JUDGMENT :

Sikri, J.

These two appeals by certificate are directed against the judgment of the High Court of Madras, directing the winding up of the appellant, the Amalgamated Commercial Traders Private Limited, hereinafter referred to as the appellant-company.

2. The appellant-company was incorporated as a private company limited by shares on January 29, 1948. It had an issued and subscribed capital of Rs. 1,00,000 divided into 1,000 fully paid shares of Rs. 100 each. The company had the sole selling agency of the Indian Sugar and Refineries Ltd., Hospet, and of the Salar Jung Mills Ltd. A.C.K. Krishnaswami and C. Hariprasad were the directors of the company till May 2, 1960.

3. On December 5, 1959, a notice was given regarding the calling of the eleventh annual general meeting of the company on Wednesday, December 30, 1959. In the circular annexed to the notice, it was stated that" your directors feel that they must advert to the fact that our principals, the Indian Sugar and Refineries Ltd. and the Salar Jung Sugar Mills Ltd., have unjustifiably and unaccountably withheld commission accruing to us as from 1st January, 1959, and have not remitted any part of it, in spite of repeated demands. We have, therefore, been put to inconvenience and have not been able to make our tax payments in time. The authorities have served on our principals notices for collection of our taxes from them." It was further added that " as on September 30, 1959, we compute that after making payment of taxes on our account to the Government, the balance payable to us by our principals will roughly amount to over Rs. 1,90,000. You will note that the disbursement of the proposed dividends to our shareholders will depend on our being able to collect outstandings from our principals."

4. On December 30, 1959, a dividend was declared and it was resolved " that a dividend of Rs. 100 per share (taxable) on the equity shares be paid to such shareholders as appear on the register of members as on date, payments to be effected when commission due from principals are realised." It appears that serious differences arose between the directors and the shareholders, and on February 23, 1960, a requisition was sent by some shareholders, including S.P. Parasrampuria, to call a meeting to consider and pass a resolution, the substance of which was to constitute a committee consisting of three shareholders to look after the management of the company. The managing director, A.C.K. Krishnaswami, sent a lengthy reply to the requisitionists on March 7, 1960, explaining the affairs of the company. However, the meeting asked for was called for April 9, 1960.

5. On March 22, 1960, A.C.K. Krishnaswami filed a petition under sections 397 and 398 of the Companies Act, 1956, inter alia, praying that the holding of the meeting called for April 9, 1960, be restrained. By order dated March 25, 1960, the High Court stayed the holding of the meeting. By a resolution dated April 12, 1960, S.P. Parasrampuria was co-opted as a director of the company with effect from April 12, 1960. It appears that a compromise was arrived at between the parties to the petition under Sections 397 and 398, and 216 shares of the appellant-company, registered in the name of A.C.K. Krishnaswami and/or Factors Private Ltd. were sold at Rs. 800 per share to the party of Parasrampuria. Parasrampuria filed an affidavit withdrawing all allegations and so did Krishnaswami. The petition under Sections 397 and 398 of the Companies Act was withdrawn and it was accordingly dismissed on April 20, 1960, but this was not the end of the dispute between the parties.

6. On May 5, 1960, one M. R. Banka wrote to the company claiming dividend on the 216 shares alleged to have been purchased by him and requested that no payment be made to the previous registered holders. On May 17, 1960, Hariprasad wrote to the company demanding the payment of Rs. 1,750 as net dividend on the 25 shares held by him on December 30, 1959, The managing dir