J.P. SRIVASTAVA AND SONS PVT. LTD. AND ORS. versus M/S GWALIOR SUGAR CO. LTD. AND ORS.

Citation: [2004] SUPP. 5 S.C.R. 648 · Decided: 26-10-2004 · Supreme Court of India · Bench: RUMA PAL · Disposal: Leave Granted & Disposed off
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Judgment (excerpt)

A 
J.P. SRIVASTAVA AND SONS PVT. LTD. AND ORS. 
v. 
MIS GWALIOR SUGAR CO. LTD. AND ORS. 
OCTOBER 26, 2004 
B 
[RUMA PAL AND ARUN KUMAR, JJ.] 
Companies Act-Sections 397, 398 and 399(3) 
Petition by shareholders including a trust-Support of share holders 
C having 10% of total issued shares-Calculation of-Held: Shareholding of 
the trust was to be taken into account as trust deed allowed a co-trustee-
petitioner to act for the trust under express authorisation. 
Petition by Shareholders including a trust-Beneficial interest in part 
of shares held by trust already vesting in its beneficiaries prior to filing of 
D petition-Held; This was irrelevant as beneficial interest rf'uld not make 
owner thereof a member of company-It could not mean that owner of shares 
as registered with company was incompetent to file the petition. 
Shareholders supporting petition-letter of their consent-Held; 
Requirement of filing such letter with the petition was not mandatory in the 
E sense that their non-filing would ipso facto result in dismissal of petition-
/I was especially so in view of power of CLB to pass any order for ends of 
justice and dispense with requirement of regulations-Only requirement was 
of filing of document as proof that consent of supporting shareholder had in 
fact been obtained prior. to filing of petition-substantial compliance with 
· F the rule was sufficient provided no prejudice was caused-Regulations 18 
(Serial 27 of Annexure lll), 44 and 48 of Company law Board Regulations 
1991. 
Support of petitioners with qualifYing percentage of shares-Held; If 
Court is satisfied that petitioners represent a body of shareholders holding 
G requisite percentage, it could assume that involvement of company in litigation 
was not lightly done and not reject the petition on a technical requirement. 
H 
Objection as to maintainability-Held-If objection is taken by demurrer 
ClB could decide the issue based on averment in the petition alone, accepting 
648 
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J.P. SRIVASTAVA AND SONS PVT.LTD. v. GWALIOR SUGAR CO.LTD. 
649 
the pleas therein as correct-However, Where CLB takes into consideration A 
facts outside the petition, it cannot not foreclose the petitioner from supporting 
its case in the petition on the basis of evidence not annexed thereto-On 
facts, held that as objection of prior consent of shareholders holding 10% 
of total issued shares was taken in application by respondent, CLB should 
have determined the issue on evidence and dismissal of petition only because 
letters of consent had not been annexed with it was incorrect-Regulation B 
24 of Company Law Board Regulations 1991. 
Appellants, a group of minority share holder in a company-respondent 
no. 1, filed a petition before Company Law Board (CLB) under Sections 397 
and 398 of Companies Act complaining of mis-management and oppression C 
of the company. Respondent No. 8 contended that the petition was not 
maintainable as requirement of Section 399 of Companies Act of petitioner 
having 10% of total issued shares was not met by the appellant as that 
calculation was done with respect to equity shares only whereas it should have 
also included preference share. Petitioner-appellant no. 3 contended that she 
had filed the petition on her behalf as well as family trust which held 1029 D 
preference shares, and hence the petition was maintainable. CLB held that 
petition was not maintainable as the said trust had not consented to filing of 
the petition by no. 3. Single judge of High Court dismissed the appeal against 
that order on the grounds that since the Trust could neither delegate their 
powers nor authorise one of them to represent the trust, that consent of the 
trustees was not pleaded, that there was no compliance with Regulation 18 of E 
Company Law Board Regulations 1991, and that the shares of trust had vested 
in the beneficiaries. Division Bench upheld the dismissal of the appeal. H .. ·nce 
the present appeal. 
Question before the Court was whether trustees could authorise one of F 
them to initiate proceeding for and on behalf of the trust, and if so, whether 
appellant no. 3 was so authorised. 
Disposing of the appeals, the Court 
HELD: 1. Although as a rule trustees must execute their duties of their G 
office jointly, this general principle is subject to the following exceptions when 
one trustee may act for all (1) where the Trust Deed allows the trusts to be 
executed by one or more by majority of trustees (2) where there is expres
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