Sabyasachi Mukharji, J.
1. This appeal arises out of the orders passed and judgments delivered in several matters on August 21, 1981. The points involved are interesting and rather novel but these are not many. An order for sale of certain assets of Andhra Steel Corporation Ltd. has given rise to this appeal. Andhra Steel Corporation Ltd., hereinafter referred to as ' the said company ', is controlled by the Mittal family. Sri B. C. Mittal was the grandfather of the present applicant/appellant. Sri B. C. Mittal had five sons, namely, Mohanlal Mittal, I. S. Mittal, D. L. Mittal, C. L. Mittal and R. K. Mittal. The wife of Sree B. C. Mittal had died some time back. Different members of the Mittal family held substantial blocks of shares in the said company. M. L. Mittal and his sons and daughters hold substantial shares but altogether they are in minority. On or about May 13, 1977, M. L. Mittal had made an application under Sections 397 and 398 of the Companies Act, 1956, being Company Petition No. 221 of 1977 complaining about alleged mismanagement of the affairs of the company by his four brothers, Sri B. C. Mittal was an old man and had died recently. He was bedridden after an attack of paralysis for a long time. It is the case of M. L. Mittal and his sons in the present applicants/appellants that he was also mentally infirm and was undergoing shock treatment. In the application made by M. L. Mittal under Sections 397 and 398 of the Companies Act, 1956, in order to make up 10% shareholding, the present appellants being sons and daughters of M. L. Mittal supported M. L. Mittal and their supporting affidavit was annexed to the main Section 397 and Section 398 application. These facts have to be borne in mind in order to consider one of the main contentions involved in this appeal.
2. In the application under Sections 397 and 398 of the Companies Act, Mohanlal Mittal had complained about mismanagement of the affairs of the company by his brothers, Indra Sen Mittal, Damodar Lal Mittal, Chaganlal Mittal and R. K. Mittal. In the said application, an order was passed on May 25, 1977, for convening an extraordinary general meeting of the company for the purpose of election of the directors under the chairmanship of Sri M.N. Sen, Barrister-at-Law. Au extraordinary general meeting was duly held. In the said election, six representatives from various financial institutions were unanimously elected as directors of the company and six other persons were elected on contest. Sri K. R. Gopivallabha Iyengar, a retired judge of the Karnataka High Court, was appointed chairman of the Committee of Management.
3. The learned trial judge had initially appointed a Committee of Management and after some proceedings, the matter went up before a Division Bench of this court and by au order dated July 26, 1977, the Division Bench, inter alia, ordered as follows :
' THE COURT : The operation of the order passed by the learned trial judge will remain stayed and the following 10 persons who were declared to have been elected as directors by the learned trial judge and the other two persons named below, i.e., the following 12 persons, will, however, constitute the Committee of Management until further orders. '
4. Thereafter, the names of the twelve persons were mentioned in the said order. Some of these persons resigned and were substiutted. At the time relevant for the present appeal, the Committee of Management consisted of the following:
' 1. Mr. K. R. Gopivallabha lyengar-Chairman
2. Mr. Srinivasa Shastri, I.A.S.--managing director,Audhra Pradesh State Financial Corporation, Hyderabad.
3. Mr. B. C. Narayan--director, K. S. F. C.
4. Mr. M. V. Mani--nominee of K. S. I. D. C.
5. Mr. K. J. George--secretary, Govt. of India (retired)
6. Mr. S. P. Banerjee--advocate, Calcutta High Court.
7. Mr. T. Ramachandra Rao--advocate, Andhra Pradesh High Court.
8. Mr. I. S. Sevak--area manager, Bank of India, Karnataka.
9. Mr. T. Krishnappa--general manager, Mysore Iron and Steel Ltd.
10. Mr. H. R. Srinivash--chartered accountant.
11. Mr. B.C. Mittal
12. Mr. I. S. Mittal.'
5. The present appeal arises out of an application made by Pramod Kumar Mittal, a shareholder of Andhra Steel Corporation Ltd. and a son of Mohanlal Mittal, for restraining the Committee of Management of the company from acting on the basis of or in furtherance of or giving any effect to the terms of settlement which were proposed to be filed in Suit No. 295 of 1977 in any manner whatsoever. There was a further prayer for Pramod Kumar Mittal to be added as a party to the Company Petition No. 221 of 1977 (Mohanlal Mittal v. Andhra Steel Corporation Ltd.) This application was made by Pramod Kumar Mittal and also by his two brothers, Laxmi Niwas Mittal and Vinod and Kumar Mittal, and the married sister, Smt. Saroj Mittal (Rataria). The applicants together with their father, Mohanlal Mittal, held 10% of the share capital of the Andhra Steel Corporation Ltd. As mentioned hereinbefore, Mohanlal Mittal had made an application under Sections 397 and 398 of the Companies Act, 1956, and that application was made with the consent of the present applicants.
6. The company had three units for production of steel, one at Dankuni, one at Vizagapatnam and one at Bangalore. The company's Dankuni unit had indisputably remained closed since December, 1976. The company's stocks, raw materials and spare parts at Dankuni, Vizagapatnam and Bangalore plants were hypothecated in favour of Bank of India. On or about May 23, 1977, the Bank of India had filed a suit in this court against the company and its directors who are guarantors. The said suit being Suit No. 295 of 1977 was pending in this court. In the said suit, receivers were appointed over the securities and various interlocutory orders were made from time to time for the purpose of carrying out the manufacturing activities of the company. The company had also mortgaged its Dankuni plant, comprising of lands, buildings, plants and machinery in favour of Dena Bank. Dena Bank had filed a suit in the Chinsura court in the District of Hooghly being Mortgage Suit No. 13 of 1980 in the court of the Subordinate Judge, Hooghly at Chinsura for the enforcement of the said mortgage and the suit was transferred to the Calcutta High Courtunder Clause 13 of the Letters Patent. In the said suit, the company and its directors were party defendants. On May 23, 1977, as mentioned hereinbefore, the Bank of India had filed a suit in this court against the company for a decree for Rs. 4,43,41,209.59 and also for a declaration of charge over goods mentioned in the agreement of hypothecation between the Bank of India and the Andhra Steel Corporation Ltd. The bank had also an equitable mortgage of the Dankuni plant including immovable property of the company which were situated outside the jurisdiction of this court.
7. In this appeal, questions have arisen as to the competency of the Committee of Management to enter into the proposed terms of settlement, the conduct of the Committee of Management and also the scope and effect of the terms of settlement.
8. It was the allegation of M.L. Mittal and his sons, the present appellants, that Sri B. C. Mittal was at all material times mentally and physically incapable of acting as a member and taking part in the affairs of the said company. Sri S. P. Banerjee is a practising advocate of this hon'ble court and lives in Calcutta. According to the appellants, he is unable to look after the said affairs of the committee at Bangalore and Vizag. Sri T. Ramchandra Rao, Sri M. V. Mani and Sri B. C. Narayan, according to the allegations of the appellants/applicants, were all along been acting at the instance of Sri I. S. Mittal. It is further the allegation of the appellants that M. V. Mani and B.C. Narayan, although nominees of Karnataka Financial Corporation, had all throughout been acting in support of Indrasen Mittal and his group. It is further alleged that the Karnataka State Financial Corporation and the Karnataka Industrial Development Corporation had been appearing through the partner of M/s. Mukherjee and Biswas, advocates on record of I.S. Mittal and his group, and had been openly supporting I.S. Mittal and his group. The allegations of the appellant/applicant is, therefore, that the Committee of Management is really a one-man show and I.S. Mittal does whatever he likes in relation to the said company.
9. It is the allegation of the appellant that while the Dankuni factory which was near Howrah in West Bengal had remained closed since December, 1976, at that time there was a boom in the steel industry from 1978 which continued, according to the appellants, till about 1980. On this aspect, the appellant had relied on certain statements made by Indrasen Mittal in the affidavit-in-opposition.
10. It is further the case of the appellant that Sri K.R. Gopivallabha Iyengar, who was the chairman of the Committee of Management appointed by the court and who is a retired judge of the Karnataka High Court had alsotaken a partisan attitude and was openly supporting, according to the appellants, the acts and decision of I.S. Mittal. The appellants have alleged that the Committee of Management had not published any report of balance-sheets and profit and loss accounts for the years 1977-78, 1978-79 and 1979-80 or of any account dealing with the said company after their appointment. It is, therefore, their allegations that the affairs of the committee had been kept secret by the Committee of Management from the general shareholders of the company. The appellant further alleged that no accounts had been filed before the court. It is further the allegations of the appellants that Sri I. S. Mittal and his brothers, D. L. Mittal, C. L. Mittal and R. K. Mittal, are in control of another company, namely, Southern Steelmet Ltd., having its office in Bangalore. Southern Steelmet Ltd. had got the capacity of manufacturing wire rods out of billets and ingots. The said company had been supplying all its products of billets and ingots at undervalue, according to the appellants, to the said Southern Steelmet Ltd. The installed capacity of Bangalore unit and Vizag unit of the said company is 36,000 tonnes and 1,10,000 tonnes per annum respectively. The allegation of the appellants is that the Committee of Management had not been utilising more than 25% of the installed capacity of the said two undertakings of the said company.
11. The Dankuni unit of the said company is comprised of electric steel melting furnace with an installed capacity of 18,000 tonnes per annum and rolling mills with a capacity of 38,000 tonnes per annum. The factory at Dankuni is comprised of an area of 6 acres of land with building and stores. The allegation is that Indra Sen Mittal is in effect trying to make a benami purchase of the Dankuni unit of the company as will be evident from the facts of this case as brought out in the affidavits.
12. In this connection, it would also be relevant to refer to some of the allegations and/or submissions made in the affidavit of Indrasen Mittal affirmed on or about November, 1980, to the application out of which this appeal arises. After setting out the circumstances under which the Committee of Management came to function and after reiterating that the said Committee of Management had functioned with ability, diligence and bona fide, it has been stated by the same deponent that though he admitted that the condition of the steel industries had improved in the country between 1978-79 and 1979-80, there were many companies producing steel in this country which were running at loss. It has been further stated that the Dankuni unit had remained closed since December, 1976. It is further the averment that with the effort of the Committee of Management and through the untiring efforts of the deponent and his younger brothers, Damodarlal Mittal and Chhagan Lal Mittal, the company's units atBangalore and Vizagapatnam had picked up production and were doing well. It has also been urged that in spite of the hostile attitude of the company's bankers, the company had been able to generate its own fund and run its factories at Bangalore and Vizag. He has alleged that since the Committee of Management took over charge, it was unable to obtain possession of the books and records of the company which were in Calcutta at the Dankuni unit and in particular the statutory books and records of the company. An application had to be made by or on behalf of the Committee of Management directing the appellant's father, M.L. Mittal, to deliver the books and records of the company which he was wrongfully withholding from the Committee of Management. The application was opposed by M.L. Mittal and his sons, Pramod Kumar Mittal and Vinod Kumar Mittal. A special officer was appointed by this court to take possession of the books and records and to initial the books and records and prepare an inventory. In order to delay the delivery of such books to the Committee of Management, the said M. L. Mittal had raised false and frivolous objections, and there was difficulty and as there was no order of this court for filing of the balance-sheet and profit and loss account, the same had not been filed. It was further asserted that in view of the fact that the Committee of Management had already commenced and concluded the preparation of the balance-sheet and the profit and loss account for the years ended Dewali 1975-76 and November, 1977, to November, 1978, and accounts for the year ended November, 1979, was in the course of preparation and audit, and as no general meeting of the company had been held, the same could not be placed before the shareholders. In these circumstances, it was asserted that it was not possible for the company to publish the balance-sheets for the years 1977-78 to 1979-80 or any accounts of the dealings with the said company after the appointment of the Committee of Management. It has also been stated by him that it was incorrect to state that the company had been only utilising 25% of the installed capacity of the company's units at Bangalore and at Vizag. It has been asserted that the utilisation had been to the extent of 80% of the installed capacity at Bangalore and 80% of the melting shop at Vizag since December, 1978. The Bank of India was the charge-holder in respect of, inter alia, the Dankuni plant and the bank had filed a suit. The said suit was for enforcement of the securities hypothecated in favour of Bank of India. Mohanlal Mittal, the father of the present applicant/appellant, was also a party to the said suit as a guarantor. As a matter of fact, by the decree which has been passed, the said suit against Mohanlal Mittal had been dismissed and an appeal was sought to be preferred by him and leave to file the appeal was not granted on the ground that it could not be said that he was in any way aggrieved by the decree passed or the settlementsmade. It is not necessary to refer to the details of the proceedings to which reference has been made in the affidavit in support of the application.
13. It has been alleged on behalf of respondents, the Committee of Management, that the Andhra Steel Corporation Ltd. started negotiation with the Bank of India and Dena Bank for settlement of the disputes and arrived at a settlement which has given rise to the present litigation.
14. It has been further alleged by the Committee of Management that the company was incurring a loss of Rs. 3 lakhs per month for maintaining the Dankuni plant which was a closed unit since 1976 and the company after due deliberations decided to sell the said unit to cut down loss and also to pay off the loans taken by the company. On or about January 16, 1976, the company's plants at Dankuni, Vizagapatnam and Bangalore were valued by a valuer. In that valuation, the Dankuni plant was valued at Rs. 2.15 crores by the valuer.
15. On February 5, 1979, an advertisement was published in two newspapers, the Business Standard and the Economic Times, inviting offers for sale of the steel plant at Dankuni. In the advertisement, it was mentioned that a mini steel plant near Calcutta in a backward area was available for sale.
16. On or about March 10, 1979, an offer was made by Shiv Kumar Agarwalla to purchase the said plant at Rs. 2.15 crores.
17. Following this offer, some negotiations took place by and between the two aforesaid banks, Andhra Steel Corporation and Shiv Kumar Agarwalla. This resulted in a composite agreement between the two banks, Andhra Steel Corporation and Shiv Kumar Agarwalla and Grand Steel and Alloys Ltd., a company floated by Shiv Kumar Agarwalla for purchasing the aforesaid steel plant. A sum of Rs. 10.5 lakhs was deposited with the Bank of India on May 22, 1980, by Grand Steel and Alloys Ltd., by a pay order of Indian Overseas Bank in favour of Bank of India for this purpose.
18. On or about August 22, 1981, Bank of India as plaintiff in Suit No. 295 of 1977 (See) : AIR1982Cal57 and as one of the defendants in the Extraordinary Suit No. 1 of 1980 having a charge in respect of the company's plant and machinery at Dankuni made an application before T. K. Basu J. for, inter alia, the following order :
(a) Suit No. 295 of 1977 (Bank of India v. Andhra Steel Corporation Ltd., : AIR1982Cal57 and Extraordinary Suit No. 1 of 1980 Dena Bank v. Andhra Steel Corporation Ltd.) be consolidated;
(b) Grand Steel and Alloys Ltd. be added as party defendant in its suit/or in Extraordinary Suit No. 1 of 1980 and/or both after passing an order of consolidation of the two suits ;
(c) The agreement or compromise evidenced by the said terms of settlement be recorded and a decree be passed in accordance therewith ;
19. At the time when the said terms of settlement were sought to be filed in court, respondent No. 1, Pramod Kumar Mittal, objected to the same and stated through his counsel that he was in a position to find a buyer of the Dankuni unit of the company for Rs. 2 crores 30 lakhs. T. K. Basu J. recorded the statement made on behalf of Pramod Kumar Mittal and directed that a formal application be made for recording the said compromise and filing the terms of settlement. Before such application for recording the compromise was made, Purna Investment Ltd., a shareholder of the Andhra Steel Corporation Ltd., made an application in Suit No. 295 of 1977 (See) : AIR1982Cal57 , for leave to intervene in the said suit and to be added as a party thereto and for leave to oppose the filing of the terms of settlement in the said suit.
20. Pramod Kumar Mittal on behalf of himself and on behalf of Vinod Kumar and Lakshmi Niwas Mittal and Smt. Saroj Ratoria made an application in the proceedings under Sections 397 and 398 of the Companies Act, 1956, then pending for, inter alia, an order of injunction restraining the Committee of Management of the Andhra Steel Corporation Ltd. from compromising the said suits and filing the said terms of settlement. A prayer was also made in the said application for removal of the Committee of Management. An order was made restraining the Committee of Management from filing the terms of settlement in the said suit until disposal of the application.
21. The application made by the Bank of India for putting in terms of settlement as well as the company petition came up for hearing before Salil K. Roy Chowdhury J, After hearing the matters for several days, judgment was reserved and on August 21, 1981, Salil K. Roy Chowdhury J. was pleased to dismiss the application made by Pramod Kumar Mittal for being added as a party in Company Petition No. 221 of 1977 and the prayer for injunction restraining the Committee of Management from filing the said terms of settlement was also refused by His Lordship. The application by Purna Investment Ltd. for being added as a party to Suit No. 295 of 1977 was also dismissed. The application filed by the Bank of India, however, succeeded. An order was made for consolidation of Suit No. 295 of 1977 and Extraordinary Suit No. 1 of 1980 and leave was granted to file the said terms of settlement in court and the compromise embodied in the said terms of settlement was recorded. Thereafter, SalilK. Roy Chowdhury J. was pleased to direct that Suit No. 295 of 1977 and Extraordinary Suit No. 1 of 1980 were to be treated as on the day's list and passed a decree in accordance with the terms of settlement. The suit was dismissed as against the defendants who were not parties to the said terms of settlement.
22. After the learned judge passed the impugned order, there was an oral application for stay of the operation of the order which the learned trial judge did not grant. Thereupon, before the Division Bench, an oral application was made on August 21, 1981, for stay of the operation of the order of the learned trial judge so far as delivery of the Dankuni Steel Plant was concerned. It was orally submitted that in between the time, that is to say, when the learned trial judge delivered the judgment on August 21, 1981, at about 1.20 p.m. and the matter was mentioned before the Division Bench on the same day at about 2.10 in the afternoon, delivery had taken place. On enquiry, it was revealed that the key of the steel plant had only been delivered to the advocate on record of the purchaser and actual physical possession had not taken place. On that, the learned advocate for the purchaser was appointed to be the receiver of the key and was directed not to part with the possession until further orders of this court. The said order has continued. As we have mentioned before, Bank of India had a charge in respect of all movables and hypothecation in its favour of all the plants. The company had also mortgaged its Dankuni plant comprising of the lands, buildings and machinery in favour of Dena Bank.
23. After the appeal was preferred and in the course of hearing of the stay petition before the Division Bench, the appellant produced Calcutta Hardware Supply Agency and Dwarka Prasad Chowdhury who were willing to purchase the plant at Dankuni for Rs. 2,45,00,000 and as a token of the bona fide intention had produced certain cheques and certain letters of guarantee from the bank.
24. In support of this appeal, it was contended, firstly, that the contract, that is to say, the terms of settlement by which the agreement was entered into, was beyond the competence of the Committee of Management and, therefore, there could not have been any valid agreement between the parties and, as such, there could not have been any terms of settlement. In order to appreciate this contention, it would be necessary to refer to the argument advanced before us. It was contended that the Committee of Management was appointed to discharge the function of and was in place and stead of the board of directors of the company. Therefore, it was submitted that the Committee of Management had to function under the same restriction as the board of directors of a company had. In this con-nection, reference was made to the provisions of Section 293 of the Companies Act, 1956, the relevant portion of which is set out as under :
'293. Restrictions on powers of board.--(1) The board of directors of a public company, or of a private company which is a subsidiary of a public company, shall not, except with the consent of such public company or subsidiary in general meeting (underlined by us),--
(a) sell, lease or otherwise dispose of the whole, or substantially the whole, of the undertaking of the company, or where the company owns more than one undertaking, of the whole, or substantially the whole, of any such undertaking;......... (2) Nothing contained in Clause (a) of Sub-section (1) shall affect-
(a) the title of a buyer or other person who buys or takes a lease of any such undertaking as is referred to in that clause, in good faith and after exercising due care and caution ; or
(b) the selling or leasing of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing.'
25. The other sub-sections are not necessary for our present purpose. We may incidentally while on these provisions note that Section 293 appears in Chapter II of Part VI of the Act which deals with the constitution of the board of directors generally and under the group of sections dealing with the board's power and restrictions thereon. There are certain sections, namely, Section 291, which deals with the general power of the board of directors of the company, Section 292 deals with certain powers to be exercised only at board meetings and Section 293 is headed as 'Restriction on powers of the board'. Section 293A, which is not relevant for our present purpose, deals with the prohibition regarding making of political contributions and Section 293B deals with the power of the board and other persons to make contributions to the National Defence Fund, etc. The point that is emphasised is that the board is to function on behalf of the company in a specified manner and under certain specified conditions and are under specified restrictions. The Committee of Management, it was, inter alia, contended, could not have greater power unless specifically conferred by the court in the order appointing the Committee of Management giving it such unrestricted powers. It was more or less the common case that no such specified special powers had specifically been given to the Committee of Management in the instant case by the court appointing or confirming the order of appointment of the Committee of the Management. It was also contended that, in the alternative, if it was contended that the Committee of Management was like a special officer ora receiver of the assets of the company, then such a receiver could not,sell off the undertakings of the company unless in the order appointingthe Committee of Management there was such specified and enumeratedpower, which, it was submitted, was absent in the instant case. Argumentswere made which we shall presently note as to whether such a Committeeof Management could be treated as a receiver and whether such leave wasnecessary in the instant case. A question was canvassed before us that aparticular unit of a company could not be considered to be an undertakingof the company in terms of Section 293(1)(a) of the Act. A closed unit, it wassubmitted, could not be treated as an undertaking as it is understood. Wehave mentioned hereinbefore that it was the common case that no specificleave had been obtained from the court entertaining the company's petition under Sections 397 and 398 of the Companies Act in the instant case. Itwas further urged that though the learned judge who was exercising anddisposing of the several matters under the Companies Act as well asthe suit which was assigned to the particular learned trial judge who wasdisposing of this company's petition, these orders could only be passed inseparate and independent jurisdiction.
26. The next point that was urged before us was that the agreement for sale upon which the terms of settlements were passed was not a bona fide transaction. In support of this submission, several points were urged,, namely, that the advertisement was not proper and valid, secondly, there was absence of the minutes of the meeting of the Committee of Management regarding the sale of these units, thirdly, the relationship between Indersen Mittal and the real buyer, Shiv Kumar Agarwalla, fourthly, the paid-up capital of the purchaser was insignificant, fifthly, there was no valuation report placed before the learned trial judge, sixthly, there was no mention of the date of the agreement, that is to say, when the alleged agreement was alleged to have been entered into and, lastly, because of certain subsequent facts, that is to say, the emergence of a purchaser who was willing to offer at a higher price prima facie would indicate that the unit was being sold at a lesser value. We shall have to refer in detail to certain facts in examining these several contentions. It was then contended that the decree was bad because the agreement upon which the decree was passed was not a registered document and, as such, could not be taken note of and looked at.
27. Apart from disputing these submissions, it was urged on behalf of the respondents that the appellants had no locus standi to make this application in the first instance and/or to prefer this appeal. It was, secondly, submitted that the decree having been passed in accordance withthe terms of settlement, no relief could at this stage be granted in favour of the appellants. Incidentally, it was also submitted that the terms of settlement have been given effect to in respect of several other matters and cannot now be impugned piecemeal.
28. In this case, indisputably, as there had not been any sanction or leave obtained for entering into the terms of settlement pursuant to which the decree was passed in favour of the Union Bank of India, it is necessary to consider the contention whether either under Section 293 of the Companies Act, which we have set out hereinbefore, sanction was required or whether any leave to compromise was necessary in view of the fact that the Committee of Management appointed by the court was in the position of a receiver which required the leave of the court or sanction of the court before entering into the compromise. We have set out Section 293 of the Companies Act. We have also set out the terms of the order dated July 26, 1977, whereby the court had empowered the Committee of Management to function. The question, therefore, is, are the transactions entered into by the Committee of Management, transactions entered into by the board of directors or receiver or officers of the court It is quite clear in view of the terms used in Section 293 that Section 293 in terms cannot have any application to the facts and circumstances of this case. The Committee of Management was not the board of directors of the company. The board of directors of the company had to perform several functions; it cannot be envisaged that the Committee of Management was functioning as the board of directors. The board of directors had to perform several other functions which could not be expected to be performed by the Committee of Management appointed by the court. In this connection, reference was made to Section 161 of the Companies Act which enjoins filing of certain returns indicating the names of the directors, etc., or Section 169, which also enjoined calling of extraordinary general meeting of the board of directors on certain conditions specially Sub-section (9) of Section 169 about the reasonable expenses incurred by the requisitionists in connection with the holding of the meeting. Similarly, Section 215 of the Act required authentication of balance-sheet in certain manner by the board of directors and Section 217, specially Sub-section (4). In this connection, about the Committee of Management, reference may be made to certain decisions in aid of the proposition that, in any event, Section 293 could only apply to a voluntary sale and not to a sale or transfer which takes place by operation of law in pursuance of a decree at the instance of a charge-holder in enforcement of its rights. When a Committee of Management sells, it sells, it was contended, by the authority of the appointment by the court and, therefore, the acts of the Committee of Management would not come within the purview of the limitations of the board ofdirectors under Section 293 of the Act. In this connection, reliance was placed, on certain observations in the case of Krishna Das Nandy v. Bidhan Chandra Roy, : AIR1959Cal181 , though the said observations were made in the context of facts which were entirely different. Our attention was also drawn to certain observations of the Supreme Court in the case of Sailendra Narayan Bhanja Deo v. State of Orissa, : 1SCR72 . We are of the opinion that the said decision is not of much relevance in the present case.
29. It was contended that in the scheme of Section 293 and in the context of the other provisions of the statute, compliance with the said provisions of Section 293 could, not be made by the Committee of Management. It is necessary to consider whether in view of the facts of this case and the provisions of the Companies Act, leave or prior sanction or direction of the court was required for entering into the terms which would entail sale or transfer of any of the units or undertaking of the company. In this connection, it was suggested that if any leave was necessary, such leave had to be obtained from the court exercising jurisdiction under Sections 397 and 398 of the Companies Act, namely, the court functioning as the company court; such leave, it was urged, could not be inferred by the permission of the suit court to file the terms of settlement and passing a decree thereupon. It was stressed that the fact that by a fortuitous combination of circumstances, the same learned judge was exercising company jurisdiction and suit jurisdiction could not obviate the necessity of such leave. It was further stressed that in this case as there had been no direction or sanction obtained from the court prior to entering into the transactions or agreeing to the terms of settlement, the subsequent commission of the court to file the terms of settlement, would not cure the defect because it was urged that the act of the Committee of Management was ultra vires and beyond its competence. In this connection, certain observations, of the House of Lords in England in the case of Alexander Ward and Co. Ltd. v. Samyang Navigation Co. Ltd.  2 All ER 424 ;  1 WLR 673 (HL) were referred to. There the pursuer was a company registered in Hong Kong and they had a claim against the defenders, a Korean company, for over 1,60,000. The pursuer company had no directors and did not hold any general meeting in 1968-69. In November, 1970, the summons for the payment of the sum was issued by the Court of Session in Scotland on behalf of the pursuer company in the names of two individuals, W and I, together with warrants authorising the arrest of the ship belonging to the defenders which was lying in Scottish waters. Arrest was necessary in order to give the Scottish court jurisdiction to try the action. In December, 1971, the defenders lodged 1,65,000 with theAccountant of the Court and warrants were recalled releasing the defendership in December, 1971, the Lord Ordinary ordered trial of a preliminary point raised by the defenders' amended defence that the company not having authorised the raising of the action, it should be dismissed. In April, 1972, before trial of that issue, the pursuers went into liquidation and an application was granted for the liquidator to be added as an additional party. In the name of the company, the liquidator ratified the acts done on its behalf by W and I. The defenders contended that despite the purported ratification, the action should be dismissed since W and I had not been authorised to act on behalf of the company and the arrestment was not capable of subsequent ratification. Reliance was placed on certain observations of Lord Hailsham at page 429 of the report. In view of the facts of this case, it appears to us that the said observations would be of no relevance to or in disposing of the present appeal. Lord Kilbrandon, with whose judgment Lord Hailsham agreed, observed (at p. 682 of  1 WLR 682):
' My Lords, I must say I have the gravest doubts as to the soundness of the proposition pleaded. I am not at all convinced that the management of a company having been confided to the directors and the instructing of actions at law being an act of management, then, if the company has for the time no directors, it cannot during that time take steps to recover its debts.'
30. Our attention was also drawn to the observations in Kerr on Receiver, 15th edition, wherein at page 200, the editors have referred to the fact that where a receiver is appointed manager, he can carry out all sales as were necessary for the ordinary conduct of the business over which he was appointed, but no sale of permanent plant or assets should be made without the leave of the court, Reliance was also placed on the observations of the learned editors of that book in the chapter dealing with 'Managers', namely, Chapter 9, where, at page 228, the character of a manager has been described. There, it was observed that where a receiver was required for the purpose not only of receiving rents and profits or of getting in outstanding property, but of carrying on or superintending a trade, business or undertaking, he was called a manager or more usually a receiver and manager. The appointment of manager implied that he had power to deal with the property over which he was appointed manager and to appropriate the proceeds in a proper manner. It was, therefore, submitted that a Committee of Management was in the place of manager or a receiver appointed by the court in ordinary cases and must act under the superintendence and direction of the court and there being no specific power given by the order appointing the Committee of Management to sell any unit or any undertaking without the leave or power pro-perly sanctioned from the court, the Committee of Management was not competent to sell or enter into agreement for sale of any undertaking. In this connection, reliance was also placed on certain observations in the case of Gardner v. London, Chatham and Dover Railway Co. (No. 1)  2 Ch App. 20. In that case, it was held that a mortgage debenture made by a railway company in the form given in Schedule 'C' of the Companies Clauses Consolidation Act, 1845, did not give the debenture holder a specific charge upon the surplus lands of the company or the proceeds of the sale of them so as to entitle them for an order for a receiver of the sale moneys or interim rents. The ' undertaking' of a railway company which was pledged in a mortgage was a going concern created by an Act which could not be broken up or interfered with by the mortgage; the sums of money were moneys ejusdem generis as the tolls and were earnings of the undertaking which were made available to satisfy the mortgagee. A railway company might give specific charge on the moneys to arise from its sales of its surplus lands for a debt due to the contractors who had constructed the works. It was held that the court would not appoint a manager of a railway. Our attention was drawn to certain observations of Lord Justice Sir H. R. Cairns at page 211 of the report where it was observed by the learned Lord Justice that when a court appointed a manager of a business or undertaking, it in effect assumed the management into its own hands ; for the manager was the servant or the officer of the court and upon any question arising as to the character or details of the management, it was the court which must decide and direct. The circumstance that in a particular case the persons appointed were previously managers employed by the company was immaterial. When appointed by the court, they were responsible to the court.
31. Having considered the facts and the circumstances of the case before us, it appears to us that clearly Section 293 would not be attracted. We are also of the opinion that the Committee of Management appointed to discharge the functions of the board of directors of the company cannot be termed either a receiver or a manager and, as such, such Committee of Management was not subject to the limitation that a receiver or a manager was but, at the same time, it must be emphasised that a Committee of Management is appointed by the court under Section 397 of the Companies Act, and must always act under the superintendence and direction of the company court. It is only for the management of the company's affairs in a certain manner that the court directs certain functions to be performed by the Committee of Management in a particular manner. Therefore, a Committee of Management has not an unchartered licence to do whatever it likes. In an appropriate case, the court can direct the Committeeof Management before any action is taken by it to comply with certain rules and regulations or to direct the Committee of Management to act in a particular manner. If the court so directs, then the Committee of Management must act in accordance with the direction given by the court. If any proposed action of the Committee of Management is brought to the notice of the court and the court considers such proposed action improper or unlawful, then the court can stop the Committee of Management from taking that action. The court can also direct the Committee of Management to act in a particular manner which it thinks just and proper. Equally, after an action has been taken, if such action is prejudicial to the conduct and affairs of the company, then the court in the interest of proper management of the affairs of the company, in exercise of jurisdiction under Sections 397 and 398 of the Companies Act, can give such direction as would be just and proper in the facts of the case. Beyond this, however, it would be improper to impose limitation upon the power and function of the Committee of Management. Therefore, in not complying with the requirements of Section 293 of the Companies Act, nor in not obtaining any prior sanction or leave before entering into the transaction in question, in our opinion, the Committee of Management had not committed any breach of law.
32. In aid of the proposition that a Committee of Management cannot have unlimited power and the transaction entered into by the special officer must be under the supervision of the court, reliance was placed on the decision of this court in the case of International Coal Corporation v. Pure Sitalpur Coal Concern Ltd., : AIR1972Cal45 . Appoint merit of special officer cannot be by consent of parties but it is a power of the court to be sparingly used only when specially necessary. He was an officer of the court and his powers and functions, which will vary, according to the facts of the case, however, must be only such that he could run the company in the best interest of the organisation and its members under the court's supervision. He cannot have unlimited powers unless specifically empowered and should take directions from the court periodically. His powers could not also be to enable him to achieve his own end or of his group. In our opinion, the principles laid down in this case have no application to the instant case before us as the facts in the case before us are entirely different.
33. The next aspect on this question is whether a closed unit as the Dankuni unit could be termed to be an undertaking which required compliance with Section 293 of the Companies Act. Then in the decision we have just referred, Gardner v. London Chatham and Dover Railway Co. (No. 1)  2 Ch 201, Lord Justice Cairns at pages 216 and 217 had dealt with the expression ' undertaking '. The learned judge has referred to two public Acts, viz., the Companies Clauses Act as well as the Lands Clauses Act, and has mentioned therein that 'undertaking' is defined to be the undertaking of works by the special Act authorised to be executed and in the private Act, the object appears to be not so much to describe what is included in the word ' undertaking ' as to divide by metes and bounds, or otherwise the various undertakings of the company from each other, The learned Lord Justice observed at pages 216 and 217 as follows :
' The object and intention of Parliament, however, in the case of each of these various undertakings, was clearly to create a railway which was to be made and maintained, by which tolls and profits were to be earned, which was to be worked and managed by a company, according to certain rules of management and under a certain responsibility. The whole of this, when in operation, is the work contemplated by the Legislature, and it is to this that, in my opinion, the name of ' undertaking ' is given. Moneys are provided for, and various ingredients go to make up the undertakings, but the term ' undertaking ' is the proper style, not for the ingredients, but for the completed work, and it is from the completed work that any return of moneys or earnings can arise. It is in this sense, in my opinion, that the ' undertaking ' is made the subject of a mortgage. Whatever may be the liability to which any of the property or effects connected with it may be subjected through the legal operation and consequences of a judgment recovered against it, the undertaking, so far, as these contracts of mortgage are 'concerned, is, in my opinion, made over as a thing complete or to be completed ; as a going concern, with internal and Parliamentary powers of management not to be interfered with; as a fruit-bearing tree, the produce of which is the fund dedicated by the contract to secure and to pay the debt. '
34. It has to be borne in mind, however, that the said observations were made in the context of those two statutes which were quite different from the present context.
35. In the case before us, it is an admitted fact that the Dankuni unit of the company has remained closed since December, 1976. In view of the fact that the Dankuni unit has not been in production for more than five years past, it cannot be said that it is an ' undertaking ' of the company which is being sold in this case. In that view of the matter, the restrictions imposed by Section 293 are not attracted in the instant case and the provisions of Section 293(1)(a) in terms do not apply to the proposed sale of the Dankuni unit of the company. It has further to be noticed in this case that sale of the Dankuni plant is being effected by the Committee of Management appointed by court in an application made under Section 397 of theCompanies Act and not by the board of directors. The fetter on the part of the board of directors under the provisions of Section 293 will not apply to the Committee of Management appointed in a proceeding under Sections 397 and 398 of the Companies Act. In the orders passed by Ajay K. Basu J. on July 18, 1977, and July 26, 1977, and also in the order passed by the Appeal Court on July 26, 1977, no restriction has been placed on the part of the Committee of Management.
36. In the case of Bennet Coleman & Co. v. Union of India  47 Comp Cas 32 (Bom) a Division Bench of the Bombay High Court had occasion to go into the question of the scope of the court's power in a proceeding under Sections 397 and 398 of the Companies Act. In that case, after various proceedings in which a company petition was filed by the Union of India before the Companies Tribunal on or about September 30, 1964, under Section 398 read with s. 401 of the Companies Act, for, inter alia, the following reliefs: (a) removal of the newly appointed directors, respondents Nos. 6 to 10 from the board, (b) injunction restraining respondents Nos. 2, 3 and 4 and respondents Nos. 6 to 10 from interfering and intermeddling in the affairs of the company, (c) removal of respondent No. 6 (the general manager) from the employment of the company and injunction restraining him from functioning or intermeddling with the affairs of the company, and (d) appointing a special officer to manage and conduct the affairs of the company. The hearing before the Companies Tribunal went on for a number of days till June 5, 1967, when the Tribunal was abolished. The petition was then transferred to the High Court and was numbered No. 114 of 1967. The hearing in the High Court went on from March 20, 1969, till August 28, 1969, during which only one witness had been examined in part. At that stage, the petitioner and all the respondents agreed to submit to the orders of the court, subject to certain stated reservations. The learned judge thought that, in the circumstances, the best thing would be to pass such orders as he thought fit on the assumption that the allegations made by the petitioner against the respondents were correct and that the conditions prescribed under Section 398 of the Act giving him jurisdiction to pass appropriate orders under Section 402 had arisen and existed. He also thought that passing appropriate orders on such assumption would cause no prejudice to the respondents inasmuch as there was going to be no admission on the part of any of the respondents in respect of the allegations contained in the petition and no finding was being recorded by him on any of the issues framed in this case and no prejudice would be caused to such of the respondents against whom other proceedings had been instituted in the matter of those proceedings. The learned judge passed an order, inter alia, to the following effect: (1) that the reconstituted board of directors of thecompany should consist of 11 persons, out of whom three should be shareholders' directors, three be nominated by the Central Government and the remaining five be appointed by the court and such reconstituted board should operate for a period of seven years from the date of the order ; he further directed that in the first reconstituted board, the three shareholders' directors should be respondents Nos. 8, 9, 10 and he also mentioned the names of the other directors and the name of the chairman of the board ; (2) he further directed that the three directors as representing the shareholders should retire in accordance with the articles of association of the company at each ordinary annual general meeting but should be eligible for re-election; he further directed that a vacancy among the directors appointed by the Central Government should be filled up by the Central Government, while a vacancy among the directors appointed by the court should be filled up by the court. This was done with a view to give a preponderating and effective majority to the directors appointed by the court and the Government over the shareholders directors; (3) he further directed that the articles of association should stand modified in the manner indicated in the schedule. Against the said order, all the respondents except respondents Nos. 7 and 9 preferred appeals.
37. A number of points were decided in the said appeals. The point which is important for our present purpose is the decision of the court with regard to the arguments based on Section 255 of the Companies Act. It was held in that case ' that Chapter II of the Act, which includes Section 255, deals with corporate management of a company through directors in normal circumstances, while Chapter VI, which contains Sections 397, 398 and 402, deals with emergent situations or extraordinary circumstances where the normal corporate management has failed and has run into oppression or mismanagement and steps are required to be taken to prevent oppression and/or mismanagement in the conduct of the affairs of the company. In the context of this scheme having regard to the object that is sought to be achieved by Sections 397 and 398 read with Section 402, the powers of the court thereunder cannot be read as subject to the provisions contained in the other chapters which deal with normal corporate management of a company. Further, an analysis of the sections contained in Chapter VI of the Act will also indicate that the powers of the court under Section 397 or Section 398 read with Section 402 cannot be read as being subject to the other provisions contained in sections dealing with usual corporate management of a company in normal circumstances. The topic or subjects dealt with by Sections 397 and 398 are such that it becomes impossible to read any such restriction or limitation on the powers of the court acting under Section 402. Without prejudice to the generality of the powers conferred on the court under these sections, Section 402 proceeds to indicate what types of orders the court couldpass. Under Clause (a) of Section 402, the court's order may provide for the regulation of the conduct of the company's affairs in future and under Clause (g) the court's order may provide for any other matter for which in the opinion of the court it is just and equitable that provision should be made. An examination of the aforesaid sections brings out two aspects : first, the very wide nature of the power conferred on the court, and, secondly, the object that is sought to be achieved by the exercise of such power with the result that the only limitation that could be impliedly read on the exercise of the power should be that nexus must exist between the order that may be passed thereunder and the object sought to be achieved by those sections and beyond this limitation which arises by necessary implication, it is difficult to read any other restriction or limitation on the exercise of the court's power. Further, Sections 397 and 398 are intended to avoid winding up of the company if possible and keep it going while at the same time relieving the minority shareholders from acts of oppression and mismanagement or preventing its affairs being conducted in a manner prejudicial to public interest and, if that be the objective, the court must have power to interfere with the normal corporate management of the company, and to supplant the entire corporate management, or rather mismanagement, by resorting to non-corporate management which may take the form of appointing an administrator or a special officer or a committee of advisers, etc., who would be in charge of the affairs of the company. The court could even have a truncated form of corporate management if the exigencies of the case required it and any truncated form of corporate management can never conform to all the provisions dealing with corporate management. It will all depend, on the facts and circumstances of each case, as to how, in what manner and to what extent the court should allow the voice of the shareholders' directors on the board of directors to prevail over that of the other directors and the court's powers in that behalf could not in any manner be curbed. Therefore, the position is clear that while acting under Section 398 read with Section 402 of the Companies Act, the court has ample jurisdiction and very wide powers to pass such orders and give such directions as it thinks fit to achieve the object and there would be no limitation or restriction on such power that the same should be exercised subject to the other provisions of the Act dealing with normal corporate management or that such orders and directions should be in accordance with such provisions of the Act.
38. Once it is held that on a true construction that the court has the widest possible jurisdiction and ample powers to bring about the desired result, there would be no question of the court not being able to reframe or insert a new article which would be in conflict with some provisions ofthe Act. Sections 397, 398 and 402, by their very nature and contents, indicate that they are intended to operate as express provisions to the contrary and would be covered by the phrase ' save as otherwise expressly provided in the Act '. In any case, the two sets of situations in which the provisions of Section 255 and the provisions of Sections 397 and 398 read with Section 402 would respectively operate are entirely different and mutually exclusive and, as such, there will be no repugnancy between any article that may be reframed or inserted by the court while passing orders under Section 398 read with Section 402 and other provisions of the Act including Section 255, which deal with normal corporate management of the company.
39. A Division Bench of the Calcutta High Court in the case of Debi Johra Tea Co. Ltd. v. Barendra Krishna Bhowmick  50 Comp Cas 771 had occasion to examine the scope of Sections 397, 398 and 402 of the Companies 'Act. It was observed as follows (at pp. 782-783):
' It should be borne in mind that when a court passes an order under Sections 397, 398 and 402 as has been done in the instant case, there could be limitation on the court's power while acting under the sections. Instead of the winding up of a company, the court under the abovementioned sections has been vested with ample power to continue the corporate existence of a company by passing such orders as it thinks fit in order to achieve the objective by removing any member or members of a company or to prevent the company's affairs from being conducted in a manner prejudicial to the public interest. The court under Section 398 read with Section 402 of the Act has the power to supplant the entire corporate management. Under the aforesaid sections, the court can give appropriate directions which are contrary to the provisions of the articles of the company or the provisions of the Companies Act.'
40. And, thereafter, at pages 784.-785 :
' It merely extended the time to file nominations for election to theoffice of directors. Under Sections 397 and 398 read with Section 402, power has been conferred upon the court ' to make such orders' as it thinks fit. The power conferred upon the court by the above-mentioned sections is very wide and the object or objects sought to be achieved by the exercise of such power have been stated in Sections 397 and 398. As we read Sub-clauses (a) and (g) of Section 402 of the Act, we have no doubt in our mind that the intention of the Legislature under the above-mentioned sections was to confer wide and ample powers upon the court for the regulation of the conduct of a company's affairs and to provide for any other matter which the court thinks just and equitable to provide for in the interest of the corporate body and the general public. Reference in this connection may be madeto the case of Bennet Coleman and Company v. Union of India .
By reason of what has been stated hereinabove, it appears to us that the court had power to make the order in regard to convening and holding of the meeting, filing of proxies or nominations or any other matter for the purpose of conducting the affairs of a company which might be contrary to the provisions of the articles of the company or the Companies Act, by virtue of the provisions of Sections 397 and 398 read with Section 402 of the said Act.'
41. The Supreme Court in the case of Cosmosteels Pvt. Ltd, v. Jairam Das Gupta : 2SCR422 , also examined the scope of Sections 397 and 398 of the Companies Act and observed at page 318 as follows:
' The scheme of Sections 397 and 402 appears to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on a company purchasing its shares under court's direction, is conferred on the court. When the court exercises this power by directing a purchase of its shares by the company, it would necessarily involve reduction of the capital of the company. Is such power of the court subject to a resolution to be adopted by the members of the company which, when passed with statutory majority, has to be submitted to court for confirmation No canon of construction would permit such an interpretation in which the statutory power of the court for its exercise depends upon the vote of the members of the company. This would inevitably be the situation if reduction of share capital can only be brought about by resorting to the procedure prescribed in Sections 100 to 104. Additionally, it would cause inordinate delay and the very purpose of granting relief against oppression would stand self-defeated. Viewed from a slightly different angle, it would be impossible to carry put the directions given under Section 402 for reduction of share capital if the procedure under Sections 100 to 104 is required to be followed. Under Sections 100 to 104, the company has to first adopt a special resolution for reduction of share capital if its articles so permit. After such a resolution is adopted which, of necessity, must be passed by majority, it being a special resolution. By a statutory majority, it will have to be submitted for confirmation to the court. Now, when minority shareholders complain of oppression by majority and seek relief against oppression from the court under Sections 397 and 398 and the court, in a petition of this nature, considers it fair and just to direct the company to purchase the shares of the minority shareholders to relieve oppression, if the procedure prescribed by Sections 100 to 104 is required to be followed, the resolution will have to be first adopted by the members of the company;but that would be well high impossible because the very majority against whom relief is sought would be able to veto it at the threshold and the power conferred on the court would be frustrated. That could never have been the intention of the Legislature. Therefore, it is not conceivable that when a direction for purchase of shares is given by the court under Section 402 and consequent reduction in share capital is to be effected, the procedure prescribed for reduction of share capital in Sections 100 to 104 should be required to be followed in order to make the direction effective.'
42. In view of the principles of law enunciated by the Supreme Court and also the judgments of the Division Bench of this High Court and the Bombay High Court and also having regard to the facts of the case before us, we are of the view that' it was not beyond the competence of the Committee of Management to enter into the impugned contract with the creditor banks in this case in the manner that it did. It cannot be said that the provisions of Section 293 had to be strictly complied with before entering into this contract as argued on behalf of the appellants.
43. We are, however, unable to accept the contention that the decree passed in the instant case by the learned trial judge has been acted upon in some respects and, therefore, it cannot be set aside by the appeal court. It was argued that the decree has become final and cannot be set aside in the proceeding under Section 397. It has been argued that on September 16, 1981, the court of appeal dismissed an application made by Mohanlal Mittal for leave to file memorandum of appeal from the judgment and order dated August 21, 1981, whereby a claim against Mohanlal Mittal as a guarantor had stood dismissed.
44. That application, however, was dismissed on the ground that Mohanlal Mittal as a guarantor could not feel aggrieved by the order of thelearned trial judge and, therefore, he had no locus standi to prefer anappeal. In this case, however, reliance has been placed on the case ofLachmeshwar v. Keshwar Lal , in aid of the proposition that though the decree passed by the learned trialjudge has been acted upon in other respects except in respect of theDunkuni plant, the appellate court had the same power not to sanctionthe compromise regarding the sale of the Dunkuni plant and it has thesame power as the trial court. Reliance was placed on the observationsof the Federal Court at page 13 of the report where it was observed thatonce a decree of the High Court had been appealed against, the matterbecame sub judice again and thereafter the court had seisin of the wholecase though for certain purposes, namely, execution, the decree, was regarded as final and the courts below retained jurisdiction. Mr. Justice Varadachariar of the Federal Court observed as follows :
' In Subhanand Chowdhary v. Apurba Krishna Mitra , this court has held that the mere fact that the particular statute in respect of which the constitutional question was originally raised had been since repealed will not put an end to the appeal; and, except on the hypothesis that this court is only a court of error, its power to do justice between the parties cannot be restricted to cases in which it is able to hold that the lower court has gone wrong in its law. The contention that the power of a Court of Appeal is so limited was distinctly negatived in Attorney-General v. Birmingham, Tame and Rea District Drainage Board AC 788 (HL) and Quilter v. Mapleson  9 QBD 672 (CA) which are referred to in the judgment in Shyramakant Lal v. Rambhajan Singh . As stated in Shyamkant Lal v. Rambhajan Singh , there is no reason, to suppose that the powers of this court when acting as a Court of Appeal are less extensive than those of the High Courts when hearing an appeal; and it has been a principle of legislation in British India at least from 186,1 that a Court of Appeal shall have the same powers and shall perform as nearly as may be the same duties as are conferred and imposed by the Civil Procedure Code on courts of original jurisdiction : See Act No. 23 of 1861, Section 37 ; Act No. 10 of 1877, s. 582 ; Act No. 14 of 1882, s. 582 ; and Act No. 5 of 1908, Section 107(2). The very words of O. 58, r. 5 of the Rules of the Supreme Court, on which Bowen L.J. laid stress in Quitter v. Mapleson  9 QBD 672 at p. 678 and Lord Gorell in Attorney-General v. Birmingham, Tame and Rea District Drainage Board  AC 788, at p. 801, namely, that the Court of Appeal has power to make such further or other orders, as the case may require, have been reproduced in Order 41, Rule 33, Civil Procedure Code of 1908 ; and even before the enactment of that Code, the position was explained by Bhashyam Iyengar J, in Krishnamachariar v. Mangammal  ILR 26 Mad 91 at pp. 95, 96 in language which makes it clearthat the hearing of an appeal is under the processual law of this country in the nature of a rehearing. The Indian Codes have from 1859 conferred upon a Court of Appeal the power given by Order 58, Rule 4, Supreme Court Rules, to allow further evidence to be adduced ; and though the English rule does not in terms impose the same limitations on this power as the Indian Codes do, these limitations are implied in the reference to ' special grounds ' in the English rule and have in effect been insisted on even in England as a matter of practice : see Nash v, Rochford Rural District Council  1 KB 384 (CA). In view of these provisions, it seems to me to make no difference that it is not explicity stated in the Indian statutes (as in Order 58, Supreme Court Rules) that an appeal is by way of rehearing. It is also on the theory of an appeal being in the nature of a rehearing that the courts in this country have in numerous cases recognized that inmoulding the relief to be granted in a case on appeal, the Court of Appeal is entitled to take into account even facts and events which have come into existence after the decree appealed against. I may also refer to Kanakayya v. Janardhana Padhi ILR 1910 Mad 432 at pp. 441-444 where the law on the point is fully discussed.'
45. Reference in this connection may also be made to Sub-section (2) of Section 107 of the CPC.
46. The objection raised by the respondents as to the maintainability of the appeal, therefore, cannot be accepted on this ground.
47. On the question of locus standi, reliance was placed on the decision in the case of Kodia Goundar v. Velandi Goundar, : AIR1955Mad281 . The Full Bench of the Madras High Court observed that Order 1, Rule 6, Sub-rule (2) provided that ' any person on whose behalf or for whose benefit a suit is instituted or defended under Sub-rule (1) may apply to the court to be made a party to such suit '. A ' party ' to such a suit is, therefore, one who is impleaded as a party or one who on an application under Order 1, Rule (8), Sub-rule (2) is brought on record, i.e., one who is 'eo nomine ' made a party. The others who were not brought on record could only be deemed to be parties and would not be parties as such. Section 47 of the CPC would not, therefore, be a bar to a fresh suit against those persons. A decree obtained in a suit instituted in accordance with the provisions of O. 1, r. 8, would be binding an all the members that belonged to the class who were sought to be represented, by operation of the principle of ' res judicata' as enacted in Section 11, Expln. VI. But the mere fact that such a decree would be binding as 'res judicata' on others who were sought to be represented cannot make such a decree enforceable as and by way of execution or otherwise. A decree obtained in a representative suit against the defendants in a representative capacity could not be executed personally against persons who were not 'eo nomine ' parties. Hence, a decree for injunction could not be extended so as to render those who were not ' eo nomine ' defendants liable for disobedience of the decree. To entitle the decree-holder to proceed against such persons who were not parties on record, the injunction must be revived against them, which must be by a separate suit. Without a revival, therefore, of the decree for injunction against these other persons, no proceedings in pursuance of the decree could be started against them. It was, therefore, submitted that as the application in the instant case was filed with the consent of the present appellants in order to make up the 10% of the shareholders who should be entitled to sustain an application, it was urged that the present appellants were parties to the Section 397 application and, therefore, they are entitled to maintain this appeal in the absence of the main applicant. Whether thesale of the Dunkuni plant was the subject-matter of the application under Section 397 and, as such, could be made a subject-matter of an application independently in respect of which this appeal has been preferred, our attention was drawn to the Division Bench judgment of this court in the case of Shyamlal Purohit v. Jagannath Ray, : AIR1969Cal424 , where it was held by Chief Justice Sinha that in the case of a public limited company registered under the Companies Act, the company was an entity separate from its shareholders. It was the company which was the owner of its assets, including immovable properties and not the shareholders. The shareholder in such a company had a right to share in the profits by way of receipt of dividends. He had a right in an appropriate case to apply for the winding up of the company and to take part in the distribution of the surplus assets after payment of the debts, and liabilities which must of course be done in accordance with the articles of association and the provisions of the said Act. As long as the company continued to exist, that is to say, before its dissolution, no shareholder could be said to have any interest in the properties and assets of the company, either legal or equitable. Shareholders in a company must certainly be interested in the properties and assets of the company in the sense that a wastage or frittering away of the assets might affect their rights to enjoy the profits and eventually the distribution of surplus assets in a winding-up. That, however, was too remote an interest and could not be included within the definition of ' interest' within the meaning of Order 21, Rule 90 of the CPC. But in the instant appeal before us, so far as the appellant in Appeal No. 271 of 1981 is concerned, who was not a party to the original Section 397 application, this principle might have some relevance, but in the case of the present appellants in this appeal, as they were parties in the Section 397 application which section gives the shareholders holding shares of certain percentage to have a say in the management of the affairs of the company and to object to the management of the company in a particular manner, this principle, in our opinion, would not be applicable in the case of the present appellant. On the question of the shareholders' rights in the assets of the company under Section 192 of the Indian Companies Act of 1913, our attention was drawn to the decision of the Supreme Court in the case of Bacha F. Guzdar (Mrs.) v. CIT : 27ITR1(Mad) , In the facts and in the circumstancesof this case, the decision would not be of much assistance in our opinion.
48. On the question that the report of the valuation which was not disclosed but which was only mentioned in the proceedings before the learned trial judge, reliance was placed on the observations of this court appearing in pp. 51 and 52 in the case of Daddy S. Mazda, v. K. R. Irani,  47 Comp Cas 39.
49. In that case, it was held that no adverse inference could be drawn from the failure to do something which a party was not bound in law to do. The provisions in Order 11 of the CPC regarding discovery, production and inspection of documents were not required to be followed in a summary proceeding under Section 155 of the Act. It was certainly open to the court to direct the appellant to produce the documents and if order was made, and not complied with, it would have been open to the court to draw an adverse inference. In the case before us, the Dunkuni unit of the company has been sold at a price which is not less than the price mentioned in the valuation report. There is no allegation that the valuation report is false or fabricated. The allegation is lack of bona fides in making the sale by the Committee of Management. The Committee of Management did not stand to gain anything by suppression of the valuation report in this case. Therefore, in our opinion, no adverse inference can be drawn for non-production of valuation report before the learned judge. But at the same time we are of the opinion that in order to show complete candour, it would have been better for the respondents to have placed the valuation report before the court to give the court a complete picture of the transaction.
50. On the question of registration, it was contended that the compromise as such did not transfer the immovable assets in connection with the Dunkuni plant. The transfer, it' was submitted, of immovable assets, if any, were done by the decree itself and that decree would be duly registered. It was submitted that Section 67 of the Transfer of Property Act, and Section 17 of the Registration Act would have no application to the facts and in the circumstances of this case. In this connection, reliance was placed on the decision in the case of Sabitri Thakurain v. Mrs. F. A. Savi, AiR 1933 Pat 306, and our attention was drawn to the observations of the court at pages 420-421 of the report. Reliance was also placed on the decision of the Division Bench of the Madras High Court in the case of Ranganayanki Ammal (K.) v. Santpathkumaran, AIR 1940 Mad 897. There, during the pendency of the suit, the parties had agreed to a compromise decree being passed. There were other disputes besides the dispute which led to the filing of the suit. These disputes related, inter alia, to two other houses besides the house in suit and the parties met to settle all their differences. The terms of settlement having been agreed upon, they were put in writing in order that there should be no dispute with regard to them. The parties agreed that the document embodying the terms of the compromise should be filed in court and decree obtained in terms thereof. It was held that the document in question was not intended to declare the rights of the parties in the immovable properties but those rights were declared in the decree of the court and consequently fell within the purview of Section 17(2)(b) and not under Section 17(2)(b) of the Indian Registration Act, The definition of what documents should be registered because it created right in immovable property and what documents only created a right to get another document was focussed in two decisions of the Supreme Court, the first one being the decision in the case of Ratan Lal Sharma v. Purshottam Harit : 3SCR109 , where it was held that where the terms of the arbitration award did not transfer the share of a partner, A, in the assets of a firm to the other partner, B, either expressly or by necessary intendment but, on the other hand, expressly made an allotment of the partnership assets and liabilities to B making him absolutely entitled to the same in consideration of a sum of money to be paid by him to the other partner, A, thereby expressly purporting to create rights in immovable property of the firm worth above Rs. 100, the award was compulsorily registrable under Section 17 of the Registration Act and, if unregistered, could not be looked into and the court could not pronounce judgment in terms of award under Section 17 of the Arbitration Act, 1940, which presupposes the existence of an award which could be validly looked into by the court, The award being an inseparable tangle of several clauses could not be forced as to separate that part not dealing with immovable property. In the case of Sidhwa T.P. v. S.B. and Sons Pvt. Ltd., : 2SCR1 , it was held by theSupreme Court that where an arbitration award relating to the partition of immovable property of the value exceeding Rs. 100 directed some of the parties to execute certain documents as might be necessary for declaring the shares and for transferring the property, such an award itself did not create or declare any right, title or interest in the property but it merely created a right to obtain another document which would, when executed, create such right, title or interest. Such award fell under Section 17(2)(v) and not under Section 17(1)(b) and was not, therefore, registrable.
51. Having considered these several contentions and the points raised and the decisions, we have come to the following conclusions :
In our opinion, (1) the Committee of Management was not hit by Section 293 of the Companies Act and, as such, there was no prior need of obtaining any approval of the court for entering into the transaction for the sale and transfer of the Dunkuni Steel Plant.
Though the Board of Management appointed by the court was not subject to the control under Section 293 of the Companies Act, yet the court had jurisdiction, in an appropriate case, on appropriate application and on proper facts being placed before it, to direct that a particular sale should either take place or to give directions as to the manner in which a particular sale or a transaction was to take place. In the facts and circumstances of this case,as mentioned before, the transaction could go through and as the shareholders who were complaining about the transaction had full opportunity to place the matter before the court, we are of the opinion that there has been no infraction of that requirement of law.
(3) We are further of the opinion that a Section 397 application is a representative application in the sense that it is on behalf of 10% of the shareholders which is required to maintain such an application and if those shareholders who had given their consent come to oppose or make any application before the court, they have sufficient locus standi to be heard by the court and as such, in an appropriate case like the present, one has a right to be added as parties in their own names. In this case, inasmuch as Promode Kumar Mittal and other appellants were supporting Mohanlal Mittal in the application under Section 397 before the court and inasmuch as Mohanlal Mittal was no longer prosecuting the Section 397 application or opposing a particular transaction during the pendency of Section 397 application of the Companies Act, we are of the opinion that the present appellants were entititled to be added as parties and not acceding to that prayer, the learned judge was in error.
(4) In this case, though the other group of Mittal, namely, Indrasen Mittal, was exercising a very dominant and controlling interest, it appears that the transaction relating to the sale of the Dunkuni Steel Plant had been considered by the Board of Management which was appointed by the court and which consisted of other independent persons including representatives of the financial institutions. One of the most important factors in this matter is the role of the Bank of India. The Bank of India because of its own reason and because of its own investigation and enquiry was willing to give certain credit to the Grand Steel Alloys Ltd., the purchaser, and was not willing to grant this kind of facility to others and this agreement being a composite agreement which on the whole would enure to the benefit of the company as a whole, in our opinion, such a transaction could not be said to be bad or not for the benefit of the company. It is true that the sale of such an important asset of the company should have been advertised and attempted to be sold in a little more organised manner and it would have been better if a proper valuation had been made and placed before the learned trial judge before inviting offers. These irregularities, in our opinion, are not such which would vitiate the sale as mala fide. It appears to us that the advertisements could have been more specific and clear on this point but in view of the fact that the Bank of India cannot be compelled to accept any other terms of settlement and to any other purchaser as the purchaser of the Dunkuni Steel Plant and as it is a composite decree of the sale, in our opinion, in the interest of justice, itwould not be proper to set aside this part of the order of the learned trial judge. It is true that in the Court of Appeal, a higher amount was offered by a purchaser produced at the instance of the appellant and perhaps it is also true if better and clear efforts are made then, a higher price might be available. We have, however, to bear in mind that in view of the inflationary tendency now prevailing in this country, there is an escalation of price with the passage of time. Therefore, the very fact that a higher offer could be available now for the Dunkuni Steel Plant would not be indicative of the position that the sale that was agreed to by the Bank of India as a part of the composite terms of settlement was not bona fide or was entered into without proper investigation. In the meantine, certain vested rights of the other parties have accrued.
(5) We are of the opinion that the Dunkuni Steel Plant being a closed unit, it could not be considered to be an undertaking in terms of Section 293 of the Companies Act, 1956.
(6) So far as the question of registration is concerned, we are of the opinion for the reasons mentioned hereinbefore that the document of compromise did not transfer or create any charge or affect any interest in the immovable property. Therefore, the terms of agreement were not required to be registered. But the terms of decree effected the transfer.
52. In the premises, in so far as the learned trial judge by his order dated August 21, 1981, refused the appellant for being added as party to Company Petition No. 221 of 1977, we are unable to sustain the same and that portion of the order of the learned trial judge is set aside. So far as the learned trial judge refused the prayer for injunction restraining the Committee of Management from filing the terms of settlement, we find no reason to interfere with that portion of the order of the learned trial judge and that portion of the order of the learned trial judge is, therefore, upheld. So far as the learned trial judge dismissed the application of Purna Investment Ltd., for being added as a party, we are in agreement with the same and the appeal by Purna Investment Ltd. on that ground is dismissed. The order made for consolidation of Suit No. 295 of 1977 (Bank of India v. Andhra Steel Corporation Ltd., : AIR1982Cal57 and Extraordinary Suit No. 1 of 1980 (Dena Bank v. Andhra Steel Corporation Ltd.) and the leave granted to file the said terms of settlement and compromise embodied in the terms of settlement which were recorded should also be upheld. We also uphold the order of the learned trial judge in so far as the learned trial judge dismissed the suit as against the defendants who were not parties to the said terms of settlement. We also uphold the order of the learned trial judge that Purna Investment Company Limited could not be given leave to intervene in the proceedings.
53. This appeal is, therefore, dismissed subject to the one condition mentioned hereinbefore.
54. In the facts and circumstances of this case, parties will pay and beartheir own costs.
55. The amount deposited by the intending purchaser will be refunded tohim.
56. On the prayer of Mr. Ahin Chowdhury, Mr. Shyamal Kr. Patra, who is appointed receiver to hold the key until disposal of this appeal, will hand over the key on or after July 26, 1982.
57. The learned advocate for the appellant makes an oral application for leave to appeal to the Supreme Court. In view of the facts and the well-settled principles of law and, according to us, no substantial question of law arises, leave to appeal is refused.
58. Rs. 1,00,000 deposited with the appellant's Advocate-on-Record will not be withdrawn until further order of this court.
59. Registration of the decree will not be done before July 26, 1982.
60. Receiver and all parties to act on a signed copy of the minutes.
Suhas Chandra Sen, J.
61. I agree.