NAGAVARAPU KRISHNA PRASAD Vs. ANDHRA BANK LIMITED

JUDGEMENT

(1.) These appeals are directed against the judgment of our learned brother, Chennakesav Reddy J., dismissing Company Petitions Nos. 10 and 12 of 1980.

(2.) C.P. No. 10/1980 was filed by two shareholders of the Andhra Bank Ltd. under ss. 433 and 439 of the Companies Act, 1956, praying for the winding-up of the company and for other consequential reliefs. C.P. No. 12/1980 is a petition filed under ss. 397 and 398 of the Companies Act on the ground that the affairs of the company are being conducted in a manner oppressive to some of the members of the company including the petitioners and other members set out in the schedule to the petition, and on the ground that the company was being mismanaged. They prayed that this court might regulate the conduct of the companys affairs by reconstituting the board of directors and providing safeguards for the future, and for other reliefs, or in the alternative to direct a payment of Rs. 610 per share to the dissenting shareholders including the petitioners with interest in accordance with s. 6 of the Central Ordinance No. 3 of 1980.

(3.) The Andhra Bank Ltd., the respondent in these appeals, is a premier banking concern in the State of Andhra Pradesh. It was incorporated in November, 1923, under the Indian Companies Act, 1913, as a public limited company. Its registered office is at Hyderabad. The nominal capital of the company is Rs. 2,00,00,000 divided into two lakhs shares of Rs. 100 each. The company was formed with the object of carrying on the business of banking and to transact all matters and things incidental thereto. Though the memorandum of association also contains several objects unconnected with the banking business, the company has been carrying on the business of banking only. After the coming into force of the Banking Regulation Act, 1949, under s. 6 of the said Act, it was permitted only to engage in any one or more of the forms of business referred to in s. 6(1) of the said Act in addition to the business of banking. Under s. 6(2) of the said Act, it was prohibited from engaging in any form of business other than those referred to in sub-s. (1). In 1980, the Banking Companies (Acquisition and Transfer of undertakings) Ordinance, 1980, referred to in this judgment as the Banking Acquisition Ordinance of 1980 was promulgated. It provided for the acquisition and transfer of six banking companies referred to in the First Schedule to the Ordinance including the Andhra Bank Ltd., called the existing banks. Six corresponding new banks were constituted with the same name as the above banks and it was provided that the undertaking of every existing bank shall be transferred to and shall vest in the corresponding new bank. Under s. 6 of the Ordinance, every existing bank was given compensation specified in the Second Schedule. Under the said Schedule, compensation for the Andhra Bank Ltd. was fixed at Rs. 610 lakhs. under s. 6(2) of the ordinance, option was given to the existing banks either to receive the compensation amount in cash in three equal annual instalments or in saleable or other transferable promissory notes of the Central Govt. or partly in cash and partly in such securities. Under s. 6(6), it was provided that the existing bank may make an application for an interim payment of an amount equal to seventy-five per cent. of the paid capital of such bank, immediately before the commencement of the Ordinance, indicating therein whether the payment was desired in cash or in securities or in both. The board of directors passed a resolution to receive seventy-five lakhs of rupees in cash and the balance in securities repayable at par in 1990 at 6% interest.