JUDGMENT :-

( 1. ) This is an appeal from the decision of the High Court of Judicature at Bombay. The respondent company was incorporate in 1908 with an authorised capital of Rs.10. lakhs divided into 10,000 shares of Rs. 100.00 each By 1945. 5, 404 shares were subscribed and Rs. 25.00. per share were called on each of them. Four thousand five hundred and ninety-six shares out of the authorised capital thus remained unissued. From about July 1944, Mr. Padampat Singhania a businessman interested in many companies began to purchase shares of the company from the holders thereof on a large scale. This naturally put an the price of the shares considerably. On 18/09/1944, at a Board meeting of the directors the Chairman drew attention of his co-directors to the attempt thus made by an outsider to corner the shares of the company. In pursuance of a resolution passed at the meeting, the chairman issued a circular to the existing shareholders acquainting them of the true position and suggesting that if they wanted to part with the shares they might get in touch with the chairman. A circular was accordingly issued with the result that two rival groups were thus offering to buy shares from th