( 1 ) BEFORE I examine the various arguments which were advanced before me on the merits of the petition I must refer to two objections of a preliminary nature which were urged by Mr. I. M. Nanavati learned advocate appearing on behalf of Bharat Kala Bhandar Limited in answer to the petition in so far as the petition was directed against Bharat Kala Bhandar Limited. Mr. C. C. Gandhi learned advocate appearing on behalf of the Company and the learned Advocate General appearing on behalf of the Directors also supported Mr. I. M. Nanavati in these preliminary objections. The first preliminary objection was that in a petition under sec. 397 or 398 of the Companies Act 1956 the Court has no jurisdiction to set aside a transfer effected by a Company in favour of a third party except in a case falling under sec. 402 (f ). The argument briefly was that sections 397 and 398 of the Companies Act 1956 were on a true construction aimed at putting an end to a continuing state of affairs and not at compensating the minority shareholders for a wrong which was no longer a continuing wrong and that the remedy given by those sections being a preventive remedy no order could be made by the Court setting aside a transfer already past and concluded between a Company and a third party unless such order was expressly authorized as in a case covered by sec. 402 The petitioners were therefore not entitled so ran the argument to have the sale of the movable and immovable properties of the Company effected in favour of Bharat Kala Bhandar Limited set aside even if the allegations made by them in the petition were well-founded and they were in a position to show that such sale was a link in the chain of conduct which could be said to be oppressive to the petitioners and other minority shareholders or prejudicial to the interests of the Company. The second preliminary objection which was urged in the alternative was that even if the power of the Court under sections 397 and 398 of the Companies Act 1956 extended to making an order setting aside a transfer already made by a Company in favour of a third party such power could not be exercised in the present case since Bharat Kala Bhandar Limited was on the facts and circumstances of the case protected by the doctrine of indoor management. The validity of these preliminary objections turned on the true interpretation to be put on the provisions of sections 397 and 398 of the Companies Act 1956 I shall therefore immediately proceed to examine the scope and ambit of these sections.

( 2 ) SECTIONS 397 and 398 are part of a fasciculus of sections commencing from sec. 397 and ending with sec. 407 and this fasciculus of sections occurs in Section A dealing with Powers of Court under Chapter VI headed Prevention of Oppression and Mismanagement. Under sec. 397 any members of a Company who complain that the affairs of the Company are being conducted in a manner oppressive to any member or members including any one or more of themselves may petition the Court which if satisfied that the Companys affairs are being conducted in a manner oppressive to any member or members and that the facts justify the making of a winding up order on the ground that it is just and equitable to do so but that this would unfairly prejudice such member or members may make such order as it thinks fit with a view to bringing to an end the matters complained of. This section corresponds to sec. 210 of the English Companies Act 1948 Sec. 398 considerably enlarges the scope of the remedy by providing that any members of a Company who complain that the affairs of the Company are being conducted in a manner prejudicial to the interests of the Company or that a material change has taken place in the management or control of the Company and that by reason of such change it is likely that the affairs of the Company will be conducted in a manner prejudicial to the interests of the Company may apply to the Court and the Court may if