Judgment BISWANATH SOMADDER, J. (1.) THE instant appeal arises from a judgement and order dated 17th November, 2006 passed by the honble First Court, dismissing the interlocutory application of the plaintiff/petitioner. (2.) IT would appear from the observations made by the Honble First court that the genesis of the interlocutory proceeding, initiated by the plaintiff/petitioner lied in the proposal of the defendant/respondent, Descon LIMITED (hereinafter referred to as DESCON), to issue equity shares in favour of venture capitalists on preferential basis upto a limit of 49% (forty nine percent) of the increased subscribed equity shares of the company at a premium of not less than Rs. 600/- (rupees six hundred only) for every further share of Rs. 10/- each. (3.) FROM the prayers set out hereinbelow, it will appear that the plaintiff/petitioner was, inter alia, seeking an order of injunction restraining DESCON from holding the Extra-ordinary General meeting (hereinafter referred to as EGM) in terms of notice appearing at "annexure H" to the interlocutory application and also for an injunction restraining the defendant/respondent, their men, servants and agents or otherwise from giving effect or further effect to any resolution passed at the said EGM: "a) Injunction restraining the respondent No. 1 from holding the Extra Ordinary General Meeting in terms of the notice being Annexure H hereof, b) Injunction restraining the respondents, their men, servants and agents or otherwise from giving effect or further effect to any resolution passed at the Extra Ordinary general Meeting of the respondent No. 1 held and/or to be held on 9th June, 2006. c) Declaration that any resolution passed at the Extra ordinary General Meeting of the respondent No. 1 on 9th June, 2006 for allotment of any shares in favour of any venture capitalists or any other authority is illegal, null and void. d) Ad-interim orders in terms of prayers above. e) Costs of and incidental to this application be borne by the respondents. f) Such further order or orders be passed and/or direction or directions be given as to this Honble Court may seem fit and proper." (4.) THE Honble First Court in the impugned judgement and order went on to record the factual matrix of the case in detail and inter alia observed as follows:- "having considered the pleadings and the rival submissions, i find that two issues emerge for resolution of the present proceeding. The first one is that of maintainability of the interlocutory motion, being G. A. No. 1745 of 2006, and the second one is as to whether the petitioner is entitled to an injunction restraining the respondent from giving effect to the resolution passed on 9th June 2006. I propose to deal with the issue of maintainability of the present proceeding first. The maintainability of the interlocutory motion, (G. A. No. 1745 of 2006) has been assailed by both the respondent and the proforma respondent on two counts. Firstly, it has been contended that the present interlocutory motion goes beyond the scope of the suit. The second ground of attack is that the petitioner, not being a shareholder of DESCON, cannot question the validity of the resolution passed in the extra-ordinary general meeting of the company. And the petitioners right, if any, cannot go beyond that which can be exercised by a shareholder as laid down in the Escorts case (supra). On the latter issue, i.e. whether the petitioner not being a shareholder of DESCON can maintain the present petition having regard to the reliefs prayed, I am not inclined to reject the petition at the threshold. I accept the submission of the respondents that if the petitioner was a shareholder of DESCON, it would not have been entitled to apply for the reliefs as prayed for in this petition. After a resolution is passed in an extra-ordinary general meeting of a company, it may not be open to a shareholder to challenge such resolution unless some illegality or irregularity in such resolution is shown. This position of law seems to be clear and well-established, as no statutory irregularity or illegality has been alleged in the present case. But the petitioners case is not on breach of any statutory right. It is founded on the basis of equitable right, which it claims, stands vested in it in view of the resolution of 9th April 1999, and the ensuing letters of offer and alleged acceptance. In my opinion, if a resolution is passed by a company, the effect of which would be to override or supersede a vested legal or equitable right of another person, then it would be open to the latter to challenge the legality of such resolution. In my opinion, if a resolution is passed by a company, the effect of which would be to override or supersede a vested legal or equitable right of another person, then it would be open to the latter to challenge the legality of such resolution. The nature of right the petitioner is seeking to enforce in the present interlocutory motion is not derived from its status of a shareholder or a potential shareholder, but for enforcement of a right which the petitioner claims, has its source in an alleged contract with the respondent. The nature of the right which may be enforced in such a situation may not remain confined to the shareholders rights as enumerated in the Escorts decision (supra). It has also been contended by the respondent that the instant interlocutory motion (i.e. G. A. 1745 of 2006) is not maintainable as the same goes beyond the scope of the suit. To this, the answer of the petitioner appears to be that the intention of the respondent as manifested in the resolution passed on 9th June 2006 is to defeat the right of the petitioner to have control of 26% of the paid up equity share capital of DESCON, and since the relief claimed in the suit include prayer for perpetual injunction restraining the defendant from issuing or allotting any further shares of the defendant except to the plaintiff and the proforma defendant in accordance with the resolution passed on 9th April 1999, the present proceeding comes well within the ambit of the suit. The foundation of the claim of the plaintiff in the suit being C. S. No. 504 of 2001 was refusal of the defendant to issue 1,73,713 equity shares of face value of Rs. 10/- each to the plaintiff. The immediate event, or incident which prompted the plaintiff to institute the suit, as it appears from the plaint, was the decision of the Board of Directors of DESCON to amend the articles of Association of the company by introducing Article 53a therein. The scope of this Article has been discussed in the earlier part of this judgement. It has been pleaded in the plaint that if this Article was incorporated, the same would tantamount to defeating the valuable rights of the company. The scope of this Article has been discussed in the earlier part of this judgement. It has been pleaded in the plaint that if this Article was incorporated, the same would tantamount to defeating the valuable rights of the company. The interlocutory motion taken out for interim relief in connection with introduction of Article 53a was disposed of by this Court by the order passed on 16th July, 2003. So far as the present interlocutory motion is concerned, this has been triggered by the proposal for issuing fresh equity share capital upto 49% of the paid up share capital of the Company at a premium in favour of venture capitalists. It appears that the resolution to give effect to this proposal has been approved by the shareholders of DESCON on 9th June 2006. The contention of the petitioner is that if this resolution is given effect to that would defeat the rights of the petitioner to control 26% of equity share capital of DESCON. But can this new set of facts be introduced in a proceeding in connection with the suit, the scope of which I have discussed in the proceeding paragraphs. I am of the opinion that it cannot be so. Under the code the Court has been conferred with jurisdiction to pass interim order directing preservation or maintenance of status quo as regards property or right whose violation is complained of in any suit, if there is threat of wastage or disposal of property or commission of breach of contract or injury to such right. Admittedly, there is no pleading in the plaint as regards the proposal and the ensuing resolution for issuing equity capital to venture capitalists as these events surfaced in the year 2006. The argument of the petitioner, however, is that the issue of the petitioners claim for control of 26% of equity capital of DESCON is central to the dispute involved in the suit, and if the impugned resolution of 9th June 2006 is given effect to, the petitioners right of 26% holding of equity share capital of DESON would stand permanently defeated. It is the case of the petitioner that its grievance or complaint forming the basis of the present interlocutory motion has direct link to the cause of action of the suit. It is the case of the petitioner that its grievance or complaint forming the basis of the present interlocutory motion has direct link to the cause of action of the suit. The claim of the petitioner in the suit, however, is in respect of its entitlement to a certain number of shares, and not over 26% equity holding. This is how the plaint has been framed. The two communications, which the petitioner claims to have concluded the contract relates to issuance of 1,73,713 shares in favour of the petitioner and does not speak of control of 26% equity holding in or of the respondent. Mr. Sarkar, has argued that the real intention of the arrangement amongst the parties which culminated in the resolution passed in the extra-ordinary general meeting of DESCON held on 9th April 1999 was that both the petitioner and DPSL would have 26% holding of the paid-up share capital of DESCON. In support of this submission, he has drawn my attention to the explanatory statement to the notice of Descon in respect of the extra-ordinary general meeting of 9th April 1999 to which I have made reference earlier. " (5.) WHILE dealing with the scope, power and jurisdiction of the interlocutory Court to grant relief in favour of a plaintiff the Honble first Court, inter alia, held as follows:- "the power or jurisdiction of a Court to grant interim relief in favour of a plaintiff flows from the case made out in the plaint. In the present case, the petitioner is seeking relief on a set of facts that occurred in the year 2006. This set of facts may defeat the petitioners right to get reliefs claimed in the suit. But this factor cannot alone bring the allegations of the petitioner on the strength of which it has applied for relief in the present interlocutory motion within the scope of the suit. The scope of a suit cannot be judged on the basis of reliefs claimed, but on the basis of statement of facts on the strength of which such reliefs are claimed. If a totally new and independent set of facts emerge subsequent to institution of a suit, in my opinion, fresh interim reliefs cannot be applied for, with the cause of action for the suit, as pleaded in the plaint, remaining unaltered. If a totally new and independent set of facts emerge subsequent to institution of a suit, in my opinion, fresh interim reliefs cannot be applied for, with the cause of action for the suit, as pleaded in the plaint, remaining unaltered. As regards the portion of the explanatory statement referred to in the preceding paragraph, a plain reading of this suggests that the control of 26% was indicated there more as a consequence of allotting the stipulated number of shares. Such degree of control may have been the idea at that point of time, but that did not get reflected in any concrete action on the part of the parties so as to make 26% control of paid-up equity shares a vested legal right of the petitioner for all time to come, but remained an inchoate arrangement." (6.) AFTER making the above observation the Honble First Court went on to hold as follows: - "in the present case, the petitioner is seeking relief on a fresh set of events, independent of the cause of action forming the basis of the suit. Just because the acts of the respondent complained against would have deprived the petitioner the degree of control it would have secured had it been allotted 1, 73, 713 shares, these acts of the respondent DESCON cannot be brought within the ambit of the same suit. The present interlocutory motion, being G. A. No. 1745 of 2006, thus in my opinion is not maintainable, the same being beyond the scope of the suit (C. S. No. 504 of 2001)." (7.) ALTHOUGH the Honble First Court held that the interlocutory motion was not maintainable, in view of the substantial arguments advanced on merit by the learned counsel appearing on behalf of the parties, the court chose to decide the case of the plaintiff/petitioner on merit as well. The observations of the Honble First Court in this regard may be found in paragraphs 43 and 44 of the judgement which are set out hereinbelow:- "the argument of the petitioner in support of this application is that it has a strong prima-facie case on merit. Such prima-facie case is, according to the petitioner, for control of 26% equity capital of the respondent. Mr. Sarkar has laid strong emphasis on the concept of "yule" group, and the DESCONs obligation to remain within that group. Such prima-facie case is, according to the petitioner, for control of 26% equity capital of the respondent. Mr. Sarkar has laid strong emphasis on the concept of "yule" group, and the DESCONs obligation to remain within that group. In support of the argument on this aspect, I have been taken through the series of events since incorporation of DESCON. Mr. Sarkar has also argued that while making of the offer, DESCON was quite clear of the fact that the petitioner would have control over 26% of the equity share capital. This gets reflected in the explanatory statement to the notice of extraordinary general meeting of 9th April 1999 as also in the odd numbers of shares which were offered. I am, however, not satisfied at this prima-facie stage of the petitioners claim of vested right over control of 26% equity-share capital of the respondent. The claim of the petitioner can at best be for 1,73,713 equity shares. There appears to be no legal prohibition and no such argument has been advanced either, on issuance of fresh equity share capital, which forms the subject-matter of the resolution of the shareholders of DESCON in its extraordinary general meeting held on 9th June 2006. Under the provisions of Section 81 (1a) of the Companies Act, 1956 the shareholders The shareholders mandate expressed through a special resolution held in a properly convened meeting would, under normal circumstances, the sole determinant for such a step." (8.) AFTER dealing with the judgements, cited by the learned counsel representing the plaintiff/petitioner, the Honble First Court finally held as follows: -"in the present case, I have already observed, I do not think the petitioner has made out a case for grant of temporary injunction. The petitioners case, at the highest, can be for allotment of 1,73,713 shares, and not permanent control of 26% equity holding of the respondent. So far the communication of the ministry of Heavy Industries, Government of India is concerned, this appears to be advisory in nature and does not create any legal right in favour of the petitioner. On the argument that there being a "yule" group, to which respondent was a necessary constituent, I do not find any legal support. So far the communication of the ministry of Heavy Industries, Government of India is concerned, this appears to be advisory in nature and does not create any legal right in favour of the petitioner. On the argument that there being a "yule" group, to which respondent was a necessary constituent, I do not find any legal support. The "group" itself is a nebulous concept in the context of this case and the petitioner cannot have any permanent control over any of its group companies under the law, save by way of establishing controlling interest on them. This is an argument based on historicity, but does not establish any legal right. In fact, the proforma respondent, which on petitioners own case, is a constituent of the group is contesting the petitioners claim. On the question of balance of convenience and inconvenience, in my opinion, this aspect largely becomes insignificant as I am of the opinion that the petitioner has failed to make out a prima-facie case. For the purpose of grant of temporary relief, requirement to establish a prima-facie case is the first and main criteria. If this condition is not satisfied, an applicants case rested on the aspect of balance of convenience and or inconvenience or irreparable loss or prejudice stands on a very weak foundation. In the present case, on facts also I do not think the petitioner has made out an outstanding case. Considering all these factors, I dismiss the present interlocutory motion. The interim order passed in this matter accordingly stands vacated. " (9.) BEFORE us, learned counsel appearing on behalf of the three parties made their respective submissions, which stood crystallized in the respective notes of arguments, filed by them subsequently. In so far as the appellant/plaintiff is concerned, it was contended, inter alia, as follows: -The interlocutory application was necessitated by reason of the fact that DESCON had convened EGM on 9th June, 2006. The purport of the said notice is to dilute and alter the structure of shareholding, which Andrew Yule and co. Ltd. is entitled to in DESCON in terms of the resolution passed in EGM of DESCON held on 9th April, 1999. The purport of the said notice is to dilute and alter the structure of shareholding, which Andrew Yule and co. Ltd. is entitled to in DESCON in terms of the resolution passed in EGM of DESCON held on 9th April, 1999. DESCON was incorporated on 24th March, 1995 and the composition of Board of Directors of DESCON was mainly consisted of nominees of Andrew Yule and Co Ltd. and/or the persons who became the Directors at the instance and with the support of the Andrew Yule. (10.) ON 27th January, 1995, Dishergarh Power Supply Company (hereinafter referred to as DPSC) proposed that the said proforma respondent would issue and allot 28, 80,000 equity shares of Rs. 10/- each at premium of Rs. 60/- per share on right basis subject to approval of the shareholders of the proforma respondent in the manner followings: - 14,40,000 equity shares together with Detachable tradable Warrants (DTW) by way of rights to be issued to the existing members of DPSC in the ratio of one share and 1 DTW of every equity share held in DPSC as the record date and 14,40,000 DTW to be converted into 14,40,000 shares of Rs. 10/- each after expiry of 12 months but within 24 months from the date of allotment of shares under the said rights issue and on such conversion one new equity share of fact value of Rs. 10/- to be issued and allotted in exchange and surrender of each DTW at a premium of Rs. 60/- and upon full payment. (11.) ON 16th November, 1995 the Board of Andrew Yule and co. Ltd. considered such offer but due to commercial reason at that point of time, Andrew Yule and Co. Ltd. and two of its group companies decided to renounce such rights issue in favour of DESCON. At that point of time, Andrew Yule and two of its group companies were together holding about 44.70% of the paid-up capital of DPSC. The aforesaid decision was taken on the clear understanding that DPSC would continue to remain under the control of Andrew Yule. In fact, there are Common directors in the board as well. (12.) IN 1996 Andrew Yule and two of its group companies, namely, Bengal Coal Company Ltd. (BCCL) and Katras jherriah Coal Company Ltd. (KJCL) owned about 44. 70% of the total paid up capital of DPSC. In fact, there are Common directors in the board as well. (12.) IN 1996 Andrew Yule and two of its group companies, namely, Bengal Coal Company Ltd. (BCCL) and Katras jherriah Coal Company Ltd. (KJCL) owned about 44. 70% of the total paid up capital of DPSC. The decision to renounce the shares in favour of DESCON was on the basis that the DESCON was within the Andrew Yule Group at the relevant time and accordingly the shares remained within the group. Andrew Yule and its group companies accordingly approached SEBI for renouncing such rights of the plaintiff and to its group companies in favour of DESCON. On 16th February, 1996, SEBI upon due consideration permitted acquisition of 29.80% stake of the plaintiff in DESCON through right renunciation by Andrew Yule and other coal companies. (13.) SEBI while granting sanction/approval had also taken into consideration that DESCON was a part of Andrew Yule Group and the shares would remain within the group companies. It was on that consideration that the preferential allotment of shares in favour of DESCON was made at Rs. 10/- each at par. DESCON thus received about 29.8% shares through such right renunciation at Rs. 10/- each at par. Out of the total paid-up capital of DESCON was Rs. 40,10,000/- made up of 4,01,000 equity shares of Rs. 10/- each, a total of 3,20,700 shares representing 79.18% of the paid-up capital of the respondent was issued and allotted in favour of employees of group companies headed by Andrew Yule including DPSC and the balance 80,300 shares representing 20.02% of the paid-up capital of Descon was issued and allotted in favour of DPSC on 25th July, 1996. 10/- each, a total of 3,20,700 shares representing 79.18% of the paid-up capital of the respondent was issued and allotted in favour of employees of group companies headed by Andrew Yule including DPSC and the balance 80,300 shares representing 20.02% of the paid-up capital of Descon was issued and allotted in favour of DPSC on 25th July, 1996. (14.) IN view of the arrangement that the overall control of the proforma respondent would be retained by Andrew Yule and its group companies and in view of the renunciation of the said rights issue by Andrew Yule and its two group Companies in favour of the respondent being on the basis of the approval issued by the SEBI that such shares would remain within the group of companies headed by Andrew Yule, at a duly convened Board Meeting of the Respondent held on December 26, 1998, it was resolved that the respondent would not sell or transfer its shareholding of and in the proforma respondent so that such shareholding in the proforma respondent remained within the group of companies headed by Andrew Yule. It was further resolved that in the event of any exigency, such shares held by the respondent in the proforma respondent would be sold or transferred then Andrew Yule and its said two group companies would have the first right to purchase the same. (15.) BY referring to a Board Meeting of the respondent, held on 17th March, 1999, it was contended on behalf of the appellant, Andrew Yule and Co. Ltd. , that the resolutions passed in the said Board Meeting were on the basis of understanding that Andrew Yule and Central Government were at all material times to retain control of DPSC, being the proforma defendant/respondent. (16.) THE appellant/plaintiff, Andrew Yule and Co. Ltd. , further contended before us as follows: - DESCON convened an EGM of its members to pass special resolutions on 9th April, 1999, which, inter alia, includes extension of the lock in period for the transfer of the equity shares allotted on 10th April, 1996 for a further period of two years from 10th April, 1999 till 10th April, 2001 and secondly to issue and allot on preferential basis 1,73,713 equity shares of Rs. 10/- each at par of the company to the plaintiff i. e. Andrew Yule and 93, 412 equity shares of Rs. 10/- each of the Company to DPSC. 10/- each at par of the company to the plaintiff i. e. Andrew Yule and 93, 412 equity shares of Rs. 10/- each of the Company to DPSC. The said 1,73,713 equity shares represent 26% share of DESCON, which DESCON had agreed to allot in the said meeting. (17.) THE explanatory statement, inter alia, gives the following reasons for passing the said two resolutions: - i) The objective of the DESCON in introducing such lock in period was to ensure that the shares are continued to be held so that they enure the benefit to the continuing employees and the company in the Andrew Yule Group. ii) The existing paid-up share capital of DESCON is held by DPSC, the promoter and the employees of andrew Yule Group. In order to strengthen the holdings of Andrew Yule Group, it had been felt desirable that AYCL, the present Company should also participate in the share capital of DESCON and simultaneously further equity shares be also issued to DPSC. Accordingly, the Board of Directors has proposed to issue and allot on preferential basis such equity shares to AYCL and DPSC for cash at par and with this preferential allotment, AYCL and DPSC will each hold 26% of the paid-up share capital of the Company. (18.) ONCE the General Body of shareholders had accepted the decision would appear in the EGM of the members, the board has to carry out such decision. No right is reserved to the Board to act to the contrary. Board has no power to take away any such shares from the group and make allotment to outsiders. DESCON thereafter by a letter dated 9th April, 1999 communicated the resolution passed by the members in such EGM. (19.) IN view of the aforesaid letter dated 9th April, 1999 which was signed by Sri Chiranjib Das as Secretary of DESCON, it is no more open for DESCON to deny its liability. The receipt of the letter dated 11th June, 1999 in respect whereof a dispute was sought to be raised by the respondent is immaterial in view of the clear acknowledgement in the letter dated 9th April, 1999 by the respondent to issue and allot to the plaintiff/petitioner 1,73,713 shares of the respondent of the face value of Rs. 10/- each at par. 10/- each at par. In view of Sections 3 and 4 of the contract Act the communication of the proposal was complete as soon as DESCON had put it into transmission and it had come to the knowledge of Andrew Yule being the person to whom such proposal was made. Accordingly, the alleged non-receipt of the letter from Andrew Yule, being letter dated 11th June, 1999, by which Andrew Yule had communicated its acceptance becomes immaterial. DESCON cannot resile from its offer. DESCON was contractually bound to make such allotment and cannot change the structure and pattern of shareholding at its own sweet will. If 26% of shares have been allotted to Andrew Yule, Andrew Yule would have the right to defeat any such resolution, which is sought to be implemented and the subject matter of challenge in the said application. (20.) MOREOVER, DESCON had admitted its liability in its pleading. The plaintiff had relied upon the Board Meeting of the respondent held on 17th March, 1999 which refers to a decision of the Board to approve issue of additional shares on preferential basis so that upon such increase in the paid up capital, Andrew Yule and DPSC would each hold 26%. While dealing with this contention, in their affidavit DESCON admitted the situation and only stated that the ". . . . . . . . . . Same are matters of record and save what appears therefrom. . . . . . . . . . . ". Significantly, the said affidavit-in-opposition was affirmed by Sri Chiranjib Das on behalf of DESCON who had signed the letter of offer dated 9th April, 1999. Accordingly, DESCON was bound by such admission in pleading and cannot act contrary thereto. (21.) THAT all of them are acting within the group would also evident that Sri Chiranjib Das was in DESCON as will appear from the Extracts of the Minutes of the Meeting of the Board of Directors held on 26th December, 1998 and the letter of offer issued by DESCON under his signature on 9th April, 1999. (22.) THE EGM of DESCON, held on 9th April, 1999, records the names of Directors who also happen to be the Directors in the Board of Andrew Yule. (22.) THE EGM of DESCON, held on 9th April, 1999, records the names of Directors who also happen to be the Directors in the Board of Andrew Yule. The said Sri Chiranjib Das while dealing with the allegations made by the plaintiff, admitted the said offer, but in his letter dated 9th July, 2001 doubted about the concluded contract. The conduct of Chiranjib Das is absolutely unprecedented and mala fide. The same Chiranjib Das, now this time in the capacity of Secretary and Senior Manager of DPSC, communicated the reservation of the Ministry of Heavy Industries with regard to issuance of shares to the extent of 49% to venture capitalist. It shows that the personnel were commission in the ground and DESCON was all through out considered to be a part of Andrew Yule Group. (23.) THEREAFTER the Ministry of Heavy Industries permitted acquisition of 26% of the equity at par on preferential allotment basis in DESCON on 20th July, 2001. Accordingly, on 23rd July, 2001, Andrew Yule duly communicated DESCON the approval of Central government dated 20.7.2001 and intimated that the plaintiff was in the process of issuing a cheque for Rs. 17,37,130/- in favour of DESCON towards consideration of 1,73,713 equity shares of Rs. 10/- each which represents 26% of equity, which the plaintiff is entitled to. (24.) DESCON, on the specious plea that the Department of Company Affairs in an inspection carried under Section 209a of the Companies Act, 1956 had observed that the issue of shares at par would not be in the interest of the existing shareholding of DESCON and refused to allot such shares in favour of Andrew Yule. (25.) SUCH plea was absolutely untenable in view of the governments clarification dated 27th September, 2001 in which the Government has totally clarified that Inspecting offices query during inspection about the justification of allotment of 26% shares at par was a simple query and not a decision of the Department of Company Affairs. Moreover, DESCON coming to know such shares was only on the basis of remaining within the Andrew Yule group and that was a sole consideration for which the shares were allotted at Rs. 10/- at par and accordingly DESCON could not claim any higher price. They were, in fact, holding the said shares in trust for the Andrew Yule and its group companies. 10/- at par and accordingly DESCON could not claim any higher price. They were, in fact, holding the said shares in trust for the Andrew Yule and its group companies. The same has resulted in filing of the suit and interim application, which was ultimately disposed of on 16th July, 2003. On 7th July, 2006 Andrew Yule came to know that DESCON was to convene an EGM on 9th June, 2006 for the purpose of issuing equity shares on preferential basis upto a limit of 49% in favour of some venture capitalists. Since issuance of such shares would clearly jeopardize the interest of Andrew Yule in DESCON, Andrew Yule brought it to the notice of the Joint Secretary, Department of Heavy industries, about such fact and requested such Ministry to take up the matter with DPSC and to look into the grievance of Andrew Yule. On 8th June, 2006 Andrew Yule received a communication from the Department of Heavy Industries addressed to DPSC from which it appears that the Ministry had questioned such preferential allotment in favour of such venture capitalist without making allotment in favour of Andrew Yule. On the basis of instructions received from the ministry, DPSC by a letter dated 9th June, 2006 requested DESCON to postpone the EGM scheduled to be held on 9th June, 2006. DESCON by its purported reply dated 9th July, 2006 to the letter of the DPSC claimed that the question of postponing EGM does not arise and alleged that they require infusion of funds for which they have decided to convene such meeting. (26.) THAT the desire of the Government that such preferential allotment of equity shares in DESCON should come to Andrew Yule and its group would also be evident from the letter of Ministry to the Company Secretary of DPSC on 8th June, 2006. The Government had expressed its concern that notwithstanding the decision of the shareholders at the meeting held on 9th April, 1999, such shares were not allotted in terms of the said resolution. The Government had expressed its concern that notwithstanding the decision of the shareholders at the meeting held on 9th April, 1999, such shares were not allotted in terms of the said resolution. (27.) THE appellant has further contended that the Honble first Courts finding that there is no right of Andrew Yule to such 26% preferential allotment was completely misplaced and contrary to record and that the Honble first Court had failed to appreciate that no such resolution could have been passed in the event such 26% shares were allotted to Andrew Yule in terms of the decision of the board of DESCON and the offer letter dated 9th April, 1999. The appellant has also contended before us that it is seeking to enforce its contractual right and accordingly the question of legitimate expectation could not and does not arise. The claim of Andrew Yule was formally established and would also, inter alia, be evident from the following: -"i) Letter of SEBI granting approval on 16th February, 1996. ii) 26th December, 1998-decision of DESCON that they would not sell or transfer any shareholding. iii) 17th March, 1999-the decision of the Board of DESCON that Andrew Yule would retain 26% of the paid up capital of the respondent iv) 9th April, 1999- the EGM of the members passing the resolution to the aforesaid effect and thereby retaining and preserving the right of Andrew Yule to represent 26% share of DESCON. v) 9th April, 1999- communication of DESCON of the decision of the shareholders vi) 20th July, 2001-The Central Government approving acquisition of 26% of equity at par on preferential allotment basis to Andrew Yule in DESCON vii) 23rd July, 2001-Andrew Yule duly communicated the approval of the Central government of DESCON. " (28.) IT has been also contended by the appellant that since it is seeking to enforce a contractual right, the two decisions of the Honble Supreme Court rendered in Needle and in Gaekwads case, have no manner of application. Andrew Yule, having a special right and DESCON holding shares on behalf of the Andrew Yule and Co. Ltd., everyone including SEBI and Central Government proceeded on the basis that such shares were to remain within the house and/or group and that was the understanding of all, including DESCON. Andrew Yule, having a special right and DESCON holding shares on behalf of the Andrew Yule and Co. Ltd., everyone including SEBI and Central Government proceeded on the basis that such shares were to remain within the house and/or group and that was the understanding of all, including DESCON. (29.) THE special right which the plaintiff has acquired in respect of the said shares would be evident from fact that SEBI has allowed acquisition of such 29. 80% stock of the plaintiff in DPSC through alleged renunciation by Andrew Yule and other coal companies on the sole consideration that notwithstanding such renunciation group share of Andrew Yule would remain in the said House intact. (30.) THE parties have never contemplated at any point of time that the said shares could not be given to outsiders. The said fact would be evident from the subsequent resolution of DESCON dated 19th April, 1999 where a lock in period was introduced to ensure that the shares are continued to be held so, so that they enure to the benefit to the continuing employees and the company in the Andrew Yule Group. (31.) THE Central Government approved acquisition of 26% of equity at par on preferential allotment basis by Andrew Yule on 20th July, 2001. It was when this fact was communicated, DESCON took a complete u-turn and was now seeking to deny the right of Andrew Yule on unjustifiable and baseless grounds. Reference was made to an inspection purported to have been made under section 209a of the Companies Act, 1956, which, however, by reason of the clarification issued on 27th September, 2001 by the Government that the Inspecting Officers query about the justification of allotment of 26% shares at par was a simple query and was not a decision of the department of the Company Affairs. (32.) THE reason for allotment of such preferential shares at par was that in 1996 itself Andrew Yule and its group companies decided that such shares should not go out of the group and it was an in-house arrangement so that the shares may not go to any outsider. The said shares were not meant for any trading purpose. SEBI, Government and all authorities while allowing such renunciation and granting approval for such acquisition had proceeded on the same test. The said shares were not meant for any trading purpose. SEBI, Government and all authorities while allowing such renunciation and granting approval for such acquisition had proceeded on the same test. Had there be no SEBI approval on 5th January, 1996 these shares would not have gone to DESCON at all. The letter dated 16th February, 1996 by SEBI is an important document which clearly stipulates the claim of the plaintiff for acquisition of such shares at par. The government has also allowed such acquisition mentioned hereinabove. (33.) THE allegations during the course of argument that the appellant not being a shareholder was not entitled to the said relief and that there was no concluded contract, are completely misplaced and contrary to records. The SEBIs approval and Minutes of the Board Meeting of DESCON, the letter of approval of the Central Government, all go to show that the plaintiff is entitled to the said shares and the defendant is required and obliged to return those shares to the plaintiff. The right to acquire those shares on the basis of the documents on record could not be disputed. Government had expressed its concern and disapproval in its letter dated 8th June, 2006 addressed to DPSC. This letter clearly shows that the denial of right by DESCON was unfair and prejudicial and accordingly DPSC was advised to take up the matter with DESCON. With regard to the submission of the respondent that the plaintiff has gone to BIFR and the said fact had not been stated in the interlocutory petition, the appellant submitted that the respondent did not take up the point before the Honble First Court or before this Bench in any of its pleadings. The affidavit of the respondent would not show that any such allegation has been made. The proforma respondent did not file any affidavit. The proforma respondent also could not deny the obligation of DESCON to allot such shares. DPSC did not file any affidavit or written statement. The Honble First Court could not have relied on the submission of DPSC. According to the appellant, the stand of DPSC is contrary to its own letter dated 9th June, 2006. (34.) ACCORDING to the appellant, whether it was or is before bifr is not a material fact, which requires a mention in the petition. The Honble First Court could not have relied on the submission of DPSC. According to the appellant, the stand of DPSC is contrary to its own letter dated 9th June, 2006. (34.) ACCORDING to the appellant, whether it was or is before bifr is not a material fact, which requires a mention in the petition. It has been the case of the plaintiff all through out that the plaintiff is ready with the money in terms of the agreement dated 9th April, 1999. The government has also approved such acquisition, as early as on 20th July, 2001 and such approval was duly communicated to DESCON on 23rd July, 2001. The Government is still eager to ensure that such shares ultimately went to Andrew Yule as would be evident from the letter dated 8th June, 2006. (35.) IT is nobodys case and at least not pleaded that because of BIFR, Andrew Yule would not be in a position to acquire the shares. On the contrary, in the pleadings DESCON alleged that there is no concluded contract. This departure in stand is clearly mala fide and should not be permitted. The appellant even today is in a position to deposit the entire consideration as was agreed upon, if so directed by this Honble Court. DESCON cannot claim any higher price since DESCON themselves have acquired the shares at Rs. 10/- at par. No higher price could be claimed by DESCON in view of SEBI and Central Governments approval. (36.) THE Honble First Court failed to appreciate that Andrew Yule and its group companies are entitled to 26% of the total shareholding of DESCON, which is otherwise also evident from the various minutes of the Board meetings, SEBIs permission and Central Governments approval regarding acquisition of such shares. The number of shares have been so arranged that Andrew Yule and its group companies would get 26% of the shareholding in DESCON. The special resolution which is under challenge, if given effect to, would clearly interfere with the right of the appellant/plaintiff to have the said allotment inasmuch as the appellant is entitled to relief in terms of prayers (c), (d), (f) and (h) of the plaint. The special resolution which is under challenge, if given effect to, would clearly interfere with the right of the appellant/plaintiff to have the said allotment inasmuch as the appellant is entitled to relief in terms of prayers (c), (d), (f) and (h) of the plaint. The prayers made in the instant application are beyond any cavil of doubt that if the said resolution is given effect to, the same would clearly interfere with the valuable right of the plaintiff to acquire those shares and such prayer already exist in the plaint, namely, prayers (c), (d), (f) and (h). The object of filing of the suit was to secure this 26% of equity shares which DESCON had agreed to sell and the appellant has asked for specific performance regarding the agreement which would, inter alia, be evident from the minutes of the Meetings held on 16th February, 1995, 26th December, 1998 and letter dated 9th April, 1999. (37.) ACCORDINGLY, it cannot have been held that the prayers, which have been made in the interlocutory petition were beyond the scope of the suit. It is well settled that court could always take into consideration subsequent events and the Honble First Court had failed to apply such tests and should have allowed the prayers made in the interlocutory petition so as to preserve the right of the plaintiff till the disposal of the suit. An order of status quo, at least, ought to have been passed by the Honble First Court in order to preserve the right of the plaintiff. (38.) IN view of the aforesaid the impugned judgement is required to be set aside. On the other hand, DESCON, being the defendant/respondent no. 1 has, inter alia, contended before us as follows: -At a Board Meeting of the respondent held on 17th march, 1999, it was inter alia, decided that the paid up capital of the respondent would be increased and additional shares were to be issued on a preferential basis to the plaintiff/petitioner and the proforma respondent. It was proposed that 1,73,713 equity shares of Rs. 10/- each at par of and in the respondent be issued to the plaintiff/petitioner. On 9th April, 1999, the respondent by a letter offered to issue and allot the plaintiff/petitioner 1,73,713 shares of the respondent of the face value of Rs. 10/- each at par. It was proposed that 1,73,713 equity shares of Rs. 10/- each at par of and in the respondent be issued to the plaintiff/petitioner. On 9th April, 1999, the respondent by a letter offered to issue and allot the plaintiff/petitioner 1,73,713 shares of the respondent of the face value of Rs. 10/- each at par. The plaintiff/petitioner by a letter dated 11th June, 1999, accepted the said offer on condition that necessary approval from the Central government/president of India was required for the proposed investment by the plaintiff/petitioner in the respondent. The receipt of the said letter has been disputed by the respondent and the same is recorded in the order of the Honble Interlocutory Court dated 16th June, 2003. The letter dated 11th June, 1999 was never received by the respondent company and the same was informed accordingly by the respondent by its letter dated 9th July, 2001. (39.) IN reply to the said letter dated 9th July, 2001, the plaintiff/petitioner has admitted the fact of non-receipt of the said letter dated 11th June, 1999 and forwarded a purported copy of the said letter to the respondent under cover of its letter dated 17th July, 2001 from where the respondent came to know for the first time of the alleged letter dated 11th June, 1999. In such circumstances, it is submitted even if the letter dated 9th April, 1999 is considered to be a letter of offer, there was no acceptance of this offer by the respondent at any point of time. (40.) THEREAFTER, by a letter dated 29th June, 2001, the respondent wrote to the plaintiff/petitioner stating, inter alia, that the Department of the Company Affairs, government of India while carrying out inspection under section 209a of the Companies Act, 1956 has questioned the justification and proprietary of the said issue of shares in favour of the plaintiff/petitioner by stating: "thus, the issue of shares at par is not in the interest of the existing shareholders of the Company, considering the net value of Rs. 306. 50 per share" the respondent thereafter, on the said view taken by the Department of the Company Affairs and also in view that more than two years had passed since the offer of the said shares, resolved at the Board Meeting on 22nd May, 2001, that such preferential issue of shares at par would not be made in favour of the plaintiff/petitioner. (41.) THEREAFTER, on 20th July, 2001, approval of the Central government (being the Ministry of Heavy Industries and public Enterprise) for investment of Rs. 17,37,130/- was granted in favour of the plaintiff/petitioner for investment of the said shares of and in the respondent and such approval was communicated to the plaintiff/petitioner by the said letter dated 20th July, 2001. The respondent by a letter dated 23rd July, 2001 to the plaintiff/petitioner reiterated its stand that the Board of Directors of the respondent company had decided not to issue the said shares to the plaintiff/petitioner on preferential basis. (42.) AN Annual General Meeting of the respondent was held on 28. 09. 2001 wherein a resolution was proposed for amendment of the Article of Association with regard to buy back of the Companys own shares. (43.) IN the aforesaid circumstances, the plaintiff/petitioner filed C. S. No. 504 of 2001 challenging inter alia the resolution passed at the Annual General meeting of the respondent held on 28. 09. 01 amongst other reliefs. (44.) IN C. S. No. 504 of 2001, in an earlier interlocutory application being G. A. No. 3938 of 2001, an order of injunction in terms of prayer (e) of the said petition was passed on 03. 10. 2001. Prayer (e) of the said petition being g. A. No. 3938 of 2001 is as follows: - "injunction restraining the respondent from dealing with, transferring and alienating its shareholding in the proforma respondent except to your petitioner in any manner whatsoever"; (45.) THE said order dated 3rd October, 2001 was thereafter modified by the order dated 10th October, 2001. By the said order dated 10th October, 2001, the Honble Interlocutory Court had passed an order directing the respondent, DESCON Ltd. not to take any step in respect of buy-back of shares without complying with all steps as provided in section 77a and 77b of the Companies act, 1956. The counsel appearing for the respondent had submitted that if any such step was taken for buy-back of shares, the same would be in terms of the resolution passed at the Board Meeting of 26th December, 1998. (46.) IT has been recorded in the said order that if any steps are taken by the respondent in respect of buy-back of shares, the respondent would give notice to the Advocate-on-record of the plaintiff/petitioner. (46.) IT has been recorded in the said order that if any steps are taken by the respondent in respect of buy-back of shares, the respondent would give notice to the Advocate-on-record of the plaintiff/petitioner. It is stated that by the final order in the said interlocutory application being G. A. No. 3938 of 2001 dated 16th July, 2003, the Honble interlocutory Court had confirmed the ad-interim order which was passed on 10th October, 2001. The Honble Interlocutory Court in the order dated 16th July, 2003, inter alia, held that: -" it is clear from the fact that the question which has arisen in this matter is whether there is any concluded contract between the plaintiff/petitioner and the defendant No. 1. According to the plaintiff/petitioner, the letter dated 11th June, 1999 was received by the defendant No. 1, which is specifically denied before me and therefore, the question in my opinion cannot be decided at this stage without properly adducing evidence which in my opinion cannot be done at this stage". (47.) IN 2006, after five years, the plaintiff/petitioner filed the second interlocutory application, being G. A. No. 1745 of 2006, in C. S. No. 504 of 2001, seeking to challenge the resolution passed by the respondent at the EGM held on 9th June, 2006 inter alia for appointment of Merchant banker for selecting one or more venture capitalists and for issue of Equity shares under Section 81 (1a) of the companies Act, 1956 upto a limit of 49% at a cash premium of not less than Rs. 600/- for every further equity share of Rs. 10/- each in the respondent in favour of venture capitalists on a preferential allotment basis. G. A. No. 1745 of 2006 was filed by the plaintiff/petitioner after the said resolution was passed at the EGM of the respondent on 09. 06. 2001. On 14th June, 2006, the (48.) HONble Interlocutory Court was pleased to pass an ad-interim order of injunction restraining the respondent from giving any effect or further effect to the said resolution passed at the EGM of the respondent on 9th June, 2006. The said ad-interim order has been vacated (G. A. No. 1745 of 2006 has been dismissed) by the Judgement and order dated 17. 11. 2006 passed by the Honble First Court, being the impugned order, in the instant appeal. The said ad-interim order has been vacated (G. A. No. 1745 of 2006 has been dismissed) by the Judgement and order dated 17. 11. 2006 passed by the Honble First Court, being the impugned order, in the instant appeal. (49.) THE respondent company, DESCON is endeavouring to expand its business. The respondent company has signed an agreement with Railtel Corporation of India Ltd., which is a subsidiary of Indian Railways for sale of their bandwidth throughout the entire eastern and north eastern sector of India. The respondent company has also tied up with Motorolla for this purpose. If this project could be implemented successfully, the same would provide very substantial business and revenue to the respondent company. In that view of the matter, the respondent company is required to bring in sufficient amount of money for the said project. The respondent company has also obtained orders worth more than Rs. 10 crores from various companies and there are certain others which are in the process of finalization. Therefore, in order to ensure execution of the aforesaid projects, the company is required to earmark the required money for timely execution of each of such projects. The requirement of the respondent company for the aforesaid projects would be about Rs. 35,00,00,000/- for the year 2006-07 itself. The respondent company after exploring various options available has decided to opt for generation of necessary funds through one or more venture capitalists. (50.) IN such circumstances, the respondent company had passed a resolution in the EGM dated 9th June, 2006 for issue of equity shares under section 81 (1a) of the companies Act, 1956 upto a limit of 49% at a cash premium of not less than 600/-rupees for every further equity share of Rs. 10/- in the respondent company in favour of venture capitalists on preferential allotment basis. (51.) THE respondent company, being in urgent need of funds, passed the said resolution in the EGM, held on 9th June, 2006 for further issue of shares in favour of venture capitalists on a preferential basis. It is settled law that if the further issue of shares by a company is for the benefit or in the larger interest of the Company, the decision to issue such shares cannot be struck down on the ground that it has incidentally benefited the directors in their capacity as shareholders. It is settled law that if the further issue of shares by a company is for the benefit or in the larger interest of the Company, the decision to issue such shares cannot be struck down on the ground that it has incidentally benefited the directors in their capacity as shareholders. The said proposition of law has been laid down by various Supreme Court Judgements. (52.) THE respondent DESCON has referred to the case of Needle industries (India) Ltd. and Ors. Vs. Needle Industries Newey (India)Holdings Ltd. and Ors., reported in AIR 1981 SC 1298 , so also the subsequent judgement of the Honble Supreme Court in the case of Sangram Singh P. Gaikwad and Ors. vs. Shanta devi P. Gaikwad (dead) through Lrs. and Ors. reported in 2005 (11) SCC 314 . Relying on the aforementioned judgements, it has been contended that the plaintiff/petitioner, who is not even a shareholder of the company cannot challenge such resolution for the issue of share in favour of venture capitalists on a preferential basis. It was further submitted that arguments on behalf of the plaintiff/petitioner in the instant matter have been wholly based on facts which were subsisting on the date of the earlier petition filed by the plaintiff/petitioner, being g. A. No. 3938 of 2001. The entire case of the plaintiff/petitioner is based on the expectation of the plaintiff/petitioner to be issued 1,73,713 shares of and in the company and on the said basis, they had filed the second interlocutory petition praying for injunction restraining the resolution, which has been passed at the EGM of the respondent, DESCON on 9th June, 2006, regarding further issue of share capital of the respondent in favour of the venture capitalists on a preferential basis. It was submitted by DESCON that the issue whether the plaintiff/petitioner is entitled to allotment of the said 1,73,713 shares of and in the respondent is a disputed question and has to be decided in the pending suit as has been held by the Honble interlocutory Court in the order dated 16th July, 2003. It was therefore, submitted by DESCON that the said issue had already been concluded by the earlier interlocutory order dated 16th July, 2003 and therefore, plaintiff/petitioner ought not to be allowed to agitate the same issue which would amount to rejudicata. The concept of legitimate expectation is not applicable in a contract between two parties. It was therefore, submitted by DESCON that the said issue had already been concluded by the earlier interlocutory order dated 16th July, 2003 and therefore, plaintiff/petitioner ought not to be allowed to agitate the same issue which would amount to rejudicata. The concept of legitimate expectation is not applicable in a contract between two parties. The Honble First Court had decided both the maintainability and the merits of the case of the plaintiff/petitioner and had correctly dismissed the petition of the appellant, both on maintainability and on merits. (53.) ACCORDING to the respondent DESCON, the instant appeal is liable to be dismissed in view of suppression of material facts by the appellant/petitioner which would be evident from the following: - (54.) IT has recently come to the notice of the respondent that the plaintiff/petitioner, Andrew Yule and Company Ltd. has been referred to the Board for Industrial and Financial reconstruction (BIFR) under section 15 (1) of the Sick industrial Companies (Special Provisions) Act, 1985 and the said fact would be evident from the Annual Report of Andrew Yule and Co. Ltd. for the year 2005-06 in the directors Report. (55.) IN such circumstances, it is stated and submitted that the plaintiff/petitioner would not be even in a position to pay for 1,73,713 shares, as the plaintiff/petitioner, being a sick company, in order making payment to any party, has to take leave of BIFR. (56.) IT is stated and submitted that in a suit for specific performance, as in this case, the plaintiff/petitioner has to show a continuous readiness and willingness to pay the amount for allotment of 1,73,713 shares. It does not appear from the petition filed by the plaintiff/petitioner, being G. A. No. 1745 of 2006, that any averment has been made with regard to such readiness and willingness to pay the said amount for allotment of the said shares. In any event, in view of the fact that the plaintiff/petitioner has been declared a sick company by the BIFR, the said readiness and willingness to pay for allotment of said shares would be subject to the approval of the BIFR. (57.) IT would further appear from a newspaper article published in Telegraph, Kolkata on 23rd February, 2007 that the Central Cabinet has permitted the plaintiff/petitioner to disinvest in 3 (three) of its subsidiaries, which includes the proforma respondent, DPSC. (57.) IT would further appear from a newspaper article published in Telegraph, Kolkata on 23rd February, 2007 that the Central Cabinet has permitted the plaintiff/petitioner to disinvest in 3 (three) of its subsidiaries, which includes the proforma respondent, DPSC. Therefore, it was surprising that at this stage the plaintiff/petitioner was insisting upon transfer of the said 1,73,713 shares of the respondent in its favour. (58.) IT has been further submitted on behalf of DESCON that no suit has been filed by the plaintiff/petitioner challenging the convening, conducting and holding of such EGM of the company on 9th June, 2006. In the premises, no interlocutory application challenging the convening, conducting and holding of such EGM is maintainable. In such circumstances, the petition being G. A. No. 1745 of 2006 before the Honble First Court was rightly dismissed by Honble Judge by the judgement and order dated 17. 11. 2006. The prayers and the application (G. A. No. 1745 of 2006) before the Honble First Court were wholly beyond the scope of suit, being C. S. No. 504 of 2001. (59.) IT has been further contended by DESCON that the plaintiff/petitioner, Andrew Yule and Co. Ltd. was never, nor is, a shareholder/member of DESCON and therefore, has no locus standi to pray for the reliefs, as prayed for, in the interlocutory petition before the Honble First Court. The principal relief, as prayed for in the petition before the Honble First Court is an injunction restraining the respondent DESCON from holding the EGM in terms of the Notice dated 10.05.2006. The plaintiff/petitioner, being admittedly not a shareholder/member of DESCON, does not have any locus standi to challenge the resolution passed at the EGM of the Company, which has been duly held on 9th June, 2006. (60.) RESPONDENT DESCON finally submitted before us that it appears from the finding of the Honble Interlocutory Court, in the order dated 16th July, 2003, that whether there had been concluded contract between the plaintiff/petitioner and the respondent DESCON, with regard to the offer and acceptance of the said 1,73,713 shares, is a disputed question and has to be decided in the pending suit. In such circumstances, without final adjudication of the issue with regard to whether the plaintiff/petitioner is entitled to be allotted the said 1,73,713 shares of and in the respondent DESCON, in the suit, the plaintiff/petitioner being not a shareholder of the said company, has no locus standi to challenge the resolution for further issue of share capital in favour of the venture capitalists by the respondent company in the EGM of the respondent company, held on 9th June, 2006. (61.) THE learned counsel appearing on behalf of the respondent DESCON submitted that in the facts and circumstances, the instant appeal is liable to be dismissed. Finally, on behalf of the second defendant/respondent DPSC it was contended as follows: Company actions broadly are of four types: -i) Actions by the company for enforcement of its rights; ii) Derivative actions i.e. actions by shareholders for enforcement of the companys rights; iii) Representative actions i.e. action by shareholders for enforcement of their class or corporate rights; and iv) Personal actions by shareholders for enforcement of their personal rights. The plaintiff/appellant Andrew Yule and Co. Ltd., not being a shareholder of DESCON, is not entitled to initiate any of the aforesaid proceedings. (62.) THE rights of a shareholder have been succinctly stated by the Honble Supreme Court, in the case of Life insurance Corporation of India vs. Escorts Ltd. and Ors., reported in AIR 1986 SC 1370 . Andrew Yule and Co. Ltd. not being a shareholder of DESCON cannot have a right higher than that of a shareholder. (63.) THE present suit was filed in October 2001. The plaintiff/appellant seeks a decree for specific performance of an alleged agreement allegedly contained in the letter dated April 9, 1999, allegedly issued by the defendant DESCON to the plaintiff/petitioner and the alleged letter dated June 11, 1999, allegedly issued by the plaintiff/petitioner to the defendant DESCON being annexures "a" and "b" respectively to the plaint. A declaration has also been sought that the resolution concerning the item No. 6 passed at the annual general meeting of DESCON on September 28, 2001 is illegal and void. Item No. 6 relates to the amendment of the Articles of association by introducing a new Article 53a regarding the "buy back rights" of the company. The other prayers are consequential in the form of mandatory and perpetual injunctions. Item No. 6 relates to the amendment of the Articles of association by introducing a new Article 53a regarding the "buy back rights" of the company. The other prayers are consequential in the form of mandatory and perpetual injunctions. (64.) AFTER filing the suit the plaintiff/appellant filed an application for interim orders. These prayers have been set out in the order dated July 16, 2003. (65.) IN the said interlocutory application, three orders were passed on 03.01.01, 10.10.01 and the final interlocutory order dated 16.07.03. (66.) THE plaintiff/appellant did not get any order in respect of the main relief sought in the suit, i. e. with regard to the specific performance of the alleged agreement. By the order dated 10. 10. 01 it was held that the question whether there was any concluded contract between the plaintiff/appellant and DESCON cannot be decided at that stage without adducing evidence properly and hence, no order was passed in respect of the prayers regarding the performance of the alleged contract. Learned Counsel appearing for the defendant DESCON, had submitted that DESCON would not take any steps in respect of "buy back" of shares without complying with all steps as provided in sections 77a and 77b of the Companies Act, 1956. Learned Counsel for DESCON had further submitted that if the company takes any steps it will be in terms of the resolution passed in the Board Meeting held on September 26, 1998, that is to say, DESCON will not sell its holding of shares in the DPSC, the first offer would be made to the plaintiff/appellant and Bengal Coal Co. and Katras Jharia coal Co. the shares involved were those acquired by DESCON, consequent upon the renunciation made by Andrew Yule and Co. Ltd. in respect of its rights shares in the proforma defendant. Apart from the aforesaid, no other interim order was passed in the first application. (67.) IT is significant to note that there is no appeal from the order dated July 16, 2003. The three interim orders passed earlier are order dated 03.01.01, order dated 10.10.01 and order dated 16.07.03. The resolutions passed at the EGM held on 09.06.06 are not in violation of any of these orders. No grounds have been shown as to why the notice of the EGM dated May 10, 2006 is illegal. The three interim orders passed earlier are order dated 03.01.01, order dated 10.10.01 and order dated 16.07.03. The resolutions passed at the EGM held on 09.06.06 are not in violation of any of these orders. No grounds have been shown as to why the notice of the EGM dated May 10, 2006 is illegal. (68.) IN this case, by a letter dated April 09, 1999, DESCON made an offer to issue and allot on preferential basis 1,73,713 equity shares of Rs. 10/- each for cash at par to Andrew Yule and Co. Ltd. Andrew Yule and Co. Ltd. by its alleged letter dated June 11, 1999 made a conditional acceptance. The receipt of this letter, however, is denied by DESCON and this question cannot be decided, except at the time of trial of suit. (69.) IT is significant to note that there was no offer made for preferential allotment of 26% shares of DESCON. The offer was only made to issue on a preferential basis 1,73,713 equity shares of Rs. 10/- each in cash at par. The shares offered constituted 26% of the capital of DESCON at that point of time and this was also mentioned in the Explanatory Statement to the notice convening the meeting. The figure of 26% was calculated on the basis of the issued shares of DESCON at that time, but the fact remains that the offer was confined to 1,73,713 shares. (70.) IT is significant to note that in the plaint, prayer (a)specific performance has been sought of an alleged agreement contained in two letters viz. DESCONs letter dated 09.04.99 written to Andrew Yule and Co. Ltd. and Andrew Yule and Co. Ltd. s alleged letter written to DESCON dated 11. 06. 99. None of these letters mention 26% of the shares of DESCON, but only 1,73,713 equity shares. However, the existence of a concluded contract could not be decided by the Honble First Court, while disposing of the earlier interlocutory application, by a judgement and order dated July 16, 2003. DESCON by its letter dated June 29, 2001 had recorded, that for the reasons therein mentioned, it had resolved not to make the said preferential allotment of shares. (71.) IN the suit, an application was made by Andrew Yule and co. DESCON by its letter dated June 29, 2001 had recorded, that for the reasons therein mentioned, it had resolved not to make the said preferential allotment of shares. (71.) IN the suit, an application was made by Andrew Yule and co. Ltd. for an injunction restraining the holding of an egm by DESCON on June 09, 2006 for passing resolutions for offering shares on preferential basis to merchant Bankers under Section 81 (1a) of the Companies act, 1956. The application was made after the holding of the said meeting. (72.) THE defendant company DESCON has made out a case for need of funds to the tune of Rs. 35 crores for entering into a new venture by tying up with Railtel Corporation of India Ltd. , a subsidiary of Indian Railways, for sale of their bandwidth throughout the eastern and north-eastern sectors of India. DESCON has already tied up with Motorola for this purpose. If this project goes through, it will provide a substantial business and revenue to the said defendant company. (73.) THE EGM convened by notice dated May 10, 2006 to be held on June 09, 2006 is not within the scope of the present suit. The EGM was duly held on 09.06.06 and all the resolutions were passed unanimously. Apart from the fact that the plaintiff, not being a shareholder of DESCON, cannot maintain this action, the alleged cause of action, if any, is totally new and not the subject matter of the instant suit. (74.) THE grounds for the interlocutory application have been stated in the petition and in particular, paragraph 61 last three lines. It is submitted that the holding of the EGM or passing of the resolutions thereat, are not in violation of the earlier orders passed in the suit, nor is the notice dated May 10, 2006 illegal, as alleged or at all. The plaintiff/appellant is unnecessarily seeking to widen the scope of the existing suit by whipping a dead horse. (75.) IT is a well known proposition of law that if new shares are issued, a company is required to show its need for funds and if incidentally such issue benefits those in management, the issue would not be struck down. Reference may be made to the case reported in AIR 1981 sc 1298 paragraphs 111 and 137 (Neeedle Industries case). (76.) ON behalf of the plaintiff/appellant Andrew Yule and Co. Reference may be made to the case reported in AIR 1981 sc 1298 paragraphs 111 and 137 (Neeedle Industries case). (76.) ON behalf of the plaintiff/appellant Andrew Yule and Co. Ltd. reference has been made to letter dated 08. 06. 06 written by the Government of India to DPSC, letter dated 09.06.06 written by DPSC to DESCON and letter dated 09. 06. 06 from DESCON to DPSC, inter alia, seeking to restrain DPSC from voting in favour of the resolution. It is submitted that these letters have no legal standing or force. In any event, DPSC wrote to DESCON on 09. 06. 06 for postponement of the meeting and for protection of its rights. DESCON expressed its inability to postpone the egm but assured that the details of the venture capitalists and the proposed agreement to be entered into by DESCON will be furnished to DPSC. In the larger interest of DESCON, there should not be any embargo on the measures sought to be taken on behalf of DESCON for its new venture. (77.) IN the aforesaid facts and circumstances, it is submitted that the order now sought for restraining the resolution to make an allotment on preferential basis of Merchant bankers cannot challenged in the present suit by the plaintiff/appellant, Andrew Yule and Co. Ltd. The meeting is not the subject matter of the suit, nor can the order now prayed for, be said to be in aid of the relief claimed in the suit. Moreover, the balance of convenience is not in favour of the plaintiff/appellant. Any delay in implementing the resolutions already passed at the EGM would cause irreparable loss and prejudice to the defendant company. It now transpires that Andrew Yule and Co. Ltd. is a sick industrial company within the meaning of the Sick industrial Companies (Special Provisions) Act, 1985. A reference has also been made to the BIFR. This material fact has not been stated in the interlocutory petition. Andrew Yule and Co. Ltd. is a loss making Public Sector unit. It is not known when it would be possible to revive or rehabilitate Andrew Yule and Co. Ltd. It is in a precarious financial state, but not only does it want to project itself as the leading member of the Andrew Yule group, but also wants to continue to be a part of this group. It is not known when it would be possible to revive or rehabilitate Andrew Yule and Co. Ltd. It is in a precarious financial state, but not only does it want to project itself as the leading member of the Andrew Yule group, but also wants to continue to be a part of this group. It should also be remembered that the present policy of the Central government is to disinvest the shares of sick Public Sector units. Andrew Yule is willing to take shares of DESCON at face value but not at a premium. (78.) IT is, therefore, submitted on behalf of the DPSC that the interlocutory application of Andrew Yule was misconceived and not maintainable, and therefore, the Honble First Court was correct in law in rejecting the same. After taking into consideration the submissions made by the learned counsel appearing on behalf of the respective parties and upon taking into consideration the facts of the case as enumerated in detail above, we find it necessary to refer to the judgements of the Honble Supreme Court referred to by the learned counsel appearing on behalf of the parties, before we proceed to pronounce our views in the matter. On behalf of the appellant, Andrew Yule and Co. Ltd. , the following decisions were relied on before the Honble First Court, as well as before us: - i) Transmission Corpn. of A. P. Ltd. vs. Lanco Kondapalli Power (P) Ltd. (2006) 1 SCC 540 ii) Colgate Palmolive (India) Ltd. vs. Hindustan Lever Ltd. (1999) 7 SCC 1 . iii) Dorab Cawasji Warden-vs-Coomi Sorab Warden and Ors. AIR 1990 SC 867 iv) Israil and Ors. Vs. Samset Rahman and Ors. AIR 1914 Cal 362 on behalf of the respondent no. 1, DESCON, reference has been made to the following judgements: i) Needle Industries (India) Ltd. and Ors.-vs-Needle Industries Newey (India) Holdings Ltd. and Ors. ( AIR 1981 SC 1298 ) ii) Sangramsinh P. Gaekwad and Ors.-vs-Shantadevi P. Gaekwad (dead) through Lrs. and Ors. [ (2005) 11 SCC 314 ] on behalf of the respondent No. 2/proforma defendant, DPSC, reliance has been placed on the following decision: Life Insurance Corporation of India -vs-Escorts Ltd. and Ors. AIR 1986 SC 1370 . ( AIR 1981 SC 1298 ) ii) Sangramsinh P. Gaekwad and Ors.-vs-Shantadevi P. Gaekwad (dead) through Lrs. and Ors. [ (2005) 11 SCC 314 ] on behalf of the respondent No. 2/proforma defendant, DPSC, reliance has been placed on the following decision: Life Insurance Corporation of India -vs-Escorts Ltd. and Ors. AIR 1986 SC 1370 . After going through the impugned judgement of the Honble first Court, we find that except for Gaekwads case (supra), all the above judgements have been referred to and discussed in detail by the Honble Judge. To avoid prolixity, we have chosen not to discuss separately the aforementioned judgements, save and except the decision of the Honble Supreme Court rendered in Gaekwads case (supra). The Honble Supreme Court in the said decision (Gaekwads case) while relying, inter alia, on Needle Industries (India) Limiteds case held as follows: - ". . . . . . . . A distinction, thus, has been carved out as regards the fiduciary duty of the Directors with regard to the property and funds of the company as contradistinguished from the duty of Directors to current shareholders as sellers of their shares. In case of conflict between two interests, the companys interest must be protected. The directors, however, will have a fiduciary relation if they have taken unto themselves the burden of giving advice to current shareholders. . . . . . . . . " ". . . . . . . . . Fiduciary duty of the Directors to the company should not be equated with the duty to the shareholders. . . . . . . . . . " ". . . . . . . . . The law which emerges from the discussions made hereinbefore is that the Directors do not have any fiduciary duty to advise shareholders as to when and in what manner they should enter into transactions with the company, including acceptance of an offer of additional shares. . . . . . " ". . . . . . . . . The law which emerges from the discussions made hereinbefore is that the Directors do not have any fiduciary duty to advise shareholders as to when and in what manner they should enter into transactions with the company, including acceptance of an offer of additional shares. Such a fiduciary duty would arise inter alia in exceptional situations when the Directors take upon themselves the task of advising the shareholders who may be their family members, or when a transaction of purchase or sale is entered into by and between the Director and the shareholders, wherein the former takes undue benefit or has ill or improper or ulterior motive or mala fide acts solely to make a pecuniary benefit and gain for himself and to the detriment of such shareholders. If a general fiduciary duty of a Director vis-a-vis shareholders is laid down, the same would lead the Directors to the risk of multiple legal actions by dissenting minority shareholders. . . . . . . " (79.) FROM the facts of the instant case, as enumerated above, we find that the Honble First Court has, inter alia, held that there was no pleading in the plaint as regards the proposal and the ensuing resolution for issuing equity capital to venture capitalists, as these events surfaced in the year 2006. The Honble First Court also took into account the contention of the plaintiff/ petitioner that the issue with regard to its claim for control of 26% of equity capital of DESCON was central to the dispute involved in the suit, and to give effect to the resolution dated 9th June, 2006 would permanently defeat the plaintiff/petitioners right of 26% holding share of equity capital of DESCON. After taking this factor into consideration, the Honble First Court went on to observe that the claim of the plaintiff in the suit, however, was in respect of its entitlement to a certain number of shares, and not over 26% equity holding and this was how the plaint had been framed (emphasis supplied by us). After taking this factor into consideration, the Honble First Court went on to observe that the claim of the plaintiff in the suit, however, was in respect of its entitlement to a certain number of shares, and not over 26% equity holding and this was how the plaint had been framed (emphasis supplied by us). The Honble First Court after taking note of the two communications, which the plaintiff claimed to have concluded the contract observed that the same related to issuance of 1,73,713 shares in favour of the plaintiff and did not speak of control of 26% equity holding in or of the respondent (emphasis supplied by us). The Honble First Court also took note of the submissions made by the learned counsel representing the plaintiff that the real intention of the arrangement amongst the parties, which culminated in the resolution passed in the EGM of DESCON, held on 9th April, 1999, was that both the plaintiff/petitioner and DPSC would have 26% holding of the paid-up share capital of DESCON. Upon taking into consideration the above facts, the Honble First Court, inter alia, held in paragraph 40 of the impugned judgement, which has been set out in the earlier part of our judgement, that the scope of a suit cannot be judged on the basis of reliefs claimed, but on the basis of statement of facts on the strength of which such reliefs were claimed and if a totally new and independent set of facts emerged subsequent to institution of a suit, fresh interim reliefs cannot be applied for, with the cause of action for the suit, as pleaded in the plaint, remaining unaltered. Relying on and referring to the explanatory statement to the notice of DESCON in respect of the EGM on 9th April, 1999, the Honble First Court observed that a plain reading of the same suggested that the control of 26% was indicated there, more as a consequence of allotting the stipulated number of shares. The Honble First Court went on to further observe that such degree of control may have been the idea at that point of time, but that did not get reflected in any concrete action on the part of the parties so as to make 26% control of paid-up equity shares a vested legal right of the plaintiff/petitioner for all time to come, but remained an inchoate arrangement. (80.) WE are in complete agreement with the observations of the Honble First Court, as indicated above. We are also of the same opinion that by taking out the second interlocutory application, the plaintiff/petitioner was, in effect, seeking relief on a fresh set of events, independent of the cause of action forming the basis of the suit. We are further of the opinion that the Honble First Court, in the facts and circumstances of the instant case, has rightly held that just because the acts of the respondent complained against would have deprived the plaintiff/petitioner the degree of control it would have secured had it been allotted 1,73,713 shares, these acts of respondent DESCON could not be brought within the ambit of the same suit, especially taking into consideration that the cause of action for institution of the suit, as pleaded in the plaint, remaining unaltered. (81.) IN the facts and circumstances of the instant case, we are, thus, of the same opinion that the second interlocutory application, being g. A. No. 1745 of 2006, was not maintainable before the Honble First court, the same being beyond the scope of the suit, being C. S. No. 504 of 2001. (82.) IT, however, appears that the Honble First Court has gone ahead with the case on its merits as well, in view of substantial arguments advanced by the learned counsel appearing on behalf of the parties. After taking into consideration the facts of the instant case and the submissions made by the learned counsel appearing on behalf of the parties, the Honble First Court proceeded to hold that the plaintiff/petitioner had failed to make out a prima facie case for the purpose of grant of temporary relief and further held that on facts also the plaintiff/petitioner had not made out an outstanding case and taking all factors into consideration, dismissed the interlocutory motion. (83.) HERE also, we are in complete agreement with the observation of the Honble First Court in paragraph 51 of the impugned judgement. We are of the opinion, that in the facts and circumstances of the instant case, the Honble First Court has rightly observed that the plaintiff/petitioners case, at the highest, could be for allotment of 1,73,713 shares, and not permanent control of 26% equity holding of the respondent. We are of the opinion, that in the facts and circumstances of the instant case, the Honble First Court has rightly observed that the plaintiff/petitioners case, at the highest, could be for allotment of 1,73,713 shares, and not permanent control of 26% equity holding of the respondent. (84.) THE communication of the Ministry of Heavy Industries, government of India, was held by the Honble First Court to be advisory in nature and did not create any legal right in favour of the plaintiff/petitioner. On the argument of there being a "yule" group, to which respondent was a necessary constituent, the Honble First court held that it did not find any legal support with regard to such contention. The Honble First Court further observed that "group" itself was a nebulous concept in the context of the instant case and the plaintiff/petitioner could not have any permanent control over any of its group companies under the law, save by way of establishing controlling interest on them. The Honble First Court has also observed that this was an argument based on historicity, but did not establish any legal right and went on to further observe that in fact, the proforma respondent DPSC, which on the plaintiff/petitioners own case, was a constituent of the group, was contesting the plaintiff/petitioners claim. (85.) WE do not find ourselves at a variance with the above observations of the Honble First Court, which in our opinion, considering the facts and circumstances of the instant case, cannot, but be affirmed. We, therefore, hold that the Honble First Court, while dealing with the matter on its merit also correctly dismissed the second interlocutory application and vacated the interim order passed in the matter. The appeal, thus, fails and the same is hereby dismissed. There shall be, however, no order as to costs.