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Jadabpore Tea Co. Ltd. Vs. Bengal Dooars National Tea Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberAppeal No. 201 of 1979 in Company Petition No. 150 of 1978
Judge
Reported in[1984]55CompCas160(Cal)
ActsCompanies Act, 1956 - Sections 81(1), 81(1A), 154, 397 and 398
AppellantJadabpore Tea Co. Ltd.
RespondentBengal Dooars National Tea Co. Ltd.
Appellant AdvocateS.B. Mukherji and ;Dilip Dhar, Advs.
Respondent AdvocateP.C. Sen and ;R.K. Lala, Advs.
Cases ReferredRamashankar Prosad v. Sindri Iron Foundry
Excerpt:
- sabyasachi mukharji, j.1. this appeal has arisen out of an order passed and judgment delivered by the learned trial judge on 17th may, 1979. there is also a cross-objection filed by the respondent to the appeal. in the application which has resulted in the order appealed from the petitioner, the bengal dooars national tea co. ltd., the respondent herein, had asked for certain orders, inter alia, that the resolution passed in the meeting held on 5th december, 1977, be declared illegal, invalid, null and void and of no effect. there was also a prayer for an injunction restraining respondents nos. 2 to 7, who are the directors of the appellant, jadabpore tea co. ltd., from dealing with, disposing of or transferring or selling or alienating any of the assets of the company. there were mainly.....
Judgment:

Sabyasachi Mukharji, J.

1. This appeal has arisen out of an order passed and judgment delivered by the learned trial judge on 17th May, 1979. There is also a cross-objection filed by the respondent to the appeal. In the application which has resulted in the order appealed from the petitioner, the Bengal Dooars National Tea Co. Ltd., the respondent herein, had asked for certain orders, inter alia, that the resolution passed in the meeting held on 5th December, 1977, be declared illegal, invalid, null and void and of no effect. There was also a prayer for an injunction restraining respondents Nos. 2 to 7, who are the directors of the appellant, Jadabpore Tea Co. Ltd., from dealing with, disposing of or transferring or selling or alienating any of the assets of the company. There were mainly three factors involved in this application. The petitioner, viz., the Bengal Dooars National Tea Co, Ltd., claimed to be a shareholder of 10,002 ordinary shares of Rs. 20 each. The authorised share capital of the company was Rs. 4,50,000 divided into 22,500 shares of Rs. 20 each, and the subscribed capital was Rs. 49,689. The petitioner in the original application under Section 397 of the Companies Act, 1956, was holding about 49 percent, shares and was the largest single shareholder.

2. There were three grounds of challenge in the application. One was on the issue of further shares which was sanctioned by the company at the meeting held on 5th December, 1977. The other was about the shifting of the registered office from Jalpaiguri to Siliguri and the third was relating to certain alleged private sales and misapplication of the sale proceeds of tea. The application under Sections 397 and 398 was presented to this court on the 3rd April, 1978. The petitioner also contended that the petitioner had not received the notice of the impugned meeting. The learned judge did not accept the grievance of the petitioner about the shifting of the registered office from Jalpaiguri to Siliguri. The learned judge was unable to accept the submissions of the petitioner that the petitioner did not receive the notice of the meeting, the proceedings of which were impugned. The learned judge, however, did not deal with, either way, about the alleged private sale and misapplication of the sale proceeds. It was contended on behalf of the appellant that the learned judge had refused to accept the grievance made by the applicant under Section 397 of the Companies Act. But the learned judge held that the resolution was invalid in law, in view of the provisions of Section 81(1A), for the issue of further share capital. As the learned judge held that the resolution was not in a proper form, in view of the notice given, that action of the learned trial judge has been challenged as contrary to the provisions of law. The short facts which are necessary for the present purpose are the following :

The main business of the Jadavpur Tea Co. is to maintain tea garden at Ramshaighat in the district of Jalpaiguri, manufacture and sale of the tea grown in the said garden. The said company has its administrative office at the gate of Rai & Co., Siliguri. In or about November, 1977, the Bengal Dooars National Tea Co., being the petitioner under Section 397, came to know that the respondent, Jadavpore Tea Co. Ltd., was attempting to shift the registered office from Jalpaiguri to some other district. Therefore, according to them, they authorised one Manish Chandra Mitra to write letters on their behalf. On or about 19th November, 1977, the said Manish Chandra Mitra wrote certain letters to the respondent. It may be mentioned here that there was originally an agreement by the present applicant to sell their shares to the Chowdhuries who were willing to undertake the running of the company and it is their further case that in view of this they had lodged their share certificates with the company. When the sale transaction with the Chowdhuries had failed in 1974, they had repeatedly written to the respondent for the return of share certificates or for the issue of duplicate shares, if the shares were not available. But those were not heeded to. In this connection letters were also written to the Registrar of Joint Stock Companies as well as to the company. Thereafter several letters were written by the respondent to the appellant asking for copy of the annual balance sheets for several years as well as the particulars of the share registers. There were certain grievances as to whether Sri Manish Chandra Mitra was duly authorised or was competent to make those enquiries on behalf of the said respondent. On 9th November, 1977, it is stated that the notice for the impugned annual general meeting was alleged to have been sent under certificate of posting to the respondent. Between 21st November, 1977, and 20th December, 1977, it is the allegation of the appellant-company that there was the closure of the share register in compliance with Section 154 of the Companies Act, 1956. On 23rd November, 1977, the said Manish Chandra Mitra was written to by the appellant-company that due to the closure of the share register it was not possible to send the complete list of the shareholders. This letter, though dated 23rd November, 1977, appears to have been posted on 19th January, 1978, and was received by the respondent on the 21st January, 1978. This would be apparent from the records placed before the learned trial judge which were appearing in the paper book. In this connection a reference may be made to page 111 of the paper book. The importance of this fact is that the present respondent, relied on such conduct to indicate that the company, Jadavpore Tea Co. Ltd., was proceeding in a high-handed manner and was deliberately trying to shut out all information from the respondent so that the company could clandestinely increase the share capital and transform the respondent into a minority shareholder without any effective say in the running of the company. On 5th December, 1977, according to the appellant, the annual general meeting was held and the proceedings of the said meeting are under challenge in this appeal. On 13th December, 1977, the respondent wrote to the appellant company asking for copies of the balance-sheets of the years 1972 to 1976 as also copies of the memorandum and articles of the association. A sum of Rs. 10 was also remitted along with that letter for the aforesaid purpose. On 23rd December, 1977, the respondent reminded the appellant-company to send a complete list, as aforesaid. On 3rd January, 1978, the appellant-company wrote to the respondent enclosing balance-sheets for the years 1972-73, 1973-74, 1974-75 and 1975-76 as also memorandum and articles of association on 4th January, 1978, there was a publication in the news paper, ' Basumati ', about the shifting of the registered office. On 12th January, 1978, there was a publication about the shifting of the registered office in ' Amrita Bazar Patrika '. From the post mark on the envelope it appears that the letter dated 23rd November, 1977, which we have referred to hereinbefore, was posted on the 19th January 1978. On 20th January, 1978, a letter was written by the appellant-company to Manish Chandra Mitra to send the registration number of the shareholder. On 21st January, 1978, there was a letter received by Manish Chandra Mitra intimating to him that the registers of shareholders were closed from 21st November, 1977, to 20th December, 1977. On 21st January, 1978, a letter was written by the said Manish Chandra Mitra to the appellant-company stating that the envelope containing the letter dated 23rd November, 1977, showed that the letter was posted on the 19th November, 1978, and was received by him on 21st January, 1978, on the same date there was a letter written to the same effect by the said Manish Chandra Mitra to the Registrar of Companies, West Bengal. On 25th January, 1978, the respondent-company wrote to the Registrar of Companies, West Bengal, complaining about the illegal shifting of the registered office and non-receipt of notice convening the impugned annual general meeting. Again on 31st January, 1978, a letter was written by the respondent-company to the Registrar of Companies, inter alia, complaining about the illegal shifting of the registered office, failure to supply copies of the balance-sheets for the years ending 1972 and 1976 and non-service of the notice of impugned annual general meeting. On 4th March, 1978, the Registrar of Companies wrote to the appellant company directing them to furnish copies of the balance-sheets for 1972 and 1976 and memorandum and articles of association. It was, inter alia, stated in the letter as to whether any special resolution had been passed for shifting the registered office of the company incompliance with Section 146 of the Companies Act, 1956. On 20th March, 1978, the appellant-company forwarded a memorandum and articles of association as also balance-sheets for the years 1972 and 1976. On the same day, the appellant-company wrote to the Registrar of Companies in answer to the letter dated 4th March, 1978, of the Registrar of Companies. That letter, according to the respondent, was regarding the failure to give notice of such change to the Registrar as required under Section 146 of the Companies Act, 1956. Thereafter, further searches were caused to be made on 21st March, 1978, in the office of the Registrar of Companies and the respondent came to know about the resolution increasing the share capital of the company, which was impugned in the application under ss. 397 & 398, and the order in respect of which is under appeal. The application tinder Section 397 and Section 398 was, as we have mentioned hereinbefore, made ready on 31st March, 1978, and was filed on 3rd April, 1978.

In order to decide the main and first legal question on which the appellant has challenged the findings of the learned judge, it is necessary to set out the resolution which has been impugned in this case. The resolution increasing the share capital reads as follows :

' 7. Resolved the 15,000 equity shares of Rs. 20 each be arid are hereby issued, in terms of Section 81(1A)(a) of the Companies Act, 1956, and the directors be and are hereby authorised to decide the time and the manner of issue including the calls to be made on the shares and any other matter incidental thereto. Explanatory notes on agenda No. 7.

The company is in need of immediate funds for the development works of its garden and as such quick realisation of the share capital is vitally important. The impecunious losses for the same period has eroded public confidence to a great extent. And it will be futile to expect the general public and the existing members who have shown no interest in the matter of the company for this long time, to invest in these shares. The matter is, therefore, left entirely to the discretion of board of directors of the company who are authorised to allot and issue the shares and make calls in such a manner as would be most beneficial to the company and conducive to the purpose for which these new shares are being issued.'

3. The notice dated 19th January, 1977, was also given to that effect. It has been alleged that the said notice was bad being violative of Section 81(1A). Section 81 provides, along with (1A), which was substituted by the Companies (Amend.) Act, 1960, as follows:

'81. Further issue oj capital.--(1) Where at any time after the expiry of two years from the formation of a company or at any time after the expiry of one year from the allotment of shares in that company made for the first time alter its formation, whichever is earlier, it is proposed to increase the subscribed capital of the company by allotment of further shares, then (a) such further shares shall be offered to the persons who, at the date of the offer, are holders of the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital paid-up on those shares, at that date :

(b) the offer aforesaid shall be made by notice specifying the number of shares offered and limiting a time not being less than 15 days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined ;

(c) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person; and the notice referred to in Clause (b) shall contain a statement of this right;

(d) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose of them in such manner as they think most beneficial to the company.

Explanation : In this sub-section, ' equity share capital' and ' equity shares ' have the same meaning as in Section 85.

(1A) Notwithstanding anything contained in Sub-section (1), the further shares aforesaid may be offered to any persons whether or not those persons include the persons referred to in Clause (a) of Sub-section (1) in any manner whatsoever-

(a) if a special resolution to that effect is passed by the company in general meeting, or

(b) where no such special resolution is passed if the votes cast (whether on a show of hands, or on a poll, as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes if any cast against the proposal by members so entitled and voting and the Central Government is satisfied on an application made by the board of directors in this behalf that the proposal is most beneficial to the company. '

4. The other sub-sections are not relevant for our purpose. In this case we have seen the notice and the explanatory note. The question is, whether the said notice read with the explanatory note gave any indication as to how the existing shareholders or the public were not interested in the shares of the company and whether the section required to specify furthermore as to which persons or the manner in which the company wanted to issue the share capital. According to the appellant, whether (or not ?) it was necessary to indicate either the persons or the particular classified group to which further share capital would be issued on behalf of the appellant, it was submitted that the manner of the issue was left to the discretion of the directors. It was further submitted that the explanatory statement made it clear that the existing shareholders or the general public would not be interested in the company's shares in view of the past performance. Hence the matter was left to the directors, according to the appellant, to allot the shares in a manner most conducive to the company. Sub-section (1) of Section 81 enjoins that where at any time after the expiry of two years from the formation of the company or at any time after the expiry of one year from the allotment of shares in that company made for the first time after its formation, whichever was earlier, it was proposed to increase the subscribed share capital of the company by allotment of further shares, then such further shares should be offered to the persons who, at the date of the offer, were holders of the equity shares of the company, in proportion, as nearly as circumstances admitted to the capital paid-up on those shares, at that date and in such a contingency by other sub-clauses notice had to be given in a particular manner. On behalf of the appellant it was contended that when it could not be given to the existing shareholders then it could be given to any other persons under Section 81(1A), which might or, might not include the existing shareholders, in any manner whatsoever, provided the directors were so authorised by a special resolution of the company. In this case, therefore, it was contended on behalf of the appellant that inasmuch as the learned trial judge held that the resolution passed was iniviolation of Section 81(1A)(a) of the Companies Act, 1956, the learned judge was in error. In considering this aspect of the matter there are certain other factual aspects which have to be borne in mind. We have noticed that here the shareholding was so balanced that the present respondent to the appeal was holding nearly about 49 per cent. of the shares and was the largest single shareholder. Any increase of the share capital in such a manner and allotment of shares to such persons other than the respondent to the appeal would have the possibility of reducing the present respondent to absolute minority. Learned advocate for the respondent drew our attention to certain other observations and facts appearing in this case to emphasise that not only was the proposed issue and allotment of the shares illegal in view of the provisions of Section 81(1A)(a) of the Act but also this was found as mala fide and not in the interest of the company. In aid of this submission reliance was placed on the observations of the learned trial judge where the learned judge has further held at page 370 of the paper book that in the facts of the present case the appellant-company had not given the names of the proposed allottees and, therefore, further allotment to the respondent-company which was the major shareholder and which had started making some correspondence before the meeting and which had not attended the previous meetings would transform them into a minority shareholder. It was further contended that on the facts of this case where there was really a debt over Rs. 9 lakhs, further share capital would not have succeeded in raising funds to the extent which would have been sufficient to augment the working funds of the company. The learned trial judge has observed that though the shares of Rs. 15 each were proposed to be allotted, only Rs. 2 per share was realised. On behalf of the appellant this observation of the learned trial judge has been criticised on the ground that it was not a fact and subsequently the full amount had been realised. But this finding of fact of the learned judge, as pointed out by the respondent, has not been challenged as such, and it is a finding of fact. It was stated that the authorised capital was increased by Rs. 3 lakhs divided into 15,000 shares of Rs. 20 each. Admittedly, there was no offer of the shares to the existing shareholders and there was no cogent evidence that the existing shareholders would not have taken these shares, though it was true that until the writing of the letters on behalf of Manish Chandra Mitra there was no interest shown by the respondent in the affairs of the company and they did not attend any meetings of the company. The liabilities of the company were nearly Rs. 8,90,679 and raising the share capital of the company to the extent of Rs. 3 lakhs, according to the respondent, would not have been sufficient to meet the liabilities of the company. In this connection, the learned judge was unable to accept the contention that the intention of issuing further shares was the improvement of the financial position of the company, as only a nominal sum had been called up and subsequently during the pendency of the application the entire amount of fresh issue had been paid by the allottees. It was nowhere disclosed in the proceedings as to who were the allottees of the new shares and there appeared to be several illegalities. The learned judge has made those findings at pages 356-357 of the paper book, and, therefore, in the background of this fact there was a non-indication, as to, who were the proposed allottees of the new shares to the members in the annual general meeting, who were authorised to allot shares by the special resolution under Section 81(1A)(a) of the Companies Act, 1956, and in particular the expression 'to any persons' as also the expression ' in any manner whatsoever ' must be particularised in the notice so that shareholders could effectively exercise their judgment before voting for the resolution. Otherwise, it was submitted that the purpose of Section 81(1A) would be defeated, specially in view of Section 81(1) of that Act. It was submitted on behalf of the appellant that this view is concluded by the observation of the Supreme Court. Reliance was placed on the decision of the Orissa High Court in the case of Kalinga Tubes Ltd. v. Shanti Prasad Jain, : AIR1963Ori189 . There at page 205 learned advocate appearing in that case challenged the validity of the resolutions passed therein on 29th March, 1958, on the ground that this could not be given effect to. According to one of the resolutions, 39,000 ordinary shares of Rs. 100 each should not be offered or allotted to the existing holders of equity shares in the company or to the public. It was contended that the existing shareholders with the members of the public exhausted all persons to whom shares could be issued and if no shares were issued either to the existing shareholders or to the public, then no allotment could at all be made. The court was unable to accept this contention. This resolution and the next resolution, passed immediately after, must be read together and by the other resolution it was resolved that the directors were expressly authorised subject to the special resolution, to issue and allot the said 39,000 ordinary shares privately in the best interest of the company at the sole discretion of the directors to such persons as might have applied or might hereafter apply. There the court set out the explanatory statement which was more or less identical to the present explanatory statement. But the court made a finding of fact that the bona fides of the issue of the shares to the allottees were not disputed nor the bona fides of the allottees were questioned. In that background the Orissa High Court came to the conclusion that the resolution did not violate the provisions of Section 81(1A)(a). In the appeal from this judgment the Supreme Court did not proceed on this basis. But, reliance was placed on the observations of the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. : [1965]2SCR720 , of the judgment, where, it was submitted that the notice of the general meeting was not in compliance with Section 173 and so the proceedings of the meeting must be held to be bad. This objection was, however, not taken in the petition and the Supreme Court, therefore, did not allow this question to be raised before the Supreme Court as it was a mixed question of law and fact. 'The objection was not taken in the petition but it was urged before the Orissa High Court and it was dealt with and the Supreme Court made an observation that their Lordships would have agreed with the views of Das J., if the question was permitted to be raised. We may reiterate that the Supreme Court' in para. 25 of the judgment mentioned that in the facts of that case there could be no doubt that the seven persons to whom the shares were eventually allotted were respectable persons of independent means. There was nothing to show that they were stooges or benamidars of the Patnaik or Loganathan group. In the facts of that case the Supreme Court was of the view that the action of the majority shareholders in allotting the new shares to outsiders and not to the existing shareholders could not, therefore, in the circumstances, be said to be oppressive of the appellant and his group.

5. In our opinion, whether a particular resolution of notice should be specific as to the manner and to the persons to whom the shares would be offered, or as to whether the entire share value should be paid at a time or whether the persons should be indicated, belonging to a particular group or not, as the Supreme Court itself noted, must, in certain cases, be a mixed question of law and fact. Though it is quite true, as the learned advocates for the appellant urged, that on the construction of the section it was not obligatory that a special resolution to that effect must always mean that the persons or the allottees' names should specifically be made or the manner of their allotment should also be specifically indicated, but, in an appropriate case, that is to say, where the allotment of shares might tilt the balance of the shareholdings and might transform the major bulk of the shareholders into a minority group of shareholders, the particulars of the allottees or the manner of their allotment should also be indicated. This is necessary because, in the existing climate of erosion of the intrinsic sense of fairness, it is necessary in some cases to insit on certain procedural safeguards to ensure fairplay in action in corporate management, and we agree with the learned advocate for the respondent, that the observations of the Orissa High Court as well as the Supreme Court in the cases referred to hereinbefore that the resolution passed in that meeting, which was sought to be impugned, did not violate the provisions of Section 81(1A)(a), depended on the facts of that case upon which the Supreme Court laid great emphasis, that is to say, the action of the majority shareholders was for the benefit and the interest of the company and the allottees of the new shares were independent persons. In this case there is no such fact indicating that position. In such a background, in our opinion, it cannot be said th'at the learned judge was in error in holding that the issue of share capital was in violation of Section 81(1)(a) of the Act. In aid of this submission, on behalf of the respondent it was emphasised that allegations had been made that the allotment of shares to the, benamidars of the other group of shareholders was made but in spite of that fact, in the subsequent proceedings and in subsequent affidavits, the names of allottees had not been disclosed by the appellant. As a matter of fact, an behalf of the respondent, it was emphasised, till today the respondent was quite in the dark as to who were these allottees. Such a conduct, it was submitted, showed that the action of the company in issuing the increased shares was not in the bona fide interest of the company. It was emphasised that this fact is highlighted by the fact that the money sought to be raised would be quite insignificant and would not be of much significance in helping the so-called object of raising more funds for the company. On behalf of the appellant it was submitted that even where there was a mixed motive, such an action would not be bad. In this connection reliance was placed on the observations of the Supreme Court in the case of Nanalal Zaver v. Bombay Life Assurance Co. Ltd. : [1950]1SCR391 . There, the Supreme Court was dealing with a situation where it was found that that the company needed funds and in order to subserve funds, the company issued further shares but the motive was also there to prevent a Certain group, who were strangers to the company, from intruding into its affairs. The Supreme Court held that it was well established that the directors of the company, who were in a fiduciary position vis-a-vis the company, must exorcise their power for the benefit of the company. If the power to issue further share capital for raising funds of the company was exercised by the directors not for the benefit of the company but simply and solely for their personal aggrandisement and to the detriment of the company, the court would interfere and prevent the directors from doing so. The very bisis of the court's interference, it was stated by the Supreme Court, in such a case was the existence of a relationship of trustee and cestui que trust as between the directors and the company. If the directors had exercised the power for the benefit of the company and, at the same time, they had a subsidiary motive, which would in no way affect the company or its interests or the existing shareholders then the very basis of the interference of the court was absent. From the narration of facts in the background of which the observations of the Supreme Court were made it would be apparent that these observations cannot, in view of the facts appearing in this case, have any application to this case. It was further contended on behalf of the appellant that the issue of further shares for raising the share capital in the instant case was done by a single transaction, and, therefore, it could not constitute the subject-matter of a challenge under ss. 397 and 398 of the Companies Act. In aid of this submission and specially in view of the other findings of the learned judge reliance was placed on the observations of the Gujarat High Court in the case of Sheth Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. : (1964)0GLR804 . In this case, the learned judge has also observed that the motive of the directors in issuing further shares in the manner they proposed to do for raising the share capital, was not for the purpose of raising funds. In view of the facts found by the learned judge, as the broad object of the resolution was to transform the respondent into a minority shareholder, the observation of the Supreme Court, in our opinion, cannot have any application in this case and in that view of the matter we are unable to accept the contention, as contended, in support of the appeals.

6. Now, we shall deal with the cross-objection filed on behalf of the respondent. This cross-objection was based on certain grounds. But, before we do that, we must observe that the non-publication of the closing of the share registers, which the learned judge has observed in his judgment, violated Section 154 of the Companies Act. It was submitted on behalf of the appellant that these were not relevant factors in considering the allegations made in the petition and the notice issued under Section 81 of the Companies Act and in any event the non-publication of the closure of the share register would not affect the validity of the meeting. Reliance was placed in this connection on the observations of the learned trial judge. It is quite true that the violation of s, 154 of the Companies Act by non-publication of the closing of the share register would not invalidate the resolution on this ground but this was a factor which, in our opinion, the learned trial judge was entitled to take into consideration in considering the mala fide or bona fide of the non-indication of the names of the allottees.

7. Now, we come back to the cross-objection filed on behalf of the respondent. Here, it is the positive case of the respondent that they did not receive the notice of the annual meeting. The learned judge did not accept this contention. The learned judge had drawn presumption from the certificate of posting. It was submitted on behalf of the respondent that the learned judge did not take into consideration the totality of all the facts. In this connection reliance was placed on the observations of the learned judge. It was submitted that the learned judge was in error in observing that the appellant-company by its letter dated 3rd January, 1978, forwarded the balance-sheets for the years 1972 to 1976. It was submitted on behalf of the respondent that this observation of the learned judge was wrong because from the letter itself, which was set out by the learned judge, it did not indicate that the balance-sheets for the year 1976 had been forwarded. The learned judge had noted that the respondent herein by its letter dated 9th January, 1978, wrote to the appellant company, inter alia, alleging that the balance-sheets for the years 1972 to 1976 and also a copy of the memorandum were not received by them and again requested the appellant-company to send the balance-sheets including the balance-sheet for the year ending 31st of December, 1976. The learned judge has further observed that from the said correspondence it was quite clear that the appellant must have sent the notice of the annual general meeting held on the 5th of December, 1977, to the respondent herein, and they were aware of the existence of the balance-sheet of 1976 as they were asking for a copy of the same It was submitted on behalf of the respondent that the learned judge had erred on this aspect of the matter. It must be noted that the respondent was taking keen interest in the company through Manish Chandra Mitra, who had also written certain letters to the appellant, and it was submitted that the respondent was aware of the meeting. It is true that the letter dated 23rd November, 1977, was posted subsequently on the 21st January, 1978, and it was also received subsequently. It is also true that the said letter was posted under certificate of posting. In our opinion, on the totality of the facts which have been discussed by the learned judge, the learned judge was entitled to come to a finding of facts on this aspect of the matter. It is to be noted that the factual finding based on a totality of facts should not be looked at piece-meal or by either non-consideration of one single factor or the other. About the effect of service of the notice under certificate of posting, reliance was placed on the observations of the court in the case of Kanak Lata Ghose v. Amal Kumar Ghose, : AIR1970Cal328 , in the case Achamma Thomas v. E. R. Fairman, AIR 1970 Mys 77, at pages 80-81, paras. 7 and 11, and also in the case of Ramashankar Prosad v. Sindri Iron Foundry (P.) Ltd., : AIR1966Cal512 . It is true that whether in a particular case, the presumption of the receipt of a letter under certificate of posting would be drawn or not, would depend upon the facts and circumstances of the case, in this case in view of the facts that after some time, though not after a very long time, the respondent was taking some interest through Manish Chandra Mitra, who had been looking after the interest of the company on behalf of the respondent, we are of the opinion that it could not be said that the learned judge was in error in coming to the conclusion about the drawing of the presumption that the respondent must have received the notice, and at least, such an error does not call for an interference by this court, though we are conscious that this finding of the learned judge is rather weak. That there was some preponderance of the facts, which indicated that perhaps the notice may have been received by the respondent, also fails.

8. As to private sales, allegations have been made in the petition in paras. 41 to 43. These allegations have been denied in the affidavit in opposition. On the facts before the learned judge, particulars of district average sales were produced which would be apparent from page 126 of the paper book. It is true that the learned judge, though he noted the arguments advanced in this regard, did not deal with this question specifically. It appears that the allegations were of such a nature that it could not be said to have been clearly established before the learned judge, and, if the learned judge did not exercise his discretion, in the absence of other evidence on this aspect in the application made under Sections 397 & 398 of the Companies Act, we are of the opinion that the learned judge did not commit any error which could call for any interference by this court. Having regard to these features of this case we are unable to accept the submissions made in respect of the cross objection. Therefore, the cross-objection filed on behalf of the respondent also fails.

9. In the result, the appeal as well as the cross-objection fail and both the appeal and the cross-objection are dismissed. The order of the learned trial judge is confirmed.

10. The board of directors will now call a fresh annual general meeting in accordance with law and will not take into consideration the increased share capital but proceed on old basis in accordance with law.

11. Stay asked for is refused.

12. The parties will be at liberty to act on the signed copy of the operative portion of the order of the minutes.

13. Each party will pay and bear its own costs.

Suhas Chandra Sen, J.

I agree.


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