AIR 1981 SUPREME COURT 1298 ::1981 (3) SCC 333 ::(1981) 94 Mad LW 102 ::1981 51 Com Cas 743 ::(1981) 55 ComCas 743

Supreme Court Of India

(From: Madras)*

Hon'ble Judge(s): Y. V. Chandrachud, P. N. Bhagwati, E. S. Venkataramiah , JJJ

(A) Companies Act (1 of 1956) , S.397— Act of oppression - What constitutes. In an application under Section 397 before grating relief the Court has to satisfy itself that to wind up the company will unfairly prejudice the members complaining of oppression, but that otherwise the facts will justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up. An isolated act, which is contrary to law, may not necessarily and by itself support the inference that the law violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. But a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are a part of the same transaction, of which the object is to cause or commit the oppression of persons against whom those acts are directed. On a true construction of Section 397, an unwise, inefficient or careless conduct of a Director in the performance of his duties cannot give rise to a claim for relief under that section. The person complaining of oppression must show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes prejudice to him in the exercise of his legal and proprietary rights as shareholder. Held that though the party had faile....