HANUMAN PRASAD BAGRI AND ORS. versus BAGRESS CEREALS PVT. LTD. AND ORS.

Citation: [2001] 2 S.C.R. 811 · Decided: 27-03-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

.. 
HANUMAN PRASAD BAGRI AND ORS. 
v. 
BAGRESS CEREALS PVT. LTD. AND ORS. 
MARCH27,200! 
[S. RAJENDRA BABU AND K.G. BALAKRISHNAN, JJ.] 
Company Law : 
Companies Act, 1956-Sections 397, 398-Petition on grounds of op-
pression and mismanagement-Finding by Company Judge regarding misman-
agement-No finding of just and equitable grounds for winding up and other-
wise it will cause hardship to petitioners-Appeal allowed by Division Bench-
Held, interpretation given by Division Bench is just and proper. 
On a petition filed by the Appellant-Petitioners under Sections 397 
A 
B 
c 
& 398 of the Companies Act, 1956, the Company Judge held that the 
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petitioners' grievance in regard to ouster from the management of the 
company is legitimate and justified; that respondent No. 3 had maneuvered 
the matters in such a manner it resulted in the ouster of petitioner No. 1 
from the management of the Company and directed Petitioner No. 1 and 
his group members to sell their shares to respondents at a value to be . 
determined by a Valuer as on the date of the petition and also held that the 
E 
Petitioner No. 1 had been illegally removed as ~n Executive Director of the 
Company. An appeal was filed by the Company and by respondent No. 2. 
The Petitioners also claimed in that appeal that the Company Judge should 
have given guidelines for valuation of the shares on the market value and 
should have also provided for payment of interest on the amount receiv· 
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able by them both on account of share value and remuneration. A Division 
Bench of the High Court allowed the appeal filed by Respondents holding 
that one of the conditions precedent for granting relief under Section 397 
of the Act is that the Petitioners should prove that winding up of the 
company would unfairly prejudice the Petitioners who are claiming of 
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oppression, that otherwise the facts will justify the making of a winding up 
on just and equitable grounds. 
). 
In appeal to this Conrt, the appellant contended that even if a case of 
oppression is not made out by the Petitioners, the Court is not powerless 
under Section 397 of the Act to do substantial justice between the parties 
H 
811 
A 
B 
c 
D 
812 
SUPREME COURT REPORTS 
[2001] 2 S.C.R. 
and, therefore, on the facts available in the case the order made by the 
Company Judge should have been maintained and that it is not possible 
for the Petitioners and respondents to carry on business of the company 
together and the only solution is that one group shareholders should pur-
chase· the shares of the other group and that the Petitioners have no 
objection in selling shares of their group at a proper value. 
Dismissing the Appeal, the Court 
HELD : 1. The conclusion of the Division Bench that the company 
petition is liable to be rejected on the ground that there is no finding by the 
Company Judge that the winding up will unjustly prejudice the company 
is upheld. [815-C] 
2. The interpretation of the Division Bench that if the facts fall short 
of a case upon which the company court feels that the company should be 
wound up on just and equitable grounds and in that event no relief can be 
granted under See. 397 of the Act, is also upheld. [817-DJ 
Needle Industries (India) Pvt. l.Jd. v. Needle Industries New (India) 
Holding l.Jd., AIR (1981) SC 1298, referred to. 
CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) No. 
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17137 of 2000. 
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From the Judgment and Order dated 25.8.2000 of the Calcutta High 
Court in A. No. 255 of 1993. 
Jaideep Gupta and Praveen Kumar for the Petitioners. 
A.K. Ganguli, Somnath Mukherjee, Dhruv Agrawal and Goodwill 
Indeevar for the Respondents. 
The Judgment of the Court was delivered by 
RAJENDRA BABU, J. A petition under Sections 397 & 398 of the 
Companies Act, 1956 [hereinafter referred to as 'the Act'] was filed before 
the Calcutta High Court on grounds of oppression and mismanagement. The 
learned Company Judge held that the Petitioners' grievance in regard to 
ouster from the management of the company is legitimate and justified; that 
respondent No.3 had manoeuvred the matters in such a manner to result in 
the ouster of the Petitioner No. I from tlie management of the Company. The 
llANUMAN PRASAD BAGRI v. BAGRESS CEREALS PVT. LID. [RAJENDRA BABU, J.] 813 
learned Company Judge further directed the Petitioner No. I and his group 
members to sell their shares to respondents at a value to be determined by 
a Valuer as on 16.5.1988, that is, the da

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