Oppression and mismanagement can justify restorative relief, while a recorded assurance to preserve status quo may amount to contempt.

A company petition alleging oppression and mismanagement was held maintainable where the pleadings showed disputed meetings, contested allotments, shifting control, and interference with the company's principal asset; the Company Law Board had wrongly treated the matter as a mere claim for specific performance, and the impugned meetings, resolutions, altered shareholding and transfer chain were declared void or ineffective with restorative relief. A recorded assurance not to disturb the subject matter of the dispute was treated as an undertaking to preserve status quo; its breach by dealings with the property amounted to contempt, though the matter was concluded by requiring apologies and acquitting the remaining alleged contemnors.

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Issues: (i) Whether the company petition under Sections 397, 398, 402 and 403 of the Companies Act, 1956 disclosed oppression and mismanagement and whether the Company Law Board erred in treating it as a mere suit for specific performance; (ii) Whether the statement recorded on 18 December 2013 amounted to an undertaking to the Court and whether its breach constituted contempt.

Issue (i): Whether the company petition under Sections 397, 398, 402 and 403 of the Companies Act, 1956 disclosed oppression and mismanagement and whether the Company Law Board erred in treating it as a mere suit for specific performance.

Analysis: The pleadings and surrounding conduct showed a sustained course of action by one faction to alter the shareholding, control and management of the company through disputed meetings, contested allotments, and shifting control over the company's only substantial asset. The Company Law Board wrongly confined the grievance to enforcement of an agreement and failed to examine the wider complaint that the affairs of the company were being conducted oppressively and prejudicially, with alleged fabrication of meetings and diversion of consideration. The jurisdiction under Sections 397, 398, 402 and 403 is wide enough to grant restorative relief and to undo acts done by wrongdoers where the facts justify such intervention.

Conclusion: The petition was maintainable on the facts pleaded and proved prima facie, and the Company Law Board's dismissal was set aside. The challenged meetings, resolutions, altered shareholding and the impugned transfer chain were declared void or ineffective, with consequential restorative directions issued in favour of the appellants.

Issue (ii): Whether the statement recorded on 18 December 2013 amounted to an undertaking to the Court and whether its breach constituted contempt.

Analysis: The recorded assurance that the subject matter of the controversy would not be disturbed was clear, express and unconditional in substance, and was made when the Court was considering an injunction. The statement was treated as an undertaking to preserve the status quo of the Jaipur property. Subsequent dealings with the property and related arrangements showed breach of that undertaking by the persons bound by the order. The Court held that the submission had induced it not to pass a formal restraint, and that the conduct amounted to contempt; however, no substantial damage had occurred and the matter called only for an apology and disposal of the proceeding.

Conclusion: The statement amounted to an undertaking, breach thereof constituted contempt against respondents 1 to 10, and the remaining alleged contemnors were acquitted.

Final Conclusion: The appeals succeeded substantially, the company petition was restored in effect through substantive final reliefs, and the contempt proceeding was disposed of after recording guilt against respondents 1 to 10 and directing apologies.

Ratio Decidendi: A petition under Sections 397 and 398 is maintainable where the substance of the complaint is oppressive alteration of control, shareholding and diversion of a company's assets, and the court may grant restorative relief under Section 402; a clear recorded assurance to preserve the subject matter of litigation can amount to an undertaking, breach of which attracts contempt.

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