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PETITIONER: WORLD WIDE AGENCIES PVT. LTD. AND ANR.

       Vs.

RESPONDENT: MRS. MARGARAT T. DESOR AND ORS.

DATE OF JUDGMENT19/12/1989

BENCH: MUKHARJI, SABYASACHI (CJ) BENCH: MUKHARJI, SABYASACHI (CJ) RAY, B.C. (J)

CITATION:  1990 AIR  737            1989 SCR  Supl. (2) 545  1990 SCC  (1) 536        JT 1989  Supl.    413  1989 SCALE  (2)1473

ACT:     Companies Act, 1956---Sections 109, 397 and 398--Whether a  person  not registered as member of company  entitled  to move petition for winding up.

HEADNOTE:     The appellant No. 1 is a private limited Company  incor- porated  under the Indian Companies Act. The Company had  at all  relevant times 7 share-holders and the total number  of shares subscribed and paid up was 2010 shares. The appellant No.  2  is a shareholder and a whole-time  Director  of  the Company. Consequent upon the death of one share-holder,  Mr. S.K. Desor, who had controlling interest in the Company, his legal representatives, wife and children respondents herein. filed a petition under Section 397 and 398 of the Act and in the  alternative  prayed for winding up of  the  company.  A preliminary objection was raised on behalf of Mrs. Amrit  K. Singh, appellant No. 2 regarding the maintainability of  the petition on the ground that the respondents were not members of  the company as their names had not been recorded in  the register of members and as such they had no locus standi  to file the petition in question. A further objection was  also taken  that a composite petition under Sections 397 and  398 of the Act with an alternative prayer for winding up of  the company was not maintainable.     A company Judge of the High Court before whom the  peti- tion came up for hearing held that the respondents who  were the  wife and children of the deceased share-holder and  who having  obtained  Reserve Bank’s permission and  letters  of administration according to law should be treated as members for the purpose of maintaining a petition under Sections 397 and  398  of  the Act. The company Judge also  held  that  a composite petition was maintainable.     Appellant No. 2 preferred an appeal against the order of the  Company  Judge. The appellants also  moved  this  Court under  Article 136 of the Constitution against the order  of the Company Judge. This court by its order dated 18th  Janu- ary  1989 stayed the further proceedings before  the  Single Judge  and directed expeditious disposal of the appeal.  The Division  Bench dismissed the appeal holding that the  peti- tion under

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546 Sections 397 and 398 was maintainable. Hence this appeal.     The same two questions as stated above arose for  deter- mination by this Court, Dismissing the appeal, this Court,     HELD: Succession is not kept in abeyance and the proper- ty of the deceased member vests in the legal representatives on the death of the deceased and they should be permitted to act  for the deceased member for the purpose of transfer  of shares under Section 109 of the Act. [558D]     In  some situations and contingencies, the ’member’  may be  different from a ’holder’. A ’member’ may be a  ’holder’ of shares but a ’holder’ may not be a ’member’. [558E]     To  hold  that the legal representatives of  a  deceased shareholder  could not be given the same right of  a  member under  Sections  397 and 398 of the Act would  be  taking  a hyper-technical  view  which does not advance the  cause  of enquiry or justice. [558B]     In the instant case, the legal representatives have been more than anxious to get their names put on the register  of members  in place of deceased member, who was  the  Managing Director and Chairman of the company and had the controlling interest. It would. therefore, be wrong to insist that their names must be first put on the register before they can move an  application under Sections 397 and 398 of the Act.  This would frustrate the very purpose of the necessity of action. [558F-G]     The  decision of the English courts are not  binding  on the  courts in India. But the observations or the  reasoning are of persuasive value. [555C]     Re  Jermyn Street Turkish Baths Ltd., [1970] 3 All  E.R. 37;  Re Bayswater Trading Co. Ltd.. [1970] 1 All  E.R.  608; James  v.  Quena  Venture Nitrate  Grounds  Syndicate  Ltd., [1896]  1  Chancery Division 456; Re Dlewellyn  v.  Kasintoe Rubber Estate Ltd., [1914] 15 All E.R. 558; New Zealand Gold Extraction Company, (Newberyvautin Process) Ltd. v. Peocock, [1948]  1 Q.B. 622; Re Meyer Dougals Pty Ltd.,  [1965]  V.R. 638;  Kedar Nath Agarwal v. Jay Engg. Works Ltd.  and  Ors., [1963]  33  Company Cases 102; Rajahmundry  Electric  Supply Corpn. Ltd. v. A. Nageshwara Rao and Ors., AIR 1956 SC  213; Life Insurance Corporation of India v.Escorts Ltd. and Ors., AIR 1986 SC 547 1370 at p. 1412; Shanti Prasad Jain v. Kalinga Tubes, [1965] 35 Company Cases 363 and Bilasrai Joharmal and Ors. v. Akola Electric  Supply  Co. Pvt. Ltd., 20 Company Cases  549,  re- ferred to.

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5 186  of 1989.     From the Judgment and Order dated 31.8.1989 of the Delhi High Court in Company Appeal No. 35 of 1988.     F.S.  Nariman, Ashok K. Mahajan and Subhash  Sharma  for the Appellants. Anil B. Devan and Vinoo Bhagat for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ. Leave granted.     This  is  an appeal from the judgment and order  of  the Division  Bench of the High Court of Delhi, dated  31st  Au- gust, 1989. The appellant No. 1--M/s World Wide Agencies (P) Ltd.  is  a private limited company incorporated  under  the provisions  of the Indian Companies Act,  1956  (hereinafter

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referred  to as ’the Act’) to which Table ’A’ of Schedule  1 to  the  Act applies, as stipulated under  the  Articles  of Association of the company. As per the memorandum of associ- ation the appellant company was carrying on the business  of travel  agents  at G-40, Connaught Circus,  New  Delhi.  The authorised  Share capital of the company was to the tune  of Rs.5 lakhs divided into 5000 equity shares of Rs. 100  each. The  paid up capital as per the last annual return filed  by the   company   with  the  Registrar   of   Companies,   was Rs.2,01,000. The company had at all relevant times 7  share- holders  and the total number of shares subscribed and  paid up was 2010 shares.     The appellant No. 2 Mrs. Amrit Kaur Singh, at all  rele- vant  times,  was a shareholder holding 545  fully  paid  up shares in the share capital of the company, and was also the whole-time  working  Director of the  company,  holding  the office from 1974 onwards. Late Mr. S.K. Desor was a  British national.  He held 600 shares in the said company,  acquired by him from the Ex-Managing Director Mr. Amrik Singh  Saluja and  his family. The respondents Nos. 2 & 3 to  this  appeal are  children of late Mr. S.K. Desor who died on 5th  March, 1985. As per the certified copy of the annual return made up to 15th February, 1984 548 the  shareholders of appellant No. 1 (company) were as  fol- lows: Mr. S.K. Desor                         600 shares Mrs. Amrit Kaur Singh                  545 shares Mr. Yash Pal Malhotra                  250 shares Mrs. Amrit Gupta                       200 shares Mrs. Savitri Devi Kohli                  5 shares Mr. A.S. Saluja                          5 shares Mr. Balwant Singh                      405 shares                                       2010 shares     A  petition  under ss. 397 & 398 of the Act and  in  the alternative  for winding up of the company was filed by  the respondents on 25th March, 1985, wherein it was alleged that on  12th  March, 1985 respondent No. 1, being the  widow  of late  Mr. S.K. Desor, applied as a legal heir of  late  S.K. Desor to the Board of Directors of the appellantcompany  for transmission  of 850 shares held by her late husband. It  is stated  that  the shares of Yash Pal Malhotra had  been  ac- quired  by  late Mr. S.K. Desor; and that respondent  No.  1 filed an affidavit of her daughter Ms. Kim Paul, relinquish- ing her claim to the shares of her late father. The Board of Directors  resolved that they had no objection to  transmis- sion  of  the shares held by Mr. S.K. Desor but  the  actual transmission would take place on respondent No. 1’s  obtain- ing  Reserve Bank of India’s permission and  the  succession certificate.  The respondent No. 1’s application for  allot- ment  of  5 shares as per her letter of the  same  date  was allowed by the Board of Directors, and it was resolved  that in  view of allotment of these shares, her interest  in  the shares  of her late husband, she be appointed as a  Director of  the company, subject to Reserve Bank of India’s  permis- sion.     It  is stated in the judgment under appeal that  at  the said meeting of the Board of Directors, they recorded  their deep appreciation for the services rendered by late Mr. S.K. Desor as Managing Directorcum-Chairman of the company,  and. mourned his passing away. The quorum of the said meeting was two--Mrs.  Amrit  Gupta and Mrs. Savitri Devi Kohli.  It  is recorded  in the judgment under appeal that on  23rd  March, 1985  the  Board  of Directors  held  another  meeting.  The minutes of the meeting of 12th March, 1985 were confirmed by

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the two above-mentioned Directors. The third Director,  Mrs. Amrit K. Singh, however, objected as she stated that she had not been informed of the last meeting. Various averments had been made in the petition with 549 regard  to  oppression and removal of certain  valuables  of Mrs.  Amrit K. Singh and illegal operation of the  bank  ac- count etc. It was also asserted that Mrs. Singh was  holding 545  shares  benami and these in fact belonged to  Mr.  S.K. Desor.     A  preliminary  objection was raised on behalf  of  Mrs. Amrit K. Singh regarding the maintainability of the petition on  the ground that the appellants were not members  of  the company as their names had not been recorded in the register of  members. A further objection was taken that a  composite petition under ss. 397 & 398 of the Act with an  alternative prayer for winding up of the company was not maintainable.     The learned single Judge of the High Court sitting as  a Company  Judge dealt with the application and held that  the appellants  who were the wife and children of late Mr.  S.K. Desor and had obtained letters of administration. u/s 290 of the  Indian Succession Act read with s. 273 of the  Act,  as also the permission of the Reserve Bank of India, should  be treated as members for the purpose of maintaining a petition u/ss.  397 & 398 of the Act. The learned single  Judge  also held that a composite petition was maintainable.     The  appellant Mrs. Amrit K. Singh filed an  appeal  for herself and, as she alleged, as "Working Director" from  the judgment and order dated 21st September, 1988 of the learned single  Judge.  It appears that  the  appellants,  aggrieved thereby,  had  also moved this Court under art. 136  of  the Constitution.  This Court by its order dated  18th  January, 1989  stayed  the  further proceedings  before  the  learned single Judge and directed expeditious disposal of the appeal pending  before the division bench or the High  Court,  from the said order of 21st September, 1988 which had been admit- ted on 13th October, 1988, for consideration by the Division Bench of the High Court of the application for.  directions. By  a judgment and order delivered on 31st August  1989  the Division  Bench dismissed the said appeal and held that  the petition u/s. 397 & 398 was maintainable by the  respondents in  the  facts  and circumstances of the case,  and  that  a composite  petition  u/ss. 397,398 & 433(f) of the  Act  was maintainable.  Aggrieved thereby, the  appellants  preferred this appeal to this Court.      We  are  concerned with two questions of  law,  namely, whether  the  legal heirs of a deceased shareholder  can  be treated  as members of the company for the purpose of  main- taining a petition u/ss. 397 & 398 of the Act, and whether a composite petition under ss. 397, 398 & 550 433(f)  of the Act is maintainable. We had the advantage  of hearing Mr. F.S. Nariman, counsel for the appellants and Mr. Anil  Diwan  for the respondents. It may be  mentioned  that during  the  pendency of the appeal before the  High  Court, without  prejudice  to  the rights and  contentions  of  the parties,  an emergent meeting of the Board of Directors  was directed by the High Court to be held on 28th January,  1989 to  consider  the  question of registration  of  450  shares belonging to the deceased Mr. S.K. Desor in the name of Mrs. Margarat  T.  Desor and her son Sameer K. Desor,  being  re- spondents  Nos. 1 & 3 respectively. It further appears  that as  per  the directions of the Division  Bench,  dated  27th January,  1989  the court had appointed  Chairman  Mr.  C.K. Mahajan  and  Mrs. Margarat T. Desor were not  permitted  to

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vote  at  the  said meeting. At a  meeting  held  subsequent thereto, by a majority, it was resolved not to register  the respondents  Nos.  1 & 3 as members. It  must,  however,  be noted  that  the Division Bench vide its  order  dated  27th January, 1989 had directed that no effect would be given  to the said Resolution.     The question, therefore, which is material to be consid- ered, is, whether the legal heirs of a deceased  shareholder whose names are not entered in the register of members,  are entitled to maintain petition u/ss. 397 & 398 of the Act. It was contended on behalf of the appellants that ss. 397 & 398 of the Act must be strictly construed.     Section 397 of the Act which is in chapter VI of the Act under  the heading "Prevention of Oppression and  Mismanage- ment", provides as follows:               "Application  to Court for relief in cases  of               oppression.(1)  Any  member of a  company  who               complains that the affairs of the company  are               being  conducted  in a manner  prejudicial  to               public  interest or in a manner oppressive  to               any  member  or members including any  one  or               more of themselves may apply to the Court  for               an  order  under this section,  provided  such               members have a right so to apply in virtue  of               section 399.               (2)  If, on any application under  sub-section               (1), the Court is of the opinion--               (a)  that  the  company’s  affairs  are  being               conducted  in a manner prejudicial  to  public               interest  or  in a manner  oppressive  to  any               member or members, and               551               (b) that to wind-up the company would unfairly               prejudice  such  member or members,  but  that               otherwise the fact would justify the making of               a  winding-up order on the ground that it  was               just and equitable that the company should  be               wound-up;               the  Court may, with a view to bringing to  an               end the matters complained of, make such order               as it thinks fit."     On  behalf of the appellants it was contended  that  the right which is a specific statutory right, is given only  to a member of the company and until and unless one is a member of  the company, there is no right to  maintain  application u/s 397 of the Act. Mr. Nariman contended that there was  no automatic  transmission of shares in the case of death of  a shareholder  to his legal heir and representatives, and  the Board  has  a  discretion and can  refuse  to  register  the shares. Hence, the legal representatives had no locus standi to  maintain an application u/ss. 387 & 398 of the Act.  Mr. Nariman submitted that the rights under ss. 397 & 398 of the Act  are statutory rights and must be strictly construed  in the  terms of the Statute. The right, it was submitted,  was given  to  "any member" of a company and it  should  not  be enlarged to include "any one who may be entitled to become a member".     In  order to decide the question involved, it  would  be necessary to examine certain provisions of the Act.  Section 2(27) of the Act states that "member" in relation to company does not include a bearer of a share-warrant of the  company issued in pursuance of section 114 of the Act. Section 41 of the Act provides as follows:               "(1)  The subscribers of the memorandum  of  a               company  shall  be deemed to  have  agreed  to

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             become  members  of the company,  and  on  its               registration,  shall be entered as members  in               its register of members.               (2)  Every other person who agreed in  writing               to become a member of a company and whose name               is  entered in its register of members,  shall               be a member of the company."     Section  26 of the English Companies Act, 1948  in  sub- stantially the same. Section 109 of the Act states as follows:               "A transfer of the share or other interest  in               a company of a               552               deceased  member  thereof made  by  his  legal               representative   shall,  although  the   legal               representative is not himself a member, be  as               valid  as if he had been a member at the  time               of  the execution of the instrument of  trans-               fer."     In  this  connection, it would be relevant to  refer  to Articles 25 to 28 of Table A of the Act, which deal with the transmission of shares and which are in the following terms:               "25.(1) On the death of a member the  survivor               where the member was a joint ,holder, and  his               legal  representatives  where he  was  a  sole               holder,  shall be the only persons  recognised               by  the  company as having any  title  to  his               interest in the shares.               (2)  Nothing in clause (1) shall  release  the               estate  of  a deceased joint holder  from  any               liability  in respect of any share  which  had               been jointly held by him with other persons.               26.(1) Any person becoming entitled to a share               in consequence of the death or insolvency of a               member may, upon such evidence being  produced               as may from time to time properly be  required               by  the Board and subject as hereinafter  pro-               vided, elect, either--               (a) to be registered himself as holder of  the               share; or               (b) to make such transfer of the share as  the               deceased or insolvent member could have made.               (2) The Board shall, in either case, have  the               same right to decline or suspend  registration               as  it  would  have had, if  the  deceased  or               insolvent  member  had transferred  the  share               before his death of insolvency.               27.  (1)  If the person so  becoming  entitled               shall elect to be registered as holder of  the               share himself, he shall deliver or send to the               company  a  notice in writing  signed  by  him               stating that he so elects.               (2)  If  the person aforesaid shall  elect  to               transfer  the  share,  he  shall  testify  his               election by executing a transfer of the share.               553               (3)  All  the  limitations,  restrictions  and               provisions  of these regulations resulting  to               the right to transfer and the registration  of               transfers of shares shall be applicable to any               such notice or transfer as aforesaid as if the               death  or  insolvency of the  member  had  not               occurred  and  the notice or transfer  were  a               transfer signed by that member.               28.  A person becoming entitled to a share  by

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             reason  of  the  death or  insolvency  of  the               holder shall be entitled to the same dividends               or  other  advantages  to which  he  would  be               entitled  if he were the registered holder  of               the  share, except that he shall  not,  become               being registered as a member in respect of the               share,  be entitled in respect of it to  exer-               cise  any  right conferred  by  membership  in               relation to meetings of the company:                         Provided that the Board may, at  any               time, give notice requiring any such person to               elect  either to be registered himself  or  to               transfer  the share, and if the notice is  not               complied  with within ninety days,  the  Board               may  thereafter withhold payment of all  divi-               dends,  bonuses  or other  moneys  payable  in               respect  of the share, until the  requirements               of the notice have been complied with."     Article  28 is more or less in para materia to  articles 32  of Table A to the English Companies Act. It may also  be mentioned, as it’ has been mentioned by the High Court, that s. 210 of the English Companies Act, before its amendment in 1990, was substantially the same as s. 397 of the Act.     As  mentioned hereinbefore, it is the admitted  case  of the parties that the regulation for management of the compa- ny as contained in Table A to the Act apply to appellant No. 1 and the said relevant provision in the articles of associ- ation of the company regarding transfer of shares is Article 17, which is as follows:               "No  share shall be transferred to any  person               other  than  a shareholder of the  company  so               long  as any member of the company is  willing               to  purchase  the  same at  fair  value.  This               clause  shall  not apply to  the  executor  of               administrator  of a deceased  shareholder,  if               there is will or to the heir or lineal decend-               ents  where  no letter of  administration  has               been taken." 554     Mr. Nariman submits that in view of the specific  provi- sions of s. 397 of the Act only a member is entitled to move a petition under ss. 397 and 398 of the Act and that  member is  one whose name is in the register of members in view  of s. 41 of the Act, as mentioned hereinbefore. In this connec- tion, it is was emphasised that not only must the  applicant be  a  member but in terms of s. 399 of the Act, he  has  to fulfil the conditions laid down under clauses (a) and (b) of s.  399 of the Act. These should be construed so as to  mean what  the words say. According to Mr. Nariman, a  member  is not, in view of the scheme of the Act, the representative of a deceased member.     It is true that it must be a member and s. 41 of the Act provides  that  a member of a company is a  person  who  has applied in writing and "whose name is entered in the  regis- ter of members" is entitled to move the petition. It appears in  this case that names of respondent Nos. 2 and 3 had  not then been entered in the register of members at the relevant time  when  the application was made. But the name  of  Late Shri S.K. Desor was still on the register of members and the requisite  shareholding for moving a petition under ss.  397 and  398 of the Act was held by him. This  question,  though res  integra so far as this country is concerned,  has  been considered in England, where Pennycuick, J. had occasion  to consider this in Re Jermyn Street Turkish Baths Ltd., [1970] 3  All E.R. 57. The Company there was incorporated  in  1946

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and  represented  a  joint venture by L and S.  In  1952,  S transferred his shareholding to Mrs. P who became a director of  the  company. L died in 1953 and thereafter Mrs.  P  was mainly responsible for the company’s affairs. The  petition- ers  therein were appointed administrators in L’s estate  in 1960, and in 1961, at their request, the names of the  peti- tioners  therein were entered in the register of members  of the company against the name of L as administrators of L. On the questions whether the entry constituted merely a note of the  grant  of  administration or the  registration  of  the petitioners  as  members, and whether the  petitioners  were members  of  the company for the purposes  of  presenting  a petition under s. 210 of the English Companies Act at p.  65 of  the report, Pennycuick, J. noted that it  was  contended before him that the petitioners therein were not members  of the  company  and hence had no locus standi to  present  the petition  bearing in mind that petition under s. 210 of  the English Companies Act could only be presented by a member of the company. In the facts of that case, Pennycuick, J.  held that the petitioners were duly registered as members of  the company  but he proceeded to hold that even if it  were  so, the  personal representatives of a deceased member  must  be regarded as members of the company for the purposes of 555 S.  210  Of the English Companies Act. In  this  connection, reference  was  made to the decision of Buckley,  J.  in  Re Bayswater Trading Co. Ltd., [1970] 1 All E.R. 608, where  at p.  609 of the report, it was held that ’member’  would  in- clude representative of a deceased member for the purpose of s. 353 of the English Companies Act. This judgment of Penny- cuick,  J. went up in appeal to the Court of Appeal  and  it was  reversed.  See  Re Jermyn Street  Turkish  Baths  Ltd., [1970]  3 All E.R. 184. But on the point whether the  repre- sentative of a deceased member can maintain an action  under s.  210  of the English Companies Act, the views  of  Penny- cuick, J. were not reversed or modified. Mr. Nariman submit- ted that the observations of Pennycuick, J. were obiter  for the  decision of the case. We are unable to  agree.  Indeed, this was a point specifically referred to by Pennycuick,  J. as  being raised and specifically decided. But we  need  not detain ourselves with this controversy because the  decision of  the  English  Courts are not binding in  the  courts  of India. But the observations or the reasoning are of  persua- sive value. We are clearly of the opinion that having regard to the scheme and the purpose of ss. 397 and 398 of the Act, the reasoning on a para materia provision of the English Act would be a valuable guide. The said construction, appears to us,  to  further  the purpose intended to  be  fulfilled  by petitions  under ss. 397 and 398 of the Act. It  facilitates solution of problems in case of oppression of the minorities when  the member is dead and his heirs or legal  representa- tives  are yet to be substituted. This is an  equitable  and just construction. This construction, as suggested by Penny- cuick, J. does not militate against either equity or justice of  the such situation. We would, therefore, adhere to  that construction.  In this connection, it may be mentioned  that in the 1972 Edition of Gore-Browne on Companies, it has been stated as follows:               "It has recently been settled that the person-               al representatives of a deceased member,  even               though they are not registered as members, are               entitled  to present a petition under s.  210.               In  Re.  Jermyn  Street  Turkish  Baths  Ltd.,               Pennycuick, J. held that on its true construc-               tion  section  210  required  that  the   word

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             ’member’ should include the personal represen-               tatives of a deceased member, on whom title of               his shares devolved by operation of law."     In 1st Supplement January 1978 of Gore-Browne on  Compa- nies, at para 16, it is stated that "while the shares remain in  the  name of the deceased holder, his  estate  is  prima facie entitled to any subsequent benefits deriving from  the shares". At p. 491 of Buckley on Companies 556 Act,  1948, the decision of Re Jermyn Street  Turkish  Baths Ltd.  ’s case (supra) has also been referred to and  it  was observed  that for the purpose of the petition under s.  210 of the English Companies Act, ’member’ includes the personal representatives  of  a deceased member. Buckley  also  notes that  this  decision referred herein  was  reversed  without affecting  this point by the Court of Appeal. In  Halsbury’s Laws of England, 4th Edition, Vol. 7, para 1010, at p.  604, same  view  has been expressed. The division  bench  of  the Delhi High Court also noticed that the view expressed in  Re Jermyn  Street  Turkish Baths (supra)  also  finds  indirect support from various other decisions of the English  Courts. Reference was made to the decision in James v. Buena Venture Nitrate  Grounds Syndicate Ltd., [1896] 1 Chancery  Division 456; Re Dlewellyn v. Kasintoe Rubber Estate Ltd., [1914]  15 All E.R. 558 and New Zealand Gold Extraction Company (Newbe- ryyautin  Proces) Ltd. v. Peacock, [1894] 1 Q.B. 622.  These decisions do indicate that the right of members in  similar, though  not  identical situations, should  be  construed  as being  belonging  to the legal representative  or  heirs  of deceased members.     Our  attention,  however, was drawn to the  decision  of Supreme  Court  of Victoria in Re Meyer Dougals  Pty.  Ltd., [1965]  V.R. 638 by Gowans, J. Article 22 of Table A to  the Victorian  Companies  Act, 1938 (4602) provides  as  follows that:               "22. A person becoming entitled to a share  by               reason of the death, bankruptcy or  insolvency               of  the holder shall be entitled to  the  same               dividends  and  other advantages to  which  he               would  be entitled if he were  the  registered               holder of the share, except that he shall  not               before being registered as a member in respect               of  the share be entitled in respect of it  to               exercise any right conferred by membership  in               relation to meeting of the company."     Gowans, J. in that case found that there was a  "careful distinction between members and persons entitled to share by reason  of the death of a member but who are not  registered appear  to deny the status of a member to a  legal  personal representative  who  is  not a member". On  an  analysis  of various  decisions,  Gowans, J. was of the view that  a  de- ceased’s  estate and its representative may in a  particular context  have to be treated as not a member and in  view  of the provisions of s. 186(1) of the Victorian Companies  Act, 1961  which provides "any member of a company who  complains that  the  affairs  of the company are  being  conducted  in manner oppressive to one or more of 557 the  members (including himself) may ... apply to the  court for  an  order under that section", Gowans, J. came  to  the conclusion  that there was no reason for treating  the  word "members" in that section as not applying to a legal  repre- sentative who is not entitled to be accorded the right which registration  would give him to vote in regulating the  con- duct  of the company’s affairs. The object of  the  section,

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which  is in para materia to s. 399 of the Act, was to  pro- vide  a remedy for the case where, notwithstanding the  fact that  a person possesses the right of a member enabling  him to participate in the conduct of the affairs of the company, he  can claim that he as a member or as one of a  number  of members, is or are being oppressed by those who conduct  the affairs  of the company. According to Gowans, J., it  should not be treated as applying to someone who is not so entitled and  cannot so claim. With respect, we are unable to  accept this view. Having regard to the purpose of the section as we conceive  it, it would not be just construction to deny  the legal  representatives of the deceased member the  right  of maintain  a petition under ss. 397 and 398. We would  prefer to  accept  the view of Pennycuick, J. in Re  Jermyn  Street Turkish  Baths Ltd. ’s case (supra). It appears to  us  that this will be in consonance with the equity of the  sections. In  Gower’s  Principles  of Modern Company Law,  at  p.  68, reference  has been made to Re Jermyn Street  Turkish  Baths Ltd. ’s, case (supra) and also to Re Meyer Douglas Pry  Ltd. ’s,  case (supra), which, according to the  learned  author, seems to be more convincing. Mr. Nariman also referred us to the  comments in Hahlo’s Casebook on Company Law,  2nd  Edi- tion,  p. 35 1, where in footnote, reference was made to  Re Jermyn  Street  Turkish Baths Ltd. ’s, case  (supra),  which have  been followed in some decisions. It was noted as  fol- lows:               "It  appears doubtful whether personal  repre-               sentatives   of  deceased  shareholders,   who               themselves  are not, or cannot become,  registered as  shareholders, can  be  regarded  as "members"  for  the purposes of s. 210 of the 1948  Act:  Re Cuthburt  Cooper  & Sons Ltd., [1937] Ch. 392 and  Re  Meyer Douglas Ltd., [1965] V.R. 635 at 655."     We  do  not agree for the reason  mentioned  before.  It further  appears  to  us the Australian  judgment  does  not reconcile  to logic in accepting that  legal  representative can  petition for winding-up, which is called  the  "sledge- hammer remedy", but would refuse the lesser and  alternative remedy  of seeking relief against oppression and  mismanage- ment  though  the latter remedy  requires  establishment  of winding-up  on just and equitable grounds as a  precondition for its 558 invocation. It would be rather incongruous to hold that  the case  for  winding-up on just and equitable grounds  can  be made out by the legal representatives under s. 439(4)(b)  of the Act but not the other. This does not appear to be  logi- cal. It appears to us that to hold that the legal  represen- tatives  of  a deceased shareholder could not be  given  the same  right  of a member under ss. 397 and 398  of  the  Act would  be taking a hyper-technical view which does  not  ad- vance the cause of equity or justice. The High Court in  its judgment  under  appeal proceeded on the  basis  that  legal representatives of a deceased member represent the estate of that  member whose name is on the register of members.  When the member dies, his estate is entrusted in the legal repre- sentatives. When, therefore, these vestings are illegally or wrongfully affected, the estate through the legal  represen- tatives must be enabled to petition in respect of oppression and  mismanagement and it is as if the estate stands in  the shoes  of  the deceased member. We are of the  opinion  that this  view  is a correct view. It may be mentioned  in  this connection  that succession is not kept in abeyance and  the property of the deceased member vests in the legal represen- tatives  on  the death of the deceased and  they  should  be

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permitted to act for the deceased member for the purpose  of transfer of shares under s. 109 of the Act.     In  some situations and contingencies, the "member"  may be  different from a "holder". A "member" may be a  "holder" of shares but a "holder" may not be a "member". In that view of  the matter, it is not necessary for the present  purpose to examine this question from the angle in which the learned Single  Judge of the Calcutta High Court analysed the  posi- tion  in the case of Kedar Nath Agarwal v.  Jay  Engineering Works  Ltd. and Ors., [1963] 33 Company Cases 102, to  which our attention was drawn.     Admittedly  in the present case, the  legal  representa- tives have been more than anxious to get theft names put  on the register of members in place of deceased member, who was the  Managing Director and Chairman of the company  and  had the  controlling interest. It would, therefore, be wrong  to insist their names must be first put on the register  before they  can move an application under ss. 397 and 398  of  the Act. This would frustrate the very purpose of the  necessity of  action.  It  was contended on behalf  of  the  appellant before the High Court that if legal representatives who were only  potential  members or persons likely to  come  on  the register  of members, are permitted to file  an  application under ss. 397 and 398 of the Act, it would create havoc,  as then persons having blank transfer forms 559 signed by members, and as such having a financial  interest, could  also claim to move an application under ss.  397  and 398 of the Act. The High Court held that this is a  fallacy, that  in  the case of persons having blank  transfer  forms, signed  by  members, it is the members  themselves  who  are shown on the register of members and they are different from the  persons  with the blank transfer forms whereas  in  the case of legal representatives it is the deceased member  who is  shown on the register and the legal representatives  are in effect exercising his right. A right has devolved on them though  the death of the member whose name is still  on  the register.  In  our opinion, therefore, the  High  Court  was pre-eminently  right in holding that the  legal  representa- tives of deceased member whose name is still on the register of members are entitled to petition under ss. 397 and 398 of the  Act. In the view we have taken, it is not necessary  to consider the contention whether as on the date of  petition, they were not members. In that view of the matter, it is not necessary  for us to consider the decision of this Court  in Rajahmundry Electric Supply Corpn. Ltd. v. A. Mageshwara Rao &  Ors.,  AIR 1956 SC 2 13. In view of the  observations  of this Court in Life Insurance Corporation of India v. Escorts Limited  &  Ors.,  AIR 1986 SC 1370 at p. 1412,  it  is  not necessary,  in  our opinion, to consider the  contention  as made  on behalf of the appellant before the High Court  that the permission of the Reserve Bank of India had been errone- ously obtained and consequently amounts to no permission. In the  present  context, we are of the opinion that  the  High Court  was right in the view it took on the first aspect  of the matter.     The  second  question was whether  a  combined  petition under  ss. 397, 398 and 433(f) of the Act was  maintainable. In  view of the observations of this Court in Shanti  Prasad Jain  v. Kalinga Tubes, [1965] 35 Company Cases 363 and  the reasoning  of the Bombay High Court in Bilasrai  Joharmal  & Ors.  v.  Akola Electric Supply Co. Pvt.  Ltd.,  28  Company Cases 549, we are of the opinion that the averments which  a petitioner  would  have to make to invoke  the  jurisdiction under  ss. 397 and 398 are not destructive of the  averments

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which are required to be made in a case for winding up under s.  433(f)  of  the Act on the just  and  equitable  ground, though  they may appear to be contradictory.  As  Halsbury’s Laws  of  England,  4th Edition, Volume 7,  at  p.  604-605, discusses  that  the prayer must be made  stating  that  the affairs are such which fulfil the requirement of winding  up but  to  wind up the company would unfairly  prejudice  that part  of the members, but otherwise the facts would  justify the  making of a winding up order on the ground that it  was just and equitable that the company should be wound up,  the Court may, with a view to bringing to an end the 560 matters  complained  of, make such order as it  thinks  fit, whether for regulating the conduct of the company’s  affairs in future or otherwise. We are of the opinion that averments which  a petitioner would have to make to invoke the  juris- diction of ss. 397 and 398 of the Act are not destructive of the  averments which are required to be made in a  case  for winding up under s. 433(f) on the just and equitable ground, though  they  may  appear to be rather  conflicting  if  not contradictory. We are in agreement with the High Court  that the petition must proceed upto certain stage which is common to  both winding up and though there may be some  difference in procedure to be adopted, it is not such which is irrecon- cilable and cannot simultaneously be gone into. Indeed these are made in the manner indicated before. It has to be  borne in  mind that a discretion is conferred on the court and  it is  only when the Court is satisfied that the facts  justify the  making of a winding up order on the ground that  it  is just and equitable that the company should be wound up,  but if  the Court is further of the opinion that it would  be  a remedy  worse than the disease, then the Court  can  examine whether the alternative relief by way of a direction under ’  s.  397 can be granted. This is a  well  accepted  remedy exercised  by the Courts. We are, therefore, of the  opinion that  the High Court.was right in the view that a  composite petition  under ss. 397,398 and 433(f) of the Act  is  main- tainable.      The  appeal,  therefore, must fail and  is  accordingly dismissed.  We dismiss the appeal with costs, which  is  as- sessed at Rs.5,000. Y.  Lal                                        Appeal   dis- missed. 561