Judgment H. L. GOKHALE, J. ( 1 ) ALL these appeals under the Letters Patent raise by and large common questions of law and facts and are therefore heard and are being decided together. These appeals arise principally as a result of a dispute between two groups of business magnets, i. e. Puri Group and Sippy Group, to claim the general agency business with an International shipping company by name Contship containers Lines Ltd. (for short "contship") which is engaged in operating vessels for transport of cargo. These Sippy Group and Puri Group are having equal shares and equal number of directors in two Indian Shipping companies by name Samrat Shipping Company Ltd. (for short "ssco") and Samrat Shipping and Transport Systems ltd. (for short "ssts" ). Both these companies are private companies. The appeals arise out of the allegations of oppression and mismanagement by the Sippy group against the Puri Group and the proceedings under the Companies Act on account of the diversion of the contship agency from SSTS to a company floated by the puri Group. ( 2 ) THIS SSTS was having principally two types of businesses; one was agency business and the other was charter business. The agency business included the business with and for Contship. The agency business was all throughout being looked after by Puris whereas the charter business was being looked after by Sippys. The major profit of the company was through the agency business. It is the grievance of the Sippy Group that puri Group diverted the agency business with Contship to another company floated by them and named as Samrat shipping and Logistics Ltd. (for short "samrat logistics") whose name was later on changed to Seaworld shipping and Logistics Pvt. Ltd. (for short "seaworld" ). It was alleged by the Sippy Group that this diverting of business by Puris was in breach of their fiduciary obligation as directors and amounted to its oppression in SSTS as well as in SSCO within the meaning of section 397 of the Companies Act, 1956 (for short "the Act" ). It was alleged by the Sippy Group that this diverting of business by Puris was in breach of their fiduciary obligation as directors and amounted to its oppression in SSTS as well as in SSCO within the meaning of section 397 of the Companies Act, 1956 (for short "the Act" ). This grievance was the main cause leading to filing of two company petitions under sections 397, 398 and 399 read with 402, 403 and 406 of the Act by Sippy Group to the Company Law Board (CLB) and seeking a direction to make good the advantage gained as provided under section 88 of the Indian Trusts Act, 1882. The defence of Puri group was that there were other prior disputes on financial aspects between Puris and Sippys and there was no confidence subsisting between the parties. Besides, the agency agreement with SSTS had been terminated by contship itself as per the terms of the agreement by a three months notice dated 1. 9. 2001 and had come to an end on 30. 11. 2001. Therefore, no corporate opportunity was any longer available to SSTS to claim this business with Contship. Contship had changed their agents in india in the past also. Therefore, according to Puris, the grievance about the alleged diversion of business with Contship to Seaworld cannot amount to breach of any fiduciary duty and/or oppression or mis-management nor any direction to make good the advantage be passed. These company petitions were substantially allowed by the CLB leading to four appeals by Puri Group to a single Judge of this Court under section 10-F of the act. The appeals have been substantially disallowed by a common judgment and order dated 23rd February 2004 and this common decision on those appeals has led to the present group of appeals under Letters Patent. The appellants have taken out Notices of Motion for stay. Apart from Motions for stay and other interlocutory reliefs, a notice of motion concerning one property of the companies occupied by a third party has been taken out by that third party in these appeals. All these motions are also heard and are being decided along with these appeals. The appellants have taken out Notices of Motion for stay. Apart from Motions for stay and other interlocutory reliefs, a notice of motion concerning one property of the companies occupied by a third party has been taken out by that third party in these appeals. All these motions are also heard and are being decided along with these appeals. ( 3 ) THE short facts leading to these appeals are as follows:-"this company-SSCO was incorporated in the year 1975 as a private shipping company with equal shareholding of Sippy Group led by one Kundan Sippy and another group known as Jaisingh Group. Vaishnav Puri of the Puri Group was employed at that time as a Senior manager with Tata Group of Companies and handled its shipping liner business. Some times in 1977-78, vaishnav Puri joined SSCO leading to Sippy Group, jaisingh Group and Puri Group each having 33% shareholding in SSCO. " ( 4 ) (I) Subsequently, Vaishnav Puri secured the agency of Contship for SSCO. An agreement between the two was entered into on 1st February 1991. This business developed over the years. (ii) Sometimes around 1994, disputes arose between jaisingh Group and Sippy Group inter se resulting into litigation. One of the causes of the dispute was stated to be with respect to the use of the word "samrat". In view of this dispute, Contship terminated the agency of ssco by end of June 1996. ( 5 ) ON 28th August 1996, SSTS was incorporated only by Puris and Sippys with equal shareholding. Contship appointed SSTS as its agent with effect from 1st October 1996. Jaisingh Group separated thereafter in March 1997. As a part of the settlement, the Jaising Group were not to use the word "samrat" anylonger. ( 6 ) (I) As stated earlier, Puri Group looked after the liner agency business all throughout, whereas the Sippy group looked after its charter business. By the end of march 2001, the income from agency business went up from rs. 13 millions to Rs. 23 millions. In the same period, the charter business showed a loss of Rs. 3. 58 crores. (ii) There is another significant development which has got to be noted. A private company by name Meridian trading Pvt. Ltd. was set up as a subsidiary of SSCO some time in July 1988. It was to manufacture and export leather garments. 23 millions. In the same period, the charter business showed a loss of Rs. 3. 58 crores. (ii) There is another significant development which has got to be noted. A private company by name Meridian trading Pvt. Ltd. was set up as a subsidiary of SSCO some time in July 1988. It was to manufacture and export leather garments. It was looked after exclusively by Sippys. SSCO invested substantial amount in this company, but it consistently made losses and no dividends have ever been declared. It is the case of puris that by end of March 2000 Meridian had a financial exposure of Rs. 13 crores. It is their case that because of the disputes about the financial position of Meridian that the accounts were initially not signed. The accounts were finally signed by Puris after the Sippys assuring that personal guarantee by Puris for Meridian will be released and Meridian will be taken over by sippys as a part of separation of business. (iii) Disputes, correspondence and discussions between the parties were going on either for conciliation or for separation. Lists of jointly held assets and businesses were prepared. Assistance of a professional mediator was taken. ( 7 ) ON this background, Sippy Group came to know in the first week of December 2001 about the Puri Group having set up a company by name Samrat Shipping and logistics Pvt. Ltd. (for short "samrat Logistics" ). It also noted advertisements issued by Samrat Logistics on 10th December 2001 and 14th December 2001 holding out that it was the general agent of Contship in India. The sippys were not informed about the notice of termination dated 1. 9. 2001 sent by Contship to SSTS which was received by Puris. The Sippy Group gave a notice to samrat Logistics on 2nd January 2002 calling upon it to desist from using the word "samrat". Initially efforts were made for mediation in January 2002 through an advocate acting as Mediator. However, since they were not fruitful, ultimately the negotiations were terminated by Sippys and they filed a suit bearing no. 400 of 2002 in this court seeking various reliefs against Samrat Logistics. This was mainly with respect to the use of word "samrat" by Samrat Logistics. This suit was filed in the name of SSTS and SSCO. However, since they were not fruitful, ultimately the negotiations were terminated by Sippys and they filed a suit bearing no. 400 of 2002 in this court seeking various reliefs against Samrat Logistics. This was mainly with respect to the use of word "samrat" by Samrat Logistics. This suit was filed in the name of SSTS and SSCO. The Puri group objected to the suit being filed in the name of these two companies and therefore the suit was withdrawn on 7/8th February 2002 with liberty to file a fresh suit. ( 8 ) THEREAFTER, Sippys wrote to Puris calling upon a meeting of the Board of Directors to consider action against Samrat Logistics, but Vaishnav Puri disputed that Kundan Puri should preside over the meeting as chairman. He suggested that the meeting should be called after an independent Chairman is appointed. Correspondence went on between the parties on these technicalities. Ultimately, the Sippy Group filed another suit bearing No. 876 of 2002 in the High Court as a derivative action in their individual names as shareholders of SSTS against Puri Group and Samrat logistics. They sought relief by way of injunction restraining the use of the word "samrat" and restraining the passing off on that basis. The Puri Group produced in the court the records relating to incorporation of samrat Logistics and ultimately agreed in April 2002 to change the name of Samrat Logistics to Seaworld Shipping and Logistics. In view thereof, this suit was subsequently withdrawn in September 2002 after filing the present company petitions. ( 9 ) (I) In June 2002, the Sippy Group filed Company petition No. 41 of 2002 before the CLB invoking sections 397 and 398 of the Act. It was filed against SSTS, vaishnav Puri, Vishal Puri, Seaworld and Contship. It was alleged that the Puri Group had in breach of its fiduciary obligations to SSTS got the agency agreement of SSTS dated 1st October 1996 with Contship terminated and had induced Contship to enter into an agency agreement with Seaworld from 1st December 2001. The sippy Group complained of oppression of mismanagement in the matter of SSTS. (ii) The Sippy Group filed another petition being company Petition No. 40 of 2002 before the CLB. This was concerning the oppression and mismanagement by Puris in the matter of SSCO. The sippy Group complained of oppression of mismanagement in the matter of SSTS. (ii) The Sippy Group filed another petition being company Petition No. 40 of 2002 before the CLB. This was concerning the oppression and mismanagement by Puris in the matter of SSCO. Apart from raising the dispute about the diversion of the Contship agency of SSTS to a puri company as affecting SSCO as well, it raised the question of Puris diverting an amount of Rs. 49 lakhs lent to them by SSCO to purchase the shares of another company Neptune Oriental Lines (India) Pvt. Ltd. (N. O. L. for short) for the benefit of Puris and not refunding the amount. We will deal with this petition after dealing with Company Petition No. 41 of 2002. ( 10 ) COMPANY Petition No. 41 of 2002 prayed for an injunction restraining Puris from transferring any funds out of India received from the agency agreement. It also sought mandatory order directing Contship to deposit in the CLB the amounts of commission, fees and remuneration received. The Sippy Group had alleged collusion between the Puri Group and Contship. It was contended that the business of SSTS to the tune of US$ 5 million per year was being deprived and diverted. It was submitted that Contship was liable to the Sippy group and to SSTS as a constructive trustee. In para 26 of this petition, it was contended that floating of another company by using the name of "samrat" for wrongful personal gain was an act of fraud on SSCO and the company (SSTS) and that the Puris had acted in breach of their fiduciary duties and their conduct was harsh, burdensome and oppressive. In para 37, it was contended that there was a complete deadlock in the management, but to wind up the company would be unfairly prejudicial to the Petitioners. ( 11 ) (I ). It is however relevant to note that contship applied in that proceeding by filing application No. 162 of 2002 to be deleted as a Respondent on the ground that the agency agreement with SSTS had already been terminated and it was not a necessary party to the petition for oppression and mismanagement. This application made in August 2002 was allowed by the CLB by its order dated 11th November 2002. This application made in August 2002 was allowed by the CLB by its order dated 11th November 2002. It is material to note that in the application, which was filed by contship for this purpose, Contship specifically stated that it was aware that there were other shareholders in both SSCO and SSTS, but it had dealt with only Puris and "it had continued to have confidence in the professionalism of and faith/ trust in Mr. Puri to look after the interest of Contship in India. " According to puris, it is relevant to note that from 7th December 2001 onwards (when Sippys came to know about the business with Contship having been diverted), Sippys made no efforts to request Contship to reconsider their decision. The affidavit of Contship further stated that its commercial interest in India had been looked after by Mr. Puri all throughout and that it had never dealt with Sippys. It further stated that it had terminated the agency of SSTS as it was concerned with safeguarding its own commercial and financial interest. (ii ). Contship pointed out in this application that earlier SSCO was appointed as an agent from 1st February 1991 and this agency continued until 30. 9. 1996. SSTS was appointed as the agent from 1. 10. 1996. Clause 7. 01 of the Agreement dated 1. 10. 1996 had provided the mechanism for termination and the agency had been terminated in accordance therewith. This Clause read as follows:-"7. 01 This Agreement shall continue until terminated by either Party giving the other not less than three months notice in writing. In case of termination, the Agent shall always be entitled to receive usual commission in cargo booked by them in the notice period of three months, but shall not be separately entitled to compensation. " (iii ). In para (vii), Contship had stated as follows:-" (vii) It is a matter of fact that the Applicant company has always dealt with Mr. Vaishnav shorilal Puri, Respondent No. 2 herein. The applicant Company was aware that there were shareholders and Directors other than Respondent no. 2 in both Samrat Shipping Company Private limited and Samurai Shipping and Transport Systems private Limited but Applicant Company never had dealing with any other person/s on any matter. The Applicant Company always had and continue to have confidence in the professionalism and faith/trust in Mr. 2 in both Samrat Shipping Company Private limited and Samurai Shipping and Transport Systems private Limited but Applicant Company never had dealing with any other person/s on any matter. The Applicant Company always had and continue to have confidence in the professionalism and faith/trust in Mr. Puri to look after the interest of the Applicant Company in India. In the changing scenario of globalization, the applicant Company is considering various options in continuing its business activities in India either through Respondent Nos. 2 or otherwise. " (iv ). In para (viii), Contship averred as follows:-". . . . It is obvious that the Applicant Company has been made a party to the proceedings more to harass the Applicant Company and as a pressure tactic against Respondent No. 2. The Applicant company has an ongoing business of a shipping line and was never and is not interested in the litigation or concerned with the litigation or the results of the litigation between the Sippys and Puris. . . . . " ( 12 ) PURIS filed their initial reply of V. S. Puri - respondent No. 2 affirmed on 20th August 2002 (styled as a Limited reply) denying that they had caused Contship to terminate SSTS agency, but pointed out that Contship itself had terminated it by its letter of 1st September 2001. Puris specifically averred in para 4. 8 and 5. 3 of this reply that right from early 2000, disputes had arisen between Puris and Sippys. It was alleged that large amounts were being diverted from SSTS to Meridian through SSCO. It was further alleged that by 2000-2001 approximately Rs. 9. 5 crores had been advanced by SSTS to ssco and from that Rs. 4 crores were diverted to meridian. There is no specific rejoinder to this allegation. It was averred in para 5. 1 that V. S. Puri had initially refused to sign / approve Meridians account in 2000. He had finally agreed to do so only on sippys assurance that they would agree for release of the personal guarantee of V. S. Puri and corporate guarantee of SSCO towards Meridian Trading Pvt. Ltd. Mr. Puri had also stated that Sippys had assured that parties would work towards separation of the joint businesses and assets whereunder Meridians losses would be taken over by Sippys. There was no rejoinder to this statement. It was further stated in para 5. Puri had also stated that Sippys had assured that parties would work towards separation of the joint businesses and assets whereunder Meridians losses would be taken over by Sippys. There was no rejoinder to this statement. It was further stated in para 5. 2 of the reply that Sippys failed to arrange for release of the personal guarantee of V. S. Puri. There is no denial to that in the rejoinder filed by Sippys. It is also seen from the record that list of assets and businesses and their valuation had been prepared by the auditors for the purposes of division/separation, but it did not ultimately conclude satisfactorily. It was further contended by Puris in para 5. 3 of their affidavit that by 2001, good amount of SSTS fund was locked up in SSCO / Meridian. It was affecting the cash flow of SSTS and its ability to duly and timely make the payments to contship. There was no rejoinder to that. ( 13 ) PARAGRAPHS 5 to 5. 16 of the reply are dealt with only in para 38 of the rejoinder of Sippys by saying that the allegations are denied and the issues regarding meridian are irrelevant. It is then stated in this para 38 -"i say that assuming whilst denying that the allegations are correct, it does not entitle the respondent No. 2 and 3 (Puris) to indulge in illegal actions. I say that the Respondent No. 2 has referred to various correspondence, balancesheets and documents in connection with meridian which are irrelevant here. "it is also on record that in October 2001 the auditors informed Mr. Puri that they were unable to proceed with the audit of Meridian as Sippys had failed to produce the stock record. It was the submission of Puris therefore that relations between the parties were already strained and hardly any confidence remained between two of them. Mr. Puri further alleged in his affidavit that Sippys had floated two more companies, viz. Swaraj Fashions Pvt. Ltd. and Swaraj Shipping and logistics Pvt. Ltd. under the management of Meridian and diverted the business and assets of Meridian to those companies. Though Meridian was suffering losses, those companies are stated to be having good profits. There is no specific denial thereof by Sippys. Swaraj Fashions Pvt. Ltd. and Swaraj Shipping and logistics Pvt. Ltd. under the management of Meridian and diverted the business and assets of Meridian to those companies. Though Meridian was suffering losses, those companies are stated to be having good profits. There is no specific denial thereof by Sippys. ( 14 ) A reply was filed on behalf of Seaworld which pointed out that it was having an independent contract with Contship from 1. 12. 2001 and that the contract of contship with SSTC had been terminated much prior to the filing of the Company Petition in June 2002. It was submitted that the reliefs sought against Seaworld were outside the jurisdiction of CLB. ( 15 ) PURIS filed further affidavits in reply from time to time and Sippys also filed their rejoinders thereto. ( 16 ) THE CLB heard the counsel for the parties. A number of authorities were cited before it. It finally heard and disposed of Company Petition No. 41 of 2002 by its order dated 29th October 2003. The CLB came to the conclusion that the entireexercise of getting the contship agency to Seaworld had been preplanned by the puri Group even when the agency was subsisting between contship and SSTS. The CLB noted that Vaishnav Puri has not disclosed the receipt of notice of termination dated 1st September 2001 received from Contship to the Board of SSTS. Contship entered into agency with Seaworld on 1st December 2001 and the Seaworld issued its service schedule from 14th December 2001. The agreement could not have been signed on 1st December 2001 without prior consultation with Contship. The inference was therefore drawn that Vaishnav Puri had used his knowledge derived in his capacity as Managing Director of SSTS to his own advantage in termination of the agency with SSTS. The prior incorporation of another company Seaworld and thereafter Contship entering into this company immediately after terminating the agreement with SSTS indicated the breach of fiduciary duties on the part of puris. ( 17 ) THE CLB held that the statement by the Puri group that Contship was not willing to deal with SSTS in view of the disputes between Sippy Group and Puri Group had not been substantiated. ( 17 ) THE CLB held that the statement by the Puri group that Contship was not willing to deal with SSTS in view of the disputes between Sippy Group and Puri Group had not been substantiated. Letters of Contship dated 1st September 2001 and 26th April 2002 did not say anything of the kind, though Contship had very much reposed confidence in Puris and desired to deal with them. The CLB therefore observed that the directors of puri Group had breached their fiduciary duties and were liable to account for the benefit and so also was seaworld liable for the business and profit derived by it. This is on the footing that the Puris are supposed to hold the benefit derived by them as constructive trustees of the beneficiary. ( 18 ) THE CLB therefore gave three directions on this company Petition No. 41 of 2002. (i) The first direction is what is contained in para 22 and 23 of the order. This is to hold Seaworld to be accountable for the benefit derived by it as a result of breach of fiduciary duties by Vaishnav Puri and Vishal vaishnav Puri. Sealworld had been given an agency for 5 years from 1st December 2001. The CLB held that it would not be proper to direct Seaworld to be accountable for all these 5 years. It directed it to account for the benefits and profits derived by it from 1st December 2001 until 21st July 2003, the date when the hearing concluded before the CLB. This was on the ground that breach of fiduciary duty is not only an act of oppression under section 397 of the Act, but is also an act of mismanagement under section 398 of the Act. (ii) The second direction was contained in para 25 of the order, that is to direct the Puri Group to purchase the shares held by Sippy Group in SSTS and Sippy Group to buy shares to Puri Group in SSCO. (iii) Since the purchase of shares cannot be done without proper valuation, the CLB directed the appointment of an independent valuer to value the shares of both the companies. The CLB also directed the valuer to compute the amount of profit that Seaworld had derived from the agency with Contship from 1st December 2001 to 31st March 2003. In essence, Company Petition No. 41 of 2002 was allowed. The CLB also directed the valuer to compute the amount of profit that Seaworld had derived from the agency with Contship from 1st December 2001 to 31st March 2003. In essence, Company Petition No. 41 of 2002 was allowed. ( 19 ) THE order of CLB and the directions in Company petition No. 41 of 2002 gave rise to three company appeals under section 10-F of the Act which are as follows:- (i) Company Appeal No. 1 of 2004 was filed by Puris since they were aggrieved by the judgment and order in this petition. (ii) Company Appeal No. 4 of 2004 was filed by seaworld to challenge the directions given therein to seaworld to account for the profits derived by it from the agency with Contship from 1st December 2001 till 21st February 2003 as noted above. (iii) Company Appeal No. 5 of 2004 was filed by Sippys since they were not happy with the part of the directions awarding profits for a specified period only. In their view, the profits should have been directed to be paid until shares of Sippy Group in SSTS were fully purchased by Puri Group or until the termination of contship agency with Seaworld whichever would be earlier. ( 20 ) COMPANY Appeal No. 2 of 2004 arising out of 2002 Company Petition No. 40 of 2002: as stated earlier, we will be dealing with Company petition No. 40 of 2002 later. It is necessary to note, however, at this stage, that this petition filed by sippys concerning the alleged oppression and mismanagement in SSCO was also allowed by the CLB while deciding Company Petition No. 41 of 2002. The CLB rendered a common judgment on both these petitions on 29th October 2003. In Company Petition No. 40 of 2002, the CLB gave direction to Puris to pay interest on account of alleged delay on their part in repayment of the amount of Rs. 49 Lakhs lent to Puris by SSCO. According to Sippys, this amount was not returned by puris within the period of four years provided for returning it. The CLB directed the Puris to pay interest at 12% for the period beyond four years until the amount was refunded. CLB directed exchange of shares of SSCO also. This decision on Company Petition no. 40 of 2002 gave rise to Company Appeal No. 2 of 2004 by Puri Group. The CLB directed the Puris to pay interest at 12% for the period beyond four years until the amount was refunded. CLB directed exchange of shares of SSCO also. This decision on Company Petition no. 40 of 2002 gave rise to Company Appeal No. 2 of 2004 by Puri Group. The learned Single Judge decided this company Appeal No. 2 of 2004 along with earlier mentioned three appeals bearing Nos. 1, 4 and 5 of 2004. We will deal with Company Appeal No. 2 of 2004 when we deal with company Petition No. 40 of 2002. ( 21 ) ISSUES framed:- (i ). As far as these three appeals, namely Company appeals No. 1, 4 and 5 of 2004 are concerned, the learned single Judge framed a number of issues separately in all these three matters. In 2004 Company Appeal No. 1 of 2004, the main issues therefrom were as follows:- (A) What is the extent of directors fiduciary liability? (C) Whether after the termination by a third party principal of the agency with the company, a director of the company had a fiduciary duty to the company qua that agency business? (E) Whether the unwillingness of a third party to deal with a company and its willingness to deal only with a director of that company was a defence based on alleged diversion of business? (F) Whether a director was liable to account to the company for profits made by him under an arrangement entered into independently by a third partywith the director on account of his personal qualifications? (ii ). In 2004 Company Appeal No. 4 of 2004, the main issue was Issue No. (C), which reads as follows:- (C) As to whether the Company Law Board had jurisdiction under sections 397, 398 and 492 to direct a third party, who is not a shareholder or a director of the company, to render accounts and pay over amounts to the company for alleged diversion of business by one of the common directors? (iii ). In 2004 Company Appeal No. 5 of 2004, the main issue was whether after arriving at the conclusion that Puris had breached the fiduciary duties, the Company Law Board ought not to have directed Seaworld to pay over all the benefits derived by it. (iii ). In 2004 Company Appeal No. 5 of 2004, the main issue was whether after arriving at the conclusion that Puris had breached the fiduciary duties, the Company Law Board ought not to have directed Seaworld to pay over all the benefits derived by it. ( 22 ) AFTER framing the issues as above, the learned judge proceeded to discuss the concept of fiduciary duties of Directors as existing in India and the finding given by CLB with respect to breach thereof by Puris. This discussion we find in paragraphs 21 to 31 of the judgment. Firstly, he referred to Section 88 and then to the judgment of the Apex Court in C. G. Chetty vs. C. S. Chetty and ors. reported in AIR 1959 S. C. at page 190 190. He noted that in para-14 of its judgment the apex court has dealt with the requirements to attract the second part of this section. Thereafter he observed that in his view the dictum in para 12 was relevant for our purpose wherein it is observed by the Apex Court that if in the facts of that case there had been a specific stipulation that the partnership business was to continue even after the expiry of 17 years (which was the term of partership therein), different considerations may have arisen. The learned Judge noted the observation of the Apex Court, that there was no absolute rule of law or equity that a renewal of lease by one partner must necessarily enure for the benefit of the other partners. The Judge also noted that the observations in later part of para-14 of that judgment were emphasized by the Counsel on the part of Puris where the Apex Court observed that the partners in that matter were not on cordial terms and that there was hardly any room for importing the idea that they were occupying a fiduciary position apart from the fact that they were partners. The learned Judge, however, observed that those observations were in the facts of that case and that the renewal of lease was not obtained clandestinely in that matter. He then observed that whether the presumption of fiduciary relationship applied will have to be decided on the facts of this case. ( 23 ) THE judgment in the case of Deva Sharma vs. L. N. Gaddodia and ors. He then observed that whether the presumption of fiduciary relationship applied will have to be decided on the facts of this case. ( 23 ) THE judgment in the case of Deva Sharma vs. L. N. Gaddodia and ors. reported in AIR 1956 Punjab page 49 was cited before the learned Judge. The learned judge however observed in para 25 that this decision has stated more or less the same principle as the one in chettys case (supra) while construing Section 88 of the trust Act. According to him the fact situation in both the cases was more or less similar inasmuch as "the lease deed and the partnership were for a definite period for the purpose of carrying on the specific business and were co-terminous with the agency business which was also about to be terminated. " He then referred to the judgment in Benett vs. Gaslight and Coke Co. of london reported in (1882) 48 LT 156 (D) referred in Deva sharmas case which was a case of express trust and wherein it was held that the trustee was disqualified from obtaining an agency to the prejudice of the trust. He noted that the last part of paragraph 39 in Deva sharmas judgment was relied upon by Puris namely that if the agency could no longer be secured, the fiduciary relationship ended. However, what we find is that the learned Judge was impressed by the fact that the Puris have conducted themselves in secrecy. In paragraphs 27 to 30, the learned Judge noted that a number of judgments from English and American Courts were cited before him and also noted the submission of the Counsel for Puris that there was a marked difference between english and the Indian law. He noted the observations from American jurisprudence Vol. 19 para-1313 to the effect that "a business opportunity ceases to be a corporate opportunity and becomes personal when the corporation is definitely no longer able to avail itself of the opportunity. " What we find however is that he has not gone into the full import of these propositions. He has then gone into the facts of the present case in para 31 and held that the conclusion reached by CLB against puri group was fully supported by the pleadings. " What we find however is that he has not gone into the full import of these propositions. He has then gone into the facts of the present case in para 31 and held that the conclusion reached by CLB against puri group was fully supported by the pleadings. ( 24 ) THEREAFTER in paragraph 32 the learned Judge referred to the definition of "fiduciary duty" as appearing in Blacks Law Dictionary, and relying on the discussion of the CLB in para 20 of its judgment, he held that there can be no hesitation in taking the view that Puri Group had breached its fiduciary duty. Para 20 of the judgment of the CLB held that Puris had preplanned the event. They had preplanned the exercise of getting the whole agency to Seaworld. It referred to the fact that an agreement was entered into between seaworld and Contship on 1st December 2001 and the service schedule was prepared on 14th December 2001. This para 20 also referred to the fact that one Viraf bharucha had applied to the Registrar of Companies in goa for incorporating a company in the name of Samrat shipping and Logistics earlier. It was stated to be a company belonging to the group of SSTS and that promoters were Vaishnav Puri and Vishal Vaishnav Puri. ROC had approved the name on 11th January 2001 for a period of 6 months. Mr. Bharucha sought an extension by another 6 months. On 18th October 2001, he informed the roc that he had no objection to the company being incorporated by other promoters and a form was filed appointing Vaishnav Puri and Vishal Puri as directors. The CLB has observed that the incorporation of the company proximate to the date of expiry of the agency agreement with SSTS also raises strong presumption that while acting as directors of SSTS and while the agency was subsisting with SSTS, Puris were planning to take away the Contship agency to Seaworld, which was in breach of the fiduciary duty to SSTS. ( 25 ) IN para 33 of his judgment, the learned Single judge accepted the argument on behalf of Sippys that the two companies SSCO and SSTS were essentially glorified partnerships and the court will be obliged to examine the matter as a bystander and apply the objective tests of whether the acts of Puri Group caused unfair prejudice to the Sippy Group and the two companies. Thereafter the learned Judge referred to Palmer's company Law on the general test for unfair prejudicial conduct, namely that it should be that of a reasonable bystander, and then Pennington's Company Law for what is oppressive conduct, and then Gore-Browne on section 210 of the English Company Law. He referred to the general duty of partners to have utmost good faith and honesty as recorded in Lindley and Banks on Partnership. Thereafter in the later part of para 37, the learned judge held that applying the standards applicable to partners of any partnership firm, it will have to be held that Puri Group committed breach ofits fiduciary duties to SSTS and SSCO. Lateron, in para 38, he observed that no attempt was made by Puri Group to persuade Contship to continue the arrangement with SSTS even though they continued to be the managing director and director of SSTS. ( 26 ) THEREAFTER in para 40, the learned Judge referred to the judgment of House of Lords in Scottish cooperative Wholesale Society Ltd. v. Meyer reported in (1958) 3 All E. R. 66 to the effect that if a partner starts a business in competition with the business of the partnership without the knowledge and consent of his partner, he acts contrary to the doctrine of utmost good faith and his conduct can be regarded or oppressive to his partners. The affairs of a company would be conducted oppressively by the directors just as they can conduct its affairs oppressively by doing something injurious to its interests when they ought not to do it. He then referred to Indian judgments on the concept of oppression in the case of Shanti Prasad Jain v. Kalinga tubes Ltd.- (1965) 35 Company Cases 351, Needle industries (I) Ltd. v. Needle Industries Newey (India) holding Ltd.- (1981) 51 Company Cases 73 and a few other judgments. He then referred to Indian judgments on the concept of oppression in the case of Shanti Prasad Jain v. Kalinga tubes Ltd.- (1965) 35 Company Cases 351, Needle industries (I) Ltd. v. Needle Industries Newey (India) holding Ltd.- (1981) 51 Company Cases 73 and a few other judgments. ( 27 ) IN para 46, the learned Judge observed that the fact that Contship terminated agency of SSTS or that the agency agreement was not subsisting on 1st December 2001 is of no consequence and cannot be the sole basis for answering the issue of fiduciary obligations and duty of puri Group. In para 49, he held that sections 397 and 398 cannot be given restricted meaning and wherever required the appropriate directions can be given, and in para 51, he held that no fault can be found with the CLB for issuing such directions. ( 28 ) THE learned Judge, therefore, dismissed Appeal no. 1 of 2004 filed by Puri Group as also Appeal No. 4 of 2004 filed by Seaworld, and allowed Appeal No. 5 of 2004 filed by Sippy Group by a common judgment and order dated 23rd February 2004. The direction by the CLB to account for the benefits for a limited period was set aside in Appeal No. 5 of 2004, but was substituted by a direction to account for the benefits until Puris purchased the shares of Sippy Group in SSTS or till the agency of Seaworld with Contship is terminated. ( 29 ) (I) The order on Company Appeal Nos. 1 and 4 of 2004 has led to the Puris and Seaworld filing present appeal Nos. 359 and 468 of 2004 under the Letter Patent. The order on Company Appeal No. 5 of 2004 has led to puris and Seaworld filing present Appeal Nos. 369 and 469 of 2004 under the Letter Patent. We will deal with the submissions of the Counsel for the parties on all these appeals together since all of them arise out of Company petition No. 41 of 2002. (ii) Company Appeal No. 2 of 2004 arising out of company Petition No. 40 of 2002 was also dismissed in part with this common judgment. That has led to filing of Appeal No. 358 of 2004 by Puris under the Letter patent. (ii) Company Appeal No. 2 of 2004 arising out of company Petition No. 40 of 2002 was also dismissed in part with this common judgment. That has led to filing of Appeal No. 358 of 2004 by Puris under the Letter patent. Company Appeal No. 2 of 2004 was, however, entertained by the learned Single Judge to a limited extent in the sense that the claim of Sippys for interest on account of alleged delay in repayment of rs. 49 Lakhs by Puris as alleged by Sippys was held unfounded. The direction given by the CLB to pay interest thereon was, therefore, set aside. Though this part of the order is against the Sippys, they have not challenged the same. We will deal with that appeal separately. We will deal with Company Petition No. 40 of 2002 at that time. ( 30 ) ALL these appeals are admitted and heard together for final hearing. ( 31 ) NOTICE of Motion No. 1706 of 2004 has been taken out by Puris in Appeal No. 359 of 2004 for stay of the judgment of the Single Judge. The Motion has been pending without any order therein. ( 32 ) NOTICE of Motion No. 1705 of 2004 has been taken out by Puris in Appeal No. 358 of 2004. Prayer (a) of the Motion is for the stay of the judgment of the single judge. Prayer (b) is for appointment of Liquidator to take charge assets of SSCO and Meridian listed in the supporting affidavit. This Motion is also pending without any order therein. ( 33 ) NOTICE of Motion No. 892 of 2005 has been taken out by Puris in Appeal No. 358 of 2004. Prayer (a) for the Motion is for Receiver and Liquidator for SSCO. This motion is also pending without any order therein. ( 34 ) (I) Notice of Motion No. 391 of 2005 has been taken out by a third party Hewlett Packard India Sales pvt. Ltd. The applicant of this motion is in possession of office premises situated on the 2nd floor of a building by name "metropolitan" situated at bandra-Kurla Complex, Mumbai with two covered and two open car parking places. These premises belong to SSCO and the applicant has executed an agreement on 29. 10. 1997 with SSCO by keeping an interest free deposit of Rs. Four Crores for getting the possession of these premises. These premises belong to SSCO and the applicant has executed an agreement on 29. 10. 1997 with SSCO by keeping an interest free deposit of Rs. Four Crores for getting the possession of these premises. (ii) It is the case of the applicant that it is no longer in need of those premises. It gave a notice of termination of the agreement dated 31. 10. 2002. It seeks to return the premises to SSCO and get back its deposit, but the notice given by the applicant has not been complied with due to the disputes between Puris and sippys. Mr. Vaishnav Puri has filed a reply and referred to the Minutes of understanding arrived at between the applicant on one hand and the Puris and Sippys on the other on 23rd July 2004 wherein it was agreed to sell the properties of SSCO and Meridian and to return the amount of Rs. Four Crores to the applicant. It is stated that Puris are agreeable to maintain this understanding but Sippys are not. Sippys have not filed any reply. This Motion is also pending without any order. ( 35 ) ALL these Motions are being heard and decided along with these Appeals. ( 36 ) MR. CHENOY, learned Counsel appearing for the appellants, submitted that the conduct of Puris in setting up another company, which has now come up to be known as Seaworld, has been the main factor which has weighed on the CLB and onthe learned Single Judge. The learned Single Judge has time and again referred to para 20 of the judgment of the CLB, wherein it is noted that the notice of termination of the agency by Contship dated 1st September 2001 was not brought to the notice of Sippys by Puris. From 22nd December 2000 and all throughout the year 2001 steps were taken to float another company at Goa through one Viraf Bharucha without informing Sippys and wherein Puris joined on 18th October 2001. Entering into the agreement with contship by Seaworld immediately thereafter on 1st december 2001 has also impressed the CLB as well as the learned Single Judge. Mr. Chenoy, however, pointed out that on the other hand, the fact that there were pre-existing disputes between the parties is clearly borne out from the pleadings. Entering into the agreement with contship by Seaworld immediately thereafter on 1st december 2001 has also impressed the CLB as well as the learned Single Judge. Mr. Chenoy, however, pointed out that on the other hand, the fact that there were pre-existing disputes between the parties is clearly borne out from the pleadings. As seen from the affidavit in reply of Puris and the rejoinder thereto by sippys, it is clearly placed on record that from early 2000 there were disputes between the parties. There was an allegation of Puris that large amounts were being diverted from SSTS to Meridian. By 2000-2001, approximately Rs. 9. 5 crores had been advanced by SSTS to ssco and from that Rs. 4 crores were diverted to meridian. Puris had refused to sign the accounts of meridian initially. Puris were assured that they will be relieved from their personal guarantee, but that was not done. In para 5. 3 of the reply, it was specifically stated that by 2001, good amounts of SSTS was locked up in SSCO / Meridian. It was affecting the cash flow of ssts and its ability to duly and timely make the payments to Contship. There was no specific rejoinder to all these averments. All that is stated in para 38 of the rejoinder is that assuming these allegations were correct, that did not entitle Puris to indulge in illegal actions. Mr. Chenoy pointed out that all throughout from December 2001, there were efforts to mediate and if reconciliation was not possible to separate amicably. These factors could not have been ignored by the CLB or by the learned Single Judge. The submission was that it clearly showed that parties no longer had any confidence in each other and their relationship was already strained. ( 37 ) IT was further submitted by Mr. Chenoy that one more important factor ought to be noted, namely that contship had specifically stated in their affidavit that they had all throughout dealt only with Puris, and that was so far nearly 20 years and that was much prior to puris joining into SSCO and bringing in the agency business with Contship. Chenoy that one more important factor ought to be noted, namely that contship had specifically stated in their affidavit that they had all throughout dealt only with Puris, and that was so far nearly 20 years and that was much prior to puris joining into SSCO and bringing in the agency business with Contship. A responsibility is cast by the clb and the learned Single Judge on the Appellants that they did not persuade Contship to continue the relationship with SSTS, but nothing is placed by Sippys on record to show that after 7th December 2001 they made any correspondence or efforts to persuade Contship. The submission of Mr. Chenoy was that the agency business had been terminated by Contship. Once that was so terminated, there was no question of any obligation on puris that they should not engage into independent relationship with Contship. Mr. Chenoy submitted that the relationship of Puris with Contship was of their own and not because of Vaishnav Puri being a director of ssts. He pointed out that Contship had terminated its agency with SSCO in the past also. Besides, for alleging any collusion between Contship and Puris and establishing such collusion, Contship ought to have been retained as a party Respondent, but it had been permitted to be deleted from the proceedings. No finding could therefore be arrived at to the prejudice of Puris on such a background. Mr. Chenoy submitted that ssts had no longer any corporate opportunity and the learned Judge erred in applying the test of Benett v. Gaslight and Coke Co. of London reported in (1882) 48 LT 156. He substantiated his arguments with a number of judgments which we will separately deal with. ( 38 ) THE submissions of Mr. Chenoy have been countered by Dr. Tulzapurkar, learned counsel appearing for Sippys. He submitted that the entire conduct in floating another company throughout the year 2001 was a clear indication of malafide intentions of Puris. The earlier disputes had arisen between the Sippy Group and jaising only on the use of the word "samrat", and now the same word was sought to be used for another private company which was clandestinely set up by Puris in Goa. The earlier disputes had arisen between the Sippy Group and jaising only on the use of the word "samrat", and now the same word was sought to be used for another private company which was clandestinely set up by Puris in Goa. After coming to know about setting up of this new company and shifting of the agency business to it, sippys tried to persuade Puris to come to a negotiating table but the Puris declined the suggestion. Ultimately, when suits were filed, Puris obstructed by submitting that Sippys could not file suits in the name of SSTS or SSCO. The whole attempt was to take away the goodwill of the name of Samrat. ( 39 ) HE submitted that the disputes with respect to meridian were an after-thought and were not raised till 10th December 2001. It was a bogie to avoid holding of meetings and bogus grounds were used as to who should preside over the meetings etc. The entire conduct of puris was in breach of their fiduciary responsibility. In his submission, the relationship between the parties were that of partners in a glorified partnership and the decision of the CLB as also the learned Single Judge could not be faulted. There was a deadlock, but the proper remedy was to issue directions in the nature they were issued and not winding upsince the main business of the company had already been diverted by Puris. He emphasised the observations in Pennigton's Company Law, 7th Edition at page 885 that Court's jurisdiction in such matters is equitable in character although originating in a statutory provision. He substantiated his arguments with a number of judgments which we will separately deal with. ( 40 ) THE points, which arise for our determination in these appeals, are principally as follows:- (i) whether the diversion of Contship agency from SSTS to Seaworld amounted to a breach of fiduciary duty on the part of Puris as Directors as referable to section 88 of the Indian Trust Act? or whether on account of the termination of the agency of SSTS by Contship, SSTS no longer had a corporate opportunity and, therefore, there was no such breach of fiduciary duty by Puris ? or whether on account of the termination of the agency of SSTS by Contship, SSTS no longer had a corporate opportunity and, therefore, there was no such breach of fiduciary duty by Puris ? (ii) whether the alleged conduct of Puris amounted to oppression of Sippys within the meaning of section 397 or that it led to mis-management of SSTS and ssco within the meaning of Section 398 of the Companies act? (iii) whether any such findings and directions based thereon given by the CLB and as sustained and/or modified by the learned Single Judge were warranted? ( 41 ) THE relevant sections : when we deal with the first point and the rival submissions thereon, it will be appropriate to refer to section 88 of the Indian Trusts Act which lays down that the advantage made in fiduciary capacity has to be made good. This section reads as under:-"fiduciary. 88. Advantage gained by fiduciary.- Where a trustee, executor, partner, agent, director of a company, legal adviser, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained. "the relevant sections of Companies Act are Sections 397, 398 and 402. They read as follows:-"application to Tribunal for relief in cases of oppression 397. (1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Tribunal for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the Tribunal is of the opinion - (a) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members; and (b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up; the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. Application to Tribunal for relief in cases of mismanagement. 398. (1) Any members of a company who complain- (a) that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company; or (b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors or manager or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company; may apply to the Tribunal for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the tribunal is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the Tribunal may, with a view to bringing to end or preventing the matters complained of or apprehended, make such order as it thinks fit. Powers of Tribunal on application under section 397 or 398 402. Powers of Tribunal on application under section 397 or 398 402. Without prejudice to the generality of the powers of the Tribunal under section 397 or 398, any order under either section may provide for- (a) the regulation of the conduct of the company's affairs in future; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) the termination, setting aside or modification of any agreement, howsoever arrived at, between the company on the one hand, and any of the following persons, on the other, namely- (i) the managing director, (ii) any other director, (iii) and (iv) (v) the manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in all the circumstances of the case. (e) the termination, setting aside or modification of any agreement between the company and any person not referred to in clause (d), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; (f) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (g) any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made. " ( 42 ) SUBMISSIONS of Mr. Chinoy, learned Counsel for puris Puris:" (i ). Mr. Chinoy submitted that if Sippys wanted to make out a case that Puris gained unfair advantage by breach of their fiduciary responsibility they will have to make out a case eitherunder the first part or the second part or both of Section 88 of the Trusts Act. Chinoy, learned Counsel for puris Puris:" (i ). Mr. Chinoy submitted that if Sippys wanted to make out a case that Puris gained unfair advantage by breach of their fiduciary responsibility they will have to make out a case eitherunder the first part or the second part or both of Section 88 of the Trusts Act. As far as the first part is concerned, it is necessary to establish that the parties were bound in fiduciary character and such element of confidence did exist between them at the time when a complaint is made by one of the parties. Secondly, it must be shown that the defendant has, by availing of his character as a director, gained for himself any pecuniary advantage. As far as this aspect is concerned, he adopted the interpretation of first part of Section 88 in paragraph 32 of the judgment of Falshaw, J. in Deva Sharma's case (supra) namely that this benefit must accrue when the person concerned is dealing with third party and poses himself as a director of the Company. Surely, such an occasion cannot arise after the termination of the agency as held in that case. That apart, he submitted that in the present case there was a clear material on record which shows that the disputes had started between the parties much earlier and that they had made the lists of the properties for their separation also. Thus, there was hardly any element of confidence left between them as in Deva Sharma's case and C. G. Chetty's case. " (ii ). Besides, there was no question of Puris gaining advantage by posing as directors of SSTS after the termination of the agency. He pointed out that Contship came first to SSCO and then to SSTS because of Puris. It was the business of Puris with Contship which was being run through SSTS. In the letter dated 26th April 2002 Contship described Puris as Contship men in India. Even CLB in para-4 of its judgment accepted this position when it observed as follows:-". . . . . The admitted position is that the second respondent (i. e. V. S. Puri) has always been managing the affairs of SSTS as a M. D. and Sippys never interfered with the working of the company. Even CLB in para-4 of its judgment accepted this position when it observed as follows:-". . . . . The admitted position is that the second respondent (i. e. V. S. Puri) has always been managing the affairs of SSTS as a M. D. and Sippys never interfered with the working of the company. "even when Contship applied for being deleted from the proceedings it clearly stated in paragraph (vii) of its application that the applicant (Contship) company never had dealings with any other person in any matter. It had always dealt with Mr. V. S. Puri. It also stated that the proceeding was more to harass the applicant-company and as a pressure tactics against mr. V. S. Puri. This contradicts the statement of Sippys in paragraph 46 of their rejoinder dated 9. 9. 2002 wherein they have stated as follows:-"i deny that Contship is today aware of the personality of the companies with whom it is doing business or the question of Contship being misled in any manner cannot or does not arise. " (iii ). Mr. Chinoy thereafter pointed out that Sippys initially pleaded that Puris had misrepresented to contship. In para-40 of their rejoinder they had contended that Puris had misrepresented to Contship that the new company set up by them viz. Sea World belonged to Samrat group. Mr. Chinoy, therefore, submitted that if Contship were to suffer a misrepresentation they would be an ignorant party. On the other hand Contship has taken a clear stand to support Puris and apart from justifying the termination of agency with SSTS they have specifically stated in the affidavit that in the changing scenario of globalization it was considering various options in continuing its business in India either through Mr. V. S. Puri or otherwise. The affidavit specifically referred to the clause in the agreement providing for termination and that it had been terminated accordingly. Therefore, the question of misrepresentation does not arise. (iv ). Mr. Chinoy submittded that on the other hand, in the proceedings before CLB as also before the learned single Judge it was however argued by Sippys that it was a case of collusion and conspiracy. Mr. Chinoy submitted that such a plea could not survive once Contship was deleted as a respondent and the rigours of Order VI Rule 2 of the Code of Civil Procedure, 1908 will apply. Mr. Chinoy submitted that such a plea could not survive once Contship was deleted as a respondent and the rigours of Order VI Rule 2 of the Code of Civil Procedure, 1908 will apply. Yet in the absence of Contship, the CLB had held that there was a conspiracy and that there was a pre-planned effort by Puris towards the same. In his submission, the same view of the learned Single Judge was also erroneous. He, therefore, submitted that there is no question of the conduct of Puris being hit by the first part of section 88 of the Trusts Act. ( 43 ) AS far as the second part of Section 88 of the trusts Act is concerned, it requires that the defendant had entered into dealings in which his own interests were adverse to those of the erstwhile company or partnerships. For that purpose it was necessary to show that SSTS continued to have the business opportunity to deal with Contship. Once Contship terminated its agency with SSTS the business opportunity ceases to be a corporate opportunity for SSTS. For this purpose he relied upon the conclusion reached by Falshaw, J. in deva Sharma's case quoted above that when a benefit can no longer be secured on behalf of a partnership the fiduciary relationship ends and the individual partner is free to look after his own interest and even to secure the benefit for himself. ( 44 ) MR. CHINOY submitted that the principle of opportunity being made available to the partnership would apply at an initial stage or during the continuation of a contract. However, once the contract is terminated or it expires, the business opportunity comes to an end. Contship could not be restrained from taking any such decision and Puris could not dictate to contship what it should do. He pointed out that the decision relied upon by the CLB viz. the judgment of messachusets Court of Appeal in Energy Res. Corporation vs. Porter reported in 438 NE 2d 391 was the case of initial offer and opportunity. ( 45 ) MR. CHINOY pointed out the English judgment in the case of Keech vs. Sanford reported in SC2 Wh and TLC 693 relied upon by the CLB and Sippys laid down the principle of absolute confidence which applied in the case of express trust. ( 45 ) MR. CHINOY pointed out the English judgment in the case of Keech vs. Sanford reported in SC2 Wh and TLC 693 relied upon by the CLB and Sippys laid down the principle of absolute confidence which applied in the case of express trust. That was acase where the lease of a market was devised towards the trustee for the benefit of an infant. Before expiry of the lease the lessor refused to renew it in favour of the infant and the trustee took it for himself. It was held that the trustee was obliged to convey it to the infant and account for the profits. Mr. Chinoy commented that the legal duty or liability of a partner securing a contract or a benefit personally was distinct from that of a trustee of an express trust. The proposition in this case was followed in Industrial Development Consultants vs. Cooley reported in (1972) 2 All England Report 162 and in Bhullar vs. Bhullar reported in (2003) EWCA page 424. The English law on this question is that whether or not the benefit would have been obtained but for the breach of the trust is irrelevant. In the submission of mr. Chinoy, the law in India is not the same as in england as laid down in C. G. Chetty's case as also in deva Sharma's case. The principle of absolute liability is not accepted in these judgments. ( 46 ) ON the other hand, Mr. Chinoy drew our attention to a few judgments from the Courts in U. S. A. and submitted that they were more apposite while considering the problem before us. The significant from amongst them are the following:- (i ). Fred Diedrich vs. John Helm by the Supreme court of Minnesota decided on 2nd June 1944 reported in 217 MINN page 483. The Court held therein that a corporation can have no interest or expectancy where the opportunity is not available to it either because of a party refuses to deal with it or because the Corporation sought it without success to obtain. In such a situation a business opportunity is no longer a corporate opportunity. (ii ). Urban Alexander Company vs. Trinkle, the judgment of Court of Appeal of Kentucky reported in 311 k. Y. 635 decided on 2nd December 1949. In such a situation a business opportunity is no longer a corporate opportunity. (ii ). Urban Alexander Company vs. Trinkle, the judgment of Court of Appeal of Kentucky reported in 311 k. Y. 635 decided on 2nd December 1949. This is also to the same effect namely that the opportunity ceases to be a corporate opportunity and becomes personal when the corporation is no longer able to avail itself of the opportunity. (iii ). The earlier referred view of the Minnesota supreme Court is followed and reiterated by the U. S. District Court of Minnesota in Luigino Inc. vs. Robert peterson decided on 28. 1. 2002 reported in (2002) U. S. Dist. Lexis 1465. (iv ). In Mau Inc. vs. Human Technologies Inc. decided on 4th August 2005 the Court of Appeal of georgia laid down a two-step process to decide the question whether there is a wrongful appropriation of a business opportunity. This is reported in Ga 274 Ga. App. 891 page 891. The test is as follows:-"first a court must determine whether the appropriated opportunity was in fact a business opportunity rightfully belonging to the corporation. If a Court finds that business opportunity was not a corporate opportunity, the directors or officers who pursued the opportunity for personal benefit are immune from the liability. "the Court also held that burden of proof rested upon the party attacking the acquisition. (v ). Similar view is taken in Robert Broz and RFB. Cellular Inc. vs. Cellular Information Systems, Inc. decided by the Supreme Court of Delaware on 22. 3. 1996 and reported in 105 (1996) DEL Lexis 105. In this judgment the Court held that the defendant-Broz was under no obligation to formally present the corporate opportunity to the CIS Board of Directors. Though presentation of such an opportunity may serve as a shield to a liability but there is no per se rule requiring such presentation, and then the Court observed as follows:-"of course presenting the opportunity to the board creates a kind of safe harbour for the director. . . . . . . It is not the law of delaware that presentation to the Board is a necessary pre-requisite to a finding that the corporate opportunity has not been usurped. " ( 47 ) IN the facts of the present case, Mr. . . . . . . It is not the law of delaware that presentation to the Board is a necessary pre-requisite to a finding that the corporate opportunity has not been usurped. " ( 47 ) IN the facts of the present case, Mr. Chinoy submitted that Sippys came to know about the termination of the agency of SSTS on 7th December 2001. They have not written a single letter to the Contship asking it to continue its agency with SSTS. They have not been able to contradict the assertions of Contship by showing any document that Contship was all throughout dealing with puris only. A grievance is made that Puris did not disclose the letter of termination to Sippys. It is submitted therefore that in any case on 7th December 2001 Sippys had come to know about it but have taken no steps to challenge the termination or to request contship to continue the agency. They resorted to a passing off action to begin with and thereafter filed the proceedings under Sections 397 and 398 of the companies Act after seven and half months in July 2002 when the agency with Sea World had already become operational. As far as the letter of termination being received by Puris is concerned, it was submitted that all correspondence by Contship was being received at the same address where the termination letter was received. It was not specifically sent to that address. It was further submitted that at the time of incorporation of ssts the registered office of SSTS was at Puris' personal office. Subsequently Puris were the people dealing with Contship and therefore they received a letter of termination. Non-disclosure of that letter can, at the highest, be criticized as the breach of duty to disclose but that cannot take away the fact of conscious termination of agency by Contship. Mr. Chinoy therefore submitted that the business opportunity was no longer available to SSTS. It ceased to be a corporate opportunity for it. Therefore as per the dicta in Deva sharma's case if Puris treated it as a personal opportunity they could not be faulted and their actions could not be hit by the second part of Section 88 of the trusts Act. It could not be said that Puris had obtained an interest adverse to that of SSTS since the opportunity was no longer available to SSTS. It could not be said that Puris had obtained an interest adverse to that of SSTS since the opportunity was no longer available to SSTS. ( 48 ) SUBMISSIONS of Mr. Doctor : (i ). Mr. Doctor appeared for Sea World in Appeal nos. 468 and 469 of 2004 to challenge the order passed in company Appeal Nos. 4 and 5 of 2004. He submitted that the proceedings filed by Sippys were withrespect to ssts and the alleged opression of Sippys by Puris therein. In his submission, CLB had no jurisdiction to pass the order against Sea World to pay its profits to sippys. Sippys had no shares in Sea World and Sea World had no connection with SSTS. He therefore submitted with respect to the third point of determination that whatever may be the order against Sippys with respect to ssts, no order could be passed against Sea World to make good the profit earned by it allegedly at the expense of sippys. He criticized the learned Single Judge for having gone to the extent of saying that there cannot be any limitation for the relief to be granted under section 402 of the Companies Act. He relied upon a judgment of the Division Bench of this Court in Shanti prasad Jain vs. Union of India reported in 75 BLR 778 at 811 to point out that a scope of proceedings under section 397 is essentially concerning the Company in dispute and not other Companies. He adopted the submissions of Mr. Chinoy but stated that even if the appeal of Mr. Chinoy fails, the order could not be maintained against Sea World. ( 49 ) APPEAL No. 358 of 2004 (arising out of the decision in Company Appeal No. 2 of 2004 and Company petition No. 40 of 2002) and submissions of Mr. Chagla, puris learned Counsel for Puris: (i ). Mr. Chagla pointed out that Company Petition no. 40 of 2002 was filed by Sippys on 1st July 2002 and the sole act of opression and/or mis-management alleged therein was with respect to the NOL transaction which had taken place some ten years earlier in 1992. In the reply of Puris, it was pointed out that this NOL which was a Company from Singapore, set up a joint venture in india with Puris alone. Puris took a loan of Rs. In the reply of Puris, it was pointed out that this NOL which was a Company from Singapore, set up a joint venture in india with Puris alone. Puris took a loan of Rs. 49 lakhs from SSCO to buy the shares in the joint venture company. This loan was sanctioned by a resolution of the Board of Directors of SSCO passed on 15. 10. 1992 and it was signed by Mr. Kundan Sippy. The resolution noted that NOL was entering into the joint venture with Puri alone in his individual capacity and the same was permitted and an interest free loan of Rs. 49 Lakhs was given to Puri. This joint venture was mutually ended in 2000. Puri sold the shares for Rs. 2. 93 Crores and repaid the loan of Rs. 49 Lakhs. That was also approved by the Board of SSCO by its resolution dated 8th May 2000 which was also signed by Mr. Kundan Sippy. The agreement for sale of the shares and the transfer forms were also signed by Mr. Kundan Sippy as witness. The return of Rs. 49 Lakhs has been duly reflected in SSCO's account ending 31st March 2001 which is also signed by mr. Kundan Sippy. Yet an allegation of not returning the amount has been made which according to Puris is false to the knowledge of Sippys. (ii ). It was pointed out by Mr. Chagla that CLB therefore specifically noted in paras 10 to 14 of its judgment the submissions of Puris that Sippys had not come with clean hands and had suppressed the facts known to them. In para 24 CLB did give the finding accordingly and also that Mr. Kundan Sippy had not denied his signatures on the above-referred documents. In spite of that CLB directed Puris to pay interest at the rate of 12% on the amount of Rs. 49 Lakhs which it considered as due for the delay in repayment on equitable considerations. The CLB gave one more direction which was with respect to exchange of shares of SSCO also. (iii ). Puris filed Appeal No. 2 of 2004 under Section 10f of the Companies Act challenging the directions to pay the interest and also the direction to buy the shares of each other to take the respective Companies. The CLB gave one more direction which was with respect to exchange of shares of SSCO also. (iii ). Puris filed Appeal No. 2 of 2004 under Section 10f of the Companies Act challenging the directions to pay the interest and also the direction to buy the shares of each other to take the respective Companies. As far as the first direction is concerned, the learned single Judge did note in para 8 of his judgment that the finding of CLB viz. that Sippys had not come with clean hands was a finding of fact which had not been challenged before him. The direction to pay interest could not therefore be sustained and the learned Single judge set it aside. The Sippys have not challenged this part of the order. (iv ). Once a finding is given that the party concerned had not come with clean hands, the petition ought to have been dismissed. The learned Single Judge, however, maintained the second direction and observed in para 49 of his judgment that in his understanding CLB had found that there was opression of Sippy group and mis-management in the affairs of the Companies and therefore that direction had been given. Reliance was placed by Mr. Chagla on a judgment of Single Judge of karnataka High Court in S. D. N. Wadiyar vs. Sri venkateshwara Real Estate P. Ltd. reported in 72 (1991) Company Cases page 211 to the effect that the question of good faith has to be tested by the conduct of the petitioner not only in the particular proceedings but also in parallel proceedings in civil courts. Mr. Chagla, therefore, submitted that both the petitions ought to have been dismissed. Yet apparently on the basis of the allegations in Company Petition No. 41 of 2002 concerning SSTS, the direction for exchange of shares has been maintained in Company Petition No. 40 of 2002 which is erroneous, since apart from the NOL controversy there was no separate allegation of opression or mis-managementconcerning SSCO. Mr. Chagla submitted that, in any case, Company Petition No. 40 of 2002 ought to have been examined independently on its own merits and dismissed. Mr. Chagla submitted that, in any case, Company Petition No. 40 of 2002 ought to have been examined independently on its own merits and dismissed. For that purpose he relied upon the following observations of the Apex Court in para 217 of Sangramsinh Gaekwad vs. Shantadevi, reported in 123 Company Cases -" For the purpose of grant of relief, the High court could only consider the pleadings filed in Company Petition No. 5 of 1991. If no relief could be granted having regard to the pleadings contained therein, it is inconceviable in law that such relief would be granted on the basis of the pleadings made in other proceedings and totally ignoring the admissions made by respondent No. 1 herein in the proceedings initiated by her. " (v ). It was pointed out by Mr. Chagla that a mere deadlock cannot be a ground for granting relief under section 397 and 398 of the Companies Act, though it may result into a winding up of a company on the ground of being just and equitable as observed by the Apex Court in para 32 of Hind Overseas Pvt. Ltd. vs. R. P. 574 Jhunjhunwalla reported in AIR 1976 SC 574. As held in para 19 of S. P. Jain vs. Kalinga Tubes, AIR 1965 SC page 1543, a finding of opression and mis-management was a pre-condition for granting reliefs under Sections 397 and 398 of the Companies Act. This view is followed by various High Courts e. g. Calcutta High Court in the case of Modern Furnishers Pvt. Ltd. reported in 58 (1985) Company Cases 558. (vi ). Since Company Petition No. 40 of 2002 was entertained on the basis of the allegations in Company petition No. 41 of 2002, Mr. Chagla dealt with the second point for determination. He pointed out that the english judgments relied upon in support of Sippys by dr. Tulzapurkar were based on the words "unfairly prejudicial" added in the English law. Section 397 of the Indian Companies Act was almost on the same line as section 210 of the English Act. In England the term "opression" in Section 210 came to be substituted by the words "unfairly prejudicial conduct", to make it clear that it was not necessary to show the act "complained of" was illegal. Such an amendment has not been accepted in India and our section has not been altered. In England the term "opression" in Section 210 came to be substituted by the words "unfairly prejudicial conduct", to make it clear that it was not necessary to show the act "complained of" was illegal. Such an amendment has not been accepted in India and our section has not been altered. Therefore the concepts of unfair prejudicial conduct act could not be brought in while interpreting Section 397 of the Indian Companies Act. ( 50 ) SIPPYS Counter by Dr. Tulzapurkar appearing for sippys: (i ). Dr. Tulzapurkar, learned Counsel appearing for sippys, submitted that one has to look to the entire controversy from the point of view of a bystander. He, for that purpose, referred to a passage from Palmer's company Law 24th Edition Vol. I page 993. The learned author holds that the general text for unfair prejudice has to be an objective one and not a subjective one namely as to what a reasonable bystander observed the consequences of the conduct would regard it. In his submission, if a third party is to be set up a company with the name Samrat, Sippys and Puris would have surely filed a joint action. In the present case, Puris sent their employee one Mr. Bharucha to Goa to float a company in the name of Samrat Logistics on the Registrar of companies pointing out that the name Samrat was registered and a no objection was required. Puris gave the no objection on behalf of SSTS on 10. 1. 2001. This was not disclosed to Sippys. This very Mr. Bharucha later-on withdrew from this proposed company and allowed puris to become the main directors of Samrat Logistics. In his submission, the Jaisingh family had walked out of his business and were compensated with the clear understanding that they will not use the name Samrat. Surely if such a company was to be floated by a third party, Sippys and Puris would have jointly taken necessary steps. (ii ). Dr. Tulzapurkar drew our attention to the correspondence leading to the filing of the Company petition. He pointed out that only on 11th December 2001 Puris had raised the disputes with respect to meridian and as to how Sippys were responsible for the financial difficulties of meridian. (ii ). Dr. Tulzapurkar drew our attention to the correspondence leading to the filing of the Company petition. He pointed out that only on 11th December 2001 Puris had raised the disputes with respect to meridian and as to how Sippys were responsible for the financial difficulties of meridian. That was only a few days after Sippys came to know of Puris setting up of a new company and diverting Contship agency to it on 7th december 2001. In his submission this was nothing but a bogie being raised. He pointed out that Sippys had asked Puris to file a Suit against Samrat Logistics. But Puris continued to create difficulties. He pointed out that the following factors show the breach of trust by Puris:-" (i) Proceeding to set up Samrat Logistics in goa in a clandestine manner. (ii) Objecting to the filing of the suit. (iii) Not holding any meeting when such a proposal was moved. (iv) Raising the bogie of Meridian at a later point of time. (v) Persuading Contship to take away the business of agency from SSTS and giving it to samrat Logistics (now Samrat Sea World ). Dr. Tulzapurkar pointed out that at page 26 of the petition this entire submission is with respect to registration in Goa and the tactics used amounting to breach of fiduciary duty have been raised and in para 20 of the CLB judgment, a finding has been given that there is a breach of the fiduciary duty. " (iii ). Dr. Tulzapurkar submitted that the two companies were nothing but glorified partnerships. Therefore, fiduciary principles in a partnership will have to be applied. If the reliefs which are prayed are not granted on the ground that the remedy under Section 433 (f) of the Companies Act namely winding up is available, it would cause injustice to Sippy group and the purpose of protecting opposite group would suffer. (iv ). Dr. Tulzapurkar criticized the fact that the termination letter dated 1st December 2001 was not disclosed to the Sippy group nor any meeting was called to discuss the effect thereof. Puris on the other hand proceeded to shift the business of Contship agency to their own new comer. This was nothing but a breach of fiduciary duty as directors under Section 88 of the trusts Act. Puris on the other hand proceeded to shift the business of Contship agency to their own new comer. This was nothing but a breach of fiduciary duty as directors under Section 88 of the trusts Act. They had availed of their position as directors of SSTS to grow in the business and now they were trying to walk out with a cream thereof.