ABDUL HADI J.

This original side appeal by the three respondents in C. P. No. 65 of 1987 which was filed by the respondent herein under sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as "the Act"), is against the final order therein dated January 12, 1996, directing the first appellant company to purchase the shares held by the respondent herein and his "wife and children" and to set off against that purchase price the amounts "lawfully due" to the first appellant company from the respondent herein, after valuing the said shares by taking into account the paid-up capital as on the date of the institution of the petition and the "present market value" of the assets owned by the said company less its liabilities as on December 31, 1995. Even though the said impugned order held that the allegations of mismanagement made against the appellants "have not been established" and even though it also held that the conduct of the respondent herein towards the abovesaid company is "far from being praiseworthy", (he having "admittedly" failed to pay to the company the value realised from the sales of stocks of the company and "diverted the funds to his own unsuccessful business") and even though it also observed that while according to the respondent herein about Rs. 13 lakhs is due from him to the abovesaid company, according to the appellants, the dues exceed Rs. 40 lakhs; the said order held that, despite the actions of the appellants being "not illegal", the effect of those actions is "oppressive" of the rights of the respondent herein. In view of this finding regarding oppression, it appears, the impugned order has given the above referred to direction under section 397 of the Act, after relying on the decision in Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd., 1981 AIR(SC) 1298, 1981 (3) SCR 698, 1981 (3) SCC 333, 1981 (51) CC 743, 1982 (1) CompLJ 1, 1981 (2) Scale 959, which dealt with the concept of oppression underlying in the said section 397 (while section 398 requires "mismanagement" for its application).Regarding the above referred to "oppression", it concludes as follows in paragraph 37 :

"the total exclusion of the petitioner (respondent herein) from the management;

the increase in the share capital even when the business was not yielding any profits, and at a time when the respondents (appellants herein) were fully aware of the petitioner's incapacity to contribute further capital;

the continuous losses of the company resulting in the denial of any benefit to the petitioner on his shareholding even while the respondents and members of their immediate family functioned as permanent directors, and enjoyed the perquisites, received remuneration and commissions from the company on its sales and purchases, by effecting such sales and purchases through firms owned by them, cumulatively, has resulted in the oppression of the petitioner's legal and proprietary rights as a shareholder in the company. "

The impugned order also observes thus :

" The fact that the company owns valuable urban land and commercial building---such value in view of the increasing prices being likely to be much more than the total liabilities of the company---is of little consolation to the petitioner at the present time. "

The impugned order also observes as follows :

" As regards the losses incurred, the explanation offered at para 52 of the second respondent's counter-affidavit is that the company cannot stunt its own growth by paying income-tax without availing of benefits such as depreciation, investment allowance, development rebate, etc. In the light of that explanation, the financial position of the company is apparently much stronger than that indicated by the losses shown in the balance-sheets, and profits and loss accounts of the company." *

In arriving at the abovesaid conclusions and giving the abovesaid directions, the learned trial judge, in the impugned order, has chosen to "lift t