JUDGMENT :

PENDSE, J.:

The appellant company was incorporated on 23 January 1948, and the founder members were D.S. Kalyanpur and his two brothers J.S. Kalyanpur and original respondent 2 S.S. Kalyanpur. One Ambala Patel was also a founder member but retired in the year 1954. D.S. Kalyanpur was governing director of the company till his demise in the year 1956. The entire share holding of the appellant-company was held by the members of Kalyanpur family. The registered office and Bombay sales office of the company are situated in Bombay. In the year 1950 the company opened a branch office at Madras and original respondent 2 was appointed to manage the affairs of Madras office. The company also set up a factory at Lonavala to manufacture grease nipples, grease guns, oil guns etc., and the distribution of these articles in the Southern States, i.e., Tamil Nadu, Andhra Pradesh, Karnataka and Kerala was entrusted to original respondent 2.

In addition to being a director and in control of the company, original respondent 2 entered into an agreement with the company whereby original respondent 2 was shown as, an employee entitled to draw a monthly remuneration of Rs. 450 with effect from 1