Balasubramanian, Vice-Chairman.—The substantive allegation in this petition filed under sections 397/398 of the Companies Act, 1956 (‘the Act’) in relation to the affairs of Tirath Ram Ahuja Limited is that the petitioners Group collectively holding 12 per cent shares in the company have been completely excluded from the management of the company in spite of its having been a part of the management for over 45 years.

2. According to the petitioners, the company which was incorporated in the year 1950 was all along being jointly managed by members of three families headed by Shri R.S. Tirath Ram Ahuja, Shri J.S. Chawla and Shri S.K. Bagai. None of the three is alive today. Even though the original subscribers to the Memorandum were late Shri Tirath Ram Ahuja and Late S.K. Bagai, yet, immediately after incorporation, Late Chawla was also inducted as a director and he continued to be so till his demise in 1996. Late Tirath Ram Ahuja was a permanent director and Chairman of the company as per the articles of association of the company. All the 3 were directors right from incorporation of the company on 28-2-1950 and the affairs of the company were being managed in line with partnership principles among the heads of the three families. When Tirath Ram expired in 1985, Late J.S. Chawla became the Chairman of the company and he continued to function as such till he expired in 1996. In 1985, the second respondent who is the son of Late Tirath Ram Ahuja became the Managing Director and Shri P.S. Chawla, a son of Late J.S. Chawla became the Joint Managing Director, a post created for the first time. When Shri Bagai expired, his son Shri R.R. Bagai joined the company as an employee and he continues to be so even now. In 1997, Shri P.S. Chawla died in an accident. Since the petitioners belonged to Chawla’s family, in spite of repeated requests made to the respondents for a representation on the Board, the same has been denied notwithstanding the fact that the business of the company is in the nature of a partnership between the 3 families. In addition to this grievance, the petitioners have also made an allegation of financial mismanagement.

3. Dr. Singhvi, Sr. Advocate appearing for the petitioners submitted: Right from incorporation of the company, the heads of the 3 families who were related, were managing the affairs of the company more or less in the nature of a partnership among themselves even though there was no formal written agreement to that effect. Originally, Chawla’s family was represented only by Late Shri J.S. Chawla and later on in 1966, Shri P.S. Chawla also joined the Board as the Joint Managing Director. Thus, from 1966 to 1996, Chawla family was being represented on the Board by two directors. Shri J.S. Chawla was a director of the company for 46 years while Shri P.S. Chawla was a director for 37 years. In other words, Chawla family was represented on the Board right from the beginning till 1997. A perusal of the list of directors would indicate that as and when one of the directors died, a family member of that director was inducted into the Board to ensure that all the 3 families were represented on the Board of the company. When Shri S.K. Bagai expired, his son Shri K.K. Bagai who was an employee in the company was made a director in 1976. Another son of Shri S.K. Bagai joined the company as an employee and worked with the company till his pre-mature death in 1965. Dr. K.S. Chawla son of Shri J.S. Chawla joined the company as an Consultant in 1978 and worked as such for about 5 years in the company. When Shri K.K. Bagai expired in 1983, his son Shri Lalit Bagai was appointed as a Manager in 1984. Since Lalit Bagai was not made a director in spite of several requests, he resigned from the company in 1995. In 1991, Shri S.S. Dugal son in law of Shri R.S. Tirath Ram joined the company as a whole-time director and Shri Arun Ahuja son of Shri N.K. Ahuja also joined the company in 1993. Thus, it is evident that all th