R.Bhattacharya, J. - (1.) These three applications have been filed under Section' 155 of the Companies Act, 1956, by Turner Morrison & Co. Ltd. (hereinafter called the petitioner-company) against the respondents, Shalimar Tar Products Ltd., Angelo Brothers Ltd., Lodna Colliery Co. (1920) Ltd., Ganapat Rai & Sons (1946) Ltd., Metal Craft (India) Ltd., Haridas Mundhra, Vijay Mundhra and several other persons. Respondent No. 1, Shalimar Tar Products (1935) Ltd., respondent No. 2, Angelo Brothers Ltd., respondent No. 3, Lodna Collieries Go. (1920) Ltd., respondent No. 4, Ganapat Rai & Sons (1946) Pvt. Ltd., and respondent No. 5, Metal Craft (India) Ltd., are hereinafter described respectively as Shalimar Tar, Angelo Brothers, Lodna Colliery, Ganapat Rai & Sons and Metal Craft. The three separate applications are considered and heard together as there are common questions of fact and law.
(2.) The case of the petitioner-company may be briefly stated. The petitioner-company is one limited by shares duly incorporated, under the provisions of the Indian Companies Act, as far back as in the year 1913, The authorised, subscribed and paid-up capital of the petitioner-company is Rs. 45,00,000 divided into 4,500 ordinary shares of Rs. 1,000 each. Out of the said shares, 2,283 are registered in the name of Hungerford Investment Trust Ltd., 2,199 in the name of British India Corporation Ltd., 3 in the name of Haridas Mundhra and 3 each in the names of W.H.J. Christie, L.W. Balcaomb, A.H. Hume, D.M. Jafrey and C.N. Rodewald. Subsidiary and controlled companies under the petitioner-company are Shalimar Tar, Angelo Brothers, Lodna Colliery, Smith Stanistreet & Co. Ltd., Shalimar Works Ltd. and two other companies. These companies were controlled by the directors of the petitioner-company. Shalimar Tar, Angelo Brothers and Lodna Colliery wore organised and incorporated by the directors of the petitioner-company and the petitioner was appointed their managing agent. These companies were undertakings of the petitioner-company and were treated as the departments of the petitioner. The petitioner-company was providing finances, loans and guarantees for loans advanced by the banks in respect of the three companies, namely, Shalimar Tar, Angelo Brothers and Lodna Colliery. These three companies were profitable and had large reserves prior to the taking over of control of the companies by Haridas Mundhra and his men. By an injunction order passed in Suit No. 600 of 1961, Haridas Mundhra got control over the petitioner-company with effect from 25th of February, 1964, and thereafter he kept his nominee-directors working as his tools in the company and its subsidiaries. It has been alleged that Haridas Mundhra placed his men and nominees in the board of directors of the petitioner-company and those nominees and directors acted at the instance of Haridas Mundhra for the personal interest of the latter. The injunction and the decree passed in Suit No. 600 of 1961 on February 25, 1964, was challenged by Hungerford Investment Trust Ltd., but without success and the matter went to the Supreme Court in Civil Appeal No. 488 of 1971. Haridas Mundhra, according to the petitioner, manipulated a fictitious suit on false allegation being Suit No. 2005 of 1965 in this court in the name of the petitioner-company as plaintiff and made a claim for Rs. 1,27,67,052 against the majority shareholder, Hunger-ford Investment Trust Ltd., and claimed a lien on 51% shares of the petitioner, owned by the said Hungerford Investment Trust Ltd. The suit (No. 2005 of 1965) was dismissed in 1968 and the appeal against that decision was also dismissed by this court in the Appellate Side in 1969. Against that decision an appeal was taken to the Supreme Court being Civil Appeal No. 1223 of 1970. The appeal was heard in February, 1972, and was dismissed by a judgment delivered on March 9, 1972, reported as Turner Morrison and Co. Ltd. v. Hungerford Investment Trust Ltd. Both the appeals, namely, Appeal No. 488 and Appeal No. 1223, were heard from 8th February to 24th February 1972. The Supreme Court rescinded the decree in Suit No. 600 of 1961 and dismissed the Appeal No. 1223 of 1970. Consequently the injunction order, giving voting rights of 51% shares to Haridas Mundhra, was vacated and the majority shareholders became entitled to voting rights in respect of 51% shares. On an application by the majority shareholders, the Central Govt. called an annual general meeting in July, 1972 and new directors were elected in the said meeting. Against that decision of the Central Govt., Haridas Mundhra filed a writ petition challenging its validity and the said Writ Petition No. 248 of 1972 was dismissed on September 25, 1972. At the end of September, 1972, however, the elected members of the petitioner-company took over the control of the management.
(3.) The case of the petitioner-company is that Haridas Mundhra when he realised, during the argument of the appeals before the Supreme Court in February 1972, that the view of the court was against him and that his control over the petitioner-company would be lost, started making attempts to undermine the financial condition of the petitioner-company and wanted to take out the shares of the company by showing false sales of those shares at a rate much below the market rate, through the directors of the company who were tools in his hands and that the sales were shown to have been made in favour of the defendants Nos. 4 and 5 through his men, relations and friends with his own money practically benami. The shares were sold in respect of the respondents Nos. 1, 2 and 3, namely, Shalimar Tar, Angelo Brothers and Lodna Colliery. The alleged sales in the names of respondents Nos. 4 and 5, according to the petitioner-company, were illegal, mala fide, ultra vires and they were sham transactions. It has been alleged that due to this transfer of shares, damage was done to the said respondents as well as to the petitioner-company. In November, 1967, Hungerford Investment Trust Ltd., the majority shareholders, filed a petition before this court on the allegation of oppression and gross mismanagement. The said petition was registered as No. 274 of 1967. It was dismissed in June, 1970, and against that dismissal order, the majority shareholder, Hungerford Investment Trust Ltd., filed appeals and one of them was numbered as Appeal No. 258 of 1970. After the Supreme Court judgment in March, 1972 [(see Turner Morrison & Co. Ltd. v. Hungerford Investment Trust Ltd. as already mentioned, an application was filed in Appeal No. 258 for the removal of the board of directors of respondents Nos. 1, 2 and 3 and the Appeal Court removed the board of directors. The share capital of Shalimar Tar is Rs. 43,64,400 divided into 43,644 ordinary shares of Rs. 100 each. Of these shares, the petitioner-company owns 27,950 shares and this was registered in the books of Shalimar Tar up to 10th March, 1972. The total subscribed share capital of Angelo Brothers is Rs. 45,00,000 divided into 4,50,000 ordinary shares of Rs. 10 each. Out of these shares, the petitioner owns 1,43,625 shares and the same stood registered in the name of the petitioner in the share register of the respondent No. 2 up to March 13, 1972. The total share capital of Lodna Colliery is Rs. 87,00,000 divided into 8,70,000 ordinary shares of Rs. 10 each. The petitioner is the owner of 4,64,940 shares, and they were registered in the share register of respondent No. 3 up to March 17, 1972. According to the petitioner the respondents Nos. 1, 2 and 3 were the best subsidiary companies of the petitioner which yielded profit and had large reserves before Haridas Mundhra assumed control over the petitioner-company and its subsidiary companies after the 25th of February, 1964.;