- (1.) ORDER : The facts leading to this order are that the 14th Annual General Meeting of the shareholders of the respondent-Company, which is a public limited concern, was scheduled to be held on December 29, 1975 at 4.00 p.m. Due notice of this meeting had been issued to all the shareholders. Mr. B. R. Adityan, respondent 5 herein and a shareholder of the company, served a notice on the Company under Section 284 of the Companies Act for removal of the Managing Director, Shri K. P. Kandasamy, from the office of the Director in the Board. S. Balsamy Nadar filed a suit in the City Civil Court Madras against the Company for an injunction restraining it from holding the Annual General Meeting on December 29, 1975. The City Civil Court granted an ex parte interim injunction restraining the Company from holding the Meeting. The Managing Director, Mr. K. P. Kandasamy did not take any step to get the injunction vacated. After this order of the City Civil Court, the Secretary of the Company is alleged to have issued notice to the shareholders that owing to the interim injunction issued by the Court the meeting would not to be held on December 29, 1975. At the instance of respondents 2 and 3 in the appeal a learned Judge of the High Court, sitting as Vacation Judge, passed an order on December 29, 1975 in Civil Misc Petition No. 14608 of 1975 in C. M. A. (unnumbered) and SR No. 100108 of 1975 suspending the order of the interim injunction passed by the City Civil Court. Against that order, Shri S. Balasamy Nadar preferred a Special Leave Petition in this Court. He also prayed for : (a) an ad interim ex parte order staying the operation of the order of the Madras High Court, dated 29-12-1975, passed in C.M.P. No. 14608 of 1975 in C.M.A. (unnumbered) and S. R. No. 100108 of 1975 and all further proceedings thereto. (b) an ad interim ex parte order restraining the respondents from carrying out the resolutions passed in the said 14th Annual General Meeting held on 29-12-1975 including the management of the Company by the Directors elected to office at the said meeting on 29-12-75.
(2.) This Court on January 14, 1976 granted an ex parte stay of the operation of the order impugned pending disposal of notice of motion. Thereupon on February 9, 1976, Special leave was granted and it was directed that the appeal be listed for hearing in the 1st week of April, 1976. The earlier stay order was confirmed with this modification : "Status quo as on to-day shall be maintained pending the disposal of the appeal in this Court."
(3.) On the same day at about 2.00 p.m. Mr. K. Jayaram, Advocate mentioned this matter. As a result, the matter again came up before us on February 10, 1976 We made an order reiterating that "the ex parte stay is confirmed and status quo as on to-day shall be maintained pending the disposal of the appeal in this Court". On March 12, 1976, Mrs. S. Bhandare Counsel for respondent No. 1 moved contempt petition No. 1953 of 1976 before us. In this petition no less than six serious allegations were made against the respondents who were in management of the Company. It was alleged : (a) that they dismissed, suspended or sent on compulsory leave several old and loyal employees of the Company and were preventing certain other employees from attending to their duties. (b) that the Company was facing a critical situation in its functioning. It has defaulted in its instalments scheduled to be paid to its bankers according to the deferred payments scheme entered into between the Company and the financial institution. (c) The Company was not in a position to execute all the pending orders placed by its regular customers against advance deposits and it was feared that legal proceedings might be taken against it for not complying with the orders and if this situation continued the Company would suffer heavy losses. (d) The purchase of raw materials has so much slackened that the mill will shortly face scarcity of raw materials which is bound to bring down the production capacity and cause heavy financial losses to the Company. (e) The company was facing labour and industrial problems.;