A person who is neither a shareholder nor a member of a company lacks locus standi to file an application under Sections 391 and 395 of the Companies Act, 1956.

PAYASAT, J.

( 1 ) THIS is a Letters Patent Appeal against the order of the learned company Judge by which the application filed by the appellant styled as one under sections 391 and 395 read with section 634 of the Companies Act, 1956 (in brief, the 'act') has been rejected, inter alia, on the ground that the same is not maintainable at the instance of the appellant, he being neither a share-holder nor a member of M/s. East Coast Breweries and Distilleries Ltd. (hereinafter referred to as the 'company' ).

( 2 ) THE facts and events leading to the filing of this appeal as portrayed by appellant are as follows:appellant is the promoter of company which was incorporated on 15-4-1969. There was participation in the equity shares by appellant and his associates to some extent. The other major share-holders are Industrial Development Corporation Limited (in short, 'idc) and the State Government, Private parties held equity shares to the tune of Rs. 5 lakhs, Appellant with his own efforts approached different financial institutions for advancement of loans to the company for carrying on its smooth business. He was appointed as Managing Director of the company with effect from 15-9-1974 for a period of five years. In an extraordinary general body meeting held on 25-11-1975 decision was taken to restructure the company at corporate level and question of removal of appellant from office of Managing Director was also discussed. Notice was issued for holding an extraordinary general body meeting of the company on 26-12-1975 to transact the business of restructuring the company by removing its Managing Director. A group of share-holders led by one Mr. N. R. Murty (hereinafter referred to as 'murty) filed Company Act Case No. 5 of 1975 under Sections 397 and 398 of the Act on 15-12-1975 for a direction to the company to conclude the formal agreement and give necessary undertaking to Industrial Development Bank of India (in short, 'idbi'), to quash the resolutions purported to have been passed at the 40th and 41st meetings of Board of Directors in connection with removal of the Managing Director and withdrawal of his powers to restrain the company and its Directors from holding the proposed extraordinary General Body meeting fixed for the 26/12/1975 and/or in the alternative to direct the company to buy the shares held by the appellant, his friends and associates at par with interest from the date of investment till payment and for several interim directions. On 24-12-1975 after hearing both sides, this Court permitted the company to hold extraordinary general body meeting as scheduled, but directed that any decision taken in such meeting was not to be implemented without its leave. Finally by judgment dated 7-1-1977, application filed was disposed of. Certain directions were given with many of which we are not concerned. However, the direction which is relevant for our purpose is that appellant was to continue to function as Managing Director. Appellant claims that though the company started production of Beer at Paradip in the year 1979, and earned a good reputation, IDC did not co-operate in management and refused to furnish required guarantee to financial institutions and bankers who demanded further guarantee due to escalation of the cost. Appellant suggested IDC to unload their shares in favour of nominees of appellant, but there was no response to the said offer. On 13-1-1983 appellant wrote a letter intimating Secretary of Industries Department, Government of India with a copy to IDC that on account of financial stringency, the factory would be facing closure, as the company had no resources to pay salary and wages to workers, and permission was sought for in that behalf. There was negotiation between appellant and Additional Secretary to State Government in Industries Department, and Chairman, IDC and it was resolved that appellant and his associates would transfer their shares in the company at face value of Rs. 7. 5 lakhs in fav