Ramachandra Iyer, J. — This appeal filed at the instance of Syed Mahomed Ali, a shareholder, arises from the judgment of Subrahmanyam, J., in O.P. No. 159 of 1956 giving certain directions under sections 397 and 398 of the Indian Companies Act. That petition was filed by Sundaramurthy the first respondent supported by 42 shareholders of the Neptune Studios, Ltd., complaining of several prejudicial acts and breaches of trust on the part of respondents 2 to 8, the directors, alleging oppression of the minority by them and praying for regulating the conduct of the company’s affairs in future. Neptune Studios, Ltd., which will hereafter be referred to as “the company” is a public limited company with a subscribed share-capital of Rs. 3,15,000 consisting of 6,150 shares, 4,000 founder-shares of Rs. 25 each and 2,150 ordinary shares of Rs. 100 each. The company owns a studio and an equipment for the production of cinematograph pictures. The company hires out the premises and the equipment and affords facilities to producers of pictures for monetary consideration. The fortunes of the company do not depend on the success or failure of the pictures produced by it as it does not itself produce any picture. Such being the nature of the business of the company there is no scope for loss if its affairs were properly managed. The directors of the company, viz., respondents 2 to 8, were interested either as directors or as partners or proprietors in several picture-producing concerns like the Jupiter Pictures (Private) Ltd., Saravanabhava Pictures, Manohara Pictures, Unity Pictures and Jyothi Pictures. These producing concerns will hereafter be referred to as the “Jupiter group.” The second respondent who had interest in more than one concern in the group became a director of the company in 1951. In course of time respondents 2 to 8 and their relations in all about ten shareholders acquired and held 3,652 founder shares and 1,098 ordinary shares of the total value of Rs. 20,1100. According to the petitioners, the directors having obtained this large volume of shares misused their position as a result of which the company sustained loss year after year. Although it appears that even before the advent of the second respondent and his friends on the directorate the company showed loss, the mounting losses in succeeding years after 1951 was a matter of concern to the shareholders. By a resolution of the general body at a meeting held on 25th December, 1956, a committee of five shareholders including Sundaramurthy and Syed Mahomed Ali was appointed to investigate and report about the affairs of the company. The committee submitted its report on 29th January, 1956, wherein quite a good number of irregularities and breaches of trust on the part of the directors were mentioned. No action appears to have been taken on the report of the committee. Thereupon Sundaramurthy with the consent of 42 shareholders filed an application under sections 397 and 398 of the Indian Companies Act for the regulation of the future conduct of the company’s affairs. In that petition various charges were made against the directors. One of the main charges was that the directors of the company purporting to give rebate to producers gave a rebate of a sum of Rs. 1,35,000 to the Jupiter group whereas for an equal number of pictures produced for outsiders the amount of rebate given was only Rs. 12,800. There was thus illegal profit of Rs. 1,20,000 made by the directors to the detriment of the interests of the company. The second charge was that he directors have been creating mortgages and charges over the properties of the company in favour of their close relations, respondents 9 to 13 with the object of having a “stranglehold” over the company. The mortgages were alleged to be fraudulent transactions unsupported by consideration. It was further alleged that the accounts of the company were not maintained properly nor were they passed at any general body meeting of the share

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