This is a petition filed by one S. S. Rajakumar under section 433(f) and 439 of the Companies Act (I of 1956) for winding up the company known as "Perfect Castings Private Limited". The petitioner is a holder of 14 fully paid equity shares and he also claims to be a creditor arbitrator. Besides the petitioner, his two brothers hold amongst themselves 11 shares. According to the petitioner, the holding of 25 shares as between himself and his two brothers do constitute one group of the shareholders. The other group of shareholders, according to the petitioner, consists of N. Subbiah Asari, who is the managing director, his wife, his brother and his brothers wife, who held amongst themselves 42 shares, which, along with the 25 shares held by the petitioner and his group, are the only paid up shares of the company. There is thus a totality shareholding of 67 paid up shares. The latter 42 shares held by Subbiah Asari and his group are characterised by the petitioner as the other group of shareholders. The petitioners case is that he was induced to join the company by Subbiah Asari, who was unable to find the working capital necessary for the running of the firm. At the instance of Subbiah Asari, the petitioner is reported to have joined the company. His complaint is that, though he was on the board till March 31, 1965, he was not served with any notice of the annual general meeting held in June, 1965, and his further case is that himself and his brothers were eliminated from the directorate at the said annual general meeting. He also alleges that Subbiah Asari is bent upon completely and totally ignoring the interest of the petitioners group and is conducting the affairs of the company in a manner totally incompatible with the normal functioning of the company. The petitioner has alleged that the directors were talking salaries contrary to the practice and law, Subbiah Asaris group are unable to do real business and that the company is working at a loss. He would also state that the machinery has become unserviceable and the company is unable to play its debts. The petitioner is apprehensive that all tangible assets of the company would disappear and that his investment would be completely lost. He alleges that he has lost faith in the commercial integrity of Subbiah Asari and in view of the alleged fraudulent misapplication of the companys funds and as the substratum of the company has already gone, it is a fit case that the company should be wound upThe petitioner alleges that at the time when he associated himself with Subbiah Asari, and therefore with the company, Subbiah Asari held out a promise that the petitioner and his brothers would be associated with Subbiah Asari in the nature of a partnership, so that at all material times the management of the company, its business and affairs would be with Subbiah Asari and his group of shareholders as also that of the petitioner and his group. After June, 1965, when the petitioner and his group were eliminated from the board of directors, it is alleged by the petitioner that there is wanton of breach of the promise held out by Subbiah Asari at the time he joined the company and therefore on the principle that a dissolution of partnership should be made when there is no confidence inter se between the partners, this company also should be wound up

Subbiah Asari expressly denies that he held out any promise to the petitioner as stated by him, nor did he induce him to become a member of the company. On the other hand, the case of Subbiah Asari, who happens to be the managing director, is that the petitioner voluntarily offered to become a member of the company by purchasing shares, that he also made his brothers shareholders contemporaneously along with him and purchased shares for Rs. 15, 000 in the first instance. Thereafter, he secured a transfer of certain shares which were available of the value of Rs. 10, 000 and that therefore the allegation that the petitioner was induced by Subbiah Asari to join the company is baseless. It is further alleged that salaries were paid in accordance with the resolutions of the board of directors in which the petitioner and his brothers participated and they cannot therefore complain that such salaries were paid irregularly and improperly. The counter petitioner also alleges that the business of the company is run on normal lines and that he was able to secure certain important contracts after the petitioner and his group of shareholders left the board of management and that he has substantially brought down the mortgage debt of the company and that at no time there was any effort on his effort on his part to deliberately keep out the petitioner and his group of shareholders from acquainting themselves with the affairs of the company. In fact, his complaint is that the petitioner and his group of shareholders did not attend the annual general meeting held in June, 1965, and in their absence nothing more could be done than what actually happened on that date in that meeting. He alleged that he at no time entertained any malice against them and that at no time did he do any act so as to prevent them from knowing the affairs of the company. Subbiah Asari contends that he was in management of the company under article 12, as he, as the managing director, was the only person who was to be in control and charge of the affairs of the company. He has also filed a supplemental affidavit and a supporting affidavit from a third party, who is the mortgagee over the fixed assets of the company. In his supplemental affidavit, he reiterates that the company is working normally and has secured profits for the year 1965-66. This third party mortgagee also supports Subbiah Asari and says that the company is doing lucrative business and is making steady progress. He affirms that his debt has been considerably reduced and as on the date he swore to the affidavit, namely, July 9, 1966, there was only a sum of Rs. 10, 500 due and outstanding to him on the mortgage. It may also be noted at this stage that Subbiah Asari denied that there was any express understanding that the petitioner should be in joint management of the affairs of the company and that he held out a promise to that effect. He denied that the understanding was as if between the two partners in a partnership and that there has been a breach of such understanding resulting in loss of trust between themselves on the foot of their being partners in the company. A reply affidavit has been filed by the petitioner wherein he reiterates the earlier stand taken by him. In particular, he affirms that he was induced by Subbiah Asari to take the share-holdings, that there was an understanding as is usual between partners that he should also be in joint management of the company and that there having been a breach of such understanding between the two groups of shareholders the company ought not to be allowed to run hereafter and it should be wound up. Several other allegations have been made in the affidavits. It is not necessary for me to set them in detail. The Registrar of Companies who had notice of this proceeding, filed an affidavit stating that there was an annual meeting on June 3, 1965, and that the directors, who are the other defendants, were re-elected to the board and that the petitioner and his two brothers were not re-elected to the board. He also states that the auditors have filed an unqualified report as regards the working of the firmWhen the case was opened by Mr. M. V. Ganapathi, learned counsel for the petitioner, he asked for permission to let in oral evidence since the petitioner wanted to establish an understanding between him and Subbiah Asari, the managing director, that the petitioner would always be consulted in the management of the affairs of the company and that the petitioner and his brothers are always assured of seats in the board of directors of the company. Though there is no infallible rule of law which guides the company court in the matter of accepting oral evidence as is available in the common law courts of our country, yet it is desirable in a given case to permit such oral evidence if the circumstances and propriety of the case require. Such a procedure is adopted only to foster justice and right a wrong. As pointed out by a Division Bench of this court, in Veeramachineni Seethiah v. Venkatasubbiah

"There is no inflexible rule or practice prohibiting the adducing of oral evidence, or the cross-examination of the deponents of affidavits in winding up applications. Where necessity suggests or expediency requires it is open to the judge trying winding-up proceedings to allow oral evidence." *

P.W. 1 the petitioner examined himself. It is the accepted case of the petitioner that he and his two brothers served on the board till March 31, 1965. In fact, it has been brought out in his examination that notices of meetings were received either by one of the brothers who was a shareholder or even by one of their employees. The petitioners case is that, contrary to the promise made by the managing director, he was designedly excluded from the affairs of the company from March 31, 1965, and that he is prejudiced thereby. He denies having had notice of the annual general meeting held on June 3, 1965. He also alleges that the managing director and his group are calculated to work against the interests of the petitioner and his group and therefore it is a fit case for the company being wound up. Mr. Ganapathi took me through the material portions of the pleadings and evidence in detail. His case is that, though Subbiah Asari was a casual acquaintance of the petitioner, the petitioner and his brothers took shares worth Rs. 25, 000 out of a paid up capital of Rs. 67, 000 because they were assured of participation in the management. On and after March 31, 1965, they were deliberately kept out of management. Such an exclusion tantamounts to a breach of undertaking on the part of Subbiah Asari, the managing director, who has taken his own people into the directorate. It is seen that the meeting fixed for June 3, 1965, was not attended at all by the petitioner even though notices were served as usual (vide exhibit R-3(c)). P.W. 1 could not explain properly as to why he did not attend the meeting. He would initially deny that notices were properly served on him. But when confronted with the practice of serving such notices on one of the brothers, or sometimes even on his employees (exhibit R-3(b)) he had no proper answer to the specific query posed to him as to why he refrained from attending the meeting on June 3, 1965. It is in this meeting that the old body of directors was re-elected. But yet, the petitioners case is that he and his group have been deliberately kept out from the board and from the management of the affairs of the company. Under article 12 of the articles of the company (exhibit R-4), the management of the company is vested in the managing director. The articles of association of a company is its Magna Carta. Each shareholder is irrefutably attributed with notice of the purport and content of such articles. Even if disputed, the shareholder concerned is presumed to have constructive knowledge of the same. Articles of association of a company, being a business document, has to be interpreted strictly, unless there are compelling circumstances to import into it a meaning other than normal. The articles thus regulating the domestic management of a company and particularly a private limited company, as in this case, creates certain rights and obligations between its members and the company. The right of management having been exclusively vested in the managing director, it does not lie in the mouth of the petitioner to contend that there was an independent contract, de hors the articles in question, which contemplated joint management. This would be re-writing the articles and importing into it something which it does not mean. If the petitioner wanted an amendment of the article in question, he could have sought the relief through an appropriate process. He cannot press into service a contract which cannot fit in with the accepted and accredited contract as disclosed in the articles. The petitioner therefore cannot avail himself of the alleged understanding between him and the managing director, and complain that he has been ousted from managementEven if the petitioner could avail himself of such a gentlemans understanding, has it been proved in this case The sheet anchor of the argument of the learned counsel for the petitioner is that there is no evidence contra to that spoken to by the petitioner and therefore the arrangement is proved. Let us examine the evidence. P.W. 1 would say that the promise made by the managing director was that himself (P.W. 1) and his two brothers would be taken on the board of directors and one of them has to manage the affairs of the company along with the managing director. P.W. 1 admits that his brothers just finished their education and were unemployed when they became members of the company. The reasonable conclusion is that they were not experienced as well. The petitioner himself was admittedly employed in Industrial Chemicals Limited as a store keeper. Normally it is difficult to believe that there was such an understanding when the petitioner and his brothers associated themselves with the company. P.W. 1 practically would have it that Subbiah Asari, the managing director, was a casual acquaintance. It is surprising that P.W. 1 who knows about the working of companies, as to what articles of association mean and being a shareholder and director of a few companies, would gullibly take what Subbiah Asari said when he is said to have invited him to join the company. In fact, only Rs. 15, 000 was invested in the first instance. P.W. 1 obtained a transfer of shares of others to the tune of Rs. 10, 000. As between P.W. 1 and his two brothers the shareholding is divided. Therefore it is not possible to believe P.W. 1 when he says that Subbiah Asari induced him to become a member on the promise of an alleged partnership in the management. In fact, P.W. 1 and his two brothers were elected as directors. In any event, P.W. 1 was actively participating in the affairs of the company till March 31, 1965. He concedes that the sum of Rs. 25, 000 invested by him was utilised for the purposes of the company. He also answered to a question put by me that he never complained in writing to the company that the alleged promise was not implemented. Though long drawn affidavits were filed, learned counsel referred to me only some material portions therein. Even on a fair reading of the affidavits filed, it is seen that till March 31, 1965, the petitioner and his brothers were having their say in the board meetings. In fact, they recommended on March 31, 1965, that the company may apply for State aid. There was therefore participation by the petitioner and his brothers in the affairs of the company. The telltale story of P.W. 1 in his affidavit and in the witness box is purely self-serving and appears to be an afterthought as if they were excluded from the board at a meeting held on June 3, 1965, which they never cared to attend. What would have happened, if they had attended, nobody can conjecture. From the prevaricating answers P.W. 1 gave in the matter of attending board meetings, service of notices of such and other meetings and on other relevant facts, I do not believe that P.W. 1 and his brothers did not receive the notice of the annual general meeting held in June, 1965, when directors were re-elected. As a matter of fact, P.W. 1 and his brothers were participating in the affairs of the company, receiving the agreed remuneration for having discharged their duties as directors, and in fact the petitioners brothers had to file a suit for the recovery of such money due to them. They having received what according to them was "salary" it would be a paradox if the petitioners contention that they were excluded, is accepted. It is only after they were not re-elected to the board, the petitioner and his brothers, in a fit of frustration, have set up a case of partnership in the management and a breach of an undertaking on the part of the managing director to deliberately avoid themApart from the allegation as to exclusion from management the petitioner has not established any act of misfeasance or malfeasance on the part of the managing director. As a matter of fact, the balance-sheet of the company discloses that for the year 1965-66, the company secured profits. Prior to March 3, 1965, the company was incurring a loss. The mortgage debt of the company has been substantially reduced. The mortgagee has filed an affidavit stating that the company is doing lucrative business and is making steady progress. The assets of the company are enough and more to meet the liabilities. There is no proof of any malversation of the funds of the company by the managing director or his group. Even the present active group of directors were on the board, before the petitioner joined the company, and continued to be so, when the petitioner and his brothers were on the board. The company is normally functioning. The Registrar of Companies, in his affidavit, refers to the annual general meeting of the company held on June 3, 1965, and the auditors of the company have furnished unqualified reports of the working of the company. It is reported that the company has improved its contacts and has received and is expected to receive bulk orders from leading concerns. It is thus seen that there is absolutely no warrant for the petitioners apprehensions about the management or working of the company

Mr. Ganapathi, however, laid stress on the principle applicable in actions for dissolution of partnership and argued that once there is lack of mutual confidence and the breach of a solemn undertaking to take the petitioner in joint management, the company has to be wound up

Section 433(f) of the Companies Act, 1956, reads that a company may be wound up by the court if the court is of the opinion, that it is just and equitable that the company should be wound up. No doubt, this is a private company. I have already held that there could have been non arrangement between the managing director and the petitioner regarding joint management, as it violates the articles of the company, and even factually, there is not enough material to support the contention. The "just and equitable" rule, though no doubt wide, has yet its own circumspection. It is true that clause (f) of section 433 is not to be read ejusdem generis with the other clauses (a) to (e) of the said section. Clause (f) or the "just and equitable" clause as it is commonly referred to, operates independently and has a precise import and content of its own. Justice, equity and good conscience is a salutary rule in jurisprudence which prompts company courts to act it real and compelling circumstances particularly because it relates to the winding up of a company. Existence of factions amongst shareholders, bickerings as between one group and another group of members, vague allegations against the quality of management by the person in charge of the company, and mere exclusion from management, as in the instant case, cannot by themselves be a ground for winding up of a company. Proved malversation and conversion of funds, deliberate and wanton oppression by the management in power, of the minority shareholders with a view to make personal illegal gains, indulging in subversive activities so as to jeopardise the substratum of the company, a justifiable lack of confidence in the conduct and management of the companys affairs due to lack of probity on the part of those in management, where there is open mismanagement and there is no panacea to remedy the evil, such are instances, though not exhaustive, when the courts exercise their jurisdiction under the "just and equitable" rule to wind up companiesIn the instant case, the cumulative effect of the facts and circumstances do not disclose such necessary circumstances to shake the conscience of the court, and direct the winding up of the company. The contention of Mr. Ganapathi that the principal applicable to actions of dissolution of partnership has to apply to cases of winding up of companies, is, in my opinion, an extreme contention. Apart from the fact that there is no acceptable proof of the existence of the arrangement as pleaded by the petitioner, it cannot be said that by reason of the exclusion from management, a case to close the company has been made out. Though originally as laid down by Lord Cozens-Hardy M.R. in Yenidje Tobacco Company Limited 1916 (2) Ch 426), the rule was that the principle applying in case of dissolution of partnership has to be applied to a company where there was in substance a partnership in the guise of a private company, this rule has been considerably whittled down in later years and the following observations of Plowman J. in Expanded Plugs Ltd., In re considerably mellows the force of the proposition as applied by Lord Cozens-Hardy M.R

"I am concerned here with a company not with a partnership, and while it is true that the partnership analogy may be of assistance in certain circumstances in considering whether it is just and equitable to wind a company up, the analogy must not be pressed too far ...." *

Even otherwise, Lord Cozens-Hardy M.R. was obliged to consider a case where factually one party refused to meet the other group of shareholders, there was continuous quarreling, and there was a state of animosity which could not be reconciled. In the instant case, no such circumstance appears. On the other hand, the managing director and his board are conducting the affairs of the company in accordance with the statute and the articles. Even the Registrar of Companies impliedly vouchsafes to such a state of affairs. There is no evidence in this case that the managing director

"has purported by means of irregularities to acquire complete control of the company and to exclude the other directors from the management of it." *

The decision cited by Mr. Ganapathi reported in In re Lundie Brothers Ltd. cannot take his case farther. That was a case where though no element of probity or fair dealing to the petitioner in his capacity as shareholder in the company had been established, yet it was found as a fact that blows were exchanged between the two groups of parties, there was incompatibility of temperament between them and the employment of one of the petitioners therein as working director was unlawfully terminated, which almost was equated to deliberate ouster from management. No such telling circumstance appears in the instant case. There is no proof either that this company was formed on the basis of a quasi partnership. Lord Clyde, Lord President of the Court of Session, in Baird v. Lees (1924 S.C. 83 at 92), says

"I have no intention of attempting a definition of the circumstances which amount to a just and equitable cause. But I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Acts would provide them with, then there does arise, in my opinion, situation in which it may be just and equitable for the court to wind up the company." *

This rule has been more forcibly and effectively put by their Lordships of the Privy Council in Loch v. John Blackwood Ltd. 1924 AC 783 at 788), in the following terms

"It is undoubtedly true that at the foundation of applications for winding up, on the just and equitable rule, there must lie a justifiable lack of confidence in the conduct and management of the companys affairs. But this lack of confidence must be grounded on conduct of the directors, not in regard to their private life or affairs, but in regard to the companys business. Further more the lack of confidence must spring not from dissatisfaction at being outvoted on the business affairs or on what is called the domestic policy of the company. On the other hand, wherever the lack of confidence is rested on a lack of probity in the conduct of the companys affairs, then the former is justified by the latter, and it is under the statute just and equitable that the company be wound up." *

The Supreme Court of India, quoting with approval the above rule in Rajahmundry Electric Supply Corporation Ltd. v. Nageswara Rao added that where nothing more is established than that the directors have misappropriated the funds of the company, an order for winding up cannot be made. In the case under consideration, not even a whisper to that effect has been made

The company is working on fairly a sound basis. After the petitioner and his brothers left, the company has made profits. It has liquidated a considerable portion of its secured debts. Even a third party creditor is satisfied about the working of the company. Merely because the petitioner and his group have been outvoted and are necessarily bound by the majority shareholders, this is not a sufficient ground to wind up the firm under section 433(f). As pointed out by Govinda Menon J., speaking for the Bench, in Veeramachineni Seethiah v. Venkatasubbiah the (just and equitable) clause should not be invoked in cases where the only difficulty is the difference of view between the majority directorate and those representing the minority. The petitioner has alternative remedies available in law to redress such grievance, which are not only adequate but efficacious. The conspectus of the facts and circumstances attendant upon this case do not persuade me to exercise my discretion and to direct a winding-up of a running company. The company petition is therefore dismissed with costs. Counsels fee Rs. 250.