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MOHANRAM SASTRY AND OTHERS. C. SRINIVASAN AND ANOTHER V/S SWADHARMA SWARAJYA SANGHA AND OTHERS , decided on Wednesday, February 22, 1995.
[ In the High Court of Madras, No . ] 22/02/1995
Judge(s) : AR. LAKSHMANAN
Advocate(s) :
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  "1995 (83) CC 272"  







        AR. LAKSHMANAN J.The facts of the case in both the petitions are as follows : Company Petition No. 12 of 1982 has been filed under sections 397 and 398 of the Companies Act 1956 (hereinafter referred to as the Act) on the grounds of oppression and mismanagement. Company Petition No. 13 of 1982 has been filed under section 155 of the Act for rectification of the share register. Swadharma Swarajaya Sangha/first respondent in both the petitions (hereinafter referred to as the Sangha) a company having the benefits under section 25 of the Act is a non-profit sharing company. The memorandum and articles of association of the Sangha would reveal that it is a charitable institution. But it is in the nature of a trust and is not a company in the strict sense of the term nor is it a commercial venture. It was founded on March 28 1930 by the late Kowtha Suryanarayana Rao as a company limited by shares. Subsequently in the year 1957 licence was obtained from the Central Government under section 25 of the Act on the ground that it is a non-profit sharing firm for promoting religious and charitable activities. The late K. S. Rao founded the Sangha and also three other business companies viz.(a) Indian Commerce and Industries Co. Pvt Ltd.(b) Kowtha Business Syndicate Pvt. Ltd.(c) Beehive Engineering and Allied Engineering Industries Pvt. Ltd.The first petitioner in C. P. No. 12 of 1982 was the only son of the late K. S. Rao. The third petitioner in C. P. No. 12 of 1982 is the son of the first petitioner and the grandson of late K. S. Rao. The second respondent in C. P. No. 12 of 1982 is also the grandson of late K. S. Rao through the daughter Parameswari. The third respondent in C. P. No. 12 of 1982 is the daughter of the first petitioner and the grand-daughter of late K. S. Rao and sister of the third petitioner. She is the wife of the second respondent B.V.S.S. Mani. The fourth respondent in C. P. No. 12 of 1982 is the daughter of K. S. Rao and sister of the first petitioner. Respondents Nos. 5 to 8 in C. P. No. 12 of 1982 are the children of respondents Nos. 2 and 3. The second petitioner C. Srinivasan is the son of C. A. Chettiar a trusted lieutenant of the founder K. S. Rao. The ninth respondent in C. P. No. 12 of 1982 is yet another trusted friend of late K. S. Rao and he was taking all the parental interest in the members of the family and he was a scholar of great repute. The tenth respondent in C. P. No. 12 of 1982 is Sri Bilweswara Charitable Trust an independent trust organisation which came into existence during 1970. It is a separate legal entity.K. S. Rao the founder died on September 23 1964. At that time C. A. Chettiar father of C. Srinivasan was mainly in charge of all the affairs of the Sanga and also the above-named three business companies till his death on February 7 1976. The fourth respondent in C. P. No.. 12 of 1982 K. Nagarajalakshmi died on January 23 1983 pending the proceedings. The first petitioner Mohanram Sastry also died on January 15 1988 pending the company proceedings.From the evidence and the records of the Sanga it will be seen that the Sanga was having only 14 members at the time when the present company proceedings commenced in 1982. Excepting C. Srinivasan and V. K. Dongre all the others are close relations and family members. Even the said C. Srinivasan and V. K. Dongre were very close to the family of the late K. S. Rao. Thus it is all the more a family affair rather than a company in the strict sense of the term.No doubt when the late K. S. Rao founded the organisation he issued share certificates in favour of less than 50 persons. Shares of the value of Rs. 100 and Rs. 10 were issued by the founder. From the evidence and materials it will be seen that the late K. S. Rao wanted to consolidate the position and obtain licence under section 25 of the Act. He therefore wanted to restrict the number of shareholders in whom he reposed confidence and with that background he took certain important decisions in the years 1956 and 1957. It is on record that the late K. S. Rao did not gift or donate any property to the Sanga before 1956-57. Before he finalised the functioning of the Sanga in 1956-57. the late K. S. Rao did his duty to his only son Mohanram Sastri by giving him the bulk of the properties by a deed of settlement dated March 26 1957. It was at that time when the licence under section 25 of the Act was expected from the Government. Only after settling the properties in favour of his only son Mohanram Sastri and grandson K. L. Manohar and after giving certain properties to his daughters the late K. S. Rao made the first gift of immovable property to the Sanga on March 28 1957.It is in evidence that section 25 of the Act licence was obtained on July 5 1957. In August 1960 K. S. Rao executed a will giving the balance of his properties to the Sanga. It is admitted that none of the parties ever questioned the action of K. S. Rao till his death on September 23 1964 and all his directions were implicitly obeyed by one and all. It is seen that Mohanram Sastri and C. Srinivasan were also directors of the Sanga in 1956-57 for different periods and they were in the know of things. It is on record that C. A. Chettiar father of C. Srinivasan was also a director of the Sanga till his death on February 7 1976. K. L. Manohar became a shareholder of the Sanga on August 13 1957. In C. P. No. 13 of 1982 three resolutions dated January 15 1956 August 13 1957 and October 14 1978 are attacked.First I will take up C. P. No. 12 of 1982. As already stated in this petition the petitioners have chosen to attack the respondents under six different heads and would claim relief under sections 397 and 398 of the Act on the grounds of oppression and mismanagement. They are(a) Safety or otherwise of the goldware belonging to the Sanga.(b) Closure of the printing press of the Sanga at Secunderabad on April 30 1981.(c) Amounts spent for the compound wall around the Sangas property in Gunatala at Vijayawada during 1977-78.(d) Delay in holding annual general body meetings (hereinafter referred to as AGM) and in particular the two AGMs held for the years 1979-80 both on January 21 1981 at 3 p.m. and 4 p.m. respectively.(e) Donations given and the expenses incurred for and on behalf of the Sanga.(f) The legality and propriety of the donation of Rs. 15 lakhs to Sri Bilweswara Charitable Trust/tenth respondent.Item No.1: This relates to the goldware of the Sanga. In paragraphs 7 and 25 of the petition certain charges have been levelled by the petitioners against the respondents regarding the goldware of the Sanga. However it is contended by the respondents that all the six gold items have been shown in the assets register of the Sanga exhibit R-146 which had been periodically inspected by the auditor and also by the petitioners. It is therefore contended that the petitioners have indulged in wild allegations against the second respondent regarding the gold items even though there is no basis for the same. However learned counsel for the petitioners has not addressed any argument specifically on this issue at the time of hearing. Hence I am not adverting to this item.Item No. 2 : This relates to the closure of printing press of the Sanga at Secunderabad. Allegations have been made by the petitioners against the second respondent in paragraphs 28 to 30 of the petition regarding the closure of the printing press. The third petitioner as P.W.-1 and the second respondent as R.W.-1 have given evidence on this aspect. Since no argument was advanced by Mr. T. Raghavan on this point specifically I am not considering this item to render any finding.Item No. 3 : This relates to the compound wall at Gunatala at Vijayawada in the year 1978-79. Allegations have been made in paragraph 23 of the petition that a sum of Rs. 4 44 486.93 was incurred by the Sanga for the construction of the compound wall at Gunatala during the period ending May 31 1977. The complaint is that it is an exaggerated figure and wasteful expenditure. On behalf of the respondents it is submitted that an obvious mistake had been made by the petitioners when a wrong reading of the balance-sheet was done by them viz. exhibit R-33 series. The report of the auditor and the balance- sheet for the year ending May 31 1977 would mention only about the additions during the year regarding the fixed assets which come to Rs. 4 44 486.93. P.W.-1 in his chief examination has talked about this compound wall. On behalf of the respondents R.W.-1 has spoken about the same. According to Mr. T. Raghavan P.W.-1 has deposed that the said amount has been included in the balance-sheet under the heads additions during the year and fixed assets. P.W.-1 has stated in his evidence about this. He queried about the construction of the compound wall by the second respondent. However it is contended that the second respondent has cleverly manipulated under the guise of a donation given by one Suryanarayana and brought back the said amount siphoned by him in the next year. It is also stated that the third petitioner was not present at the board meeting held on January 9 1978 wherein the account for the year May 31 1977 was approved. But later on the second respondent has requested him to sign the balancesheet exhibit P-33. The third petitioner has also written exhibit P-84 pointing out about the construction of the compound wall. Even the compound wall constructed according to the respondents at a cost of Rs. 2 54 329.25 has also collapsed as could be seen from the evidence of P.W.-1 in chief examination as well as in the cross-examination.P.W.-1 has stated regarding the expenses incurred for the construction of the compound wall. Several queries have been raised by the petitioners regarding the expenses incurred by the second respondent for the construction of the compound wall. The second respondent for the year ending May 31 1978 (exhibit R-34) has brought back Rs. 2.35 lakhs as if one Suryanarayana has donated the amount to the Sanga. The said Suryanarayana is a mason and has no capacity to donate the huge sum to the Sanga. P.W.-1 in his cross-examination has stated that the second respondent told him that Suryanarayana is a mason and that he has donated the fabulous sum of Rs. 2.35 lakhs to the Sanga. The sum of Rs. 2.35 lakhs has been made over to the Sangha by endorsing the fixed deposit which was in the name of Suryanarayana after the third petitioner has queried about the expenditure of construction of the compound wall.Thus it is contended by Mr. T. Raghavan that the second respondent has diverted a sum of Rs. 2.35 lakhs to his benefit and when he has been questioned by the third petitioner he has brought it back under the guise of donation from one Suryanarayana who has no capacity to donate such a huge amount.The following are the submissions made by Mr. V. R. Gopalan on behalf of the respondents. There is a resolution passed by the board of directors of the Sanga on November 29 1976 (exhibit R-2) in which the third petitioner was a party and it was resolved to construct the compound wall for the road-side property at Gunatala to safeguard the Sangas property from trespassers. The assets register exhibit R-146 gives the details about the expenses of Rs. 4 44 486.93 incurred for the compound wall. That register will show that only a sum of Rs. 2 54 329.25 had been spent. Exhibit R-147 series are the bills giving the details regarding the expenses incurred in the sum of Rs. 4 44 486.93 and these bills had been duly verified and countersigned by the auditors. No questions had been asked regarding the genuineness or the authenticity of these bills in the cross-examination while R.W.-1 was in the witness box. At no point of time the second respondent ever contended that the expenses involved for the construction of the compound wall was Rs. 4 44 486.93. On the other hand it was only Rs. 2 54 329.25. The engineer examined as P.W.-2 had valued the compound wall and there has not been much of a difference in value. In fact P.W.-1 himself had said that he had not made any estimate and according to his engineers valuation the value of the compound wall was only Rs. 1.5 lakhs. But he would admit that he had discussed with the auditor on this issue. It is submitted that the expenses involved for the construction of the compound wall were only Rs. 2 54 329 25 which had not only been accepted by the auditor after duly vouching the bills but the board of the Sanga had also passed the resolution on November 29 1976 as per exhibit R-2 to which the third petitioner himself was a party. Hence it is not open to the petitioners to throw mud on the second respondent on this issue. Further while attacking the expenses incurred for the compound wall the petitioners would also comment upon the donation made by one Suryanarayana to the Sanga in the sum of Rs. 2.35 lakhs. According to the petitioners the second respondent had realised the mistake in the diversion of the funds by inflating the figure as Rs.4 44 486.93 and later on attempted to bring back the said excess amount in the sum of Rs. 2.35 lakhs by a fictitious entry stating it to be a donation by one Suryanarayana.The balance-sheet for the year ending May 31 1977 (exhibit R-35) would disclose that the third petitioner had signed the said balance-sheet. After being a party to it he is now in my opinion trying to attack the very same document especially when this balance-sheet was prepared on January 9 1978 itself. Secondly exhibit R-3(b) is the annual general body meeting for the year 1977 wherein the second petitioner was a party and he has approved the balance- sheet. Still he would join hands with the third petitioner and make allegations against the second respondent on this issue. Thirdly under exhibit R-34 series balance-sheet for the year ending with May 31 1978 there is a specific mention about the corpus donation in the sum of Rs. 2.35 lakhs and even this balance- sheet had been duly signed by the third petitioner as well as by the Sangas auditor on November 18 1978. Fourthly exhibit R-3 is the annual general body meeting of 1978 where the third petitioner was present and had even resided over the meeting. The balance-sheet including the donation of Rs. 2.35 lakhs very much figured in that meeting. The petitioners would urge that the sum of Rs. 2.35 lakhs was brought back by the second respondent in July 1978 after the mistake was pointed out by them. According to Mr. V. R. Gopalan this statement is factually incorrect. Exhibit R 148 is the certificate issued by the Bank of Baroda on November 13 1984 which would clearly indicate that the donor B.Suryanarayana had already invested two amounts with the bank viz. Rs. 1.25 lakhs and Rs. 1.10 lakhs on May 20 1977 and July 2 1977 respectively and only the said amount of Rs. 2.35 lakhs was transferred to the Sanga on July 4 1978 by the bank. Thus it is very clear that B. Suryanarayana was himself having the funds by means of fixed deposits and it was these amounts that were transferred to the Sanga on July 4 1978 as per the directions of B. Survanarayana to the bank on July 2 1977 itself. Therefore the argument of Mr. T. Raghavan learned counsel for the petitioners that the said B. Survanarayana had no means falls to the ground. It is also pointed out that the first ever misunderstanding commenced only on June 10 1978 when the third petitioner addressed a letter to the second respondent and the second petitioner as per exhibit P-84 and long prior to it on July 2 1977 itself B. Suryanarayana the donor had funds in the form of fixed deposits with Bank of Baroda and has also given instructions to have the amounts transferred to the Sanga on maturity. Even P.W.-1 had conceded about the aforesaid fixed deposit amounts as donations to the Sanga. I am therefore of the opinion that there is no merit in the argument of Mr. T. Raghavan on item No. 3 and therefore the same is rejected.Item No. 4 : Under this item the petitioners question the annual general body meeting dated January 21 1981 for the years ending 1979 and 1980. The petitioners have made allegations against the respondents regarding the delay in the conduct of the annual general body meetings for those two years. In paragraphs 16 and 17 of the petition they have made such allegations. According to Mr. T. Raghavan the Sanga has adopted provisions for the retirement of directors by rotation and appointment by the general meeting in terms of sections 255 and 256 of the Act. Hence he contended the annual general body meetings are not held for any year and the directors who are to retire at that meeting would vacate office as could be seen from the decision in Ananthalakshmi Ammal (A.) v. Indian Trades and Investments Ltd. and other decisions. The annual general body meeting to consider the accounts of the year 1980 was held on January 21 1981 and in that meeting the second respondent and the second petitioner were present. When the second respondents election came up for consideration at that time in spite of the objections of the second petitioner he purported to preside over the meeting and declared himself elected. Reliance was placed on Nagappa Chettiars case. Therefore Mr. T. Raghavan contended that the procedure adopted is ex facie bad. According to Mr. T. Raghavan R.W.-1 has admitted in cross-examination that the second petitioner objected to his presiding. Thus the purported re-election of the second respondent is bad and he is not a director of the Sanga after January 21 1981. However the second respondent is attempting to take shelter under the plea that the holding of general meeting has been injuncted by the court. However Mr. T. Raghvan would submit that in cross-examination it has been brought out that there is no blanket order of injunction against the Sanga holding general body meetings or considering the accounts. Therefore it is contended that after 1984 there cannot be any valid board in view of the second respondents admission in evidence in 1990 that no meeting was heldsubsequent to 1981. According to Mr. T. Raghavan these facts are relevant and cannot be shut out on the plea that they constitute subsequent events. It is further argued that since the petitioners have made out a case that there is no validly constituted board it is necessary for this court to interfere and supersede the so-called board which is functioning today and appoint one or more administrators to take charge of the affairs of the Sanga. In view of the conduct of the second respondent his wife and children Mr. T. Raghavan would urge that it is essential to ensure a broad-based board and for this purpose this court should direct amendments to the articles by providing for appointment of responsible persons on the board and to ensure representation to all the groups of shareholders on the basis of the proportional representation.In support of the above contentions Mr. T. Raghavan invited my attention to the decisions in Balasundaram (V. G.) v. New Theatres Carnatic Talkies P. Ltd. wherein this court has followed the earlier decision of this court in Veeramachineni Seethiah v. Bode Venkatasubbiah and Promode Kumar Mittal v. Southern Steel Ltd. It is also not correct to state that the board of the Sanga only consists of P.W.-1 and R.W.-1 according to Mr. T. Raghavan. There were other directors on the board and they were respondents Nos. 2 4 and 9. Therefore it cannot be correct for the respondents to contend that for want of the third petitioner the board meeting has been adjourned from time to time. Therefore nothing prevented the Sanga from proceeding further with either the board meeting or the general body meeting when there were other directors and members available. The respondents have not placed any material before this court as to how they were functioning as directors of the Sanga and the material is very much available with the respondents. They have also not filed any document before this court to establish as to how they are in office. Referring to the decision of the Supreme Court in Gopal Krishnaji Ketkar v. Mohamed Haji Latif wherein the Supreme Court has taken the view that if a party in possession of the documents does not produce and place before court and withholds the same the court will normally draw adverse inference against such party Mr. T. Raghavan contended that from the above narration of facts it is clear that the respondents have vacated their office as directors by not holding annual general body meetings of the Sanga for the past 13 years and the entire board has vacated its office as such. Therefore Mr. T. Raghavan would strongly urge that the petitioners are entitled to the relief of declaration as prayed for in paragraph 34(a) of the company petition.Before proceeding to consider the argument of Mr. V. R. Gopalan on the above point it is better to deal with the other proceedings filed by the parties before the other forums. The petitioners filed two suits in the City Civil Court Madras in O. S. No. 3631 of 1981 (exhibit R-103) and O. S. No. 3442 of 1981 (exhibit R-44) questioning the validity of the annual general body meeting for 1979 and 1980. When those two proceedings were pending in appeal the hearing of Company Petition No. 12 of 1982 came up and the documents filed in the city civil court suits were summoned and marked in the present proceedings. It appears that both counsel argued the legality of the resolutions passed in the two annual general body meetings and the elections held thereat and requested this court to give a comprehensive relief in this behalf.The evidence of RW-1 relating to the above two meetings is found at pages 294 to 301 456 457 and 553 to 560. It is the case of the respondents that the delay in holding the annual general body meetings for the years 1979 and 1980 was solely because of the non-co-operative attitude and the negative approach of the third petitioner from Secunderabad. It is in evidence that the accounts relating to the printing press Kalyan Mantap and Vidya Mandir from Secunderabad were to be sent only by the third petitioner to the Madras head office without which the accounts could not be finalised. The accounting year of the Sanga is from June 1 to May 31 every year and the annual general body meeting of 1979 should have been held on or before November 30 1979 and the annual general body meeting of 1980 on or before November 30 1980.According to Mr. V. R. Gopalan the evidence on record would clinchingly show that it was the third petitioner who was the real cause for the delay and it is unfortunate that the petitioners should still accuse the respondents for the delay. Exhibit R-48 dated November 3 1979 is the letter written by the Sangas auditor to the third petitioner pointing out the various lapses on his part regarding the audit for the year ending May 31 1979 which was mainly responsible for the delay in holding the annual general body meeting for the year 1979. Exhibit R-49 dated November 5 1979 is the notice for the board meeting the agenda being the consideration of the annual accounts for the year 1979. In exhibit R-49 itself the third petitioner has endorsed a note on November 10 1979 stating that the meeting be deferred for want of all information as required by the auditor from the Secunderabad office. The above would clearly indicate that the delay was only due to the third petitioner.Exhibit R-50 dated November 14 1979 is a telex message from the second respondent at Madras to the third petitioner at Secunderabad asking for the details required by the auditor and further informing him. that the draft balance-sheet was sent to him. Exhibit R-51 is yet another telex message sent by the auditor to the third petitioner asking for the details. In exhibit R-51 there is a reply message from the third petitioner stating that a detailed letter had been posted to the auditor on 17th of that month. Exhibit P-1 dated December 3 1979 is a letter from the third petitioner to the second respondent pleading for some more time and here again the delay was only due to the third petitioner.Exhibit R-52 dated December 14 1979 is a notice sent for the board meeting to be held on December 21 1979 to consider the accounts of the Sanga for the period ending May 31 1979 and to call for the annual general body meeting 1979. The third petitioner did not attend the said meeting but sent a telegram exhibit R-53 pleading inability to attend. Even the second petitioner has sent a message pleading inability to attend. This would clearly indicate in my view that both of them were not keen and anxious to co-operate. Simultaneously Ravindran son of the second petitioner also sent a telephonic message on behalf of his father. Nevertheless the board meeting took place on December 21 1979 in the absence of petitioners Nos. 2 and 3 and the annual general body meeting for the year 1979 was fixed for January 18 1980 (exhibit R-3). Exhibit P-2 is the annual general body meeting notice dated December 27 1979. On January 18 1980 there was no quorum and the meeting was adjourned to January 25 1980. The chairman of the said meeting dated January 18 1980 was the third petitioner himself. Exhibit R-55 is a telex sent by the third petitioner on January 24 1980 pleading inability to attend the meeting on January 25 1980. Only the second petitioner and the second respondent were present and since there was no quorum the meeting was adjourned to January 31 1980. Exhibit R-56 is yet another telex message received from the third petitioner pertaining to the annual general body meeting 1979 wherein he would urge the second respondent to hold the adjourned the annual general body meeting 1979 without him but with the second petitioner. It is the evidence of the second respondent as R.W.1 that he did not want to proceed with the meeting without the third petitioner who had by now started giving trouble and the second respondent was very particular that the third petitioner attends the annual general body meeting 1979. Hence the annual general body meeting was not conducted on January 31 1980. A note to that effect was made in exhibit R-56 itself.A fresh notice dated June 16 1980 (exhibit P-3) was again sent giving notice for the conduct of the annual general body meeting 1979 on July 9 1980. On July 9 1980 again the third petitioner was absent and as there was no quorum the meeting was adjourned to July 16 1980. Only the second petitioner and the second respondent were present and again the meeting was adjourned to November 29 1980. Exhibit P-5 dated November 7 1980 was also issued being the notice for the meeting to be held on November 29 1980. Again the third petitioner was absent on November 29 1980 and the second petitioner raised an objection. Since it was not an adjourned meeting and for want of quorum the annual general body meeting 1979 was again adjourned to December 6 1980. On December 6 1980 nobody turned up for the meeting excepting the second respondent and no transaction took place. Again on December 8 1980 exhibit R-57 fresh notice was issued fixing the annual general body meeting 1979 on December 10 1980. On December 10 1980 only the second petitioner and the second respondent were present and again the third petitioner was absent. It was resolved to adjourn the meeting to January 5 1981.Under exhibit R-58 dated December 12 1980 a notice was issued for the meeting to be held on January 5 1981. The agenda for the said meeting was to elect directors in the place of the second petitioner and respondents Nos. 4 and 9 who retired. It will be seen in exhibit R-58 that the second petitioner was co-opted earlier as a director on August 16 1979. On January 5 1981 none turned up excepting the second respondent and the annual general body meeting 1979 was again adjourned. On January 12 1981 the meeting was adjourned to January 21 1981. On January 21 1981 the annual general body meeting 1979 was held at 3 p.m. On that date resolutions were passed under exhibit R-4. The accounts were passed and the auditor was also appointed for the ensuing period. The election of the three directors retiring viz. respondents Nos. 4 and 9 and the second petitioner was deferred overruling the objection of the second petitioner. In that meeting only the second respondent and the second petitioner took part and being an adjourned meeting the quorum that was required was only two. All through the participation of the third petitioner was very much expected but he failed to turn up. The above discussion in my view will amply demonstrate the real reasons for the delay in convening the annual general body meeting 1979. The delay is attributable only to the third petitioner as could be seen from the above facts.In so far as the annual general body meeting for 1980 is concerned the same old history was repeated. Exhibit R-59 dated September 12 1980 is a memo to the third petitioner at Secunderabad asking for the accounts relating to the annual general body meeting 1980. Exhibit R-60 dated December 31 1980 is yet another memo sent to the third petitioner. Exhibit R-61 dated November 8 1980 is the reply from the third petitioner stating that the trial balance-with available figures was getting ready. Exhibit R- 62 is the telex message issued to the third petitioner by the second respondent on November 15 1980 asking for accounts from Secunderabad followed by another telex message exhibit R-63 dated November 21 1980 complaining that the accounts were not forthcoming from Secunderabad. Exhibit R-64 dated November 21 1980 is the reply telex message from Secunderabad requesting the Sangas auditor to come on Monday to take up the audit work at Secunderabad. Exhibit R-65 is a telex message of the auditor to the third petitioner dated December 19 1980. Exhibit R-66 is again a telex message received from the Secunderabad office asking for postponement of the auditors meeting. Exhibit R-57 dated December 30 1980 is a critical note of the Sangas auditor addressed to the third petitioner pointing out the defects in his accounting towards the audit for the year ending May 31 1980 and exhibit R-67(b) is the annexure to the said document. Exhibit R-68 dated January 28 1981 is a memo from the second respondent to the third petitioner complaining about the lack of information from the third petitioner to the queries raised by the auditor.The annual general body meeting for 1980 was convened on January 5 1981 and as there was no quorum the meeting was adjourned. The same was again convened on January 12 1981 and the third petitioner avoided that meeting. Only the second resspondent and the second petitioner attended. The minutes of the aforesaid meeting were also placed before the court. Ultimately the annual general body meeting 1980 was held on January 21 1981 at 4 p.m. under exhibit R-4(a). The accounts for the year ending May 31 1980 were not ready as details from the Secunderabad office were yet to be received and the said subject alone was put off to a later date. From this it is clear how the third petitioner was responsible for the delay. The second resolution was for appointing the auditor for the ensuing period. The second respondent and the third respondent were re-elected as directors and the term of the second petitioner ended but he was not re-elected. The minutes of the meeting had been fully recorded in exhibit R-4(a) and also the explanatory statement recorded by the second respondent as the chairman of that meeting.O. S. No. 8442 of 1982 was filed by the second petitioner while O. S. No. 8631 of 1982 by the third petitioner in the city civil court questioning the annual general body meeting 1980 and the resolutions passed at 4 p.m. on January 21 1981. The allegation was that the second respondent had unauthorisedly altered the minutes of the meeting. As already stated both counsel had agreed and requested this court to deal with the subject matter pertaining to the city civil court suits and adjudicate upon the validity of the meeting dated January 21 1981. It is also relevant to point out that the prayer in Company Petition No. 12 of 1982 among other reliefs asked for viz. prayer (g) is for a declaration that the petitioners Nos. 2 and 3 continue to be the directors of the Sanga. Likewise prayer (g) is for a declaration that all the proceedings of the board after January 21 1981 are void and inoperative. However no specific allegation had been made regarding the illegality or otherwise of the meeting dated January 21 1981 as such. But evidence was adduced and arguments advanced on this issue also.Article 78 of the memorandum and articles of association deals with the election of the directors every year. Admittedly the second petitioner was only a co-opted director on August 10 1979 and unless and until he was re-elected in the next meeting he ceases to be a director as per article 82. So far as the third petitioner is concerned his term had expired and he did not stand for re-election. It is therefore submitted by learned counsel for the respondents that both petitioners Nos. 2 and 3 are no longer directors of the Sanga.So far as the election of the third respondent is concerned as a director in the meeting held on January 21 1981 it is argued by Mr. V. R. Gopalan the same cannot be questioned. A technical objection has been taken as to the election of the second respondent as a director on January 21 1981 and this objection is raised only at the time of arguments. The said objection according to Mr. V. R. Gopalan is not taken in the pleadings nor when the meeting was held at 4 p.m. on January 21 1981. Exhibit R-4(a) deals with that matter and it will be seen that no objection whatsoever was taken by the second petitioner regarding the candidature of the second respondent as a director in that meeting. Only after the meeting on January 22 1981 a letter was issued by the second petitioner under exhibit P-8 taking the aforesaid objection for the first time. Moreover the second respondent was present at the meeting and he his spoken clearly about the events that happened on January 21 1981. There is no contra evidence available. The second petitioner who was present at the meeting had not chosen to come to the witness box and speak about the events that had happened. Hence I am of the view that for want of contra evidence the evidence given by the second respondent as R.W.-1 has to be accepted. The third petitioner though examined himself as P.W.-1 has no personal knowledge about the meeting held on January 21 1981. On the otherhand as already pointed out he was avoiding the meeting wantonly and he was the cause for the delay in the conduct of the annual general body meetings 1979 and 1980. He did not attend the meeting and in fact declined from doing so even though enough opportunities were given to him.From the evidence of the second respondent as R.W.-1 and a reading of exhibit R-4(a) minutes the following facts can be clearly seen.(a) Only two persons attended the annual general body meeting and being an adjourned meeting it was sufficient quorum.(b) Both the candidates viz. second respondent and the second petitioner were seeking re-election on January 21 1981 for directorship and no third person was available to chair the meeting.(c) The evidence of R.W.-1 would clearly show that he made an offer to the second petitioner to chair the meeting which was declined. This piece of evidence had not been challenged by the second petitioner by getting into the box.(d) It will be seen that a poll was demanded and there was no difficulty in declaring the results of the poll in view of the proxies and as a matter of routine it was declared by the chairman that 103 votes were in favour of the resolution and only 10 votes were against. There was no show of hands. This aspect of the number of votes secured is not challenged or disputed. There was nothing to be decided by the chairman except to declare the results of the poll.(e) The second respondent had to necessarily chair the meeting since there was no other alternative left.While replying to the rulings cited by Mr. T. Raghavan in Nagappa Chettiar (N. V. R.) v. Madras Race Club Mr. V. R. Gopalan contended that the above decision has no application to the facts of the case and the said judgment was rendered on October 5 1948 before the advent of the Indian Constitution. The facts and circumstances of the said case are entirely different and the said decision will not apply to the facts of this case because in the instant case there are only about 14 members of the Sanga out of which 12 are relations and family members the remaining two being close associates and family friends. It is conceded that the respondents are in the majority having majority shareholdings whereas the petitioners are in minority. No decision was called upon to be taken by the chair excepting announcing the results of the poll. No quasi- judicial function was required to be performed by the chair in the instant case. In the above cited Supreme Court case Nagappa Chettiars case there were 260 club members eligible to vote and the chairman in that case was called upon to decide regarding the validity of the amendment of the constitution of the club and he had to decide whether the new rule was applicable or not. He was further called upon to decide the validity of nomination. He was called upon to give a ruling on all those questions including the validity of the nominations which included his own. Hence a Division Bench of this court felt that there was a conflict between his duty and his interest and that the chairman Mr. Natesan should have vacated the chair and requested another person who was not a candidate to take the chair. The said position is not available in the instant case since there was no other third person to chair the meeting. As already seen there had been a long delay in the conduct of the two annual general body meetings because of the non-co-operation and the obstructive attitude of the petitioners. Having regard to the above it is submitted by Mr. V. R. Gopalan that the annual general body meeting held at 4 p.m. on January 21 1981 for the year ending May 31 1980 is legally valid and in the interests of justice and fair play the same should be upheld. I see much force in his contention.The arguments advanced by Mr. T. Raghavan learned counsel for the petitioners regarding the subsequent events viz. the reasons for not holding the subsequent general body meetings and the competency of the second respondent and others to represent the Sanga cannot now be adjudicated upon at this juncture in this proceeding since the events that happened subsequent to February 1982 i.e. after the filing of the present company proceedings are the subject-matter of C. P. No. 71 of 1986 and the issues raised therein cannot be decided in this proceedings. It is for the parties to put forward all the evidence and materials in C. P. No. 71 of 1986 and argue those points. Since serious prejudice will be caused to the parties the issues mentioned above are not decided in the present proceedings. Item No. 4 is therefore decided against the petitioners.Item No. 5 : In this the petitioners question the donations given and the expenses incurred. In paragraph 24 of the Company Petition No. 12 of 1982 the petitioners question the travelling expenditure and other expenditure incurred by the second respondent as well as the donations given for and on behalf of the Sanga. The second respondent as R.W.-1 has given answers to these allegations. The petitioners in paragraph 22 of the petition have set out in detail about the proposal initiated by the second respondent to form a trust in or about 1970. Admittedly the Sanga has accumulated its income from time to time. Sometime in February 1970 the second respondent mooted out the proposal in exhibit P-69 dated November 16 1970 that the Sanga should promote a new trust for satisfying the income-tax requirements. This was followed by a draft deed given to the petitioners on December 3 1970 and on that day the second respondent persuaded the other directors that the Sanga will be associated in the management of the said trust. However the trust deed as finalised does not make any such provision. According to learned counsel for the petitioners the trust deed was executed by Visweswara Rao on November 9 1970 and registered on December 16 1970. The substantial amount of Rs. 15 lakhs was made over to the new trust by the Sanga on the initiative of the second respondent. According to learned counsel for the petitioners the petitioners were induced to make this transfer on the representation that the Sanga will be in control as a trustee.P.W.-1 has stated that the sole trustee P. V. Rao was not acting and the second respondent was administering the trust. In fact the so-called trustee has admitted in exhibit P-114 that the second respondent got his son the fifth respondent appointed as the managing trustee of the tenth respondent. By such misrepresentation the second respondent has deprived the substantial assets and is therefore guilty of breach of trust. No evidence has been given on behalf of the trust. The second respondent as R.W.-1 has stated clearly that he has given evidence only on his own behalf. Therefore it is contended that once it is established that the property of the Sanga has been transferred to the tenth respondent in breach of trust it is open to the Sanga to seek restitution and follow the trust properties in the hands of the tenth respondent or anyone else. It is also pointed out that the second respondent has also acted as the trustee of the tenth respondent and as on date the tenth respondent is represented by respondents Nos. 3 and 5 who are the wife and son of the second respondent. According to Mr. T. Raghavan the memorandum of the Sanga exhibit P-101 does not authorise such a transfer of asset. The transaction therefore is ultra vires the Sangas memorandum and the amount misapplied has to be brought back. In this context he relied on paragraph 941 Volume 48 Edition IV of the Halsburys Laws of England and the judgment reported in Lakshmanaswami Mudaliar (A.) (Dr.) v. Life Insurance Corporation of India.In so far as the expenses of the Sanga are concerned it is contended that there is no necessity for the Sanga to borrow funds and spend and that the Sanga has borrowed from Sri Ramalingeswaradu Trust wherein the second respondent is the sole trustee. The Sanga has borrowed Rs. 5 to Rs. 6 lakhs by mortgaging its properties to the said Trust. In this context learned counsel for the petitioners has also referred to the evidence of RW-1 who has stated that the income of the Sanga is Rs. 2.5 to Rs. 3 lakhs per year and that the Sanga which is under his management could not meet expenses in regard to the education medical and cultural activities and therefore it has borrowed and spent. It is further urged that during the pendency of the company petition proceedings the second respondent has sold 3 1/2 acres of land belonging to the Sanga for Rs. 3.67 lakhs as per the evidence of RW-1. According to the petitioners there is no necessity for the Sanga to borrow funds and spend and as on to-day the Sanga is in debts. The financial position of the Sanga is not known to anyone except the second respondent and that the second respondent has been treating the Sanga as a sole proprietary concern and has made the Sanga to borrow and spend from time to time beyond its capacity. The Sanga is a charitable trust and a non-profit organisation and there is no necessity to sell its immovable properties and spend the same for charitable purposes. As on March 31 1990 the Sanga owes to Sri Ramalingeswaradu Trust Rs. 11.5 lakhs and none is aware of the financial position of the Sanga as on date.In answer to the above allegations Mr. V. R. Gopalan invited my attention to the answers given by the second respondent as RW-1. He had given full explanations as to how the expenditures were on the increase.It is further said that the expenditures incurred during the years ending with May 31 1977 May 31 1978 May 31 1979 May 31 1980 and May 31 1981 were all duly approved by the board of directors of the Sanga and ultimately by the general body also excepting the general body meeting for the year ending May 31 1981 because of the order of injunction granted by this court. All the expenditure incurred and donations given had been approved by the board of directors the general body as well as the Income-tax Department and the vouchers were also verified by the auditor and initialled and the balance is also struck. The copies of the balance-sheets for all the years had been furnished to the petitioners and they are aware of the details of the expenditure.Moreover in his evidence R.W.-1 has explained that previously and originally the travelling expenses were debited against the three business companies and the Sanga was not burdened with the same. The said position continued before the strained relationship between the parties and the position was different from 1979 onwards when the second respondent could no longer debit Indian Commerce and Industries Co. Pvt. Ltd. with the travelling expenditure. It is in point to mention that in 1979 the third petitioner wanted to become the vice-president and president subsequently of the Rotary Club at Secunderabad and he wanted a donation of Rs. 5 250 to be sent to the Secretary of the Rotary Club of Secundarabad which was done as could be seen from exhibits R-71 to R-77. Printing of certain publications and giving donations for book printing had also been explained by R.W.-1 in his evidence.It is urged by Mr. V. R. Gopalan that all these expenditures were questioned for the first time only on October 28 1981 and not before.By that time the difference of opinion between the parties had come up to the surface. In so far as Sri Bhilweswara Charitable Trust is concerned it is a third party and is an independent trust and that the same has been brought into the picture unnecessarily. Paragraph 22 of the Company Petition No. 12 of 1982 deals with the allegations and averments made against the tenth respondent/ Trust. As rightly pointed out by Mr. V. R. Gopalan it is pertinent to point out that no reliefs of any nature had been asked for directly and specifically against the tenth respondent which is a separate legal entity and such a relief cannot be asked for in a company proceedings. It is further submitted that this court sitting in company jurisdiction cannot deal with a totally different legal entity and grant any relief against it. It is no doubt true that a corpus donation of Rs. 15 lakhs was given by the Sanga to the tenth respondent Trust in 1970. A question is raised as to the competence of the Sanga to give such a donation and it is argued that it is ultra vires. It is submitted that clause III sub-clauses 10 and 24 of the memorandum of association of the Sanga are very clear and specific. According to Mr. V. R. Gopalan clauses 10 and 24 give amplepowers to the Sanga to organise promote establish and maintain aid in the promotion establishment maintenance of the Sanga or associations with objects similar to those of the Sanga in all parts of India and elsewhere and that the Sanga can subscribe or guarantee money for any national charitable benevolent religious public general and useful objects. It is contended that the Sanga had all the legal competence to donate aid or subscribe and the test is that the receiving institution should have objects of similar nature or should be national charitable benevolent religious public and useful objects. A comparative reading of the memorandum and articles of association of the Sanga and its objects on the one hand and the trust document of the tenth respondent on the other it will be clearly seen that the objects are similar and the matter comes squarely within sub-clauses 10 and 24 referred to above. Hence I see force in the contention of Mr. V. R. Gopalan that there is no question of any legal incompetence or ultra vires of the action taken in 1970 and questioned in the year 1982.At this juncture it is relevant to point out that the board of the Sanga passed a resolution on November 14 1970 vide exhibit R-2(g) which meeting was attended by the late C. A. Chettiar second respondent third petitioner and the ninth respondent and the resolution passed by the board reads as follows:Resolved therefore subject to the approval of the general body that a sum of Rs. 15 00 000 (rupees fifteen lakhs only) be endowed to Sri Bhilweswara Charitable Trust on the strict understanding that the said amount so endowed will be added to and held as an accretion to and as a corpus of the trust and held by the trustees with the obligation referred to in the deed of trust dated November 9 1970. * The aforesaid resolution is in the handwriting of the very same A. K. Balasubramaniam the accountant of Indian Commerce and Industries Co. Pvt. Ltd. who was in charge of writing the Sangas books. An extraordinary general body meeting of the Sanga met on December 7 1970 and exhibit R-3(e) resolution was passed. Both the petitioners Nos. 2 and 3 were parties to the said resolution and the said meeting was chaired by the late C. A. Chettiar. Being a special resolution the same was filed with the Registrar of Companies also. The second respondent as R.W.-1 has explained the reasons for parting with and donating the sum of Rs. 15 lakhs. Sri P. Visweswar Rao the author and founder of the tenth respondent trust is not a stranger and the evidence would disclose that his only son had predeceased him. Mr. P. Visweswar Rao had even during the lifetime of K. S. Rao donated a sum of Rs. 10 000 to the Sanga on February 28 1962 vide exhibit R-167. Still the petitioners would characterise him as an associate of the second respondent and that he was an elderly person having no means. In fact the said P. Visweswar Rao was also a shareholder of the Sanga till 1978 and he died on May 19 1979.It is in evidence that the formation of the tenth respondent trust and regarding the details which were worked out the same took place in October 1970 during Navarathiri celebrations in Vijayawada when P. Visweswar Rao also took part. R.W.-1 speaks about the same. After the modalities were worked out the trust was formed by P. Visweswara Rao on November 9 1970 and Visweswara Rao wrote exhibit R-119 letter to the Sanga on November 10 1970. Along with that letter he enclosed a copy of the trust deed which copy has been marked as exhibit R-159. Exhibit R-159 is a carbon copy of the original trust deed exhibit R-160. It will be seen that the original trust deed was registered on December 19 1970 and in the Sangas files in exhibit R-159 an endorsement to that effect had been made on the top portion of the document. Exhibit R-159 has been on the files of the Sanga from November 1970 onwards till this date. It is stated that the same was seen by everyone and it is an open secret.As already stated exhibit R-119 was placed before the board of Sanga under the chairmanship of C. A. Chettiar and the other directors who participated were the third petitioner and respondents Nos. 2 and 9 and the resolution was passed on November 14 1970 under exhibit R-2(g) which was subsequently approved by the general body on December 7 1970 vide exhibit R-3(c). Only thereafter on December 14 1970 the Sanga wrote exhibit R-163 to the tenth respondent. The trust was already registered on December 19 1970 and a letter to that effect was sent by P. Visweswar Rao on December 22 1970. Only thereafter on December 30 1970 the donation was made vide exhibit R-164 and the matter ended there.It is pertinent to notice that at no point of time any of the petitioners ever questioned the functioning of the tenth respondent trust from December 30 1970 till Company Petition No. 12 of 1982 was filed in February 1982. There was not even a single protest in all these years and the tenth respondent was independently functioning from 1970 onwards and it is only after a lapse of 12 years the present proceeding had been initiated for the first time. The petitioners as pointed out by Mr. V. R. Gopalan did not even raise any protest or query about the functioning of the tenth respondent either in the board meeting of the Sanga or in the general body meeting all these 12 years. It is further contended that petitioners Nos. 2 and 3 acting as directors of Indian Commerce and Industries Co. Pvt. Ltd. as well as Beehive Engineering and Allied Industries Limited had taken loans from the tenth respondent and even during those occasions they never treated the tenth respondent as forming part of the Sanga. Beehive Engineering and Allied Industries Ltd. in which both petitioners Nos. 2 and 3 are directors borrowed a sum of Rs. 13 30 000 from the said tenth respondent trust on October 26 1977 as per exhibits R-165 and R-166. It is common knowledge that both of them knew about the separate and independent entity of the tenth respondent and knowing fully well about the actual state of affairs they went to the extent of borrowing a heavy amount from the tenth respondent.Exhibit R-161 is the judgment of this court in C. S. No. 208 of 1981 filed by the tenth respondent against Beehive Engineering and Allied Industries Pvt. Ltd. for recovery of the loan amount and the suit claim was for Rs. 24 94 293.27. That suit was decreed by this court on September 2 1983. The present company proceedings had been filed one year after the filing of the above suit against the business company wherein petitioners Nos. 2 and 3 are directors. Similarly the other business company Indian Commerce and Industries Co. Pvt. Ltd. also run by petitioners Nos. 2 and 3 herein had availed of a loan of Rs. 12 lakhs from the tenth respondent earlier in September 1977 vide exhibit R-162. The said amount was repaid by them subsequently and again borrowed by the very same petitioners for and on behalf of Beehive Engineering and Allied Industries Pvt. Ltd.It is submitted that both the above transactions took place in the year 1977 and that petitioners Nos. 2 and 3 were fully aware of the existence of an independent management for the tenth respondent and at no point of time they treated the tenth respondent as forming part of the Sanga. There is yet another resolution passed by the Sanga on December 29 1971 vide exhibit R-2(i) which will show that certain shares and securities of the Sanga had been sold to the tenth respondent and the said meeting was attended by C. A. Chettiar and respondents Nos. 2 3 and 4 and that the chairman of the said meeting was C. A. Chettiar. From a reading of the evidence of PW-1 and RW-1 it will be seen that a number of drafts were prepared for the formation of the trust and legal advice was also taken. Initially it was thought that the Sanga could be a member of the trust but on legal advice the said idea was given up and the matter ended in the year 1970.In the present proceedings the petitioners would pretend that the tenth respondent is only an organ of the Sanga and that the entire corpus donation given in the year 1970 should be called back. The third petitioner and his clerk D. V. R. N. Sharma at Secunderabad chose to file an application before the Commissioner Endowments Department Hyderabad on September 10 1984 requesting the State Government of Andhra Pradesh to take over the tenth respondent vide exhibit R-174. If really the third petitioner was keen and anxious to get back the corpus donation of the Sanga such a course would not have been adopted by him. There was a writ proceeding in the Andhra Pradesh High Court on this subject initiated by Bhilweswara Charitable Trust which was allowed vide exhibit R-175. Finally the Commissioner Endowments Department Hyderabad passed an order on February 19 1986 vide exhibit R-176 holding that the inclusion of the tenth respondent in the list published earlier is invalid. The third petitioner would file yet another writ proceeding in Writ Petition No. 1864 of 1986 in the High Court of Andhra Pradesh vide exhibit R-177.It is in evidence that the tenth respondent institution has been functioning independently since its inception in the year 1970 and till this date it has been recognised as an independent institution even by the income-tax authorities. Admittedly the petitioners never challenged P. Visweswar Rao the founder of this frust till his death on May 19 1979 and only after his death they would pretend that the tenth respondent is a benami of the Sanga and make all wild and false allegations. It is in evidence that even during the lifetime of P. Visweswar Rao he had coopted the fifth respondent as a co-trustee of the tenth respondent and the same took place on May 13 1979. It is to be noted that P. Visweswar Rao is a close relation and the third petitioner and the second respondent are his nephews. There is nothing wrong in the action of P. Visweswar Rao for inducting the fifth respondent on May 13 1979 nearly nine years after the formation of the trust especially when his only son was dead.It is also to be noticed that an attempt was made by the petitioners to implicate the tenth respondent and wanted the documents of the tenth respondent to be produced in court in this company proceeding but the said request was negatived by this court on August 28 1986 in Application No. 221 of 1983. The same was challenged before a Bench of this court in O. S. A. No. 179 of 1983. The Bench by order dated September 11 1983 dismissed the said appeal and confirmed the order of the company court. Having regard to the above I am of the view the present proceedings initiated implicating the tenth respondent is not legally maintainable. If really any fraud was practised by the second respondent in 1970 at the time of the formation of the tenth respondent trust nothing prevented the petitioners from taking any action immediately. On the other hand they recognised the independent functioning of the trust when they chose to borrow moneys from the trust. Only when the tenth respondent filed a suit for recovery of the said amount in 1981 the tenth respondent had been wilfully and wrongly implicated in this proceeding. The twelve years gap of inaction has not been explained at all by the petitioners At any rate no relief can be granted against the third party trust in a company proceeding. Therefore I reject the contention of the petitioners on this point as well.As pointed out by Mr. V. R. Gopalan a word must be said about the contribution of the second respondent and the members of his family as donations to the Sanga. The evidence of R.W.-1 would indicate that they had donated a sum of Rs. 6 lakhs to the Sanga. The evidence would further disclose that even P. Visweswar Rao the founder of the tenth respondent had given a donation of Rs. 10 000 to the Sanga in 1960. On the other hand it is conceded that none of the petitioners ever made any donation to the Sanga. As already seen there are six items of complaints levelled against the respondents. The right of the petitioners under section 25 of the Act is only to ensure that the charitable objects of the company are carried out and certainly the personal benefits of the petitioners do not at all come into the picture. The scope of section 397 of the Act is rather curtailed in the case of a section 25 company.The scope of section 397 of the Act has been considered by the Supreme Court in Needle Industries case which is an authority on the subject. In that case the Supreme Court referred to only three types of companies and section 25 company is not at all referred to in the discussion which according to learned counsel for the respondents would show that section 25 company stands on a totally different footing in regard to all matters. He would submit that sections 397 and 398 of the Act can at best be invoked only if the petitioners have come out with a clear and clinching case and proved and substantiated their version fully and effectively.In the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. the Supreme Court has said that for invoking section 397 of the Act the conduct of the majority must be burdensome and harsh and wrongful and mere lack of confidence is not sufficient unless the lack of confidence springs from oppression in the management of the companys affairs. It is hence submitted by the learned counsel for the respondents that in the case of a section 25 company the shareholders do not have a proprietary right in the sense it is understood in a commercial company. In my opinion this argument is well founded.In the case of Five Minute Car Wash Service Ltd. In re it has been held that the matters complained of must affect the person alleged to be oppressed in his or their character as a member or members of the company ; harsh and unfair treatment to the petitioner cannot entitle him to any relief. A member or a director will have no personal interest in the case of a section 25 company since the object of the company is wholly charitable and no member or director can complain that he was ignored while doing the charity. Mr. V. R. Gopalan learned counsel for the respondents would submit that in the instant case it is the petitioners/minority who are oppressing and even giving pressure on the respondents/majority and it is a reverse case.It is also not in dispute that most of the properties belonging to the Sanga are tenanted to the three business companies run by petitioners Nos. 2 and 3. It is also alleged that even though the third petitioner ceased to be a director of the Sanga from 1981 he had not handed over the assets and properties of the Sanga at Secunderabad in spite of the orders of court. Before winding up counsel for the respondents would also draw my attention to the fact that the petitioners herein not only created a stalemate in the functioning of the Sanga by filing a number of litigations in different courts but they would even after filing the present company proceedings in February 1982 not evince any interest in proceeding with the enquiry in Company Petitions Nos. 12 and 13 of 1982. It is seen that P.W.-1s evidence was commenced on April 6 1983 and concluded after a number of sittings only on December 21 1983 and that PWs-2 and 3 on January 15 1984 and thereafter the matter was not taken up. The evidence of R.W.-1 was taken up on March 30 1984 and while he was under cross-examination applications were filed for inspection and production of records which were negatived by this court. O.S.A. Nos. 178 and 179 of 1986 were filed against that order and at this juncture R.W.-1s cross- examination was in an advanced stage.It is to be noticed that the learned judge who was then conducting the trial passed an order on September 22 1986 against the petitioners expressing grave concern and deprecating the attitude of the petitioners for delaying and not completing the cross-examination of RW-1. In fact a Division Bench of this court by order dated September 25 1986 made in C. M. P. No. 13646 of 1986 in O. S. A. No. 179 of 1986 characterised the attitude of the petitioners as one intended to defeat and delay the proceedings. In the meantime C. P. No. 71 of 1986 was filed by the very same petitioners under sections 397 and 398 of the Act. The petitioners would insist that the present proceedings also should be tried jointly along. with C. P. No. 71 of 1986 forgetting for a moment that in the present proceedings the evidence was over and in C. P. No. 71 of 1986 the case was only in the initial stages. The respondents moved before the Supreme Court for directions which were given on January 15 1991. Only thereafter the trial re-commenced. Mr. V. R. Gopalan would further submit that because of the stalemate created the administration and functioning of the Sanga had been seriously affected.The petitioners have also been functioning as directors all through. They were parties to the boards resolutions and the general body resolutions. Still they would disown their responsibility and try to put the blame only on the second respondent. The evidence adduced would clearly show that the petitioners have been parties to all the transactions and they were fully aware of the same. There is absolutely no evidence to show that they were ignorant of the transactions. Sanga a charitable institution in the nature of trust is not commercial. It is argued that there is no question of any oppression of the petitioners right as members of company especially in a section 25 company. According to Mr. V. R. Gopalan the scope of section 397 of the Act is very limited in a case of this kind. On the ground of mismanagement no specific instances have been spelt out. On the other hand the six items of complaints levelled against the respondents have been well met and answered. The right of the petitioners under section 25 of the Act is only to ensure the performance of a charitable trust and certainly the personal benefits of the petitionersdo not come into the picture. Hence I am of the view that in the case of a section 25 company the scope of section 397 of the Act is curtailed.A Division Bench of the Kerala High Court had occasion to deal with section 397 of the Act in the case of Thomas Vettom (V. J.) v. Kuttanad Rubber Co. Ltd. The Bench held that the decision of minority shareholders in the conduct of the affairs of the company will not normally persuade a court to interfere in the matter and it is only when the court has reliable information before it where the majority acts against the provisions of the articles of association or the statute covering it or makes any arbitrary use of the majority powers resulting or likely to result in financial loss or where action could be characterised as unfair and improper the court will exercise its power under sections 397 and 398 of the Act. But every action of oppression cannot be remedied by the court. It is submitted that the provisions of the Act especially Chapter VI are not meant to convert the company court into a superstructure supervising all its affairs. Section 397 of the Act is essentially a remedy available to members who complain that the affairs of the company are conducted in a manner prejudicial to the public interestor in a manner oppressive to any member or members. Unless either of the aforesaid ingredients are established an application under section 397of the Act will not lie more so in a section 25 company case.Bengal Luxmi Cotton Mills Ltd. In re is an authority for the proposition that if there is delay in seeking remedies discretionary relief cannot be granted. The case cited by learned counsel for the petitioners reported in Lakshmanaswami Mudaliar (A.) (Dr.) v. Life Insurance Corporation of India [1963] 33 Comp Cas 420 (SC) has absolutely no application to this case. In the said case before the Supreme Court all the parties concerned were before the court. It is a case where the action on the part of the insurance-company was held to be ultra vires. In the instant case it is not so. Articles 10 and 24 are quite clear and specific. Moreover the transfer of funds by way of donation to the corpus in the instant case was in favour of an independent trust founded by the late P. Visweswar Rao in the year 1970. P. Visweswar Rao was alive till 1979. The sum of Rs. 15 lakhs had gone to the corpus fund of the trust founded by P. Visweswar Rao in the year 1970 itself and it is in evidence that P. Visweswar Rao had been in charge of the tenth respondent for nine years till his death in 1979 utilising the amount for the trust. No action was taken against P. Visweswar Rao or against the tenth respondent during the said period of nine years. Only in the year 1979 after a gap of nine years the fifth respondent had been co-opted as a trustee by P. Visweswar Rao and the fifth respondent has come into the scene as a co-trustee of the tenth respondent only in the year 1979. Simply because the fifth respondent is a shareholder or director of the Sanga also whether the petitioners can file proceedings belatedly after the long lapse of time asking for the return of the amount is the question. In my view the same cannot be done either in law or on facts.The other case cited by Mr. T. Raghavan viz. Mannalal Khetan v. Kedar Nath Khetan relating to section 108 of the Act also has no application to the facts of the present case. It is not the case of the respondents in this proceeding that there are no proper instruments of transfer of the shares. On the other hand there is the positive evidence of RW-1 that all the share transfers questioned are covered by instruments of transfer duly complying with all the legal formalities and that they were all kept in the share transfer file which had been stealthily removed by the second petitioner by using the duplicate set of keys of the cupboard. In fact it is the evidence of R.W.-1 that the question cropped up for the first time in December 1981 when he was in the witness box in the two city civil court suits O. S. Nos. 8442 and 8631 of 1981. He was suddenly asked about the share transfer file. R.W.-1 took time to produce the same into court and on the next day he had to report to the court that the said file was missing which he noted only then. In this connection it is highly pertinent to note that in the two city civil court suits the petitioners have not challenged the share transfers nor had they alleged that there had been no valid instruments of transfer in all the transactions. If really there had been any lacuna in the share transfers the petitioners would have agitated the said issue at the earliest opportunity viz. in the two city civil court suits. It is therefore submitted by Mr. V. R. Gopalan that the present attempt in these proceedings complaining about lack of valid and proper transfer forms has been made by the petitioners deliberately after securing the said file and making it impossible for the second respondent to produce the same. When a serious allegation has been made on this issue against the second petitioner one would have expected him to come to the witness box and deny the charges levelled against him. He refrained from coming into the witness box. It is therefore rightly contended by Mr. V. R. Gopalan that the petitioners cannot complain that the mandatory provisions of section 108 of the Act had not been complied with. In the instant case it is submitted by Mr. V. R. Gopalan that it is the petitioners/minority who are oppressing the respondents/ majority and it is a reverse case.It is also pointed out that the printing press owned by the Sanga at Secunderabad was under the exclusive control of the third petitioner and the same had to be closed down because for ten consecutive years there was loss. He had not handed over the press and the records in spite of the directions given by the Andhra Pradesh High Court. Many instances have been placed before this court to demonstrate as to how the minority has been oppressing the majority endlessly and would still complain and level charges against the respondents about the loan taken by the Sanga to meet its commitments especially because all the funds that should be regularly flowing to the treasury of the Sanga have been deliberately blocked by the petitioners who happened to be the lessees of most of the Sangas properties.On a careful consideration of all the materials placed on record it is clearly seen that the petitioners have come to this court with an untrue case. There has been no oppression and mismanagement on the part of the respondents as alleged by the petitioners. It therefore follows that Company Petition No. 12 of 1982 is highly misconceived and has been filed without any basis or merit and above all there is inordinate delay and laches in seeking remedies which are discretionary in nature. As pointed out earlier discretionary relief cannot be granted if there is inordinate delay and laches. Prayer (a) seeking for a declaration therefore cannot be granted as in my view no case has been made out by the petitioners. Prayer (b) relating to investigation into the conduct of respondents Nos. 2 to 5 and 9 in relation to the affairs of the Sanga and the alleged diversion of the funds and assets of the Sanga cannot also be granted since no case has been made out for the grant of such a relief. Prayer (c) relating to the transfer of Rs. 15 lakhs as corpus donation to the tenth respondent cannot be granted since the said event took place in 1970 and is being questioned in 1982. Therefore on the question of laches as well this relief cannot be granted. Prayer (d) is to restrain the second respondent from exercising any right as a member of the Sanga excepting in respect of ten equity shares of Rs. 100. This relief also cannot be granted since no case has been made out to grant such a relief. Regarding prayer (e) there is no necessity at all to give any such direction in this regard in view of the fact that the second respondent has already explained about the safety of the gold items of the Sanga. There is also no necessity to direct amendment of the articles of association of the Sanga as prayed for in prayer (f) as no case has been made out for the grant of the said relief. Prayer (g) is also negatived since as already held petitioners Nos. 2 and 3 do not continue to be directors of the Sanga. In view of my finding that the two annual general body meetings held on January 21 1981 are perfectly valid and legal there is absolutely no necessity to give any directions as prayed for in prayer (h). No specific directions are necessary with regard to prayer (i). In view of the finding that respondents Nos. 5 to 9 are the shareholders of the Sanga no injunction can be granted against them as prayed for in prayer (i). So far as prayer (k) is concerned now that Company Petition No. 12 of 1982 is dismissed it is open to the respondents to call for a general meeting of the Sanga and proceed to conduct the affairs of the Sanga in accordance with the objects of the Sanga and the memorandum and articles of association. The relief of injunction against the second respondent restraining him from intermeddling with the affairs of the Sanga as requested in prayer (1) is also not granted since the petitioners have not made out a case for the grant of such relief.In the result Company Petition No. 12 of 1982 deserves to be dismissed and is hereby dismissed with costs.Before parting with this case I may direct both the parties who are kith and kin and a closely knit family to sink their difference of opinion and unite together in the interest of the trust which was created by the founder with an avowed object at least from now onwards. The suggestion made by the petitioners counsel for appointment of an administrator in my view is unwarranted and quite unnecessary. Instead the parties may consider the appointment of some eminent persons who are interested in public social and religious activities on the board.Now I will take up Company Petition No. 13 of 1982. In this petition filed under section 155 of the Act the petitioners pray for rectification of the share register of the Sanga by deleting the names of respondents Nos. 2 and 3 in respect of the shares said to have been transferred by virtue of the resolution of the board dated January 15 1956 August 11 1957 and October 4 1970. The first respondent is the Sanga the second respondent is B.V.S.S. Mani and respondents Nos. 3 to 7 are the wife sons and daughters of the second respondent.According to the petitioners they are the shareholders of the Sanga. The second respondent was allotted only ten shares of Rs. 100 each. However taking advantage of his stay with the late K. S. Rao he got entries made in the register of members without any instrument of transfer and without following the procedure laid down in section 108 of the Act. The petitioners have every reason to believe that the minutes of the said board of directors dated January 15 1956 and August 13 1957 are not genuine. The second petitioner K. L. Manohar was appointed as director in 1959 when he was hardly 19 years and he was not aware of the aforesaid entries regarding the transfer or the illegality with regard to the same. The books and records of the Sanga were at the material time in the personal custody of the second respondent who never made them available to the petitioners until recently.The petitioners would further aver that the second respondent caused entries made in the books and records of the Sanga with the object of securing ultimate control over the Sanga to the exclusion of the other members of the Sanga. These transfers came to light when the minutes book of the Sanga was inspected by K. L. Manohar on August 5 1981. Later when the records were produced in December 1981 in the city civil court it was also disclosed that typewritten sheets pasted in the minutes books and purporting to have been signed by the late K. S. Rao as constituting authority far the transfer of shares in the names of respondents Nos. 2 and 3. The truth and validity of the above transfers were very much questioned as they were apparently got up by the second respondent as part of his design to have the control of the Sanga.In paragraph 12 of the petition the genuineness of the board meeting and the resolution passed therein on October 4 1978 are attacked by the petitioners. It is their contention that Navarathri celebrations of the Sanga took place between October 3 and 10 of 1978 at Vijayawada and that all the parties were only at Vijayawada during that period and hence this meeting could not have taken place at Madras. It is also alleged that certain shares belonging to the dead persons had been transferred in the meeting to and in favour of the second respondent and none of the transfers sought to be effected on October 4 1978 was borne out by any transfer deed duly signed by both the transferor and the transferee and stamped in accordance with the mandatory requirement of the Act and articles of association of the Sanga. But instead mere entries have been made in the statutory registers of the company deleting the names of several members who were either deceased or who were not taking any interest in the activities of the Sanga and entries made in the name of the second respondent or his wife as holders of the said shares.In paragraph 13 of the petition it is alleged that the second petitioner K. L. Manohar made an inspection of the Sangas records in 1981 and the complaint is that the second respondent was effectively avoiding making the records of the Sanga available to the petitioners. When the inspection took place on August 5 1981 of the Sanga records the file containing the share transfer application of the company from its inception was shown to K. L. Manohar and he noted serious infirmities in several of the applications which related to the transfer of shares to respondents Nos. 2 and 3.In the counter-statement filed on behalf of respondents Nos. 1 and 2 the following defences were taken :(a) This petition is clearly barred by limitation with reference to the transfer of shares made on January 15 1956 August 13 1957 and October 4 1978.(b) K. L. Manohar had suppressed the fact of his holding 75 shares of Rs. 10 each which shares he obtained by virtue of the board resolution dated August 13 1957 only and he was co-opted as director in the year 1959 only after he became eligible by holding the requisite shares.(c) The petitioners have been directors of the Sanga and they are well aware of the share transfers. When respondents Nos.2 to 7 participated in the affairs of the company as shareholders---as directors they were never questioned before 1981. The petitioners have acquiesced in the acts of the transfer in favour of respondents Nos. 2 to 7.(d) It is further contended that the records of the minutes dated January 15 1956 and August 13 1957 are real genuine and legally binding. The transfers were effected in accordance with law and they are valid. After a lapse of 26 years and after having acquiesced the petitioners are estopped from questioning the share transfers.(e) The extract given by the petitioners in para 10 of the petition has not been fully and correctly given by the petitioners. It does not give a true picture. The late K. S. Rao was empowered under articles 88 and 89 of the articles of association to effect transfers which he did on January 15 1956 and August 13 1957 respectively and the petitioners were fully aware of the same and they never questioned the same during the lifetime of K. S. Rao.(f) In spite of the general body or the board meetings the above transfers were never disputed nor even a notice was sent by any of the petitioners questioning the transfers effected in the years 1956 and 1957.Paragraph 13 of the counter affidavit deals with the board meeting dated October 4 1978. It is contended that proper procedures were adopted under articles 35A and 35B of the articles of association of the Sanga before the shares were transferred on October 4 1978. The respondents would further contend that the records of the Sanga were always available for inspection and they have been periodically inspected and nothing was suppressed. In fact on December 24 1979 there was an inspection of the records. There is no file Containing share transfer forms in the custody of the second respondent at the time of inspection and only the file relating to the share applications was inspected. Since the late C. A. Chettiar father of the first petitioner was in sole custody of the Sangas records during his lifetime the first petitioner must have removed the same with the connivance of the second petitioner K. L. Manohar and both of them have now joined together to put the blame on the second respondent with ulterior motive. Only the petitioners are responsible to make available the file containing the share transfer forms which is not available in the custody of the second respondent.In paragraph 16 of the counter it is contended that all the transfers of shares were done in accordance with law but unfortunately the file containing the share transfer applications is obviously in the custody of the petitioners and now they want to take advantage of the same. At no point of time any specific demand was ever made by either of the petitioners for the production of the share transfer application file and no occasion arose to any one to look into the said file all these years. With reference to October 4 1978 meeting in paragraph 17 of the counter affidavit the respondents would submit that all the share transfers were done in accordance with law. Even after October 4 1978 there were the annual general body meetings in which the petitioners were present and no question about the invalidity or the impropriety of the transfer of shares was ever made by either of them.Mr. T. Raghavan learned counsel for the petitioners would contend that the second respondent taking advantage of his stay with the late K. S. Rao; got entries made in the share transfer register without any instrument of transfer and without following the procedure laid down in section 108 of the Act. The second respondent in his cross-examination would state that he was not aware personally whether transfer deeds were placed before the board. He admits that only K. S. Rao alone signed the minutes exhibit R-1(a) dated January 15 1956 as chairman. He was the beneficiary but he did not know whether he has signed the transfer form as the transferee. He states that all the formalities were taken care of by K. S. Rao. The only person who signed the minutes was K. S. Rao. The second respondent has not lodged any complaint nor taken any steps to trace out the file containing transfer deeds. The second respondent has not produced any document to show that the first petitioners father had any key with him. The only director the late K. S. Rao who signed the minutes as chairman was not empowered by the board to put through the transfers. For a board meeting the minimum quorum is two. The transfer deeds were defective and not stamped. Section 108 of the Act is mandatory non-compliance with which is fatal and the transfers should be set aside.Mr. T. Raghavan would then contend that best evidence is available with the Sanga for the transfers. The same is being withheld by the second respondent Failure to produce the books--- this court is entitled to draw an adverse inference that if the documents were produced it will go against the respondents. Notice of a board meeting in writing is necessary as per section 286 of the Act. No meeting took place on October 4 1978 since all the parties were at Vijayawada. Article 35 does not permit the second respondent to transmit the shares from the deceased members to himself. The shares transferred from the deceased members are not in accordance with the provisions of the Act. There is no estoppel against statute. Non-compliance with sections 108 and 286 of the Act is fatal. Therefore according to Mr. T. Raghavan the petitioners are entitled to the relief as prayed for.The point that arises for consideration in Company Petition No. 13 of 1982 is:Whether the boards resolutions dated January 15 1956 August 13 1957 and October 4 1978 are true and genuine regarding the shares transferred in these meetings and legally valid ?Point : As already pointed out the late K. S. Rao the founder of the Sanga was a self-made man and a man of independent thinking. He always took final decisions in the matter relating to the Sanga as well as his three business companies. K. S. Rao was acting as the managing director of the Sanga till his lifetime which is not disputed. Articles 86 to 90 of the articles of association deal with the powers of the managing director. As already discussed 1956 and 1957 were crucial periods for the Sanga in that K. S. Rao applied for a licence under section 25 of the Act from the Central Government which he got eventually on July 5 1957. He did not gift or donate any property to the Sanga before 1956-57. In fact he did his duty to his only son Mohanram Sastry and his sons son K. L. Manohar by settling substantial properties in their favour on March 26 1957. Only thereafter he made the first gift to the Sanga on March 28 1957. None of the parties ever questioned the action of the late K. S. Rao till his death on September 23 1964. With the above background the resolutions dated January 15 1956 and August 13 1957 should be analysed.It is admitted that the Sangas registered office has been functioning from the very beginning at 29 Broadway Madras-1. The Sanga occupies the first and second floors whilst the two business companies Indian Commerce and Industries Co. Pvt. Ltd. and Kowtha Business Syndicate Pvt. Ltd. are occupying the entire ground floor of the above premises. The records of the Sanga were kept in the cupboard in the ground floor at No. 29 Broadway Madras-1 where the two business companies were functioning. C. A. Chettiar the trusted friend of the late K. S. Rao was in charge of the Sanga as well as the business companies till his death on February 7 1976. It is further conceded that C. A. Chettiar his son C. Srinivasan B.V.S.S. Mani and K. L. Manohar were all functioning as directors of the two business companies which were functioning in the ground floor of premises No. 29 Broadway Madras-1 till 1981. The records of the Sanga were kept in the said cupboard and B. V. S. S. Mani and C. Srinivasan were seated side by side in the hall and there was no partition in between the two tables. The evidence of B. V. S. S. Mani is very clear to the effect that there were two sets of keys for the cupboard containing the Sangas records one set under the custody of B. V. S. S. Mani and the other set with C. A. Chettiar and after his lifetime with his son C. Srinivasan. This stand had been specifically taken in the counter- statement also and C. Srinivasan had not come to the witness box and disputed the said statement.On a careful consideration of the entire evidence it will be clearly seen that all the parties had easy access to the Sangas records and they were all moving freely with each other. The accusations against B. V. S. S. Mani that he was having complete and full control of the Sangas records and he never allowed the other parties to have any access or inspection are all baseless having regard to the evidence on record. Hence I reject the said contention.B. V. S. S. Mani as R.W.-1 had clearly stated that C. V. Subba Rao an employee of Indian Commerce and Industries Co. Pvt. Ltd. was in charge of the Sangas records till his death in 1950. The minutes book maintained by him had been marked as exhibit R-134. After his lifetime the minutes books were maintained either in the handwriting of C. A. Chettiar till his death in 1976 or by A. K. Balasubramaniam accountant of Indian Commerce and Industries Co. Pvt. Ltd. till his death in 1970. At the time when the two board meetings were held on January 15 1956 and August 13 1957 it is conceded that A. K. Balasubramaniam was maintaining the minutes in his own handwriting and certainly not B.V.S.S. Mani.Exhibit R-1 is the minutes book and exhibit R-1(a) is the pasted resolution dated January 15 1956. Exhibit R-1(aa) is the underneath writing in the handwriting of A. K. Balasubramaniam dated January 15 1956. Exhibit R-1(h) is the photo copy. Exhibit R-1(b) is the pasted resolution dated August 13 1957. Exhibit R-1(bb) is the underneath writing on August 13 1957. Exhibit R-1(f) is the photo copy.The only witness examined on behalf of the petitioners is K. L. Manobar as P.W.-1. He would say that he was only 19 years of age when the aforesaid two resolutions came to be passed. No other witness had been examined to substantiate and prove the various charges and allegations made against B. V. S. S. Mani. Neither Mohanram Sastri who died in 1988 only pending the proceeding nor C. Srinivasan chose to give evidence in the case. B. V. S. S. Mani had examined himself as RW-1. The evidence of P.W.-1 was recorded prior to the minutes book being examined by the Forensic Department. His evidence commenced on April 6 1983 and after a number of sittings it was concluded on December 21 1983.On a careful analysis of the evidence given by P.W.-1 it will be clearly seen that he has been throughout evasive and never answered the questions directly during cross-examination. In fact his evidence in chief with reference to Company Petition No. 13 of 1982 is very meagre. In his evidence P.W.-1 had not ventured to say anything about the underneath writings made on January 15 1956 and August 13 1957 by A. K. Balasubramaniam. He is very silent on this crucial aspect of the case. P.W.-1 had conceded that he was living with K. S. Rao during the years 1954 to 1957 at Madras doing his diploma course in Mechanical Engineering. He was part and parcel of the family of K. S. Rao being the sons son. The arguments put forward on behalf of the respondents to the effect that P.W.-1 had full knowledge and was in the know of things about the incidents that took place in 1956-57 are therefore well founded. B. V. S. S. Mani as R.W.-1 has spoken about this aspect.P.W.-1 had also conceded that B. V. S. S. Mani was living with his family at Vijayawada in the establishment of his father-in-law Mohanram Sastry from 1950 to 1956. He was the executive director of Indian Commerce and Industries Co. Pvt. Ltd. at that time functioning at Ramavarapadu Vijayawada. B. V. S. S. Mani as R.W.-1 had also clearly said that whenever his presence was required by the late K. S. Rao at Madras he was coming and going. In view of the above it is futile to contend that B. V. S. S. Mani prevailed upon K. S. Rao to effect the share transfers during 1956-57. Both the meetings dated January 15 1956 and August 13 1957 took place only at Madras. C. A. Chettiar and his son C. Srinivasan were always living at Madras. C. A. Chettiar was the director of Indian Commerce and Industries Co. Pvt. Ltd. till 1970. Further both Mohanram Sastry and C. A. Srinivasan were also directors of the Sanga in the years 1956 and 1957 and the two impugned resolutions took place only when they were directors of the Sanga.It is worthwhile to see the background and the reasons as to how and why the share transfers were effected by the late K. S. Rao on January 15 1956 and August 13 1957 respectively. It is true that the late K. S. Rao founded the organisation originally as a company limited by shares and even issued share certificates to about 50 persons the value of the shares being Rs. 100 and Rs. 10 each respectively. Already it has been discussed as to how a stalemate was created in the year 1948 and how originally K. S. Rao wanted to have a broadbased board of directors and how those persons did not come up to the expectation of the late K. S. Rao and did not even pay the subscription amount with the result their names were struck off. The evidence would clearly disclose that in the years 1956 and 1957 there was thinking and re-thinking in the mind of the late K. S. Rao when he wanted to consolidate his position when he applied for the licence under section 25 of the Act. Naturally he wanted to restrict the number of shareholders in whom he reposed confidence. Only with this background he took decisions 1956-57 and only after taking the said decision the first ever disposition was made by him to the Sanga on March 28 1957. It was at that time that the licence under section 25 of the Act was expected from the Central Government. K. S. Rao did his duty to his son and sons son by settling the bulk of his properties on them on March 26 1957 and then alone to the Sanga on March 28 1957. The licence under section 25 of the Act was obtained on July 5 1957 and the second disposition was made by the late K. S. Rao to the Sanga on August 11 1960 by a will exhibit R-4 and the two resolutions should hence be approached in the above background and the stand taken by the respondents on this account is well founded.It is in evidence that the Sangas records were maintained by A. K. Balasubramaniam till his death in 1970 and it was he who recorded the two resolutions dated January 15 1956 and August 13 1957 respectively. It is nobodys case that there were no boards resolutions on January 15 1956 and August 13 1957. In fact the petitioners would concede that the board of the Sanga passed resolutions on January 15 1956 and August 13 1957 respectively. It is further conceded that both the aforesaid resolutions do find a place in the same minutes book maintained by A K. Balasubramaniam in a regular and routine way. It is nobodys case that the two resolutions were inserted subsequently after the demise of K. S. Rao on September 23 1964. In fact both the resolutions originated only from the late K. S. Rao himself.The most important and crucial aspect of the case is that K. L. Manohar came to hold shares in the Sanga only from August 13 1957 and his share holding commenced only from the resolution dated August 13 1957. No fresh shares were issued to him but there was transfer of shares in his favour vide exhibit R-1(b) resolution dated August 13 1957 whereunder 75 shares of Rs. 10 each were transferred. Yet K. L. Manohar would attack the very same resolution dated August 13 1957.Another important aspect is that there were share transfers from C. A. Chettiar to C. Srinivasan and his wife Jayalakshmi as per resolution dated January 15 1956. Both the petitioners had very cleverly refrained from attacking that part of the resolutions dated January 15 1956 and August 131957 which are very much in their favour since they got transfer of shares in their favour. But they would attack only that part of the resolutions in favour of Mr. B. V. S. S. Mani and his wife. No explanation is forthcoming from the petitioners as to why they had chosen to attack only part of the resolutions dated January 15 1956 and August 13 1957. It is not the case of the petitioners that the writing underneath subsequently found out from the report of the Forensic Library was true and genuine. In fact the petitioners had not said either in the pleadings or in the oral evidence that only the writing underneath prevails and that it was true and genuine. Their objection was only to the effect that both the resolutions were pasted resolutions. Here again they would attack only part of the resolutions.The evidence of P.W.-1 is most unimpressive very vague and very meagre too. In fact P.W.-1 has not come out with a clear case. But he would say that he was fully aware of the fact that there was writing underneath the two pasted resolutions. He would even add that the pasting was done only at the top portion. If that were so the writing underneath would have been easily visible. He made two official inspections before filing the company petitions one on August 5 1981 and another during December 1981 in the City Civil Court Madras. The present petition filed in February 1982 is very silent and there is no whisper at all about the writing underneath. In fact the petitioners had not spelt out their case regarding the writing underneath at all.The evidence of P.W.-1 regarding the two resolutions is conflicting in nature. He concedes that the signatures in the two pasted resolutions were those of his grandfather the late K. S. Rao. At no point of time the signature of the founder was ever challenged or doubted. But strangely in paragraphs 10 and 11 of Company Petition No. 13 of 1982 the petitioners would allege that B. V. S. S. Mani took advantage of his presence with the late K. S. Rao and managed to have the two resolutions passed in favour of himself and his wife. The petitioners are very silent with reference to the part of the resolutions which is in their favour. There is no whisper about the genuineness of the signature of the late K. S. Rao in the two resolutions in the pleadings.The minutes book exhibit R-1 was sent to the Forensic Department under orders of this court to remove the two pasted sheets containing the resolutions dated January 15 1956 and August 13 1957 in a scientific manner and make available to the court the writing underneath which was done by the Forensic Department some time in 1984. As already stated PW-1s evidence was commenced on April 6 1983 and ended on December 21 1983. He did not speak anything about the writing underneat. He is silent about this crucial aspect. PW-1 never applied to the court for re-calling himself and speak about this writing underneath after the minutes book came back from the Forensic Department. As matters stand excepting the evidence of B.V.S.S. Mani as R.W.-1 there is absolutely no contra evidence available on this crucial and important aspect of the case. R.W.-1 had explained about the events that took place when the two resolutions dated January 15 1956 and August 13 1957 were passed since he was a director who took part in the aforesaid two meetings along with the late K. S. Rao. When I looked into the writing underneath in exhibits R-1(aa) beneath the pasted resolution exhibit R-1(a) dated January 15 1956 it is clearly seen that the writing underneath is incomplete and the matter itself is not complete and does not make sense. As explained by R.W.-1 in his evidence A. K. Balasubramaniam the scribe could not complete the resolution for want of space and that was the reason why the pasted resolution gives a complete and full picture and as such the same came to be affixed. There being no contra evidence on this aspect the evidence of R.W.-1 is to be accepted. By no stretch of imagination it could be said that the writing underneath and the incomplete matter dated January 15 1956 was ever acted upon by the parties and it is nobodys case either. If the incomplete writing underneath goes out of picture what survives is the pasted resolution exhibit R-1(a) which is full complete and meaningful. The writing underneath stopped abruptly with the word and.Another special feature is that we do not find any change or difference or contradiction between the writing underneath and the pasted resolution dated January 15 1956 excepting that the writing underneath makes a full sense only when we read the pasted resolution. RW-1 also had clearly stated that the transferors mentioned in the resolution dated January 15 1956 were very much alive at that time. Exhibit R-1(b) is the pasted resolution dated August 13 1957 and exhibit R-1(bb) is the writing underneath. On a very careful analysis of both the writing underneath and the pasted resolution the following features as pointed out by Mr. V. R. Gopalan learned counsel for the respondents are clearly seen :(a) There are in all four stages the first stage being the writing underneath by A. K. Balasubramaniam the second stage being the pencil notings and corrections made in the writing underneath the third stage is the pasted resolution without any correction or deletion and the fourth stage is the complete pasted resolution corrected and deletions made and countersigned by the late K. S. Rao on either side. The evidence on record would clearly indicate that K. S. Rao had thinking and re-thinking during that period and the resolution dated August 13 1957 took a full and final shape only when the fourth stage was reached. The contention put forward by Mr. V. R. Gopalan on this aspect is quite logical and impressive.(b) That the board meeting took place on August 13 1957 is not disputed by the petitioners. That the late K. S. Rao and B. V. S. S. Mani were the only two directors who took part in the proceedings is also not disputed. The signatures of both the late K. S. Rao as well as B. V. S. S. Mani in the writing underneath and also in the top portion of the resolution are very much seen. The participation of the late K. S. Rao and B. V. S. S. Mani in the aforesaid board meeting cannot be doubted. At the end of the resolution the late K. S. Rao had signed as the chairman of the meeting.(c) In the writing underneath the share certificate details had not been given by A. K. Balasubramaniam whereas the same had been specifically given in the pasted resolution.(d) The evidence of B. V. S. S. Mani would show that the late K. S. Rao intended to transfer 10 shares of Rs. 100 each from Surukupatti Subba Rao to B. V. S. S. Mani but changed his mind immediately and decided to transfer additional 20 shares of Rs. 10 each which is indicated as + 10 + 10 in pencil. B. V. S. S. Mani would further explain that one more share of the value of Rs. 10 of Mahalakshmi wife of Subba Rao was added to the benefit of B. V. S. S. Mani which has been indicated in pencil writing as 10 + 1. This is reflected fully in the pasted resolution exhibit R-1(b) wherein the share certificate numbers the name of the transferor and the name of the transferee had been clearly given.(e) So far as the third respondent Lalitha Rathnam is concerned the evidence of R.W.-1 would disclose that initially K. S. Rao wanted to transfer 100 shares of Rs. 10 each but immediately decided to transfer 10 more shares of Rs. 10 each belonging to Kadiyalau Suryanarayana Rao which is reflected in pencil writing as + 10 of 10. The pasted resolution exhibit R-1(b) reflects the said position.(f) So far as K. L. Manohar is concerned in the writing underneath initially K. S. Rao was intending to transfer 125 shares of Rs. 10 each to him which was also his thinking when the pasted resolution exhibit R-1(b) was typed. But eventually when K. S. Rao put his signature in the final resolution he restricted the share transfer retaining and not touching the 50 shares of Sella Lakshmana Sastry of Varanasi. The reason for retaining Lakshmana Sastrys shares and not disturbing the same had been well explained by R.W.-1.(g) By restricting the share transfer only to 75 in favour of K. L. Manohar as against the original thinking of 125 neither B. V. S. S. Mani nor Mrs. Lalitha Rathnam got any advantage or benefit. On the other hand the evidence would clearly show that the late K. S. Rao wanted to retain the services of Lakshmana Sastry of Varanasi and that was the reason why his 50 shares were not touched(h) In the writing underneath there was no mention about Harishankara Sastry but at the margin in pencil writing it has been written as MHS 10 of 10 KPK. R.W.-1 would explain that K. S. Rao the founder wanted to transfer 10 shares of K. P. Krishnaswami to M. Harishankara Sastry which was reflected in the final typed and pasted resolution exhibit R-1(b).The above discussions would clearly indicate that all the five persons under exhibit R-1(b) dated August 13 1957 viz. B. V. S. S. Mani K. L. Manohar Lalitha Rathnam M. Harishankara Sastri and C. A. Chettiar were benefited. But in the present company petition only the share transfers in favour of B. V. S. S. Mani and his wife alone were challenged and not the ones in favour of the other three and no explanation is forthcoming on this aspect from the petitioners. The corrections made of 125 into 75 shares in favour of K. L. Manohar have been specifically initialled by K. S. Rao himself in the pasted resolution on either corners which would clearly indicate that the same was made only by K. S. Rao and K. S. Rao alone. By no stretch of imagination can it be said that B. V. S. S. Mani had any part to play on this aspect. This action on the part of K. S. Rao was never challenged till his death on September 23 1964.The auditor of the Sanga had initialled only the pasted resolution and not the writing underneath. There was absolutely no occasion or any provocation for anyone to look into the writing underneath at any point of time and no one attached any importance to the writing underneath. Only during the pendency of the case after the minutes book came from the Forensic Department an argument is put forward for the first time without any pleadings or even oral evidence. Whether K. L. Manohar got 75 shares or 125 shares as per the resolution dated August 13 1957 could have been easily proved by K. L. Manohar himself by producing the original share certificates transferred in his favour on August 13 1957 and the controversy could have been easily resolved beyond any doubt. Unfortunately K. L. Manohar has not chosen to produce the original share certificates transferred in his name on August 13 1957.It is in evidence that C. A. Chettiar C. Srinivasan and Mohanram Sastry were directors of the Sanga during 1956-57 and they being the directors they are bound to be having full knowledge and details about the share transfers. It is unfortunate that no questions were ever raised until the death of the late K. S. Rao or during the lifetime of C. A. Chettiar. The persons now complaining were directors of the Sanga. They ask B. V. S. S. Mani alone to explain the events that took place in 1956-57. In fact both of them had recognised all the share transfers made by the late K. S. Rao without raising any protest till 1982. The share register of the Sanga had been filed as exhibit R-124. The shareholdings of each and every one had been clearly mentioned in that book in the handwriting of A. K. Balasubramaniam himself. Only the two pasted resolutions dated January 15 1956 and August 13 1957 figure in that book and not the writing underneath.The annual returns as on December 19 1956 addressed to the Registrar of Companies have been marked as exhibit R-122. This has been signed by B. V. S. S. Mani and C. Srinivasan. Similarly the annual returns as on October 31 1957 marked as exhibit R-123 would contain the signatures of B. V. S. S. Mani and the late K. S. Rao himself. In those returns submitted to the competent authorities in the usual course of business of the Sanga only the two pasted resolutions exhibits R-1(a) and R-1(b) dated January 15 1956 and August 13 1957 find place which would go to show that only those two pasted resolutions had been fully given effect to and acted upon then and there from 1956 and 1957 onwards. In all the directors meetings as well as the annual general body meetings only those two pasted resolutions exhibits R-1(a) and R-1(b) were acted upon and at no point of time anybody questioned the said position. The balance-sheets of the years 1956 and 1957 had been signed only on that basis and also for the subsequent years. The two typewritten resolutions were typed in the same typewriter belonging to the business company---Indian Commerce and Industries Co. Pvt. Ltd. as spoken to by R.W.-1. The methodology adopted by the late K. S. Rao as to how and why the writing underneath had to be cancelled and pasted resolutions were effected had been well explained by R.W.-1. There is no contra evidence.Above all article 89 of the memorandum of association gives ample powers to the directors to entrust and confer upon the managing director such of the powers and privileges exercisable by the directors. It is conceded that the late K. S. Rao was the managing director till his death. Hence the late K. S. Rao the founder of the Sanga and also its managing director had all the legal competence to effect the share transfers and both the pasted resolutions exhibits R-1(a) and R-1(b) contain the signature of the late K. S. Rao as the chairman of the board meeting.The evidence of R.W.-1 would clearly show that there were two files one the share transfer file and the other share application file. Only the share application file exhibit R-162 series is available with him and had been produced. R.W.-1 would say that the share transfer file is missing. R.W.-1 would charge the petitioners that after securing the share transfer file only they had made allegations in the present proceedings about the legal formalities regarding stamp signature etc. knowing full well that R.W.-1 would not be in a position to produce into court the share transfer file with a view to meet those selections. Even under exhibit P-110 said to be the notes prepared by K. L. Manohar and exhibit R-40 acknowledgment of K. L. Manohar to the Sanga it has been clearly mentioned that the official inspection made by K. L. Manohar was only with reference to the share application file and not the share transfer file.The allegations levelled against B. V. S. S. Mani that he manoeuvred the shares transferred in his name as per the resolutions dated January 15 1956 and August 13 1957 with a view to get at the properties of the Sanga at a future date have absolutely no legs to stand and those allegations have been made mischievously and wantonly for the first time in this company proceeding.On a careful analysis of both the oral and documentary evidence adduced I am of the view that the request for rectification of the share register cannot be granted since it is highly belated and time-barred. Only the two pasted resolutions have been acted upon fully and effectively by the members and directors of the Sanga right from 1956 and 1957 and at no point of time did anybody question the same. The petitioners are estopped from questioning the said position at this belated juncture. In fact only those two pasted resolutions have been accepted and found in the records of the Registrar of Companies also. The two pasted resolutions are the real and genuine ones and there cannot be any doubt about it. It is the positive evidence of RW-1 that all the legal formalities pertaining to the transfer of shares were also meticulously done. But unfortunately the share transfer file had been surreptitiously removed by the petitioners as alleged by R.W.-1. Only after securing the said file which is very obvious the petitioners had chosen to make allegations against B. V. S. S. Mani knowing full well that he cannot produce the said missing file to answer the charges. There is considerable force in this argument of Mr. V. R. Gopalan and the same has to be accepted.It is again unfortunate that B. V. S. S. Mani had been singled out and had been asked to explain at this belated stage as to what transpired in 1956-57 when the Sanga was under the absolute control of K. S. Rao the founder himself. The long lapse of time from 1956-57 to 1982 had not been explained at all by the petitioners. Instead they would only plead ignorance. Even though they were shareholders and directors of the Sanga still they would pretend that they were not aware of the details of the shareholdings all these years which story in my view cannot be easily digested. It is a clear case of escapism. Having regard to all the above it has to be held that the present belated attempt on the part of the petitioners for rectification of the share register pertaining to the two resolutions dated January 15 1956 and August 13 1957 cannot be sustained either legally or factually.Exhibit R-2(a) is the resolution passed in the meeting held on October 4 1978 which is also questioned in Company Petition No. 13 of 1982. The petitioners question the very genuineness of the meeting. It is the contention of the petitioners that the Navarathri celebrations of the Sanga took place between October 3 1978 and October 10 1978 at Vijayawada and that all the parties were at Vijayawada during that period. Hence this meeting on October 4 1978 could not have been held at Madras. The further allegations of the petitioners are that certain shares belonging to dead persons had been transferred in that meeting to and in favour of B. V. S. S. Mani without observing all the legal formalities. K. L. Manohar as P.W.-1 has given evidence on this aspect. B. V. S. S. Mani has given evidence as R.W.-1.The share transfers in the meeting held on October 4 1978 relate to P. Visweswar Rao J. Stephen C. Lakshmana Sastry A. V. Jagannathan and P. E. Ethirajulu Chetty. Out of the five Lakshmana Sastry P. Visweswar Rao and A. V. Jagannathan were alive at that time and the other two were dead. It is the positive evidence of RW-1 that due letters had been addressed to the shareholders Stephen and P. E. Ethirajulu Chetty to the addresses mentioned in the Sangas records and only after complying with the legal formalities as laid down under articles 35(A) and (B) the transfers were effected. He would further state that the notices sent to dead persons were returned and they were all kept in the share transfer file which is now missing. In respect of the other three shareholders all the formalities had been observed by getting the transfer of shares and the transfer documents were also kept in the said missing file. It is contended by Mr. V. R. Gopalan learned counsel for the respondents that none of the persons whose shares were transferred or the legal representatives of the deceased persons ever questioned or made any claim to the Sanga till now on the transfers effected on October 4 1978. It is seen that at that time the board of directors of the Sanga were B. V. S. S. Mani Lalitha Rathnam K. Nagarajalakshmi (daughter of the founder K. S. Rao) K. L. Manohar and V. K. Dongre. Out of the above three persons viz. B. V. S. S. Mani V. K. Dongre and Naga rajalakshmi took part in the proceedings and Lalitha Rathnam the fourth director who is the wife of B. V. S. S. Mani is a consenting party. The only director left out was K. L. Manohar who alone questions the meeting and the transfers effected on October 4 1978.It is true that all the parties excepting Nagarajalakshmi were at Vijayawada on October 3 1978. But it is the evidence of R.W.-1 that the parties had already decided to hold the meeting at Vijayawada originally on October 4 1978. It has been the customary practice to hold the board meetings during the Sangas celebrations say Navarathri Krishna Jayanthi etc. It so happened that the health condition of Nagarajalakshmi who was admittedly a chronic patient became suddenly worse and it is the evidence of RW-1 that both himself and V. K. Dongre immediately left for Madras in the afternoon of October 3 1978 and by the time they reached Madras the old lady recovered and as originally fixed the meeting took place at Madras instead of at Vijayawada on October 4 1978. The practice of sending written notices to all the directors was not in vogue even during the lifetime of K. S. Rao and C. A. Chettiar since the parties felt that the Sangas affair was more or less a family one. One important fact which should not be lost sight of here is that apart from B. V. S. S. Mani the other two persons who took part in the meeting dated October 4 1978 were Nagarajalakshmi and V. K. Dongre who are responsible persons the former being the daughter of the founder K. S. Rao and the latter being the trusted friend of the founder K. S. Rao and a reputed scholar. Nothing can be suggested against them. Searching questions were put to RW-1 regarding the meeting that took place on October 4 1978 and he had given convincing answers.As already observed the petitioners had stealthily removed the share transfer file kept in the cupboard at No. 29 Broadway Madras-1 by using the alternate set of keys. The evidence of R.W.-1 would disclose that it must have happened sometime after December 24 1979. Hence we cannot expect the transfer deeds the returned covers etc. pertaining to the meeting dated October 4 1978 kept in the file be made available by B. V. S. S. Mani in this proceeding since the entire file is missing from the Sangas custody. R.W.-1 would assert that only after removing the file all the allegations have been deliberately made by the petitioners knowing full well that he cannot produce the file and meet the queries. There is considerable force in the explanation given by B. V. S. S. Mani in this regard. The same is quite convincing and has to be accepted.Per contra K. L. Manohar has given evidence as P.W.-1 regarding the meeting dated October 4 1978. In the cross-examination he has given prevaricating answers which will show that he has not come out with true and real version. His answers are very evasive and most unimpressive. Further even in the counter statement the second respondent would clearly state that the petitioners had also taken part in the subsequent board meetings and the annual general body meetings but never questioned the minutes of the meeting dated October 4 1978. On a careful consideration of the oral and documentary evidence it has to be held that the meeting dated October 4 1978 was a genuine one and the share transfers effected in that meeting are legal and quite in order. The petitioners chose to attack only part of the resolutions pertaining to the two meetings dated January 15 1956 and August 13 1957 relating to the transfer of shares to and in favour of the second and third respondents but they would very conveniently refrain from questioning the other part of the resolutions wherein they were the beneficiaries of the share transfers. It goes without saying that the present attempt of the petitioners is most mala fide and unjustified.The share transfer in favour of respondents Nos. 4 to 7 made on July 27 1981 (exhibit R-42) are also attacked by the petitioners. But it is clearly seen that the transferor is B. V. S. S. Mani and there is nothing wrong or illegal in such transfer. Once the share transfer in favour of Mrs. and Mr. B. V. S. S. Mani are held to be in order and legal it automatically follows that the share transfer made in favour of the children are also in order and quite legal. The facts and circumstances would clearly show that the accusations and allegations made against B. V. S. S. Mani are all ill founded and unwarranted. They have been invented for the purpose of this case and there is absolutely no truth in the same and only to spite B. V. S. S. Mani and his family members the same have been made.In view of the detailed discussions made above I am of the view that the reliefs asked for in Company Petition No. 13 of 1982 cannot be granted. There is absolutely no necessity for rectification of the share register of the Sanga. Mr. T. Raghavan would confine his attack only to the three meetings referred to above wherein the share transfers took place. The petitioners have not made out any case justifying the rectification of the share register. The petitioners have miserably failed to prove the allegations made in Company Petition No 13 of 1982.For the foregoing reasons Company Petition No. 13 of 1982 is also dismissed with costs.