Oppression and mismanagement petition: heirs must be heard where section 402 relief may affect a deceased director's estate.

A petition under sections 397 and 398 of the Companies Act, 1956, concerned oppression and mismanagement, and allegations against a deceased director did not by themselves make his heirs necessary parties. Section 543 was a separate winding-up remedy requiring a distinct prayer for repayment, restoration or compensation, so a mere reference to that provision did not justify impleading legal representatives. However, where the petition expressly sought relief under section 402 that could affect the deceased director's estate or heirs, they were entitled to be heard before any order was made. Excluding them in that situation would offend natural justice.

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Issues: Whether the heirs and legal representatives of a deceased director are required to be joined or substituted as parties in a petition under sections 397 and 398 of the Companies Act, 1956, where the petition also contains a prayer capable of leading to relief under section 402 and where section 543 is referred to in support of possible consequential relief.

Analysis: A petition under sections 397 and 398 is primarily concerned with oppression and mismanagement, and allegations of wrongful conduct by a deceased director do not, by themselves, make his heirs liable or necessary parties. Relief under section 543 is a distinct remedy that requires a separate application and a prayer for repayment, restoration, or compensation in winding up proceedings; in the absence of such a prayer, that provision does not justify impleading the legal representatives. However, where the petition expressly seeks relief under section 402 that may affect the rights of the deceased director's estate or heirs, they are entitled to be heard before any such order is passed. Exclusion of the heirs in that situation would offend the principles of natural justice.

Conclusion: The heirs and legal representatives ought to have been joined as respondents for consideration of the reliefs that could be granted under section 402, and the order refusing substitution was unsustainable.

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