TaxTMI 
TaxTMI 
TaxTMI 
1994 (2) TMI 244
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.... as the managing director and her husband, of one company as the managing director. She was married to Ketan L. Shah on March 51,. 1991. She stayed with her husband in the house in the occupation of other members of the in-laws' family for some days. She was only newly wed. When she had returned to her parents and was away from Pondicherry, it is stated, her husband committed suicide on June 10, 1991. Her case in brief is that she was denied the status of a widow of her husband by her father-in-law and brother-in-law and other members of their family and leaving the details how their relationship got estranged, in sum that she found no provisions for her not even the transfer of shares of the above three companies in her name and when she found, it was no longer possible to ensure that she received what legally belonged to her from her father-in-law and brother-in-law, she moved a civil suit in a sub-court in Pondicherry for partition of the properties of the family in accordance with law and filed petitions for winding up of the companies in this court on grounds, inter alia, that she has received no assets as a share in the companies she has moved a petition for appointment of a ....
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....s for winding up of the companies on the so-called just and equitable grounds, as according to them, these companies have done nothing to deny to the appellant her legal dues which do not go beyond the right to hold the shares in the companies which her husband held until his death. Learned counsel for the appellant has contended that the appellant has no other way to protect her interest in the three companies. According to him although her husband's shareholdings are not in any manner less than the shareholdings of her father-in-law and brother-in-law, the respondents have transferred in her name only some shares and not all and thus, have denied to her all that they must have legally done immediately after the death of her husband. He has submitted that her husband held the position of managing director in one of the three companies (Toolex Private Limited) and even though her father-in-law and brother-in-law together held the majority shareholdings, they are obliged to appoint her as the director/managing director in the said company and when they have not done so, they have committed an unjust act which alone is a ground to justify a winding up order. There could hardly be any....
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....lso told me that his father Mr. L. M. Shah is not in the company." "I submit that I issued notice to Mr. A.L. Shah asked him to produce the share register and minutes book of the respondent-company. Mr. A.L. Shah has gone through the notice and asked me to show the court warrant. I gave him a xerox copy of the commission warrant, after he has gone through the warrant, he has returned both notice and commission warrant saying that he would not give any records without permission from his father. Then I asked Mr. A. L. Shah to call his father, Mr. A.L. Shah rang up to his father and informed about the commission warrant and notice." "I submit that Mr. Lalit M. Shah came to the respondent-company by 4.40 p.m. on June 5, 1992. I gave notice and the xerox copy of the commission warrant but Lalit M. Shah has refused to receive the same thereafter I asked him to obey the order Mr. L. M. Shah has gone through the notice and warrant given by me and told that the share register and the minutes book will not given without his lawyer's permission. I asked him to receive notice and make an endorsement as he told me. Finally, he has received notice after long discussion and made an endorsement....
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....issions in the present ease we are not prepared to extend these principles to the present company." On invoking the just and equitable clause, he has pointed out the following observation in the judgment of the Supreme Court in the case of Hind Overseas Pvt. Ltd. [1976] 46 Comp. Cas. 91 , at page 105): "The principle of "just and equitable" clause baffles a precise definition. It must rest with the judicial discretion of the court depending upon the facts and circumstances of each case. These are necessarily equitable considerations and may, in a given case, be superimposed on law. Whether it would be so done in a particular case cannot be put in the strait jacket of an inflexible formula" and emphasized the observations in this behalf in the said judgment which read as follows (at page 105) : "...It is now well established that, the sixth clause, namely, 'just and equitable' is not to be read as being ejusdem generis 'with the preceding five clauses. While the five earlier clauses prescribe definite conditions to be fulfilled for the one or the other to be attracted in a given case, the just and equitable clause leaves the entire matter to the wide and wise judicial discretion....
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....the 'just and equitable' clause, but it now seems that, although such classification may be convenient for purposes of presentation, the words 'just and equitable' require a more flexible interpretation. In the words of Lord Wilberforce: illustrations may be used, but general words should remain general and not be reduced to the sum of particular instances. By way of illustration, under this clause winding up orders have been made on the grounds: That the substratum of the company was gone. The substratum is held to be gone when the main object for which the company was formed has become impracticable...that one of the principal shareholders refused to produce accounts or balance-sheets, or to pay dividends, they having a majority of the voting power That the petitioner was excluded from all participation in the business: That in the case of a small private company, the company was in substance a partnership and the facts would justify the dissolution of a partnership. 'The last two illustrations relate only to small private companies founded on personal relationship involving mutual confidence between the members. If in such a case a member commits a breach of good faith which....
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....70 of 1987) [1988] 1 WLR 1068; it has been held that a failure to meet the reasonable expectation of members to receive dividend can provide a ground for winding up petition. In Anglo-Continental Produce Co. Ltd., In re [1939] 1 All ER 99 (Ch D), it has been pointed out that oppression of minority shareholders will be a "just and equitable ground" where those who control a company exceed or abuse their power to such an extent as to seriously prejudice the interests of minority shareholders. It has been held in the case of Zinotty Properties Ltd., In re [1984] 3 All ER 754 that the failure of the majority shareholders to appoint the petitioner therein as a director after he subscribed for the company's shares on the understanding that he would be made a director will justify a winding up order. This is a case, in our opinion, in which the court cannot silently and mechanically observe the companies being highjacked by those who have not intended fully to honour the interests of a daughter-in-law of the family. There is a serious allegation in the reply affidavit of the appellant in C.P. No. 64 of 1992, which runs as follows: "I am further advised to submit that since no provision h....
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....ppellant, so that they may not deny to the appellant a due position in the affairs of the companies. Keeping, in. view the above, we are inclined to direct that the companies shall continue to function as they have been, subject to the condition that the appellant shall be taken as one of the directors in all the companies as her husband had been and shall be paid all emoluments that her husband was paid by the companies. To achieve the above, we direct in the instant case as follows: (1) The respondents shall furnish before the learned company judge, the details of the constitution of the board of directors of all the three companies as it existed before the death of the husband of the appellant and the details of such re-constitution which has taken place after the death of the husband of the appellant within two (2) weeks from today. (2)The respondents shall also furnish to the court the details of all withdrawals by the father-in-law and brother-in-law of the appellant from the companies and shall accordingly indicate as to what the appellant's husband would have drawn, had he continued in the respondent-companies with the position he had occupied before his death. (3) The r....