TaxTMI 
TaxTMI 
1951 (12) TMI 5
X X X X Extracts X X X X
X X X X Extracts X X X X
....a firm of partnership which was carried on by the two brothers, Chandi Das Nundy and Kristo Das Nundy. In 1926 they decided to form a private limited liability company and the company was formed and registered. The shares were held by these two brothers in proportion to their interest in the partnership, Kristo Das Nundy owning considerably more shares than the present petitioner. A third shareholder was introduced, namely, Kartick Churn Slullick who owns twelve one thousand rupee shares. It will be seen later that this gentleman now plays a most important part in the affairs of the company. Unfortunately disputes have arisen between the petitioner Chandi Das Nundy and the directors of the company who are the petitioner, Kristo Das and Kartick. Chandi Das Nundy eventually presented this petition alleging in the first place that the company was insolvent and unable to pay its debts and secondly, that it was just and equitable to wind up the company. As I have stated earlier, the company was formed to carry on the business of a partnership and indeed the members of the company were really nothing more than the partnership being carried on in a different guise. The directors wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e clearly was a man of Kristo ruled that this transfer was legal and sanctioned it in the teeth of opposition from the petitioner. The names of these sons have now been entered in the register of shareholders and the only way that they can be removed is by way of an application to the court. It is suggested that this was a deliberate attempt to increase the strength of Kristo's party as it were in this company. Quite clearly these shares could not be transferred in the manner suggested, but though that had been clearly pointed out Kartick nevertheless ruled that it could be done and the transfer was sanctioned. It seems to me that this was a deliberate act and was intended to deprive the petitioner of any possible influence he might still have left in the company. Mr. Atul Gupta on behalf of the company has contended that this might have been an honest act of Kartick, but I cannot see how it can possibly be. They had consulted solicitors and it is quite clear that the solicitors never gave them the advice that this transaction was not in fact a transfer of shares. What else was it but a transfer? Nevertheless Kartick had no difficulty in ruling that it was not a transfer because....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the company. Kristo would be perfectly secure if this is a solvent company if a debenture was issued. But Kristo has strongly objected to that because he says that the assets of the company have not the value which they are stated to have. If a debenture was issued Kristo could enforce his rights through the court, but if a hypothecation deed in the terms drafted by Kristo was executed, Kristo could enter into possession and manage the affairs of this company without any reference or interference by the court. The insistence on this form of hypothecation deed clearly shows that these two directors Kristo and Kartick are more concerned with the interest of Kristo than they are with the interest of the company and it appears to me that the petitioner who is a very substantial shareholder and a director has a very legitimate grievance. No attempt is made to protect the interest of the company and this affair relating to hypothecation is being conducted entirely for the benefit of Kristo. Both these brothers, the petitioner and Kristo, were managing directors and were each paid a handsome salary and commission. Each received the same salary, but the commission was in proportion to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that suggestion is that the petitioner's son, who is a man of thirty, does carry on a small motor-repairing business. There is no evidence at all that the petitioner is concerned in that business. Further it is quite clear that this allegation as to the petitioner carrying on a rival business was only made as a counterblast to the petitioner's attitude in the transactions concerning the hypothecation deed. When it became clear that the petitioner would not consent to this transaction the other allegation was made. This is clear from the minutes of the directors' meeting of July 23, 1918. There the petitioner had refused to sign a cheque for Rs. 60,000 in favour of Mr. Kristo Das Nundy because it was concerned in this hypothecation transaction. It was resolved at that meeting that as Mr. Chandi Das Nundy had refused to sign the cheque the same should be signed by Kartick Chum Mullick as chairman. Mr. Mullick then signed the cheque and immediately there follows a minute referring to a letter of Mr. Kristo Das Nundy to Chandi Das Nundy about a rival business. There is no evidence at all that he is carrying on a rival business and it seems to me that this allegation has been made by Mr....