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of <h1>Appeal allowed, trial court order set aside. Civil suit maintained. Trial court directed to decide suit on merits.</h1> <h3>Ajay Pratap Singh and Another Versus Gwalior Dairy Limited Gwalior and Others</h3> The appeal was allowed, and the trial court's order was set aside. The court held that the civil suit filed by the plaintiffs/appellants is maintainable, ... - Issues Involved:1. Maintainability of the suit.2. Authority of the Board of Directors to dispose of company property without general body approval.3. Applicability of Sections 397 and 398 of the Companies Act, 1956.Summary:Issue 1: Maintainability of the SuitThe plaintiffs/appellants filed an appeal against the trial court's order dated 2.11.2007 in Civil Suit No. 16A/2006, which dismissed the suit on the grounds of maintainability. The trial court decided preliminary issues (No. 5, 8(A), and 8(B)) and held that the plaintiffs had no right to file the suit, thus deeming it not maintainable.Issue 2: Authority of the Board of DirectorsThe plaintiffs sought a declaration that the sale deeds executed in favor of defendants No. 9 to 14 be declared null and void, arguing that the Board of Directors of the company had no authority to return the suit land without the approval of the general body, as required u/s 293 of the Companies Act, 1956. The trial court failed to consider that the Board of Directors could not dispose of substantial property without general body consent, thus affecting the plaintiffs' rights as shareholders.Issue 3: Applicability of Sections 397 and 398 of the Companies Act, 1956The respondents argued that the plaintiffs should seek remedy u/s 397 and 398 of the Companies Act, 1956, concerning oppression and mismanagement. However, the court noted that these sections are subject to limitations u/s 399 and do not apply if the member lacks the requisite number of shares or support. The court held that the plaintiffs' rights were impaired due to the lack of general body approval, making the civil suit maintainable.Conclusion:The appeal was allowed, and the trial court's order was set aside. The court held that the civil suit filed by the plaintiffs/appellants is maintainable, and the trial court is directed to decide the suit on merits in accordance with the law.
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