The judgment establishes the legal principles governing suits alleging fraud upon the minority shareholders, emphasizing the necessity of specifying the wrongdoers and the form of the suit.

JUDGMENT

Ameer Ali, J. - The defendant company was formed as long ago as 1874 with a capital of eight lakhs divided approximately into 800 shares. Since that date, it has had its ups and downs, but it has spun and woven. It has made its profits. It has turned out goods, and no doubt if its management would devote its attention more exclusively to spinning and weaving it would be a flourishing industrial concern. Among the downs, may be mentioned the winding up petition of 1930, which ultimately resulted in borrowing some 70 lakhs upon debentures. In 1931 largely I gather as the result of the need for finance managing agents were obtained in the shape of the Jhajharia and Dhandhania families, who combining into the unit of Morarji Goculdas & Co., became for a period the managing agents. If I recollect rightly, the Jhajharias became selling agents under an agreement, the term of which was 20 years. The managing agents under their agreement became liable for advances to the extent of 20 lakhs in two stages. These advances were secured by the company by hypothecating its stock and by depositing debentures of a certain aggregate value. The actual management of the company was carried on by Ramdhonedas Jhajharia, who gave evidence before me. In January 1933 the managing agents were dismissed. Of the directors who took that action only one survives, Mr. Cama. This breach between the Jhajharias and the company led to a series of suits : a suit by one member of the Jhajharia family impugning the act of the directors; a suit by Morarji Goculdas & Co. for damages and or specific performance of the managing agency agreement; a suit by the Jhajharias in respect of certain debentures relating to their loan; and lastly to certain disputes between the Jhajharias as selling agents and the company, which were submitted to arbitration. The selling agency dispute seems to have dragged on indefinitely. In the suits the Jhajharia interest with the exception of the debenture suit seems to have been uniformly unsuccessful, subject to this that the managing agents' suit is still under appeal to the Judicial Committee.

2. For the period 1933 to 1937 there were no managing agents. In February 1937 again coupled with arrangements for further advances, this time to the extent of 12 lakhs, the Murarkas were appointed managing agents, and the trouble already indicated became more acute. The Jhajharias before August 1938 had acquired some 255 shares. They represented what might be called the opposition; in particular, they were demanding some form of enquiry into the management of the company. On 31st August 1938, there was a company meeting, which has been the subject-matter of conflicting evidence, rather the circumstances surrounding that meeting have been the subject-matter of conflicting stories. The plaintiffs' case, generally speaking, is that the incidents of this meeting and those surrounding it contained a successful attempt to buy over or dispose of the opposition. To this incident and its implications I may have again to refer. In February 1939 the selling agency was terminated, according to the Jhajharias, wrongfully. This matter was also referred to arbitration. Apparently the company claimed against the Jhajharias considerable sums alleged to be due from them in their capacity as selling agents and in pursuance of this claim the company or the directors purported to declare a lien over a large proportion of the Jhajharias' shares, I think 211 shares. Shortly after this, at any rate before the end of 1939 the Murarkas caused themselves to be registered as owners in respect of 163 shares out of the 265 originally acquired by the Jhajharias. The Murarkas claimed to obtain these by purchase; the Jhajharias claimed that the Murarkas were no more at the highest than subpledgees, the intermediate pledgees being the Dalmias.

3. In January 1940 a tender was made in order to procure the release of these shares unsuccessfully. Then followed first police Cou