Mohanram Sastry and others vs Swadharma Swarajya Sangha and others

A.R. Lakshmanan, J.—The facts of the case in both the petitions are as follows : Company Petition No. 12 of 1982, has been filed under

sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as ""the Act""), on the grounds of oppression and mismanagement.

Company Petition No. 13 of 1982 has been filed u/s 155 of the Act for rectification of the share register. Swadharma Swarajava Sangh/first

respondent in both the petitions (hereinafter referred to as ""the Sangha""), a company having the benefits u/s 25 of the Act, is a non-profit sharing

company.

The memorandum and articles of association of the Sangha would reveal that it is a charitable institution. But, if is in the nature of a trust and is

not a company in the strict sense of the term, nor is it a commercial venture. It was founded on March 28, 1930, by the late Kowtha

Suryanarayana Rao as a company limited by shares. Subsequently, in the year 1957, licence was obtained from the Central Government u/s 25 of

the Act on the ground that it is a non-profit sharing firm for promoting religious and charitable activities. The late K. S. Rao founded the Sangha

and also three other business companies, viz.,

(a) Indian Commerce and Industries Co. Pvt. Ltd.

(b) Kowtha Business Syndicate Pvt. Ltd.

(c) Beehive Engineering and Allied Engineering Industries Pvt. Ltd.

The first petitioner in C.P. No. 12 of 1982 was the only son of the late K. S. Rao. The third petitioner in C.P. No. 12 of 1982 is the son of the

first petitioner and the grandson of late K. S. Rao. The second respondent in C.P. No. 12 of 1982 is also the grandson of late K. S. Rao through

the daughter Parameswari. The third respondent in C.P. No. 12 of 1982 is the daughter of the first petitioner and the grand-daughter of late K. S.

Rao and sister of the third petitioner. She is the wife of the second respondent B. V. S. S. Mani. The fourth respondent in C.P. No. 12 of 1982 is

the daughter of K. S. Rao and sister of the first petitioner. Respondents Nos. 5 to 8 in C.P. No. 12 of 1982 are the children of respondents Nos.

2 and 3. The second petitioner, C. Srinivasan, is the son of C. A. Chettiar, a trusted lieutenant of the founder K. S. Rao. The ninth respondent in

C.P. No. 12 of 1982 is yet another trusted friend of late K. S. Rao and he was taking all the parental interest in the members of the family and he

was a scholar of great repute. The tenth respondent in C.P. No. 12 of 1982 is Sri Bilwesware Charitable Trust, an independent trust organisation

which came into existence during 1970. It is a separate legal entity.

K. S. Rao. the founder, died on September 23, 1964. It that time, C.A. Chettiar, father of C. Srinivasan, was mainly'' in charge of all the affairs

of the Sanga and also the above-named three business companies till his death on February 7, 1976. The fourth respondent in C.P. No. 12 of

1982, K. Nagarajalakshmi, died on January 23, 1983. pending the proceedings. The first petitioner, Mohanram Sastry, also died on January 15,

1988, pending the company proceedings.

From the evidence and the records of the Sanga it will be seen that the Sanga was having only 14 members at the time when the present

company proceedings commenced in 1982. Excepting C. Srinivasan and V. K. Dongre. all the others are close relations and family members.

Even the said C. Srinivasan and V. K. Dongre were very close to the family of the late K. S Rao. Thus, it is all the more a family affair rather than

a company in the strict sense of the term.

No doubt, when the late K. S. Rao founded the organisation, he issued share certificates in favour of less than 50 persons. Shares of the value

of Rs. 100 and Rs. 10 were issued by the founder. From the evidence and materials, it will be seen that the late K. S. Rao wanted to consolidate

the position and obtain licence u/s 25 of the Act. He, therefore, wanted to restrict the number of shareholders in whom he reposed confidence, and

with that background, he took certain important decisions in the years 1956 and 1957. It is on record that the late K. S. Rao did not gift or donate

any property to the Sanga before 1956-57. Before he finalised the functioning of the Sanga in 1956-57. The late K. S. Rao did his duty to his only

son Mohanram Sastri by giving him the bulk of the properties by a deed of settlement dated March 26, 1957. It was at that time when the licence

u/s 25 of the Act was expected from the Government Only after setting the properties in favour of his only son, Mohanram Sastri, and grandson.

K. L. Manohar, and after giving certain properties to his daughters, the late K. S. Rao made the first gift of immovable property to the Sanga on

March 28, 1957.

It is in evidence that section 25 of the Act licence was obtained on July 5, 1957. In August, 1960, K. S. Rao executed a will giving the balance

of his properties to the Sanga. It is admitted that none of the parties ever questioned the action of K. S. Rao till his death on September 23, 1964,

and all his directions were implicitly obeyed by one and all. It is seen that Mohanram Sastri and C. Srinivasan were also directors of the Sanga in

1956-57 for different periods and they were in the know of things. It is on record that C. A. Chettiar, father of C. Srinivasan, was also a director

of the Sanga till his death on February 7, 1976. K. L. Manohar became a shareholder of the Sanga on August 13, 1957. In C.P. No. 13 of 1982,

three resolutions dated January 15, 1956, August 13, 19S7, and October 14, 1978, are attacked.

First, I will take up C.P. No. 12 of 1982. As already stated, in this petition, the petitioners have chosen to attack the respondents under six

different heads and would claim relief under sections 397 and 398 of the Act on the grounds of oppression and mismanagement. They are,

(a) Safety or otherwise of the goldware belonging to the Sanga.

(b) Closure of the printing press of the Sanga at Secunderabad on April 30, 1981.

(c) Amounts spent for the compound wall around the Sanga''s property in Gunatala at Vijayawada during 1977-78.

(d) Delay in holding annual general body meetings (hereinafter referred to as ""AGM"") and in particular the two AGMs held for the years 1979-80,

both on January 21, 1981, at 3 p.m. and 4 p.m., respectively.

(e) Donations given and the expenses incurred for and on behalf of the Sanga.

(f) The legality and propriety of the donation of Rs. 15 lakhs to Sri Bilweswara Charitable Trust/tenth respondent.

Item No. 1 : This relates to the goldware of the Sanga. In paragraphs 7 and 25 of the petition certain charges have been levelled by the petitioners

against the respondents regarding the goldware of the Sanga. However, it is contended by the respondents that all the six gold items have been

shown in the assets register of the Sanga, exhibit R-146, which had been periodically inspected by the auditor and also by the petitioners. It is,

therefore, contended that the petitioner, have indulged in valid allegations against the second respondent regarding the gold items even though there

is no basis for the same. However learned counsel for the petitioners has not addressed any argument specifically on this issue at the time of

hearing. Hence, I am not adverting to this item.

Item No. 2 : This relates to the closure of printing press of the Sanga at Secunderabad. Allegations have been made by the petitioners against the

second respondent in paragraphs 28 to 30 of the petition regarding the closure of the printing press. The third petitioner as P.W. - 1 and the

second respondent as R.W. - 1 have given evidence on this aspect. Since no argument was advanced by Mr. T. Raghavan on this point

specifically, I am not considering this item to render any finding.

Item No. 3 : This relates to the compound wall at Gunatala at Vijayawada in the year 1978-79. Allegations have been made in paragraph 23 of the

petition that a sum of Rs. 4,44,486.93 was incurred by the Sanga for the construction of the compound wall at Gunatala during the period ending

May 31, 1977. The complaint is, that it is an exaggerated figure and wasteful expenditure. On behalf of the respondents it is submitted that an

obvious mistake had been made by the petitioners when a wrong reading of the balance-sheet was done by them, viz., exhibit R-33 series. The

report of the auditor and the balance-sheet for the year ending May 31, 1977, would mention only about the additions during the year regarding

the fixed assets which come to Rs. 4,44,486.93. P.W. - 1 in his chief examination has talked about this compound wall. On behalf of the

respondents, R.W - 1 has spoken about the same. According to Mr. T. Raghavan, P.W. - 1 has deposed that the said amount has been included

in the balance-sheet under the heads ""additions during the year"" and ""fixed assets"". P.W. - 1 has stated in his evidence about this. He queried about

the construction of the compound wall by the second respondent. However, it is contended that the second respondent has cleverly manipulated

under the guise of a donation given by one Suryanarayana and brought back the said amount siphoned by him in the next year. It is also stated that

the third petitioner was not present at the board meeting held on January 9, 1978, wherein the account for the year May 31, 1977, was approved.

But, later on, the second respondent has requested him to sign the balance-sheet, exhibit P-33. The third petitioner has also written exhibit P-84

pointing out about the construction of the compound wall. Even the compound wall, constructed according to the respondents at a cost of Rs.

2,54,529.25, has also collapsed, as could be seen from the evidence of P.W. - 1 in chief examination as well as in the cross-examination.

P.W. - 1 has stated regarding the expenses incurred for the construction of the compound wall. Several queries have been raised by the

petitioners regarding the expenses incurred by the second respondent for the construction of the compound wall. The second respondent for the

year ending May 31, 1978, (exhibit R-34) has brought back Rs. 2.35 lakhs as if one Suryanarayana has donated the amount to the Sanga. The

said Suryanarayana is a mason and has no capacity to donate the huge sum to the Sanga. P.W. - 1, in his cross-examination, has stated that the

second respondent told him that Suryanarayana is a mason and that he has donated the fabulous sum of Rs. 2.35 lakhs to the Sanga. The sum of

Rs. 2.35 lakhs has been made over to the Sangha by endorsing the fixed deposit which was in the name of Suryanarayana after the third petitioner

has queried about the expenditure of construction of the compound wall. Thus, it is contended by Mr. T. Raghavan that the second respondent has

diverted a sum of Rs. 2.35 lakhs to his benefit and when he has been questioned by the third petitioner, he has brought it back under the guise of

donation from one Suryanarayana, who has no capacity to donate such a huge amount.

The following are the submissions made by Mr. V. R. Gopalan on behalf of the respondents. There is a resolution passed by the board of

directors of the Sanga on November 29, 1976 (exhibit R-2) in which the third petitioner was a party and it was resolved to construct the

compound wall for the road-side property at Gunatala to safeguard the Sanga''s property from trespassers. The assets register, exhibit R-146,

gives the details about the expenses of Rs. 4,44,486.93 incurred for the compound wall. That register will show that only a sum of Rs.

2,54,329.25 had been spent. Exhibit R-147 series are the bills giving the details regarding the expenses incurred in the sum of Rs. 4,44,486.93 and

these bills had been duly verified and countersigned by the auditors. No questions had been asked regarding the genuineness or the authenticity of

these bills in the cross-examination while R.W. - 1 was in the witness box. At no point of time the second respondent ever contended that the

expenses involved for the construction of the compound wall was Rs. 4,44,486.93. On the other hand, it was only Rs. 2,54,329.25. The engineer

examined as P.W. - 2 had valued the compound wall and there has not been much of a difference in value. In fact, P.W-1 himself had said that he

had not made any estimate and according to his engineer''s valuation, the value of the compound wall was only Rs. 1.5 lakhs. But, he would admit

that he had discussed with the auditor on the issue. It is submitted that the expenses involved for the construction of the compound wall were only

Rs. 2,54,329.25, which had not only been accepted by the auditor after duly vouching the bills, but the board of the Sanga had also passed the

resolution on November 29, 1976, as per exhibit R-2, to which the third petitioner himself was a party. Hence, it is not open to the petitioners to

throw mud on the second respondent on this issue. Further, while attacking the expenses incurred for the compound wall, the petitioners would

also comment upon the donation made by one Suryanarayana to the Sanga in the sum of Rs. 2.35 lakhs. According to the petitioners, the second

respondent had realised the mistake in the diversion of the funds by inflating the figure as Rs. 4,44,486.93 and later on attempted to bring back the

said excess amount in the sum of Rs. 2.35 lakhs by a fictitious entry stating it to be a donation by one Suryanarayana.

The balance-sheet for the year ending May 31, 1977 (exhibit R-33) would disclose that the third petitioner had signed the said balance-sheet.

After being a party to it, he is now, in my opinion, trying to attack the very same document especially when this balance-sheet was prepared on

January 9, 1978, itself. Secondly, exhibit R-3(b) is the annual general body meeting for the year 1977, wherein the second petitioner was a party

and he has approved the balance-sheet. Still, he would join hands with the third petitioner and make allegations against the second respondent on

this issue. Thirdly, under exhibit R-34 series, balance-sheet for the year ending with May 31, 1978, there is a specific mention about the corpus

donation in the sum of Rs. 2.35 lakhs and even this balance-sheet had been duly signed by the third petitioner as well as by the Sanga''s auditor on

November 18, 1978. Fourthly, exhibit R-3 is the annual general body meeting of 1978, where the third petitioner was present and had even

presided over the meeting. The balance-sheet including the donation of Rs. 2.35 lakhs very much figured in that meeting. The petitioners would

urge that the sum of Rs. 2.35 lakhs was brought back by the second respondent in July, 1978, after the mistake was pointed out by them.

According to Mr. V. R. Gopalan, this statement is factually incorrect. Exhibit R-148 is the certificate issued by the Bank of Baroda on November

13, 1984, which would clearly indicate that the donor, B. Suryanarayana, had already invested two amounts with the bank, viz., Rs. 1.25 lakhs

and Rs. 1.10 lakhs on May 20, 1977, and July 2, 1977, respectively, and only the said amount of Rs. 2.35 lakhs was transferred to the Sanga on

July 4, 1978, by the bank. Thus, it is very clear that B. Suryanarayana was himself having the funds by means of fixed deposits and it was these

mounts that were transferred to the Sanga on July 4, 1978, as per the directions of B. Suryanarayana to the bank on July 2, 1977, itself.

Therefore, the argument of Mr. T. Raghavan, learned counsel for the petitioners, that the said B. Suryanarayana had no means falls to the ground.

It is also pointed out that the first ever misunderstanding commenced only on June 10, 1978, when the third petitioner addressed a letter to the

second respondent and the second petitioner as per exhibit P-84 and long prior to it, on July 2, 1977, itself B. Suryanarayana, the donor, had

funds in the form of fixed deposits with Bank of Baroda and has also given instructions to have the amounts transferred to the Sanga on maturity.

Even P. No. 1 had conceded about the aforesaid fixed deposit amounts as donations to the Sanga. I am, therefore, of the opinion, that there is na

merit in the argument of Mr. T. Raghavan on item No. 3 and, therefore, the same is rejected.

Item No. 4 : Under this item, the petitioners question the annual general body meeting dated January 21, 1981, for the years ending 1979 and

1980. The petitioners have made allegations against the respondents regarding the delay in the conduct of the annual general body meetings for

those two years. In paragraphs 16 and 17 of the petition, they have made such allegations. According to Mr. T. Raghavan, the Sanga has adopted

provisions for the retirement of directors by rotation and appointment by the general meeting in terms of sections 255 and 256 of the Act. Hence.

he contended, the annual general body meetings are not held for any year and the directors, who are to retire at that meeting, would vacate office

as could be seen from the decision A. Ananthalakshmi Ammal and Another Vs. The Indian Trades and Investments Ltd. and Another, , and other

decisions. The annual general body meeting, to consider the accounts of the year 1980, was held on January 21, 1981, and in that meeting, the

second respondent and the second petitioner were present. When the second respondent''s election came up for consideration at that time, in spite

of the objections of the second petitioner, he purported to preside over the meeting and declared himself elected. Reliance was placed on

Nagappa Chettiar''s case 1949 19 Comp Cas 175. Therefore, Mr. T. Raghavan contended that the procedure adopted is ex facie bad.

According to Mr. T. Raghavan, R.W. - 1 has admitted in cross-examination that the second petitioner objected to his presiding. Thus, the

purported re-election of the second respondent is bad and he is not a director of the Sanga after January 21, 1981. However, the second

respondent is attempting to take shelter under the plea that the holding of general meeting has been injuncted by the court. However, Mr. T.

Raghavan would submit, that in cross-examination it has been brought out that there is no blanket order of injunction against the Sanga holding

general body meetings or considering the accounts. Therefore, it is contended that after 1984, there cannot be any valid board in view of the

second respondent''s admission in evidence in 1990 that no meeting was held subsequent to 1981. According to Mr. T. Raghavan, these facts are

relevant and cannot be shut out on the plea that they constitute subsequent events. It is further argued that since the petitioners have made out a

case that there is no validly constituted board, it is necessary for this court to interfere and supersede the so-called board, which is functioning

today, and appoint one or more administrators to take charge of the affairs of the Sanga. In view of the conduct of the second respondent, his wife

and children, Mr. T. Raghavan would urge that it is essential to ensure a broad-based board and for this purpose, this court should direct

amendments to the articles by providing for appointment of responsible persons on the board and to ensure representation to all the groups of

shareholders on the basis of the proportional representation.

In support of the above contentions Mr. T. Raghavan invited my attention to the decisions in Balasundaram (V.G.) v. New Theatres Carnatic

Talkies P. Ltd. [1993] 77 Comp Cas 324, wherein this court has followed the earlier decision of this court in Veeramachineni Seethiah v. Bode

Venkatasubbiah [1949] 19 Comp Cas 107 (Mad) and Promode Kumar Mittal and Others Vs. Southern Steel Ltd. and Others, . It is also not

correct to state that the board of the Sanga only consists of P.W. - 1 and R.W. - 1, according to Mr. T. Raghavan. There were other directors on

the board and they were respondents Nos. 2, 4 and 9. Therefore, it cannot be correct for the respondents to contend that for want of the third

petitioner, the board meeting has been adjourned from time to time. Therefore, nothing prevented the Sanga from proceeding further with either the

board meeting or the general body meeting when there were other directors and members available. The respondents have not placed any material

before this court as to how they were functioning as directors of the Sanga and the material is very much available with the respondents. They have

also net filed any document before this court to establish as to how they are in office. Referring to the decision of the Supreme Court in Gopal

Krishnaji Ketkar Vs. Mahomed Haji Latif and Others, , wherein the Supreme Court has taken the view that if a party in possession of the

documents does not produce and place before court and withholds the same, the court will normally draw adverse inference against such party,

Mr. T. Raghavan contended that from the above narration of facts it is clear that the respondents have vacated their office as directors by not

holding annual general body meetings of the Sanga for the past 13 years and the entire board has vacated its office as such. Therefore, Mr. T.

Raghavan would strongly urge that the petitioners are entitled to the relief of declaration as prayed for in paragraph 34(a) of the company petition.

Before proceeding to consider the argument of Mr. V. R. Gopalan on the above point, it is better to deal with the other proceedings filed by

the parties before the other forums. The petitioners tiled two suits in the City Civil Court, Madras, in O.S. No. 3631 of 1981 (exhibit R-103) and

O.S. No. 3442 of 1981 (exhibit R-44) questioning the validity of the annual general body meeting for 1979 and 1980. When those two

proceedings were pending in appeal, the hearing of Company Petition No. 12 of 1982, came up and the documents filed in the city civil court suits

were summoned and marked in the present proceedings. It appears that both counsel argued the legality of the resolutions passed in the two annual

general body meetings and the elections held thereat and requested this court to give a comprehensive relief in this behalf.

The evidence of RW-1 relating to the above two meetings is found at pages 294 to 301, 456, 457 and 553 to 560. It is the case of the

respondents that the delay in holding the annual general body meetings for the years 1979 and 1980 was solely because of the non-co-operative

attitude and the negative approach of the third petitioner from Secunderabad. It is in evidence that the accounts relating to the printing press,

Kalyan Mantap and Vidya Mandir from Secunderabad were to be sent only by the third petitioner to the Madras head office, without which the

accounts could not be finalised. The accounting year of the Sanga is from June 1, to May 31, every year and the annual general body meeting of

1979 should have been held on or before November 30, 1979. and the annual general body meeting of 1980 on or before November 30, 1980.

According to Mr. V. R. Gopalan, the evidence on record would clinchingly show that it was the third petitioner who was the real cause for the

delay and it is unfortunate that the petitioners should still accuse the respondents for the delay. Exhibit R-48 dated November 3, 1979, is the letter

written by the Sanga''s auditor to the third petitioner pointing out the various lapses on his part regarding the audit for the year ending May 31,

1979, which was mainly responsible for the delay in holding the annual general body meeting for the year 1979. Exhibit R-49 dated November 5,

1979, is the notice for the board meeting, the agenda being the consideration of the annual accounts for the year 1979. In exhibit R-49 itself the

third petitioner has endorsed a note on November 10, 1979, stating that the meeting be deferred for want of all information as required by the

auditor from the Secunderabad office. The above would clearly indicate that the delay was only due to the third petitioner.

Exhibit R-50 dated November 14, 1979, is a telex message from the second respondent at Madras to the third petitioner at Secunderabad

asking for the details required by the auditor and further informing him that the draft balance-sheet was sent to him. Exhibit R-51 is yet another

telex message sent by the auditor to the third petitioner asking for the details. In exhibit R-51, there is a reply message from the third petitioner

stating that a detailed letter had been posted to the auditor on 17th of that month. Exhibit P-1 dated December 3, 1979, is a letter from the third

petitioner to the second respondent pleading or some more time and here again, the delay was only due to the third petitioner.

Exhibit R-52 dated December 14, 1979, is a notice sent for the board meeting to be held on December 21, 1979, to consider the accounts of

the Sanga for the period ending May 31, 1979, and to call for the annual general body meeting 1979. The third petitioner did not attend the said

meeting but sent a telegram, exhibit R-53, pleading inability to attend. Even the second petitioner has sent a message pleading inability to attend.

This would clearly indicate, in my view, that both of them were not keen and anxious to co-operate. Simultaneously, Ravindran, son of the second

petitioner, also sent a telephone message on behalf of his father. Nevertheless, the board meeting took place on December 21, 1979, in the

absence of petitioners Nos. 2 and 3, and the annual general body meeting for the year 1979 was fixed for January 18, 1980 (exhibit R-3). Exhibit

P-2 is the annual general body meeting notice dated December 27, 1979. On January 18, 1980, there was no quorum and the meeting was

adjourned to January 25 1980. The chairman of the said meeting dated January 18, 1980, was the third petitioner himself. Exhibit R-55 is a telex

sent by the third petitioner on January 24, 1980, pleading inability to attend the meeting on January 25, 1980. Only the second petitioner and the

second respondent were present and since there was no quorum, the meeting was adjourned to January 31, 1980. Exhibit R-56 is yet another

telex message received from the third petitioner pertaining to the annual general body meeting 1979, wherein he would urge the second respondent

to hold the adjourned the annual general body meeting 1979 without him but with the second petitioner. It is the evidence of the second respondent

as R. W. - 1 that he did not want to proceed with the meeting without the third petitioner who had by now started giving trouble, and the second

respondent was very particular that the third petitioner attends the annual general body meeting 1979. Hence, the annual general body meeting was

not conducted on January 31, 1980. A note to that effect was made in exhibit R-56 itself.

A fresh notice dated June 16, 1980 (exhibit P-3), was again sent giving notice for the conduct of the annual general body meeting 1979 on July

9, 1980. On July 9, 1980, again the third petitioner was absent and as there was no quorum, the meeting was adjourned to July 16, 1980. Only

the second petitioner and the second respondent were present and again the meeting was adjourned to November 29, 1980. Exhibit P-5 dated

November 7, 1980, was also issued, being the notice for the meeting to be held on November 29, 1980. Again, the third petitioner was absent on

November 29, 1980, and the second petitioner raised an objection. Since it was not an adjourned meeting and for want of quorum, the annual

general body meeting 1979 was again adjourned to December 6, 1980. On December 6, 1980, nobody turned up for the meeting excepting the

second respondent and no transaction took place. Again on December 8, 1980, exhibit R-57 fresh notice was issued fixing the annual general

body meeting 1979 on December 10, 1980. On December 10, 1980, only the second petitioner and the second respondent were present and

again the third petitioner was absent. It was resolved to adjourn the meeting to January 5, 1981.

Under exhibit R-58 dated December 12, 1980, a notice was issued for the meeting to be held on January 5, 1981. The agenda for the said

meeting was to elect directors in the place of the second petitioner and respondents Nos. 4 and 9, who retired. It will be seen in exhibit R-58 that

the second petitioner was co-opted earlier as a director on August 16, 1979. On January 5, 1981, none turned up excepting the second

respondent and the annual general body meeting 1979 was again adjourned. On January 12, 1981, the meeting was adjourned to January 21,

1981. On January 21, 1981, the annual general body meeting 1979 was held at 3 p.m. On that date, resolutions were passed under exhibit R-4.

The accounts were passed and the auditor was also appointed for the ensuing period. The election of the three directors retiring, viz., respondents

Nos. 4 and 9 and the second petitioner was deferred, overruling the objection of the second petitioner. In that meeting only the second respondent

and the second petitioner took part and being an adjourned meeting, the quorum that was required was only two. All through, the participation of

the third petitioner was very much expected but he failed to turn up. The above discussion, in my view, will amply demonstrate the real reasons for

the delay in convening the annual general body meeting 1979. The delay is attributable only to the third petitioner as could be seen from the above

facts.

In so far as the annual general body meeting for 1980 is concerned, the same old history was repeated. Exhibit R-59 dated September 12,

1980, is a memo to the third petitioner at Secunderabad asking for the accounts relating to the annual general body meeting 1980. Exhibit R-60

dated December 31, 1980, is vet another memo sent to the third petitioner. Exhibit R-61, dated November 8, 1980, is the reply from the third

petitioner stating that the trial balance with available figures was getting ready. Exhibit R-62 is the telex message issued to the third petitioner by the

second respondent on November 15, 1980, asking for accounts from Secunderabad, followed by another telex message, exhibit R-63, dated

November 21, 1980, complaining that the accounts were not forthcoming from Secunderabad. Exhibit R-64 dated November 21, 19B0, is the

reply telex message from Secunderabad requesting the Sanga''s auditor to come on Monday to take up the audit work to Secunderabad. Exhibit

R-65 is a telex message of the auditor to the third petitioner dated December 19, 1980. Exhibit R-66 is again a telex message received from the

Secunderabad office asking for postponement of the auditor''s meeting. Exhibit R-57 dated December 30, 1980, is a critical note of the Sanga''s

auditor addressed to the third petitioner pointing out the defects in his accounting towards the audit for the year ending May 31, 1980, and exhibit

R-67(b) is the annexure to the said document. Exhibit R-68 dated January 28, 1981, is a memo from the second respondent to the third petitioner

complaining about the lack of information from the third petitioner to the queries raised by the auditor.

The annual general body meeting for 1980 was convened on January 5, 1981, and as there was no quorum, the meeting was adjourned. The

same was again convened on January 12, 1981 and the third petitioner avoided that meeting. Only the second respondent and the second

petitioner attended. The minutes of the aforesaid meeting were also placed before the court. Ultimately, the annual general body meeting 1980 was

held on January 21, 1981, at 4 p.m., under exhibit R-4(a). The accounts for the year ending May 31, 1980, were not ready as details from the

Secunderabad office were vet to be received and the said subject alone was put off to a later date. from this it is clear how the third petitioner was

responsible for the delay. The second resolution was for appointing the auditor for the ensuing period. The second respondent and the third

respondent were re-elected as directors and the term of the second petitioner ended but he was not re-elected. The minutes of the meeting had

been fully recorded in exhibit R-4(a), and also the explanatory statement recorded by the second respondent as the chairman of that meeting.

O.S. No. 8442 of 1982 was filed by the second petitioner while O.S. No. 8631 of 1982, by the hird petitioner in the city civil court

questioning the annual general body meeting 1980 and the resolutions passed at 4 p.m., on January 21, 1981. The allegation was that the second

respondent had unauthorisedly altered the minutes of the meeting. As already stated, both counsel had agreed and requested this court to deal with

the subject-matter pertaining to the city civil court suits and adjudicate upon the validity of the meeting dated January 21, 1981. It is also relevant

to point out that the prayer in Company Petition No. 12 of 1982 among other reliefs asked for, viz., prayer (g) is, for a declaration that the

petitioners Nos. 2 and 3 continue to be the directors of the Sanga. Likewise, prayer (g) is for a declaration that all the proceedings of the board

after January 21, 1981, are void and inoperative. However, no specific allegation had been made regarding the illegality or otherwise of the

meeting dated January 21, 1981, as such. But, evidence was adduced and arguments advanced on this issue also.

Article 78 of the memorandum and articles of association deals with the election of the directors every year. Admittedly, the second petitioner

was only a co-opted director on August 10, 1979, and unless and until he was re-elected in the next meeting, he ceases to be a director as per

article 82. So far as the third petitioner is concerned, his term had expired and he did not stand for re-election. It is, therefore, submitted by

learned counsel for the respondents, that both petitioners Nos. 2 and 3 are no longer directors of the Sanga.

So far as the election of the third respondent is concerned as a director in the meeting held on January 21, 1981, it is argued by Mr. V. R.

Gopalan. the same cannot be questioned. A technical objection has been taken as tn the election of the second respondent as a director on

January 21, 1981, and this objection is raised only at the time of arguments The said objection, according to Mr. V. R. Gopalan, is not taken in the

pleadings nor when the meeting was held at 4 p. m, on January 21, 1981. Exhibit R-4(a) deals with that matter and it will be seen that no objection

whatsoever was taken by the second petitioner regarding the candidature of the second respondent as a director in that meeting. Only after the

meeting, on January 22, 1981, a letter was issued by the second petitioner under exhibit P-8 taking the aforesaid objection for the first time.

Moreover, the second respondent was present at the meeting and he has spoken clearly about the events that happened on January 21, 1981.

There is no contra evidence available. The second petitioner, who was present at the meeting, had not chosen to come to the witness box and

speak about the events that had happened. Hence, I am of the view, that for want of contra evidence, the evidence given by the second

respondent as R.W. - 1 has to be accepted. The third petitioner, though examined himself as P.W. - 1, has no personal knowledge about the

meeting held on January 21, 1981. On the other hand, as already pointed out, he was avoiding the meeting wantonly and he was the cause for the

delay in the conduct of the annual general body meetings 1979 and 1980. He did not attend the meeting and in fact declined from doing so even

though enough opportunities were given to him.

From the evidence of the second respondent as R.W. - 1 and a reading of exhibit R-4(a) minutes, the following facts can be clearly seen.

(a) Only two persons attended the annual general body meeting and being an adjourned meeting, it was sufficient quorum.

(b) Both the candidates, viz., second respondent and the second petitioner were seeking re-election on January 21, 1981, for directorship and no

third person was available to chair the meeting.

(c) The evidence of R.W. - 1 would clearly show that he made an offer to the second petitioner to chair the meeting, which was declined. This

piece of evidence had not been challenged by the second petitioner by getting into the box.

(d) It will be seen that a poll was demanded and there was no difficulty in declaring the results of the poll in view of the proxies and as a matter of

routine, it was declared by the chairman that 103 votes were in favour of the resolution and only 10 votes were against. There was no show of

hands. This aspect of the number of votes secured is not challenged or disputed. There was nothing to be decided by the chairman except to

declare the results of the poll.

(e) The second respondent had to necessarily chair the meeting since there was no other alternative left.

While replying to the rulings cited by Mr. T. Raghavan in K.A.S. Mohammed Ibrahim Vs. Jaithoon Bivi Ammal, represented by her next friend

and guardian, Shaik Dawood Rowther, , Mr. V. R. Gopalan contended that the above decision has no application to the facts of the case and the

said judgment was rendered on October S, 1948, before the advent of the Indian Constitution. The facts and circumstances of the said case are

entirely different and the said decision will not apply to the facts of this case because in the instant case, there are only about 14 members of the

Sanga, out of which 12 are relations and family members, the remaining two being close associates and family friends. It is conceded that the

respondents are in the majority having majority shareholdings whereas the petitioners are in minority. No decision was called upon to be taken by

the chair excepting announcing the results of the poll. No quasi-judicial function was required to be performed by the chair in the instant case. In

the above cited Supreme Court case, Nagappa Chettiar''s case [1949] 19 Comp Cas 175, there were 260, club members eligible to vote and the

chairman in that case was called upon to decide regarding the validity of the amendment of the constitution of the club and he had to decide

whether the new rule was applicable or not. He was further called upon to decide the validity of nomination. He was called upon to give a ruling on

all those questions including the validity of the nominations, which included his own. Hence a Division Bench of this court felt that there was a

conflict between his duty and his interest and that the chairman, Mr. Natesan, should have vacated the chair and requested another person. who

was not a candidate, to take the chair. The said position is not available in the instant case since there was no other third person to chair the

meeting. As already seen, there had been a long delay in the conduct of the two annual general body meetings because of the non-co-operation

and the obstructive attitude of the petitioners. Having regard to the above, it is submitted by Mr. V. R. Gopalan, that the annual general body

meeting held at 4 p.m., on January 21, 1981, for the year ending May 31, 1980, is legally valid and in the interests of justice and fair play, the same

should be upheld. I see much force in his contention.

The arguments advanced by Mr. T. Raghavan, learned counsel for the petitioners, regarding the subsequent events, viz., the reasons for not

holding the subsequent general body meetings and the competency of the second respondent and others to represent the Sanga, cannot now be

adjudicated upon at this juncture in this proceeding, since the events that happened subsequent to February, 1982. i.e., after the filing of the

present company proceedings, are the subject-matter of C.P. No. 71 of 1986 and the issues raised therein cannot be decided in this proceedings.

It is for the parties to put forward all the evidence and materials in C.P. No. 71 of 1986 and argue those points. Since serious prejudice will be

caused to the parties, the issues mentioned above are not decided in the present proceedings. Item No. 4 is. therefore. decided against the

petitioners.

Item No. 5 : In this, the petitioners question the donations given and the expenses incurred. In paragraph 24 of the Company Petition No. 12 of

1982, the petitioners question the travelling expenditure and other expenditure incurred by the second respondent as well as the donations given for

and on behalf of the Sanga. The second respondent as R.W. - 1 has given answers to these allegations. The petitioners in paragraph 2 of the

petition have set out in detail about the proposal initiated by the second respondent to form a trust in or about 1970. Admittedly in February, has

accumulated its income from time to time. Sometime in February, 1970, the second respondent mooted out the proposal in exhibit P-69 dated

November 16, 1970, that the Sanga should promote a new trust for satisfying the Income Tax requirements. This was followed by a draft deed

given to the petitioners on December 3, 1970, and on that day the second respondent persuaded the other directors that the Sanga will be

associated in the management of the said trust. However, the trust deed, as finalised, does not make any such provision. According to learned

counsel for the petitioners, the trust deed was executed by Visweswara Rao on November 9, 1970, and registered on December 16. 1970. The

substantial amount of Rs. 15 lakhs was made over to the new trust by the Sanga on the initiative of the second respondent. According to learned

counsel for the petitioners, the petitioners were induced to make this transfer on the representation that the Sanga will be in control as a trustee.

P.W. - 1 has stated that the sole trustee P. V. Rao was not acting and the second respondent was administering the trust. In fact, the so-called

trustee has admitted in exhibit P-114 that the second respondent got his son the fifth respondent appointed as the managing trustee of the tenth

respondent. By such misrepresentation, the second respondent has deprived the substantial assets and is, therefore, guilty of breach of trust. No

evidence has been given on behalf of the trust. The second respondent as R.W. - 1 has stated clearly that he has given evidence only on his own

behalf. Therefore, it is contended that once it is established that the property of the Sanga has been transferred to the tenth respondent in breach of

trust, it is open to the Sanga to seek restitution and follow the trust properties in the hands of the tenth respondent or anyone else. It is also pointed

out that the second respondent has also acted as the trustee of the tenth respondent and as on date, the tenth respondent is represented by

respondents Nos. 3 and 5, who are the wife and son of the second respondent. According to Mr. T. Raghavan, the memorandum of the Sanga

exhibit P-101 does not authorise such a transfer of asset. The transaction, therefore, is ultra vires the Sanga''s memorandum and the amount

misapplied has to be brought back. In this context, he relied on paragraph 941, Volume 48, Edition IV of the Halsbury''s Laws of England, and the

judgment reported in Dr. A. Lakshmanaswami Mudaliar and Others Vs. Life Insurance Corporation of India and Another, .

In so far as the expenses of the Sanga are concerned, it is contended that, there is no necessity for the Sanga to borrow funds and spend, and

that the Sanga has borrowed from Sri Ramalingeswaradu Trust, wherein the second respondent is the sole trustee. The Sanga has borrowed Rs. 5

to Rs. 6 lakhs by mortgaging its properties to the said Trust. In this context, learned counsel for the petitioners has also referred to the evidence of

RW-1 who has stated that the income of the Sanga is Rs. 2.5 to Rs. 3 lakhs per year and that the Sanga, which is under his management, could

not meet expenses in regard to the education, medical and cultural activities and, therefore, it has borrowed and spent. It is further urged that

during the pendency of the company petition proceedings, the second respondent has sold 3 1/2 acres of land belonging to the Sanga for Rs. 3.67

lakhs as per the evidence of RW-1. According to the petitioners, there is no necessity for the Sanga to borrow funds and spend and as on to-day,

the Sanga is in debts. The financial position of the Sanga is not known to anyone except the second respondent, and that the second respondent

has been treating the Sanga as a sole proprietary concern and has made the Sanga to borrow and spend from time to time beyond its capacity.

The Sanga is a charitable trust and a non-profit organisation and there is no necessity to sell its immovable properties and spend the same for

charitable purposes. As on March 31, 1990, the Sanga owes to Sri Ramalingeswaradu Trust Rs. 11.5 lakhs and none is aware of the financial

position of the Sanga as on date.

In answer to the above allegations, Mr. V. R. Gopalan invited my attention to the answers given by the second respondent as RW-1. He had

given full explanations as to how the expenditures were on the increase. It is further said that the expenditures incurred during the years ending with

May 31, 1977, May 31, 1978, May 31, 1979. May 31, 1980 and May 31, 1981, were all duly approved by the board of directors of the Sanga

for the year ending May 3 1, 1981, because of the order of injunction granted by this court. All the expenditure incurred and donations given had

been approved by the board of directors, the general body as well as the Income Tax Department, and the vouchers were also verified by the

auditor and initialled and the balance is also struck. The copies of the balance-sheets for all the years had been furnished to the petitioners and they

are aware of the details of the expenditure.

Moreover, in his evidence R.W. - 1 has explained that previously and originally the travelling expenses were debited against the three business

companies and the Sanga was not burdened with the same. The said position continued before the strained relationship between the parties and the

position was different from 1979 onwards when the second respondent could no longer debit Indian Commerce and Industries Co. Pvt. Ltd. with

the travelling expenditure. It is in point to mention that in 1979, the third petitioner wanted to become the vice-president and president subsequently

of the Rotary Club at Secunderabad and he wanted a donation of Rs. 3,250 to be sent to the Secretary of the Rotary Club of Secunderabad,

which was done as could be seen from exhibits R-71 to R-77. Printing of certain publications and giving donations for book printing had also been

explained by R.W. 1 in his evidence.

It is urged by Mr. V. R. Gopalan that all these expenditures were questioned for the first time only on October 28, 1981, and not before. By

that time, the difference of opinion between the parties had come up to the surface. In so far as Sri Bhilweswara Charitable Trust is concerned, it is

a third party and is an independent trust and that the same has been brought into the picture unnecessarily. Paragraph 22 of the Company Petition

No. 12 of 1982 deals with the allegations and averments made against the tenth respondent/Trust. As rightly pointed out by Mr. V. R. Gopalan, it

is pertinent to point out that no reliefs of any nature had been asked for directly and specifically against the tenth respondent, which is a separate

legal entity and such a relief cannot be asked for in a company proceedings. It is further submitted that this court sitting in company jurisdiction

cannot deal with a totally different legal entity and grant any relief against it. It is no doubt true that a corpus donation of Rs. 16 lakhs was given by

the Sanga to the tenth respondent Trust in 1970. A question is raised as to the competence of the Sanga to give such a donation and it is argued

that it is ultra vires. If is submitted that clause Ill, sub-clauses 10 and 24 of the memorandum of association of the Sanga are very clear and specific.

According to Mr. V. R. Gopalan, clauses 10 and 24 give ample powers to the Sanga to organise, promote, establish and maintain, aid in the

promotion, establishment, maintenance of the Sanga or associations with objects similar to those of the Sanga in all parts of India and elsewhere

and that the Sanga can subscribe or guarantee money for any national, charitable, benevolent, religious, public, general and useful objects. It is

contended that the Sanga had all the legal competence to donate, aid or subscribe and the test is that the receiving institution should have objects of

similar nature or should be national, charitable, benevolent, religious, public and useful objects. A comparative reading of the memorandum and

articles of association of the Sanga and its objects on the one hand and the trust document of the tenth respondent on the other, it will be clearly

seen that the objects re similar and the matter comes squarely within sub-clauses 10 and 24 referred to above. Hence, I see force in the contention

of Mr. V. R. Gopalan, that there is no question of any legal incompetence or ultra vires of the action taken in 1970, and questioned in the year

1982.

At this juncture, it is relevant to point out that the board of the Sanga passed a resolution on November 14, 1970, vide exhibit R-2(g), which

meeting was attended by the late C. A. Chettiar, second respondent, third petitioner and the ninth respondent and the resolution passed by the

board reads as follows :

Resolved therefore subject to the approval of the general body that a sum of Rs. 15,00,000 (rupees fifteen lakhs only) be endowed to Sri

Bhilweswara Charitable Trust on the strict understanding that the said amount so endowed will be added to and held as an accretion to and as a

corpus of the trust and held by the trustees with the obligation referred to in the deed of trust dated November 9, 1970.

The aforesaid resolution is in the handwriting of the very same A. K. Balasubramaniam, the accountant of Indian Commerce and Industries Co.

Pvt. Ltd., who was in charge of writing the Sanga''s books. An extraordinary general body meeting of the Sanga met on December 7, 1970 and

exhibit R-3(e) resolution was passed. Both the petitioners Nos. 2 and 3 were parties to the said resolution and the said meeting was chaired by the

late C. A. Chettiar. Being a special resolution, the same was filed with the Registrar of Companies also. The second respondent as R.W.-1 has

explained the reasons for parting with and donating the sum of Rs. 15 lakhs. Sri P. Visweswar Rao, the author and founder of the tenth respondent

trust, is not a stranger and the evidence would disclose that his only son had predeceased him. Mr. P. Visweswar Rao had even during the lifetime

of K. S. Rao donated a sum of Rs. 10,000 to the Sanga on February 28, 1962, vide exhibit R-167. Still the petitioners would characterise him as

an associate of the second respondent and that he was an elderly person having no means. In fact, the said P. Visweswar Rao was also a

shareholder of the Sanga till 1978 and he died on May 19, 1979.

It is in evidence that the formation of the tenth respondent trust and regarding the details which were worked out, the same took place in

October, 1970, during Navarathiri celebrations in Vijayawada when P. Visweswar Rao also took part. R.W. - 1 speaks about the same. After the

modalities were worked out, the trust was formed by P. Visweswara Rao on November 9, 1970, and Visweswara Rao wrote exhibit R-119 letter

to the Sanga on November 10, 1970. Along with that letter, he enclosed a copy of the trust deed, which copy has been marked as exhibit R-159.

Exhibit R-159 is a carbon copy of the original trust deed exhibit R-160. It will be seen that the original trust deed was registered on December 19.

1970 and in the Sanga''s files, in exhibit R-159, an endorsement to that effect had been made on the top portion of the document. Exhibit R-159

has been on the files of the Sanga from November, 1970, onwards till this date. It is stated that the same was seen by everyone and it is an open

secret.

As already stated, exhibit R-119 was placed before the board of Sanga under the chairmanship of C.A. Chettiar and the other directors who

participated were the third petitioner and respondents Nos. 2 and 9, and the resolution was passed on November 14, 1970, under exhibit R-2(g),

which was subsequently approved by the general body on December 7, 1970, vide exhibit R-3(c). Only thereafter on December 14. 1970, the

Sanga wrote exhibit R-163 to the tenth respondent. The trust was already registered on December 19, 1970, and a letter to that effect was sent by

P. Visweswar Rao on December 22, 1970. Only thereafter on December 30, 1970, the donation was made vide exhibit R-164, and the matter

ended there.

It is pertinent to notice that at no point of time any of the petitioners ever questioned the functioning of the tenth respondent trust from

December 30, 1970, till Company Petition No. 12 of 1982 was filed in February, 1982. There was not even a single protest in all these years and

the tenth respondent was independently functioning from 1970 onwards and it is only after a lapse of 12 years, the present proceeding had been

initiated for the first time. The petitioners, as pointed out by Mr. V. R. Gopalan, did not even raise any protest or query about the functioning of the

tenth respondent either in the board meeting of the Sanga or in the general body meeting all these 12 years. It is further contended that petitioner,

Nos. 2 and 3 acting as directors of Indian Commerce and Industries Co. Pvt. Ltd., as well as Beehive Engineering and Allied Industries] Limited,

had taken loans from the tenth respondent and even during those occasions, they never treated the tenth respondent as forming part of the Sanga.

Beehive Engineering and Allied Industries Ltd., in which both petitioners Nos. 2 and 3 are directors, borrowed a sum of Rs. 13,30,000 from the

said tenth respondent trust on October 26, 1977, as per exhibits R-165 and R-166. It is common knowledge that both of them knew about the

separate and independent entity of the tenth respondent and knowing fully well about the actual state of affairs, they went to the extent of

borrowing a heavy amount from the tenth respondent.

Exhibit R-161 is the judgment of this court in C.S. No. 208 of 1981, filed by the tenth respondent against Beehive Engineering and Allied

Industries Pvt. Ltd., for recovery of the loan amount and the suit claim was for Rs. 24,94,293.27. That suit was decreed by this court on

September 2, 1983. The present company proceedings had been filed one year after the filing of the above suit against the business company,

wherein petitioners Nos. 2 and 3 are directors. Similarly, the other business company, Indian Commerce and Industries Co. Pvt. Ltd., also run by

petitioners Nos. 2 and 3 herein, had availed of a loan of Rs. 12 lakhs from the tenth respondent earlier in September, 1977, vide exhibit R-162.

The said amount was repaid by them subsequently and again borrowed by the very same petitioners for and on behalf of Beehive Engineering and

Allied Industries Pvt. Ltd.

It is submitted that both the above transactions took place in the year 1977 and that petitioners Nos. 2 and 3 were fully aware of the existence

of an independent management for the tenth respondent, and at no point of time, they treated the tenth respondent s forming part of the Sanga.

There is yet another resolution passed by the Sanga on December 29, 1971. vide exhibit R-2(i) which will show that certain shares and securities

of the Sanga had been sold to the tenth respondent and the said meeting was attended by C.A. Chettiar and respondents Nos. 2, 3 and 4, and that

the chairman of the said meeting was C.A. Chettiar. From a reading of the evidence of PW-1 and RW-1, it will be seen that a number of drafts

were prepared f0or the formation of the trust and legal advice was also taken. Initially, it was thought that the Sanga could be a member of the

trust, but on legal advice, the said idea was given up and the matter ended in the year 1970.

In the present proceedings, the petitioners would pretend that the tenth respondent is only an organ of the Sanga and that the entire corpus

donation given in the year 1970 should be called back. The third petitioner and his clerk D. V. R. N. Sharma at Secunderabad; chose to file an

application before the Commissioner, Endowments Department, Hyderabad, on September 10, 1984, requesting the State Government of Andhra

Pradesh to take over the tenth respondent, vide exhibit R-174. If really the third petitioner was keen and anxious to get back the corpus donation

of the Sanga, such a course would not have been adopted by him. There was a writ proceeding in the Andhra Pradesh High Court on this subject

initiated by Bhilweswara Charitable Trust, which was allowed, vide exhibit R-175. Finally, the Commissioner, Endowments Department,

Hyderabad, passed an order on February 19, 1986. vide exhibit R-176, holding that the inclusion of the tenth respondent in the list published

earlier is invalid. The third petitioner would file yet another writ proceeding in Writ Petition No. 1864 of 1986 in the High Court of Andhra Pradesh

- vide exhibit R-177

It is in evidence that the tenth respondent institution has been functioning independently since its inception in the year 1970, and till this date, it

has been recognised as an independent institution even by the Income Tax authorities. Admittedly, the petitioners never challenged P. Visweswar

Rao, the founder of this trust, till his death on May 19, 1979, and only after his death, they would pretend that the tenth respondent is a benami of

the Sanga and make all wild and false allegations. It is in evidence that even during the lifetime of P. Visweswar Rao, he had co-opted the fifth

respondent as a co-trustee of the tenth respondent and the same took place on May 13, 1979. It is to be noted that P. Visweswar Rao is a close

relation and the third petitioner and the second respondent are his nephews. There is nothing wrong in the action of P. Visweswar Rao for

inducting the fifth respondent on May 13, 1979, nearly nine years after the formation of the trust, especially when his only son was dead.

It is also to be noticed that an attempt was made by the petitioners to implicate the tenth respondent and wanted the documents of the tenth

respondent to be produced in court in this company proceeding but the said request was negatived by this court on August 28, 1986, in

Application No. 221 of 1983. The same was challenged before a Bench of this court in O.S.A. No. 179 of 1983. The Bench by order dated

September 11, 1983, dismissed the said appeal and confirmed the order of the company court. Having regard to the above, I am of the view, the

present proceedings initiated implicating the tenth respondent is not legally maintainable. If really any fraud was practised by the second respondent

in 1970 at the time of the formation of the tenth respondent trust, nothing prevented the petitioners from taking any action immediately. On the

other hand, they'' recognised the independent functioning of the trust when they chose to borrow moneys from the trust. Only when the tenth

respondent filed a suit for recovery of the said amount in 1981, the tenth respondent had been wilfully and wrongly implicated in this proceeding.

The twelve years gap of inaction has not been explained at all by the petitioners. At any rate, no relief can be granted against the third party trust in

a company proceeding. Therefore, I reject the contention of the petitioners on this point as well.

As pointed out by Mr. V. R. Gopalan, a word must be said about the contribution of the second respondent and the members of his family as

donations to the Sanga. The evidence of R.W. - 1 would indicate that they had donated a sum of Rs. 6 lakhs to the Sanga. The evidence would

further disclose that even P. Visweswar Rao, the founder of the tenth respondent. had given a donation of Rs. 10,000 to the Sanga in 1960. On

the other hand, it is conceded that none of the petitioners ever made any donation to the Sanga. As already seen, there are six items of complaints

levelled against the respondents. The right of the petitioners u/s 25 of the Act is only to ensure that the charitable objects of the company are

carried out and certainly the personal benefits of the petitioners do not at all come into the picture. The scope of section 397 of the Act is rather

curtailed in the case of a section 25 company.

The scope of section 397 of the Act has been considered by the Supreme Court in Needle Industries'' case [1981] 51 Comp Cas 743, which

is an authority on the subject. In that case. the Supreme Court referred to only three types of companies and section 25 company is not at all

referred to in the discussion, which, according to learned counsel for the respondents, would show that section 25 company stands on a totally

different footing, in regard to all matters. He would submit that sections 397 and 398 of the Act can at best be invoked only if the petitioners have

come out with a clear and clinching case and proved and substantiated their version fully and effectively.

In the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp Cas 351, the Supreme Court has said that for invoking section 397

of the Act, the conduct of the majority must be burdensome and harsh and wrongful and mere lack of confidence is not sufficient unless the lack of

confidence springs from oppression in the management of the company''s affairs. It is hence submitted by the learned counsel for the respondents

that in the ease of a section 25 company, the shareholders do not have a proprietary right in the sense it is understood in a commercial company. In

my opinion, this argument is well founded.

In the case of Five Minute Car Wash Service Ltd., In re [1966] 36 Comp Cas 566 (Ch D) it has been held that the matters complained of

must affect the person alleged to be oppressed in his or their character as a member or members of the company; harsh and unfair treatment to the

petitioner cannot entitle him to any relief. A member or a director will have no personal interest in the case of a section 25 company Since the

object of the company is wholly charitable and no member or director can complain that he was ignored while doing the charity. Mr. V. R.

Gopalan, learned counsel for the respondents, would submit that in the instant case. it is the petitioners/minority who are oppressing and even

giving pressure on the respondents/majority and it is a reverse case.

It is also not in dispute that most of the properties belonging to the Sanga are tenanted to the three business companies run by petitioners Nos.

2 and 3. It is also alleged that even though the third petitioner ceased to be a director of the Sanga from 1981, he had not handed over the assets

and properties of the Sanga at Secunderabad in spite of the orders of court. Before winding up, counsel for the respondents would also draw my

attention to the fact that the petitioners herein not only created a stalemate in the functioning of the Sanga by filing a number of litigations in different

courts but they would, even after filing the present company proceedings in February, 1982, not evince any interest in proceeding with the enquiry

in Company Petitions Nos. 12 and 13 of 1982. It is seen that P.W. - 1''s evidence was commenced on April 6, 1983, and concluded after a

number of sittings only on December 21, 1983, and that PWs-2 and 3 on January 15, 1984, and, thereafter, the matter was not taken up. The

evidence of R. W-1 was taken up on March 30, 1984, and while he was under cross-examination, applications were filed for inspection and

production of records, which were negatived by this court. O.S.A. Nos. 178 and 179 of 1986 were filed against that order and at this juncture,

R.W. - 1''s cross-examination was in an advanced stage.

It is to be noticed that the learned judge who was then conducting the trial, passed an order on September 22, 1986, against the petitioners

expressing grave concern and deprecating the attitude of the petitioners for delaying and not completing the cross-examination of RW-1. In fact, a

Division Bench of this court, by order dated September 25, 1986, made in C.M.P. No. 13646 of 1986 in O.S.A. No. 179 of 1986, characterised

the attitude of the petitioners as one intended to defeat and delay the proceedings. In the meantime, C.P. No. 71 of 1986 was filed by the very

same petitioners under sections 397 and 398 of the Act. The petitioners would insist that the present proceedings also should be tried jointly along

with C.P. No. 71 of 1986, forgetting for a moment that in the present proceedings the evidence was over and in C.P. No. 71 of 1986, the case

was only in the initial stages. The respondents moved before the Supreme Court for directions which were given on January 15, 1991. Only

thereafter, the trial re-commenced. Mr. V. R. Gopalan would further submit that because of the stalemate created, the administration and

functioning of the Sanga had been seriously affected.

The petitioners have also been functioning as directors all through. They were parties to the board''s resolutions and the general body

resolutions. Still, they would disown their responsibility and try to put the blame only on the second respondent. The evidence adduced would

clearly show that the petitioners have been parties to all the transactions and they were fully aware of the same. There is absolutely no evidence to

show that they were ignorant of the transactions. Sanga, a charitable institution in the nature of trust, is not commercial. It is argued that there is no

question of any oppression of the petitioners'' right as members of company especially in a section 25 company. According to Mr. V. R. Gopalan,

the scope of section 397 of the Act is very limited in a case of this kind. On the ground of mismanagement, no specific instances have been spelt

out. On the other hand, the six items of complaints levelled against the respondents have been well met and answered. The right of the petitioners

u/s 25 of the Act is only to ensure the performance of a charitable trust and certainly the personal benefits of the petitioners do not come into the

picture. Hence, I am of the view, that in the case of a section 25 company, the scope of section 397 of the Act is curtailed.

A Division Bench of the Kerala High Court had occasion to deal with section 397 of the Act in the case of V.J. Thomas Vettom and K.M.J.

Joseph and Another Vs. Kuttanad Rubber Co. Ltd. and Others, . The Bench held that the decision of minority shareholders in the con duct of the

affairs of the company will not normally persuade a court to interfere in the matter and it is only when the court has reliable information before it,

where the majority acts against the provisions of the articles of association or the statute covering it, or makes any arbitrary use of the majority

powers, resulting or likely to result in financial loss or where action could be characterised as unfair and improper, the court will exercise its power

under sections 397 and 398 of the Act. But, every action of oppression cannot be remedied by the court. It is submitted that the provisions of the

Act, especially Chapter VI, are not meant to convert the company court into a superstructure, supervising all its affairs. Section 397 of the Act is

essentially a remedy available to members who complain that the affairs of the company are conducted in a manner prejudicial to the public interest

or in a manner oppressive to any member or members. Unless either of the aforesaid ingredients are established, an application u/s 397 of the Act

will not lie, more so in a section 25 company case.

In Re: Bengal Luxmi Cotton Mills Ltd., is an authority for the proposition that if there is delay in seeking remedies, discretionary relief cannot

be granted. The case cited by learned counsel for the petitioners reported in Dr. A. Lakshmanaswami Mudaliar and Others Vs. Life Insurance

Corporation of India and Another, has absolutely no application to this case. In the said case, before the Supreme Court, all the parties concerned

were before the court. It is a case where the action on the part of the insurance company was held to be ultra vires. In the instant case, it is not so.

Articles 10 and 24 are quite clear and specific. Moreover, the transfer of funds by way of donation to the corpus, in the instant case, was in favour

of an independent trust founded by the late P. Visweswar Rao in the year 1970. P. Visweswar Rao was alive till 1979. The sum of Rs. 15 lakhs

had gone to the corpus fund of the trust founded by P. Visweswar Rao in the year 1970 itself and it is in evidence that P. Visweswar Rao had

been in charge of the tenth respondent for nine years till his death in 1979 utilising the amount for the trust. No action was taken against P.

Visweswar Rao or against the tenth respondent during the said period of nine years. Only in the year 1979, after a gap of nine years, the fifth

respondent had been co-opted as a trustee by P. Visweswar Rao, and the fifth respondent has come into the scene as a co-trustee of the tenth

respondent only in the year 1979. Simply because the fifth respondent is a shareholder or director of the Sanga also. whether the petitioners can

file proceedings belatedly after the long lapse of time asking for the return of the amount, is the question. In my view, the same cannot be done

either in law or on facts.

The other case cited by Mr. T. Raghavan viz., Mannalal Khetan v. Kedar Nath Khetan [1977] 47 Comp Cas 185 (SC), relating to section

108 of the Act, also has no application to the facts of the present case. It is not the case of the respondents in this proceeding that there are no

proper instruments of transfer of the shares. On the other hand, there is the positive evidence of RW-1 that all the share transfers questioned are

covered by instruments of transfer duly complying with all the legal formalities and that they were all kept in the share transfer file, which had been

stealthily removed by the second petitioner by using the duplicate set of keys of the cupboard. In fact, it is the evidence of R.W.-1, that the

question cropped up for the first time in December, 1981, when he was in the witness box in the two city civil court suits O.S. Nos. 8442 and

8631 of 1981. He was suddenly asked about the share transfer file. R.W. - 1 took time to produce the same into court and on the next day, he

had to report to the court that the said file was missing, which he noted only then. In this connection, it is highly pertinent to note that in the two city

civil court suits the petitioners have not challenged the share transfers nor had they alleged that there had been no valid instruments of transfer in all

the transactions. If really there had been any lacuna in the share transfers, the petitioners would have agitated the said issue at the earliest

opportunity, viz., in the two city civil court suits. It is, therefore, submitted by Mr. V. R. Gopalan, that the present attempt in these proceedings

complaining about lack of valid and proper transfer forms has been made by the petitioners deliberately after securing the said file and making it

impossible for the second respondent to produce the same. When a serious allegation has been made on this issue against the second petitioner,

one would have expected him to come to the witness box and deny the charges levelled against him. He refrained from coming into the witness

box. It is therefore, rightly contended by Mr. V. R. Gopalan, that the petitioners cannot complain that the mandatory provisions of section 108 of

the Act had not been complied with. In the instant case, it is submitted by Mr. V. R. Gopalan. that it is the petitioners/minority who are oppressing

the respondents; majority and it is a reverse case.

It is also pointed out that the printing press owned by the Sanga aI Secunderabad was under the exclusive control of the third petitioner and

the same had to be closed down because for ten consecutive years, there was loss. He had not handed over the press and the records in spite of

the directions given by the Andhra Pradesh High Court. Many instances have been placed before this court to demonstrate as to how the minority

has been oppressing the majority endlessly and would still complain and level charges against the respondents about the loan taken by the Sanga to

meet its commitments especially because all the funds that should be regularly flowing to the treasury of the Sanga have been deliberately blocked

by the petitioners, who happened to be the lessees of most of the Sanga''s properties.

On a careful consideration of all the materials placed on record it is clearly seen that the petitioners have come to this court with an untrue case.

There has been no oppression and mismanagement on the part of the respondents as alleged by the petitioners. It, therefore, follows that Company

Petition No. 12 of 1982 is highly misconceived and has been filed without any basis or merit and above all, there is inordinate delay and laches in

seeking remedies, which are discretionary in nature. As pointed out earlier, discretionary relief cannot be granted if there is inordinate delay and

laches. Prayer (a) seeking for a declaration, therefore, cannot be granted, as, in my view, no case has been made out by the petitioners. Prayer (b)

relating to investigation into the conduct of respondents Nos. 2 to 5 and 9 in relation to the affairs of the Sanga and the alleged diversion of the

funds and assets of the Sanga, cannot also be granted since no case has been made out for the grant of such a relief. Prayer (c) relating to the

transfer of Rs. 15 lakhs as corpus donation to the tenth respondent cannot be granted since the said event took place in 1970 and is being

questioned in 1982. Therefore, on the question of laches as well, this relief cannot be granted. Prayer (d) is to restrain the second respondent from

exercising any right as a member of the Sanga excepting in respect of ten equity shares of Rs. 100. This relief also cannot be granted since no case

has been made out to grant such a relief. Regarding prayer (e), there is no necessity at all to give any such direction in this regard in view of the fact

that the second respondent has already explained about the safety of the gold items of the Sanga. There is also no necessity to direct amendment of

the articles of association of the Sanga as prayed for in prayer (f) as no case has been made out for the grant of the said relief. Prayer (g) is also

negatived, since, as already held, petitioners Nos. 2. and 3 do not continue to be directors of the Sanga. In view of my finding that the two annual

general body meetings held on January 21, 1981, are perfectly valid and legal, there is absolutely no necessity to give any directions as prayed for

in prayer (h). No specific directions are necessary with regard to prayer (i). In view of the finding that respondents Nos. 5 to 9 are the

shareholders of the Sanga, no injunction can be granted against them as prayed for in prayer (i). So far as prayer (k) is concerned, now that

Company Petition No. 12 of 1982 is dismissed, it is open to the respondents to call for a general meeting of the Sanga and proceed to conduct the

affairs of the Sanga in accordance with the objects of the Sanga and the memorandum and articles of association. The relief of injunction against

the second respondent restraining him from intermeddling with the affairs of the Sanga, as requested in prayer (1) is also not granted since the

petitioners have not made out a case for the grant of such relief.

In the result, Company Petition No. 12 of 1982 deserves to be dismissed and is hereby dismissed with costs.

Before parting with this case, I may direct both the parties, who are kith and kin and a closely knit family, to sink their difference of opinion and

unite together in the interest of the trust, which was created by the founder with an avowed object, at least from now onwards. The suggestion

made by the petitioners'' counsel for appointment of an administrator, in my view, is unwarranted and quite unnecessary. Instead, the parties may

consider the appointment of some eminent persons who are interested in public social and religious activities on the board.

Now, I will take up Company Petition No. 13 of 1982. In this petition filed u/s 155 of the Act, the petitioners pray for rectification of the share

register of the Sanga by deleting the names of respondents Nos. 2 and 3 in respect of the shares said to have been transferred by virtue of the

resolution of the board dated January 15, 1956, August 11, 1957, and October 4, 1970. The first respondent is the Sanga, the second respondent

is B. V. S. S. Mani and respondents Nos. 3 to 7 are the wife, sons and daughters of the second respondent.

According to the petitioners, they are the shareholders of the Sanga. The second respondent was allotted only ten shares of Rs. 100 each.

However, taking advantage of his stay-with the late K. S. Rao, he got entries made in the register of members without any instrument of transfer

and without following the procedure laid down in section 108 of the Act. The petitioners have every reason to believe that the minutes of the said

board of directors dated January 15, 1956, and August 13, 1957, are not genuine. The second petitioner K. L. Manohar was appointed as

director in 1959 when he was hardly 19 years and he was not aware of the aforesaid entries regarding the transfer or the illegality with regard to

the same. The books and records of the Sanga were, at the material time, in the personal custody of the second respondent, who never made them

available to the petitioners until recently.

The petitioners would further aver that the second respondent caused entries made in the books and records of the Sanga with the object of

securing ultimate control over the Sanga to the exclusion of the other members of the Sanga. These transfers came to light when the minutes book

of the Sanga was inspected by K. L. Manohar on August 5, 1981. Later, when the records were produced in December, 1981, in the city civil

court, it was also disclosed that typewritten sheets pasted in the minutes books and purporting to have been signed by the late K. S. Rao as

constituting authority for the transfer of shares in the names of respondents Nos. 2 and 3. The truth and validity of the above transfers were very

much questioned as they were apparently got up by the second respondent as part of his design to have the control of the Sanga.

In paragraph 12 of the petition, the genuineness of the board meeting and the resolution passed therein on October 4, 1978, are attacked by

the petitioners. It is their contention that Navarathri celebrations of the Sanga took place between October 3 and 10 of 1978, at Vijayawada and

that all the parties were only at Vijayawada during that period and hence, this meeting could not have taken place at Madras. It is also alleged that

certain shares belonging to the dead persons had been transferred in the meeting to and in favour of the second respondent and none of the

transfers sought to be effected on October 4, 1978, was borne out by any transfer deed duly signed by both the transferor and the transferee and

stamped in accordance with the mandatory requirement of the Act and articles of association of the Sanga. But, instead, mere entries have been

made in the statutory registers of the company deleting the names of several members, who were either deceased or who were not taking any

interest in the activities of the Sanga and entries made in the name of the second respondent or his wife as holders of the said shares.

In paragraph 15 of the petition, it is alleged that the second petitioner K. L. Manohar made an inspection of the Sanga''s records in 1981 and

the complaint is that the second respondent was effectively avoiding making the records of the Sanga available to the petitioners. When the

inspection took place on August 5, 1981, of the Sanga records, the file containing the share transfer applications of the company from its inception

was shown to K. L. Manohar and he noted serious infirmities in several of the applications which related to the transfer of shares to respondents

Nos. 2 and 3.

In the counter-statement filed on behalf of respondents Nos. 1 and 2, the following defences were taken -

(a) This petition is clearly barred by limitation with reference to the transfer of shares made on January 15, 1956, August 13, 1957, and October

4, 1978.

(b) K. L. Manohar had suppressed the fact of his holding 75 shares of Rs. 10 each, which shares he obtained by virtue of the board resolution

dated August 13, 1957, only, and he was co-opted as director in the year 1959 only after he became eligible by holding the requisite shares.

(c) The petitioners have been directors of the Sanga and they are well aware of the share transfers. When respondents Nos. 2 to 7 participated in

the affairs of the company as shareholders-as directors, they were never questioned before 1981. The petitioners have acquiesced in the acts of

the transfer in favour of respondents Nos. 2 to 7.

(d) It is further contended that the records of the minutes dated January 15, 1956, and August 13, 1957, are real, genuine and legally binding. The

transfers were effected in accordance with law and they are valid. After a lapse of 26 years and after having acquiesced, the petitioners are

estopped from questioning the share transfers.

(e) The extract given by the petitioners in para 10 of the petition has not been fully and correctly given by the petitioners. It does not give a true

picture. The late K. S. Rao was empowered under articles 88 and 89 of the articles of association to effect transfers which he did on January 15,

1956, and August 13, 1957, respectively, and the petitioners were fully aware of the same and they never questioned the same during the life-time

of K. S. Rao.

(f) In spite of the general body or the board meetings, the above transfers were never disputed nor even a notice was sent by any of the petitioners

questioning the transfers effected in the years 1956 and 1957.

Paragraph 13 of the counter affidavit deals with the board meeting dated October 4, 1978. It is contended that proper procedures were

adopted under articles 35A and 35B of the articles of association of the Sanga before the shares were transferred on October 4, 1978. The

respondents would further contend that the records of the Sanga were always available for inspection and they have been periodically inspected

and nothing was suppressed. In fact, on December 24, 1979, there was an inspection of the records. There is no file containing share transfer

forms in the custody of the second respondent at the time of inspection and only the file relating to the share applications was inspected. Since the

late C. A. Chettiar, father of the first petitioner, was in sole custody of the Sanga''s records during his lifetime, the first petitioner must have

removed the same with the connivance of the second petitioner K. L. Manohar, and both of them have now joined together to put the blame on

the second respondent with ulterior motive. Only the petitioners are responsible to make available the file containing the share transfer forms which

is not available in the custody of the second respondent.

In paragraph 16 of the counter, it is contended that all the transfers of shares were done in accordance with law but unfortunately the file

containing the share transfer applications is obviously in the custody of the petitioners and now they want to take advantage of the same. At no

point of time any specific demand was ever made by either of the petitioners for the production of the share transfer application file and no

occasion arose to any one to took into the said file all these years. With reference to October 4, 1978, meeting, in paragraph 17 of the counter

affidavit, the respondents would submit that all the share transfers were done in accordance with law. Even after October 4, 1978, there were the

annual general body meetings in which the petitioners were present and no question bout the invalidity or the impropriety of the transfer of shares

was ever made by either of them.

Mr. T. Raghavan, learned counsel for the petitioners, would contend that the second respondent, taking advantage of his stay with the late K.

S. Rao, got entries made in the share transfer register without any instrument of transfer and without following the procedure laid down in section

108 of the Act. The second respondent in his cross-examination would state that he was not aware personally whether transfer deeds were placed

before the board. He admits that only K. S. Rao alone signed the minutes, exhibit R-1(a), dated January 15, 1956, as chairman. He was the

beneficiary but he did not know whether he has signed the transfer form as the transferee. He states that all the formalities were taken care of by

K. S. Rao. The only person who signed the minutes was K. S. Rao. The second respondent has not lodged any complaint nor taken any steps to

trace out the file containing transfer deeds. The second respondent has not produced any document to show that the first petitioner''s father had

any key with him. The only director the late K. S. Rao who signed the minutes as chairman was not empowered by the board to put through the

transfers. For a board meeting the minimum quorum is two. The transfer deeds were defective and not stamped. Section 108 of the Act is

mandatory, non-compliance with which is fatal and the transfers should be set aside.

Mr. T. Raghavan would then contend that best evidence is available with the Sanga for the transfers. The same is being withheld by the second

respondent. Failure to produce the books - this court is entitled to draw an adverse inference that if the documents were produced, it will go

against the respondents. Notice of a board meeting in writing is necessary as per section 286 of the Act. No meeting took place on October 4,

1978, since all the parties were at Vijayawada. Article 35 does not permit the second respondent to transmit the shares from the deceased

members to himself. The shares transferred from the deceased members are not in accordance with the provisions of the Act. There is no estoppel

against statute. Non - compliance with sections 108 and 286 of the Act is fatal. Therefore, according to Mr. T. Raghavan, the petitioners are

entitled to the relief as prayed for.

The point that arises for consideration in Company Petition No. 13 of 1982 is :

Whether the board''s resolutions dated January 15, 1956, August 13, 1957, and October 4, 1978, are true and genuine regarding the shares

transferred in these meetings and legally valid ?

Point : As already pointed out, the late K. S. Rao, the founder of the Sanga, was a self-made man and a man of independent thinking. He always

took final decisions in the matter relating to the Sanga as well as his three business companies. K. S. Rao was acting as the managing director of

the Sanga till his lifetime, which is not disputed. Articles 86 to 90 of the articles of association deal with the powers of the managing director. As

already discussed, 1956 and 1957 were crucial periods for the Sanga, in that, K. S. Rao applied for a licence u/s 25 of the Act from the Central

Government, which he got eventually on July 5, 1957. He did not gift or donate any property to the Sanga before 1956-57. In fact, he did his duty

to his only son, Mohanram Sastry, and his son''s son, K. L. Manohar, by settling substantial properties in their favour an March 26, 1957. Only

thereafter he made the first gift to the Sanga on March 28, 1957. None of the parties ever questioned the action of the late K. S. Rao till his death

on September 23, 1964. With the above background, the resolutions dated January 15, 1956, and August 13, 1957, should be analysed.

It is admitted that the Sanga''s registered office has been functioning from the very beginning at 29, Broadway, Madras-1. The Sanga occupies

the first and second floors whilst the two business companies Indian Commerce and Industries Co. Pvt. Ltd., and Kowtha Business Syndicate Pvt.

Ltd., are occupying the entire ground floor of the above premises. The records of the Sanga were kept in the cupboard in the ground floor at No.

29, Broadway, Madras-1, where the two business companies were functioning. C. A. Chettiar, the trusted friend of the late K. S. Rao, was in

charge of the Sanga as well as the business companies till his death on February 7,1976. It is further conceded that C. A. Chettiar, his son, C.

Srinivasan, B. V. S. S. Mani and K. L. Manohar were all functioning as directors of the two business companies which were functioning in the

ground floor of premises No. 29, Broadway, Madras-1, till 1981. The records of the Sanga were kept in the said cupboard and B. V. S. S. Mani

and C Srinivasan were seated side by side in the hall and there was no partition in between the two tables. The evidence of B. V. S. S. Mani is

very clear to the effect that there were two sets of keys for the cupboard containing the Sanga''s records, one set under the custody of B. V. S. S.

Mani and the other set with C. A. Chettiar and after his lifetime with his son C. Srinivasan. This stand had been specifically taken in the counter-

statement also and C. Srinivasan had not come to the witness box and disputed the said statement.

On a careful consideration of the entire evidence, it will be clearly seen that all the parties had easy access to the Sanga''s records and they

were all moving freely with each other. The accusations against B. V. S. S. and that he was having complete and full control of the Sanga''s records

and he never allowed the other parties to have any access or inspection, are all baseless having regard to the evidence on record. Hence, I reject

the said contention.

B. V. S. S. Mani as R. W-1 had clearly stated that C. V. Subba Rao, an employee of Indian Commerce and Industries Co. Pvt. Ltd., was in

charge of the Sanga''s records till his death in 1950. The minutes book maintained by him had been marked as exhibit R-134. After his lifetime, the

minutes books were maintained either in the handwriting of C. A. Chettiar till his death in 1976 or by A. K. Balasubramaniam, accountant of Indian

Commerce and Industries Co. Pvt. Ltd., till his death in 1970. At the time when the two board meetings were held on January 15, 1956, and

August 13, 1957, it is conceded that A. K. Balasubramaniam was maintaining the minutes in his own handwriting and certainly not B. V. S. S.

Mani.

Exhibit R-1 is the minutes book and exhibit R-1(a) is the pasted resolution dated January 15, 1956. Exhibit R-1(aa) is the underneath writing in

the handwriting of A. K. Balasubramaniam dated January 15, 1956. Exhibit R-1(h) is the photo copy. Exhibit R-1(b) is the pasted resolution dated

August 13, 1957. Exhibit R-1(bb) is the underneath writing on August 13, 1957. Exhibit R-1(f) is the photo copy.

The only witness examined on behalf of the petitioners is K. L. Manohar as P. W-1. He would say that he was only 19 year of age when the

aforesaid two resolutions came to be passed. No other witness had been examined to substantiate and prove the various charges and allegations

made against B. V. S. S. Mani. Neither Mohanram Sastri, who died in 1988 only pending the proceeding, nor C. Srinivasan chose to give

evidence in the case. B. V. S. S. Mani had examined himself as RW-1. The evidence of P.W. - 1 was recorded prior to the minutes book being

examined by the Forensic Department. His evidence commenced on April 6, 1983, and after a number of sittings, it was concluded on December

21, 1983.

On a careful analysis of the evidence given by P.W. - 1, it will be clearly seen that he has been throughout evasive and never answered the

questions directly during cross-examination. In fact, his evidence in chief with reference to Company Petition No. 13 of 1982 is very meagre. In his

evidence P.W. - 1 had not ventured to say anything about the underneath writings made on January 15, 1956, and August 13, 1957, by A. K.

Balasubramaniam. He is very silent on this crucial aspect of the case. P. W.-1 had conceded that he was living with K. S. Rao during the years

1954 to 1957 at Madras doing his diploma course in Mechanical Engineering. He was part and parcel of the family of K. S. Rao, being the son''s

son. The arguments put forward on behalf of the respondents to the effect that P.W. 1 had full knowledge and was in the know of things about the

incidents that took place in 1956-57 are, therefore, well founded. B. V. S. S. Mani as R.W. 1 has spoken about this aspect.

P.W. - 1 had also conceded that B. V. S. S. Mani was living with his family at Vijayawada in the establishment of his father-in-law Mohanram

Sastry from 1950 to 1956. He was the executive director of Indian Commerce and Industries Co. Pvt. Ltd., at that time functioning at

Ramavarapadu, Vijayawada. B. V. S. S. Mani as R.W. - 1 had also clearly said that whenever his presence was required by the late K. S. Rao at

Madras, he was coming and going. In view of the above, it is futile to contend that B. V. S. S. Mani prevailed upon K. S. Rao to effect the share

transfers during 1956-57. Both the meetings dated January 15, 1956 and August 13, 1957, took place only at Madras. C. A. Chettiar and his

son, C. Srinivasan, were always living at Madras. C. A. Chettiar was the director of Indian Commerce and Industries Co. Pvt. Ltd., till 1970.

Further, both Mohanram Sastry and C. A. Srinivasan were also directors of the Sanga in the years 1956 and 1957, and the two impugned

resolutions took place only when they were directors of the Sanga.

It is worthwhile to see the background and the reasons as to how and why the share transfers were effected by the late K. S. Rao on January

15, 1956, and August 13, 1957. respectively. It is true that the late K. S. Rao founded the organisation originally as a company limited by shares

and even issued share certificates to about 50 persons, the value of the shares being Rs. 100 and Rs. 10 each respectively. Already it has been

discussed as to how a stalemate was created in the year 1948 and how originally K. S. Rao wanted to have a broadbased board of directors and

how those persons did not come up to the expectation of the late K. S. Rao and did not wen pay the subscription amount with the result their

names were struck off. The evidence would clearly disclose that in the years 1956 and 1957, there was thinking and re-thinking in the mind of the

late K. S. Rao when he wanted to consolidate his position when he applied for the licence u/s 25 of the Act. Naturally, he wanted to restrict the

number of shareholders in whom he reposed confidence. Only with this background he took decisions 1956-57, and only after taking the said

decision, the first ever disposition was made by him to the Sanga on March 28, 1957. It was at that time that the licence u/s 25 of the Act was

expected from the Central Government. K. S. Rao did his duty to his son and son''s son by settling the bulk of his properties on them on March

26, 1957, and then alone to the Sanga on March 28. 1957. The licence u/s 25 of the Act was obtained on July 5, 1957, and the second

disposition was made by the late K. S. Rao to the Sanga on August 11, 1960, by a will, exhibit R-4, and the two resolutions should hence be

approached in the above background and the stand taken by the respondents on this account is well founded.

It is in evidence that the Sanga''s records were maintained by A. K. Balasubramaniam till his death in 1970 and it was he who recorded the

two resolutions dated January 15, 1956, and August 13, 1957, respectively. It is nobody''s case that there were no board''s resolutions on January

15, 1956, and August 13, 1957. In fact, the petitioners would concede that the board of the Sanga passed resolutions on January 15, 1956, and

August 13, 1957, respectively. It is further conceded that both the aforesaid resolutions do find place in the same minutes book maintained by A.

K. Balasubramaniam in a regular and routine way. It is nobody''s case that the two resolutions were inserted subsequently after the demise of K. S.

Rao on September 23, 1964. In fact, both the resolutions originated only from the late K. S. Rao himself.

The most important and crucial aspect of the case is that K. L. Manohar came to hold shares in the Sanga only from August 13, 1957, and his

shareholding commenced only from the resolution dated August 13, 1957. No fresh shares were issued to him but there was transfer of shares in

his favour, vide exhibit R-1(b) resolution dated August 13, 1957, whereunder 75 shares of Rs. 10 each were transferred. Yet, K. L. Manohar

would attack the very same resolution dated August 13, 1957.

Another important aspect is, that there were share transfers from C. A. Chettiar to C. Srinivasan and his wife Jay lakshmi as per resolution

dated January 15, 1956. Both the petitioners had very cleverly refrained from attacking that part of the resolutions dated January 15, 1956, and

August 13, 1957, which are very much in their favour since they got transfer of shares in their favour. But, they would attack only that part of the

resolutions in favour of Mr. B. V. S. S. Mani and his wife. No explanation is forthcoming from the petitioners as to why they had chosen to attack

only part of the resolutions dated January 15, 1956, and August 13, 1957. It is not the case of the petitioner; that the writing underneath

subsequently found out from the report of the Forensic Library was true and genuine. In fact, the petitioners had not said either in the pleadings or

in the oral evidence, that only the writing underneath prevails and that it was true and genuine. Their objection was only to the effect that both the

resolutions were pasted resolutions. Here gain, they would attack only part of the resolutions.

The evidence of P.W. - 1 is most unimpressive, very vague and very meagre too. In fact, P.W. - 1 has not come out with a clear case. But, he

would say that he was fully aware of the fact that there was writing underneath the two pasted resolutions. He would even add that the pasting was

done only at the top portion. If that were so, the writing underneath would have been easily visible. He made two official inspections before filing

the company petitions, one on August 5, 1981, and another during December, 1981, in the City Civil Court, Madras. The present petition filed in

February, 1982, is very silent and there is no whisper at all about the writing underneath. in fact, the petitioners had not spelt out their case

regarding the writing underneath at all.

The evidence of P.W. - 1 regarding the two resolutions is conflicting in nature. He concedes that the signatures in the two pasted resolutions

were those of his grandfather the late K. S. Rao. At no point of time, the signature of the founder was ever challenged or doubted. But, strangely,

in paragraphs 10 and 11 of Company Petition No. 13 of 1982. the petitioners would allege that B. V. S. S. Mani took advantage of his presence

with the late K. S. Rao and managed to have the two resolutions passed in favour of himself and his wife. The petitioners are very silent with

reference to the part of the resolutions which is in their favour. There is no whisper about the genuineness of the signature of the late K. S. Rao in

the two resolu-tions, in the pleadings.

The minutes book, exhibit R-1, was sent to the Forensic Department under orders of this court to remove the two pasted sheets containing the

resolutions dated January 15, 1956, and August 13, 1957, in a scientific manner and make available to the court the writing underneath, which was

done by the Forensic Department some time in 1984. As already stated, PW-1''s evidence was commenced on April 6, 1983 and ended on

December 21, 1983. He did not speak anything about the writing underneath. He is silent about this crucial aspect. PW-1 never applied to the

court for recalling himself and speak about this writing underneath after the minutes book came back from the Forensic Department. As matters

stand, excepting the evidence of B. V. S. S. Mani as R.W.-1, there is absolutely no contra evidence available on this crucial and important aspect

of the case. R.W.-1 had explained about the events that took place when the two resolutions dated January 15, 1956, and August 13, 1957, were

passed, since he was a director who took part in the aforesaid two meetings along with the late K. S. Rao.

When I looked into the writing underneath in exhibits R-1(aa), beneath the pasted resolution, exhibit R-1(a), dated January 15, 1956, it is

clearly seen that the writing underneath is incomplete and the matter itself is not complete and does not make sense. As explained by R.W.-1 in his

evidence, A. K. Balasubramaniam, the scribe, could not complete the resolution for want of space and that was the reason why the pasted

resolution gives a complete and full picture and as such, the same came to be affixed. There being no contra evidence on this aspect, the evidence

of R.W.-1 is to be accepted. By no stretch of imagination it could be said that the writing underneath and the incomplete matter dated January 15,

1956, was ever acted upon by the parties and it is nobody''s case either. If the incomplete writing underneath goes out of picture, what survives is

the pasted resolution exhibit R-1(a), which is full, complete and meaningful. The writing underneath stopped abruptly with the word ''and''.

Another special feature is that we do not find any change or difference or contradiction between the writing underneath and the pasted

resolution dated January 15, 1956, excepting that the writing underneath makes a full sense only when we read the pasted resolution. RW-1 also

had clearly stated that the transferors mentioned in the resolution dated January 15, 1956, were very much alive at that time. Exhibit R-1(b) is the

pasted resolution dated August 13, 1957, and exhibit R-1(bb) is the writing underneath. On a very careful analysis of both the writing underneath

and the pasted resolution, the following features as pointed out by Mr. V R. Gopalan, learned counsel for the respondents, are clearly seen :

(a) There are in all four stages the first stage being the writing underneath by A. K. Balasubramaniam; the second stage being the pencil notings and

corrections made in the writing underneath; the third stage is the pasted resolution without any correction or deletion; and the fourth stage is the

complete pasted resolution corrected and deletions made and countersigned by the late K. S. Rao on either side. The evidence on record would

clearly indicate that K. S. Rao had thinking and re-thinking during that period and the resolution dated August 13, 1957, took a full and final shape

only when the fourth stage was reached. The contention put forward by Mr. V. R. Gopalan on this aspect is quite logical and impressive.

(b) That the board meeting took place on August 13, 1957, is not disputed by the petitioners. That the late K. S. Rao and B. V. S. S. Mani were

the only two directors who took part in the proceedings is also not disputed. The signatures of both the late K. S. Rao as well as B. V. S. S. Mani

in the writing underneath and also in the top portion of the resolution are very much seen. The participation of the late K. S. Rao and B. V. S. S.

Mani in the aforesaid board meeting cannot be doubted. At the end of the resolution the late K. S. Rao had signed as the chairman of the meeting.

(c) In the writing underneath, the share certificate details had not been given by A. K. Balasubramaniam, whereas the same had been specifically

given in the pasted resolution.

(d) The evidence of B. V. S. S. Mani would show that the late K. S. Rao intended to transfer 10 shares of Rs. 100 each from Surukupatti Subba

Rao to B. V. S. S. Mani, but changed his mind immediately and decided to transfer additional 20 shares of Rs. 10 each, which is indicated as + 10

+ 10 in pencil. B. V. S. S. Mani would further explain that one more share of the value of Rs. 10 of Mahalakshmi, wife of Subba Rao, was added

to the benefit of B. V. S. S. Mani, which has been indicated in pencil writing as 10 + 1. This is reflected fully in the pasted resolution exhibit R-

1(b), wherein the share certificate numbers, the name of the transferor and the name of the transferee had been clearly given.

(e) So far as the third respondent Lalitha Rathnam is concerned, the evidence of R.W. - 1 would disclose that initially K. S. Rao wanted to transfer

100 shares of Rs. 10 each but immediately decided to transfer 10 more shares of Rs. 10 each belonging to Kadiyalau Suryanarayana Rao, which

is reflected in pencil writing as + 10 of 10. The pasted resolution exhibit R-1(b) reflects the said position.

(f) So far as K. L. Manohar is concerned, in the writing underneath initially K. S. Rao was intending to transfer 125 shares of Rs. 10 each to him,

which was also his thinking when the pasted resolution exhibit R-1(b) was typed. But, eventually when K. S. Rao put his signature in the final

resolution, he restricted the share transfer retaining and not touching the 50 shares of Sella Lakshmana Sastry of Varanasi. The reason for retaining

Lakshmana Sastry''s shares and not disturbing the same had been well explained by R.W.-1.

(g) By restricting the share transfer only to 75 in favour of K. L. Manohar as against the original thinking of 125, neither B. V. S. S. Mani nor Mrs.

Lalitha Rathnam got any advantage or benefit. On the other hand, the evidence would clearly show that the late K. S. Rao wanted to retain the

services of Lakshmana Sastry of Varanasi and that was the reason why his 50 shares were not touched.

(h) In the writing underneath, there was no mention about Harishankara Sastry but at the margin in pencil writing, it has been written as ""MHS 10

of 10 KPK"". R.W.-1 would explain that K. S. Rao, the founder, wanted to transfer 10 shares of K. P. Krishnaswami to M. Harishankara Sastry,

which was reflected in the final typed and pasted resolution exhibit R-1(b).

The above discussions would clearly indicate that all the five persons under exhibit R-1(b) dated August 13, 1957, viz., B. V. S. S. Mani, K.

L. Manohar, Lalitha Rathnam, M. Harishankara Sastri and C. A. Chettiar were benefited. But, in the present company petition, only the share

transfers in favour of B. V. S. S. Mani and his wife alone were challenged and not the ones in favour of the other three and no explanation is

forthcoming on this aspect from the petitioners. The corrections made of 125 into 75 shares in favour of K. L. Manohar have been specifically

initialled by K. S. Rao himself in the pasted resolution on either corners, which would clearly indicate that the same was made only by K. S. Rao

and K. S. Rao alone. By no stretch of imagination can it be said that B. V. S. S. Mani had any part to play on this aspect. This action on the part

of K. S. Rao was never challenged till his death on September 23, 1964.

The auditor of the Sanga had initialled only the pasted resolution and not the writing underneath. There was absolutely no occasion or any

provocation for anyone to look into the writing underneath at any point of time and no one attached any importance to the writing underneath. Only

during the pendency of the case, after the minutes book came from the Forensic Department, an argument is put toward for the first time, without

any pleadings or even oral evidence. Whether K. L. Manohar got 75 shares or 125 shares as per the resolution dated August 13. 1957, could

have been easily proved by K. L. Manohar himself by producing the original share certificates transferred in his favour on August 13, 1957, and

the controversy could have been easily resolved beyond any doubt. Unfortunately, K. L. Manohar has not chosen to produce the original share

certificates transferred in his name on August 13, 1957.

It is in evidence that C. A. Chettiar, C. Srinivasan and Mohanram Sastry were directors of the Sanga during 1956-57 and they being the

directors, they are bound to be having full knowledge and details about the share transfers. It is unfortunate that no questions were ever raised until

the death of the late K. S. Rao or during the lifetime of C. A. Chettiar. The persons now complaining were directors of the Sanga. They ask B. V.

S. S. Mani alone to explain the events that took place in 1956-57. In fact, both of them had recognised all the share transfers made by the late K.

S. Rao without raising any protest till 1982. The share register of the Sanga had been filed as exhibit R-124. The shareholdings of each and every

one had been clearly mentioned in that book in the handwriting of A. K. Balasubramaniam himself. Only the two pasted resolutions dated January

15, 1956, and August 13, 1957, figure in that book and not the writing underneath.

The annual returns as on December 19, 1956, addressed to the Registrar of Companies have been marked as exhibit R-122. This has been

signed by B. V. S. S. Mani and C. Srinivasan. Similarly, the annual returns as on October 31, 1957, marked as exhibit R-123 would contain the

signatures of B. V. S. S. Mani and the late K. S. Rao himself. In those returns submitted to the competent authorities in the usual course of

business of the Sanga, only the two pasted resolutions exhibits R-1(a) and R-1(b) dated January 15, 1956, and August 15, 1957, find place which

would go to show that only those two pasted resolutions had been fully given effect to and acted upon then and there from 1956 and 1957

onwards. In all the directors meetings as well as the annual general body meetings, only those two pasted resolutions exhibits R-1(a) and R-1(b)

were acted upon and at no point of time, anybody questioned the said position. The balance-sheets of the years 1956 and 1957 had been signed

only on that basis and also for the subsequent years. The two typewritten resolutions were typed in the same typewriter belonging to the business

company - Indian Commerce and Industries Co. Pvt. Ltd., as spoken to by R.W.-1. The methodology adopted by the late K. S. Rao as to how

and why the writing underneath had to be cancelled and pasted resolutions were effected had been well explained by R.W.-1. There is no contra

evidence.

Above all, article 89 of the memorandum of association gives ample powers to the directors to entrust and confer upon the managing director

such of the powers and privileges exercisable by the directors. It is conceded that the late K. S. Rao was the managing director till his death.

Hence, the late K. S. Rao, the founder of the Sanga and also its managing director had all the legal competence to effect the share transfers and

both the pasted resolutions exhibits R-1(a) and R-1(b) contain the signature of the late K. S. Rao as the chairman of the board meeting.

The evidence of R.W.-1 would clearly show that there were two files, one the share transfer file and the other share application file. Only the

share application file, exhibit R-162, series is available with him and had been produced. R.W.-1 would say that the share transfer file is missing.

R.W.-1 would charge the petitioners that after securing the share transfer file only they had made allegations in the present proceedings about the

legal formalities, regarding stamp, signature, etc., knowing full well that R.W.-1 would not be in a position to produce into court the share transfer

file with a view to meet those selections. Even under exhibit P-110, said to be the notes prepared by K. L. Manohar, and exhibit R-40,

acknowledgment of K. L. Manohar to the Sanga, it has been clearly mentioned that the official inspection made by K. L. Manohar was only with

reference to the share application file and not the share transfer file.

The allegations levelled against B. V. S. S. Mani that he manoeuvred the shares transferred in his name as per the resolutions dated January

15, 1956, and August 13, 1957, with a view to get at the properties of the Sanga at a future date, have absolutely no legs to stand and those

allegations have been made mischievously and wantonly for the first time in this company proceeding.

On a careful analysis of both the oral and documentary evidence adduced, I am of the view that the request for rectification of the share

register cannot be granted since it is highly belated and time-barred. Only the two pasted resolutions have been acted upon fully and effectively by

the members and directors of the Sanga right from 1956 and 1957 and at no point of time did anybody question the same. The petitioners are

estopped from questioning the said position at this belated juncture. In fact, only those two pasted resolutions have been accepted and found in the

records of the Registrar of Companies also. The two pasted resolutions are the real and genuine ones and there cannot be any doubt about it. It is

the positive evidence of RW-1 that all the legal formalities pertaining to the transfer of shares were also meticulously done. But, unfortunately, the

share transfer file had been surreptitiously removed by the petitioners as alleged by R.W.-1. Only after securing the said file, which is very obvious,

the petitioners had chosen to make allegations against B. V. S. S. Mani knowing full well that he cannot produce the said missing file to answer the

charges. There is considerable force in this argument of Mr. V. R. Gopalan and the same has to be accepted.

It is again unfortunate that B. V. S. S. Mani had been singled out and had been asked to explain at this belated stage as to what transpired in

1956-57 when the Sanga was under the absolute control of K. S. Rao, the founder himself. The long lapse of time from 1956-57 to 1982 had not

been explained at all by the petitioners. Instead, they would only plead ignorance. Even though they were shareholders and directors of the Sanga,

still they would pretend that they were not aware of the details of the shareholdings all these years, which story, in my view, cannot be easily

digested. It is a clear case of escapism. Having regard to all the above, it has to be held that the present belated attempt on the part of the

petitioners for rectification of the share register pertaining to the two resolutions dated January 15, 1956, and August 13, 1957, cannot be

sustained either legally or factually.

Exhibit R-2(a) is the resolution passed in the meeting held on October 4, 1978, which is also questioned in Company Petition No. 13 of 1982.

The petitioners question the very genuineness of the meeting. It is the contention of the petitioners that the Navarathri celebrations of the Sanga

took place between October 3, 1978, and October 10, 1978, at Vijayawada and that all the parties were at Vijayawada during that period.

Hence, this meeting on October 4, 1978, could not have been held at Madras. The further allegations of the petitioners are that certain shares

belonging to dead persons had been transferred in that meeting to and in favour of B. V. S. S. Mani without observing all the legal formalities. K.

L. Manohar as P.W. - 1 has given evidence on this aspect. B. V. S. S. Mani has given evidence as R.W.-1.

The share transfers in the meeting held on October 4, 1978, relate to P. Visweswar Rao, J. Stephen, C. Lakshmana Sastry, A. V.

Jagannathan and P.E. Ethirajulu Chetty. Out of the five, Lakshmana Sastry, P. Visweswar Rao and A. V. Jagannathan were alive at that time and

the other two were dead. It is the positive evidence of RW-1 that due letters had been addressed to the shareholder''s Stephen and P.E. Ethirajulu

Chetty to the addresses mentioned in the Sanga''s records and only after complying with the legal formalities as laid down under articles 35(A) and

(B), the transfers were effected. He would further state that the notices sent to dead persons were returned and they were all kept in the share

transfer file, which is now missing. In respect of the other three shareholders, all the formalities had been observed by getting the transfer of shares

and the transfer documents were also kept in the said missing file. It is contended by Mr. V. R. Gopalan, learned counsel for the respondents, that

none of the persons whose shares were transferred or the legal representatives of the deceased persons ever questioned or made any claim to the

Sanga till now on the transfers effected on October 4, 1978. It is seen that at that time, the board of directors of the Sanga were B. V. S. S. Mani,

Lalitha Rathnam, K. Nagarajalakshmi (daughter of the founder K. S. Rao), K. L. Manohar and V. K. Dongre. Out of the above, three persons,

viz., B. V. S. S. Mani, V. K. Dongre and Nagarajalakshmi, took part in the proceedings and Lalitha Rathnam, the fourth director, who is the wife

of B. V. S. S. Mani, is a consenting party. The only director left out was K. L. Manohar who alone questions the meeting and the transfers

effected on October 4, 1978.

It is true that all the parties excepting Nagarajalakshmi were at Vijayawada on October 3, 1978. But, it is the evidence of R.W.-1 that the

parties had already decided to hold the meeting at Vijayawada originally on October 4, 1978. It has been the customary practice to hold the board

meetings during the Sanga''s celebrations, say, Navarathri, Krishna Jayanthi, etc. It so happened that the health condition of Nagarajalakshmi, who

was admittedly a chronic patient, became suddenly worse and it is the evidence of RW-1 that both himself and V. K. Dongre immediately left for

Madras in the afternoon of October 3, 1978, and by the time they reached Madras, the old lady recovered and as originally fixed, the meeting

took place at Madras instead of at Vijayawada on October 4, 1978. The practice of sending written notices to all the directors was not in vogue

even during the lifetime of K. S. Rao and C. A. Chettiar since the parties felt that the Sanga''s affair was more or less a family one. One important

fact which should not be lost sight of here is that apart from B. V. S. S. Mani, the other two persons who took part in the meeting dated October

4, 1978, were Nagarajalakshmi and V. K. Dongre, who are responsible persons, the former being the daughter of the founder, K. S. Rao, and the

latte being the trusted friend of the founder K. S. Rao and a reputed scholar. Nothing can be suggested against them. Searching questions were put

to RW-1 regarding the meeting that took place on October 4, 1978, and he had given convincing answers.

As already observed, the petitioners had stealthily removed the share transfer file kept in the cupboard at No. 29, Broadway, Madras-1, by

using the alternate set of keys. The evidence of R.W. - 1 would disclose that it must have happened sometime after December 24, 1979. Hence,

we cannot expect the transfer deeds, the returned covers, etc., pertaining to the meeting dated October 4, 1978, kept in the file, be made available

by B. V. S. S. Mani in this proceeding since the entire file is missing from the Sanga''s custody. R.W. - 1 would assert that only after removing the

file. all the allegations have been deliberately made by the petitioners knowing full well that he cannot produce the file and meet the queries. There

is considerable force in the explanation given by B. V. S. S. Mani in this regard. The same is quite convincing and has to be accepted.

Per contra, K. L. Manohar has given evidence as P.W. - 1 regarding the meeting dated October 4, 1978. In the cross-examinat!on he has

given prevaricating answer which will show that he has not come out with true and real version. His answers are very evasive and most

unimpressive. Further, even in the counter statement the second respondent would clearly state that the petitioners had also taken part in the

subsequent board meetings and the annual general body meetings but never questioned the minutes of the meeting dated October 4, 1978. On a

careful consideration of the oral and documentary evidence, it has to be held that the meeting dated October 4, 1978, was a genuine one and the

share transfers effected in that meeting are legal and quite in order. The petitioners chose to attack only part of the resolutions pertaining to the two

meetings dated January 15, 1956, and August 13, 1957, relating to the transfer of shares to and in favour of the second and third respondents but

they would very conveniently refrain from questioning the other part of the resolutions wherein they were the beneficiaries of the share transfers. It

goes without saying that the present attempt of the petitioners is most mala fide and unjustified.

The share transfer in favour of respondents Nos. 4 to 7 made on July 27, 1981 (exhibit R-42) are also attacked by the petitioners. But, it is

clearly seen that the transferor is B. V. S. S. Mani and there is nothing wrong or illegal in such transfer. Once the share transfer in favour of Mrs.

and Mr. B. V. S. S. Mani are held to be in order and legal, it automatically follows that the share transfer made in favour of the children are also in

order and quite legal. The facts and circumstances would clearly show that the accusations and allegations made against B. V. S. S. Mani are all

illfounded and unwarranted. They have been invented for the purpose of this case and there is absolutely no truth in the same and only to spite B.

V. S. S. Mani and his family members, the same have been made.

In view of the detailed discussions made above, I am of the view, that the reliefs asked for in Company Petition No. 13 of 1982, cannot be

granted. There is absolutely no necessity for rectification of the share register of the Sanga. Mr. T. Raghavan would confine his attack only to the

three meetings referred to above, wherein the share transfers took place. The petitioners have not made out any case justifying the rectification of

the share register. The petitioners have miserably failed to prove the allegations made in Company Petition No. 13 of 1982.

For the foregoing reasons, Company Petition No. 13 of 1982 is also dismissed with cost.