1. The substantive allegations in this petition filed under sections 397 and 398 of the Companies Act, 1956 ("the Act") in relation to the affairs of M/s. ACE Rubber and Allied Products Private Limited ("the Company") are that the petitioners’ group has been excluded from the management of the Company in spite of having been a part of the management since the inception of the Company; that the second respondent has not been convening and holding general or annual general or Board meetings nor issuing notices to such meetings; that the second respondent failed to render accounts of the Company, settle the dues of the financial institutions out of the sale proceeds of the assets of the Company; and improperly managed the affairs of the Company in gross violation of the statutory requirements.

2. Shri Srinivasan Ramaswamy, Practising Chartered Accountant, while initiating his arguments submitted that the Company was incorporated in September, 1983 with the main object to carry on the business of manufacturers and sellers of rubber and allied products. The petitioner’s father and the second respondent’s father are promoters of the Company. The authorised capital of the Company is Rs. 6 lakhs consisting of 600 equity shares of each Rs. 1,000 and paid-up capital Rs. 1,56,000 consisting of 156 equity shares of Rs. 1,000 each. The petitioner together with his family members and relatives hold 56 shares constituting 35.95 per cent and the second respondent with his family members and relatives hold 100 shares of the Company representing 64.1 per cent of paid-up capital of the Company. The petitioner’s father, the second respondent’s father and the second respondent are subscribers to the Memorandum of Association of the Company subscribing to one share each. The petitioner’s father was the Managing Director looking after the affairs of the Company till his demise on 24-6-1990. The father of the second respondent was the chairman of the Company till 2-7-1986, when he passed away. During their life-time, they had purchased a land in the name of the second respondent for erecting the plant and machinery and the land was leased out to the Company for the purpose of carrying on its business. The Company had borrowed funds from The Pondicherry Industrial Promotion Development and Investment Corporation ("PIPDIC") for construction of shed and purchase of plant and machinery against the security of the assets of the Company. The petitioner who became a director on 18-6-1990 was appointed as the Managing Director of the Company upon the demise of his father on 6-7-1990. The second respondent who became a director of the Company with effect from 6-9-1983 claims himself to be the Chairman of the Company with effect from 18-6-1990 though he was not elected as chairman of the Company for a particular period either in the Board meeting or general body meeting of the Company. The first petitioner has been looking after the manufacturing activities of the Company while the second respondent, a chartered accountant is in charge of the financial transactions and maintaining the entire accounts including the secretarial work of the Company and various statutory compliances of the Act. However, the second respondent has been was managing the affairs of the Company contrary to the Articles of Association of the Company by not convening, since June 1990, any Board meeting or annual or general meeting of members of the Company. The second respondent has neither issued any notice to any of such meetings thereby the shareholders have been kept in dark of the affairs of the Company. The second respondent wantonly failed to file the statutory returns with the Registrar of Companies, Pondicherry. The second respondent has not issued share certificates to any of the shareholders of the petitioners’ group. The share certificates issued by the second respondent are also not in conformity with the Companies (Issue of share Certificates) Rules, 1960. While the Com