R KHEMKA Vs. DECCAN ENTERPRISES PRIVATE LIMITED SECUNDERABAD

JUDGEMENT

(1.) Statutory protection against 'oppression' in corporate management as provided under Sections 397 and 398 of the Companies Act cannot but be ascribed to be discretionary in nature and the law Courts would be within its right to pass appropriate orders having due regard to the facts and circumstances of the matter under consideration and there is due statutory sanction in regard thereto. While it is true that there is no definition of 'oppression' as such in the Companies Act, but the fact remains that the events shall have to be shown in such a manner so as to depict a continuous state of affairs which would render the Court to come to the conclusion that the affairs of the company and the management thereof are being conducted in a manner oppressive to some members of the Company. Be it noted that isolated act of indiscipline or indifference or even deprivation by itself would not bring home the charge of oppression there shall have to be a continuity of a burden-some, harsh and wrongful conduct. As a matter of fact, the conduct of the oppressor towards oppressed shall have to be such so as to evince an existing element of absence of fair dealing or lack of probity. The observations of the Supreme Court in the case of Shanti Prasad Jain vs. Kalinga Tubes lends support to the above. The discretion spoken of earlier and as is available within the meaning of the statute, however, knows no fetters by reason of specific language used, to wit, "make such order as it thinks fit", by the law makers in Section 397 of the Companies Act.

(2.) Before proceeding further, it would, however, be convenient to advertbriefly to the factual matrix of the matter under consideration.

(3.) The Deccan Enterprises Private Ltd., being the respondent-company, wasincorporated under the provisions of the Companies Act on 15-4-1966 with the registered office at Secunderabad. The authorised capital of the Company was Rupees ten lakhs of which issue capital was Rupees five lakhs divided into 50,000 shares of Rs. 10/- each. As regards share-holding as on 30-9-1968, the records depict as follows : <FRM>JUDGEMENT_628_ALT1_1999Html1.htm</FRM>