T S SIVAPRAKASA MUDALIAR Vs. K M SAMARAPURI

JUDGEMENT

(1.) In February 1948 two persons to whom we will refer as respondents 1 and 3, brought into existence two companies. One was the Thirunageswaram Weavers' Welfare and Benefit Co., the share holders of whom are weavers working in Thirunageswaram. The other was Ramada and Co., Ltd. a private company Page 1 of 5 T.S. Sivaprakasa Mudaliar and Anr. vs. K.M. Samarapuri and Ors. (31.03.1949 - MA... consisting of only two share-holders, respondents 1 and 3 themselves. These two persons were presumably responsible for the drawing up of the constitution of the two companies; and it was agreed upon at the same time that a managing agency agreement should be executed, whereby the powers of management in the Thirunageswaram Weavers' Welfare and Benefit Co., Ltd., should be exercised by Ramaswami and Co. Ltd., for a term of 20 years, with a further extension of 20 years upon the resolution of the company at an ordinary general meeting. Unfortunately, these two respondents fell out; and so made it difficult for them to conduct either their own business of Ramaswami and Co., Ltd. or that of the Thirunageswaram Weavers' Welfare and Benefit Co., Ltd. of which these two respondents are the two leading directors. The Weavers' Welfare and Benefit Co., became divided into two factions, the larger, controlling 240 to 305 shares out of a total of 403, supporting respondent 3, and the other controlling anything upto 163 shares, following the leadership of respondent l. It would appear, if the allegations of respondent 1 are true, that respondent 3, as the controller of the larger number of share-holders, succeeded in depriving respondent 1 of all share in the management, with the result that respondent 1 filed O. S. No. 395 of 1948 on the file of the District Munsif of Poonamallee for a declaration that he was equally entitled with respondent 3 to manage the affairs of Ramaswami and Co., of which the main concern was the conducting of the Weavers' Welfare and Benefit Co., and praying for an injunction to restrain defendant 3 from unlawfully ousting him from the joint manager ship of the companies. At the same time, he filed I. A. No. 939 of 1948 for a temporary injunction. A temporary injunction was passed on 3rd November 1948; but as respondent 1 was not satisfied with the extent of the temporary injunction passed, he filed C. M. A. No. 90 of 1948 in the Court of the District Judge of Chingleput against the order in I. A. No. 939 of 1948. On 10th November 1948, on an application for the appointment of a receiver, one Devaraja Mudaliar was appointed as receiver on 4th December 1948. Respondent 3 attempted to circumvent this order in favour of respondent l by getting two men of his faction to file I. A. NO. 54 of 1949 in C. M. A. No. 90 of 1948, to restrain the receiver from interfering with the affairs of the management of the Thirunageswaram Weavers' Welfare and Benefit Co. By that time there were proceedings pending in the High Court also, and so the learned District Judge dismissed that application. C. M. A. No. 52 of 1949 has been filed against the order of the District Judge dismissing I. A. No. 54 Of 1949, while in C. R. P. No. 92 of 1949 respondent 3 prays this Court to revise and set aside the order of the District Judge appointing a receiver. We may add that Devaraja Mudaliar refused to accept the office of receiver, with the result that the learned District Judge was unable to secure the unanimous approval of all interested parties with regard to the person to be appointed as receiver. Various names were submitted to him by the rival factions, and he appointed one Janab M.K. Sandhamiyan Sahib, whom he considered to be the moat fitted for that office.

(2.) Very many points have been argued on behalf of respondent 3 and the two members of his faction who filed I. A, No. 54 of 1949. The first is that the Court had no jurisdiction to appoint a receiver in a going concern like Ramaswami and Co. Their learned advocate seeks as authority for that contention a brief dictum to be found at the conclusion of the judgment of Greaves J. in Kailashchandra Datta v. Sadar Munsif, Silahar, 52 cal, 513 at p. 521 : (A.I.R. (12) 1925 cal. Page 2 of 5 T.S. Sivaprakasa Mudaliar and Anr. vs. K.M. Samarapuri and Ors. (31.03.1949 - MA... 817). There, the learned Judge said without giving any reasons,

(3.) It was next argued that even though it be unobjectionable to appoint a receiver for Ramaswami and Co. with regard to its own business, it would be improper to appoint a receiver for that part of the business of Ramaswami and Co. which deals with its managing agency on behalf of the Weavers' Welfare and Benefit Co. It has been argued that since the contract of agency was between the Weavers' Welfare and Benefit Co. on the one hand and Ramaswami and Co. on the other, a receiver cannot be substituted for Ramaswami and Co. If Ramaswami and Co. is not to manage the affairs of the Weavers' Wealfare and Benefit Co. then, it is argued, it is for the company to decide who shall manage it. The receiver is however only the manager of the business of Ramaswami and Co. and was not substituted for Ramaswami and Co. The business of Ramaswami and Co. was not taken away from it. That company continues to exist and to be the managing agents of the Weavers' Welfare and Benefit Co. As the manager of that; company, the receiver is entitled to perform all the duties of that company, including the managing agency of the Weavers' Welfare and Benefit Company.