Srikanta Datta Narasimharaja Wadiyar Vs Sri Venkateswara Real Estate Enterprises Pvt Ltd - Citation 380637 - Court Judgment

Judgment:
ORDER

Bopanna, J.

1. By my Order dated 11-8-1988 : ILR1989KAR2562 the preliminary objection as to the maintainability of Company Petitions Nos. 32 and 67 of 1987 was upheld and the petitions were posted for grant of interim relief on 2-9-1988. Since the grant of interim relief is closely connected with the question of admission of these petitions, I have heard the learned Counsel on both these points. It may also be noticed that my Order dated 11-8-1988 is pending in appeal in O.S.A. No. 10 of 1988 and in the absence of any Order by the Division Bench staying the operation of that Order, there is no bar for this Court to hear these petitions on the question of admission and interim relief.

2. Company Petitions Nos. 32 and 67 of 1987 are filed by the petitioner under the provisions of Sections 397 and 398 of the Companies Act, 1956 (in short the Act). Company Petitions Nos. 49 and 50 are filed by the very same petitioner under the provisions of Section 433(f) of the Act. The facts in all these petitions are not in serious controversy since they could be culled out from a number of Agreements entered into between the parties and from a number of letters exchanged by the parties and produced as Annexures to these petitions.

3. The petitioner Srikanta Datta Narasimharaja Wodeyar is the son of late His Highness the Maharaja of Mysore (hereinafter referred to late Highness) and in these petitions he has prayed for a number of reliefs against the members of Chamaraju family (who are described as the Chamaraju group in these Petitions) and the two Companies now under their control. Late Chamaraju was a renowned building contractor in this part of the State and it is not in dispute that he had advanced huge sums of money to late Highness from time to time. It is on record from one of the representations made by the petitioner and his mother to the then Prime Minister of India on 2-3-1975 that late Highness was indebted to the extent of Rs. 67 lakhs and interest thereon at 6% per annum to late Chamaraju. Certain agreements between late Highness and Chamaraju go to show that consequent on the Abolition of Privy Purses by the Central Government late Highness was in straightened circumstances financially and, therefore, he considered a Hotel project on the lines of a Five Star Hotel in Bangalore to be put up in collaboration with the technical services of late Chamaraju who was, as noticed earlier, a well known building contractor. Certain Agreements were entered into between them to which a brief reference will be made presently and on the basis of those Agreements two Companies were incorporated one by name Venkateswara Real Estate Enterprises Pvt. Ltd. (in short Venkateswara) and the other by name Chamundi Hotels Private Ltd. (in short Chamundi). Promotion of these 2 Companies was with a view to develop the extensive lands owned by the late Highness in Bangalore and also to develop the existing Palace situate in these lands. These lands and the Palace situate therein are compendiously known as Bangalore Palace consisting of nearly 454 acres of non-agricultural prime land, Palace, Cottages, Tennis Courts, Outhouses and other appurtenances. The salient features of the Agreement dated 11-12-1970 between the late Highness and Venkateswara represented by the Managing Director, i.e., late Chamaraju, are that the late Highness would sell and Venkateswara would purchase free from all encumbrances the entire property described in Schedule A consisting of 344 acres of land which is part and parcel of Bangalore Palace area for Rs. 2,40,80,000/- being the sale price fixed by mutual agreement subject to the stipulations mentioned in the said Agreement. Out of the sale price of Rs. 2,40,80,000/-a sum of Rs. 30,00,000/- was paid as advance in cash by Venkateswara and the balance of the sale price was agreed to be paid at the time of registration. The late Highness agreed to deliver to Venkateswara for the purpose of scrutiny of title deeds, etc. all the documents and receipts in his possession and custody relating to the title to the property to be conveyed, that possession of the A Schedule property had already been handed over entirely and exclusively in favour of Venkateswara on 30-11-1970; that the Power of Attorney Holder late one H. Nagarajappa, Advocate, Mysore, would execute the registered Sale Deed and complete the sale transaction for and on behalf of late Highness in due course and when reasonably required. In case the sale transaction fell through, late Highness bound himself not only to repay the entire advance received as mentioned above, but also to pay interest on the said advance at the rate of 12% per annum from the date of advance or from the respective dates of advance in addition to damages as may be suffered by Venkateswara in the circumstances of the case until such repayment is paid in full. The other Clauses are not very material for the purpose of this Petition. A similar agreement was also entered into by late Highness on the very same day with Chamundi. In that Agreement late Highness agreed to sell to Chamundi represented by its Managing Director Chamaraju an extent of 110 acres of land situate in Bangalore Palace area for a consideration of Rs. 1,25,00,000/-. A sum of Rs. 11 lakhs was paid as advance and a sum of Rs. 18 lakhs was paid in cash presumably on the date of the Agreement and the balance of the sale price was agreed to be paid by Chamundi at the time of registration; that possession of 110 acres of land was handed over entirely and exclusively in favour of Chamundi on 30-11-1970 by late Highness; that the Power of Attorney Holder Nagarajappa, Advocate, would execute the registered Sale Deed and complete the sale transactions for and on behalf of late Highness. This Agreement also contains Clauses similar to the one in the other Agreement binding the late Highness to repay the advances received with interest at 12% per annum from the respective dates of advance in case the sale transaction fell through. The other terms of the agreement are not material for the purpose of these Petitions. The Power of Attorney Holder Nagarajappa by a separate endorsement dated 30-11-1970 has stated that the Bangalore Palace area measuring about 115 acres was handed over to Chamundi on 30-11-1970 and the balance 330 acres was also handed over to Venkateswara on the same date. So the position as It stood on 30-11-1970 is that Chamundi was in possession of 115 acres of land as also the Palace with furniture etc. and Venkateswara was in possession of 330 acres of land in the Bangalore Palace complex.

4. It transpires that these Agreements could not be put through since the transfer of the lands either to Chamundi or to Venkateswara by a valid registered document did not materialise on account of some legal hurdles. It is to be noted at this stage that an inventory had been prepared as to the property held by late Highness at the time of his accession to the Union of India in the year 1950. The Bangalore Palace property finds a place in Item No. 22 Note 1 of the Inventory. A condition was imposed in that Note to the effect that the Palaces of Bangalore, Mysore and Ooty would be inalienable and the State Government would be liable to meet the expenses for the maintenance of these Palaces. Because of this in alienation Clause, the sale deeds could not be executed either in favour of Chamundi or in favour of Venkateswara and thus the project could not be Implemented immediately thereafter. This position does not admit of any doubt in view of the letters exchanged between the State Government and the Minister of Home Affairs and the discussion in the Rajya Sabha on 22-11-1973. But, later on a clearance was issued from the Central Government for alienating these properties. But, there were again inter se disputes amongst the members of the family of the late Highness, which resulted in a number of suits being filed. These suits were filed by the petitioner against late Highness and also against his mother and the first wife of late Highness. O.S.No.430 of 1974 renumbered as O.S.622 of 1980 on the file of the Civil Judge at Bangalore was filed by the petitioner against his father, his mother, his father's first wife and his sisters who are Defendants 1 to 7 respectively and his brother-in-law, K.B. Ramachandraraj Urs who is Defendant No. 8 and his (brother-in-law) daughters, viz., Defendants 9 to 12 minors represented by their father natural guardian Ramachandraraj Urs. In that suit he claimed the following reliefs:

'Judgment and decree against the defendant:

a) directing the taking of account of the management of the family, its assets as and from 1953 up-to-date, and holding the late Highness liable therefor and denying him any further share from the properties and further holding him to make up the just half share of the plaintiff.

b) directing the partition of schedule properties as aforesaid into TWO equal shares out of the estates as on 1953 and separating one share and allotting it to the plaintiff, the division to be effected by metes and bounds, having regard to the present and potential value of the properties;

c) directing the late Highness to render further account of current management and to account for and pay mesne profits to the plaintiff;

d) directing such equitable provisions to other defendants out of the share (if any available) to such of the defendants;

e) Awarding the costs of this suit; .. .. ..'

These reliefs also had an impact on the right of the late Highness to alienate the Bangalore Palace properties in terms of the Agreement dated 11th of December, 1970. Earlier another suit was filed viz., O.S.No. 145 of 1974 by the petitioner on 29-5-1974 for a declaration that the two Agreements of 1970 in favour of these two Companies are null and void. It appears that many reckless and wild allegations were levelled against his father late Highness. In the written statement filed by the late Highness he admitted and confirmed the execution of the two Agreements of Sale. In view of the stand taken by the Highness in that suit the petitioner filed another suit O.S.No. 430 of 1974 on 13-9-1974 in the Court of the Civil Judge, Bangalore City, to which I had already adverted to. It is unnecessary to go into the various reckless allegations made by the petitioner against his own father since we are not concerned with those allegations in this Petition, but, it would be necessary to make a reference to these suits and the manner in which these suits were compromised between the petitioner and the Chamaraju group. A number of other suits also had been filed in the various Courts. A detailed reference to those suits is not necessary since it is on record that all those suits amongst the members of the family were compromised under the Agreement dated 26-3-1978. The relevant portion of the preamble to that Agreement should be noticed:

'AND WHEREAS subsequently certain misunderstandings and disputes arose between the members of the 1st Party on the one hand and the 2nd party on the other regarding the transferring of the portions of the Bangalore Palace to the said two Companies and the working of the said two Companies and consequently certain suits and legal proceedings were commenced by the Members of the 1st party hereto or at their instance which are more fully detailed in Schedule-I here below and similarly Party No. 2 also had to institute legal proceedings against the members of the 1st Party now pending as specified in Schedule-II here below.

AND WHEREAS now in the meanwhile H.H. Jaya-chamaraja Wodeyar, Ex. Maharaja died on 23-9-1974 leaving behind him, the Members of the 1st Party and Smt. Satyaprema Kumariyavaru as his only representatives;

AND WHEREAS well-wishers of both the parties intervened and proposed that all the disputes should be settled amicably, the suits and legal proceedings should be compromised and the two companies aforesaid viz., parties No. 3rd and 4th hereto should be run in the best interest of both the parties.

AND WHEREAS pursuantly after negotiations and talks between the parties the disputes have now been settled and the parties have agreed to compromise the suits and other legal proceedings and to run the two companies in co-operation with one another in the best interest of both the parties.

AND WHEREAS for the said purpose the parties have agreed to settle and compromise the suits and legal proceedings as specified in Schedule III herebelow and run the two companies, viz., Parties No. 3 and 4 herein after amending the articles of associations of both the companies as detailed in Annexures 'B' and 'C' hereto.'

The list of cases mentioned in the schedules shows the large number of suits which were pending in various Courts in Bangalore and Mysore between the members of the family and also between the petitioner and the Chamaraju Group. They are:

SCHEDULE - I

In the Court of the II Additional Civil Judge,

Bangalore City.

O.S.63/74

'N. Nagarajappa and

Srikanta Datta

Narasimharaja Wodeyar.

Sri. A. Chamaraju and Ors.

2. In the Court of the II Additional Civil

Judge, Bangalore City.

O.S. 66/74

Sri. M.L. Raje Urs

& Sri. Nagarajappa

A. Chamaraju and Ors.

3. In the Court of the Principal Civil Judge,

Bangalore.

O.S. 145 of 74

Srikanta Datta Narasimharaja Wodeyar

A. Charaaraju and Ors..

4. In the Court of the I Additional I Munsiff,

Bangalore.

O.S. 1269/76

Sri. Srikantadatta Narasimharaja Wodeyar

Sri. A. Chamaraju and Ors..

5. In the Court of the I Additional I Munsiff.

O.S. 1270/76

Sri Srikantadatta Narasimharaja Wodeyar

A. Chamaraju and Ors.

6. In the High Court of Karnataka, Bangalore.

C.R.P. No. 122 of 1978

Between Smt. Meenakshl Devi Avaru & Petitioner Postal Store Departments and Ors. - Respondents.

SCHEDULE II

In the Court of the Civil Judge, Bangalore City.

O.S. No. 335 of 1977

Plaintiff: Sri. A. Chamaraju

Defendants: Sri. Srikantadatta Narasimharaja

Wodeyar

SCHEDULE III1. O.S.63/74 II Additional Civil Suits to be gotJudge, Bangalore City, dismissed2. O.S.66/74 -do- as not pressedafter amendmentof article of the 2 Companies.3. O.S.145/74 Principal To be disposed Civil Judge, off as mutuallyBangalore agreed toCity. between theparties.4. O.S.1269/76 I Additional Suits to beI Munsiff, dismissed asBangalore not pressed byCity. plaintiff.5. O.S.1270/76 -do- -do-6. C.R.P. 122/78 High Court of -do-Karnataka Bangalore.7. O.S.335/77 Civil Judge, To be got Bangalore. decreed asmutuallyagreed tobetween theparties.

5. Notwithstanding this compromise, no understanding was reached between the petitioner and the Chamaraju group as could be seen from the subsequent Agreement, which is the sheet anchor of the petitioner's case in all these Petitions. The subsequent Agreement, viz., the Agreement of 29th January, 1982, shows that notwithstanding the earlier compromise entered into in the year 1978 the parties could not come to any amicable understanding in the running of these two Companies and they realised that they cannot jointly carry on the business in both the Companies and therefore they decided that they should part company in good grace, allowing the petitioner to manage the affairs or Venkateswara and the Chamaraju Group to manage the affairs of the Chamundi. The share holdings of both the groups (hereinafter referred to as the Maharaja Group and the Chamaraju Group) in both the Companies were not in any way affected. The Maharaja Group retained 60% of the share holding and the Chamaraju Group retained 40% of the share holding and it was agreed that the management of Venkateswara would go to Maharaja Group and the management of Chamundi would go to the Chamaraju group. On the basis of that understanding the parties agreed as follows:

'All the parties hereby note that Sri. A. Chamaraju, the predecessor of the Second Party (Chamaraju Group) has put in all exertions and all pains till now to get the exemption for 110 (one hundred ten) acres being 'B' Schedule property plus 20 (twenty) acres of land in the 'A' Schedule property from the restrictive provisions of the Urban Land (Ceiling and Regulations) Act, 1976, at his own expenses. In view of the death of Sri. A. Chamaraju it is agreed that hereinafter the FIRST PARTY (petitioner), alone should make all necessary exertions and pursue the proceedings for exemption of 'B' Schedule property plus 35 (thirty-five) acres being portion of 'A' Schedule property from the restrictive provisions of the Urban Land (Ceiling and Regulation) Act, 1976, at his own expenses.

2. The SECOND PARTY (Chamaraju Group), herein agrees and undertakes to transfer all the shares, rights, title and interest which they and persons of their group may have in the FOURTH PARTY (Venkateswara) Company in favour of the FIRST PARTY (Petitioner) and his nominees and the SECOND PARTY (Chamaraju group) herein agrees and undertakes to completely withdraw all their right, title and interest from the FOURTH PARTY Company (Venkateswara) herein. Further the FOURTH PARTY (Venkateswara) will continue to be in possession of 'C' Schedule properties. This transfer etc. of the FOURTH PARTY (Venkateswara) Company made over to the FIRST PARTY or his nominee as aforesaid has to be completed this day itself. No specific consideration will be payable by the FIRST PARTY (Petitioner) or his nominees for the transfer as the consideration for this transfer will be the other obligations to be discharged by the FIRST PARTY (petitioner) to this agreement. It is further agreed that the amounts as soon to be payable by the FOURTH PARTY (Venkateswara) Company and its liabilities in the Balance Sheet as on 31-3-1981 or any other liabilities that are due by FOURTH PARTY (Venkateswara) Company to any outsiders should be part of consideration in this agreement and should be taken over by the members of the SECOND PARTY (Chamaraju group). This is part consideration for the further benefits conferred upon the members of the SECOND PARTY (Chamaraju group) under this Agreement.

3(a) The parties hereby agree that it the exemption is obtained in regard to 110 (one hundred ten) acres in 'B' schedule then the FIRST PARTY (petitioner) will convey 45 (forty-five) acres of the property subject to verification marked RED therein in the plan annexed hereto with an easementary right of way over the portion marked in RED in the plan annexed hereto from the Palace Road through the Palace Main Gate to the said portion in favour of the THIRD PARTY (Chamundi) Company at the expenses of the THIRD PARTY (Chamundi) Company and also see to it that the shares in the names of his father and nominees in the Company would be completely transferred in the name of the members of the SECOND PARTY (Chamaraju group) or their nominees. It will be sole responsibility of the FIRST PARTY (Petitioner) to see that the members of the SECOND PARTY (Chamaraju group) get complete shares holding of the THIRD PARTY (Chamundi) Company. It is clearly understood that the conveyance in respect of the 45 (forty five) acres aforesaid will be done in favour of the Company simultaneously with the transfer of all shares therein by the FIRST PARTY (petitioner) and his group in favour of the SECOND PARTY (Chamaraju group) or their nominees. If the FIRST PARTY (petitioner) for any reason is unable to bring out a total control of the Company of Chamundi Hotel Private Limited then the first party (petitioner) will transfer the said 45 (fortyfive) acres to the SECOND PARTY or their nominees or to a Private Limited Company to be floated by them or any other nominee of their choice.

(b) If for any reason either in 'B' or 'C' schedule the subject matter exemption is less than 110 acres, the FIRST PARTY (petitioner) should convey the proportionate quantum of the 'B' or 'C' Schedule property on the same lines as mentioned above and the shortfall for the said extent of 45 (forty five) acres would be made up by the repayments, the amount borrowed at the 1.25 lakhs rate per acre with interest in the... .at the rate per annum.

(c) If for any reason if the exemption is granted chere is any legal impediment either from the terms of the agreement or otherwise in law for the transfer of the property in favour of the SECOND PARTY (Chamaraju group) or their nominee then the transfer would be in favour of M/s Chamundi Hotel Private Limited of the entire 110 (one hundred ten) acres of the Schedule 'B' and the company will be managed by both parties as per terms and the agreement dated 26-3-1978 with consequential alteration in the pattern of shareholding and pattern of voting. Simultaneously with the conveyance as per Clause (a) or (b) above, the Third Party (Chamundi) Company will release and hand over the balance of 65 (sixty five) acres in the 'B' Schedule property marked BLUE in the Plan annexed hereto to the Party I.

4. If, however, the entire 'A' Schedule property is exempted from the restrictive provisions of the Urban Land (Ceiling and Regulation) Act, 1976, then the SECOND PARTY (Chamaraju Group) and the THIRD PARTI (Chamundi) shall be entitled to retain only the portion measuring 45 (forty five) Acres marked RED in the plan annexed hereto, subject to physical verification, forming part of 'B' Schedule property and the remaining portion of the 'A' Schedule property shall be released by the SECOND (Chamaraj group) and THIRD PARTIES (Chamundi) in favour of the FIRST PARTY (petitioner) or his nominee or nominees.

5. If, however, no exemption is obtained in respect of any portion of the 'A' Schedule property and the application for exemption under the Urban Land (Ceiling and Regulation) Act, 1976, is rejected, then the FIRST PARTY herein agrees and undertakes to repay to the SECOND (Chamaraju Group) and THIRD (Chamundi) parties the amounts borrowed by the late H.H. Jayachamaraja Wodeyar from them and more fully detailed in the Agreement of Compromise dated 26-3-1978 with interest at the rate of 12% per annum from the respective dates of borrowings from the said parties within twelve months of any rejection of the application for exemption in respect of 'A' Schedule property or any portion thereof. This will be in addition to the liability of the estate of late Sri. Jayachamaraja Wodeyar.

6. It is specifically agreed and understood that the 45 (fortyfive) acres of land should be retained by the THIRD PARTY (Chamundi) in case exemption is granted in respect of 'B' Schedule property.

7. It is specifically understood that if by any chance no exemption is obtained in respect of 'B' Schedule property but obtained in respect of 'C' Schedule property, then the FIRST and FOURTH Parties (Petitioner and Venkateswara) will convey 45 (forty five) acres of the 'C' Schedule property marked GREEN in the plan annexed hereto, subject to physical verification, on the same lines as mentioned in para 1 of this Agreement. In either case, whether it is part of 'B' or 'C' Schedule, it is in consideration of the entire amount advanced by late A. Chamaraju and the THIRD and FOURTH (Chamundi and Venkateswara) parties to H.H. late Sri. Jayachamaraja Wodeyar and Smt. Tripurasundara Ammanivaru and the conveyance will be in full discharge of the said amounts with interest if any including the amounts claimed in O.S.335/77, (O.S.1749/80) on the file of the Civil Judge, Bangalore.

8. If any land is acquired by the Government in the 'A' Schedule property parallel to the Railway Line either for the purpose of the Railways or for the purpose of road, the compensation payable for the same should be shared between the First Party (petitioner) and Parties II and III (Chamaraja Group and Chamundi) in the proportion of 60:40 (Sixty: Forty).'

The other Clauses are not material for the purpose of this case.

6. I have quoted the terms of this Agreement in extenso since the cause of action of the petitioner in all these Petitions under the relevant provisions of the Companies Act rests on the terms of this Agreement. In the first two Company petitions he has sought for a declaration that this Agreement is binding on all the parties to these petitions and the necessary consequences should flow on the basis of that declaration, i.e., to say that on account of acts of oppression and mismanagement alleged by him against the Chamaraju Group this Court should exercise its power under Section 402 of the Act and give the necessary relief based on the terms of the Agreement between the parties dated 29-1-1982.

7. In support of the plea of oppression and miss-management the petitioner has alleged various acts of omissions allegedly committed by Chamaraju group. But, before I go into those allegations one Memorandum of Agreement dated 16th July, 1984 between the petitioner and other members of the family of late Highness should be noticed. What the petitioner says in para 23 of the petition is:

'The petitioner says that certain disputes and differences had existed between the legal heirs of late Sri H.H. Jayachamaraja Wodeyar as pointed out earlier. The same were fully and finally settled and a family settlement was arrived at on 16th July, 1984 whereunder all the assets and estates of late Sri Jaya-chamaraja Wodeyar except specified a portion of the immovable property of Bangalore Palace were agreed and admitted to belong to the petitioner absolutely. Accordingly the petitioner became and is the sole and absolute owner of the equity shares of the first respondent Company standing in the name of late Sri H.H. Jayachamaraja Wodeyar were transmitted to the name of the petitioner.'

To this Memorandum neither Chamundi nor Venkateswara were parties though there is an endorsement in that Agreement that Venkateswara had agreed to the terms of that Agreement and given effect to the terms of the Agreement by parting with the possession of the property under its control to the petitioner. The effect of that Agreement which was entered into without notice to Chamundi or to Venkateswara or to the Chamaraju group will have to be considered while dealing with the alleged acts of oppression and mismanagement alleged against the respondents by the petitioner.

8. The allegations of oppression in Co.P. No. 32 of 1987 are that the petitioner's group was not served with the notice of the Meetings i.e., to say, notices of Members' Meeting or Extraordinary General Meeting or Annual General Meeting; that the share certificates standing in the name of late Highness and also in the name of Petitioner's mother were not transferred to the petitioner despite the fact that the Agreement dated 29th January, 1982 provided for the transfer of these shares; that there was change in the constitution of the Board of Directors of Venkateswara notwithstanding the fact that the petitioner's group were holding 3220 shares in Venkateswara and that he, his wife and the power of attorney holder for late Highness and his brother-in-law Lakshmikantraj Urs were the Directors of the Company, but they were subsequently replaced by surreptitious methods and without notices to them by the Chamaraju group by calling for an extraordinary General Meeting on 23rd of January, 1986. According to the petitioner the Meetings of the General Body and the Board of Directors were held from 1982 upto December, 1985, wherein only the Maharaja group who were the members of the Company were given notices and the Chamaraju group were not called as they were not entitled to any notice; that the accounts were maintained and certified by the petitioner as the Chairman and Managing Director of Venkateswara; that the annual returns were filed by the petitioner as the Chairman and Managing Director of Venkateswara with the Registrar of Companies; that his group was solely managing the affairs of the Company excluding the Chamaraju group, which surrendered all rights, title and interest to the petitioner's group; that however Chamaraju group by convening an Extraordinary General Meeting on 23-1-1986 completely took over the management of Venkateswara without notice to the petitioner or to the other members of his group. This is what the petitioner says in paragraph 30 of Company Petition No. 32 of 1987:

'At the alleged general meeting of the share holders held on 23rd January, 1986 Sri. A.C. Srinivas Raju was appointed as Managing Director of the Company. At the alleged meeting of the Board of Directors held on 23rd January, 1986, 1500 equity shares held by the estate of the late Sri Chamaraju were transmitted in the names of the persons mentioned in the said resolution and 30 equity shares were allotted to the three Directors mentioned in the said resolution so as to enable them to acquire the qualification shares under Article 15 of the Memorandum and Articles of Association and Sri A.C. Srinivasa Kaju was authorised to operate the Bank account of the Company with Canara Bank.'

In paragraph 31 of the petition the petitioner says that he had gone to U.K. in December, 1985 and he was out of India till February, 1986; that he and other members or his group were not given any notice of the aforesaid Meetings alleged to have been held on 23rd January, 1986; that for convening the meeting of the share holders and Board of Directors, twentyone days' notice was required which was not issued or given; that the letter dated 13th January 1986 written by Sri A.C. Chandrashekhar Raju shows that the meetings of 23rd January, 1986 were not contemplated at that time otherwise he would not have affirmed and recognised the Agreement dated 29th January, 1982 if such a meeting was proposed to be convened on 23rd January, 1986; that the meetings alleged to have been convened on 23rd January, 1986 were bogus and in fact no meeting of the share holders or the Board of Directors was held on that day and if it is so held (which the petitioner denies) the same are fraudulent, improper and illegal. In paragraph 32 of the petition, the petitioner says that on 23rd January, 1986 Sri A.C. Srinivas Raju wrote a letter to Sri B.C. Govinda Rao, Manager of the Company, stating that pursuant to the resolution passed at the Extraordinary General Meeting of the share holders dated 23-1-1986, Srinivasa Raju who was elected as the Director of Venkateswara was appointed as the Managing Director of the Company and had been authorised to take over the records of the Company and examine them for further action and Govinda Rao was directed to produce all the statutory books and the records of the Company before the Managing Director for his perusal and examination and that he was informed that 1,500 equity shares held by the estate of late Chamaraju had been transferred to the persons mentioned in the said letter by the resolution of the Board of Directors passed at the Meeting held on 23-1-1986 and that the Manager was directed to ensure that the necessary entries were made In the Register of Members. He was further informed that at the aforesaid Board Meeting 30 equity shares had been allotted to the 3 members mentioned therein so as to enable them to acquire the qualification shares under Article 15 of the Memorandum and Articles of Association and that the Managing Director had been authorised to operate the Bank account of the Company with Canara Bank; that taking advantage of the petitioner's absence by reason of he being out of India, Chamaraju group had usurped the management of the Company and are alleged to have convened the Extraordinary Meeting of the share holders of the Company and of the Board of Directors on 23-1-1986 wherein the aforesaid resolutions were alleged to have been passed. The further grievance of the petitioner is that the statutory books and the records of the Company were with the petitioner's group; that the Managing Director, Srinivasa Raju, belonging to Chamaraju group cannot be authorised to take over the records of the Company for his examination or action; that Chamaraja Group could not claim to have 1,500 equity shares and that the same could not have been transmitted to the persons mentioned in the alleged resolution of the Board of Directors at the meeting held on 23-1-1986 as Chamaraju Group had surrendered all its rights, title and interest in the shares of Venkateswara and also in the Management of the Company; that 30 equity shares could not have been allotted to the 3 Directors as Chamaraju Group had no power or authority to appoint the Directors by the resolution alleged to have been passed in the aforesaid Meeting.

The next act of oppression alleged to have been committed against the petitioner Is that Chamaraju Group Illegally constituted the Board of Directors by increasing the strength from 11 to 18; that as per the Articles of Association of Venkateswara the maximum number of Directors could only be 11, but the Board as constituted by Chamaraju Group consists of 15 to 18 Directors; that the Board being illegally constituted, the same is contrary to the Articles and Association of Venkateswara; that the aforesaid actions amounted to illegal usurpation of the affairs of the Company and that the same is illegal, fraudulent, wrongful against the right of the petitioner and his group and contrary to the Compromise Agreement dated 29-1-1982. According to the petitioner, the alleged Meetings and the resolutions passed thereat were also forbidden, oppressive and malafide and Intended to oust the petitioner and his group from the management of Venkateswara. The next act of oppression is found in para 34 of the Petition and it relates to books and records of Venkateswara. It transpires that one K. Ramaraju who is admittedly the brother-in-law of the late Chamaraju claiming to be the Director of Venkateswara wrote a letter dated 29-1-1986 to the Manager Govindarao and a copy was endorsed to the brother-in-law of the petitioner Lakshmikant Raj Urs informing them that the minutes of the proceedings of the General Body should be kept at the registered office and made available for inspection and for taking abstracts by the members under Section 196 of the Act and that the said Ramaraju was also entitled to inspect all books of accounts, papers including minute books of the Board of Directors and other records of the Company and the Manager had failed to comply with the aforesaid provisions and was punishable under law and that the Manager was further informed that Ramaraju had made an application for inspecting the minutes and other records of the Company, that the Manager had no authority to hand over the books to Lakshmikanth Raj Urs and had no right to take away the books from the office of the Company and he was asked to forthwith restore the books and records of Venkateswara at the registered office of the Company. From this letter the petitioner infers that Chamaraju Group had even designs of unlawful assumption of the management of Venkateswara and they were trying to coerce and pressurise the Manager, Govindarao, to hand over all books to Chamaraju group which they had no right to possess. This action of the Chamaraju group is also an act of usurpation amounting to oppressive, fraudulent, harsh and unlawful conduct. In this regard, the petitioner has averred in para 36 of the Petition that the Power of Attorney Holder, Meenakshi Devi, who is the sister of the petitioner, had written to the Registrar of Companies stating that the Chamaraju Group had convened an Extraordinary Meeting of the Company and elected certain persons as the Directors and that none of the members of Venkateswara had received the notices of meeting alleged to have been held on 23-1-1986; that the aforesaid meeting was held knowing that the petitioner was out of India and that action taken in the said meeting was illegal and hence she requested the Registrar of Companies not to take on record any form of notice and such other papers that may be filed by the alleged Directors of Venkateswara. It is also alleged that one of the shareholders of the Company, i.e., Nagarajappa who was the Power of Attorney of late Highness, had filed a civil suit in the Civil Court at Bangalore in O.S.No. 10136 of 1986 challenging the validity of the resolution passed in the meeting held on 23-1-1986. There is also a reference to the Police complaint dated 12-2-1986 informing the Commissioner of Police about the aforesaid illegal resolutions and further informing that Chamaraju Group along with some other persons were trying to take control and management of the portion of the land of the Bangalore Palace and also trespass upon the property and take possession of the same. There is a reference to the letter dated 27-4-1986 in the petition by the petitioner to Canara Bank inviting their attention to the Compromise Agreement dated 29-1-1982 and requesting them not to take any action on the basis of the resolution passed at the Company Meeting held on 23-1-1986. The grievance of the petitioner is that the Canara Bank did not take any action on this letter on the ground that in the absence of an injunction order from the Court it would not be proper for the Bank to comply with the directions of the petitioner not to operate the Bank account of Venkateswara. The petitioner has also challenged the validity of the Board Meeting held on 23-1-1986 on the ground that no notice was given to some of the Directors and that Chamaraju Group had no right to convene the meeting as they had surrendered all their rights of management of Venkateswara to the petitioner's Group under the Compromise Agreement dated 29-1-1982 and further confirmed by their letter dated 13-1-1986. He has also challenged the notice dated 9-12-1986 by Chamaraju Group for convening the Board Meeting on 17-12-1986. The notice calling for the meeting was challenged by Nagarajappa in O.S.No.990 of 1986 in the Court of the Munsiff at Mysore, but no finality has been reached in the said suit. In para 40 of the Petition the petitioner has complained about one Srinivas Raju who claiming to be the Managing Director of Venkateswara had addressed a letter dated 20-12-1986 to the petitioner's brother-in-law Lakshmikant Raj Urs asking him to return the statutory books and other records of Venkateswara forthwith to enable him to file the annual returns with the Registrar of Companies at Bangalore and in the said letter he had further threatened the said Lakshmikanth Raj Urs that Criminal action would be taken against him in case he failed to return the records. According to the petitioner this act amounts to an act of oppression on the part of Chamaraju Group. The petitioner has relied on the letters dated 23-1-1987 and 20-12-1986 produced as Annexures T and U in the petition to prove that Chamaraju Group handed over the records of Venkateswara to the petitioner's group by virtue of the agreement dated 29-1-1982 and, therefore, the subsequent control of Venkateswara by Chamaraju Group by virtue of the meetings held on 23-1-1986 and 17-12-1987 was forbidden, oppressive and malafide and intended to oust the petitioner and his group from the company and usurpation of the management of the company which they had already surrendered. He has also complained about the resolution passed by Chamaraju Group in the meeting held on 23-1-1986 and the notices dated 13-5-1986 and 9-12-1986 for calling those meetings. These are the allegations of the petitioner against the respondents. On these allegations the petitioner wants this Court to take action under Sections 397 and 398 of the Act. He has also pressed into service the plea of loss of confidence. In para 46 of the petition, the petitioner says that there is absolute loss of confidence and faith amongst the parties which was the very basis for incorporating Venkateswara; that if the company is wound up irreparable loss will be caused to the petitioner's group and interim orders should be passed at an early date as prayed for. Otherwise the petitioner and his group would suffer an irreparable loss which cannot be compensated in terms of money and the interest of Venkateswara and the public interest will also suffer. The reliefs claimed by the petitioner are as follows:

(a) To declare that the Compromise Agreement dated 29-1-1982 is binding by and between the parties thereto and in particular is binding on the petitioner, the members of the Chamaraju group, i.e., Respondents 2 to 11 and Venkateswara;

(b) To direct that the regulation, conduct and the management of the affairs of Venkateswara by the petitioner and the members of his group, i.e., the Maharaja Group alone;

(c) To restrain Respondents Nos. 2 to 11 being the members of Chamaraju group by permanent injunction from interfering with regulation, conduct and management of the aforesaid affairs of Venkateswara by the petitioner and/or by the Maharaja group.

(d) To direct Respondent Nos. 2 to 11 and/or member of the Chamaraju group to transfer the shares of Venkateswara in the name of late A. Chamaraja and/or his heirs to the name of the petitioner and/or the members of Maharaja group.

(e) To restrain Respondents Nos. 2 to 11 being the members of Chamaraju Group by permanent injunction from operating the bank account of the first respondent company with Canara Bank, Bangalore, or with any other bank.'

9. I may say at this stage that the allegations against Chamundi and the Chamaraju Group in Company Petition No. 67 of 1987 are more or less same as the allegations made in Company Petition No. 32 of 1987 and, therefore, there is no need to traverse the same in this order. But the grounds on which the reliefs are claimed may be briefly noted. They are:

'(A) Chamundi has not commenced its business within one year from its incorporation and its affairs are regulated by Chamaraju Group contrary to the provisions of the Act;

(B) Chamundi has not executed the Registered document in pursuance of the Agreement of Sale dated 11th December, 1970, and that the Company was never ready and willing to perform the said agreement and that having regard to the agreement dated 29th January, 1982, the petitioner is the sole and absolute owner of the property and that Chamundi and Chamaraju Group have no right, title or interest in the said property;

(C) Having regard to the provisions of Urban Land (Ceiling and Regulation) Act, 1976 it is not possible to transfer by registered document the aforesaid property and that Chamundi and Chamaraju Group are only entitled to 45 acres of land as provided in the Agreement dated 29th January, 1982;

(D) Chamaraju Group is bound by the Agreement dated 29th January, 1982, and that they have no other right except the right provided therein. Chamaraju Group is acting contrary to the aforesaid agreement dated 29th January, 1982 and they have tried to usurp the management and affairs of Venkateswara and that they are also managing the affairs of the Chamundi contrary to the said agreement;

(E) The Companies were established on the basis of the mutual trust and confidence between the parties and that the same no longer exist. But on the contrary the Chamaraju Group is acting in a manner which is oppressive, mala fide, illegal, arbitrary and injurious to the interest of Maharaja Group and the Company and the public interest;

(F) Chamaraju Group has committed number of acts of mismanagement as stated herein above and that they are trying to oust Maharaja Group from the affairs of the Chamundi and also Venkateswara and that their sole object is to establish complete control over both the companies which is illegal, oppressive, malafide and contrary to the agreements entered into between the parties and the provisions of the Companies Act;

(G) Having regard to the provisions of the Urban Land (Ceiling & Regulation) Act, 1956, it is not possible to transfer the land in favour of Chamundi and that having regard to the compromise, dated 29th January, 1982, the said Agreement of sale has come to an end and that it is not possible for the Chamundi to carry on any business in future and no useful purpose would be served by continuing the existence of the Chamundi;

(H) Chamaraju Group conducts the affairs of the Company ignoring the petitioner and Maharaja Group. No notice of meetings either of the Board of Directors or of the Annual General Meeting is given to the Maharaja Group and to the knowledge of the petitioner, no regular meetings are held and that the affairs of the company are not being run in accordance with the provisions of the Companies Act, 1956;

(I) Chamaraju Group have illegally refused to transfer the shares of late Highness in favour of the petitioner. On the death of late Highness, father of the petitioner, the shares devolved upon the petitioner and that he is the sole and exclusive heir of his deceased father and that Chamaraju Group have arbitrarily and illegally refused to transfer the shares in favour of the petitioner and that their sole object is to oust the majority shareholders and deprive them of their right to participate in the management and affairs of the company;

(J) No statutory meeting has been called or convened. The accounts of Chamundi are not properly maintained or audited and the books of the company are also not maintained as required by the Companies Act, 1956;

(K) The Directors are not having qualification shares and that the Articles of Association only provide for maximum nine Directors out of which 5 belong to the Maharaja group, whereas the Directors appointed by Chamaraju Group are eleven and, therefore the Constitution of the Board is illegal and contrary to the provisions of Memorandum and Articles of Association;

(L) The business of the Company has not been commenced within one year from the date of its incorporation and that the business of the management is not carried on in accordance with the Memorandum and Articles of Association and the provisions of the Companies Act;

(M) The transmission of 1200 Equity shares of the Estate of late Chamaraja to his heirs is illegal, fraudulent, oppressive and contrary to law;

(N) The Company has put up unauthorized construe tion on the land. The unauthorisedly constructed buildings are given on rent which is being recorded by Chamaraja Group which is not accounted for and the management is done arbitrarily, fictitiously, malafide and injurious to the interest of Maharaja Group. Chamaraju Group is collecting rents and is also giving property for film shooting, marriage, etc. and most of the income is not accounted for in the accounts of the Chamundi and it has never declared any profit and most of the income is being appropriated by Chamaraju group;

(O) A portion of the property has been leased to Krishnadevaraya Education Trust and to run Vishweswaraiah College of Technology and one of the Managing Trustee Shri A.S. Kupparaju of the said Trust is the Director of the Chamundi and the said transfer of the property in favour of the aforesaid College is not authorised and is contrary to the Memorandum and Articles of Association. The aforesaid Act is oppressive, harsh and injurious to Maharaja Group and is contrary to law;

(P) The main building of the Palace is in possession of the petitioner and that the furniture and other household goods of the petitioner are lying in the Palace and that it is impossible for Chamundi to carry on any business in future having regard to the aforesaid circumstances; and

(Q) Chamaraju Group in their various acts have tried to usurp the management and affairs of Chamundi and , that they have committed a number of illegal acts in as much as the meetings are not called as required by law and that the meetings called are also without any notice and the affairs of the Company are being managed as if it is a Private property of Chamaraju group.

The reliefs claimed are:

'(a) To declare that the Compromise Agreement dated 29th January, 1982, is binding by and between the parties thereto and in particular is binding on the Petitioner, the members of Chamaraju Group that is Respondents 2 to 10 herein and upon Chamundi;

(b) That Respondents Nos. 2 to 10 and/or the members of Chamaraju Group be directed by this Court to transmit the shares of Chamundi in the name of late Highness to the name of the petitioner;

(c) To issue a permanent injunction restraining Chamaraju Group from managing the affairs of Chamundi except in the case of 45 acres of land as provided in the agreement dated 29th January. 1982 and restraining them from interfering with the other properties which by agreement dated 29th January, 1982 belong to the petitioner; and

d) Pending hearing and final disposal of the petition, Chamundi, Chamaraju Group, their agents, Officers and servants be restrained by an order of injunction of this Court from in any way dealing with or disposing of, transferring, alienating, leasing, hiring, renting and boarding any part of the schedule property in any manner whatsoever.'

11. In the objections filed by the respondents in both these petitions various contentions have been taken. The legal contentions taken are that the substantial reliefs claimed in the petitions are dependent on the enforcement of Agreement dated 29-1-1982 and this Agreement cannot be specifically enforced under Sections 397 and 398 of the Act; that the reliefs claimed are the subject matter of suits pending in the Civil Courts and, therefore, this Court in exercise of its equity jurisdiction should not grant the same reliefs which are the subject matter of the pending civil suits; that the petitioner's conduct and the lack of bona fides in these Petitions disentitle him to claim the equitable relief which could be granted under the provisions of Sections 397 and 398 of the Act; that in any event the acts of oppression and mismanagements as alleged do not come under the purview of Sections 397 and 398 of the Act; that the Agreement dated 29-1-1982 is a contingent contract and, therefore, the parties having not complied with the obligations on their part, this Court should stay its hand and desist from making a declaration as prayed for as the Agreement in question is a void Agreement as on this date and does not admit of any declaration as sought for; that all the parties to the Agreement are not before this Court and therefore no declaration could be made by this Court so as to bind the persons who are parties to the Agreement but have not been impleaded as parties to these Petitions.

12. A consideration of all these legal issues will necessarily take me to the detailed objections filed by the respondents. But the question is whether on the facts of these cases, this Court should go into the objections and determine the issues for consideration on merits. In my considered view, this Petition could be disposed of on the preliminary issue, viz., whether the petitioner has filed this Petition in good faith in order to work out his rights within the framework of the Act. It is well settled that the reliefs under Sections 397 and 398 of the Act is an equitable relief which is entirely left to the discretion of the Company Court. In the 5th edition of Pennington's Company Law. dealing with relief from acts of oppression it is stated:

'A petition for relief from oppression under the original statutory provision would be dismissed if it was not presented in good faith solely in order to obtain such relief, and because of the equitable and therefore discretionary character of the Court's jurisdiction under both the original and the present provision, the requirement of good faith on the part of the petitioner undoubtedly continues. Thus, even if the directors or majority shareholders have been guilty of proper or irregular conduct, so that there is a prima facie case for relief, it will be refused if the real purpose of the petitioner is to obtain payment of a debt owned by the company, or to force the Directors to accept his views as to the way in which the company's business should be managed; or if the petitioner has submitted to the conduct complained of without protest and has acquiesced in the improper management of the company affairs. Likewise, delay by the petitioner in initiating proceedings after he must have realised that he was the victim of a scheme of oppression or unfair treatment will induce the Court to refuse relief, because this indicates that the petitioner has acquiesced in the respondents' conduct and that his complaint is therefore not made in good faith.'

It should be noticed that in English Law there is no provisions which is similar or comparable to Section 398 of the Act. But Section 397 of the Act is present in the English Act in a slightly different form. In the 1985 Act the word 'oppression' is substituted by the words 'unfairly prejudicial'. The principles applicable for granting relief against oppression under the English Act are equally applicable to Indian conditions since it is well settled that the Company Court constituted under the Act Is also conferred with equity Jurisdiction and, therefore, the principles applicable for granting reliefs against oppression under Section 397 would be applicable to the grant of relief under Section 398. But, it should also be noted that the Court's power to exercise jurisdiction under Section 397 or for that matter under Section 398 cannot be defeated by mere technicalities, as observed by the Supreme Court in NEEDLE INDUSTRIES (INDIA) LTD. AND ORS. v. NEEDLE INDUSTRIES NEWEY (INDIA) HOLDINGS LTD. AND ORS : [1981]3SCR698 .

13. That takes me to the question of good faith of the petitioner in presenting these company petitions. The question of good faith has to be tested by the conduct of the petitioner as reflected not only in the proceedings before this Court but also in the parallel proceedings in the Civil Courts and in other civil litigations in other Courts.

14. I have earlier noticed that the litigation against Chamaraju group started as early as in the year 1974. The 2 Agreements which late Highness entered into with late Chamaraju were with a view to preserve the family fortune and with a view to meet certain financial commitments which he had incurred consequent on the abolition of the Privy Purse. The very basis of those Agreements was challenged by the petitioner in the civil suits filed by him. In O.S.No. 145 of 1974 the relief claimed is that the 2 Agreements entered into by late Highness with late Chamaraju are null and void on the ground they were not for the benefit of the family; that the properties were of the joint family and not the absolute properties of late Highness, that he had no right to deliver possession of the property to late Chamaraju, that all the amounts realised by the transfer of the land were utilised for immoral purposes and, therefore, these transactions are tainted with illegality and that the Agreements were the product of coercion exerted by Chamaraju group. In the pleadings of the parties there are a number of allegations and counter allegations. But, two of the allegations stand out very prominently in the mind of this Court. The allegation made by the petitioner is that the untimely demise of his father was due to the fact that he was kept under a high degree of intoxication by administration of alcohol and drugs by Chamaraju group. The allegations made by Chamaraju group is that late Highness was heart broken by the indiscriminate litigation and reckless allegations to which the petitioner had resorted to against his own father and within 10 days after the suit was filed, late Highness died on 23-9-1974. It is also on record that a number of Counsel had appeared in those suits and vakalaths of Counsel engaged had been terminated on some ground or the other. All these facts go to show that the relationship between the parties had reached a very high degree of acrimony, mistrust, misunderstanding and the filial relationship between father and son belonging to this Ruling family of the erstwhile Mysore State was completely destroyed. The petitioner should be blamed to some extent for such type of litigations to which he had resorted to either directly or through his Power of Attorney holder Nagarajappa who was a Director of both the Companies and through other shareholders of these Companies. To quote only one instance where the petitioner had resorted to character assassination of his own father, reference may be made to the counter affidavit filed by late Highness by way of objections to I.A.I in O.S. No. 145 of 1974. Repudiating the allegations made against him, late Highness has sworn to the following facts in his affidavit:

'I am the successor to the throne of Mysore. I was Ruler of high reputation and I enjoyed the esteem of one and all, within and outside the State and also within the Country and abroad, I was the Maharaja, Rajpramukh, Governor of Mysore State and Governor of Madras for several decades. Between 1964 and the date of suit, I went abroad nearly ten times. I had been invited by men of learning and high status to deliver lectures on Indian Philosophy. My intellectual moral and mental capacities have never been impaired and as for my physical condition, I am like any other normal person of my age and status. With the leave of the Hon'ble Court, I reserve ray right to initiate proceedings in respect of the defamatory allegations made against me in paragraph 3 of the affidavit.

The allegations in paragraph 4 of the affidavit that defendant 3 and Dharanipalan have actually planned and completed a scheme to 'knock off the property' and thereafter are likely to throw me out and that the said Dharanipalan and others had kept me out of the reach of the members of my family and also have disconnected the phone etc. are imaginary and a clear distortion of facts. I am not aware of the allegations that the 3rd defendant had issued instructions to close the gates of the Palace and had placed restrictions for the entry of even the royal family members to meet me. Prior to the handing over of the possession of the suit schedule property to the 1st and 2nd defendant Companies, the Palace Authorities had their own system of regulating entry into the Palace. But after 30-11-1970, it was left to the 1st and 2nd defendants to regulate the entry into the suit premises. It is not correct to contend or allege that the age old convention could be continued after it was agreed to by me and the other members of the family to dispose of the suit schedule property in favour of the 1st and 2nd defendant Companies.

... ....The allegations in paragraphs 5 to 8 of the affidavit that there is no valid agreement for the sale of the suit schedule property, much less a binding contract, that the 3rd defendant and the said Dharanipalan have managed to keep me under their thumb, and toward off the evil influence of defendant 3 and Dharanipalan the plaintiff is trying to remove me from their influence, that the defendants are to be restrained from causing any encumbrance to the suit property, that if the sale is allowed to be completed, and that the plaintiff and the other members of the family would be put to irreparable loss and injury leading to multiplicity of proceedings etc. are baseless and false.

I succeeded to the Gadi or throne of the Rulers of Mysore in 1940 after the demise of my uncle, His Highness Nalmadi Krishnaraja Wodeyar, who was the former Maharaja of Mysore, The properties appertaining to the Gadi passed from Ruler to Ruler and were the absolute properties of the Ruler and never the coparcenary properties. The members of the family cannot claim any interest or share therein by birth. I am the absolute owner of the vast properties, including the suit schedule property, having inherited the same along with the Gadi of the Maharaja of Mysore, As it was inherited from my uncle, the suit schedule property is not an ancestral property in my hands for the plaintiff to claim any rights in it by birth,

. . . . . .It was only out of natural love and affection, kindness and generosity that I allowed the plaintiff and the other members of the Royal family to be in joint use of the properties I inherited from my uncle along with the Gadi, without waiving my rights to be the absolute owner of these separate properties appertaining to the throne and also without any intention of abandoning my exclusive right to these properties. There was absolutely no intention on my part to convert my absolute and separate properties of which the suit schedule property is one of the items, into one of coparcenary property.

. . . . . .It was only after frank and free negotiation and collection of data as to the then prevailing market rates and above all the difficulty of finding a purchaser who could invest millions of rupees and take the burden of facing the ceiling and urban taxes, that I, as a prudent person, negotiated with the 3rd defendant to form the two companies. In the said companies, the other members of the family and I would have shares and some of us are also Directors thereof. I am the Chairman of the two companies. The 3rd defendant, representing the two companies, required that all the members of the family should give their consent and execute an agreement. Accordingly, the other members of the family and I executed a Deed of Agreement on 30-11-1970 agreeing to dispose of the suit schedule property in favour of the said companies of which the 3rd defendant was one of the chief promoters. On 11-2-1970, I executed two agreements of sale in favour of the 1st and 2nd defendant Companies wherein the earlier agreement of 30-11-1970 and the delivery receipt of the same date have been referred to. At the time of taking decision on 30-11-1970, the plaintiff was a minor and the other members of the family were present in the family meeting and I signed that deed as the natural guardian on behalf of my minor children including the plaintiff. ... ...

15. From these averments made by the late Highness on oath it is demonstrably clear that late Highness wanted to stand by the Agreement of 11th December, 1970 and give full effect to it, but the petitioner took the initiative to challenge those Agreements solemnly entered into by the late Highness. That was the starting point of litigation between the petitioner and the Chamaraju group. Subsequently, O.S.No. 63/74 and 66/74 were respectively filed by the petitioner and Nagarajappa and the father of petitioner's brother-in-law Laxmikantaraj Urs and Nagarajappa for a declaration that the petitioner alone is the Director duly empowered and entitled to hold office as such in respect of Venkateswara and also for grant of injunction against Chamaraju group as also against late Highness who was defendant No. 8 therein and certain other persons restraining them from implementing or otherwise giving effect to the resolutions passed on 26-12-1973 and for grant of injunction against the defendants therein from acting as Directors. In those suits late Highness who as the 8th defendant was represented by Counsel. In the written statement filed by him he has stated that there was no Agreement between him and Venkateswara; that no consideration whatsoever were received by him; that the subject-matter of contemplated sale was not 'res commercium' and it continues to be inalienable property; that he came to Bangalore on 26-12-1973 and was ready for Meeting from 4,00 p.m. onwards and the alleged Meeting of 26-12-1973 did not actually take place on that day as claimed by Chamaraju group. It is on record that this statement by late Highness repudiating the Agreement entered into by him was brought to his notice by the Chamaraju group and the Highness terminated the vakalat in favour of his Counsel and filed his amended statement supporting the case of Chamaraju group that he was standing by the Agreement of 1970. These facts leave test-tale marks on the conduct of the petitioner in the litigation that he had embarked upon against his own father and the Chamaraju group. The subsequent memo filed by the petitioner in O.S. 145/74 shows that the petitioner had absolutely no scruples in making reckless allegations against his father and also against the Chamaraju group. In that memo he has stated as follows:

'That subsequent to the filing of the suit, at the instance of well-wishers, the plaintiff, defendants 1 to 3 and 6 to 14 met and verified the material facts regarding the property known as the Bangalore Palace. The plaintiff is satisfied that under an agreement of sale entered into between the 4th defendant and the 1st defendant represented by the 3rd defendant, possession of the properties forming part of Bangalore Palace more fully described in Schedule 'A' has been delivered by the 4th defendant to the 1st defendant and similarly the 4th defendant had handed over the possession of the portion of the Bangalore Palace Property morefully described in the Schedule 'B' here-below. Under the circumstances the defendant No. 1, has got possessory title to properties described in Schedule 'A' herebelow and defendant No. 2 has got possessory title to properties described in Schedule (B) herebelow. In view of the above and other circumstances, the plaintiff and defendants 1 to 3 and 6 to 14 have settled all the disputes outstanding between them in particular with regard to the Bangalore Palace property and have entered into an agreement dated 26-3-1978, whereunder the parties have agreed to implement the various projects contemplated earlier.

The plaintiff therefore, does not press the suit as the suit is thus settled out of Court true to the tenor of the Agreements dated 26-3-1978, and prays that this memo may be recorded and the suit be dismissed.'

So, on the petitioner's own say, the suit filed by him had no legs to stand. So he compromised the salt and by that compromise it is implicit that all the allegations made against his father in that suit, which were of a defamatory nature, as could be seen from the affidavit filed by his father, were withdrawn. But, the further point for consideration is whether this Court could take into consideration his conduct in the suits filed against his father for the purpose of determining the good faith and bona fides in filing these petitions. The suits were filed not only against his father but also against the Chamaraju group. They bore the brunt of the allegations since they were the persons who had considerable stakes in the litigation against the late Highness. In the Agreement dated 26th of March, 1973 between petitioner, Party No. 1, his sisters who are parties Nos. 3, 4, 5 and 6, his mother party No. 2, his brother-in-law party No. 11, late Chamaraju - Party No-12 and Chamundi - Party No. 13 and Venkateswara - Party No. 14, the petitioner had admitted that a sum of Rs. 28,45,000/- was paid as advance by late Chamaraju, to late Highness. So, a portion of the amount paid as advance by Chamaraju amounting to Rs. 28,45,000/- was admittedly due to him even in the year 1978. In his letter to the Prime Minister along with his mother he had admitted that late Chamaraju had advanced amounts aggregating to nearly Rs. 67 lakhs including interest. He has not contested the money suits against him and decrees have been passed in the civil suits aggregating to Rs. 56,77,600/-inclusive of interest. But all the same he had averred in the winding up petitions that not a farthing was paid by Chamaraju group before they took possession of the land for the business of both these Companies. In my view the petitioner could not be permitted to plead something which is contrary to the legal and moral obligations of his father, when he had in unequivocal terms stated on oath that he stood by the Agreement of 1970 for which the consideration had fully paid from Chamaraju group. This one fact is sufficient to show that the petitioner's allegations in these petitions cannot be taken at their face value, they are lacking in candour and also in good faith. Secondly, a substantial portion of the reliefs claimed by the petitioner are admittedly subject-matters of litigations in Civil Courts in the pending suits. No reasons are forthcoming by the petitioner as to why he is not pursuing those civil suits in the Civil Courts against Chamaraju group. Thirdly the petitioner seems to be completely oblivious of his legal obligations to Chamaraju group under the Agreement of 29th of December, 1982. The two letters exchanged between the parties in the year 1985 i.e., just an year or so before the filing of the petitions would show that the petitioner did not want to abide by any of his commitments to Chamaraju group. In his letter dated 18-11-1985 regarding the transmission of shares of late Highness to his name he has invited the attention of Chamaraju group to the Agreement dated 26-3-1978, Compromise Decree and Court order amongst the members of the family, Agreement dated 29-1-1982, Will of his mother dated 4-11-1982 and the family settlement amongst his family members dated 16th July, 1984. Perhaps he was slightly enraged by the stand taken by Chamaraju group regarding the transmission of shares of his father to his name since Chamaraju group had taken the stand that he should obtain a clear title to his shares (presumably in view of the family litigation which was the subject matter of various suits in the Civil Court). The petitioner has ended the letter with the following words:

'Various self-serving statements contained in page 3 and 4 are bereft of any credence while I refute this innumerable falsehood you may note that I do not intend traversing specifically in this correspondence. It is apropos to point out that I am not the architect of making 'much ado about nothing' as you have in pages 3 and 4, Having realised where the fault lies I have taken steps which you may note. How can you ever hope me to refrain from taking appropriate steps. Is it also a case of Hopes triumph over experience. I cannot refrain from taking legitimate action as long as you perpetuate committing acts which are prejudicial to my interest, even if you hope. I may add that in the Court Case 335/74 wherein Late A. Chamaraja had demanded the money he had stated that it was my 'pious' obligations to pay the money my father had borrowed.

To keep the files of the Hon'ble Minister and the Registrar of Companies, I mark copies of this letter to their files following your tradition.'

This letter was suitably replied to by Chamaraja group in their letter dated 24-11-1985. This reply is produced by the petitioner himself on 4-1-1988 and that letter contains the history of litigation between the parties and the stand of the petitioner in that litigation. In para-9 of the letter, Chamaraju group had stated as follows:

'After the death of my father on 31-12-1981 we were very young and even before the 13th day ceremony was conducted, Shari Lakshmi-kantaraj Urs, your brother-in-law approached us at your instance and promised to end all the disputes from your Highness and for the development of the Projects for which two Companies viz. Charaundi Hotels Pvt. Ltd. and Sri Venkateswara Real Estate Enterprises Pvt. Ltd. were started. He conveyed and promised that IN A MATTER OF. FEW DAYS your Highness would secure clearance from Urban Land Ceiling authorities and convey 45 acres of land as a matter of settlement. Your Highness agreed to give the heirs of late Shri A. Chamaraju 45 acres of land in the Palace Compound which vour Highness is aware of.'

In para-10 it had stated as follows:

'Thus an agreement was entered into between the heirs of late Shri A. Chamaraju on one side and your Highness on the other side along with these two Companies on 29-1-1982, Terms of the agreement I hope you are undoubtedly aware of fully. Believing your words and believing your representations without demur, we signed the agreement in good faith even before the lapse of one month from the death of my father.

In para-11 it had stated as follows:

'After signing of the agreement the Management of Sri Venkateswara Real Estate Enterprises Pvt. Ltd., was handed over to you. After taking the management of the said Company your Highness continued to manage the affairs in a feudalistic fashion. Sri A.S. Kupparaju, Sri. A.V. Humpa Urs and Sri. K. Rama Raju who were directors of the said Company were not called for any of the Board Meetings or for the Annual General Body Meetings of the Shareholders to which they, as Directors and Members respectively were entitled to. Your Highness should remember that it is only the LEGAL HEIRS OF LATE SHRI A. CHAMARAJU WHO CONSTITUTE THE CHAMARAJU GROUP (and they figure as the Second Party in the agreement dated 29-1-1982 agreed for such an agreement.

In para-12 it had stated as follows:

'Your Highness should take into consideration the interests of all the members of M/s Sri Venkateswara Real Enterprises Pvt. Ltd., who include the heirs of late Sri A. Chamaraju along with a few others while managing the said Company. We have not seen the Balance Sheet of the aforesaid Company after 1981. No notices of the General Body Meetings were sent to us despite the fact the Estate of Late Sri A. Chamaraju and his other friends and relatives who have joined him as Co-promoters along with your father while floating the Company Sri Venkateswara Real Estate Enterprises Pvt. Ltd., continued to be the members and are shown as such in the Annual Returns till date. Further despite the solemn assurance given by your Highness in getting the Urban Land Ceiling exemption, your Highness has not pursued diligently in the matter to secure such an exemption.......From the memorandum of 16th July 1984 which is enclosed along with your letter, it is further seen your Highness has parted the possessory rights of M/s Sri Venkateswara Real Estate Enterprises Pvt. Ltd., and a substantial portion of the land in favour of your Highness's sisters to settle their claims against your Highness relating to their shares and claims in respect of the property devolved on all the legal heirs of late His Highness Jayachamaraja Wodeyar. In fact it is seen from the document that the land that was given to them was towards their own share and not towards any claims. This is the most reprehensible act of mismanagement in the management of the Company Sri Venkateswara Real Estate Enterprises Pvt. Ltd.'

In para-14 of the tetter, which assumes some significance for the purpose of granting the reliefs to the parties, Chamaraju group has stated as follows:

'On my own behalf and behalf of other legal heirs of Late A. Chamaraju I assure your Highness that we do not require anything more than a needle point of land in the Palace Compound than what you have promised in the agreement dated 29-1-1982 and request your Highness to implement this agreement with sincerity.'

In paragraph-16 it had stated as follows:

'I entreat your Highness to bury the litigation and the unhappy past with the dead. The past has no meaning unless it gives a lesson for the present for guiding the future. From the past let us take a lesson for the present to guide our future and avoid all litigation. I assure I shall honour in letter and spirit the agreement dated 29-1-1982 on my part as a gentleman. I expect similarly your Highness, both as a gentleman and as the Maharaja to honour the agreement dated 29-1-1982 in letter and spirit and avoid litigation. Please pause for a moment and ponder at my supplicate suggestion. Please do not dismiss them as impertinent sentiments of a Poleian and allow us to turn a new leaf of implementing the 29-1-1982 agreement in letter and spirit.'

16. The tone of this letter is conciliatory and also borders on veneration of the petitioner and his Royal lineage though he had gone back on the earlier Agreements and the commitments made in the said Agreements. So from this correspondence it Is clear that the petitioner was fully aware of the Agreements between late Highness and late Chamaraju and the subsequent Compromise Agreement of 29-1-1982 and also his commitments under the said Agreement, the incorporation of these two Companies viz., Venkateshwara and Chamundi the respective holdings of the Maharaja group and the Chamundi group in these Companies. But if a reference is made to the letter of 26th of March, 1985, produced as Annexure-G in the statement of objections in Company Petition No. 67/87, the petitioner appears to have given a go-bye to all his commitments under the various Compromise Agreements which had been already discussed in the earlier portion of this order. That letter was with reference to a letter of 21st of March, 1985 from the Chamaraju group insisting on their right to recover rents from the tenants of Chamundi Hotels while denying the rights of petitioner to collect rents from the properties leased by them presumably under the Agreement of 1970. This is what the petitioner says:

'I deny what is stated in para III that your Company is in actual possession, control and management of a portion of the Bangalore Palace Compound as per the agreement dated 30-11-1970. There is no such agreement dated 30-11-1970 according to my knowledge. You have said that ever since that date the said Company has been collecting rentals from the various tenants in the said portion of the Bangalore Palace Compound, I hereby call upon you to furnish me the said particulars of all rents you have received and/or collected so far and under what authority?

I deny what is stated in para-5 that ray demand against your clients also amounts to slander possessory title to the property which is actionable under law. I would like to request you to send necessary documentary records and evidence to prove your possessory title to the property, .

In the above circumstances I hereby once again - request you to desist from making any demands for rent and/or lease amount from the tenants of various buildings situated in a portion of the Bangalore Palace Compound, Bangalore, of which I am the owner, or doing any act which are uncalled for thus spoiling good relations existing between us.

As you stated that your Company is in possession of various buildings situated in a portion of the Bangalore Palace Compound, I hereby request you to send me the following information regarding your Company:

1) Articles of Association and Memorandum of the Company

2) Date of Registration of your Company

3) Authorised capital of your Company

4) Paid up capital of your Company

5) Names of Chairman & Managing Director and Directors of the past and the present.

6) Names of all the share-holders of the Company

7) Number of shares held by each person in the Company.

8) Minutes Books of the Company from 1970 to March 1985.

9) Audited Balance Sheets of your Company from 1970 to March 1985.

I would like to draw your attention that your Company is in unauthorised occupation of the premises and/or others and not paying rent also which will be dealt separately, which may be pleased noted.'

When the contents of this letter were specifically brought to the notice of the learned Counsel for the petitioner, Mr. Nanavathi submitted that this letter was written out of a sense of frustration without knowing the consequences of writing such a letter. I am not prepared to accept that explanation offered by the learned Counsel on behalf of the petitioner, as the petitioner cannot plead ignorance of the earlier Agreements and his obligation under the said documents. This letter in my view proves that the petitioner was not at all serious about any of his legal obligations under the earlier Agreements and that is a sure indication that these petitions are not filed in good faith. Even assuming the allegations of the petitioner if proved do make out a case of oppression and mismanagement within the scope of Sections 397 and 398 of the Act, mere proof of those allegations would not entitle the petitioner to the reliefs sought for when these reliefs are discretionary reliefs and they will be granted to persons who approach this Court in good faith and the parties who approach this Court for equitable reliefs must come with a clean record. I do not go to the extent of accusing the petitioner for not approaching this Court with clean hands, but I am satisfied that the petitioner's earlier conduct borders on recklessness as he is prepared to disown his own obligations, his own documents for the sake of obtaining some advantage against his adversary. So such a person should not be entitled to the reliefs under Sections 397 and 398 of the Act.

17. Even otherwise the Agreement on which the petitioner seeks the reliefs in all these cases is not an Agreement which could be declared as binding on all the parties before this Court. It may be open to the petitioner to say that he has not sought for a specific performance of the Agreement, but he has only sought for a declaration as prayed for. As noticed earlier everyone of the terms of the Agreement dated 29-1-1982 is hedged by conditions and that Agreement amounts to a contingent contract governed by the provisions of Sections 31 and 32 of the Contract Act.

In Halsbury's Laws of England Volume 9, Pages 356 and 357, paragraphs 515 and 516, the characteristics of a contingent contract are enumerated in great detail. In paragraph 515 it is stated thus:

'Nature of mutual promises. Where a contract consists of mutual promises, these may be independent, dependent, or concurrent. Where the promises are independent, the breach of one of them gives the other party a right of action for damages only, and he is bound to perform his part of the contract; where the promises are dependent, due performance by one party of his promise is a condition precedent to the liability of the other party to perform his promise, and the non-performance of such a condition precedent releases the other party from his obligation to perform the contract, unless he has received a substantial part of consideration for his promise, or unless he has in some way lost the right to rescind, in which cases he can only recover damages for breach of the other's promise; where the promises are concurrent, the effect is to bind each party to be ready and willing to perform his promise on tender of performance by the other party.'

In paragraph 516 it is stated thus:

'Criteria for determining whether promises independent or dependent. The question whether the promise of one party is a condition precedent to the liability of the other party or is independent depends upon the construction of the contract taken as a whole, and is to be determined by the intention of the parties as appearing from the terras of the contract and the surrounding circumstances. The test applied is whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the party in default a thing different in substance from what the other party has stipulated for, or whether it merely partially affects it and may be compensated for in damages.

Certain stipulations are categorised by statute or by the common law as going or not going to the root of the contract, but such categorisations usually yield to any contrary intention of the parties, who are free to allot such consequences as they wish to the non-fulfillment of a particular stipulation.'

Certain examples of contingent contracts are found in Sections 31 and 32 of the Contracts Act. One such example which is nearer to the facts of these cases is Example (b) which reads as under:

'A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuse to buy the horse. The contract cannot be enforced by law unless and until C refuses to buy the horse.'

Example (c) also may be noticed. It reads:

'A contracts to pay B a sum of money when B marries C. C dies without being married to B. The contract becomes void.'

18. In these cases, the Agreement dated 29-1-1982 provides for a number of contingencies. The first contingency is that the petitioner alone should make all the necessary exertions and pursue the proceedings for exemption of 'B' schedule properties plus 35 acres being a portion of 'A' schedule property from the restrictive provisions of the Urban Land (Ceiling and Regulation) Act, 1976 (in short the 'Ceiling Act') at his own expense. So, if the petitioner does not make any exertions the entire contract will fall through because, transfer of this 45 acres which is the obligation cast on the petitioner cannot be enforced without obtaining such exemption. Clause-3 of the agreement is also dependent on the exemption to be obtained by the petitioner. There is one more clause in the said paragraph, the implication on which I fail to understand. It reads as under:

'If the FIRST PARTY for any reason is unable to bring out a total control of the Company of Chamundi Hotel Private Limited then the FIRST PARTY will transfer the said 45 (fortyfive) acres to the SECOND PARTY or their nominees or to a Private Limited Company to be floated by them or any other nominees of their choice.'

Even this Clause is also dependent on the exemption to be obtained by the petitioner. The other Clauses relate to the mutual obligations between the parties primarily depending on the exemption to be obtained from the provisions of the Ceiling Act, As the matter stands now, the petitioner instead of pursuing his efforts to obtain exemption has by his petition dated 9-1-1985 effectively and completely deprived the Chamaraju Group from obtaining the benefit of exemption for 45 acres under the Agreement dated 29-1-1982. What the petitioner says in that petition is:

'The petitioner submits that looking to the above mentioned facts the Bangalore Palace properties is the absolute ownership of Shri Srikantadatta Narasimharaja Wodeyar and the said Company M/s Chamundi Hotel Pvt. Ltd., has no right, title in the said Bangalore Palace properties.

The petitioner submits that looking to the above mentioned facts, the petitioner being the Chairman of M/s Chamundi Hotel Pvt. Ltd., requests your honour not to take any action to process the Form No. 6 filed by then Managing Director of M/s. Chamundi Hotel Pvt. Ltd., and as a Chairman I may be given liberty to withdraw the said Form No. 6 in favour of Srikanta Datta Narasimharaja Wodeyar who is the absolute owner of the said property known as 'Bangalore Palace' property at Bangalore.

The petitioner has filed this petition to avoid multiplicity of the proceedings and to save your Honour's valuable time and to avoid unnecessary delay in finalisation of the matter in the interest of justice.'

By this petition, the exemption sought for by Chamaraju group is nullified by the petitioner and in terms of the prayer made by him, the authorities are at liberty to ignore the Form which is filed by Chamaraju. But no material has been placed before this Court by the petitioner to show that he has pursued the proceedings for exemption diligently as undertaken by him in the Agreement dated 29-1-1982. However, after the conclusion of the arguments, the learned Counsel for the petitioner has produced the certified copy of the proceedings before the Additional Deputy Commissioner and Competent Authority, Urban Land Ceiling, Bangalore, in ULC. No. 8(9)/83-84. The petitioner had made a representation in response to the notice under Sub-section (1) of Section 8 of the Ceiling Act under which he was called upon to appear before the Competent Authority on 28-10-1985 with all the relevant documents etc., for an enquiry under the aforesaid sub-section. The petitioner had prayed in that representation that exemption may please be granted for the land in question since the same is not 'vacant land' as defined under the Ceiling Act-So, the matter rests there and no final orders have been passed. It is common ground that the petitioner has not obtained any clearance on the representation made by him and likewise the Chamaraju Group has also not obtained any clearance on the Form which is filed by them obviously because there are conflicting claims and conflicting interest in the respective representations. So, a declaration sought for by the petitioner in these cases would be a declaration which will not enable the petitioner to give effect to the terms of the Agreement. So that Agreement being a contingent contract under Section 31 of the Contract Act, the same would be a void Agreement for the purpose of these petitions since it is not the case of the petitioner in these Petitions that he would be in a position to get a clearance from the Ceiling Authorities presently or in the immediate future if the declaration as prayed for is made by the Court. For these reasons, the petitioner is not entitled to any relief in both these petitions. For the same reasons the petitioner is not entitled to any relief In the winding-up petitions.

19. But the matter does not end there since the first two Petitions are under Sections 397 and 398 of the Act and the powers of this Court are not controlled by the prayers made in the Petitions. The entire controversy between the parties could have been resolved at a very early stage if either of the parties had pursued the matter before the Competent Authorities under the Celling Act and obtained the necessary clearance for the benefit of both sides. But unfortunately, the petitioner and the Chamaraju group have not seen eye to eye in regard to the management of both Chamundi and Venkateswara, However, a suggestion made by this Court in this regard was gracefully accepted by both the sides and they have filed their respective memos suggesting the terms of an order to be made under Section 402 of the Act. I have cleared myself of the legal hurdle to make such an order in the light of the decision of the Supreme Court in Needle Industries Case to which I have already adverted to. The Supreme Court having found that the petitioner in that case was not entitled to any relief under Section 397 of the Act, observed:

'Even though the Company petition fails and the appeals succeed on the finding that the Holding Company has failed to make out a case of oppression, the Court is not powerless to do substantial justice between the parties and place them, as nearly as it may, in the same position in which they would have been, if the meeting of 2nd May were held in accordance with law. The notice of the meeting was received by Sanders in U.K. on the 2nd May when everything was over, bar the post-meeting recriminations which eventually led to this expensive litigation. If the notice of the meeting had reached the Holding Company in time, it is reasonable to suppose that they would have attended the meeting, since one of the items on the Agenda was 'Policy-(a) Indianisation, (b) Allotment of shares.' Devagnanam and his group were always ready and willing to buy the excess shares of the Holding Company at a fair price as is clear from the correspondence to which our attention has been drawn.'

20. In these cases, I am concerned with the Agreement of 29-1-1982 which creates certain mutual rights and obligations between the parties. The respondents have unequivocally stated in one of their letters to which I have already adverted to that they will not take an inch more than 45 acres of land to which they are entitled to under the Agreement of 29-1-1982. The petitioner has admitted in the Agreement of 1978 the entire liability of his father in a sum of Rs. 28,45,000/-' inclusive of interest of 12 per cent from the dates of the advances made to him and they are reflected in the Agreement in 1982. There are also money decrees for those amounts against the petitioner on the basis of the admission made by him. If I were to simply dismiss the Petitions, I would be denying justice to both the parties by taking a legalistic view of the matter. The provisions of Section 402(d) of the Act also indicate that without prejudice to the general powers of the Court under Sections 397 and 398 any order under either Section may provide for the termination, setting aside or modification of any Agreement, however arrived at, between the Company on the one hand, and any of the following persons, on the other namely:-(i) the Managing Director, (ii) any other Director, (iii) the Managing Agent, (iv) the Secretaries and Treasurers and (v) the Manager, upon such terms and conditions as may, in the opinion of the Court, be just and equitable in all the circumstances of the case, provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned and further the Section provides for termination, setting aside or modification of any other matter for which in the opinion of the Court it is just and equitable that provision should be made.

21. The Court should first make an order under Sections 394, 397 and 398 and in that order it has to provide for matters more particularly stipulated in Section 402 of the Act. This Section read with Rule 9 of the Company (Court) Rules, 1959 which deals with the inherent powers of the Court to give such direction to meet the ends of justice was the basis of the decision of the Supreme Court in Needle Industries Case*. In my view, that power of the Company Court is wide enough on the facts and circumstances of these cases and on the basis of the Memos of Compromise filed by the parties to make suitable provisions under Section 402 of the Act read with Rule 9 of the Company (Court) Rules, 1959 to bring about an amicable settlement to the longstanding dispute between the parties.

22. From the respective Memos filed by the parties, it is seen that the petitioner is prepared to convey 45 acres of land, more particularly described in para-4 of the Memo dated 19-4-1989 and is prepared to obtain exemption under Section 20 of the Ceiling Act in respect of the said 45 acres of land and Chamundi had agreed to take 45 acres of land or on the failure of the petitioner to get exemption in respect of 45 acres of land, to receive Rs. 1,54,41,400/-. On the basis of these assurances or either side, the terms of the order to be made under Section 402 of the Act were dictated and copies of those terms were handed over to the learned Counsel for the respective parties on 19-4-1989 for their approval. Those terms are appended to this order with a view to enable the parties to arrive at a suitable compromise since all these terms are dependent primarily on the exemption to be obtained by the petitioners under Section 20 of the Ceiling Act or on his failure to get exemption, payment of Rs. 1,54,41,400/- etc., as agreed to by the petitioner.

23. Learned Counsel for the respondents has expressed, at this stage, his apprehension, presumably in the light of his earlier experience, that the petitioner will not purposely get exemption under the Ceiling Act and therefore, he would not risk his clients to agree to this consent order under Section 402 of the Act.

24. In the circumstances, the proper course for me is to leave open the chances of future agreement between the parties after the petitioner gets exemption for this 45 acres of the land from the Ceiling Authorities and after obtaining such exemption, the parties may obtain an order from this Court under Section 402 of the Act.

25. With these observations, these Petitions are dismissed. The reasons for not granting relief under Sections 397 and 398 of the Act are equally applicable to the Winding up Petitions in other two Company Petitions. For the said reasons, these two Petitions are also dismissed.

26. The affidavit filed by the petitioner to the effect that all the cases filed against Chamaraja group or Chamundi or Venkateswara have been withdrawn no longer binds the petitioner and therefore, it is open to the petitioner to file the necessary Memos before the appropriate Court and prosecute the cases against Chamundi, Chamaraju or Venkateswara. However, prosecution of those cases will not come in the way of parties to obtain an order under Section 402 of the Act, if they so desire.

27. The following are the Annexures to this order:

i) Memo dated 4-4-1989 filed by the petitioner and respondents (not signed),

ii) Memo dated 19-4-1989 filed by the petitioner .

iii) Memo filed by the respondents in Co. P. No. 32 of 1987 dated 17-4-1989.

iv) The terms of the proposed order under Section 402 of the Act with the modifications made by this Court after eliciting views of both the petitioners and respondents.

COMPANY PETITION Nos. 32, 49, 50 and 67 OF 1987

The terms of the proposed order under

Section 402 of the Companies Act.

From the respective Memos filed by the parties, it is seen that the petitioner is prepared to convey to Chamundi 45 acres of land more particularly described in para-2 of the Agreement dated 29-1-1982 and that he is prepared to make all efforts to obtain clearance under Section 20 of the Urban Land (Ceiling & Regulation) Act, 1976 in respect of the said 45 acres of land. The Bangalore Palace property comprising of 454 acres of land.

2. It is not in dispute that pending the dispute between the parties in these petitions and also the earlier litigation, Chamaraju group is in possession of the Bangalore Palace plus 110 acres of land, out houses, tennis courts and other appurtenance in the said land. Petitioner wants Chamaraju group to hand over possession of 65 acres of land along with the buildings and structures now standing thereon, on the date of this order, t do not think that Chamaraju group should be directed to hand over possession of 65 acres even before the transfer of 45 acres of land to them in terms of the undertaking given by the petitioner in the Compromise Memo. The interest of Chamaraju group could be protected by this Court only if they are allowed to retain possession of the Bangalore Palace and 110 acres of land which are now in their possession till the petitioner obtains clearance from the Ceiling Authorities for the aforesaid 45 acres of land and conveys the same to Chamundi in accordance with law or in his failure to secure exemption under Section 20 of the Urban Land (Ceiling & Regulation) Act, 1976 in the extent of 454 acres of land.

3. However Chamundi Hotel Co. Ltd. shall not make any structural alterations or improvements either in the land or In the Palace buildings so as to prejudice the rights of the petitioner. But the Company is at liberty to attend day to day repairs and maintenance of the Palace.

4. The petitioner shall obtain clearance from the authorities under the Ceiling Act for the aforesaid 45 acres of land within a period of three months from the date of receipt of this Order after making out a case of hardship under Section 20 of the Act, The hardship being his liability to discharge the huge debt of Rs. 1,54,41,400-00. If, however, no exemption is granted in respect of any portion of the Bangalore Palace Campus, and if the application is ultimately rejected under the Act, then the petitioner has to pay to M/s Chamundi Hotel Co. Ltd./Chamaraju Group, the sum of Rs. 1,54,41,400-00 inclusive of interest till this day. Such payment shall be made within two months from the date of rejection, failing which Chamundi will be entitled to further interest on the principal amounts at the rate of 12% from the date of rejection.

5. In the course of the arguments a request was made by the learned Counsel for the petitioner that pending the transfer of 45 acres, the petitioner along with the members of his family should be permitted to reside in Bangalore Palace whenever they visit Bangalore. There is some difficulty in accepting this request, it is seen from the letter of 30th April 1976 that both the petitioner and his mother were seeking permission from Chamundi to stay in Bangalore Palace during their sojourn in Bangalore when this Palace came under the control of Chamundi. Even late Highness used to seek such permission to stay in the Palace and such permission was granted to him because he was the Chairman of the two Companies viz., Chamundi and Venkateswara. This is evident from the letter dated 29th March 1970. But, it transpires that there are some criminal cases pending between the parties in this regard and therefore I am not inclined to make an order of the Court permitting the petitioner to stay in the Bangalore Palace as a matter of right till he fulfils his obligation of transferring 45 acres of land to Chamundi, on failure to obtain exemption of any land in Bangalore Palace Campus of 454 acres, pays a sum of Rs. 1,54,41,400/- with interest till the date of payment. if the petitioner makes his best efforts and obtains the clearance as early as possible, there should be no difficulty for him to take possession of the entire Palace complex and the land appurtenant thereto excluding the said 45 acres. So, that request is rejected.

6. On the transfer of said 45 acres of land to Chamundi or on failure to get any extent of land in Bangalore Palace Campus on payment of a sum of Rs. 1,54,41,400/- Chamaraju Group which is now in control of Venkateswara will pass the necessary resolution transferring their entire interest and also 40% shares in Venkateswara to the petitioner, the consideration being the transfer of 45 acres of land by the petitioner and also his interest in Chamundi to the Chamaraju Group.

7. The parties have agreed that the family settlement of 16th of July 1984 will not in any way affect the rights of Chamundi in this order and the same is recorded.

8. It is also made clear that this transfer of 45 acres by the petitioner would be free from all attachments either statutory or otherwise including the attachment proceedings initiated by the Income-Tax Department for arrears of taxes due from the estate of late Highness. The petitioner shall obtain clearance certificate from the Central Board of Direct Taxes to the effect that the property to the extent of 45 acres agreed to be conveyed to Chamundi is free from any such attachment, charge or lien or encumbrance for giving effect to this order.

9. Notwithstanding the transfer of lands of Venkateswara to the petitioner, facilities like water, sewerage and power enjoyed by Chamundi hitherto shall continue to be enjoyed by them without any interruption or interference. Petitioner agrees to provide access to the property demarcated as plot of 45 acres, which is shown in the lay-out plan through the front right side gate of the Bangalore Palace Complex, with 100 feet wide road, as it now exists, parallel to the Railway line, which is proposed to be acquired by the Railway authorities, to be used as a public road. This extent of land covering the said Road, is not included in the extent of 45 acres that should be transferred to Chamaraju. The petitioner is entitled to receive the entire compensation to be awarded for this strip of land, from the acquiring body. Petitioner ensures that the access to the extent of 45 acres to be transferred to the Chamundi is by this 100 feet wide road, from the front right side gate, shall not be interfered with either by him or anybody claiming through him or his agents and servants.

10. The parties agree that Chamaraju shall be in exclusive control, possession and management of Chamundi Hotels and of the Bangalore Palace Property to the extent of 110 acres and all buildings therein including the main palace till the petitioner gets exemption under Section 20 of the Urban Land (Ceiling & Regulation) Act transfers 45 acres more particularly described in the layout plan attached to this order or failure to get any clearance of land in Bangalore Palace Campus, pays the said sum of Rs. 1,54,41,400/-.

11. That immediately after transfer of 45 acres to Chamundi, Chamaraju Group shall relinquish possession of 65 acres of Bangalore Palace property which was possessed by the Company in 1970 and has been treated all along as the property of the Company to the petitioner with all the existing structures on the said property- The undertaking of Chamaraju that no new tenancy would be created in 110 acres of land which is now in their possession is recorded. But, this undertaking shal! not exclude the right of Chamaraju Group to lease out the land for marriages, film shootings, seminars and other public functions as has been done hitherto.

12. It is further made clear that on the delivery of possession of 344 acres of land by Chamaraju group to the petitioner by a resolution duly passed by the Board of Venkateshwara on or before 20th of May 1989 the petitioner shall retain possession of the same without alienating his rights to third parties and if any third parties are put in possession before the petitioner complies with his obligation in this order, Chamaraju Group will be at liberty to evict them forthwith and resume possession of the land till the petitioner complies with his obligation. Likewise Chamaraju Group shall not induct any third parties to 110 acres now in the possession of Chamundi Hotel Co. Ltd. and earmarked to be returned to the petitioner till the petitioner complies with the terms of this order.

13. Both sides have agreed that these terms are the terms of the order of this Court under Section 402 of the Act and it is open to both sides to apply for any modification If it is necessary in order to give full effect to this order.

14. The memo filed by the respondents today is taken on record, Whatever rights are acquired by or occasioned to Chamundi Hotel Co. Ltd. as mentioned in that Memo will be available to them subject to any legal prohibition if the petitioner does not comply with the terms of this order.

15. The memo filed by the petitioner on 19-4-1989 indicating the total liability of late Highness to Chamaraju Group, in paragraph-7 of the said memo, in a sum of Rs. 1,54,41,400/- inclusive of interest as on this day is taken on record and the same is incorporated in this order.

16. In view of this order, no separate orders are necessary in Winding-up Petitions, namely, Company Petition Nos. 49 and 50 of 1987 and they are dismissed.

17. The suits pending in the various Courts including Company Petition No. 2/86 pending on the file of this Court are withdrawn by the petitioner and an affidavit has been filed in Court to that effect and the same is taken on record.

18. The submission of the learned Counsel for the respondents that no cases have been filed or pending against the petitioner is recorded. But, if there are any proceedings initiated by Chamaraju group or Chamundi or Venkateswara against any other authorities, it is open to the petitioner to get himself impleaded in those proceedings and have the proceedings terminated in the light of this order.

19. If under the Urban Land (Ceiling & Regulation) Act, 1976 the petitioner is called upon to surrender any portion of the land in the Bangalore Palace Complex measuring 454 acres, the petitioner, in order to give effect to this order, shall not surrender 45 acres which is ear-marked for Chamundi in the Lay-out Plan attached hereto.

20. Whatever movables that are found in Bangalore Palace as per the list signed by the petitioner and his mother shall be delivered to the petitioner after they comply with the terms of this order. But this order shall not cover the articles already returned to late Highness under acknowledgment dated

21. For the sake of keeping the records straight this portion of the order is made after the draft of the same was put to the parties and after eliciting their views and comments.

MEMO FILED BY THE PETITIONER & RESPONDENTS

The petitioner and Respondents above named state as follows:-

1. The Petitioner agrees to convey to the Respondent Company 45 (fortyfive) Acres of land as described in Paragraph 2 of the Agreement dated 29-1-1982.

2. The Petitioner agrees that he will make his best possible efforts to obtain exemption under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976, in respect of the said 45 acres of land.

3. If, for any reason, the exemption is granted for less than 45 acres of land, then the shortfall for the said extent of 45 acres of land will be made good by the Petitioner herein at the rate of Rs. 1,25,000/-(Rupees One Lakh Twentyfive thousand only) per Acre.

4. If no exemption is granted in respect of the 45 acres of land, the Petitioner agrees to pay to the Respondent No. 1 and the heirs of Chamaraju group, the amounts borrowed by late H.H. Jayachamarajendra Wadiyar from them, which are morefully detailed in the Agreement of Compromise dated 26-3-1978 entered into amongst the parties herein, with interest at the rate of 12% (twelve per cent) per annum, from the respective dates of borrowings, within 12 (twelve) months from the date of such refusal to grant the exemption and the Respondents undertake to hand over the possession of 45 acres of land retained by them.

5. The Petitioner will also transfer the shares of Maharaja's group in Chamundi Hotel (Pvt) Ltd., in favour of the Legal Representatives/heirs or Representatives of Chamaraju group.

6. The Respondents agree that the Petitioner shall be in exclusive possession, control and management of the Company M/s. Venkateshwara Real Estate Enterprises Private Limited, and the Bangalore Palace to the extent of 344 acres of land as shown in Schedule 'C' to the Compromise Agreement dated 29-1-1982 and further agree that they shall not interfere with the said Company henceforth and they will also transfer the shares of A. Chamaraju group including that of A. Kupparaju and A. Ramaraju in favour of the Petitioner, upon entering into this Compromise.

7. The Respondents will give a full and true account of the Company M/s Venkateshwara Real Estate Enterprises Private Limited, from the period beginning from 23-1-1986 till the possession and control of the said company is handed over to the Petitioner herein.

8. The Respondent No. 1 Company should confine its operation only to the extent of 45 acres of land and hand over the possession of 65 acres of land along with the buildings and structures now standing thereon, to the Petitioner herein, on the date of this compromise.

9. The Petitioner and the Respondents agree to withdraw all the suits pending before the different Courts of Law.

10. The Petitioner further agrees that he is ready and willing as on this date to execute the necessary documents pertaining to the transfer of 45 acres of land as per the directions of this Hon'ble Court, in favour of the Respondent No. 1 Company of the heirs of Chamaraju group, or their nominees.

11. On conveying the 45 acres of land as per the terms of the Agreement dated 29-1-1982, the liability of the petitioner of the estate of late Majaraja gets completely discharged with reference to the O.S.No. 335 of 1977.

WHEREFORE, the Petitioner and the Respondents pray the Hon'ble Court be pleased to dispose of the Company Petition as per the terms of this Settlement arrived at between the parties herein.

ADVOCATE FOR THE PETITIONER PETITIONER

ADVOCATE FOR THE RESPONDENTS RESPONDENTS

Place: Bangalore,

Dated: 4-4-1989.

Memo filed by the Petitioner and the Respondents

The petitioner and the respondents above named agreed to the following terms and conditions to be incorporated in the final orders to be passed by the Court.

1. The petitioner agrees to convey to the Respondent Company 45 (Forty five) acres of land as described in para 2 of the Agreement dated 29-1-82.

2. The petitioner agrees that he will make all possible efforts to obtain permission from the Restrictive under provisions under Urban Land (Ceiling and Regulation) Act, 1976 in respect of the said 45 acres of land for being transferred in the name of 1st Respondent, or members of Chamaraju group, who shall bear the costs of transfer.

3. If the respondent is agreeable, the petitioner is prepared to execute a power of Attorney in favour of M/s Chamundi Hotel Pvt. Ltd., or any member of Chamaraju group, for obtaining permission from the Competent Authority under Urban Land (Ceiling and Regulation) Act, 1976 as aforesaid, for the said area of 45 acres to be registered in favour of the said Company. The power of attorney also will authorise the said Chamaraju group of the person representing them to register the sale deed(s) and do all other acts for the transfer of the said 45 acres in accordance with law.

4. The exemption from the Restrictive provisions of the Urban Land Ceiling Act, 1976 has to be obtained within a period of 6 months from the date of the order of this Court.

5. If for any reason the exemption from the Restrictive provisions of the Urban Land Ceiling Act is granted for less than 45 acres land when the shortfall for the said extent of 45 acres of land will be made good by the petitioner herein at the rate of Rs. 1,25,000/-(Rupees One lakh twenty five thousand) per acre.

6. If the Competent Authority grants exemption from the Restrictive provisions under Urban Land Ceiling Act, the first respondent is entitled to hold 45 acres of land and deliver management of the remaining 65 acres of land, out of the said 110 acres now in management of the first respondent along with the main Palace and the adjoining buildings, retaining only 45 acres and demarcated in the plan agreed to by the parties under the Agreement dated 29-1-82.

7. If for any reason no exemption is granted, or the exemption applied for in respect of the said 45 acres of land is rejected by the Competent Authority, the petitioner agrees to pay to the respondent and/or the heirs of Chamaraju group the amounts due by late H.H. Jayachamarajendra Wodeyar amounting to Rs. 1,54,41,400/- (Rupees One crore fifty four lakhs forty one thousand and four hundred only) which is quantified as noted in the margin upto the date of this order without any further interest thereon. This amount of Rs. 1,54,41,400/- (Rupees One crore fifty four lakhs forty one thousand and four hundred only) shall be paid to the first respondent or to Chamaraju group within one month from the date of such refusal or rejection of such exemption from the Competent Authority, in full and final satisfaction of all the claims by the first respondent and the Charnaraju group against the petitioner. In case, for any reason exemption under Urban Land Ceiling Act is not obtained within a period of 6 months or a reasonable time, the Respondent shall continue to retain 45 acres of land only in perpetuity till the Urban Land Ceiling clearance is obtained and deliver Management to the petitioner of the remaining 65 acres of land out of 110 acres now in management along with the Main Palace and other adjoining buildings, in accordance with the agreed plan under the Agreement of 29-1-1982.

*Principal

Rs.

28,45,000

18,75,000

3,00,000

50,20,000

Interest

54,62,400

42,75,000

6,84,000

1,04,21,400

Prin. 50,20,000

Int. 1,04,21,400

1,54,41,400

8. There upon the petitioner will transfer the shares of the Maharaja group in Chamundi Hotel Pvt. Ltd., in favour of the L.Rs/heirs or representatives of the Chamaraju group.

9. The respondents agree that the petitioner shall be in exclusive control and management of the company M/s. Venkateshwara Real Estate Enterprises Pvt. Ltd., to the extent of 344 acres of land as shown in Schedule 'C' to the Compromise Agreement dated 29-1-1982 and further agree that they shall not interfere with the said Company henceforth and they will also transfer the entire shares of A. Chamaraju group Including that of A. Kupparaju and A. Ramaraju in favour of the petitioner, from the date of this order.

10. The respondents will give a full and true account along with all the Records and account books and deliver management of the same of the Company 'M/s. Venkateshwara Real Estate Enterprises Private Limited, from the period beginning from 23-1-1986 till the management and control of the said Company is handed over forthwith to the petitioner herein.

11. The petitioner further agrees that he is ready and willing as on this date to execute the necessary documents pertaining to the transfer of 45 acres of land as per the directions of this Hon'ble Court, in favour of the Respondent No. 1 Company or the heirs of Chamaraju group, or their nominees.

12. On conveying the 45 acres of land as per the terms of the Agreement dated 29-1-1982, the liability of the petitioner of the estate of late Maharaja gets completely discharged with reference to O.S.No. 335 of 1977.

Advocate for Petitioner Petitioner

Advocate for Respondents Respondents

Bangalore,

Date: 19-4-1989

_____

MEMO DATED 17-4-1989

MEMO FILED BY RESPONDENTS

The Respondents above named state as follows:

On the direction of the Hon'ble Court, the Respondents have given proposals to give effect to the Agreement dated 29-1-1982, except to the extent it stands modified/varied, as specifically mentioned therein, because of the subsequent events. This was a composite offer, each part thereof being dependent on the other, and the acceptance of the proposals by the Petitioner, shall be absolute and unqualified, but the Petitioner has not accepted these proposals according to the terms therein. There is possibility that the Petitioner, while accepting a part of the offer, may try to confine his dispute to the other part - of the proposals, to deny the rights like adverse possession etc., acquired by or accrued to, the two Companies over a period of 19 years, from 30-11-1970. There is also the possibility that the Petitioner may dispute the right of Chamaraju Group, to have complete shareholding in the Company M/s Chamundi Hotel (P) Ltd. and to restrain him from dealing in any manner with the shares held by late Maharaja or other members of Maharaja Group, and to get all the shares standing in the names of late Maharaja and members of that group, transferred to the legal heirs of late Sri A. Chamaraju or their nominees and the consideration being performance of other obligations; the right to get the extent of 45 acres cleared from any attachment, lien, charge or encumbrance, from the Income-tax, Wealth tax or Estate Duty or any liability imposed on the Estate of late Maharaja; the right to get alternative plot of 45 acres or any shortfall therein, in the property earmarked for the other Company Sree Venkateshwara Real Estate Enterprises (P) Ltd., as provided in para 9 of the Agreement of 29-1-1982, marked in green colour in the plan annexed to that agreement; the right to get the other obligations entered into on behalf of the 1st respondent company with third parties till date of handing over control and management of the said Company to the Petitioner, such as licence given to hoardings within the Compound abutting Bellary Road, rnango yard, sand yard etc.

Hence it is respectfully prayed that the Hon'ble Court may be pleased to take these facts into consideration, in order to avoid any prejudice being caused to the rights that were acquired by or accrued to, the two companies over these 19 years, and to avoid the Petitioner from using any part of the proposals, to his advantage, as each part of the proposals being dependent on the other.

BangaloreDated; 17-4-1989 Respondent-1 & 3Advocate for Respondents

Subject	Company
Court	Karnataka High Court
Decided On	Apr-04-1989
Case Number	Co. Petn. Nos. 32, 49, 50 and 67 of 1987
Judge	Bopanna, J.
Reported in	ILR1989KAR2603
Acts	Companies Act, 1956 - Sections 397 and 398
Appellant	Srikanta Datta Narasimharaja Wadiyar
Respondent	Sri Venkateswara Real Estate Enterprises (Pvt.) Ltd.
Appellant Advocate	Nanavathi, Adv. for ;M.S. Subbarayappa, Adv.
Respondent Advocate	T. Raghavan and ;A.C. Yaduraya Gowda, Advs.

Srikanta Datta Narasimharaja Wadiyar Vs. Sri Venkateswara Real Estate Enterprises (Pvt.) Ltd. - Court Judgment