Judgment :- BABU, J 1. This petition under sections 397 and 398 of the Companies Act, 1956 (hereinafter 'the Act') is by a shareholder holding 20, 000 shares of Rs. 10 each in the capital of the respondent-company. The authorised capital is Rs. 25 lakh divided into 2, 50, 000 shares of Rs. 10 each. The paid-up capital, according to the respondents, is Rs. 11, 91, 150. According to the petitioner, the paid-up capital is only Rs. 5, 91, 050. The allotment of 50, 000 shares of the face value of Rs. 5, 00, 000 to the respondent No. 6-Smt. R. Sivakamasundari and 10, 000 shares of value of Rs. 1, 00, 000 to the respondent No. 2-Udaya Kumar Rajah, the husband of Smt. Sivakamasundari and 100 shares registered in the name of the respondent No. 7-Nalinikanth Rajah, are being disputed by the petitioner. Udaya Kumar Rajah and Nalinikanth Rajah are brothers of the petitioner herein. 2. Respondent No. 1-company was incorporated in July 1974 with the object of running a dairy and carrying on business in milk and milk products. It purchased 58.36 acres of land in Noonbal Village of Chengleput District on 19th November, 1974. Though it installed pasteurising equipment, it is undisputed that the company could not utilise the land for the purpose of growing fodder for the cattle and that the business of the company was closed by the year 1979. All the lands owned by the company had been mortgaged to Bank of Madura from which bank it had obtained loan of about Rs. 35, 00, 000. That loan was guaranteed by Udaya Kumar Rajah and V. K. Sundaram, both of whom were signatories to the memorandum of association. Sundaram having also been a director all along, while Udaya Kumar Rajah, according to his claim, was the Chief Administrative Officer till the year 1986 when he became a director and continued thereafter as a director in charge, there being no managing director in the company after 1979. One of the other signatories to the memorandum of association, one Gupta, was the managing director till 12th August, 1976 and, thereafter, G. P. Sukumaran, the respondent No. 5 herein, has been designated as managing director. One of the other signatories to the memorandum of association, one Gupta, was the managing director till 12th August, 1976 and, thereafter, G. P. Sukumaran, the respondent No. 5 herein, has been designated as managing director. It is the petitioner's case that Sukumaran was removed from the directorship at an extraordinary general meeting ('the EGM') held in the year 1979, which EGM was requisitioned by the petitioner and his brother, the respondent No. 2-Udaya Kumar Rajah. 3. The mortgagee-bank had filed a Company Petition No. 24/1978 on account of the respondent-company's failure to repay the dues of the bank. That petition remained pending till the year 1986 for the till it was withdrawn on 7th October, 1986. After such withdrawal, the bank instituted a suit CS No. 661/1986 against the company in which there was a compromise decree on 24th December, 1986 under which the bank agreed to receive a sum of Rs. 110, 00, 000 in four quarterly instalments, the first of which was payable on 1st January, 1987, interest being payable on the amount outstanding for the period subsequent to 1st January, 1986. The amount that had been claimed in the suit was Rs. 1, 56, 60, 742.00. The bank had even before instituting the company petition had filed a suit against the two guarantors, respondent Nos. 2 and 3, V. K. Sundaram and U. K. Rajah, in CS No. 298 of 1978 and had obtained a decree against them on 2nd February, 1983 for Rs. 1, 00, 00, 000. 4. The company had passed a resolution shortly after its incorporation on 20th September, 1974 under section 81(1A) of the Act. Pursuant to that resolution, the petitioner who was not a signatory to the memorandum of association was allotted 20, 000 shares on 31st January, 1975, the share certificate having been issued to him later in the same year. Shares were allotted to the respondent No. 5-G P. Sukumaran, the respondent No. 3-V K. Sundaram and others on 20th April, 1979. The total number of shares so allotted being 30, 250, of which 22, 500 shares were allotted to G. P. Sukumaran; and 4, 000 shares to V. K. Sundaram. According to the affidavit of the Registrar of Companies, the returns of allotment made during the years 1974, 1975 and 1979 have been filed. The total number of shares so allotted being 30, 250, of which 22, 500 shares were allotted to G. P. Sukumaran; and 4, 000 shares to V. K. Sundaram. According to the affidavit of the Registrar of Companies, the returns of allotment made during the years 1974, 1975 and 1979 have been filed. According to the respondents, the allotment of 10, 000 shares to Udaya Kumar Rajah who till then held only 10 shares; and 50, 000 shares to his wife Sivakamasundari who was not a shareholder earlier, was made on 31st March, 1986 at a Board meeting held immediately after the EGM held on 31st March, 1986 at which meeting, he had been elected as a director and was asked to be in charge of the affairs of the company. Though the respondent No. 2 has claimed that returns must have been filed, the return of allotment has not been filed, according to the affidavit of the Registrar. 5. Petitioner, though he was the single largest shareholder till 1979, did not become a director of the company and, in fact, at no point of time, was he a director of the company. Even after 1979, when he was the second largest shareholder, he did not choose to take part in the management of the company; nor did he raise any objection to the manner in which the company was being managed, till 1985. Admittedly, the petitioner and his brother Udaya Kumar Rajah ceased to live together in the year 1983, and, according to the petitioner, they have not been on talking terms since the year 1985. 6. Petitioner has in his evidence stated that his brother offered to buy out his shares at the price of Rs. 7, 25, 000; but did not do so and that the petitioner is now not willing to sell his shares. According to Udaya Kumar Rajah, he had offered to purchase the shares for Rs. 6, 00, 000. 7. Petitioner had attended the EGM that was held on 31st March, 1986 at which Udaya Kumar Rajah was elected as a director. Though he claims in his testimony in this proceeding that he had objected to the election, the minutes of the meeting do not show any such opposition; nor had the petitioner disputed the election of Udaya Kumar Rajah, earlier. Though he claims in his testimony in this proceeding that he had objected to the election, the minutes of the meeting do not show any such opposition; nor had the petitioner disputed the election of Udaya Kumar Rajah, earlier. Petitioner, on the other hand, gave notice for convening the EGM for the purpose of removing the respondent No. 2 and the respondent No. 3 from the position of directors, that notice having been given only in July 1986. The petitioner thereafter filed OS No. 1402 of 1986 for injunction to prevent the respondents from alienating the company's properties on the ground that the EGM had not been convened. It was the plea of the petitioner in that case that EGM that had been held on 30th March, 1986 had passed a resolution authorising respondent No. 2 to sell the company's lands to the extent of 45 acres at a price of not less than Rs. 45, 00, 000 and to pay the sale proceeds to the Bank of Madura. Petitioner chose to withdraw the suit on 1st April, 1987. This petition under sections 397 and 398 of the Act was filed thereafter on 2nd April, 1987. 8. Petitioner has alleged various acts of mismanagement against the respondents. The allegations are that the company has got into financial difficulties on account of mismanagement and owes Rs. 1.1 crore to Bank of Madura in terms of compromise decree passed in the year 1986; that the management has failed to apprise the shareholders of the financial problems and has failed to convene annual general meeting ('the AGM') for more than six years; that the company has not had its accounts audited for over six years; that the annual return have not been filed with the Registrar of Companies after 1979; that the respondent Nos. 2 and 3 have disposed of certain costly materials like motor car and generator worth Rs. 9 lakh and appropriated the monies for themselves; that the petitioner has not been afforded the inspection of the books of the company though sought by him on 2nd November, 1986; that the valuable godown land situate within the compound of the first respondent-company have not been brought into the accounts of the company, but had been misappropriated. 9 lakh and appropriated the monies for themselves; that the petitioner has not been afforded the inspection of the books of the company though sought by him on 2nd November, 1986; that the valuable godown land situate within the compound of the first respondent-company have not been brought into the accounts of the company, but had been misappropriated. It is further alleged that these acts show that mismanagement of the affairs of the company in a manner prejudicial to the interests of the company and its shareholders. 9. Petitioner has also alleged that the petitioner was made aware of the allotment of shares to the respondent Nos. 2 and 6 only when the resolution proposed by him were defeated at the EGM held on 31st March, 1987, and it is the case of the petitioner that the allotment of shares made to the respondent Nos. 2 and 6 is wholly invalid. The registers of company, it is alleged, have been manipulated for the ulterior purpose of enabling the respondent No. 2 to retain the control and affairs of the company. The petition on that ground alleges oppression. 10. The reliefs sought by the petitioner are : (i) appoint a receiver to take charge of the affairs of the company; (ii) declare the respondent Nos. 2, 6 and 7 as not valid shareholders of 10, 000, 50, 000 and 10 shares, respectively, in the company; (iii) direct the company to hold AGMs of the company which have not been conducted for more than six years; (iv) declare the EGM held on 27th March, 1987 as invalid; and (v) declare that the respondent No. 2 is not a director of the company since he does not possess the qualification shares on the date of his appointment as director on 31st March, 1986. 11. The allegations made in the petition have been denied in the common statements of the respondent Nos. 1, 2 and 3. Petitioner has examined himself as PW 1 and the respondent No. 2 has examined himself as RW 1. Petitioner has produced ex. P.1 to 19 and respondent No. 2 has produced ex. R 1 to 11. 12. It is common ground that the object for which the company was formed has not been achieved and that the company ceased to carry on business in milk, long years prior to the filing of the company petition. Petitioner has produced ex. P.1 to 19 and respondent No. 2 has produced ex. R 1 to 11. 12. It is common ground that the object for which the company was formed has not been achieved and that the company ceased to carry on business in milk, long years prior to the filing of the company petition. Even according to the petitioner, the value of the assets of the company were insufficient to meet the claims of its creditors in the year 1980, and that the loan obtained by the company on the mortgage of all its lands to the Bank of Madura, has still not been cleared. Though these facts would warrant the winding up order being made, it is the contention of the petitioner that such winding up would not be in the interest of the company and its members. 13. The only asset the company has in the land. This court permitted the sale of 45 acres of land - 30 acres at a price not less than Rs. 2.25 lakh per acre and 15 acres at a price not less than Rs. 2.5 lakh per acre for the purpose of enabling the company to raise funds required to repaying the monies due to the secured creditor, Bank of Madura. It is the case of the respondents that 37.25 acres have been sold pursuant to the permission granted by the court, and a sum of Rs. 1, 25, 57, 190 realised from such sale has been paid to the Bank of Madura. By reason of the default in keeping to the time schedule prescribed in the compromise decree, the bank, it is stated, is insisting upon the payment of a further sum of Rs. 65, 00, 000 in the execution petition filed by the bank which is still pending. The asset now remaining with the company is 13.36 acres. It is stated that 7 acres of land have been leased out to A. S. Shipping Co. such lease having been effected prior to the institution of the company petition and that 45 acres out of 74 acres allowed to be sold, was the subject-matter of development agreement pursuant to which agreement, the company had received a sum of Rs. 4, 00, 000. The amount realised by way of rental is said to be Rs. 6, 500 per month. 14. 4, 00, 000. The amount realised by way of rental is said to be Rs. 6, 500 per month. 14. The activity of the company is now apparently confined to negotiating with the Bank of Madura for the settlement of the remaining amount due to it; while the bank continues to remain a secured creditor in respect of the amounts which remain unpaid in terms of the compromise decree and the bank remains a mortgagee of the lands which have remained unsold. According to the respondents, claims of other creditors aggregate to Rs. 10, 00, 000 for which there is no proof. 15. The respondents have not disputed the fact that the AGMS of the company have not been held since the year 1979; that the accounts of the company have not been audited; that the balance-sheet, the annual returns and other returns have not been filed with the Registrar of Companies after 1979, and that those in charge of the company, for their failure to file returns, had been prosecuted. The respondents, however, contended that there was no mismanagement in effecting the sale of the equipments which had become either unusable or had no utility to the company, as the company had stopped the business even as early as in the year 1980 and the primary concern of the company thereafter was only the repayment of the loans obtained by it from the Bank of Madura. The respondents have also contended that there is no illegality in the allotment of shares to U. K. Rajah and his wife and that they have been lawfully on the Board of directors and they are entitled to continue as shareholders and directors. It is the case of U. K. Rajah that though the books produced by him show that he has been participating in the meeting of the Board of directors as a director at least from the year 1981, and admittedly the number of shares held by him was 10 until the disputed allotment was made on 31st March, 1986 that he was in fact Chief Administrative Officer till the year 1986, and that he became a director only thereafter. There can be no doubt that he had posed himself as a director and has in fact taken part in the Board meetings and has signed in the minutes of the Board from the year 1981 onwards as a director. There can be no doubt that he had posed himself as a director and has in fact taken part in the Board meetings and has signed in the minutes of the Board from the year 1981 onwards as a director. According to him, prior to 1986, he had not been appointed as a director and he did not hold qualification shares required of a director. 16. The petitioner as also the respondent U. K. Rajah have been examined before the court. They have produced a number of documents in support of their respective cases. The loan register is marked as ex. R. 2 and the minutes books is marked as ex. R. 5. These are the documents which are required to be seriously examined. The certified copies of the returns filed by the company with the Registrar of Companies upto the year 1979 have been marked for the petitioner. They include the return of allotment made in the year 1975, as also the return of allotment made in the year 1979 when 30, 250 shares were allotted to five persons not including U. K. Rajah and his wife. 17. On 31st March, 1986, admittedly, an EGM was held at which U. K. Rajah was elected as a director. At the time the meeting was held, it is undisputed that the [number of] shares held by U K Rajah was 10 and that his wife Smt. Sivakamasundari was not even a member of the company. It is the case of U. K. Rajah and his wife that immediately after that general body meeting, the meeting of the Board of directors was held which was attended by the respondents, G. P. Sukumaran and V. K. Sundaram, at which one Kannan was co-opted as a director and it was agreed that the loans given to the company by U. K. Rajah and his wife would be converted into equity shares, and that the resolution was also passed for the allotment of 10, 000 shares to U. K. Rajah and 50, 000 shares to his wife, the consideration for the allotment being by way of conversion of loans alleged to be outstanding as on the date. 18. In support of that case, the respondents have produced the minutes books and loan ledger. The loan ledger has 312 pages. 18. In support of that case, the respondents have produced the minutes books and loan ledger. The loan ledger has 312 pages. It purports to record the loans obtained by the company from 36 persons as also the advances obtained from a builder, an alleged tenant and advance against the sale of the land. The first entry is dated 1st May, 1979. It is significant that all the entries for the period from 1st May, 1979 to 28th April, 1986 are in the same handwriting and in the same ink. It is obvious that this book has been prepared some time after 28th April, 1987, and entries upto date having been made by one stretch. The entries after 1st May, 1986 are in the same ink and in the same handwriting. There is nothing to show that this loan register was at any time audited. The loan ledger on the face of it does not inspire any confidence as a document maintained by the company in the ordinary course of business. The loans alleged to have been given to the company by U. K. Rajah, and his wife, are mostly written as 'cash received'. Most of the entries are made each month for the same amount and more or less on the same date of the month. The loans allegedly said to have been advanced by Smt. Sivakamasundari are shown to have aggregated to Rs. 3, 82, 700 on 10th January, 1986. That figure is continued on the following page. Further amounts are alleged to have been lent by her and added thereafter on 22nd April, 1979. The figure of Rs. 5, 48, 700 is shown as loan received from her. In the books of account, most of the entries shown are cash received. As on 30th April, 1986, his balance is shown as Rs. 1, 83, 660.76 after setting off Rs. 1 lakh towards share capital account on 31st March, 1986. So far as Sivakamasundari is concerned, no amount is shown as having been adjusted towards share capital account. She is thus shown both as a creditor and a shareholder of 50, 000 shares without any amount having been paid by her to the company even by way of alleged adjustment of the loan towards share capital. 19. So far as Sivakamasundari is concerned, no amount is shown as having been adjusted towards share capital account. She is thus shown both as a creditor and a shareholder of 50, 000 shares without any amount having been paid by her to the company even by way of alleged adjustment of the loan towards share capital. 19. The Registrar of Companies has filed an affidavit in which it is stated that no return of allotment was filed by the company after the year 1979. It is obvious that the company has not filed any return of the alleged allotment made to U. K. Rajah and his wife in the year 1986. 20. The recording of the minutes book made on 31st March, 1986 show several corrections and over-writing and interpolation. The time of the meeting appears to have been altered and what was earlier written was over-written by drawing the vertical line to show the hour of the meeting as 11.00 a.m. The name of Kannan has been interpolated in the list of persons attending the meeting. In the body of the minutes, there has been correction and over-writings. 21. The respondents, it is clear, had, with a view to entrench themselves in control of the company, after the petitioner who admittedly held 20, 000 shares of the value of Rs. 2 lakh in the total paid-up capital of Rs. 5.91 lakh shown in the last audited balance-sheet filed by the company with the Registrar of Companies in the year 1979, and who had indicated his opposition to U. K. Rajah being entrusted with the control of the company had purported to allot to themselves for an illusory consideration 60, 000 shares. The respondents have thereafter created a record of the minutes of the meeting and the loan ledger as if huge amounts have been lent by these two persons to the company and that those amounts had been converted into shares as on 31st March, 1986. It is not the case of the respondents that any one the persons to whom amounts are shown as due in the loan ledger have filed any suit. Any suit for recovery of the alleged loan would now be barred by limitation. 22. It is not the case of the respondents that any one the persons to whom amounts are shown as due in the loan ledger have filed any suit. Any suit for recovery of the alleged loan would now be barred by limitation. 22. The respondents have not produced any document to evidence the loans allegedly given by U. K. Rajah and his wife apart from producing the self-serving and self-created loan ledger which appears to have been written for the purpose of this case. The accounts of the company have not been audited. Though the respondents undertook to produce the audited accounts of the company, they have failed to do so. The allotment of shares treating allegedly outstanding loan as consideration is not bona fide or genuine and it is not possible to accept that the loan as entered in the loan ledger had in fact been given to the company by U. K. Rajah and his wife. The allotment allegedly made to Smt. Sivakamasundari by adjustment of the alleged loan is not even reflected in the loan ledger showing any adjustment and the return was not filed with the Registrar of Companies immediately after the allotment. The minutes of the meeting at which the allotment took place must have been created at a subsequent point of time after the petitioner had given the requisition to hold an EGM of the shareholders for the purpose of removing U. K. Rajah from the position of director and for consideration of the resolution to appoint the petitioner as the director in charge. It is evident that the respondents have attempted to bring out the change in the ownership and control of the company by the alleged allotments to U. K. Rajah and his wife, Smt. Sivakamasundari. 23. It is also of interest to note that though several others are shown as loanees, there was no allotment of shares to others, though the reasons recorded in the minutes is that it is in the interest of the company to convert the loans into shares. The real reason for creating this record appears to be only to place the company in the hands of U. K. Rajah and his wife, Smt. Sivakamasundari, by purporting to make them owners of 60, 000 shares when the number of shares issued and paid as on that day was 59, 100 shares. The real reason for creating this record appears to be only to place the company in the hands of U. K. Rajah and his wife, Smt. Sivakamasundari, by purporting to make them owners of 60, 000 shares when the number of shares issued and paid as on that day was 59, 100 shares. Such allotment has been without any consideration at all and the alleged loans are not credible. 24. The petitioner has alleged that the valuable equipments owned by the company have been sold away and the amounts have been misappropriated by the respondents. Though the respondents are in possession of the records and books of the company and the company has apparently been in their control, from the year 1986 onwards, they have failed to produce the books or records to show that what the valuable equipments are and as to whether the amounts realised were commensurate with the market value of the equipments. 25. It is not the case of the respondents that they have convened the AGMs of the company after the year 1986 or that they had books of the account of the company audited. It is obvious that the AGMs have not been held after the year 1979. The accounts have not been audited and filed with the Registrar and the annual and other returns required to be filed under the Act have not been filed with the Registrar of Companies. Though the respondents had undertaken to produce the audited accounts in this court, as already stated, they have failed to do so. 26. In the light of these facts, the only possible conclusion that can be reached is that the purported change in the ownership and control of 60, 000 shares in the company by the purported allotment to U. K. Rajah and his wife, Smt. Sivakamasundari, is illegal and the change said to have been brought about by that allotment is prejudicial to the interests of the company and its members. The purported allotment of shares is illegal. It is also clear that the company had been mismanaged by the respondents on account of their failure to comply with the requirement of law in not holding the AGMs and in not having the accounts audited and in not having filed the annual returns and other documents with the Registrar of Companies. 27. It is also clear that the company had been mismanaged by the respondents on account of their failure to comply with the requirement of law in not holding the AGMs and in not having the accounts audited and in not having filed the annual returns and other documents with the Registrar of Companies. 27. The company has also not maintained proper accounts and the interests of the shareholders are prejudicially affected by the actions of the persons who are now in control of the company. 28. Learned counsel for the petitioner relied on the following decisions of the courts : (1) The case of Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. 1982 1 Comp LJ (SC)/ was relied on for the purpose of showing what the petitioner is required to do for establishing oppression. The court in that decision observed that while it may be contrary to law, an isolated act may not necessarily and by itself support the inference that the law was violated with a mala fide intention, or that such violation was burdensome, harsh and wrongful. A series of illegal acts following one another, in the context, may lead justifiably to the conclusion that they are a part of the same transaction of which the object is to cause or commit the oppression of persons against whom those acts are directed. The court further observed that on a true construction of section 397 , an unwise, inefficient or careless conduct of a director in the performance of his duties cannot give rise to a claim for relief under that section. The person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him, and which causes prejudice to him in the exercise of his legal and proprietary rights as shareholder. It is also held in that decision that the power to issue shares can be used only if there is need to raise additional capital. That power can be used for other reasons, as for example, to create a sufficient number of shareholders to enable the company to exercise statutory powers or to enable it to comply with legal requirements. The court also held that the discretionary powers in a company administration are in the nature of fiduciary powers and must, for that reason, be exercised in good faith. The court also held that the discretionary powers in a company administration are in the nature of fiduciary powers and must, for that reason, be exercised in good faith. Mala fides vitiate the exercise of such discretion.The court as regards the scope of section 398 , held that technicalities cannot be permitted to defeat the exercise of the equitable jurisdiction conferred by section 397. (2) In the case of Chockalingam Chettiar v. Official Liquidator 1944 AIR(Mad) 87, it was held that the issue of shares in consideration of promissory notes is a circumvention of the provisions of the Act, but this in itself would not be sufficient to prove fraud, but it would suggest fraud. (3) In the case of Alote Estate v. R. B. Seth Hiralal Kalyanmal Kasliwal, it was held that while the consideration for the allotment of shares may be money or money's worth, e.g., the transfer to the company of property where the contract is fraudulent or shows on the face of it that the consideration given to the company is illusory or is clearly not equivalent to the nominal value of the shares, the shares cannot, to that extent, be treated as fully paid and the shareholder may be held liable to pay for them in full, if the register is rectified and if it is determined in the appropriate proceedings that he is not fully paid-up shareholder. (4) In State of Bombay v. Bandhan Ram Bhandari, it was held that the fact that no general meeting of the company was held was no defence to the charge of not complying with the requirements of section 32 of the repealed companies Act, 1913, and that the person charged with the offence could not rely on his own default as an answer to the charge. (5) In the case of Shanti Prasad Jain v. Kalinga Tubes Ltd., it was held, inter alia that : "In a petition under section 397 of the Companies Act, 1956, it is not enough to show that there is just and equitable cause for winding up the company, though that must be shown as preliminary to the application of section 397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as member and this requires that events have to be considered not in isolation but as a part of a consecutive story. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as member and this requires that events have to be considered not in isolation but as a part of a consecutive story. There must be continuous acts on the part of the majority shareholders continuing up to the date of the petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members. The conduct must be burdensome, harsh and wrongful and mere lack of confidence between the majority shareholders and the minority shareholders would not be enough unless the lack of confidence springs from oppression of a minority by a majority in the management of a company's affairs, and such oppression must involve at least an element of lack of probity or fair dealing to a member in the matter of his proprietary rights as a shareholders.The Apex Court in the course of that judgment referred to the decision by the House of Lords in the case of Scottish Co-operative Wholesale Society Ltd. v. Meyer. While considering section 210 of English Companies Act, 1948, it was held that leave under that provision could be granted even in cases where the companies had ceased business, Lord Denning observed :" Now, I quite agree that the words of the section do suggest that the legislation had in mind some remedy whereby the company, instead of being wound up, might continue to operate. But it would be wrong to infer therefrom that the remedy under section 210 is limited to cases where the company is still in active business. The object of the remedy is to bring to an end the matters complained of, that is, the oppression, and this can be done even though the business of the company has been brought to a stand still, if a remedy is available when the oppression is so moderate that it only inflicts wounds on the company, whilst leaving it active, so, also it should be available when the oppression is so great as to put the company out of action altogether. Even though the oppressor by his oppression brings down the whole edifice-destroying the value of his own shares with those of every one else-the injured shareholders have, I think, a remedy under section 210. Even though the oppressor by his oppression brings down the whole edifice-destroying the value of his own shares with those of every one else-the injured shareholders have, I think, a remedy under section 210. "It was further observed by the learned Denning, LJ, that the section gives a large discretion to the court, and it is well exercised in making an oppressor make compensation to those who have suffered at his hands. (6) In the case of V. Radhakrishnan v. P. R. Ramakrishna 1995 17 CLA 63/ 1995 (78) CC 694, a Division Bench of this court held that allotment of shares without notice or offer to the official liquidator had the adverse effect of reducing the shareholding of the company in liquidation.(7) In the case of Nungambakkam Dhanarakshaka Saswatha Nidhi Ltd. v. ROC, it was held by a learned Single Judge of this court that the holding of the AGM is mandatory even if accounts are not ready. (8) In the case of Sishu Ranjan Dutta v. Bhola Nath Paper House Ltd., a learned Single Judge of the Calcutta High Court held that the continuing managing director and directors whose election is not valid would amount to mismanagement and that the court can appoint a special officer to manage the affairs of the company, settle the liability and devide the assets as between the two factions which hold shares in the company. (9) In the case of Malleswara Finance & Investments Co. Ltd. v. CLB 1994 15 CLA 226/, it was held by a learned Single Judge of this court that in a proceeding under section 397 , where allotment of shares is declared as non est in law, there was no scope for invoking the aid of section 111 and, consequently, all shares illegally allotted would automatically fall to the ground. (10) also relied on the passage in Palmer's Company Law (21st edn.) where, under the practice notes, it is stated that where accounts are not available in time for them to be considered at an AGM, the practice was to hold the meeting within the statutory time limit, and transact all business other than the consideration of the accounts and then to adjourn the meeting to some future date when accounts will be ready. It is also observed therein that the AGM cannot be avoided only because accounts are not available in any one year, and it should be held on a future date by which accounts should be made available. 29. Learned counsel for the respondent referred to the following decisions in support of his submission that as a precondition to invoke section 397 , the petitioner has to plead and establish that it is just and equitable to wind up the company.(1) In the decision of the Court of Appeal in the case of H. R. Harmer Ltd., In re., it was observed that :" For the purpose of obtaining relief under section 220 , it is not essential to prove that the alleged oppressor is oppressing in order to obtain pecuniary benefit and where there is oppression, it remains so, even though the oppression is due simply to the controlling shareholders' overwhelming desire for power and control, and not with a view to his own advantage in the pecuniary sense. The result rather than the motive is the material thing. "(2) The case of Shanti Prasad Jain (supra) which is also relied on by the petitioner and in which the decision of the Court of Appeal in the case of H. R. Harmer Ltd. (supra), was referred to with approval, was referred to show that the burden of showing just and equitable ground for winding up exists and that there are acts of oppression is on the petitioner. (3) V. M. Rao v. Rajeswari Ramakrishnan, and G. Kasturi v. Murali 1991 5 CLA 269/ decision of Division Benches of this court, which have applied the decisions laid down by the Supreme Court in the case of Shanti Prasad Jain (supra), were also relied upon. It was observed in the case of V. M. Rao (supra) that majority shareholders are not bound to accept the view of the minority shareholders'. In the case of G. Kasturi (supra), it was emphasised that interest of the company must be preferred to those of individual shareholders. It was observed in the case of V. M. Rao (supra) that majority shareholders are not bound to accept the view of the minority shareholders'. In the case of G. Kasturi (supra), it was emphasised that interest of the company must be preferred to those of individual shareholders. (4) In the case of Hind Overseas (P.) Ltd. v. Raghunath Prasad Jhunjhunwalla, it was held by the Apex Court that in an application for winding up of the company under just and equitable clause, the allegations in the petition are of primary importance, and that prima facie case has to be made before the court could take any action in the matter.(5) Counsel relied on the following decisions of Calcutta High Court in support of his submission that it is for the petitioner to furnish full particulars of the case pleaded by him and he cannot expect the company to provide the documents, to prove the petitioner's case. Mehta Bros. (P.) Ltd. v. Calcutta Landing & Shipping Co. Ltd., wherein the Division Bench held that when dealing with a petition for relief from oppression or mismanagement made under sections 397 and 398 of the Act, the court must confine itself to the case as made out in the petition and to the allegations made therein and the supporting affidavits and not look at other evidence with regard to events that might have happened subsequent to the petition. Vague and uncertain allegations of oppression or mismanagement, although they may constitute grounds for oppression, do not entitle a petitioner to ask the court to embark upon investigation into the affairs of the company in the hope that, in consequence of such investigation, something will turn up which will enable the court to grant relief to the petitioner. The petitioner must prove prima facie, at any rate, that an investigation is called for. In Maharani Lalita Rajya Lakshmi v. Indian Motor Co. (Hazaribagh) Ltd., it was held by another Division Bench of the Calcutta High Court, that denial of access to, or inspection of books of account of the company to, a shareholder is not an act of oppression within the meaning of section 397 , because a shareholder has not such right under the Act. It was also observed that to attempt to get a majority by lawful means is not a fact or circumstance which would justify winding up of the company. It was also observed that to attempt to get a majority by lawful means is not a fact or circumstance which would justify winding up of the company. It was further held that failure to comply with section 173(2) of the Act would not make it a case ipso facto of oppression.(6) Smt. Abnash Kaur v. Lord Krishna Sugar Mills Ltd., is a decision of the Division Bench of the Delhi High Court. It was held therein that the powers of the court under the just and equitable clause are not limited, the court will be guided by the rules of equity and will do what justice demands keeping in view the facts and circumstances of each case. It was also held that under section 288 of the Act, only notice of the meeting of the Board of directors is required to be given in writing to every director, and that the law does not require an agenda for the meeting of the Board of directors, and any business whatsoever can be transacted at the Board meeting. It was further held that hypothetical and unsubstantiated allegations is a petition cannot be the basis for an order under section 397. (7) It was submitted for the petitioner that the court has ample discretion in making an order on a petition under sections 397 and 398 . Counsel in this context made reference to the decision of the Andhra Pradesh High Court in the case of Gajarabai M. Patny v. Patny Transport (P.) Ltd., wherein, Jaganmohan Reddy, J. as he then was observed :" The court has unfettered discretion in such a case to impose upon the parties whatever settlement it considers just and equitable to remove the oppression. (8) In the case of Debi Jhora Tea Co. Ltd. v. Barendra Krishna Bhowmick, it was held by a Division Bench of the Calcutta High Court that there can be no limitation on the court's power while acting under sections 397 , 398 and 402 of the Act and that instead of winding up a company, the court has been vested by ample power to continue the corporate existence of a company passing such orders as it thinks fit, in order to achieve the objective by removing any member or members of a company or to prevent the company's affairs from being conducted in a manner prejudicial to the public interest. It was also held therein that the court has the power to supplant the entire corporate management and that the court can give appropriate directions which are contrary to the provisions of the articles of the company or the provisions of the Act, and that on a reading of section 402(a) and 402(g) , there can be no doubt that the intention of the Legislature was to confer wide and ample powers upon the court for the regulation of the conduct of the company's affairs and to provide for any other matter which the court thinks just and equitable to provide for, in the interests of the corporate body and the general public.(9) Counsel also referred to the case of Needle Industries (India) Ltd. (supra). It was, inter alia, held therein that resolution passed by the Board of directors may be perfectly legal and yet oppressive, and conversely, a resolution which is in contravention of the law may be in the interests of the shareholders and the company. It was also held therein that notices of the meeting of the Board of directors have to be construed reasonably, by considering what they mean to those to whom they are given. It was further held that where the directors did not exercise their fiduciary powers over he shares merely or solely for the purpose of destroying an existing majority or for creating a new majority which did not previously exist, but for the purpose of preventing the affairs of the company from being brought to a grinding halt, such act of the director was not prejudicial to the interests of the company and not regarded as oppressive of the rights of the majority shareholders. 30. The powers of this court to grant relief in a petition under sections 397 and/or 398 is vast. The court is invested with the power to make such order as it thinks fit to bring to an end the matter complained of. Section 402 of the Act, which specifies some of the things that can be done by the court on an application under sections 397 or 398 of the Act, is without prejudice to the generality of the powers conferred by sections 397 and 398 of the Act. Section 402 of the Act, which specifies some of the things that can be done by the court on an application under sections 397 or 398 of the Act, is without prejudice to the generality of the powers conferred by sections 397 and 398 of the Act. The fact that the other provisions of the Act would enable the concerned parties to secure limited relief from the forum prescribed therein, will not come in the way of such relief being granted by this court exercising the powers conferred under section 397 and/or 398 of the Act. The power extends to directing a company to buy its own shares, though any such purchase by the company is impermissible under the other provisions of the Act. The power under sections 397 and 398 also extends to altering the articles of association of the company even without a resolution of, and without placing the matter before the general body of shareholders. It is evident that the legislative intention was not to place any limitation on the power of the court under sections 397 and 398 . The order that can be made under these sections would be an order regarded by the court as just and proper in the circumstances of a given case. The order being a judicial order is not to be arbitrary. The section does not in any event require that a party found to be entitled to relief, be driven to other forums for all or any part of the relief which may be found to be appropriate. The fact that a procedure is prescribed for seeking rectification of the register of members and the fact that power is vested in the Central Government to direct the convening of general meetings, do not come in the way of this court granting relief in respect of those matters in a petition under sections 397 and 398. 31. The company is now in the hands of the respondent No. 2 - U. K. Rajah, who has styled himself as the Chairman and who along with his wife, Smt. Sivakamasundari the respondent No. 6 has inducted others into the Board of directors. Neither the respondent No. 2 nor his wife the respondent No. 6 are qualified to hold the position of directors. Neither the respondent No. 2 nor his wife the respondent No. 6 are qualified to hold the position of directors. The respondent No. 2 had subscribed to 10 shares and that was the extent of his shareholding in the year 1986 when he was elected as the director at the EGM held on 31st March, 1986. He had acted as the director for several years prior to that meeting though he had not been elected to that office, in total breach of the provisions of the Act. After his election on 31st March, 1986, he could hold the office as director for not more than three months within which time, he should have acquired qualification shares, namely, 100, prescribed in the articles of association. His wife, the respondent No. 6 was not a shareholder prior to 31st March, 1986 on which date she purported to become a shareholder allegedly acquiring large block of 50, 000 shares for a wholly illusory consideration. As it has now been found that the allotment of shares to them was, for a wholly illusory consideration, illegal and was an act of prejudicial to the interests of the company, the shares purportedly allotted to them cannot be regarded as being held by them and neither of them, therefore, have qualification shares to hold the office of the directors and their continuance as directors is illegal. The other directors inducted by them in the general meeting, not having elected them as directors [who were not elected by them in their capacity as directors ?], the continuance in office of those other directors is also illegal. The present Board of directors by deliberately failing to convene the AGM for almost 3 decade have sought to entrench themselves in office to the prejudice of the interest of the members of the company and to the prejudice of the company. This state of affairs cannot be allowed to continue.32. The fact that the petitioner has not established that there has been misappropriation of funds belonging to the company does not in any way excuse or entitle the respondents to continue in office to the prejudice of the other members and interests of the company. The present Board of directors has practically ignored all the provisions of the Act. In the circumstances of the case, an order of winding up on the ground of just and equitable would be fully warranted. The present Board of directors has practically ignored all the provisions of the Act. In the circumstances of the case, an order of winding up on the ground of just and equitable would be fully warranted. Such an order, however, would cause prejudice to the petitioner and other members. The disputed allotment must first be set aside and the members allowed to elect the directors in a properly constituted meeting at which they are enabled to vote in accordance with the shares properly held by them. The company also is possessed of valuable land which is close to the city of Chennai. With prudent management, it may be possible to salvage the company in order that the company may embark on any other business if the shareholders resolve to do so. 33. The present Board of directors of the company shall, therefore, stand superseded. There shall be a declaration that the respondent No. 2 and respondent No. 6 are not entitled to hold the office of the directors of the company. All the directors inducted by them are similarly disentitled to hold the office as directors. 34. The proceedings of the EGM held on 31st March, 1987 are declared to be invalid as votes were cast in respect of 60, 000 shares, the allotment of which has now been declared as illegal. 35. A receiver is appointed to take charge of the affairs of the company for a limited period of six months within which the receiver shall convene and hold AGM of the company even if the audited accounts cannot be made ready in the meantime. All those whose names are shown in the register of shareholders and who own shares which were allotted to them by the company prior to the year 1980 (the last valid allotment having been made in 1979) shall be entitled to vote at the meeting. The meeting shall convened after giving the requisite notice to all the shareholders. The respondent No. 2 and all other directors of the company shall immediately to the receiver all the books and account and all records of the a list of all the documents so handed over, a copy of which shall be filed into court within three weeks. The respondent No. 2 and all those who are presently on the Board shall furnish to the receiver all such information and assistance as he may require. 36. The respondent No. 2 and all those who are presently on the Board shall furnish to the receiver all such information and assistance as he may require. 36. Mr. R. Murari, advocate, is appointed as receiver of the company for a period of six months. After the AGM is held, and a new Board of directors is constituted, the receiver may seek discharge. The receiver shall be entitled to initial remuneration of Rs. 20, 000 (Rs. twenty thousand only). This amount shall be deposited into the court by the petitioner within two weeks from today. After such deposit, a sum of Rs. 10, 000 (Rs. ten thousand only) shall be paid to the receiver immediately and the balance sum of Rs. 10, 000 shall be paid after he reports having taken steps to convene the AGM. The expenses required for convening and holding the meeting after the amount made known by the receiver shall also be deposited into court by the petitioner. Petitioner shall be entitled to have all the amounts paid by him reimbursed to him by the company after a new Board of directors takes charge of the company. Further amount to be paid to the receiver shall be determined after the AGM is held and a new Board of directors is elected. All the records of the company filed into court forming part of this company petition shall be made available to the receiver by the Registry whenever a request is made by him. Receiver is permitted to take share register and such other records as may be required for the purpose of convening the AGM. 37. The respondents shall not operate any bank account in the name of the company or enter into any transaction or carry on any correspondence in the name of the company with immediate effect. 38. After the general meeting is held, and after the Board of directors is constituted, the receiver shall hand over the custody of all the books and records of the company to the newly elected Board. The receiver shall not alienate any of the assets of the company or encumber the same without the leave of the court. The respondents shall provide all the assistance to the receiver to identify and take charge of all the assets of the company.