JUDGMENT

BHARUCHA, J. - These are cross appeals against the judgment and order of a Division Bench of the High Court or Madhya Pradesh.

2. The appellant in Civil Appeal No. 1975 of 1986, Shekhar Mehra (Mehra), and the second appellant in Civil Appeal No. 1974 of 1986, R.K. Dubey (Dubey) promoted Kilpest Pvt. Ltd. (the company) and were its first Directors. Dubey was the Managing Director and Mehra was the Joint Managing Director. The two fell out and Mehra did not attend the Board or other meetings of the company after 1-9-1981. In December 1981 Mehra, his relations and friends (the Mehra group) held 1500 shares of the company of Rs 100 each and Dubey, his relations and friends (the Dubey group) held 1625 shares. Thereafter the Dubey group increase its shareholding so that when the present petition was filed they held 4500 shares. As a Board meeting of the company held on 2-1-1982, K.P. Mishra, the third appellant in Civil Appeal No. 1974 of 1986, was appointed to the Board as an Additional Director. In the Extraordinary General Meeting held on 15-1-1983, Articles 84 to 86, 91 and 93 of the Articles of Association of the company, which provided for the management of its business by Dubey and Mehra for life with equal remuneration, were altered and the post of Joint Managing Director was abolished. At a Board meeting held on 9-4-1983, it was resolved that Mehra had ceased to be a Director. He then filed a civil suit, with which we are not directly concerned, and then the present petition for oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956.

3. It was the case of Mehra in the petition that the meetings subsequent to December 1981, had been called without notice to him so as to surreptitiously allot additional shares to the Dubey group and remove Mehra from the post of Joint Managing Director. The allotment of additional shares and the alteration of the aforesaid articles had altered the basic structure of the company. While this might be a ground for winding it up, Mehra sought relief under Sections 397 and 398 of the Act. The petition also set out various alleged acts of mismanagement by Dubey. The petition was contested. The learned Single Judge found it appropriate to try the petition as a winding-up petition. The company appealed. The Division Bench allowed the appeal, set aside the order of the Single Judge and dismissed the petition. Mehra then filed an appeal to this Court, which was allowed and the matter was remanded.

4. Upon remand the parties went to trial on the basis of affidavits. The Single Judge dismissed the petition, whereupon Mehra filed the appeal upon which the order under challenge was passed. The Division Bench came to the conclusion that there was no merit in Mehras case that he had not been given notice of the meetings. If found that the company could not be treated as a partnership concern and there was no ground for winding it up under the just and equitable clause. Dubey was found to have committed an act of breach of faith by appropriating to himself the sum of Rs 52,875 belonging to the company. Having regard to its powers under Section 402 of the Companies Act, the Division Bench directed that Mehra be appointed a Director of the company enjoying all the powers and privileges enjoyed by the other Director, K.P. Mishra; that Dubey should pay back to the company the sum of Rs 52,875; and that the Registrar of Companies should inspect the records of the company for the period 1981 till the date of the judgment regarding purchases of raw materials from the parties mentioned therein and if it was found that no such purchases had been made and payments were to fictitious parties, Dubey should pay back the amount thereof.

5. At the stage when leave to appeal was given by this Court, the operation of the order under challenge was stayed. It was directed that the company would function in the manner it was functioning during the pendency of the appeal before the High Court