WORLD WIDE AGENCIES PVT. LTD. AND ANR .versusMRS. MARGARAT T. DESOR AND ORS.

      WORLD WIDE AGENCIES PVT. LTD. AND ANR .
                                                                              . A
                       v.
        MRS. MARGARAT T. DESOR AND ORS.

                         DECEMBER 19, 1989

     [SABYASACHI MUKHARJI, CJ AND B.C. RAY, JJ.J                               B

      Companies Act, 1956--Sections 109, 397 and 398-Whether a
person not registered as member of company entitled to move petition
for winding up.

      The appellant No. 1 is a private lbnited Company incorp<irated under
the Indian Companies Act. The Company had at all relevant times 7              c
share-holders and the total number of shares subscribed and paid up
was 2010 shares. The appellant No. 2 is a shareholder and a wiiole-time
Director of the Company. Consequent upon the death of one share-holder,
Mr. S.K. Desor, who had controlling interest in the Company, his iegal
representatives, wife and children respondents herein. tiled a petition
under Section 397 and 398 of the Act and in the alternative prayed for
winding up of the company. A preliminary objection was raised on
behalf of Mrs. Amtit K. Singh, appellant No. 2 regarding the
maintainability of the petition on the ground that the respondents were
not members of the company as their mimes had not been recorded in
the register of members and as such they had no locus standi to tile the       E
petition in question. A further objection was also taken that a composite
petition under Sections 397 and 398 of the Act with an alternative
prayer for wtnding up of the company was not maintainable.

      A company Judge of the High Court before whom the petition
came up for hearing held that the respondents who were th< wife and            ji
children of the deceased share-holder and who having obtained Reserve
Bank's permission and letters of administration according to law shOuld
be treated as members for the purpose of maintaining a petition under
Sections 3?7 and 39l! of the Act. The -company Judge also held that a
comp~site petition was maintainable.

                                                                               G
      Appellant No. 2 preferred an appeal against the order of tlie
Company Judge. The appellants also moved this Court under Article
i36 of the Coiistitution against the order of the Company Judge. This
court b_y_its order dated 18th January 1989 stayed the further procee<Iuigs
before the Single Judge and directed expeditious disposal of the appeal.
The Division Bench dismissed the appeal holding that the petition under        H

                                  545
    546          SUPREME COURT REPORTS '                [ 1989] Supp. 2 S.C.R.

    Sections 397 and 398 was maintainable. Hence this appeal.
A
          The same two questions as stated above arose for determination
    by this Court.

          Dismissing the appeal, this Court,
B
          HELD: Succession is not kept in abeyance and the property of
    the deceased member vests in the legal representatives on the death
    of the deceased and they should be permitted to act for the deceased
    member for the purpose of transfer of shares under Section 109 of
    the Act. [558D J

c         In some situations and contingencies, the 'member' may be diffe-
    rent from a 'holder'. A 'member' may be a 'holder' of shares but a
    'holder' may not be a 'member'. (558E]

         To hold that the legal representatives of a deceased shareholder
D   could not he given the same right of a member under Sections 397 and
    398 of the Act would be taking a hyper-technical view which does not
    advance the cause of equiry or justice. [558B]

          In the instant case, the legal representatives have been more than
    anxious to get their names put on the register of members in place of
E   deceased member, who was the Managing Director and Chairman of
    the company and had the controlling interest. It would. therefore, be
    wrong to insist that their names must be first put on the register before they
    can move an application under Sections 397 and 398 of the Act. This
    would frustrate the very purpose of the necessity of action. [558F-G]

F         The decision of the English courts are not binding on the courts in
    India. But the observations or the reasoning are of persuasive value. [555C]

        Re Jermyn Street Turkish Baths Ltd., [1970] 3 All E.R. 37; Re
  Bayswater Trading Co. Ltd .. [1970] l All E.R. 608; James v. Quena
  Venture Nitrate Grounds Syndicate Ltd., ll896] l Chancery IJivision
G 456; Re Dlewellyn v. Kasintoe Rubber Estate Ltd., [1914] 15 All E.R.
  558; New Zealand Gold Extraction Company, (Newberyyautin Pro-
  cess) Ltd. v. Peacock, ll948] I Q.B. 622; Re Meyer Dougals Pty Ltd.,
  [1965] V.R. 638; Kedar Nath Agarwal v. Jay Engg. Works Ltd. and
  Ors., [1963] 33 Company Cases I02i Raiahmundry Electric Supply
  Corpn. Ltd. v. A. Nageshwara Rao and Ors., AIR 1956 SC 213; _Life
H Insurance Corporation of India v.Escorts Ltd. and Ors., AIR 1986 SC
    WORLD WIDE AGENCIES v. MRS. M.T. DESOR [MUKHARJI, CJ.]         547

1370 at p. 1412; Shanti Prasad Jain v. Kalinga Tubes, [1965] 35 Com-
                                                                           A
pany Cases 363 and Bilasrai Joharmal and Ors. v. Ako/a Electric Supply
Co. Pvt. Ltd., 20 Company Cases 549, referred to.

      CIVIL APPELLATE JURSIDICTION: Civil Appeal No. 5186
of 1989.                              ·
                                                                           B
     From the Judgment and Order dated 31.8.1989 of the Delhi High
Court in Company Appeal No. 35 of 1988.

    F.S. Nariman, Ashok K. Mahajan and Subhash Sharma for the
Appellants.

      Anil B. Devan and Vinoo Bhagat for the Respondents.                  c
      The Judgment of the Court was delivered by

      SABYASACHI MUKHARJI, CJ. Leave granted.
                                                                           D
      This is an appeal from the judgment and order of the Division
Bench of the High Court of Delhi, dated 31st August, 1989. The
appellant No. 1-M/s World Wide Agencies (P) Ltd. is a private
limited company incorporated under the provisions of the Indian Com-
panies Act, 1956 (hereinafter referred to as 'the Act') to which Table
'A' of Schedule 1 to the Act appelies, as stipulated under the Articles    E
of Association of the company. As per the memorandum of associa-
tion the appellan.t company was carrying on the business of travel
agents at G-40, Connaught Circus, New Delhi. The authorised Share
capital of the company was to the tune of Rs.5 lakhs divided into 5000
equity shares of Rs.100 each. The paid up capital as per the last annual
return filed by the company with the Registrar of Companies, was.          F
Rs.2,01,000. The company had at all relevant times 7 shareholders and
the total number of shares subscribed and paid up was 2010 shares.

      The appellant No. 2 Mrs. Amrit Kaur Singh, at all relevant
times, was a shareholder holding 545 fully paid up shares in the share
capital of the company, and was also the whole-time working Director       G
of the company, holding the office from 1974 onwards. Late Mr. S.K.
Desor was a British national. He held 600 shares in the said company,
acquired by him from the Ex-Managing Director Mr. Amrik Singh
Saluja and his family. The respondents Nos. 2 & 3 to this appeal are
children of late Mr. S.K. Desor who died on 5th March, 1985. As per
the certified copy of the annual return made up to 15th February, 1984     H
    548        SUPREME COURT REPORTS              [ 1989] Supp. 2 S.C.R.

A the shareholders of appellant No. 1 (company) were as follows:

  Mr. S.K.Desor                                    600 shares
  Mrs. Amrit Kaur Singh                            545 shares
  Mr. Y ash Pal Malhotra                           250 shares
  Mrs. Amrit Gupta                                 200 shares
B Mrs. Savitri Devi Kohli                            5 shares
  Mr. A.S. Saluja                                    5 shares
  Mr. Balwant Singh                                405 shares

                                                 2010 shares


c       A petition under ss. 397 & 398 of the Act and in the alternative
  for winding up of the company was filed by the respondents on 25th
  March, 1985, wherein it wa~ alleged that on 12th March, 1985 respon-
  dent No. 1, being the widow of late Mr. S.K. Desor, applied as a legal
  heir of late S.K. Desor to the Board of Directors of the appellant-
D company for transmission of 850 shares held by her late husband. It is
  stated that the shares of Yash Pal Malhotra had been acquired by late
  Mr. S.K. Desor; and that respondent No. 1 filed an affidavit of her
  daughter Ms. Kim Paul, relinquishing her claim to the shares of her
  late father. The Board of Directors resolved that they had no objec-
  tion to transmission of the shares held by Mr. S.K. Desor but the
E actual transmission would take place on respondent No. l's obtaining
  Reserve Bank of India's permission and the succession certificate. The
  respondent No. l's application for allotment of 5 shares as per her
  letter of the same date was allowed by the Board of Directors, and it
  was resolved that in view of allotment of these shares, her interest in
  the shares of her late husband, she be appointed as a Director of the
  company, subject to Reserve Bank of India's permission.
F
        It is stated in the judgment under appeal that at the said meeting
  of the Board of Directors, they recorded their deep appreciation for
  the services rendered by late Mr. S.K. Desor as Managing Director-
  cum-Chairman of the company, and. mourned his passing away. The
G quorum of the said meeting was two-Mrs. Amrit Gupta and Mrs.
  Savitri Devi Kohli. It is recorded in the judgment under appeal that on
  23rd March, 1985 the Board of Directors held another meeting. The
  minutes of the meeting of 12th March, 1985 were confirmed by the two
  above-mentioned Directors. The third Director, Mrs. Amrit K. Singh,
  however, objected as she stated that she had not been informed of the
H last meeting. Various averments had been made in the petition with
WORLD WIDE AGENCIES v. MRS. M.T. DESOR [MUKHARJI, CJ.I              549

regard to oppression and removal of certain valuables of Mrs. Amrit
                                                                          A
K. Singh and illegal operation of the bank account etc. It was also
asserted that Mrs. Singh was holding 545 shares benami and these in
fact belonged to Mr. S.K. Desor.

      A preliminary objection was raised on behalf of Mrs. Amrit
K. Singh regarding the maintainability of the petition on the ground      B
that the appellants were not members of the company as their names
had not been recorded in the register of members. A further objection
was taken that a composite petition under ss. 397 & 398 of the Act with
an alternative prayer for winding up of the company was not
maintainable.

      The learned single Judge of the High Court sitting as a Company     c
Judge dealt with the application and held that the appellants who were
the wife and children of late Mr. S.K. Desor and had obtained letters
of administration. u/s 290 of the Indian Succession Act read withs. 273
of the Act, as also the permission of the Reserve Bank oflndia, should
be tre!lted as members for the purpose of maintajning a petition u/ss.    D
397 & 398 of the Act. The learned smgle Judge also held that a compo-
site petition was maintainable.

      The appellant Mrs. Amrit    K:   Singh filed an appeal for herself
and, as she alleged, as "Working Director" from the judgment and
order dated 21st September, 1988 of the learned single Judge. It E
appears that the appellants, aggrieved thereby, had also moved this
Court under art. 136 of the Constitution. This Court by its order dated
18th January, 1989 stayed the further proceedings before the learned
single Judge and directed expeditious disposal of the appeal pending
betore the division bench of the High Court, from the saic:rorder of 21st
September, 1988 which had been admitted .on 13th October, 1988, for F
consideration by the Division Bench of the High Court of the applica-
tion tor directions. By a judgment and order delivered on 31st August.
1989 the Division Bench dismissed the said appeal and held that the
petition u/ss. 397 & 398 was maintainable by the respondents in the
facts and circumstances of the case, and that a composite petition u/ss.
397, 398 & 433(f) of the Act was maintainable. Aggrieved thereby, the G
appellants preferred this appeal to this Court.

      We are concerned with two questions of law, namely, whether
the legal heirs of a deceased shareholder can be treated as members of
the company for the purpose of maintaining a petition u/ss. 397 & 398
of the Act, and whether a composite petition under ss. 397, 398 &         H
    550         SUPREME COURT REPORTS               [ 1989) Supp. 2 S.C.R.

A 433(f) of the Act is maintainable. We had the advantage of hearing
                                                                                '
  Mr. F .S. Nariman, counsel for the appellants and Mr. Anil Diwan for
  the respondents. It may be mentioned that during the pendency of the
  appeal before the High Court, without prejudice to the rights and
  contentions of the parties, an emergent meeting of the Board of
  Directors was directed by the High Court to be held on 28th January,
B 1989 to consider the question of registration of 450 shares belonging to
  the deceased Mr. S.K. Desor in the name of Mrs. Margarat T. Desor
  and her son Sameer K. Desor,.being respondents Nos. 1 & 3 respec-
  tively. It further appears that as per the directions of the Division
  Bencl1_, dated 27th January, 1989 the court had appointed Chairman
  Mr. C.K. Mahajan and Mrs. Margarat T. Desor were not permitted to
  vote at the said meeting. At a meeting held subsequent thereto, by a
C majority, it was resolved not to register the respondents Nos. I & 3 as
  members. It must, however, be noted that the Division Bench vide its
  order dated 27th January, 1989 had di'rected that no effect would be
  given to the said Resolution.

D        The question, therefore, which is material to be considered; is,
    whether the legal heirs of a deceased shareholder whose names are not
    entered in the register of members, are entitled to maintain petition
    u/ss. 397 & 398 of the Act. It was contended on behalf of the appel-
    lants that ss. 397 & 398 of the Aci must be strictly construed.

E          Section 397 of the Act which is in chapter VI of the Act under the
    heading "Prevention of Oppression and Mismanagement", provides
    as follows:

                "Application to Court for relief in cases of oppression.-
                (!) Any member of a company who complains that the
F               affairs of the company are being conducted in a manner
                prejudicial to public interest or in a manner oppressive to
                any member or members including any one or more of
                themselves may apply to the Court for an order under this
                section, provided such members have a right so to apply in
                virtue of section 399.
G
                (2) If, on any application under sub-section (1), the Court
                is of the opinion-

                (a) that the company's affairs are being conducted in a
                manner prejudicial to public interest or in a manner
H               oppressive to any member or members, and
WORLD WIDE AGENCIES v. MRS. M.T. DESOR [MUKHARJI, CJ.]              55 J

           (b) that to wind-up the company would unfairly prejudice
                                                                           A
           such member or members, but that otherwise the fact
           would justify the making of a winding-up order on the
           ground that it was just and equitable that the company
           should be wound-up;
           the Court may, with a view to bringing to an end the mat-
                                                                           B
           ters complained of, make such order as it thinks fit."
       On behalf of the appellants it was contended that the right which
is a specific statutory right, is given only to a member of the company
and until and unless one is a member of the company, there is no right
to maintain application u/s 397 of the Act. Mr. Nariman contended
that there was no automatic transmission of shares in the case· of death
of a shareholder to his legal heir and representatives, and the Board
                                                                           c
has a discretion and can refuse to register the shares. Hence, the legal
representatives had no locus standi to maintain an application u/ss. 387
& 398 of the Act. Mr. Nariman submitted that the rights under ss. 397
& 398 of the Act are statutory rights and must be strictly construed in
the terms of the Statute. The right, it was submitted, was given to "any   D
member" of a company and it should not be enlarged to include "any
one who may be entitled to become a member".

      In order to decide the question involved, it would be necessary to
examine certain provisions of the Act. Section 2(27) of the Act states
that "member" in relation to company does not include a bearer of a        E
share-warrant of the company issued in pursuance of section 114 of the
Act. Section 41 of the Act provides as follows:

           "(1) The subscribers of the memorandum of a company
           shall be deemed to have agreed to become members of the
           company, and on its registration, shall be entered as           F
           members in its register of members.

           (2) Every other person who agreed in writing to become a
           member of a company and whose name is entered in its
           register of members, shall be a member of the company."
                                                                           G
      Section 26 of the English Companies Act, 1948 in substantially
the same.

      Section 109 of the Act states as follows:

            "A transfer of the share or other interest in a company of a   H
    552         SUPREME COURT REPORTS                [1989] Supp. 2 S.C.R.

                deceased member thereof made by his legal representative
A
                shall, although the legal representative is not himself a
                member, be as valid as if he had been a member at the time
                of the execution of the instrument of transfer."

          In this connection, it would be relevant to refer to Articles 25 to
B   28 of Table A of the Act, which deal with the transmission of shares
    and which are in the following terms:

                "25.(1) On the death of a member the survivor where the
                member was a joint holder, and his legal representatives
                where he was a sole holder, shall be the only persons recog-
                nised by the· company as having any title to his interest in
c               the shares.

                (2) Nothing in clause (1) shall release the estate of a
                deceased joint holder from any liability in respect of any
                share which had been jointly held by him with other
D               persons.

               26.(1) Any person becoming entitled to a share in conse-
               quence of the death or insolvency of a member may, upon
               such evidence being produced as may from time to time
               properly be required by the Board and subject as herein-
E              after provided, elect, either-

                (a) to be registered himself as holderof the share; or

                (b) to make such transfer of the share as the deceased or
                insolvent member could have made.
F
                (2) The Board shall, in either case, have the same right to.
                decline or suspend registration as it would have had, if the
                deceased or insolvent member had transferred the share
                before his death of insolvency.

G               27.(1) If the person so becoming entitled shall elect to be
                registered as holder of the share himself, he shall deliver or
                send to the company a notice in writing signed by him
                stating that he so elects.

                (2) If the person aforesaid shall elect to transfer the share,
H               he shall testify his election by executing a transfer of the
                share.
WORLD WIDE AGENCIES v. MRS. M.T. DESOR (MUKHARJI, O.J                  553

           (3) All the limitations, restrictions and provisions of these
                                                                              A
           regulations resulting to the right to transfer and the regist-
           ration of transfers of shares shall be applicable to any such
           notice or transfer as aforesaid as if the death or insolvency
           of the member had not occurred and the notice or transfer
           were a transfer signed by that member.
                                                                              B
           28. A person becoming entitled to a share l)y reason of the
           death or insolvency of the holder shall be entitled to the
           same dividends or other advantages to which he would be
           entitled if he were the registered holder of the share,
           except that he shall not, become being registered as a
           member in respect of the share, be entitled in respect of it
           to exercise any right conferred by membership in relation          c
           to meetings of the company:

                  Provided that the Board may, at any time, give notice
            requiring any such person to elect either to be registered
            himself or to transfer the share, and if the notice is not        D
            complied with within ninety days, the Board may there-
            after withhold payment of all dividends, bonuses or other
            moneys payable in respect of the share, until the require-
            ments of the notice have been complied with."

      Article 28 is more or less in para materia to articles 32 of Table A    E
to the English Companies Act. It may also be mentioned, as it· has
been mentioned by the High Court, that s. 210 of the English Com-
panies Act, before its amendment in 1990, was substantially the same
ass. 397 of the Act.

      As mentioned hereinbefore, it is the admitted case of the parties       F
that the regulation for management of the company as contained in
Table A to the Act apply to appellant No. 1 and the said relevant
provision in the articles of association of the company regarding trans-
fer of shares is Article 17, which is as follows:

            "No share shall be transferred to any person other than a         G
            shareholder of the company so long as any member of the
            company is willing to purchase the same at fair value. This
            clause shall not apply to the executor of administrator of a
            deceased shareholder, if there is will or to the heir or lineal
            decendents where no letter of administration has been
            taken."                                                           H
    554         SUPREME COURT REPORTS               [1989] Supp. 2 S.C.R.

          Mr. Nariman submits that in view of the specific provisions of
A
    s. 397 of the Act only a member is entitled to move a petition. under
    ss. 397 and 398 of the Act and that member is one whose name is in the
    register of members in view of s. 41 of the Act, as mentioned hereinbe-
    fore. In this connection, it is was emphasised that not only must the
    applicant be a member but in terms of s. 399 of the Act, he has to fulfil
B   the conditions laid down under clauses (a) and (b) of s. 399 of the Act.
    These should be construed so as to mean what the words say. Accord-
    ing to Mr. Nariman, a member is not, in view of the scheme of the Act,
    the representative of a deceased member.

           It is true that it must be a member and s. 41 of the Act provides
    that a member of a company is a person who has applied in writing and
c   "whose name is entered in the register of members" is entitled to
    move the petition. It appears in this case that names of respondent
    Nos. 2 and 3 had not then ·been entered in the register of members at
    the relevant time when the application was made. But the name of
    Late Shri S.K. Desor was still on the register of members and the
D   requisite shareholding for moving a petition under ss. 397 and 398 of
    the Act was held by him. This question, though res integra so far as this
    country is concerned, has been considered in England, where Pen-
    nycuick, J. had occasion to consider this in Re Jermyn Street Turkish
    Baths Ltd., (1970] 3 All E.R. 57. The Company there was incor-
    porated in 1946 and represented a joint venture by Land S. In 1952, S
E   transferred his shareholding to Mrs. P who became a director of the
    company. L died in 1953 and thereafter Mrs. P was mainly responsible        '
    for. the company's affairs. The petitioners therein were appointed
    administrators in L's estate in 1960, and in 1961, at their request, the
    names of the petitioners therein were entered in the register of
    members of the company against the name of L as administrators of L.
F   On the questions whether the entry constituted merely a note of the
    grant of administration or the registration of the petitioners as mem-
    bers, and whether the petitioners were members of the company for
    the purposes of presenting a petition under s. 210 of the English Com-
    panies Act at p. 65 of the report, Pennycuick; J. noted that it was
    contended before him that the petitioners therein were not members
G   of the company and hence had no locus standi to present the petition
    bearing in mind that petition under s. 210 of the English Companies
    Act could only be presented by a member of the company. In the facts
    of that case, Pennycuick, J. held that the petitioners were duly
    registered as members of the comapny but he proceeded to hold that
    even if it were so, the personal representatives of a deceased member
H   must be regarded as members of the company for the purposes of
WORLD WIDE AGENCIES v. MRS. M. T. DESOR [MUKHARJI, CJ. I              555

s. 210 of the English Companies Act. In this connection, reference was
                                                                             A
made to the decision of Buckley, J. in Re Bayswater Trading Co. Ltd.,
 [1970] I All E.R. 608, where at p. 609 of the report, it was held that
'member' would include representative of a deceased member for (he
purpose of s. 353 of the English Companies Act. This judgment of
Pennycuick, J. went up in appeal to the Court of Appeal and it was
reversed. See Re Jermyn Street Turkish Baths Ltd., I 1970] 3 All E.R.        B
 184. But on the point whether the representative of a deceased
member can maintain an action under s. 210 of the English Companies
Act, the views of Pennycuick, J. were not reversed or modified. Mr.
Nariman submitted that the observations of Pennycuick, J. were obiter
for the decision of the case. We are unable to agr~. Indeed, this was a
point specifically referred to by P~nnycuick, J. as being raised and
specifically decided. But we need not detain ourselves with this con-
                                                                             c
troversy because the decision of the English Courts are not binding in
the courts of India. But the observations or the reasoning are of
persuasive value. We are clearly of the opinion that having regard to
the scheme and the purpose of ss. 397 and 398 of the Act, the reason-
ing on a para materia provision of the English Act would be a valuable       D
guide. The said construction, appears to us, to further the purpose
intended to be fulfilled by petitions under ss. 397 and 398 of the Act. It
facilitates solution of problems in case of oppression of the minorities
when the member is dead and his heirs or legal representatives are yet
to be substituted. This is an equitable and just construction. This con-
struction, as suggested by Pennycuick, J. does not militate against          E
either equity or justice of the such situation. We would, therefore,
adhere to that'construction. In this connection, it may be mentioned
that in the 1972 Edition of Gore-Brnwne on Companies, it has been
stated as follows:

            "It has recently been settled that the personal representa-      F
            tives of a deceased member, even though th~y are not
            registered as members, are entitled to present a petition
            under s. 210. In Re. Jermyn Street Turkish Baths Ltd.,
            Pennycuick, J. held that on its true construction section 210
            required that the word 'member' should include the
            personal representatives of a deceased member, on whom           G
            title of his shares devolved by operation of law."

      In !st Supplement January 1978 of Gore-Browne on Companies,
at para 16, it is stated that "while the shares remain in the name of the
deceased holder, his estate is prima facie entitled to any subsequent ·
benefits deriving from the shares". At p. 491 of Buckley on Companies H
    556        SUPREME COURT REPORTS .            [1989] Supp. 2 S.C.R.

  Act, 1948, the decision of Re Jermyn Street Turkish Baths Ltd. 's case
A
  (supra) has also been referred to and it was observed that for the
  purpose of the petition under s. 210 of the English Companies Act,
  'member' includes the personal representatives of a deceased member.
  Buckley also notes that this decision referred herein was reversed
  without affecting this point by the Court of Appeal. In Halsbury's
B Laws of England, 4th Edition, Vol. 7, para 1010, at p. 604, same view
  has been expressed. The division bench of the Delhi High Court also
  noticed that the view expressed in Re Jermyn Street Turkish Baths
  (supra) also finds indirect support from various other decisions of the
  English Courts. Reference was made to the decision in James v. Buena
  Venture Nitrate Grounds Syndicate Ltd., [1896] I Chancery Division
  456; Re Dlewellyn v. Kasintoe Rubber Estate Ltd., [1914] 15 All E.R.
C 558 and New Zealand Gold Extraction Company (Newberyyautin Pro-
  ces) Ltd. v. Peacock, [1894] 1 Q.B. 622. These decisions do indicate
  that the right of members in similar, though not identical situations,
  should be construed as being belonging to the legal representative or
   heirs of deceased members.
D
          Our attention, however, was drawn to the decision of Supreme
    Court of Victoria in Re Meyer Dougals Pty. Ltd., [1965] V.R. 638 by
    Gowans, J. Article 22 of Table A to the Victorian Companies Act,
    1938 (4602) provides as follows that:

E              "22. A person becoming entitled to a share by reason of
               the death, bankrupcy or insolvency of the holder shall be
               entitled to the same dividends and other advantages to
               which he would be entitled if he were the registered holder
               of the share, except that he shall not before being regis-
               tered as a member in respect of the share be entitled in
F              respect of it to exercise any right conferred by membership
               in relation to meeting of the company."

          Gowans, J. in that case found that there was a "careful distinc-
    tion between members and persons entitled to share by reason of the
    death of a member but who are not registered appear to deny the
G   status of a member to a legal personal representative who is not a
    member". On an analysis of various decisions, Gowans, J. was of the
  view that a deceased's estate and its representative may in a particular
  context have to be treated as not a member and in view of the provi-
  sions of s. 186(1) of the Victorian Companies Act, 1961 which provides
  "any member of a company who complains that the affairs of the
H company are being conducted in manner oppressive to one or more of
WORLD WIDE AGENCIES v. MRS. M.T. DESOR [MUKHARJI, CJ.]                 557

the members (including himself) may ... apply to the court for an
                                                                              A
order under that section", Gowans, J. came to the conclusion that
there was no reason for treating the word "members" in that section as
not applying to a legal representative who is not entitled to be
accorded the right which registration would give him to vote in regulat-
ing the conduct of the company's affairs. The object of the section,
which is in para materia to s. 399 of the Act, was to provide a remedy        B
for the case where, notwithstanding the fact that a person possesses
the right of a member enabling him to participate in the conduct of the
affairs of the company, he can claim that he as a member or as one of a
number of members, is or are being oppressed by those who conduct
the affairs of the company. According to Gowans, J., it should not be
treated as applying to someone who is not so entitled and cannot so
claim. With respect, we are unable to accept this view. Having regard         c
to the purpose of the section as we conceive it, it would not be just
construction to deny the legal representatives of the deceased member
the right of maint!lin a petition under ss. 397 and 398. We would prefer
to accept the view of Pennycuick, J. in Re Jermyn Street Turkish Baths
Ltd. 's case (supra). It appears to us that'this wilt'be in consonance with   D
the equity of the sections. In Gower's Principles of Modem Company
Law, at p. 68, reference has been made to Re Jermyn Street Turkish
Baths Ltd. 's, case (supra) and also to Re Meyer Douglas Pty Ltd. 's,
case (supra), which, according to the learned author, seems to be more
convincing.-Mr. Nariman also referred us to the comments in Hahlo's
Casebook on Company Law, 2nd Edition, p. 351, where in footnote,              E
reference was made to Re Jermyn Street Turkish Baths Ltd.'s, case
(supra), which have been followed in some decisions. It was noted as
follows:

            "It appears doubtful whether personal representatives of
            deceased shareholders, who themselves are not, or cannot          F
            become, registered as shareholders, can be regarded as
            "members" for the purposes of s. 210 of the 1948 Act: Re
            Cuthburt Cooper & Sons Ltd., [1937] Ch. 392 and Re
            Meyer Douglas Ltd., [1965] V.R. 635 at 655."

       We do not agree for the reason mentioned before. It further            G
appears to us the Australian judgment does not reconcile to logic in
accepting that legal representative can petition for winding-up, which
is called the "sledge-hammer remedy", but would refuse the lesser and
alternative remedy of seeking relief against oppression and mis-
management though the latter remedy requires establishment of
winding-up on just and equitable grounds as a precondition for its            H
    558         SUPREME COURT REPORTS              [1989] Supp. 2 S.C.R.

  invocation. It would be rather incongruous to hold that the case for
                                                                             ....•
A
  winding-up on just and equitable grounds can be made out by the legal
  representatives under s. 439(4)(b) of the Act but not the other. This
  does not appear to be logical. It appears to us that to hold that the
  legal representatives of a deceased shareholder could not be given the
  same right of a member under ss. 397 and 398 of the Act would be
B taking a hyper-technical view which does not advance the cause of
  equity or justice. The High Court in its judgment under appeal pro-
  ceeded on the basis that legal representatives of a deceased member
  represent the estate of that member whose name is on the register of
  members. When the member dies, his estate is entrusted in the legal
  representatives. When, therefore, these vestings are illegally or
  wrongfully affected, the estate through the legal representatives must
C be enabled to petition in respect of oppression and mismanagement
  and it is as if the estate stands in the shoes of the deceased member.
  We are of the opinion that this view is a correct view. It may be
  mentioned in this connection that succession is not kept in abeyance
  and the property of t!ie deceased member vests in the legal representa-
D tives on the death of the deceased and they should be permitted to act
  for the deceased member for the purpose of transfer of shares under s.
  109 of the Act.

        In some situations and contingencies, the "member" may be
  different from a "holder". A "member" may be a "holder" of shares
E but a "holder" may not be a "member''. In that view of the matter, it
  is not necessary for the present purpose to examine this question from
  the angle in which the learned Single Judge of the Calcutta High Court
  analysed the position in the case of Kedar Nath Agarwal v. Jay
  Engineering Works Ltd. and Ors., [1963] 33 Company Cases 102, to
  which our attention was drawn.
F
        Admittedly in the present case; the legal representatives have
  been more than anxious to get their names put on the register of
  members in place of deceased member, who was the Managing
  Director and Chairman of the company and had the controlling
  interest .. It would, therefore, be wrong to insist their names must be
G first put on the register before they can move an application under
  ss. 397 and 398 of the Act. This would frustrate the very purpose of the
  necessity of action. It was contended on behalf of the appellant before
  the High Court that if legal representatives who were only potential
  members or persons likely to come on the register of members, are.
  permitted to file an application under ss. 397 and 398 of the Act, it
H would create havoc, as then persons having blank transfer forms
WORLD WIDE AGENCIES v. MRS. M.T. DESOR (MUKHARJI, O.]                 559

signed by members, and as such having a financial interest, could also
                                                                             A
claim to move an application under SS. 397 and 398 of the Act. The
High Court held that this is a fallacy, that in the case of persons having
blank transfer forms, signed by members, it is the members themselves
who are shown on the register of members and they are different from
the persons with the blank transfer forms whereas in the case of. legal
representatives it is the deceased member who is shown on the register       B
and the legal representatives are in effect exercising his right. A right
has devolved on them though the death of the member whose name "is
still on the register. In our opinion, therefore, the High Court was
.pre-eminently right in holding that the legal representatives of
deceased member whose name is still on the register of members are
entitled to petition under ss. 397 and 398 of the Act. In the view we
have taken, it is not necessary to consider the contention whether as        c
on the date of petition, they were not members. In that view of the
matter, it is not necessary for us to consider the decision of this Court
in Rajahmundry Electric Supply Corpn. Ltd. v, A. Mageshwara Rao &
 Ors., AIR 1956 SC 213. In view nf the observations of this Court in
Life Insurance Corporation of India v. Escorts Limited & Ors., AIR           D
 1986 SC 1370 at p. 1412, it is not necessary, in our opinion, to consider
the contention as made on behalf of the appellant before. the High
Court that the permission of the Reserve Bank of India had been
 erroneously obtained and consequently amounts to no J>ermission. In
the present context, we are oflhe opinion that the High Court .was
right in the view it took on the first aspect of the matter.                 E

       The second question was whether a combined petition under
ss. 397, 398 and 433(f).of the Act was maintainable. In view of the
observations of this Court in Shanti Prasad Jain v. Kalinga Tubes,
[1965] 35 Company Cases 363 and the reasoning of the Bombay High
Court m Bilasrai Joharmal & Ors. v. Akola Electric Supply Co. Pvt.           F
Ltd., 28 Company Cases 549, we are of the opinion that the averments
which _a petitioner would have to make to invoke the jurisdiction under
ss. 397 and 398 are not destructive of the averments which are required
to be' made in a case for ~diD.g up under s. 433(f) of the Act on the
just and equitable ground, though they may appear to be ~ontradic­
tory. As Halsbury's Laws of England, 4th Edition, Volume 7, at               G
p. 604-605, discusses that the prayer must be made stating that the
affairs are such which fulfil the requirement of winding up but to wind
up the company would unfairly prejudice that part of the members,
but otherwise the facts would justify the making of a winding up order
on the ground that it was just and equitable that the company should
be wound up, the Court may, with a view to bringing to an end the            H
    560         SUPREME COURT REPORTS              [1989] Supp. 2 S.C.R.

A matters complained of, make such order as it thinks fit, whether for
  regulating the conduct of the company's affairs in future or otherwise.
  We are of the opinion that averments which a petitioner would have to
  make to invoke the jurisdiction of ss. 397 and 398 of the Act are not
  destructive of the averments which are required to be made in a case
  for winding up under s. 433(!) on the just and equitable ground,
B
  though they may appear to be rather conflicting if not contradictory.
  We are in agreement with the High Court that the petition must pro-
  ceed upto certain stage which is common to both winding up and
  though there may be some difference in procedure to be adopted, it is
  not such which is irreconcilable and cannot simultaneously be gone
  into. Indeed these are made in the manner indicated before. It has to
C be borne in mind that a discretion is conferred on the court and it is
  only when the Court is satisfied that the facts justify the making of a
  winding up order on the ground that it is just and equitable that the
  company should be wound up, but if the Court is further of the opinion
  that it would be a remedy worse than the disease, then the Court can
  examine whether the alternative relief by way of a direction under
0 s. 397 can be granted. This is a well accepted remedy exercised by the
  Courts. We are, therefore, of the opinion that the High Court.was
  right in the view that a composite petition under ss. 397, 398 and 433(!)
  of the Act is maintainable.

         The appeal, therefore, must fail and is accordingly dismissed.
E   We dismiss the appeal with costs, which is assessed at Rs.5,000.

    Y.Lal                                               Appeal dismissed.