is significant to note that the letter is after the said second disputed meeting of 14.1.1991. 144. About the presence of 3 to 4 persons, there is a reference at the bottom of page 628. As stated therein, these 3 or 4 persons were not shareholders, nor proxy holders and, when the members inquired who they were, respondent No. 1 stated that they were his friends and were not there to participate in the meeting. 145. 144. About the presence of 3 to 4 persons, there is a reference at the bottom of page 628. As stated therein, these 3 or 4 persons were not shareholders, nor proxy holders and, when the members inquired who they were, respondent No. 1 stated that they were his friends and were not there to participate in the meeting. 145. These persons, according to Shri Rana, then sat quiet and away from the meeting. In para 6 at page 629, the aforesaid outcome as recorded from the petition is briefly alluded to and it is reiterated that respondent No.s 1, 2, 9, 10 and 11 have ceased to be the directors on and from the date of meeting, i.e., 20.12.1990. In keeping with this outcome, filing of returns, submission of Form No. 32 to the Registrar of Companies, etc., has been done and the copy thereof has been produced along with the affidavit, Annexure I. 146. Respondent No. I in his surrejoinder, page 674 onwards, has denied all these things and has also produced along with his surrejoinder affidavit of Shri Desai, a practising advocate and solicitor and partner of Messrs Desai and Diwanji of Bombay, as also that of Mr. Vipin P. Shah, a chartered accountant, practising at Bombay. The affidavit of Shri Desai is at pages 758 and 759. He refers to the presence of two practising advocates of this court at the meeting, Shri S.N. Soparkar and along with him, Shri Vipin Shah, a chartered accountant. Shri Desai attended the meeting at the request of respondent No. 1. He was offered a seat by the side of the chairman, i.e., respondent No. 1. Shri Desai in his affidavit says that he introduced himself to the persons attending the meeting and also disclosed his name and profession and also informed that he is present in the meeting at the invitation of Shri S.P. Gaekwad, respondent No. 1. 147. At the meeting, according to Shri Desai, respondent No. 1 sought his opinion on some of the legal aspects concerning the proceedings of the AGM. Then, he concludes his affidavit by saying that he has gone through the minutes of the AGM of Gaekwad Investment Corporation (P) Ltd., as recorded in the minutes books of the company, (and that) the contents thereof are true and correct recital of the proceedings of the meeting. 148. Then, he concludes his affidavit by saying that he has gone through the minutes of the AGM of Gaekwad Investment Corporation (P) Ltd., as recorded in the minutes books of the company, (and that) the contents thereof are true and correct recital of the proceedings of the meeting. 148. The affidavit of Shri Shah starts from page 760 and ends at page 762. He also confirms having attended the meeting and, before that, he refers to the practice of minutes being written of the AGM as well as the Board meeting immediately after the holding of the meeting. This is in reply to the aforesaid stand of Shri Khade. 149. In para 3 of his affidavit, he confirms the minutes of 9 August, 1990, 10 December, 1990, and 5 January, 1991, of the Board of directors' meeting, as also AGM of 20 December, 1990. There is a reference to EGM of 14 January, 1991. According to Shri Shah, minutes of the meetings were written after the said meeting and, so far as the Board meetings are concerned, they were kept ready for the immediately following Board meeting in order to confirm and sign the same. 150. In para 4, he refers to the sickness of Shri M.N. Khade and, therefore, his inability to attend the AGM on 20 December, 1990, and this was the reason why he was requested by respondent No. 2 to attend the meeting and assist in the secretarial functions in the course of the meeting. In para 5, he confirms his presence at the meeting and he affirms the correctness of the proceedings of the said meeting recorded in the minute book. In para 6, he disputes and denies the correctness of the petitioners' version. 151. In para 7, he says that he was appointed aS a scrutineer for poll by ballot held at the said ACM, and that after polling, the votes were counted on the basis of the ballot papers found in the ballot boxes. According to him, 9,481 votes were cast in favour of all the resolution put to vote and none was against. 152. This seems to be quite reasonable. Merely because the petitioners' group is protesting, the respondents' group would not have refrained from casting their votes. According to him, 9,481 votes were cast in favour of all the resolution put to vote and none was against. 152. This seems to be quite reasonable. Merely because the petitioners' group is protesting, the respondents' group would not have refrained from casting their votes. According to the petitioners, they may not be the valid votes, but, therefore, it is not possible to say that the resolutions tabled for votes were defeated by majority, unless the entire lot of 9,415 is ignored and kept apart and that is exactly what the petitioners have done. The situation is obviously other way round. In my opinion, therefore, the result of the polling has been in favour of the respondents' group. 153. So far as the removal of records is concerned that aspect has been dealt with earlier. There does not seem to be any substance in this. There is a reference to a complaint said to have been filed by respondent No. I and the copy thereof is produced at Annexure F, page 125. Perusal of that Annexure discloses it to be a communication from an advocate of GIC, one Shri K.P. Jetmalani, who has addressed to the Police Inspector, Navapara Police Station, Baroda, and what has been conveyed is that the AGM is to be held at 11.00 a.m. at the registered office, i.e., Indumatimahal, Jawaharlal Nehru Marg, Baroda and that Jetmalani anticipates that some problem might come in the meeting and some person might break the law and disturb the peace. The request, therefore, was for providing police protection during the time the meeting lasted. This seems to be more in precautionary nature rather than a complaint. It is not the case of anyone either that police had in fact come or that the petitioners knew about the letter to police and felt intimidated during the meeting. 154. In my opinion, therefore, the meeting dated 20 December, 1990, was held and the result went in favour of the respondents' group. The points now urged in support of the contention of invalidating the meeting including the point as to the notice being of a shorter duration is of no avail to the petitioners' group. 155. About the meeting dated 14.1.1991, shortness of the meeting persists. This could have been avoided. The points now urged in support of the contention of invalidating the meeting including the point as to the notice being of a shorter duration is of no avail to the petitioners' group. 155. About the meeting dated 14.1.1991, shortness of the meeting persists. This could have been avoided. There was no urgency as is sought to be made out with regard to the AGM which had to he held before the end of the year. In contrast to the conduct of petitioners' group on receipt of the notice of the AGM to be held on 20 December, 1990, there is immediate loud protest.both by telegrams and by letters. The respondents' group, however, proceeds in convening the meeting and that too at Bombay, and not at the registered office of respondent No. 6 company at Baroda. As the position of the company's record stood on 14.1.1991, and it being the same as was on 20 of December, 1990, as already held, the result was a foregone conclusion. On the meeting being held, Shri Rana, Shri Shinde and others who were supporting the petitioners lost their directorship. The registered office of the company also has been shifted from Baroda to Surat. 156 This would have been an example of what a majority minded to ride roughshod over minority can do. This could have, therefore, been a target for a petition under sections 397 and 398 of the said Act. The relief in that regard, therefore, could have been granted. 157. However, I am not inclined to grant any (relief ?), because to do so, would be to put the clock back so far as the Board of directors of GIC is concerned and allowing the directors thus removed to complete their tenure as per the articles of association. This having taken place in the month of January, 1991, and more than 4 years having passed and, more particularly, because the fate of BRC is inextricably linked up with that of GIC, in larger public interest, keeping in mind BRC, I would not give any relief to the petitioners. If reliefs were to be given, it would have been to strike down the said EGM, and its entire proceedings and declare the directors removed thereat to be continuing as directors from that order onwards till the remaining time of the tenure. If reliefs were to be given, it would have been to strike down the said EGM, and its entire proceedings and declare the directors removed thereat to be continuing as directors from that order onwards till the remaining time of the tenure. To make this relief effective, obviously, the directions would have to allow these directors to resume on the date of this order declaring the intervening period from 21.1.1991 till the date of this order to be ignored completely and the remaining tenure to be counted from the date of this order. 158. On the whole, therefore, the petitioners have failed to make out a case of oppression. So far as mismanagement is concerned, there is hardly any alleged. If at all there is any, it is an apprehension that the respondent group coming in majority will certainly mismanage the company. 159. However, this apprehension is belied by concrete material right from 1987 to 1991 when this petition came to be filed. It may be recalled that, in the year 1987, the GIC was facing financial crunch on account of BRC finding itself in straightened circumstance. That is why, new share capital was decided to be issued. Money were also needed for purchasing shares offered by BRC as rights issue. GIC did and always wanted to control BRC. Non-subscribing to the rights issue would have certainly created an awkward situation for GIC in this regard. It would have certainly lost the overwhelming control that it has over BRC. 160. Later on, BRC turned corner and so does the GIC. As a result, GIC was able to declare dividend of 300 per cent., a very big dividend by any standard. If this is what the management in the hand of respondent No. 1 had done, from the point of view of the company's interest, I do not see any mismanagement, much less oppression. 161. Incidentally, respondent No. 12 has received the said dividend and has certainly got it credited in her account. Reference may be made to page Nos. 900 and 901. It is now easy for her to turn round and say that she is prepared to give up her 1,000 shares because in return, the petitioners' group is likely to get more than 9,000 shares from the respondents' group. Reference may be made to page Nos. 900 and 901. It is now easy for her to turn round and say that she is prepared to give up her 1,000 shares because in return, the petitioners' group is likely to get more than 9,000 shares from the respondents' group. If for 1,000 shares, the respondent No. 12 gets the dividend, obviously, the respondents' group will simultaneously get their share of the dividend as well. 162. In this regard, it was pointed out on behalf of the petitioners, by Shri S.B. Vakil, that dividend has been paid to Indrani after 9 August, 1990, and, therefore, the stand now taken by the respondents' group as to Indrani and transfer to it having been rescinded is belied. I do not attach any importance to this. The reason is the composition of Indrani. No doubt, it is a private limited company. For that reason, it is a legal entity distinct from the members who constituted it. At the same time, in matters of equitable jurisdiction, one cannot lose sight of the fact that the shareholders who individually hold the aforesaid total number of shares, they have formed themselves into a private limited company and keeping token number of shares with them have transferred the bulk of 9,415 (shares) in favour of Indrani. Instead of, therefore, receiving dividend directly via Indrani, these shareholders respondents Nos. 2 to 12 are getting dividend. If there is a case of lifting the veil, to assess the reality, in my opinion, this is the one. 163. About the probity of respondent No. 1, several submissions were made. The aforesaid performance of GIC and BRC with which he has been closely connected since long, could be an answer to it. During the lifetime of FRG, he has been introduced to BRC first and, thereafter, in G1C, as per the details set out above. His concern for BRC as also for GIC is, therefore, quite understandable. That was what had motivated him from 1987 to bring in extra money and, in the process, according to the said family meeting or managing committee meeting or whatever it is, that allotment of 15,000 shares were worked out, as set out by the petitioners themselves in the petition. That was what had motivated him from 1987 to bring in extra money and, in the process, according to the said family meeting or managing committee meeting or whatever it is, that allotment of 15,000 shares were worked out, as set out by the petitioners themselves in the petition. If at all, anything can be said against respondent No. 1, it is only this that he did not give up the control either of GIC or BRC. However, if he can retain the same legally, and if otherwise, his position is unassailable, that is what it is. It has to be accepted as a fact of life. 164. On behalf of the respondents, submissions were made on the basis of waiver, delay, etc. I have not gone by that at all. However, to an extent I agree with the submissions made on behalf of the respondents that the petitioners having come with a particular case in their petition, have sought to broaden the area of controversy by amending the prayer portion of the petition only. They are seeking those reliefs including the one for setting aside the entire issue of 10,500 shares as also striking down the meeting, etc., largely on the basis of what respondent No. 1 has said in his affidavit-in-reply and the material produced along with it. For this purpose, the petitioners are also relying on the said parallel proceedings of CLB, Delhi, CLB, Bombay and different civil courts filed by the shareholders supporting the petitioners' group. 165. On behalf of the petitioners, the learned advocate, Shri Vakil, had relied on Sri-La Sri Subramania Desika Gnanasambanda Pandarasannidi v. State of Madras, AIR 1965 SC 1578 : AIR 1980 Bom 28 (sic) in support of his submission that in a petition before the High Court, material produced by the other side by way of reply or rejoinder can certainly be relied upon. Both these proceedings before the respective Hon'ble courts were petitions under Article 226 of the Constitution of India. Civil Procedure Code does not apply to these petitions. As against that, Companies (Court) Rules, particularly, rule 9 do apply. Therefore, these authorities are of hardly any avail to the petitioners. 166. Inspite of that, I have dealt with these submissions and have allowed the matter to be argued also on the basis of what is sought for by way of additional prayers. As against that, Companies (Court) Rules, particularly, rule 9 do apply. Therefore, these authorities are of hardly any avail to the petitioners. 166. Inspite of that, I have dealt with these submissions and have allowed the matter to be argued also on the basis of what is sought for by way of additional prayers. This I have permitted mainly because oppression was urged on behalf of the petitioners and the facts referred to by the respective sides were very much to their respective knowledge and, to that extent, therefore, drawing upon the analogy of Kunju Keshavan v. M.M. Philip, AIR 1964 SC 164 , head note D, the absence of pleading, if a particular view is taken, would not matter. No doubt, this authority relates to non-framing of an issue under order 14 of the Civil Procedure Code read with order 6, rule 2, and rule 1 of order 14. Their Lordships of the Supreme Court held that when both the sides knew issues involved and have gone to the trial on that basis, absence of an issue will be of no effect. It may be mentioned here that both the proceedings, i.e., Delhi and Bombay, are stayed pending the disposal of this petition and, hence, it can well be said, as stated by the petitioners that parties have gone to 'trial', knowing the issues involved. For the aforesaid reasons, I have not gone much by the pleadings, as urged on behalf of the respondents. Hence, I am not discussing the two authorities on the point cited by Shri S.B. Vakil. They are Palghat Exports (P) Ltd. v. T.V. Chandran, (1994) 1 Comp LJ 469 (Ker) and P. S. Offshore Inter Land Services (P) Ltd. v. Bombay Offshore Suppliers and Services Ltd., (1994) 2 Comp LJ 407 (Born): (1992) 75 Comp Cas 583 (Bom). 167. Now I will take up the authorities cited at the bar by the respective sides. First the authorities cited on behalf of the petitioners. Nanalal Zaver v. Bombay Life Assurance Co. Ltd., (1950) 20 Comp Cas 179 (SC) : AIR 1950 SC 172 . It relates to the fiduciary obligation of the directors vis-a-vis the company. The power given to the directors is to be utilised for the benefit of the company and not for personal aggrandisement and should not be to the detriment of the company. Ltd., (1950) 20 Comp Cas 179 (SC) : AIR 1950 SC 172 . It relates to the fiduciary obligation of the directors vis-a-vis the company. The power given to the directors is to be utilised for the benefit of the company and not for personal aggrandisement and should not be to the detriment of the company. In the present petition, the aspect of detriment of the company is totally absent. There was no question of aggrandisement either. Except for getting 9,481 shares for themselves, the respondents' group had done nothing. If this is an act of personal aggrandisement, the petitioners' group agree to it to the extent of 6,475 shares. Once the respondents' group is in majority whether they get 3,000 additional shares or not would not be that important and certainly, of no importance unless it is shown to be detriment(al) to the company. It may he detrimental to the petitioners' group as perceived by them. Their perception is clearly to the effect that till he leaves, FRG was to control and, on his death, as sole heir, petitioner No. I is to control the company. Her claim is advanced also on the basis that she is the eldest member of the family. In my opinion, these considerations are outside the purview of the functioning of the company under the Companies Act. 168. The second decision relied on by the petitioners' is Needle Industries (I) Ltd. v. Needle Industries Nezvey (1) Holdings Ltd., (1982) 1 Comp LJ 1 (SC) : AIR 1981 SC 1298 . This authority has been referred to by both the sides. Different paragraphs at different pages have been cited to fortify their respective submissions on different points. For the present, it is being referred to with regard to their fiduciary duty towards the company. The relevant discussion is to be found at paragraphs 103, page 1337 (of AIR). The question posed is whether the directors abused fiduciary power regarding shares' issue. The answer in the instant case is negative for the reasons already stated. 169. On the point of oppression, Shri Vaki] had cited Shanti Prasad lain v. Kalinga Tubes Ltd., (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 , para 2, page 1536, as also paragraphs 25 and 26, at pages 1545. The question involved therein was that of rights issue. 169. On the point of oppression, Shri Vaki] had cited Shanti Prasad lain v. Kalinga Tubes Ltd., (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 , para 2, page 1536, as also paragraphs 25 and 26, at pages 1545. The question involved therein was that of rights issue. The company, at the relevant time, was being controlled by three different groups having almost equal shareholdings. If the shares were allowed to be issued as rights issue, of the three groups, the two, who from the inception of the company were controlling the company and because of financial constraints had to take the third group along with it as these two groups were not able to provide enough of resources and, hence, they would not have been able to purchase rights shares. The third group was not suffering from any such handicap. Therefore, by majority, the shares were decided to be offered to the public at large. The allotment was made and this was cited as an act of oppression. Finding that allotment was not to benamidars or stooges, the petition was rejected. Had the allotment been to benamidars or stooges, fraud could have been inferred. The Hon'ble Supreme Court has clearly held that the action of directors has not resulted into a consequence complained of. There is no oppression unless that is shown to be the purpose right from the beginning. 170. If the present situation, is viewed in light of this Supreme Court decision, it is quite clear that upto 1.9.1988, i.e., till FRG lived, there was already a decision taken to offer 8,000 shares to FRG and 6,475 to respondent No. 1, 500 to respondent No. 12 and 25 to respondent No. 13. What has happened thereafter has been discussed at length. The decision, therefore, does not apply. 171. Needle Industries (1) Ltd. v. Needle Industries Newey (I) Holdings Ltd., (1982) 1 Comp LJ I (SC) : AIR 1981 SC 1298 is referred to again, but with reference to paragraphs 49 and 52, at page 1319, and also paragraphs 107 and 108 of this very decision. The decision, therefore, does not apply. 171. Needle Industries (1) Ltd. v. Needle Industries Newey (I) Holdings Ltd., (1982) 1 Comp LJ I (SC) : AIR 1981 SC 1298 is referred to again, but with reference to paragraphs 49 and 52, at page 1319, and also paragraphs 107 and 108 of this very decision. The last two paragraphs on the contrary refer to the position where additional capital is bona fde required and is issued honestly and, likewise, unless oppression is made out, no inference will be there from the court and exercise of fiduciary power will not be interfered with, if no prejudice is caused. 172. Paragraph 49 of the judgment refers to a situation where the disputed resolution may be perfectly legal and vet be oppressive and conversely, it could he illegal yet it may be in the interest of the company and shareholders. Thereafter, the classic English decision Elder v. Elder and Watson, (1952) Scottish Cases 49 is referred. Isolated act, therefore, is not held to be an oppression and unless the case of lack in probity, unfair and prejudicial exercise of legal and proprietary right as a shareholder is made out, the court will not interfere. 173. Needless to say, Shri Vakil after narrating all the events starting with the February, 1988, Board meeting onwards, characterised the action of respondent No. I to be purposeful and aimed at grabbing the control of GIC. This has already been discussed and found against the petitioners. 174. Cosmosteels (P) Ltd. v. Jairam Das Gupta, (1978) 48 Comp Cas 312 (SC) : AIR 1978 SC 375 relates to the power of this court in matters relating to oppression and mismanagement. As per section 402 of the said Act, they are very wide and about that, there is no dispute. He has also referred to Bennet Coleman and Co. v. Union of India, (1977) 47 Comp Cas 92 (Bom), in this regard. 175. After offering his comments about the authorities cited by Shri Vakil, Shri Chagla, the learned counsel for the respondents' group had opened with Hind Overseas (P) Ltd. v. Raghunath Prasad Jhunjlninwala, (1976) 46 Comp Cas 91 (SC) : AIR 1976 SC 565 . v. Union of India, (1977) 47 Comp Cas 92 (Bom), in this regard. 175. After offering his comments about the authorities cited by Shri Vakil, Shri Chagla, the learned counsel for the respondents' group had opened with Hind Overseas (P) Ltd. v. Raghunath Prasad Jhunjlninwala, (1976) 46 Comp Cas 91 (SC) : AIR 1976 SC 565 . The purpose of referring this authority is that if winding up of a company is sought under section 433(f) of the said Act, in many of the cases, a situation is likely to arise as would be arising in a case for dissolution of partnership and accounts. Lack of mutual trust, ouster of a partner from management, usurpation of property, etc., would he a cause of dissolution of a firm on the one hand, and would also be the reason for appointing a receiver on just and equitable ground. 176. The submission, therefore, was that in cases, particularly, under section 397, over and above, there being presence of circumstances of the aforesaid nature, taking into consideration the interest of the company including that of the shareholders in minority in particular, and the public at large, instead of winding up, the court may pass appropriate orders under section 402 of the Act. 177. Shri Chagla, therefore, submitted that unless the circumstances for exercise of the power under section 433(f) are made out, which would prompt the court to order winding up under section 433(f) and, thereafter, the aforesaid overriding consideration of interest will have to he shown to be existing for this court to exercise power under section 402, this court cannot exercise the power. According to him, no such circumstances are existing. Therefore, there is no contingency for the court to exercise power under section 402 on account of a petitioner under section 397 of the said Act. Shri Chagla referred to para 16, page 570, para 26,'page 572, para 32, page 574, of this report. The aforesaid submission of Shri Chagla and the reliance placed by him on the aforesaid authority are accepted by me. The circumstances indicated above do not exist. Hence, there is hardly any question of exercising power under section 402 in a company petition under section 397. Shri Vakil had distinguished this authority after referring to para 32 of the report. The aforesaid submission of Shri Chagla and the reliance placed by him on the aforesaid authority are accepted by me. The circumstances indicated above do not exist. Hence, there is hardly any question of exercising power under section 402 in a company petition under section 397. Shri Vakil had distinguished this authority after referring to para 32 of the report. There being lack of probity, other members of the family will now be excluded from management, etc., would certainly create a situation where situation in relation to a partnership may have to be considered and, hence, as stated in para 32, the veil be pierced and realities be accepted. He also drew my attention to para 26 of that judgment where decision of the Privy Council in Loch v. john Blackwood Ltd., reported in (1924) AC 783 : (1924) All ER 200 (AC), has been referred to and a portion thereof has been quoted. The quotation is from the case of Baird v. Lees, 1924 Scottish Cases 83. I will also quote that portion in the said Scottish case, which is as given below. I have no intention of attempting a definition of the circumstances which amount to just and equitable cause. But, I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Acts would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the Court to wind up (the company)." 178. Shri Vakil for the petitioners in view of the allotments in favour of respondents 2 to 5, had relied on Shanti Prasad lain v. Kalinga Tubes Ltd., (1965) 1 Comp LJ 193 (SC) : AIR 1965 SC 1535 to make out that allotment to be a case of oppression. In that particular case, instead of going for rights which would attract section 81 of the said Act, the Board decided to issue shares to public at large and in the process, one of the three groups could not get control which it could have if rights issue was resorted to. 179. This would have happened because the members of the other two groups were not financially well placed enough to take up their portion of the rights issue. This had the consequence of the said third group losing an opportunity of control. 180. Examining the question, the Hon'ble Judges laid down that unless the shares are allotted to persons who can be described as benamidars or stooges, if deprivation of control or even the share capital was not the purpose, but on mere consequence, no oppression can be made out. 181. In the instant case, upto 1.9.1988, there is no dispute. On this date, FRG died. Prior thereto, the said meeting of 21.3.1988 or 23.3.1988 had more or less crystallised the situation. Whether respondent No. 1 takes the block of 6,475 shares as per the decision of that meeting or gives to his family, the aspect has already been gone into. In my opinion, therefore, this would not be a case of oppression. The consequence could be as now clearly is to be seen that the petitioners are not getting an opportunity to get controlling shares, but unless this is shown to be the purpose, it is of no avail. No doubt, the petitioners are now alleging this to be the purpose. But for the reasons stated above, that theory is not acceptable. It, on the contrary, appears to be an afterthought. The decision, therefore, does not help the petitioner. 182. No doubt, the petitioners are now alleging this to be the purpose. But for the reasons stated above, that theory is not acceptable. It, on the contrary, appears to be an afterthought. The decision, therefore, does not help the petitioner. 182. Shri Vakil had argued on the basis of Patel Eordhandas Hargovindas v. Municipal Commissioner, Ahmedabad, AIR 1963 SC 1742 , particularly, paragraphs 31 to 34, that merely because Article 14 has the aforesaid provision in the nature of an exception to transfer to outsiders, unless the formalities of the articles are completed, respondent No. 1 cannot fall back upon Article 14. According to the aforesaid Supreme Court decision, if law enjoins a particular method, it must be followed. However, on reading the judgment, it is to be found that their Lordships were dealing with taxation matters and that too, power of municipality to impose tax. It had power to tax property, but the method to tax it was in question and, therefore, strict compliance with the legal requirement was insisted upon. In my opinion, internal affairs of the company cannot be equated with the power of taxation exercised by a taxing body which in any case, is a delegated authority like municipal corporation, and not the legislature itself. The decision, therefore, does not help the petitioners. 183. The net result, therefore, is that it is not possible to define what could be the just and equitable and each case will have to be viewed in light of the facts that come on record. No doubt, according to the petitioners; there is ample material on record to indicate that the circumstances do exist in this regard. They have already been discussed and I do not accept the case of the petitioners for the reasons already stated hereinabove. 184. Shri Ganesh appearing for respondent No. 12 had cited Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1979 SC 621 on the point of waiver. As stated above, I have not gone by that at all and, hence, I do not discuss this authority any further. 185. Shri Ganesh had further cited [Century Flour Mills Ltd. v. S. Suppiahl, (1975) 45 Comp Cas 444 (Mad), a Full Bench decision, where in face of a stay order, meeting was held and it was struck down as non est. 185. Shri Ganesh had further cited [Century Flour Mills Ltd. v. S. Suppiahl, (1975) 45 Comp Cas 444 (Mad), a Full Bench decision, where in face of a stay order, meeting was held and it was struck down as non est. This decision is cited in respect of the stay orders obtained for Indrani shareholding. This aspect has been dealt with and this authority does not help them. 186. With regard to said issue of 8,000 shares, as stated above, petitioner No. 1 is claiming on the basis of inheritance. However, what she inherits is an offer made to the deceased in respect of 8,000 shares. An offer of shares undoubtedly creates 'fresh rights' as held by the Supreme Court in Mathalone v. Bombay Life Assurance Co. Ltd., (1954) 24 Comp Cas 1 (SC) : AIR 1953 SC 385 . But as per the said Needle's case (1982) 1 Comp LJ 1 (SC) : 1981 SC 1289, relevant remarks at page 1348, para 136, the right which it creates is either to accept the offer or to renounce it. It does not create any interest in the shares in respect of which offer is made. As stated above, if at all petitioner No. I had this right, she exercised it somewhere in the month of November, 1988, as referred to earlier. Obviously, therefore, there can hardly be any case built up on this basis. 187. Reliance is further placed on behalf of the petitioners on Worldwide Agencies P) Ltd. v. Margaret T. Desor, (1990) 1 Comp LJ 208 (SC) : AIR 1990 SC 737 , at page 747, cited by the learned advocate, Shri Ganesh. In my opinion, this decision also would not be of any help to the petitioners. This authority is with regard to the equitable relief under sections 397 and 398 of the said Act. 188. Shri Chagla had cited Palghat Exports (P) Ltd. v. T. V. Chandran, (1994) 1 Comp LJ 469 (Ker), a Kerala decision, where the learned Judges, after setting out the grounds of petition in para 10, and the allegations as to oppression, mismanagement, have digested Indian cases in paragraphs 22 and 23. Para 22 contains the cases where oppression is established and in para 23 allegations of oppression were negatived. This was done on the basis of the pleadings and that was held to be the only material relevant for the purpose. Para 22 contains the cases where oppression is established and in para 23 allegations of oppression were negatived. This was done on the basis of the pleadings and that was held to be the only material relevant for the purpose. On examination of the case pleaded, the learned Judges found, in para 47, that the petition was filed for collateral purpose and was not bona fide. The company dealt with in this judgment started on 22.6.1984. The allegations were that the persons who were in charge of the business have mismanaged and misappropriated. But, ultimately, the petition was found to be for the purpose of recovering monies spent by the petitioners before the Company Court. 189. Shri Chagla, therefore, submitted that so far as the petitioners are concerned, having started the said action, in relation to Alaukik, namely, allotment of 1,000 shares in favour of present respondent No. 12, and thereby making GIC, respondent No. 6, to lose a subsidiary and having realised the suit initiated by GIC in respect of Alaukik referred to earlier, they are now trying to build up a case of oppression and mismanagement on the basis of events that have taken place which were till the filing of the petition never known as acts of oppression and mismanagement. If there is lack of probity, according to Shri Chagla, it is on the part of the petitioners' group as revealed by the said account in Alaukik. This may or may not be so, but the present dispute between the two groups has certainly precipitated after the said action in Alaukik and, more so, when GIC initiated the said suit in respect of Alaukik. Viewed in this light, this would, indeed, be an action for collateral purpose. 190. In my opinion, the petitioners' group and the respondents' group being of one family and thus closely thrown into contact with each other, have, after the demise of FRG, gradually started drifting apart and, in the process, has accumulated grudges and developed distrust. One thing led to the other. In the process, what was never felt to be an objectionable act, has suddenly assumed larger than life proportion giving rise to a perceived feeling of oppression. On close scrutiny and being tested objectively, none of these grievances is found to have been made out. 191. One thing led to the other. In the process, what was never felt to be an objectionable act, has suddenly assumed larger than life proportion giving rise to a perceived feeling of oppression. On close scrutiny and being tested objectively, none of these grievances is found to have been made out. 191. The Company Law Board was served through the Regional Director, Western Region, and on behalf of the said Regional Director, Additional Standing Counsel for the Central Government, Shri Jayant M. Patel, has filed his appearance. As submitted by Shri Jayant M. Patel, the Regional Director has no opinion to express about the controversy involved and instruction to Shri Patel is to the effect that the matter is left to the court. 192. The net result, therefore, is that the petition fails. It is dismissed. Looking to the relationship between the parties, they are left to bear their own costs. 193. After the judgment was pronounced in the open court, the request made on behalf of the petitioners by the learned counsel, Shri S.B. Vakil, is that as the petitioners want to carry the matter in order to see that no further equities are created and to see that the position as to the holding of shares as on today, without conceding to their having been properly allotted so far as the petitioners are concerned, they would like to see that the status quo is continued. In reply, the learned advocate, Shri D.K. Khambhatta, appearing on behalf of respondents 1 to 5, has strongly opposed this request and, at the same time, has made a statement that so far as respondents' 1 to 5 are concerned, their respective holding as on the date will not be disturbed in any manner and they will continue to hold the respective shares for a period of 4 weeks which was the time sought for by the other side. In view of this statement made by the learned advocate, Shri D.K. Khambhatta, no orders are passed.