Case: Ramesh Narang Vs. Rama Narang & Others

Tipnis, J.This appeal filed by the original plaintiff challenges the order passed by the learned single Judge on May 5, 1997 approving the reports dated 10th April 1997 and 22nd April 1997 filed by the Administrator appointed by the Court and rejecting the application dated 22nd April 1997 filed by the plaintiff seeking certain reliefs.2.The dispute between the sons from the first wife on the one hand and the father and sons from the second wife on the other has taken a very bitter turn and several proceedings between the parties right upto the apex Court have been pending.3.Ramesh Narang, the plaintiff in Suit No.3535 of 1994 filed the suit for specific performance of agreement of family settlement dated 12th July 1990, supplementary family settlement dated 3.7.1991 and family settlement dated 30.1.1992. In particular, the plaintiff has sought specific performance of supplemental family settlement dated 3rd July 1991 read with the family settlement dated 12th July 1990 and the family settlement dated 30th January 1992. The case of the plaintiff is that though in view of the family settlement dated 3.7.1991 he gave up so many of his rights and contentions, the defendants are wrongfully not implementing the settlement dated 3 7.1991 which has resulted into gross injustice.4.In the suit, the plaintiff took out Notice of Motion No.2646 of 1994 for several reliefs. We will have occasion to refer to the reliefs claimed and granted by the learned Judge in the said Notice of Motion at appropriate stage. It may be noticed at this juncture that, ultimately, apart from other reliefs, the learned Judge by his judgment and order dated 15th February 1995 and further order dated 28th February 1995 appointed an Administrator for looking after, managing and controlling the affairs of the defendant no.6 company. The learned Judge appointed Mr.P.S.Shah, a retired Judge of this Court as the Administrator. By order dated 28.2.1995, the learned Judge gave certain further directions.5.Being aggrieved by the said judgment and order passed by the learned Judge disposing of Notice of Motion No.2646 of 1994, Rama Narang (defendant no.1) filed Appeal No.226 of 1995 which was disposed of by judgment and order dated 31st October and 1st November 1996 by a Division Bench presided over by the learned Chief Justice of this Court. The original plaintiff had also filed cross-objections. The appeal as well as the cross-objections were dismissed by the Division Bench by the aforesaid order.6.Being aggrieved by the judgment and order of the Division Bench, Rama Narang preferred Petition for Special Leave to Appeal (Civil) No.25069 of 1995 before the apex Court. By order dated 27th January 1997, the apex Court dismissed the said Special Leave Petition.7.In pursuance to the order passed by the learned single Judge which was confirmed upto the apex Court, the learned Administrator assumed charge on 29th January 1997. Thereafter, the Administrator has been giving periodical reports to the Court from time to time. The Administrator has, accordingly, given several reports. However, so far as this matter is concerned, we are mainly concerned with the reports dated 10.4.1997 and 22.4.1997. Earlier to these reports, the Administrator had also made a report dated 12.2.1997 and the learned Judge had passed an order dated 4.3.1997 on the basis of the said report. In the reports dated 10.4.1997 and 22.4.1997, the Administrator suggested a particular agenda for holding 16th and 17th Annual General Meetings and sought approval of the Court. The plaintiff by his application dated 22nd April 1997 made to the Court sought certain reliefs regarding the resolutions which he had suggested as also directions regarding holding of the 16th and 17th Annual General Meetings.8.By the impugned order dated 5.5.1997, the learned Judge rejected the application filed by the plaintiff - dated 22nd April 1997 and approved and endorsed the reports dated 10.4.1997 and 22.4.1997 filed by the Administrator.9.In this appeal, which was heard for many days and at great length, we have heard the learned counsel appearing for the appellant-plaintiff Mr.Kapil Sibal, the learned counsel appearing for the respondent no.7 Mr.Manohar, the learned counsel appearing for the respondent no.1 Mr.Gopal Subramaniam and Mr.Parsurampuria, learned counsel appearing for the respondents no.2 to 5 and We have also heard Mr.Dushant Dave, learned counsel who appeared for the appellant-plaintiff and addressed us in reply and Mr.Seervai for the respondent no.1. All the learned counsel took us through several documents, several orders, several reports of the Administrator and other material on record to which we will have occasion to refer to at appropriate stage. The learned counsel also cited several authorities in support of their respective contentions to which we may refer at appropriate stage.10.Mr.Kapil Sibal, learned counsel appearing for the appellant-plaintiff, after taking us through the judgments and orders passed by Dhanuka,J and the Division Bench in appeal and several other documents on record, firstly, contended that so far as the conduct of the Administrator is concerned, it is not as impartial as it ought to be. In fact, Mr.Kapil Sibal appearing for the original plaintiff and Mr.Manohar appearing for the original defendant no.7 stated that they have serious grievance to be made against the conduct of the Administrator. The contention being that there is a deliberate effort on the part of the defendants to malign the appellant-plaintiff and, in that behalf, reference was made to certain letters being addressed by the parties as also the report and the file note dated 5.4.1997 prepared by the Administrator and two of the members of the Advisory Committee. It was also contended that certain actions of the Administrator give a feeling that he has been siding with the respondent no.1-original defendant no.1. Then serious objection has been taken to the reports dated 10.4.1997 and 22.4.1997 submitted by the Administrator. Several provisions of the Companies Act have been referred to and it has been contended that, firstly, the Administrator was never appointed Administrator having all the powers under sections 397, 398 and 402 of the Companies Act. It was contended that the recommendations contained in the reports dated 10.4.1997 and 22.4.1997 regarding the resolutions to be adopted in the 16th and 17th Annual General Meetings are contrary to the spirit of the order of Dhanuka,J. as well as contrary to several provisions of the Companies Act. It was contended that the defendant no.1 Rama Narang was convicted on 22nd December 1986. His first appointment as a Director was on 1.1.1988. He was appointed as Managing Director on 25.6.1990. The Articles of Association of the company with which we are concerned were amended on 29.6.1990. Rama Narang was, ultimately, acquitted on 4.5.1995 and was appointed as an Additional Director on 8.5.1990. It is contended that from 22.12.1986 till he was acquitted on 4.5.1995 the appointment of Rama Narang as a Director or as Additional Director was ab initio void, in view of the provisions of section 274 of the Companies Act. It was contended that so far as the finding by the learned Judge in her order dated 5th May 1997 on this aspect is concerned, it is ex facie erroneous. The contention is that if Rama Narang was not a Director in the eye of law, he could never have been appointed as Director for life as per the amended Articles of Association. It was further contended that the administrator cannot and was not empowered to deal with the disputes between the shareholders. He was merely appointed to look after the day-to-day management and all other corporate affairs, subject to specific restrictions imposed by the learned Judge, were left to be handled in accordance with the provisions of the Companies Act in that behalf. It was contended that the Administrator had no power and competence to decide over the disputes between the parties and he ought to have left all these matters for decision to the Court. In substance, Mr.Sibal, learned counsel appearing for the appellant-plaintiff, contended that the issue involved in this appeal is as to what is the nature and ambit of the power of the Administrator appointed under the orders dated 15.2.1995 and 28.2.1995 passed by Dhanuka,J. It was contended that the object was to remedy the injustice done to plaintiff Ramesh and his brother and all actions of the Administrator must conform to this spirit of the order. Submissions were made by rival counsel regarding the meaning of the words "managing" and "controlling" the affairs of the respondent no.6 company. Reference was also made to the fact that Rama Narang (original defendant no.1), in fact, had challenged the order passed by Mrs.Baam,J. on 4.4.1997 so far as paras 24, 25 and 26 thereof are concerned and the said challenge was repelled by the Division Bench by its order dated 26.3.1997. It was contended that even the Administrator had deemed it fit to call the Annual General Meeting under section 166. Reference was made to the correspondence between the parties as also the earlier report of the Administrator in support of the submission that for all purposes, the parties and even the Administrator had understood the order of Dhanuka,J. in its correct spirit, viz., that the Annual General Meeting was to be held in accordance with the provisions of the Companies Act. It was, in short, contended that the Administrator had no competence to decide on issues regarding statutory rights of the shareholders and that was the function exclusively of a competent Court.11.Mr.Sibal also made a grievance regarding the conduct of the Administrator in that he contended that the Administrator has intervened in certain proceedings at a crucial stage of hearing. It was pointed out that the Administrator was conscious that the 16th and 17th Annual General Meetings had to be called as statutorily required. As a matter of fact, as reflected in the report dated 12.2.1997, the Administrator had directed the Board of Directors to convene the meeting. At that time, Rama Narang and his group was controlling the management. Despite the Administrators direction, no steps were taken to hold the Annual General Meeting and, therefore, Ramesh, the plaintiff, had filed proceedings before the Company Law Board for appropriate directions. During the hearing of those proceedings before the Company Law Board, the Administrator appointed a counsel to represent him before the Company Law Board and when it was felt that directions would be issued directing the company to fix the date for the adjourned Annual General Meeting, the counsel for the Administrator stated that the Administrator was taking necessary steps to comply with the order passed by this Court and, at that time, an undated statement was produced before the Company Law Board and date was put by the learned counsel when he was told to do so by the Company Law Board. It was contended that even before the learned single Judge, the Administrator appeared through his counsel and sought adjournment. It was contended that this conduct on the part of the Administrator reflects that the Administrator has acted in aid of the respondent no.1. Very strong exception was taken to these allegations by the learned counsel for the respondent no.1. It was pointed out that the Administrator appeared before the Company Law Board pursuant to the notice issued to him by the Company Law Board. It was secondly contended that as personal allegations were made against the Administrator by Ramesh, it was appropriate for the Administrator to file his say before the Court which he has done during the proceedings. It was vehemently contended by the learned counsel for the respondents that though they are not appearing for the Administrator, they deem it their duty to point out the correct facts to the Court in fairness to the Administrator who is an Officer of the Court appointed by the Court.12.Mr.Manohar, learned counsel appearing for the respondent no.7 Rajesh Narang, contended that the order passed by Dhanuka,J. can never he construed to mean that rights of the shareholders were, in any way, excepting to the extent as specifically provided by the order, were affected. Mr.Manohar pointed out that Omi Narang, who is one of the brothers of Rama Narang, had about 1190 shares in the company which is about 2.018 of the total shareholding and it cannot be held that the rights of persons like Omi Narang were frozen or the shareholders were prevented from exercising rights under the Companies Act. Mr.Manohar contended what in view of the conviction of Rama Narang in 1986 and subsequent appointment as Director on 1.1.1988, Managing Director on 25.6.1990 and acquittal on 4.5.1995, it is clear that under the provisions of the Companies Act. All these appointment were void ab initio. Mr. Manohar further contended that Rama Narang was appointed as Additional Director on 8.5.1995 under section 260 of the Companies Act. Mr.Manohar contended that appointment as Additional Director cannot, in any case, be continued in law beyond the date on which the Annual General Meeting of the company ought to have been held. In that behalf, Mr.Manohar relied upon the decision of this Court in A.I.R. 1960 Bombay 312. Mr Manohar referred to several sections of the Companies Act and contended that these provisions give valuable statutory rights to the shareholders and, as such, by no stretch of imagination, those rights could have been abridged or totally done away with by the order of Dhanuka,J. In that behalf, Mr.Manohar relied upon the decision of this Court reported in A.I.R. 1992 Bombay 114.13.Mr.Gopal Subramaniam, learned counsel appearing for the respondent no.1, also took us through the order of Dhanuka,J. as well as the order of the Division Bench as also several other documents on record and contended that so far as continuation of Rohit Narang is concerned, it cannot be challenged as it was challenged before the single Judge (Dhanuka,J.) as also before the Division Bench by way of cross-objection and the said challenge having been repelled, it cannot be reagitated in these proceedings. Mr.Subramaniam read out certain parts of Special Leave Petition filed by Ramesh Narang in the apex Court and contended that several of the contentions which are raised on behalf of Ramesh in this appeal have been incorporated in the aforesaid Special Leave Petition and, ultimately, the Supreme Court having dismissed the said Special Leave Petition, in fact, the contentions are barred under the principles of res judicata. Mr.Subramaniam further contended that when Dhanuka,J. appointed an Administrator and vested the management and control in him in respect of the respondent no.6 company, it means that qua management, the Board of Directors cannot interfere and qua control the shareholders cannot exercise their rights and all these functions were necessarily vested with the Administrator. Mr.Subramaniam contended that it is relevant to notice that the plaintiff had invited the order of appointment of the Administrator and now he cannot find fault with the same. Mr.Subramaniam referred to the fact that the Division Bench having rejected the cross-objections filed by Ramesh, the matter, so far as points raised in the cross-objections are concerned, stands concluded and cannot be reagitated. Mr.Subramaniam, thereafter, addressed us on the power and competence of the Administrator appointed under sections 397, 398 and 402 of the Companies Act and also cited several authorities in support of his submissions, viz., 47 Company Cases 93 and (1960) 1 Chancery Division 563. He also read extracts from Palmers Company Law. Mr.Subramaniam submitted that so far as the reports of the Administrator are concerned, the reasoning given therein is founded on reality and in view of the fact that the Administrator is having personal knowledge of the ground or field realities, his opinion should be accepted. Mr.Subramaniam contended that if voting takes place in the Annual General Meeting, there was likely to be scramble and if the Administrator thought it fit to avoid any further disputes and litigations, the said view of the Administrator cannot be said to be unreasonable on any ground. Mr.Subramaniam submitted that even if voting had taken place on different resolutions, the defendant no.1 cannot be placed in a situation worse than his position even if 3.7.1991 settlement was implemented. Mr.Subramaniam then contended that plaintiff Ramesh, by the proposed resolution, has shown that he is not ready and willing to perform his part of the contract under the 3rd July 1991 settlement and, therefore, under Order 39 Rule 11, his suit itself would be dismissed for the default on the part of the plaintiff. Even if it is held, contended Mr.Subramaniam, that the Administrator cannot adjudicate the issues between the parties, he necessarily must decide the issues which arise before him, and as the Administrator has taken a reasonable and most advantageous view in the matter, viz., to have the minimum number of Directors required by the statutory provisions and avoided undue scramble or further litigation, the said view deserves acceptance.14.In the alternative, Mr. Subramaniam contended that assuming that the shareholders could exercise their rights, the very resolutions forwarded by Ramesh must put him out of the Court. It is here where Notice of Motion No.2156 of 1997 has been pressed in service. It is contended that even if the agreement or settlement dated 3.7.1991 is implemented, the defendant No.1, viz., Rama Narang will have to transfer 38% shares in the name of the plaintiff and another 12% in the joint names of Rama Narang and the plaintiff Ramesh Narang. Mr.Subramaniam showed the willingness of the defendant no.1 that pending the suit, by way of a workable arrangement, Rama Narang would be ready to transfer 38% of the shares from out of the shares held by Fashion Wears Pvt. Ltd. and another 12% from Fashion Wears Pvt. Ltd. could be held in the joint names of Rama Narang and Ramesh and these 12% shares will be deposited in the Court and be frozen. Mr.Subramaniam then pointed out that, as a matter of fact, when Rama Narang wanted to do the very thing, Ramesh (plaintiff) obstructed Rama Narang from doing so in the proceedings taken out in the City Civil Court. Mr Subramaniam, therefore, contended that the plaintiff having obtained the order is, in fact, obstructing the implementation thereof and, therefore, under Order 39 Rule 11 of the Code of Civil Procedure, either his suit could be dismissed or under Order 39 Rule 4, relief granted by Dhanuka,J. in terms of prayer (c) of the earlier Notice of Motion should be vacated or it may be clarified that Fashion Wears Pvt. Ltd.s shares can be transferred subject to the final outcome of the suit and until Ramesh consents to such a course of action, no meeting of the shareholders be held. Mr.Subramaniam took strong objection to the allegations made against the Administrator. He contended that, in fact, some of the allegations are false and, as such, the plaintiff has exposed himself to some strict action being taken by the Court. Mr.Subramaniam emphasized the fact that under the Articles of Association, Rama will be Chairman for life and also Director for life. Mr.Subramaniam further contended that even under the settlement of 3.7.1991, during the life time, Rama was to continue as the Managing Director and Ramesh (plaintiff) was obliged to agree with the decisions of Rama Narang. Mr.Subramaniam contended that, as a matter of fact, Rama Narang and other defendants have got a very strong defence to the suit. He emphasized that it is relevant to notice that 12,034 shares of Manu Narang were transferred much prior, viz., on 28th September 1990 and what was done on 24th March 1992 was merely notional retransfer to Manu and again transfer of the same to Rama. Mr.Subramaniam contended that, as a matter of fact, there is earlier family settlement dated 12.1.1990 and if all the family settlements are taken into consideration, it is clear that Rama Narang was expected to be the Managing Director and he always had a primacy in the management of the company. Mr.Subramaniam contended that so far as the disability of Rama Narang is concerned, it was only in respect of Managing Director and not to hold the post of Director. He read out the judgment of this Court reported in 1994 Mah.L.J. 1863 as also the judgment of the apex Court reported in (1995) 2 S.C.C. 513. Mr.Subramaniam contended that the position of Director and Managing Director under the provisions of the Companies Act is quite different. In any case, Mr.Subramaniam contended that on proper reading of the provisions of section 274 of the Companies Act, two conditions must be concurrently established, viz., that the person ought to have been convicted as also sentenced to a particular term. Mr.Subramaniam contended that the word sentence as used in the provisions of section 274 must mean that the person must have actually undergone the sentence. Mr.Subramaniam further contended that when Rama was acquitted on 4.5.1995, the entire effect of conviction must be held to have been totally effaced and all his earlier appointments which could be said to be bad in law would automatically be good in law. Mr. Subramaniam contended that the appointment of Rama as Director or Addl. Director has never been declared void by any Court of competent jurisdiction in any proceedings. Therefore, the result would be that whatever embellishment was attached to holding the post of Director by Rama due to his conviction vanishes and he would be deemed to be a lawfully appointed Director for all the times. However, if the appointment of Rama as a Director or Addl. Director was declared as void by any Court, than fresh appointment would have to be made even if he was acquitted. In the submission of Mr.Subramaniam, the effect of acquittal of Rama is that but for any declaration by a competent Court voiding his appointment as a Director or Addl. Director, all resolutions appointing Rama as a Director would automatically become valid and lawful. In that behalf, Mr.Subramaniam relied upon the decision of the apex Court reported in A.I.R. 1981 S.C. 547. Mr.Subramaniam also relied upon the decision of the apex Court reported in A.I.R. 1992 S.C. 111 in support of his contention that even a nullity has to be challenged before the Court.15.Mr.Parsurampuria, learned counsel appearing for the respondents no.2 to 5, adopted the arguments of Mr.Subramaniam. Mr.Dushant Dave, learned counsel appearing for the appellant Ramesh, in reply, pointed out that in Company Petition No.681 filed by Ramesh, the amendments of Articles were expressly challenged which Company Petition was withdrawn by Ramesh in pursuance to the agreement dated 3.7.1991. It was pointed out that it is inconceivable that in the present suit, the rights of the plaintiffs could be frozen. In support of various submissions, Mr.Dave read out certain passages from Halsburys Laws of England and he also relied upon the decisions of the apex Court reported in (1986) 2 S.C.C. 667, 1964 (2) Company Law Journal 184, A.I.R. 1965 S.C. 40, A.I.R. 1986 S.C. 1370, and (1985) 2 S.C.C. 167. He also contended that the order passed by Dhanuka,J. was in the nature of an interim order during the pendency of the suit and, therefore, must be held to be an order akin to the order which could be passed under the provisions of section 403 of the Companies Act. He also relied upon the judgment of the apex Court reported in A.I.R. 1981 S.C. 483, and (1989) 3 S.C.C. 132. Mr.Dave also contended that if one looks at the spirit of the order of Dhanuka,J., the day-to-day management cannot be entrusted to the defendants, viz., Rama, Rohit and Rahul which appears to have been done by the Administrator. We have also heard Mr.Seervai on certain decisions cited by Mr.Dave. Mr.Seervai contended that all these judgments deal with normal functioning of a normal corporate body under the Companies Act and not when there is an appointment of an Administrator. Subject to this general comment in respect of several judgments cited by Mr.Dave, Mr.Seervai also contended that the judgments and the passages cited therein by Mr.Dave must be read and understood in the context of the facts and circumstances and the specific contentions and issues before the Court in a particular case. Mr.Seervai contended that this matter and other proceedings between the parties have exercised all the Courts, including the apex Court. Every report of the Administrator has been challenged. Taking into consideration the nature of the litigation and the history thereof uptill now, it would be in the interest of everyone concerned that the hearing of the suit should be expedited.16.As Mr.Subramaniam had emphasized that certain false allegations are made, Mr.Manohar contended that so far as the fax message sent by the learned Advocate for the plaintiff Ramesh to the learned Administrator is concerned, it is necessary to notice that 11th April 1997 was Friday and the Advisory Committee conducted the meeting upto 8 p.m. In the very meeting itself the Administrator handed over notice dated 9th April 1997 regarding the Annual General Meeting. April 12, 1997 was 2nd Saturday, 13th was Sunday and 14th was Monday, but was a holiday being Dr. Ambedkar Jayanti. April 15, 1997 was Tuesday and a working day. Mr.Manohar produced a file and contended that the fax message was sent from the residence of the learned Advocate in view of the holidays and it shows O.K. report meaning thereby that it has reached the destination. Mr.Manohar contended that it is one thing to say that the Administrator might not have actually received the fax message from his office and another to say that the assertion that the Advocate had sent the fax message is false. It is possible that the message was sent and even then it was not actually received personally by the Administrator. Mr.Manohar has also cited decisions of the apex Court reported in A.I.R. 1972 S.C. 1248 and A.I.R. 1974 S.C. 1863 for interpretation of the word "control". He contended that the provisions of sections 267, 274 and 284 will have to be interpreted harmoniously and if so interpreted, it is clear that once Rama was convicted and sentenced on 26.12.1986, he is incapacitated by the provisions of section 274 from holding the post of Director. Mr.Manohar relied upon the decision of the apex Court reported in 1997 (2) Scale 719 in support of his submission that the resolutions which were passed and the actions which were taken during the stay of the order passed by Dhanuka.J. must be set at naught as, ultimately Special Leave Petition was dismissed by the apex Court and then it becomes the duty of the Court to put the parties in the same position they would have been, but for the interim orders of the Court.17.Before we deal with the respective submissions, we find it necessary to refer to the order of Dhanuka,J. in detail as also the relevant portions of the judgment of the Division Bench in appeal therefrom, the order passed by Mrs.Baam,J. on 4.3.1997, reports of the Administrator dated 12.2.1997, 10.4.97 and 22.4.1997, the application of Ramesh Narang made to the Court on 22.4 1997 and the say of the Administrator to the same and, obviously, the impugned order dated 5th May 1997. We would also refer to certain correspondence between the parties which may throw light how the parties had understood the order of Dhanuka,J.18.Coming first to the order of Dhanuka,J., it is relevant to notice that Dhanuka,J. has observed that family companies of Narangs functioned as family concerns on par with quasi-partnership for several decades. Dhanuka,J. has also observed that the defendants no.1 to 5 wanted to back out from their obligations under the settlement dated 3.7.1991 and oust the plaintiff from the joint control and management of the defendant no.6 company after having acquired the benefit of the part implementation of the family settlements. Dhanuka,J. has observed:-"The supplemental family arrangement dated 3rd July 1991 continues to remain un-implemented insofar as it makes provision beneficial to the plaintiff because of acts of obstruction as well as wrongful and malicious repudiation of solemn supplementary family arrangement dated 3rd July 1991 referred to hereinabove by defendants no.1 to 5."In para 30 of the judgment, Dhanuka,J. has referred to the plaintiffs case as to how he has done various acts and performed his part of the obligations under the settlement dated 3.7.1991 and at the end of para 31, Dhanuka,J. has observed as under:-"The defendants 1 to 5 now planned to deprive the plaintiff of his entitlement to shares and managing directorship of defendant no.6 also and thus bring virtually him on the street. The defendants 1 to 5 adopted all possible strategies in this direction, as would be shown below. This is my strong prima facie view."In para 35, it is observed as under:"Clause 1 of the said agreement dated 3rd July 1991 emphatically provided that the fundamental basis of the family agreement was that Group C and Group B will have their shareholding in defendant no.6 in the manner set out therein. Group B as defined in the said agreement refers to plaintiff above. If the specified percentage of share holding was to be held by Group A and Group B, transfers of shares from the name of existing shareholdings would be necessary, such transfer of shares was possible with consent of the then existing shareholders. All the shareholders of defendant no.8 also were agreeable to implement the settlement by becoming party to settlement dated 30th January 1992 in which the supplemental family arrangement dated 3rd July 1991 was incorporated as discussed above on this footing, the plaintiff resigned and retired from several firms and companies allotted to other members of the family. It was necessary to leave the working out of a few details and the implementation of the settlement to an independent and respectable Advocate/Solicitor. The defendant no.1 himself recommended the name of Shri J.R. Gagrat for the said purpose to which the plaintiff agreed. The defendant no.9 has set out the gist of this version directly or indirectly in his very first letter addressed to Shri J.R. Gagrat on 30th March 1992 and rightly so. The plaintiff is still ready and willing to implement the said supplementary family arrangement dated 3rd July 1991 in accordance with the directions of Shri J.R Gagrat. The defendant no.1 is not so willing. The conduct of defendants 1 to 5 lacks bonafides. Prima facie the alleged repudiation of solemn family settlement dated 3rd July 1991 is wrongful, arbitrary and malicious. It is more so as the said settlement was partly acted upon by the plaintiff and the concerned defendants have already derived various benefits as a result of such part implementation."In para 40, the learned Judge has observed that the prima facie picture which emerges from the above discussion is that as a result of the part implementation of three family settlements which are to be read together, the shareholding of the defendants no.1 to 5 in defendant no.6 company has shot up and the shareholding of the plaintiff has remained the same. It is further observed as under:"As a result of transfer of 12034 shares Rama Narang Group, exclu-ding Ramesh Narang who is sought to be wrongfully ousted from the said group, now holds 20130 shares. On 14th January 1994, the defendant no.1 caused these 20,130 shares to be transferred in various names i.e. himself, jointly with one or other members from defendants no.2 to 5. By his conduct, the defendant no.1 has shown bias and partiality in favour of defendants no.2 to 5 and animus against the plaintiff and defendant no.7 without any justification. Thus the Rama Narang Group has virtually ousted the plaintiff from joint management and control of Defendant no.6 as contemplated under family settlement dated 3rd July 1991."19.So far as the fact of the conviction of Rama Narang is concerned, the learned Judge has dealt with the same in detail in paras 44, 45, 46 and 47 of the order. The learned Judge, after referring to the judgment of the apex Court, held that the conviction of the defendant no.1 for the offences or the disqualification emanating therefrom regarding directorship or managing directorship of a company was never stayed by the High Court. Referring to section 274 of the Companies Act and the Judgment of the Division Bench of this Count in Appeal No.684 of 1992, the learned Judge observed that the Division Bench has in terms held that the defendant no.1 was disqualified from acting as a Director of any company so long as the order of conviction was not set aside or the conviction of the defendant was not stayed. In para 47, the learned Judge has observed as under:"If the defendant no.1 succeeds in the pending criminal appeal, the defendant no.1 can act as a director of defendant no.6 or any other company subject to other provisions of law."In para 50, the learned Judge has observed as under:-"The contesting defendants have practically made the plaintiff desparate by depriving him of most of his assets and by repudiating the settlement dated 3rd July 1991 without any justification. The with prejudice offer made in writing by defendant no.1 is inadequate and is not acceptable to the plaintiff."In para 51, the learned Judge repelled the submission on behalf of the defendants that the plaintiff has shown that he is not ready and willing to perform his part of the contract. It is relevant to notice that in para 52, the learned Judge has observed:"The plaintiff desires that by an interlocutory order of this Court, the defendant no.1 should be directed to hold 10,184 shares as trustees for the plaintiff. It is not possible to grant any such relief to the plaintiff at this interlocutory stage in view of the order of the Supreme Court dated 12th August 1994. It was conceded at the Bar that these shares are virtually freezed by the order of the Supreme Court. Nothing more need be done on this aspect of the case by this Court."It is also relevant to notice that in para 53, the learned Judge dealt with the prayer of the plaintiff seeking injunction against all the defendants so as to prevent them from obstructing the plaintiff from functioning as Managing Director of the defendant no.6 company. The learned Judge observed that in view of the provisions contained in clause 36 of Articles of Association of the defendant no.6 company, he was hesitant to grant any relief to the plaintiff and permit the plaintiff to function as Managing Director for life in terms of settlement dated 3rd July 1991. The defendant no.1 has contended that the plaintiff has already retired by rotation even as Director of the defendant no.6 company. The resolution was passed, in this behalf, at the Annual General Meeting held on 21st November 1994. By an order passed by the Company Law Board on 19th November 1994, the operation of the said resolution has already been stayed. The application made by the defendant no.1 for vacating the said order is still undecided. Significantly, the learned Judge has observed further as under:"Let the proceeding before the Company Law Board continue on merits and in accordance with law."Ultimately, in para 55 of the order, the learned Judge has enumerated his prima facie conclusions. In sub-para (1) of para 55, the learned Judge has observed that the supplementary family arrangement dated 3rd July 1991 was a concluded enforceable contract. That the said agreement operates in respect of all the shares of the defendant no.6 company except the shares held by Omi Narang group, viz., 1190 shares i.e. 2.67% shares of total paid up share capital of the defendant no.6. It is the legal liability of contesting defendants to arrange and procure the transfer of the shares of the defendant no.6 company to the name of the plaintiff so as to enable the plaintiff to hold 38% shares or 44,471 minus 1,190 = 43,281 shares in his own name and 12% shares in joint names of the defendant no.1 and the plaintiff as contemplated under the above referred to supplementary family arrangement dated 3rd July 1991. In sub-para (3), the learned Judge has observed as under:"(3)The said agreement was part-performed by the plaintiff. The said agreement was duly acted upon. The contesting defendants have derived benefit from such part-performance."In sub-para (4), the learned Judge has observed as under:"Subject to amendment in articles of association of defendant no.6, the plaintiff can function as chairman and managing director of defendant no.6 if defendant no.1 is enable to function in this capacity by operation of law, provided the plaintiff is duly appointed and/or elected to the said office in accordance with law."In sub-para (9), the learned Judge has observed as under:"(9)The plaintiff has made out a strong prima facie case. The equities are in favour of the plaintiffs. The conduct of contesting defendants is most blameworthy."In sub-para (10), the learned Judge has observed as under:"(10) By part-implementation of the family settlements, the shareholding of defendants 1 to 5 in defendant no.6 has shot up. The defendants 1 to 5 wrongfully desire to manipulate the matters and continue their fraudulent strategies by refusing to arrange for corresponding increase in shareholding of the plaintiff as contemplated under the settlement after having induced the plaintiff to do various acts and things as listed in para 3 of affidavit in support of notice of motion. The Court cannot be a silent spectator to such a gross injustice. The Court is not divesting the shareholders of their title in respect of 12034 shares obtained by defendant no.1 from Manu Narang Group in implementation of the family settlement. The Court shall have to freeze these shares in terms of prayer (c) of notice of motion."In sub-para (11), the learned Judge has observed as under:"It is not possible for the Court to appoint the plaintiff as a managing director of defendant no.6 company for life at this stage or grant any other relief in this behalf till Articles of Association of defendant no.6 are amended. It would be a travesty of justice to allow the manipulations and wrongful strategies of defendants 1 to 5 to continue. The Court has thus no alternative but to appoint a senior retired Judge of this High Court as an administrator as done sometimes in a petition filed under Section 397 and 398 of the Companies Act I of 1956. The Court has inherent jurisdiction to pass necessary interim orders in the interest of justice even in a suit and the case is a fit one for exercise of inherent jurisdiction."In para 64, the learned Judge as specifically dealt with the prayers in the Motion. The learned Judge felt that no order was necessary at that stage on prayer (a) which sought an injunction against the defendants no.1 to 5 and 6 from alienating, encumbering, parting with possession or creating any third-party rights in respect of the properties, assets or actionable claims of the defendant no.6 company and/or his subsidiaries. So far as prayer (b) is concerned, it sought direction to the defendant no.8, viz., Fashion Wears Pvt. Ltd. to hold 10,184 shares of the defendant no.6 company as trustee for the plaintiff and all rights, interests and acquisitions in respect of the said shares only as per the directions of the plaintiff and in no other manner. The learned Judge felt that no orders should be passed in view of the order dated 12th August 1994 passed by the apex Court in Petition for Special Leave to Appeal No.1169 of 1994. The learned Judge observed that it appears that 10,184 shares standing in the defendant no.8 are already freezed. The learned Judge made the Motion absolute in terms of prayer clause (c) with some modifications. The order was passed to the effect that pending the hearing and final disposal of the suit, defendants no.1 to 5 be restrained by an order and injunction of this Court from in any manner exercising any rights, voting or other incidental and all other rights, interest accruing thereof or arising therefrom which have been transferred in the name of the defendants no.1 to 5 from other members of the family, viz., Manu Narang and Ashok Narang in defendant No.6 company pursuant to the family settlement between the parties. The learned Judge added the following rider:-"This order of injunction shall be operative until the defendant nos.1 to 5 arrange for and procure transfer of shares to the name of the plaintiff in defendant no.6 company so as to enable the plaintiff to hold 38% shares of 43,281 shares of defendant no.6 company in his own name (i.e. 44,471 total shares issued by defendant no.6 - 1190 shares held by Omi Narang Group) and further 12% shares of 43281 shares in joint names of Rama Narang and Ramesh Narang. It is further clarified that no mandatory order of injunction is granted by the Court directing defendant nos.1 to 5 to procure the transfer of the above referred shares to the name of the plaintiffs. The prohibitory order of injunction shall however continue to operate till the defendant no.1 to 5 procure transfer of such shares to the name of the plaintiff."So far as prayer clause (f) which sought an injunction restraining the defendants no.1 to 5 and 6 from, in any manner, interfering, obstructing or causing hindrance in functioning of the plaintiff as Chairman and Managing Diractor of the defendant no.6 company in any manner whatsoever is concerned, the learned Judge said that no order at that stage in view of the provisions of article 36 of the Articles of Association of the defendant no.6 company. No interim order can be passed by the Court at that stage so as to direct amendment of Articles of Association of the defendant no.6. The learned Judge observed that it is rather unfortunate that the contesting defendants are obstructing the implementation of the family settlement on technical and hyper-technical grounds. After observing that the Court is not able to grant any interim relief in terms of prayer (f) of the Notice of Motion, the learned Judge significantly observed that the plaintiff may pursue his remedy in pending CompanyPetition No.28 of 1992 or in any other proceedings. Then the learned Judge dealt with prayer clause (g) which sought appointment of an administrator for looking after, managing and controlling the affairs of the defendant no.6 company. In para 72, the learned Judge onserved that the plaintiff has made out a strong prima facie case for enforcement of supplementary family arrangement dated 3.7.1991. The learned Judge further observed that nevertheless, it was not possible for the Court to grant interim relief in terms of prayer (f) until the Articles of Association of the defendant no.6 company are amended and, therefore, he had declined to grant interim relief in terms of prayer (f) of the Notice of Motion. Thereafter, the learned Judge has observed as under:-"It would be a travesty of justice to allow the defendants 1 to 5 to take advantage of their own wrong and continue to manage the affairs, assets and business of defendant no.6 company as done at present. In exercise of the inherent powers of the Court and in order to prevent the ends of juctice being defeated, I make the notice of motion absolute in terms of prayer (g) and pass further order as indicated below coupled with the following directions."20.The learned Judge, thereafter, proceeded to appoint Mr.Justice P.S.Shah, a retired Judge of this Court to be the Administrator of the defendant no.6 company in terms of prayer (g) of the Notice of Motion. The learned Judge further directed that the Administrator shall be assisted by an Advisory Committee consisting of the following:(a)The plaintiff;(b)The defendant no.3(c)The Prothonotary and Senior Master or a senior officer of the High Court on the original side recommended by the Prothonotary & Senior Master whose name is approved by the Court.(d)The Court Receiver, High Court, Bombay or any other senior officer assisting the Court Receiver, in the office of the Court Receiver, whose name is recommendad by the Court Receiver and approved by the Court.(e)The Administrator shall be at liberty to take assistance also from an independent professional expert of his choice from the profession of law or the Chartered Accountant The Administrator may suggest the name and make his recommendation in this behalf including the terms on which such expert is willing to assist the Administrator. On the approval of the name of the expert being granted by the Court, the said expert shall also be an additional member of the Advisory Committee."In para 74, the learned Judge has observed that all further directions are reserved and in this sense, the Notice of Motion is not yet finally disposed of. Perhaps certain conseq-uential directions shall have to be given by the Court at the subsequent hearing of the Notice of Motion. For that moment, it was directed that the order appointing the Administrator shall come into force from 1st March 1995. Thereafter, the learned Judge directed that no Board meeting or Annual General Meeting of the defendant no.6 shall be held without obtaining prior leave of the Court.21.At that stage, Mr.Manohar, learned counsel for the defendant no.7, invited the attention of Dhanuka,J. to the order passed by Bahuguna,J. on 29th November 1994 to pass consequential order. In para 80, Dhanuka,J. observed that on 30th November 1994, the Annual General Meeting of the defendant no.6 company was scheduled to be held at which meeting the purported appointment of the defendant no.3 as Joint Managing Director of the defendant no.6 was supposed to be approved. The plaintiff sought to ad-interim injunction restraining the defendant no.6 from holding the said meeting or passing a resolution in this behalf. By an order dated 29.11.1994, Bahuguna,J. directed that the meeting may be held and the resolution may be passed as proposed but the resolution which may be passed in this behalf shall be subject to further orders of the Court as may be passed at the final hearing of the Notice of Motion. The learned Judge observed that he did not propose to adjudicate on the validity of the purported resolution passed at the Annual General Meeting of the company held on 30th November 1994. The learned Judge clarified that the defendant no.3 is not included in the Advisory Committee by reason of his alleged status as Joint Managing Director of the defendant no.6. What is observed by the learned Judge thereafter is extremely significant which is as under:-"Principally the idea is to give equal representation to both the parties as far as practicable. Keeping this objective in mind, I have passed an order to the effect that the plaintiff as well as defendant no.3 both shall be the members of the advisory committee. Two officials of the Court are included in the Advisory Committee in order to enable the Administrator to avail of the official machinery of the Court for getting his decisions implemented. The Administrator shall make periodical reports to the Court and shall obtain sanction of the Court before taking any major decision involving large finances."22.In the further order dated 28th February 1995, the learned Judge observed that the meetings and the working of the Advisory Committee may be organized as far as practicable in a way so as not to hamper performance of normal duties by the Court officials referred to in the said order. The plaintiff and the defendant no.3 shall not be entitled to payment of any honorarium for the time being. Later on the Court shall take appropriate decision on this aspect of the matter whatever required Para 4 of the said order reads as under:-"4. The Administrator herein shall have all the powers of an administrator of the 6th defendant company mutatis mutandis with the powers of an administrator appointed by the Company Court or the Company Law Board under section 397, 398 and 402 of the Companies Act I of 1956 and the powers analogous to that of a receiver though the administrator is not appointed Receiver as such. The defendants to the suit and all the office bearers of defendant no.6 company including its secretary as well as the staff of the company are directed to cooperate with the administrator. The directors of defendant no.6 are restrained from interfering with the management and control of the company by the administrator with the aid of the advisory Committee. The bank account of the company shall be operated by the administrator alongwith one officer of the Court or another member of the advisory committee or in the manner deemed fit by the administrator."In para 7, the learned Judge directed that the Administrator shall take charge on 10th April 1995 or soon thereafter. Till then, no Board Meeting or Annual General Meeting or Extra-ordinary General Meeting shall be held. Till then, the funds of the company shall not be utilized except for the business of the company in ordinary course. Thereafter, the management and control of the defendant no.6 company shall vest in the Administrator.23.In Appeal No.226 of 1995, the Division Bench also observed that the shareholding of the defendant no.6 company (NIHPL) is that of family members; it is virtually a family concern for all purposes, except for the Companies Act. It is further served that in the background of the facts of the case, the question is how to preserve the properties in dispute. In para 15, it is observed that apart from the suit filed by Ramesh Narang, a number of other proceedings are pending between the parties, which indicates that there is something wrong with the implementation of the family settlements between the parties or that there is some dissatisfaction with regard to those settlements and in such situation also preservation of the properties in dispute is a must. In para 16, the Division Bench observed that from the facts on record and the submissions, prima facie it appears that the plaintiff has made out a strong prima facie case on the basis of family settlement. That equity is in favour of the plaintiff as the plaintiff has already acted upon the promise given by his father (defendant no.1) He has relied upon the family settlement and parted with various rights. That all throughout, since 1973 to 1989, the plaintiff was in the management of the company and he has developed it by leaps and bounds. In such a situation, the rights of the plaintiff would be jeopardized if the defendant no.1 is given absolute right of management of the company. The apprehension of the plaintiff is well founded because of the various litigations. Defendant no.1 has developed intention to back out from the family settlement, may be for justified or unjustified reasons, but till the suit is decided, it would be just and proper for preserving the property to confirm the order passed by the learned single Judge. The Administrator is appointed for the benefit of all concerned, who will be the representative of the Court and of all the parties interested in the litigation. In para 21, the Division Bench observed that the fact that various proceedings are pending between the parties itself would be a ground to say that the property is required to be managed as directed by the learned single Judge, which would preserve and protect the interest of all the parties. In para 23, the Division Bench observed that whether the other family members were having share in the said business or whether Rama Narang was having right to settle with regard to other family members cannot be decided at this stage. It can only be decided at the time of final hearing of the matter, but during that time the plaintiffs interest in the said property which is recognized by the settlement dated 3rd July 1991 requires to be protected and for protecting it, the order passed by the learned single Judge is equitable, just and proper. In para 24, the Division Bench has observed as under:-"24 It was sought to be contended by the learned Counsel for the Appellant that even according to the settlement dated 3rd July, 1991 the Appellant was to remain in full control of the management of the Company. Therefore, there is nothing wrong if the Appellant remains in the control and management of the said Defendant no.6 Company till the disposal of the suit. To this it was pointed out by the learned Counsel for the Respondents that by remaining in control and management of the Defendant No.6 Company, the Defendant No.1 (Appellant) intends to drive out the Plaintiff from the management of the said Company. It was also pointed out that there would not be any check on the Appellant with regard to the management and to what extent the property of the Defendant No.6 Company would be siphoned off cannot be judged subsequently. Mismanagement will result in depriving the Plaintiff of getting his share in the Defendant No.6 Company."In para 25, the Division Bench has observed as under:"It is the case of the Plaintiff that he has acted upon the family settlement dated 3rd July, 1991; he has parted with some assets; he has withdrawn the Company Petition and he has given up all his rights and now the Appellant wants to take undue advantage buy denying him his due share as agreed for the reasons best known to him. Respondent no..6 Company admittedly is a family concern. All the shareholders are family members of Narang Group and, therefore, the impugned order passed by the learned Single Judge is not going to affect any third person in any way. Considering the present situation between the family members and scramble for getting the management of the Defendant No.6 Company, by all means, the impugned order passed by the learned Single Judge appointing Administrator appears to be the only solution for preserving the property as it is likely to take a long time for deciding the various matters pending before this Court and Company Law Board filed by various members of Narang family. Further, by the impugned order the right of the parties to manage the Defendant No.6 Company is not affected because the Administrator is required to be assisted by Advisory Committee consisting of various persons as mentioned in the impugned order. It is clarified that at the relevant time as Defendant No.1 was not available for management as he was convicted, his name was not included in the Advisory Committee by the learned Single Judge. To that extent the impugned order can be suitably modified by directing that in the Advisory Committee, Defendant No.1 (Appellant) would also be a member."In para 27, the Division Bench has observed as under:"27. With regard to the Cross-Objections, it would be difficult to arrive at a conclusion that the Resolutions passed in certain Annual General Meetings are illegal. It would depend upon the final result of the suit because both the parties claimed that they have passed Resolutions in their favour on the assumption that they are in majority. Undisputedly, by the order passed by the Supreme Court certain shareholding is freezed till the suit is decided. In such situation it would be difficult to arrive at a conclusion that majority shareholders passed impugned resolutions as required under the Company Law. The dispute is required to be decided finally after result of this suit or in any case by separate proceedings."24.Special Leave Petition filed by Rama Narang, being Petition for Special Leave to Appeal (Civil) No.25069 of 1996 was dismissed by the apex Court on 27.1.1997.25.Thereafter, the Administrator took charge as per the order of Dhanuka,J. on 29th January 1997 and the first report submitted by the Administrator is dated 12th February 1997. After narrating the history of the litigation terminating in the dismissal of the Special Leave Petition, the Administrator has stated that he took charge as the Administrator of the defendant no.6 company on 29.1.1997 and that he has given the requisite directions to the members of the staff and the Board of Directors in consonance with the directions of Dhanuka,J. In the said report, the Administrator has stated that while administering the affairs of the company, the set up built over the years need not be disturbed at present as there is every possibility that such action might result in an adverse impact on the business of the company. The Administrator has mentioned that the defendants no.1 and 3 have been a vital link in the conduct of running the business of the defendant no.6 company and bearing in mind the objective of preserving the assess of the company and running the business, at least at the current profitable level and if possible to promote growth, the assistance of the defendants nos.1 and 3 in the day-to-day operations, in his opinion, is necessary and desirable. Even the plaintiff who had till about 1990-91 taken active interest in the same manner in the matter of running business of the company and, therefore, the Administrator had directed the plaintiff alongwith the defendant no.3 to assist him in the business of the company, viz , flight kitchens and croissants, etc. In this report, after referring to the directions of the Court, the administrator has stated that he has on 12.2.1997 issued directions to the Board of Directors of the company to take necessary steps to convene the adjourned 16th Annual General Meeting of the company, in accordance with the law, as also take necessary steps to convene the Annual General Meeting for the year ending March 1996 in accordance with law. The Administrator has further stated that incidentally, it may be pointed out that the Annual General Meeting has been called under section 166 of the Companies Act, 1956. Failure to call the Annual General Meeting invites penalties under the said Act. Then there is reference to the appointment of independent expert, viz., Mr.Bhupendra Fafadia, Chartered Accountant. Then there is reference to honorarium to be paid to Court officers assisting as members of the Advisory Committee and the Administrator suggested that honorarium to be paid to Ms. Ajinkya should be increased to Rs.5,000/- from Rs.2,000/-.26.After this report, the learned Judge seized the matter has passed an order dated March 4, 1997. After narrating the history of the litigation and various orders passed earlier and after referring to the report of the Administrator dated 12.2.1997, the learned Judge noted in para 8 that the report reveals that the aforesaid arrangement could be reviewed from time to time. These arrange-ments as earlier part shows are regarding assistance of the plaintiff and the defendant no.3 to be taken by the Administrator. An application was made by the plaintiff to the learned Judge in respect of these directions by the Administrator and it was contended by the plaintiff that as per the order of Dhanuka,J., so far as the defendants no.1 to 5 are concerned, they are not to be involved in the management of the defendant no.6 company. Giving the defendants no.1 and 3 the right to participate in the day-to-day management and working of the company is contrary to the order passed by Dhanuka,J. In para 11 of the order dated 4 3.1997, the learned Judge observed that the set up of the organization reveals that originally the organization was under the control of the Chief Managing Director who is defendant no.1, the Joint Managing Director who is defendant no.3 and other Directors. Under their control is the Executive Director and below him there is Vice President (Official) and Vice President (Finance), Corporate Internal Auditor, Corporate Executive Chief, Corporate Food and Sewerage Controller and thereafter unit of the General Manager. By virtue of the order passed by Dhanuka,J., the body is now headed by the Administrator with the aid of his advisory committee who is required to look after the business, management and affairs of what is known as Narang Group of Hotels. After referring to the contentions of the plaintiff and the defendants 1 to 5, the learned Judge observed in para 18 that the question that arises for consideration is the involvement of the defendants no.1 and 3 in the management and day-to-day affairs of the defendant no.6 company. The Administrator also gave his say and voiced a grievance with regard to the tenor of the application made by the plaintiff and during the hearing, Ms.Anklesaria appearing for the plaintiff stated that the plaintiff had no intention whatsoever to make any allegation against the Administrator and he only wanted or desired that the order of Dhanuka,J. be construed properly. The learned counsel for the plaintiff also tendered an unconditional apology to the learned Administrator with regard to any such misconception which the learned Administrator may have in that behalf. In para 19, the learned Judge has observed that when the order was passed, the defendants were in control of the management which absolute control has been taken away by the appointment of the Administrator. The Administrator cannot be expected to be conversant with the affairs of the hotel management and day-to-day affairs of hotel management and day-to-day affairs of Narang Group of Hotels which is not only under the control of the defendants but also under the control of various tiers of employees who control the working of the company at every stage. In order to ensure that the Administrator is ably assisted for preserving the property, an Advisory Committee has been constituted on which the plaintiff, the defendant no.3 alongwith two officers of the Court have been appointed and by the order of the appellate Court, the 1st defendant has also been brought in as a member of the Advisory Committee. It is the Administrator who with the help of the Advisory Committee required to look after the management of the defendant no.6. The Board of Directors has no role to pay in the matter. In para 21, the learned Judge has observed that the Administrator has stated that the plaintiff and the defendants no.1 and 3 have an interest as shareholders of the company and under proper financial supervision are likely to work more effectively than any employee and are not likely to leave the services either and, therefore, for successful and profitable operation of the company, the day-to-day services of the defendants no.1 and 3 be utilized and the benefit of their knowledge and expertise be continued to be made available for the successful working of the company. Even the plaintiff has been appointed to participate in the management and day-to-day operation of the company business, viz., two flight kitchens, croissants at Mumbai and Delhi. However, it transpires that the plaintiff has not taken any step to participate in the management and day-to-day operation of the company. In para 22 of the order, the learned Judge has observed that the Administrator who had just taken charge of the defendant no.6 will require sometime to be conversant with the management of the business of the defendant no.6 for which he needs the assistance of the persons who have been in charge and control of this business which charge and control has not been exclusively given to them but the same is under the control and supervision of the Administrator. The learned Judge observed in para 23 of the order that therefore so far as the plaintiff is concerned, at that stage, the learned Judge did not find it necessary to disturb or set at naught the directions given by the Administrator more particularly when the parties will be answerable and liable to the Administrator and also in view of the fact that they will be under the control of Chartered Accountant who in an independent person who has been appointed to look after the accounts. In para 24 of the order, the learned Judge has noted that the Administrator in his report has stated that he has given directions on 12th February 1997 to the Board of Directors of the company to take necessary steps to convene the adjourned 16th Annual General Meeting of the company in accordance with law. In para 25, the learned Judge has observed that, however, she was given to understand that no Board meeting has been called and as the entire control of management of the defendant no.6 company is with the Administrator, it is incumbent and necessary that the Administrator should hold Annual General Meeting which is required to be held under the statute failing which penal consequences will be imposed upon the defendant no.6 company and for that purpose take necessary steps and issue necessary directions pertaining to the agenda, issue notices and fix the date of meeting. In para 26, the learned Judge referred to the submission of Mr.Parsurampuria on behalf of the defendant no.1. The learned Advocate for the defendant no.1 brought to the notice of the learned Judge that the defendant no.1 had taken out Notice of Motion, being Notice of Motion No.605 of 1997 in which relief sought was that pending the hearing and final disposal of the suit, no Annual General Meeting or Extraordinary General Meeting of the defendant no.6 company be held. In the opinion of the learned Judge, this was curious and contrary to the orders passed by Dhanuka,J. The learned Judge referred to the fact that the said Notice of Motion is pending and no interim or ad-interim directions are sought. The learned Judge observed that she failed to understand the significance of the arguments that till the Notice of Motion is disposed of, the Board meeting should not be held. Ultimately, the learned Judge observed that in view of the fact that the parties are acting under the control of the Administrator, at that stage, no interference is called for couples with the fact that the Administrator has in terms stated that the terms of the arrangement would be reviewed from time to time.27.It is extremely significant to notice that so far as the learned single Judges observations in paras 24, 25 and 26 are concerned, the defendant no.1 Rama filed appeal, being Appeal No.249 of 1997. In the submission of the defendant no.1, the directions in paras 24, 25 and 26 regarding the Administrator convening the meeting were uncalled for and contrary to the order of the learned single Judge (Dhanuka,J.) confirmed by the Division Bench. After reading para 74 of the order dated 13.2.1995 and para 7 of the order of the learned single Judge (Dhanuka,J.) dated 28.2.1995, the Division Bench held that they do not find any infirmity in the observations of the learned Judge in paras 24, 25 and 26 of the impugned order and the appeal was dismissed.28.The next relevant document is the report dated 10th April 1997 by the learned Administrator. In the said report, after referring to the directions issued to Ramesh (plaintiff), Rohit Narang (defendant no.3) and Rama Narang (defendant no.1) regarding the assistance to the learned Arbitrator for looking after the day-to-day operations of different establishments, the Administrator referred to the modifications made in the order. The Administrator noted in the report that in spite of the directions, Ramesh Narang has not attended to any of the day-to-day operations of either the flight kitchens or Hotel Ambassador Ajanta, Aurangabad, and Hotel Ambassador Pallava, Chennai. The report noted that Mrs.Ajinkya, Master and Assistant Prothonotary visited the Delhi flight kitchen to be conversant with the operations therein and the Administrator himself visited the flight kitchen at Mumbai and acquainted himself with the operations. In para 9 of the said report, the Administrator has mentioned that, as per the directions of the Court, the 16th Annual General Meeting for the financial year ending 31st March 1996 has bean convened by him on 2nd May 1997. Similarly, the 17th Annual General Meeting for the financial year ending 31st March 1996 has been convened by him on 6th May 1997. The Administrator in para 9 has further mentioned as under:-"Such agenda as it necessary and appropriate has been fixed for both the meetings and the notices thereof issued to the shareholders."The Administrator has stated that, accordingly, he will be conducting the two Annual General Meetings on the due dates. In para 11, the Administrator has referred to the conduct of the plaintiff Ramesh Narang which was described as extremely aggressive and disruptive and the Administrator has stated that the plaintiff displayed total disregard for all known norms of behaviour and decorum required at such meetings. It is further mentioned that the conduct of the plaintiff and the language used resulted in the members of the Advisory Committee present, particularly the Court Receiver and Mr.Bhupendra Fafadia, taking strong exception and they have also expressed the view that necessary directions may be given by this Court to ensure that the functioning of the Advisory Committee is permitted to be carried on in a smooth and peaceful manner. In para 12, the Administrator has referred to the fact that the defendant no.1 having addressed a letter dated 5th April, 1997 to the plaintiff calling upon the plaintiff to refrain from repeating such conduct at future meetings also to the letter written by the plaintiff in reply stating that though the plaintiffs views differ from the views expressed by the Administrator at various meetings, yet the plaintiff holds the Administrator in highest esteem.29.Next is the report dated 22nd April 1997. After referring to original prayer clause (g) and paras 4 and 7 of the further order passed on 28.2.1995 by Dhanuka,J. and the underlined sentence "Thereafter the management and control of Defendant No.6 company shall vest in the Administrator", the Administrator has stated that not only the management but also the control of the defendant no.6 company has been vested in the Administrator. In para 5, the learned Administrator has referred to the portion of the order passed by the Division Bench in appeal. On the basis of the observations, the Administrator has stated in para 6 of the report that the Administrator has been appointed by the Court as a representative of the Court and all the parties interested in the litigation to ensure that the property in litigation, viz., the defendant no.6 company, is preserved until the rights of the disputing parties and rival contentions are adjudicated upon. In para 7, the Administrator has observed that as the 16th and 17th Annual General Meetings had not been held for sometime in view of the disputes between the parties and orders passed by the Court, it was considered necessary by the Administrator to hold the said meetings for the purposes of complying with the statutory requirements of holding such meetings vis-a-vis the liability to statutory authorities. The Administrator has stated that in accordance with the further orders passed by this Court on 4th March 1996, the 16th and 17th Annual General Meetings were convened by him by notices dated 2nd April 1997 and 9th April 1997 issued by him. The agenda fixed for the said meetings was only such agenda as was considered necessary for the purposes of meeting certain statutory requirements and formal approval of accounts for complying with necessary obligations to Banks and other authorities for filing duly approved balance sheets. Consequently, the agenda for the 16th Annual General Meeting consists of the approval of accounts for the financial year ended 31st March 1995 and the appointment of auditors for the following year. The Administrator in para 7 of his report has further stated that Rama Narang had been appointed by the Board of Directors as Managing Director for a term of five years from 8.5.1995 and under the provisions of section 269 of the Companies Act read with Schedule XIII, the said appointment made by the Board of Directors requires approval at the succeeding meeting of the shareholders. Similar approval is also needed to the appointment of Mrs.Mona Narang who was appointed as a Wholetime Director on 23.6.1995. It is stated that insofar as the appointment of Rama Narang as the Managing Director for a period of five years by the Board of Directors, approval of the appointment has been suitably modified to ensure that he will after 29.1.1997 only do such acts as are authorised by the Administrator. The Administrator further mentions that Rama Narang is a member of the Advisory Committee and is assisting the Administrator in the day-to-day working of the defendant no.6 company and is not separately drawing any remuneration for the said purpose and, hence, it is considered appropriate that he may be permitted to draw remuneration as Managing Director on the terms set out in the explanatory statement annexed to the notice until ordered to the Contrary by the Administrator. It is further mentioned that the company is required to ensure compliance with various statutes, including income-tax, sales tax, excise, customs, labour law, etc. and almost all statutes provide for liabilities in the nature of penalty as well as imprisonment for the persons responsible for the management in case of default of compliance and Rama Narang has undertaken to ensure the compliance by the company of the various legal provisions and be responsible for any default in compliance. In the circumstances, it is considered necessary and appropriate that the agenda fixed by the Administrator for the 16th Annual General Meeting be approved by the parties. In respect of the 17th Annual General Meeting, the agenda consists of approval of accounts for the year ended 31st March 1996, the appointment of statutory auditors, confirmation of the declaration of the interim dividend and, in the circumstances, it was considered necessary and appropriate that the agenda fixed by him for the 17th Annual General Meeting be approved by all the parties. Thereafter, the learned Administrator has given details of the correspondence between the plaintiff and the Administrator regarding certain inspection of register of Directors as also several proposals sentby Rama Narang for consideration at the Annual General Meeting and further fact that the Administrator pointed out to Ramesh Narang that the Annual General Meetings had been convened only for the purposes of considering the agenda fixed by the Administrator and no other proposals would be considered, particularly in regard to the appointment of Directors as suggested by Ramesh. As regards the exercise of voting rights by the parties, mentions the Administrator, the Administrator asked Ramesh Narang to furnish his view in the matter for consideration of the Administrator. In para 10, the learned Administrator referred to the various proposed resolutions sent by Ramesh Narang. By the said proposed resolutions, Rama and Rohit were sought to be removed from the positions of Managing Director and Joint Managing Director and as Directors. It sought removal of all the remaining members of the Board of Directors and it was proposed that the plaintiff himself, Rajesh and Mrs.Amla Samanta be appointed as Directors. Four more resolutions were also proposed and submitted by the defendant no.7 Rajesh as Constituted Attorney of Omi Narang proposing appointment of four outsiders on the Board of Directors of the company. The Administrator noted that excepting Ramesh, none of the persons whose names are proposed are shareholders of the company. In para 13, the Administrator has mentioned that various proposed resolutions by Ramesh Narang and Omi Narang through Rajesh Narang after due consideration of the facts and circumstances and the import of the orders passed by this Court were rejected by the Administrator on 21.4.1997. In para 14, the learned Administrator mentioned that in view of the correspondence addressed by Ramesh Narang and Omi Narang, it is apparent that the parties intend to raise fresh disputes in regard to the business of the 16th and 17th Annual General Meetings and the same is likely to result in fresh litigation between the parties. In para 15, the Administrator has reiterated that he is vested not only with the management but also the control of the defendant no.6 company and has been conferred powers mutatis mutandis with those of an Administrator appointed under sections 397, 398 and 402 of the Companies Act and of a Receiver, to ensure that there is preservation of the business and property of the defendant no.6 company and there is no further scramble for power. The Administrator has stated that in the interests of preservation of the defendant no.6 company and its property, it is considered necessary that further disputes be avoided and the agenda fixed for the 16th and 17th Annual General Meetings be directed by this Court to be approved by the parties or alternatively, this Court be pleased to direct that the agenda stand approved. It is further stated that in view of the correspondence and proposals addressed by Ramesh Narang and Omi Narang. At the meeting of the Advisory Committee held on 4.4.1997, it is apparent that unless such orders and directions are passed, fresh litigation will ensue. The Administrator considered that it is in the interest of all the parties that further disputes be avoided and the parties work solemnly for the prosperity and benefit of the defendant no.6 as members of the Advisory Committee and devote their time and energy towards that direction. In para 16, the Administrator reiterated that the Board of Directors has no role to play in the management of the company.The present Board of Directors consists of two non-retiring Directors, viz., Rama Narang holding office under the Articles of Association of the company and Rohit Narang who is not liable to retire by rotation until the expiry of his term of appointment as Joint Managing Director. All other Directors are liable to retire by rotation and would cease to hold office after holding of the 16th and 17th Annual General Meetings. The Administrator, thereafter, stated as under:"The Court has supplanted the entire corporate management by the Board of Directors with the management by the Administrator with the aid of the Advisory Committee and the Board of Directors have neither a role in management nor control of the Company and hence it is considered inappropriate and not necessary to appoint any Directors so long as the Company is under the management of the Court through the Administrator."The Administrator, therefore, prayed that the Court may be pleased to issue directions.30.At this stage, it is also relevant to notice the application made by Ramesh on 22nd April 1997 as that was also considered in the order impugned in this appeal. The application was filed by Ramesh for certain necessary directions with regard to conducting of the 16th and 17th Annual General Meetings. It was pointed out that the application made by plaintiff Ramesh to the Company Law Board on 19.2.1997 for convening the Annual General Meeting has been disposed of by orders of the Company Law Board passed on 17.3.1997 in view of the statement dated 17th March 1997 filed by the Administrator that he is taking necessary steps to comply with the orders passed by this Court. Accordingly, the Administrator issued notice on 2nd April 1997 convening the 16th Annual General Meeting and the notice was served on the plaintiff after the meeting of the Advisory Committee held on 4th April 1997. It was also pointed out that the earlier notice dated 25th September 1995 issued by the contesting defendants convening the 16th Annual General Meeting on 26th October 1995 was stayed by the appellate Court in view of the pending appeals against the judgment and order of Dhanuka,J. In para 9 of the application, there is reference to the correspondence and apprehension that the defendants are likely to implicate the plaintiff falsely as has been done earlier. The file note prepared on 5th April 1997 and served on Ramesh as late as in the evening of 15th April 1997 is referred to. Thereafter, in para 10, there is a reference to the letter dated 8th April 1997 addressed by Rama (defendant no.1) to Ramesh (plaintiff). In the said letter, it was mentioned that it was the prerogative of the Administrator to determine the business to be transacted in the Annual General Meeting and agenda has been determined by the Administrator which is considered appropriate and the same must be supported by all the shareholders of the company. In the said letter, Rama asked Ramesh to vote on all 11456 shares and to approve all the items on the agenda at the ensuing 16th Annual General Meeting and relying on the agreement dated 3rd July 1991, and without prejudice to the contention that the agreement dated 3rd July 1991 is null and void sought confirmation of the plaintiff within 48 hours. Then there is some correspondence referred to regarding seeking inspection of certain documents, etc. In para 14 of the application it is stated that the Special Leave Petition filed by the contesting defendants was on 10th January 1997 adjourned to 27th January 1997 and the stay granted by the Division Bench was continued. In the interregnum, about 3998 equity shares are purported to have been transferred in the name of Mrs.Mohini Rohit Narang, wife of Rohit, the defendant no.3, from out of 12,034 equity shares held by the defendants no.1 to 5 group transferred to their names by Manu Narang and Ashok Narang pursuant to the family settlement and in respect of which the defendants no.1 to 5 have been restrained by an order of the learned single Judge dated 15/28 2.1995 by granting prayer clause (c) of the Notice of Motion. The plaintiff had described this act as fraudulent on the part of the defendants no.1 to 5 which is only with a view to circumvent the order passed by Dhanuka,J. and to secure majority of the votes. It was, therefore, submitted by Ramesh that the said Mrs.Mohini must be restrained from exercising any voting rights in respect of the said hares transferred in her favour. It was further stated that in view of the fraudulent and dishonest conduct of the defendants no.1 to 5 group, the defendants no.1 to 5 should not be permitted to participate as members of the Advisory Committee and/or day-to-day affairs of the defendant no.6 company. In para 20 of the said application, it is stated that on 12th April 1997 the Advocate for the plaintiff informed him that the suit was appearing on board for directions on 15th April 1997. Therefore, the Advocate of Ramesh immediately faxed a letter to the Administrator on 12th April 1997 asking for a copy of the report to which a reference was made by the Administrator in the meeting of the Advisory Committee. On 13th April 1997, just before the matter was called out, a copy of the report was supplied to the plaintiff. The Administrator by letter dated 14th April 1997 addressed to Ramesh inter alia requested to furnish the plaintiffs views in the matter of voting rights. In para 24, plaintiff Ramesh mentioned that in view of the various orders passed by various Courts, the defendants no.1 to 5 group would be entitled to exercise voting rights only in respect of 9,204 shares while the plaintiff would be entitled to vote in respect of 11,456 shares and Omi Narang in respect of 1190 shares at the 16th and 17th Annual General Meetings. In para 25, it is stated that Dhanuka,J. by his order had directed the Directors not to interfere with the management of the company by the Administrator but has not superseded the functioning of the Board of Directors nor restrained them from performing their statutory obligations required to be performed by them under the provisions of the Companies Act as also not curtailed the rights of the shareholders, in any manner.31.Ultimately, several prayers were made. Prayer (a) was to the effect that the proceedings of the 16th and 17th Annual General Meetings of the defendant no.6 company scheduled to be held on 2nd May and 6th May 1997, respectively, be conducted by the shareholders as per the provisions of the Companies Act, 1956 and all resolutions that are on the agenda and/or proposed in accordance with the Companies Act, 1956 by any shareholder be put to vote. Prayer (b) was for directing that no voting rights in respect of 12,034 shares be exercised by the defendants no.1 to 5 or any other person whosoever claiming through them. Prayer (c) was for appointment of an independent observer to attend both the 16th and 17th Annual General Meetings. Prayer (d) was that the purported transfer of 3,998 shares to the name of Mrs.Mohini Rohit Narang on 22nd January 1997 be declared as illegal and void. In the alternative to the above prayer (d), no voting rights be permitted to be exercised in respect of those transferred shares. It may be mentioned here and now that in view of the fact of the dismissal of the Special Leave Petition and the order of Dhanuka,J., prayer (b) was not pressed before us by the learned counsel as also prayers (c) and (d) were not pressed. Prayer (d) was not pressed because of the order of the Supreme Court dated 29.7.1997 passed in Petition for Special Leave to Appeal (Civil) No.12994 of 1997 whereunder statements were made by the counsel for rival parties that status quo will be maintained so far as the composition of the Board of Directors of Narang International Hotels Pvt. Ltd. as well as the shareholding of 10,587 shares of Narang International Hotels Pvt. Ltd. is concerned till the disposal of the said petition. In other words, the only question is whether the plaintiff should have been granted relief in terms of prayer clause (a) to which we have made a detailed reference.32.At this juncture, it may be necessary to refer to the say filed by the Administrator to the aforesaid application. The say was dated 29th April 1997. After taking strong objections to the allegations made which are termed by the Administrator as false and frivolous, in para 4, the Administrator has again reiterated that the conduct of Ramesh in the Advisory Committee meeting held on 4th April 1997 was intolerable to all present. He used abusive language and adopted threatening postures. The Administrator has recorded that he did not consider it appropriate to make any record of the plaintiffs conduct in the minutes of the meeting held on 4th April 1997. However, at the conclusion of the meeting at 8 p.m., apart from the Administrator, Mr.Mestha, Court Receiver, and Mr.Fafadia also felt that the conduct of the plaintiff was absolutely intolerable and some action would have to be taken in regard thereto. Consequently, a meeting was hold on Saturday, the 5th April 1997 between the Administrator and Mr.Mestha and Mr.Fafadia and after discussing the conduct of the plaintiff, both the members of the Advisory Committee strongly expressed that it was necessary to bring the conduct of the plaintiff to the notice of this Court and, therefore, a file note was recorded on 5th April 1997 which was signed by the Administrator and Mr.Mestha and Mr.Fafadia on that date itself. A copy of the file note was annexed to this say of the Administrator. In para 5, the Administrator has mentioned that copies of the report dated 10th April 1997 were handed over to Mrs.Ajinkya for furnishing the same to the Advocates of all the concerned parties. The Administrator has mentioned that in the said report, although the conduct of the plaintiff was brought to the attention of this Court, no specific directions were sought by the Administrator against the plaintiff as it was believed by the Administrator that the said conduct having been pointed out, the plaintiff would improve his behaviour. With reference to the allegation of the plaintiff that his Advocate had faxed a letter dated 12.4.1997 asking for a copy of the report and no reply having been given by the Administrator, the Administrator has stated that, in fact, no fax or letter dated 12.4.1997 was received by the Administrator or the office from the Advocate for the plaintiff as alleged, though two other letters dated 12.4.1997 seeking certain details about the Directors and shareholders were received in the office from the plaintiff by hand delivery and fax. So far as the allegations of the fraudulent conduct on the part of the defendants no.1 to 5 in the matter of transfer of shares in the name of Mrs.Mohini Narang is concerned, the Administrator has stated that the said transfer was alleged to be of 22nd January 1997 whereas the Administrator has taken charge on 29th January 1997 and the Administrator was appointed with the primary object of preserving the property and the business of the company and not for the purpose of investigating into and determining the claims of the parties against one another which are the subject-matter of the suit before this Court. The Administrator has further referred to the barage of letters from the plaintiff inter alia demanding to know what were the voting rights of the parties at the meeting convened in respect of which demand the Administrator had called upon the plaintiff to give his views for the consideration of the Administrator. In para 7, the Administrator has explained that on 15.4.1997 when the report dated 10th April 1997 submitted by the Administrator was before this Court, the defendant no.1 applied for time for filing a reply to the said report and the Administrator was informed that the plaintiffs Advocate had also desired to file a reply to the said report and the Administrator felt that in all fairness, the plaintiff should be furnished with a copy of the file note and, consequently, handed over copies of the said file note to Mrs.Ajinkya with directions to hand over copies thereof to the Advocates of all the concerned parties and the Administrator was informed, accordingly, that copy of the said file note was delivered inter alia to the Advocate of the plaintiff. In para 8, the learned Administrator has stated that it is not comprehensible as to why it should be necessary to nominate or attempt to appoint outsiders and non-shareholders as Directors of the defendant no.6 company. In view of the orders of the Court and appointment of the Administrator, any attempt to nominate and propose outsiders as Directors was considered by the Administrator as not in the interest of the company and, therefore, the Administrator rejected the nominations. Thereafter, referring to the order dated 4.3.1997 passed by Mrs.Baam and in particular the following observations:"It is the Administrator who is with the help of Advisory Committee required to look after management of the Defendant No.6. The Board of Directors has no role to play in the matter."and then the further observations:"As the entire control of management is with the Administrator, it is incumbent and necessary that the Administrator should hold Annual General Meeting which is required to be held under the statute failing which penal consequences will be imposed upon Defendant no.6 company and for that purpose take necessary steps and issue necessary directions pertaining to the agenda, issue notices and fix the date of meeting."the Administrator has stated that, accordingly, the said function of the Board of Directors has also been discharged by the Administrator in accordance with the directions of this Court. In para 10 again it is reiterated that the Board of Directors has neither any role in the management nor in the control of the company. It is further stated by the Administrator that the Board of Directors do not have any say in the management and in the control of the company, the Board is completely redundant and can serve no possible purpose nor can have any function. Then it is submitted by the Administrator that functioning of the Board and appointment of any persons thereon particularly outsiders is bound to result only in conflict, disputes and interference with the management and control by the Administrator and the Advisory Committee. Thereafter, the Administrator has proceeded to state that this Court having clarified that even the statutory obligations of convening the meetings are to be discharged by the Administrator, the Board has no role to play and has clearly been superseded and if considered necessary and appropriate, this Court may clarify the same. It is next submitted by the Administrator that out of the existing Board of Directors of six persons, four retiring Directors would, in any event, cease to hold office after the holding of the 16th and 17th Annual General Meetings and insofar as the two who as per records of the company are non-retiring Dirsctors are concerned, they are also members of the Advisory Committee and this Court may, if considered necessary, clarify that they would not discharge any function as members of the Board and that they would function only in an executive capacity. In para 11, the Administrator has pointed out that the plaintiff, in spite of having been given an opportunity and having been repeatedly called upon to assist the Administrator in the day-to-day operations has neglected to do so and is not rendering any assistance to the Administrator. Reiterating the assistance received from Rama Narang and the fact that Rama has undertaken to ensure the compliance by the company of the various legal provisions and be responsible for any default of compliance, it is considered necessary by the Administrator to permit the defendant no.1 to function as nominal Managing Director in an executive capacity for discharging such functions and duties as are authorized by the Administrator and under the overall supervision of the Administrator and for rendering such duties, to draw the remuneration as sanctioned by the Board of Directors at the time of his appointment. The Administrator has further mentioned in para 12 that in the circumstances that have transpired, it is apparent that the parties wish to raise rival claims on the question of voting rights and claim control of the defendant no.6 company by exercise of voting rights and in view of ths orders of the Court and the necessity to ensure that there is no multiplicity of litigation between the parties, it is necessary and appropriate that the parties be directed to approve the agenda as specified in the notices issued on 2nd April 1997 and 9th April 1997 or the Court may be pleased to direct that the said agenda stands approved.33.It is these two reports dated 10th April 1997 and 22nd April 1997 and the application of the plaintlff Ramesh dated 22nd April 1997 and the say of the Administrator referred to above which were before the Court for passing necessary orders which orders were passed by the learned single Judge by order dated 5th May 1997 which is the order impugned in this appeal. In the order dated 5th May 1997, after referring to these reports and the application and before dealing with the same, in para 5, the learned Judge has observed that it is regrettable to note that though tha learned Administrator was appointed on the basis of the suit filed by ths plaintiff against the defendants seeking specific performance of the family settlement and the plaintiff himself had prayed for appointment of the Administrator who is to function with the aid of the Advisory Committee consisting of the plaintiff to assist the Administrator in the day-to-day management, the plaintiff has been adopting such conduct which would affect the smooth functioning of the defendant no.6 company. The learned Judge in para 7 has observed that the necessity for passing the order appointing the Administrator was to ensure that the property is preserved and the management and control is not left with either of the groups and though the plaintiff was given certain powers and was directed to manage and control the affairs of the 7th defendant, the plaintiff does not wish to participate in the managemant or the pretext given by him that he is required to participate in the management and affairs of the 6th defendant alongwith the defendants no.1 and 3. In para 8, referring to the conduct of the plaintiff in the meeting of 4th April 1997, the learned Judge observed that contempt notice should be issued against the plaintiff for whatever may be the grievances or disputes between the parties, the plaintiff is required to have a restraint on his behaviour and conduct which has been totally disappointing as reflected from the reports of the Administrator and in the minutes (the learned Judge is obviously referring to the file note dated 5th April 1997) signed by three independent members. The learned Judge directed the plaintiff to maintain the dignity and decorum in the meetings failing which the learned Judge warned that the plaintiff will be debarred from acting as a member of the Advisory Committee. Subject to these observations, the learned Judge accepted the report dated 10th April 1997. With reference to the contention that appointment of Rama Narang, the 1st defendant, as the Managing Director would not be a valid appointment is he has ceased to ba Director on account of his conviction and, therefore, he is required to be appointed afresh as a Director before he can be appointed as the Managing Director, the learned Judge referred to the provisions of section 283(1)(e) of the Companies Act as also the proviso to sub-section (2) of section 283 and observed that though the defendant no.1 was convicted in 1985, a petition by way of an appeal was preferred within 30 days and, therefore, he falls within the proviso to sub-section (2)(b) of section 283 of the Companies Act. He was acquitted in 1995 and, therefore, he is not disqualified to act as a Director neither has he vacated the office as a Director and he continues to be a Director. In view of the legal position, the learned Judge accepted the submission and contention raised on behalf of the defendant no.1 and held that there is no question of the defendant no.1 being appointed as a Director before he is appointed as the Managing Director. We must immediately mention that the learned counsel for the defendant no.1 conceded that the provisions of section 283 would not be attracted and this part of the findings of the learned Judge cannot be supported. Though as stated in the earlier part of the judgment, several submissions were made in support of the contention that the defendant no.1 could be validly appointed as the Managing Director and, in fact, was so appointed to which we have already made a detailed reference. In para 13, the learned Judge has observed that the order of Dhanuka,J. clearly records the fact that by the appointment of the Administrator who is required to control and look after the management and preserve the property in question, the role of the Board of Directors does not come into play as the Board ceases to exist. The entire administration and managerial control vest in the Administrator and the Advisory Committee with whose assistance the Administrator functions. Appointing new Directors on the Board will tantamount to resurrecting the Board of Directors which does not exist as per the order dated 15th February 1995 and the same would stir up hornets nest and would mean resorting to further disputes and litigations which is to be avoided at all cost as the same will affect and interfere with the working of the Administrator and the Administrator will not be in a position to look after or manage or control or preserve the property if at every stage there is a spoke planted in the way of smooth running of the functioning by the Administrator with the aid of the Advisory Committee or in the decisions, managerial, administrative or otherwise. So far as the Board of Directors is concerned, the learned Judge felt that by virtue of the order of Dhanuka,J. dated 15.2.1995 which is confirmed by the appellate Court, the Board of Directors has no role to play either in the policy decisions or in the management. With reference to several arguments advanced on the basis of the various provisions of the Companies Act regarding appointment and functioning of the Board of Directors, the learned Judge felt that they are not material in the light of the order of the learned single Judge which has been confirmed by the appellate Court which has considered the fact that the present situation is brought about on account of dispute between the family members and the scramble for getting the control over the management and affairs of the defendant no.6 company which is sought to be preserved by the appointment of the Administrator and the Advisory Committee which was the only solution for preserving the property. The learned Judge in para 15 has observed that the appointment of the defendant no.1 as the Managing Director would not mean that he will take any policy decision pertaining to management or administration of the defendant no.6 but he will function under the control and supervision of the Administrator and the Advisory Committee and for the purpose of management of the defendant no.6 company, certain documents are required to be signed. The company is required to comply with the statutory obligations default of which would entail the penal consequences which the learned Administrator is not expected to suffer but the same is required to be shouldered by some person and the defendant no.1 has undertaken to ensure that all necessary obligations and statutory requirements will be complied with by him. Therefore, the function of the defendant no.1 will only be that he will be getting a nominal Managing Directorship which would be under the control of the Administrator and which would be as per the directions of the Administrator and Advisory Committee. The learned Judge also felt that in view of the order of Dhanuka,J., by virtue of the powers conferred on him under sections 397, 398 and 402 of the Companies Act, the Administrator has fixed Annual General Meetings of 16th and 17th and also agenda of these meetings. In para 17, the learned Judge has observed that so far as the plaintiff is concerned, it is not open to the plaintiff, who has not cared to participate in the management and to assist the Administrator though he is a member of the Advisory Committee, to contend that the appointment of the defendant no.1 as the Managing Director of the respondent No.6 company is illegal. Further, the learned Judge felt it regrettable that the plaintiff, though misbehaved himself in the meeting of 4th April 1997, has borne out by the minutes of the meeting, has not cared to submit his apology or express any regrets for his conduct34.In para 18, the learned Judge has made a note of the fact that arguments were heard with regard to these reports on 24th April, 1997. Whilst the matter was being argued on behalf of the defendant no.7, Dr. Chandrachud appeared at 2.45 p.m. and stated that he was representing the Administrator and requested for time. However, when on 30th April 1997, the matter was being heard, Dr.Chandrachud was informed by the Court that so far as the Administrator is concerned, the Court has not asked for any representation on behalf of the Administrator and, therefore, his appearance for the Administrator would not serve any useful purpose. Ultimately, the learned Judge, on the basis of the discussion in the order, accepted the report dated 22nd April 1997 and rejected the plaintiffs application of the same date.35.Before dealing with the submissions of the rival parties, we find it more convenient to make a reference to various cases cited before us in support of the various submissions to which we have made a detailed reference.36.Mr.Manohar, learned counsel appearing for the respondent no.7 Rajesh, cited the decision of a Division Bench of this Court in Krishnaprasad v. Colaba Land and Mills Co., reported in A.I.R. 1960 Bombay 312, where under it was held that the Court has to ascertain the tenure of the office of an elected Director not merely from section 256 but from the language of sections 166, 255 and 256 read together. In a case where despite the mandatory provisions of section 166 and in breach of their duty as Directors, the Directors do not call an Annual General Meeting of the Company for any length of time, they cannot claim to continue in their office of Director after the expiry of the period mentioned in the section for calling the statutory meeting. A Director vacates his office at the latest on the last day on which an Annual General Meeting could have been called as required by section 166. Mr.Manohar relied upon this authority with reference to section 260 where under Rama was appointed as the Managing Director and by analogy, he has submitted that on the date on which subsequent Annual General Meeting ought to have been called, the appointment of Rama Narang as Addl. Director under the provisions of section 260 must be deemed to have come to an end automatically and the Director vacates office not as and when the next Annual General Meeting is called but on the last day on which the meeting could have been and should have been called.37.On the point of various provisions of the Companies Act and the importance of rights of shareholders, Mr.Manohar relied upon the decision of a single Judge of this Court (Dhanuka, J.) in Kishore Y.Patel v. Patel Engineering Co.Ltd. reported in A.I.R. 1992 Bombay 114. He specifically brought to our notice paras 13, 15 and 17 thereof and the ultimate conclusions mentioned in para 21 of the judgment which are as under :-"21. In conclusion, I hold as under :-(1) The Companies Act I of 1956 makes specific provisions for convening of Company meetings. The Act empowers authorities like Company Law Board to convene meetings and issue directions notwithstanding the provisions contained in the Articles of Association. The Act specifically empowers the Court to direct convening of meetings in certain situation only. The civil Court or the Company Court has no inherent power to convene or conduct acompany meeting by appointing a chairman or otherwise. The Companies Act I of 1956 prevails. In absence of invocation of overriding statutory provision of the Act, Articles of Association of the Company must prevail.(2) Rule 9 of the Companies (Court) Rules in liable to be interpreted in light of the enabling provisions of the Act contained in Section 643 of the Companies Act. Rule 9 can therefore be invoked by the Company Court while considering applications made to it under one or other substantive provision of the Companies Act I of 1956 and not otherwise.(3) The Civil Court cannot intervene to conduct a Company meeting not in the manner prescribed by the Act or by the Articles of Association of the Company or override the same in exercise of its inherent power under Rule 9 of Companies (Court) Rules or Section 151 of the Code of Civil Procedure."38.On the interpretation of the word "Control", Mr.Manohar relied upon the decision of the Supreme Court in S.V. Co-op. Bank v. K.Panduranga, reported in A.I.R. 1972 S.C. 1248 and para 6 thereof in particular wherein it is observed as under :-"The word `control is synonymous with superintendence, management or authority to direct, restrict or regulate (See p. 442 of Words and Phrases (Vo.9) Permanent Edition). Control is exercised by a superior authority in exercise of its supervisory power. Adjudication disputes is a judicial or quasi-judicial function and it would, in our opinion be unduly straining the meaning of the word `control to hold that it also covers the adjudication of disputes between a co-operative society and its members. There is a clear distinction between jurisdiction to decide a dispute which is a judicial power and the exercise of control which is an administrative power and it would be wrong to treat the two as identical or equate one with the other."We must immediately mention that in the aforesaid case, the apex Court was interpreting the word "control" as used in section 2(1) of the Multi-Unit Co-operative Societies Act.39.Mr.Manohar also relied upon the decision of the Supreme Court in State of Mysore v. Karibasappa, reported in A.I.R. 1974 S.C. 1863 and especially para 16 thereof. However, we must mention that the discussion on the word "control" in para 16 is with specific reference to the statutory provisions, viz., section 54 of the Mysore Co-operative Societies Act.40.In support of his submission that once the Apex Court had dismissed the Special Leave Petition filed by Rama Narang and once the stay has come to an end along with the dismissal of the petition, whatever resolutions were passed or actions taken by the parties to the suit which are contrary or in breach of the orders of Dhanuka, J. must be held to have been wiped out or must be held to be inoperative by the Court. Mr.Manohar relied upon the decision of the apex Court in Kanoria Chemicals v. U.P.S.E.B., reported in 1997 (2) Scale 719. In para 12 of the said judgment on page 725, the apex Court has observed as under:-"It is equally well settled that an order of stay granted pending disposal of a writ petition/suit or other proceeding, comes to an end with the dismissal of the substantive proceeding and that it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the Court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner inspite of his failure. We do not think that any such unjust consequence can be countenanced by the courts."41.Mr.Gopal Subramaniam, learned counsel appearing for the defendant No.1, cited the decision of a Division Bench of this Court in Bennet Coleman & Co. v. Union of India, reported in 47 Com. Cases 93. In the said case, the Court considered the powers of the Court under sections 397, 398 and 402 of the Companies Act. The issue before the Court was as to whether in exercise of the powers of the Court under sections 397, 398 and 402, directions which were violative of the provisions of section 255 could be issued. In other words, whether the provisions of sections 397, 398 and 402, etc., were subject to other provisions of the Companies Act, specifically section 255. In the said case, after considering the provisions of several sections of the Companies Act and the scheme thereof, the Division Bench observed :-"We are, therefore, unable to accept Mr.Sens contention that the courts powers under section 398 read with section 402 should be read as subject to the other provisions of the Act dealing with normal corporate management or that the Courts orders and directions issued thereunder must be in consonance with the other provisions of the Act."It was further observed as under :-"If under section 398 read with section 402 the Court is required by its order to provide for the regulation of the conduct of the companys affairs in future because of oppression or mismanagement that has occurred during the course of normal corporate management, the court must have the power to supplant the entire corporate management, or rather corporate mismanagement by resorting to non-corporate management which may take the form of appointing an administrator or a special officer or a committee of advisers, etc., who could be in charge of the affairs of the company. If the Court were to have no such power the very object of the section would be defeated. We must observe in fairness to Mr.Sen that it was not disputed by him that the powers of the Court under section 398 read with section 402 of the Companies Act were wide enough to enable the court to appoint an administrator or a special officer or a committee of advisers for the future management of the company and thereby supplant completely the corporate management through the board of directors and it was conceded that it should be so for the simple reason that if as a result of corporate management that has been allowed to run for a certain period oppression or mismanagement has resulted, the court should have power to substitute the entire corporate management by some form of non-corporate management and while doing so the Court cannot obviously have any regard or be subject to the other provisions dealing with the corporate form of management."It was further observed :-"Secondly, it will all depend upon the facts and circumstances of each case as to how, in what manner and to what extent the court should allow the voice of the shareholders directors on the board of directors to prevail over that of the other directors and we do not think that the courts powers in that behalf could in any manner be curbed. In our view, therefore, the position is clear that while acting under section 398 read with section 402 of the Companies Act the Court has ample jurisdiction and very wide powers to pass such orders and give such directions as it thinks fit to achieve the object and there would be no limitation or restriction on such power that the same should be exercised subject to the other provisions of the Act dealing with normal corporate management or that such orders and directions should be in consonance with such provisions of the Act."42.On the interpretation of word "control", Mr.Subramaniam relied upon the decision in Inland Revenue Commissioners v. Harton Coal Co. Ltd., reported in (1960) 1 Chancery Division 563, especially on the following passage on page 578 thereof :-"Was the control of the company in the hands of Stephenson and B.I.C. by reason of their beneficial ownership of shares in the company This question raises three distinct points :(a) was the control of the company exclusively in the hands of Schroder for the purpose of section 21(6) by reason of its interest in the management share If so, obviously the control of the company was not in the hands of Stephenson and B.I.C. It is established that the expression "control" in relation to a company means the power by the exercise of voting rights to carry a resolution at a general meeting of the company. It is also established that in the absence of an indication to the contrary in the context in which the word occurs, the persons who possess those voting rights are to be ascertained by reference to the articles of the company and its register of members: see as to those points British American Tobacco Co.Ltd. v. Inland Revenue Commissioners; Inland Revenue Commissioners v. J. Bibny & Sons Ltd.; Barclays Bank Ltd. v. Inland Revenue Commissioners. It appears from these cases that there is for the present purpose no relevant distinction between the expressions "control" and "controlling interest". It is also established, always in the absence of an indication to the contrary in the context, that where there are joint holders of a share and the articles of the company contain a provision corresponding to article 78 here, the first registered holder alone is to be taken into account in the ascertainment of voting rights."43.Passages from Palmars Company Law, 24th Edition, on page 1247 under the caption "General effects of the order; the position of directors" were relied upon. A reference was also made to Gowers Principles of Modern Company Law, Fifth Edition. On page 752 there is caption "Powers of administrators".44.Reliance was also placed by Mr.Subramaniam on a decision of a Division Bench of the Calcutta High Court reported in 58 Company Cases 772 which, in fact, refers with approval to the decision of the Division Bench of this Court reported in 47 Company Cases 93. Both the sides had also brought to our notice the decision of a Division Bench of this Court reported in 1994 Mah.L.J. 1862 and especially paras 7 and 8 thereof which case is in respect of the conviction of Rama Narang and the effect thereof. In para 8 of this judgment, a reference is made to the provisions of sections 267, 274 and 283 of the Companies Act and it was observed that a perusal of the provisions of sections 267, 274 and 283 makes it clear that the Legislature had contemplated cases of disqualification of a Director on the one hand and Managing Director on the other hand. At the end of para 8, it is observed :-"It is, therefore, obvious that respondent No.1 cannot be appointed or continued as Managing Director of the company in view of the specific provisions of section 267 of the Companies Act."45.A reference is also made by both the sides to the decision of the Supreme Court in appeal from the aforesaid decision of the Division Bench. The decision of the apex Court is reported in (1995) 2 S.C.C. 513 and in particular paras 10 and 14 thereof.46.In support of his submission that acquittal of Rama Narang must, for all practical purposes, efface the conviction from its inception, Mr.Subramaniam cited the decision of the Supreme Court reported in A.I.R. 1981 S.C. 547. He especially referred to para 27 thereof which is as under : _"27. Before examining the facts and ratio of Mani Lals case (AIR 1971 SC 330 ) it will be worthwhile to notice here a general principle of criminal law bearing on this issue. This principle as reiterated by this Court in Dilip Kumar Sharmas case (at p.289): (AIR 1976 SC 133 ) (ibid) is as follows:An order of acquittal particularly one passed on merits wipes off the conviction and sentence for all purposes, and as effectively as if it had never been passed. An order of acquittal annulling or voiding a conviction operates from nativity. As Kelson puts it, "it is a true annulment, an annulment with retroactive force". So when the conviction (for the offence) was quashed by the High Court (in appeal) ......... it killed the conviction not then, but performed the formal obsequies of the order which had died at birth."The observations in para 37 are as under:-"37. It is possible that difficult and anomalous situations may arise if the rule in Manni Lal v. Parmai Lal is applied in a converse hypothetical case wherein the candidate whose nomination is rejected on account of his disqualification, viz., conviction and sentence exceeding two years imprisonment existing as a fact on the date of scrutiny of nominations, brings an election-petition to challenge the election of the returned candidate on the ground that his nomination was improperly rejected, as his disqualification had been, as a result of his subsequent acquittal by an appellate Court, annulled and obliterated with retroactive force."However, the Supreme Court in para 38 has stated that it does not think it necessary to indulge in this hypothetical and academic exercise.47.In support of his contention that assuming without admitting that appointments of Rama as Director or Addl. Director were nullity as they were unlawful from inception in view of the provisions of section 274 of the Companies Act, even such nullity has to be challenged and a declaration to that effect has to be obtained from a competent Court, Mr.Subramaniam relied upon the decision of the Supreme Court in State of Punjab v. Gurdev Singh, reported in A.I.R. 1992 S.C. 111 and especially paras 4 and 8 of the said judgment. In para 8, the apex Court has observed as under :-"8. It will be clear from these principles, the party aggrieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him. He must approach the Court within the prescribed period of limitation. If the statutory time limit expires the Court cannot give the declaration sought for."It must be appreciated that these observations were in the context of the submission that the suit in the aforesaid case is not governed by the law of limitation as is clear from para 4 thereof.48.Mr.Dave on behalf of the appellants in reply referred to certain passages relevant to the issue of powers of the Administrator from Halsburys Laws of England, Fourth Edition, Vol. 7(2). In para 1319 under the caption "Administration order", it is stated that an administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the company are to be managed by a person (`the administrator) appointed for the purpose by the Court. In para 1320 which deals with "Power of court to make an administration order", it is stated that the order must specify the purpose or purposes for which it is made. In para 1334 it is stated as under :-"1334. General duties of administrator. The administrator of a company must, on his appointment, take into his custody or under his control all the property to which the company is or appears to been titled; and he must manage the affairs, business and property of the company at any time before proposals have been approved, with or without modifications, in accordance with any directions given by the court, and at any time after proposals have been so approved, in accordance with those proposals as from time to time revised, whether by him or a predecessor of his."In para 1370, it is observed :-"1370. Venue and conduct of company meetings. Where the administrator summons a meeting of members of the company, he must fix a venue for it having regard to their convenience.The chairman of the meeting must be the administrator or a person nominated by him in writing to act in his place. A person so nominated must be either one who is qualified to act as an insolvency practitioner in relation to the company, or an employee of the administrator or his firm who is experienced in insolvency matters.If within 30 minutes from the time fixed for commencement of the meeting there is no person present to act as chairman, the meeting stands adjourned to the same time and place in the following week or, if that is not a business day, to the business day immediately following.Subject to the above provisions, the meeting must be summoned and conducted as if it were a general meeting of the company summoned under the companys articles of association, and in accordance with the applicable provisions of the Companies Act 1985."49.Mr.Dave also relied upon the decision of the Supreme Court in A.P. Christians Medical Educational Society v. Government of A.P. reported in (1986) 2 S.C.C. 667 and especially the observations in para 10 thereof which are as under :-"Any direction of the nature sought by Shri Venugopal would be in clear transgression of the provisions of the University Act and the regulations of the University. We cannot by our fiat direct the University to disobey the statute to which it owes its existence and the regulations made by the University itself. We cannot imagine anything more destructive of the rule of law than a direction by the Court to disobey the laws."50.Mr.Dave also relied upon the decision of a single Judge of the Calcutta High Court reported in (1964) II Com.L.J. 184 and the observations on page 199 to the following effect:-"But even assuming that the special Officer was acting as an Officer of this Court, this Court should not direct its officer to act in contravention of existing statutes. On the other hand this Court should see that statutory provisions are not violated by its officer in any act done pursuant to orders of this Court. The order made on November 22, 1963, in terms provides for permission being obtained of the appropriate authorities under the Act and the Rules. Orders made by this Court in exercise of its powers under sections 397 and 398 of the companies Act, 1956, cannot override the provisions of other statutes."We must immediately notice the words "provisions of other statutes".51.Mr.Dave also relied upon the decision of the apex Court in The Tata Engineering and Locomotive Co. Ltd. v. State of Bihar, reported in A.I.R. 1965 S.C. 40 and para 24 which is as under :-"The true legal position in regard to the character of a corporation or a company which owes its incorporation to a statutory authority, is not in doubt or dispute. The Corporation in law is equal to a natural person and has a legal entity of its own. The entity of the Corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the (liability of the members or shareholders is limited to the capital invested by them, similarly the creditors of the members have no right to the assets of the Corporation. This position has been well-established ever since the decision in the case of Saloman v. Salomon and Co., 1897 AC 22 was pronounced in 1897; and indeed, it has always been the well recognized principle of common law. However, in the course of time, the doctrine that the Corporation or a Company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the Corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the Corporation. As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognized exceptions to the rule about the juristic personality of the Corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more."52.Mr.Dave also relied upon the decision of the Supreme Court in L.I.C. of India v. Escorts Ltd., reported in A.I.R. 1986 S.C. 1370 and the observations in paras 84, 95, 96, 100 and sub-para (9) of para 110.53.Mr.Dave also relied upon the decision of the Supreme Court reported in (1985) 2 S.C.C. 167 and especially the observations in paras 26, 28 and 29 thereof.54.Mr.Dave next relied upon the decision of the apex Court reported in A.I.R. 1981 S.C. 483 wherein the effect of earlier conviction of a person who was later on acquitted as President of Municipal Council and the order of the Government passed under section 16(1) (a) of the Maharashtra Municipalities Act were considered and on the basis of the facts and circumstances of the case and the material on record, the apex Court held that the appellant does not benefit from the order of the State Government so far as his election as President in 1974 is concerned.55.Mr.Dave also relied upon the decision of the apex Court reported in (1989) 3 S.C.C. 132 and paras 25 and 27 thereof.56.So far as these authorities cited by Mr.Dave are concerned, we are in complete agreement with the submission made by Mr.Seervai, learned counsel appearing for the defendant no.1, that the observations relied upon will have to be appreciated on the basis and in the context of the facts and circumstances and in the context of submissions and issues raised in each particular case.57.The first question which will have to be determined, in our opinion, is the ambit, nature, powers and functions of the Administrator appointed by Dhanuka, J. Is he appointed and vested with all powers under sections 397, 398 and 402 or is he merely appointed as Administrator to manage the day-to-day affairs and whether holding of Annual General Meetings or other requirements under the provisions of the Companies Act are beyond the powers and functions of the Administrator. We have already made a detailed reference to the rival submissions in that behalf as also the two orders of Dhanuka, J., the order of the Division Bench, the reports by the Administrator as also two orders passed by Mrs.Baam, J. As we have already referred to them in detail, we do not propose to repeat what we have already mentioned in the earlier part of this judgment. However, with a view to understanding the purport of the order of appointment of the Administrator by Dhanuka, J., it is essential to refer to certain important aspects of Dhanuka, J.s order as well as the order by the Division Bench as also the report of the Administrator and the correspondence between the parties to appreciate how the Administrator and the parties have understood the order of appointment of the Administrator.58.Coming first to the order passed by Dhanuka, J., it is relevant to notice that at the end of sub-para (11) of para 55, the learned Judge has observed:-"It is not possible for the Court to appoint the plaintiff as a managing director of defendant no.6 Company for life at this stage or grant any other relief in this behalf till Articles of Association of defendant No.6 are amended. It would be a travesty of justice to allow the manipulations and wrongful strategies of defendants 1 to 5 to continue. The Court has thus no alternative but to appoint a senior retired judge of this High Court as an administrator as done sometimes in a petition filed under Section 397 and 398 of the Companies Act I of 1956. The Court has inherent jurisdiction to pass necessary interim orders in the interest of justice even in a suit and the case is a fit one for exercise of inherent jurisdiction." (Emphasis supplied)This makes it abundantly clear that while passing an order of appointment of Administrator, Dhanuka, J. was not sitting as a Company Court or as a Company Judge. In fact, in view of these powers now being entrusted to the Company Law Board, there is no question of Civil Court or the High Court in its original jurisdiction making an order of appointment of an Administrator under the provisions of sections 397 and 398 of the Companies Act at all. Dhanuka, J.s order makes it clear that he has made the order in exercise of the inherent jurisdiction of the Civil Court or the Original Side of this Court. As such, it must be appreciated that the Administrator is not appointed under sections 397 and 398 properly so called. It is also relevant to notice that Dhanuka, J. has granted prayer (C) which prayer restrains the defendants no.1 to 5 by an order of injunction, in any manner, exercising any rights, voting or other incidental and all other rights, interest accruing thereof or arising therefrom which have been transferred in the name of the defendants no.1 to 5 from other members of the family, viz., Manu Narang and Ashok Narang in defendant no.6 company pursuant to the family settlement between the parties. While granting prayer (c), Dhanuka, J. added a rider to the effect that the order of injunction shall be operative until the defendants no.1 to 5 arrange for and procure transfer of shares to the name of the plaintiff in the defendant no.6 company so as to enable the plaintiff to hold 38% shares of 43,281 shares of the defendant no.6 company in his own name and further 12% shares of 43,281 shares in joint names of Rama Narang and Ramesh Narang. The prohibitory order of injunction shall continue to operate till the defendants no.1 to 5 procure transfer of such shares to the name of the plaintiff. It is extremely relevant to notice that this order is passed despite clear advertance and consciousness to the fact that 10,184 shares in defendant no.6 company standing in the name of the defendant no.8 Fashion Wears Pvt. Ltd. were already frozen by the order of the apex Court. This, in our opinion, clearly shows that the learned Judge wanted the parties to exercise their voting rights. Otherwise, this injunction would make no sense. If that be so, the Administrator could not have been appointed so as to take the entire control of the corporate functioning of Narang International Hotels Pvt. Ltd. (defendant No.6 company) because if that was the intention, then there was no question of any voting rights and the exercise thereof as the Administrator would substitute the Board of Directors. The learned Judge has also considered prayer (f) of the plaintiff Ramesh which is to the effect that the defendants No.1 to 5 and 6 be restrained, in any manner, interfering, obstructing or causing hindrance in the functioning of the plaintiff as Chairman and Managing Director of the defendant no.6 company in any manner whatsoever. The learned Judge declined to pass any order at that stage in view of the provisions of article 36 of the Articles of Association of the defendant no.6 company and the learned Judge felt that no interim order can be passed by the Court at that stage so as to direct amendment of the Articles of Association of the defendant no.6 company. However, the learned Judge lamented that contesting defendants are obstructing the implementation of the family settlement on technical and hyper-technical grounds, even though all the shareholders of the defendant no.6 and the defendant no.8 as well as the concerned companies acting in the corporate capacity were parties to the settlement dated 3.7.1991. The learned Judge observed that nevertheless, the Court is not able to grant any interim relief in terms of prayer (f) of the Notice of Motion. What follows is very important which is as under :-"The plaintiff may pursue his remedy in pending Company Petition No.28 of 1992 or in any other proceedings."In our opinion, this clearly shows that the learned Judge clearly contemplated other proceedings in respect of the rights of the shareholders and other provisions of the Companies Act. It is after these being considered as aforesaid that the learned Judge could not grant prayer (f) until the Articles of the Association of the defendant no.6 company are amended and, therefore, he had declined to grant relief in terms of prayer (f). The learned Judge observed as under :-"It would be a travesty of justice to allow the defendants 1 to 5 take advantage of their own wrong and continue to manage the affairs, assets and business of defendant No.6 company as done at present. In exercise of the inherent powers of the Court and in order to prevent the ends of justice being defeated, I make the notice of motion absolute in terms of prayer (g) and pass further order as indicated below coupled with the following directions."59.In order to appreciate the power, ambit and nature of the appointment of the Administrator, one must go to the spirit of the order and the purposes for which it was passed. The purpose is obviously to remove the injustice to the extent possible which was done to the plaintiff, viz., his total ouster from the management of the company and the management of the company being enjoyed by the defendants no.1 to 5 to the exclusion of the plaintiff. From the reports of the Administrator which have been accepted, it appears that the Administrator has given emphasis on the words "as done at present" meaning thereby exclusively by the defendants and in as much as the Administrator is now vested with the management, that the purpose of the order has been served. Looking to the entire tenor of the order of Dhanuka, J., we are clear, in our opinion, that the purpose of the order was also to remedy the situation of the management of the affairs of the company by the defendants no.1 to 6 to the exclusion of the plaintiff. It is, thereafter, that the learned Judge has appointed the retired Judge of this Court as the Administrator. In para 74, the learned Judge has directed that no Board meeting or Annual General Meeting of the defendant no.6 shall be held without obtaining prior leave of the Court. In further order dated 28.2.1995 in para 4, the learned Judge has stated that the Administrator here in shall have all the Powers of an Administrator of the 6th defendant company mutatis mutandis with the powers of an Administrator appointed by the Company Court or the Company Law Board under sections 397, 398 and 402 of the Companies Act I of 1956 and the powers analogous to that of a Receiver though the Administrator is not appointed Receiver as such. The defendants to the suit and all the office bearers of the defendant no.6 company including its Secretary as well as the staff of the company were directed to cooperate with the Administrator. The Directors of the defendant no.6 are restrained from interfering with the management and control of the company by the Administrator with the aid of the Advisory Committee. These directions coupled with the earlier orders and observations of the learned Judge, in our opinion, clearly show that the appointment of the Administrator was only for a limited purpose of actual day-to-day management of the business of the defendant no.6 company and the rights of the shareholders or other procedure for holding of the meetings and election of Directors, etc. were left to be dealt with in accordance with the Companies Act. If the intention of the learned Judge was to appoint an Administrator with all powers under sections 397, 398 and 402, it is not conceivable that the learned Judge will pass orders of injunction in respect of the voting rights of a particular number of shares as already mentioned. The Division Bench in appeal in para 14 also observed that the question at present is how to preserve the properties in dispute i.e. to say whether the order passed by the learned Judge should be confirmed or modified. The Division Bench felt that in a situation obtainable, the preservation of the property in dispute is a must. It is further observed that till the suit is decided, it would be just and proper for preserving the property to confirm the order passed by the learned single Judge. In para 23, the Division Bench observed that whether the other family members were having share in the said business or whether Rama Narang was having right to settle with regard to other family memberscannot be decided at that stage. It can only be decided at the time of final hearing of the matter, but during that time, the plaintiffs interest in the said property which is recognized by the settlement dated 3rd July 1991 requires to be protected and for protecting it, the order passed by the learned single Judge is equitable, just and proper. In para 27 of the Division Bench judgment while rejecting cross-objections, for the reasons stated therein, it is extremely relevant to notice that the Division Bench observed that "the dispute is required to be decided finally after result of this suit or in any case by separate proceedings." In our opinion, on proper reading of the judgment and order of Dhanuka, J. as also of the Division Bench, it is clear to us that the Administrator was appointed essentially for preservation of the property and for management of the business of the company and for that purpose the Advisory Committee was appointed to assist him. Dhanuka, J. had made it abundantly clear that the defendant no.3 Rohit is not made a member of the Advisory Committee by virtue of his holding the office of the Joint Managing Director. Taking into consideration the entire order of Dhanuka, J. as well as the Division Bench, we are of the opinion that it cannot be stated that the Administrator had all the powers under sections 397, 398 or 402. The purpose of appointment of an Administrator was to see that the defendants no. 1 to 5 are not in a position to manage the business of the company to the exclusion of the plaintiff. That is why even the plaintiff was made a member of the Advisory Committee. Even the provisions of Sections 397, 398 and 402 expressly give power to the Company Law Board. Mr.Subramaniam made a statement at the Bar that, as a matter of practice, the Company Law Board merely appoints Administrator under Sections 397 and 398 and, thereafter, as a matter of practice, such Administrator always exercises those powers. The power under sections 397 and 398 of the Companies Act are vested expressly in the Company Law Board and as we have already held, the order of Dhanuka, J. coupled with the observations of the Division Bench in appeal, we are of the opinion that it cannot be stated that in the present matter, the Administrator is vested with all powers under sections 397, 398 and 402 of the Companies Act so as to render the Board of Directors totally redundant or that the Board of Directors has no role to play. All the rights of the shareholders, including those of Omi Narang who has nothing to do with the present quarrel between the plaintiff and the defendant no.7 on one hand and the defendants no.1 to 5 on the other cannot be held to be taken away. After all, once the company is incorporated and the provisions of the Companies Act are attracted, unless there is express and definite order of the competent Court in that behalf, it is not possible to hold that by implication, the Administrator was invested with all powers. As stated earlier, for a Civil Court, under the express terms of sections 397, 398 and 402, it was incompetent to make an appointment of an Administrator. Dhanuka, J. has expressly made it in exercise of the inherent jurisdiction of the civil Court and in the order, Dhanuka, J. has stated that the Administrator will have all the powers mutatis mutandis of an Administrator appointed under section 397. It only means that whatever powers were necessary for the limited purpose of managing the business of the defendant No.6 company were vested with the Administrator. The directions given to the staff members, the executives and the Directors injuncting them from interference with the management and control of the Administrator is also indicative of the fact that the Administrator is not vested with all the powers under sections 397, 398, 402 and because if that was so, it was unnecessary to give any other directions or any other order as was done by the learned Judge.60.It is also relevant to notice how the parties had understood the order of appointment of the Administrator. In that behalf, it is extremely relevant to notice that Mrs.Baam, J. by an order dated 4.3.1997 in para 24 referred to the Administrators report dated 12.2.1997 and especially to the statement of the Administrator that he has issued directions to the Board of Directors of the Company to take necessary steps to convene the adjourned 16th Annual General Meeting of the company, in accordance with law, as also take steps to convene the Annual General Meeting for the year ending March 1996, in accordance with law. In para 25 of the order, the learned Judge has noted that no Board meeting has been called and as the entire control and management of the defendant No.6 is with the Administrator, it is incumbent and necessary that the Administrator should hold the Annual General Meeting which is required to be held under the statute, failing which penal consequences will be imposed upon the defendant no.6 company and for that purpose take necessary steps and issue necessary directions pertaining to the agenda, issue notices and fix the date of the meeting. These directions were obviously because of failure on the part of the Board of Directors to do the needful. Para 26 is very eloquent. The learned Judge found it rather curious that the defendant no.1 should have taken out Notice of Motion to seek an order that till the disposal of the suit, no Annual General Meeting or Extraordinary General Meeting of the defendant no.6 company be held. The learned Judge failed to notice the significance of the argument of Mr.Parsurampuria that till the Notice of Motion was disposed of, the Board meeting should not be held. However, it is not far to see the significance. The significance is that even the defendants no.1 to 6 understood the ambit of the powers of the Administrator and taking into consideration their position and voting rights in the face of the injunction order of Dhanuka, J. they were reluctant to hold any Annual General Meeting. This is amply demonstrated as the defendant No.1 Rama had preferred an appeal challenging these directions in paras 24, 25 and 26 which was dismissed by the Division Bench of this Court by order dated 26.3.1997. In para 3 of the order of the Division Bench, the Division Bench observed that reading the two orders of the learned Single Judge dated 15.2.1995 and 20.2.1995, it is of the opinion that the directions of the learned single Judge contained in his order dated 5.2.1995 stood modified by order dated 20.2.1995 wherein it was clearly stated that till the Administrator takes charge on 30th April 1995, no Board meeting or Annual General Meeting or Extraordinary General Meeting should be held. This obviously contemplates that thereafter the Annual General Meeting or any other meeting mentioned could be held and should be held. It is also relevant to notice that prior to the holding of these meetings, Rama Narang addressed a letter dated 8th April 1997 to plaintiff Ramesh in which Rama expressed that, in his view, the calling of the 16th Annual General Meeting by the Administrator besides being a statutory requirement is a decision entirely left to the Administrator. The business to be transacted at any such General Meeting is also the prerogative of the Administrator and as the business to be transacted at the General Meeting has been determined by the Administrator, keeping in mind the statutory requirements as is evident from the explanatory statement annexed to the notice dated 2.4.1997, in the view of Rama, it is not only prudent but also necessary that any business that the Administrator considers appropriate must be wholeheartedly supported by all the shareholders of the 6th defendant company. In any event, since the very disputed writing dated 3.7.1991 which is sought to be enforced by Ramesh does not leave the discretion with regard to Rameshs voting rights except in a manner affirmative with Ramas right, Rama proposed that the business to be transacted at the forthcoming Annual General Meeting be approved. After referring to certain clauses of the writing dated 3.7.1991 and the relief in prayer (f) claimed by Ramesh and para 15 of the written submissions made by Ramesh to the Division Bench, Rama has mentioned that there cannot be any dispute or difference in the matter of voting on the various items of agenda fixed by the Administrator. In the last para, Rama had made it clear that he intends to vote at the 16th Annual General Meeting in respect of all the shares held and/or controlled by Rama for approval of all the items on the agenda fixed by the Administrator and to ensure unanimity and avoid dispute and litigation and without prejudice to his contention that the disputed writing dated 3.7.1991 is null and void and superseded, Ramesh was directed to vote at the 16th Annual General Meeting to be held on 2.5.1997 on all the 11,456 equity shares held by him in favour of all the item numbers 1 to 4 on the agenda dated 2.4.1997 issued by the Administrator. Ramesh was specifically called upon to confirm in writing within 48 hours that he will be voting in favour of approval of all the items on the agenda as directed above and in the absence of such written confirmation, it will be assumed that Ramesh does not wish to act in accordance with the commitments under not only the writing but also made to the Court on the basis of which he obtained the interim order. Identical contentions and demands have been made by Rama in his letter dated April 11, 1997 addressed to Ramesh. In our opinion, the challenge to the directions in paras 24, 25 and 26 of the order dated 4.3.1997 of Mrs.Baam, J. by filing an appeal and the above assertions in the letter leave no manner of doubt that even the defendant no.1 was conscious that even after appointment of the Administrator, the Annual General Meeting is to be held in accordance with the provisions of the Companies Act in that behalf and the shareholders are entitled to vote in accordance with the provisions of the Companies Act. For the aforesaid reasons, we are of the opinion that the learned Administrator was wrong in assuming that the Board of Directors had no role to play and that he can fix up the agenda and the learned Judge was also in error in accepting that interpretation of the learned Administrator and accepting his report to that extent under the impugned order. Under the circumstances, the action of the Administrator in determining the agenda insofar as it relates to appointment of the Managing Director and deciding not to appoint any Director at all was beyond his authority as the Administrator appointed under the orders of Dhanuka, J. The impugned order so far as it confirms these actions must be set aside and is hereby set aside. We make it clear that so far as item no.1, viz., to receive, consider and adopt the audited balance sheet as at 31st March, 1995 and the profit and loss account for the year ended on that date together with reports of the Directors and Auditors thereon, and item no.2, viz., to confirm the appointment of M/s. J.G.Verma & Co., as Auditors for financial year ended 31.3.1996 for which the Auditors Report dated 26th November 1996 has been submitted and to approve the remuneration of Rs.65,000/- paid to them, are concerned, Mr.Kapil Sibal made it clear that these being formal items, he may not have any objection to the same. However, item no.3 which is as regards approving the appointment of Rama made by the Board as the Managing Director of the Company for a period of five years with effect from 8.5.1995 is concerned, the appellant has serious objection to the same. Item no.4 which is as regards approving the reappointment made by the Board of Directors of Mrs.Mona Narang as Whole time Director is concerned, the appellant has serious objection to the same and it must be quashed. So far as the agenda of 17th Annual General Meeting is concerned, the three items are as under :-"1.To receive, consider and adopt the audited Balance Sheet as at 31st March, 1996 and the Profit and Loss Account for the year ended on that date together with Reports of the Directors and Auditors thereon.2.To confirm and treat the Interim Dividend declared and paid as the final dividend.3.To appoint and fix the remuneration of the Auditors M/s.J.G.Verma & Co., Chartered Accountants who retire at the conclusion of this Annual General Meeting and being eligible offer themselves for reappointment."Mr.Sibal made it clear that in view of the formal nature of the resolutions, the appellant may not have much objection to the same although as we have held above, the Administrator was not authorized to settle the agenda. As has transpired, the Administrator had not only settled the agenda but in the meetings held, he chaired the meetings and without any voting has held that in both these meetings, the agenda as mentioned in the notices dated 2.4.1997 and 9.4.1997, respectively, stand approved and resolutions are carried. In our opinion, this was beyond the competence of the Administrator in his capacity as an Administrator under the orders of Dhanuka, J. The learned Judge, in our opinion, was not right in approving that part of the report of the Administrator and, consequently, the learned Judge was also not right in rejecting prayer (a) of the application made by plaintiff which ought to have been allowed. We make it clear, however, that whatever is the result of the Annual General Meeting held in accordance with the provisions of the Companies Act and whosoever may be the Managing Director or Joint Managing Director or Director, obviously, will be bound to obey the order of Dhanuka, J. so far as it restrains the Board of Directors from interfering with the day-to-day management of the business of the defendant no.6 by the Administrator.61.We are also of the opinion that the learned Judge in the impugned order was not right to decline to grant any relief to the plaintiff on the ground that it is not open to the plaintiff who has not cared to participate in the management and to assist the Administrator, though he is a member of the Advisory Committee to contend that the appointment of the 1st defendant as the Managing Director of the defendant No.6 company is illegal. Even if the conduct of the plaintiff is objectionable, the legal submissions made on behalf of the plaintiff or his rights as a shareholder under the provisions of the Companies Act cannot be denied.62.Assuming that the Administrator was competent to determine the agenda, in our opinion, the entire tenor and spirit of the order of Dhanuka, J. ought to have been taken into consideration before proposing Rama to be the Managing Director and Rohit to be the Joint Managing Director as has been done by the learned Administrator. It is extremely relevant to notice that the travesty of justice was management by the defendant nos. 1 to 5 to the exclusion of the plaintiff and redressal of that injustice was the theme of the judgment of Dhanuka, J. which is evident from various passages which we have quoted from Dhanuka, J.s judgment in the earlier part of this judgment. The justification that Rama is ready to undertake the liability, in our opinion, is no good reason. It does not depend on the volition of the Managing Director or the other Directors of the company to accept the liability or the statutory obligations. It is by force of law that any person who is a Managing Director or Director is obliged to comply with the statutory requirements and upon failure is exposed to statutory liabilities. Anyone holding the post of Managing Director or Director is exposed to statutory obligations and is automatically responsible by force of the provisions of the Companies Act. Under the circumstances, even if the Administrator wanted to settle the agenda, he ought to have seen that to the extent practicable, the spirit and intention of the order of Dhanuka, J. is implemented. We are also not impressed by the observations of the learned Administrator as well as the learned Judge that Rama is appointed a nominal Managing Director in the executive capacity. Indeed the post gives substantial monthly payments and several perquisites as indicated in the explanatory note to the resolution. As such, in any event, the Administrator could have suggested Managing Directorship to Rama and Joint Managing Directorship to Ramesh.63.So far as challenge to the appointment of Rama as the Managing Director is concerned, it is relevant to notice that Rama was convicted by the Addl. Sessions Judge, Delhi, on 22nd December, 1986. On 17th January 1987 the appeal was admitted by the Delhi High Court and stay was granted to the impugned order. Rama was appointed as Additional Director by the Board of Directors on 1.1.1988. The appointment was approved by shareholders by 21.9.1988. On 25.6.1990 in a Board meeting, Rama was appointed as the Managing Director. On 29.6.1990 the Extraordinary General Meeting was held and the Articles of Association of the Company came to be amended by inclusion of Articles 29 and 33A. Under article 29, Rama shall hold office until death or until he resigns. Under article 33A, Rama shall be the chairman of the Board of Directors and hold office until death or until he resigns. In the Extraordinary General Meeting held on 29.6.1990 the appointment of Rama as the Managing Director was approved. Rama was, ultimately acquitted by an order of the Delhi High Court passed on 4.5.1995. On 8.5.1995 Rama was appointed as an Additional Director and Managing Director under Section 260 of the Companies Act. Mr.Manohar contended that section 274 of the Companies Act provides that a person shall not be capable of being appointed Director of a company if ........................ (d) he has been convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence. Mr.Manohar stated that inasmuch as on 22nd December 1986 Rama was convicted and sentenced under the provisions of section 274(1)(d), the appointment of Rama as an Additional Director on 1.1.1988, approval thereafter by the shareholders on 21st September 1988, appointment as Managing Director on 25.6.1990 by the Board of Directors, and status to Rama under the amended Articles 29 and 33A, which articles were adopted on 29.6.1990 in the Extraordinary General Meeting as also the appointment of Rama as the Managing Director approved on 29.6.1990 in the Extraordinary General Meeting are all bad in law as Rama under the express terms of section 274 was not capable of being appointed Director of a company. So far as his appointment as Managing Director is concerned, it was held to be illegal by the Division Bench of this Court and the apex Court by virtue of the provisions of section 267 of the Companies Act. This aspect of the matter is already referred to in the judgment and order of Dhanuka, J. in paras 44 to 47. As against this, Mr.Subramaniam, learned counsel for the defendant No.1, contended that to incur disqualification under the provisions of section 274(1)(d) not only the person should have been convicted, but he should have been sentenced and in the context of the provisions of sections 274 and 283 of the Companies Act, in the submission of Mr.Subramaniam, "sentenced" must mean has undergone the sentence and inasmuch as Rama never underwent any sentence and, ultimately, he was acquitted, the conditions of section 274(1)(d) were never satisfied. We find it difficult to accept this submission of Mr.Subramaniam. The provisions of section 274 declare the very initial incapacity of a person of being appointed Director of a company. Section 274(1)(d) provides for one the contingencies of such incapacity, viz., that if a person has been convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence. In our opinion, the moment there is an order of a competent Court convicting a person of any offence involving moral turpitude, sentencing him to imprisonment for not less than six months, the person concerned incurs incapacity. The further provision to the effect "and a period of five years is not elapsed from the date of the expiry of the sentence", in our opinion, merely provides for the termination of such incapacity. Rama Narang was convicted on 26.12.1986 and he was acquitted on 4.5.1995. As such, Ramas first appointment as a Director on 1.1.1988 was obviously void ab initio. We are also of the opinion that the Articles of Association were amended on 29.6.1990 making Rama a Director for life as also Chairman of the Board of Directors for life. In view of the provisions of section 274(1)(d), even these amendments would be void ab initio because on the date on which the Articles of Association were amended, Rama by virtue of his conviction and sentence was incapable of being appointed as a Director of the company. Rama was appointed as an Additional Director on 8.5.1995 i.e. after the date of his acquittal and, as such, the said appointment cannot be held to be invalid for any purpose on any court. However, the resolution proposed by the learned Administrator and taken as having passed regarding the appointment of Rama as the Managing Director, in our opinion, is not in accordance with law for the simple reason that before a person can be appointed as a Managing Director, he must be appointed as a Director. As held by this Court in A.I.R. 1960 Bombay 312, the appointment of Rama as an Additional Director on 8th May 1995 must be held to have come to an end on the date on which the next annual general meeting ought to have been held. No such meeting has been held on such a date in the year 1996 and as such the said appointment in the eyes of law must come to an end. In fact, it is significant to note that is why the original resolution dated 25th September, 1995 proposed by Rama Narang group was, firstly, states that Rama who was appointed as an Additional Director of the company and who holds by virtue of section 260 of the Companies Act such office up to the date of the meeting be and is here by appointed as a Director of the company and, thereafter, the second resolution proposes the appointment of Rama as the Managing Director of the company for a period of five years with effect from 8th May 1995. This was obviously to comply with the legal requirements of the Companies Act. Under the aforesaid circumstances, the resolution proposed by the learned Administrator on 2.4.1997 approving the appointment made by the Board of Rama as the Managing Director of the company for a period of five years with effect from 8th May 1995 is obviously not lawful. It was emphasised by the learned counsel for Rama that the learned Administrator had added a proviso to this resolution viz., that with effect from 29.1.1997 Rama shall discharge only such functions and duties as may be delegated to him and authorised by the Administrator. We are of the view that this addition is, in fact, unnecessary because even in the absence of such additional proviso, by virtue of the order of Dhanuka, J., so far as day-to-day management of the defendant no.6 is concerned, the Board of Directors was specifically injuncted from interfering with the functioning of the Administrator.64.Coming to the Notice of Motion No.2156 of 1997, we find it impossible to grant prayer (a) that the suit filed by the plaintiff be dismissed. We are not impressed by the submission that the plaintiff has obtained orders from the Court and is obstructing the implementation thereof. Freezing of various shares, including those of Fashion Wears Pvt. Ltd., is done under the orders of the competent Court which were passed on the basis of the facts and circumstances and requirement of particular proceedings before different Courts. The refusal of Ramesh to agree to particular arrangements cannot be treated as unwillingness or obstruction in the implementation of the orders of the Court. In that view of the matter, we are not inclined to grant any prayers made in Notice of Motion No.2156 of 1997 and the said Notice of Motion is, accordingly dismissed.65.Coming to certain allegations made against the Administrator, we must state that we had made it clear to the learned counsel during hearing that we will primarily concern ourselves with the merits of the appeal. However, we will have to make some observations as parties have made submissions in that behalf. Undoubtedly, the retired Judge of the High Court is entitled to due respect. However, it was an agreed position before us between the counsel for rival parties that as an Administrator appointed by this Court, all his actions must be subject to scrutiny and directions of this Court. So far as the file note is concerned, we have no doubt that meeting was held on 5th April 1997 and file note was prepared as stated by the learned Administrator. However, it would have been better if the learned Administrator had served Ramesh with a copy of the file note as early as possible so that no cause whatsoever could have been provided for making any allegations. We are also of the view that as pointed out by the learned counsel for Rama, the Administrator appeared before the Company Law Board in pursuance to the notice issued to him. So far as the committee of Advisors appointed by the Court to assist the Administrator is concerned and so far as the orders by the Administrator for taking assistance of one or the other member of the Advisory Committee and the extent of the assistance is concerned, we are of the clear view that the Administrator in the very nature of things, must be given a free hand and all these matters must be left to the Administrator. Any other view may unnecessarily create hurdles in the functioning of the Administrator. In fact, we must record here that Mr.Kapil Sibal clearly agreed with this during the course of his argument and his entire emphasis was on the nature and ambit of the powers of the Administrator. The Administrator has made complaints against the conduct of Ramesh and the learned Judge of the trial Court has made comments thereon. If the plaintiff wants to participate as a member of the Advisory Committee, he will have to conduct himself in a manner which will help the smooth functioning of the Administrator. We would, however, add that taking into consideration the tenor of the order of Dhanuka, J., the Administrator may be well advised to see that, as far as possible and to the extent practicable, the Advisors themselves do not participate into the day-to-day affairs of the business of the 6th defendant company and their role should be limited to advising the Administrator on matters on which the Administrator seeks their advise. Needless to say that business of hotel company like the defendant No.6 and day-to-day operation of the management is always conducted by a professionally qualified and competent executive staff appointed by the hotel management. The administrator is justified in taking the assistance of the members of the Advisory Committee initially for getting acquainted with the day-to-day administration and the other aspects of the business of the defendant No.6 company. But looking to the tenor and the spirit of the order of Dhanuka, J., the role of the Committee of Advisors has to be limited. We again make it clear that in the very nature of things, all these matters must be left to the good judgment and discretion of the learned Administrator.66.We also cannot part with this matter without expressing our views on another aspect. Dhanuka, J. directed that the Administrator shall be assisted by an Advisory Committee of the plaintiff; the defendant No.3; the Prothonotary and Senior Master or a senior officer of the High Court on the Original Side recommended by the Prothonotary & Senior Master or a senior officer of the High Court on the Original Side recommended by the Prothonotary & Senior Master whose name is approved by the Court; the Court Receiver, High Court, or any other senior officer assisting the Court Receiver, in the office of the Court Receiver, whose name is recommended by the Court Receiver and approved by the Court. Dhanuka, J. has expressly stated in his order that two officials of the Court are included in the Advisory Committee in order to enable the Administrator to avail of the official machinery of the Court for getting his decisions implemented. Dhanuka, J. has also stated in his order that the meetings and the working of the Advisory Committee may be organised, as far as practicable, in a way so as not to hamper performance of normal duties by the above referred to Court officials. On the basis of the material on record, we are of the view that it would be in the general interest of this Court if the two senior Officers who are working on the Committee of Advisors are spared. One of the officers has been recommended and is being paid remuneration of Rs.5,000/- per month. We have also found that the said member was asked to visit hotel at Aurangabad to make a report of the Civil work of renovation of rooms to be carried out. She had also gone to Delhi to attend the proceedings before the Company Law Board. Even during the hearing before us, she remained present in this Court for a number of days and she mentioned that she is representing the Administrator. Taking into consideration that both the Court officials are very senior Officers of this Court and taking into consideration the bitter and contentious litigation between the parties, we are of the view that unless impossible, the senior Officers of the Court or for that matter any officer of the Court should not be unnecessarily exposed to possible allegations and made to work in a private organization, may be under the Administrator. The reasons for avoiding such situation, in our opinion, are too obvious. We make it absolutely clear that we have found absolutely nothing objectionable in the conduct of the said officials. We are not suggesting even remotely anything against the said officers. Our only anxiety is to avoid the involvement of the Court officials in any private and personal disputes of the parties. We are also of the view that the time and energy of such senior officers should not be allowed to be spent except for their official duties. In the administration and management of a hotel business, we do not find any necessity for any Court official being involved in any manner. Any other professional or expert could more fruitfully and usefully be appointed. However, we feel that this aspect pertains to the discipline and administration of this Court which is best left to the learned Chief Justice of this Court and, accordingly, we direct the registry to place the matter for appropriate orders in that behalf before the learned Chief Justice.67.We are also of the opinion that taking into consideration the fact that litigation between these parties have exercised several forums, in several proceedings even on interim orders, it is necessary that the suit is decided as expeditiously as possible. However, for obvious reasons, we decline to fix a peremptory date of hearing of the suit which must be left to the learned Judge dealing with suits. Therefore, we grant liberty to the parties to approach the appropriate Court for expeditious disposal of the suit.68.At the time of the admission of the appeal on 16.6.1997, the Division Bench presided over by the learned Chief Justice had directed that holding of the Annual General Meeting which was held on that day and the Resolutions passed therein would be subject to the final decision which may bepassed by this Court in this appeal. If the appeal is ultimately allowed, this Court would pass appropriate orders for calling Annual General Meeting to consider the Resolutions which are moved by the Shareholders. In view of the discussion in the earlier part of this judgment, we hold that the learned Administrator was not authorized to determine and settle the resolutions and the agenda of the 16th and 17th Annual General Meetings of the respondent no.6 company. The normal result would be that the entire proceedings of the 16th and 17th Annual General Meetings will have to be quashed and set aside. However, with a view to avoiding any inconvenience as also in view of the submissions made by Mr.Kapil Sibal as recorded in para 60, we do not think it necessary to quash the proceedings and the resolutions so far as item no.1 i.e. to receive, consider and adopt the audited Balance Sheet as at 31st March, 1995 and the profit and loss account for the year ended on that date together with reports of the Directors and Auditors thereon, and item no.2 i.e. to confirm the appointment of M/s. J.G. Verma & Co., as Auditors for the financial year ended 31.3.1996 for which the Auditors Report dated 26th November 1996 has been submitted and to approve the remuneration of Rs.65,000/- paid to them, held to have been passed in the 16th Annual General Meeting held on 16.6.1997 are concerned. For the very reason, we are also not quashing the resolutions passed in terms of item no.1 i.e. to receive, consider and adopt the audited Balance Sheet as at 31st March, 1996 and the profit and loss account for the year ended on that date together with Reports of the Directors and Auditors thereon, item no.2 i.e. to confirm and treat the interim dividend declared and paid as the final dividend, and item no.3 i.e. to appoint and fix the remuneration of the Auditors M/s.J.G.Verma & Co., Chartered Accountants who retire at the conclusion of the Annual General Meeting and being eligible offer themselves for reappointment in the 17th Annual General Meeting of the respondent no.6 held on 16th June, 1997. However, resolutions no.3 and 4 held to have been passed in the 16th Annual General Meeting of the Respondent No.6 on 16th June, 1997 are hereby quashed. We direct that the 16th Annual General Meeting shall be held in accordance with the provisions of the Companies Act and in accordance with law and the observations made in this judgment.

Decision reasoning: 1[ds]66.We also cannot part with this matter without expressing our views on another aspect. Dhanuka, J. directed that the Administrator shall be assisted by an Advisory Committee of the plaintiff; the defendant No.3; the Prothonotary and Senior Master or a senior officer of the High Court on the Original Side recommended by the ProthonotarySenior Master or a senior officer of the High Court on the Original Side recommended by the ProthonotarySenior Master whose name is approved by the Court; the Court Receiver, High Court, or any other senior officer assisting the Court Receiver, in the office of the Court Receiver, whose name is recommended by the Court Receiver and approved by the Court. Dhanuka, J. has expressly stated in his order that two officials of the Court are included in the Advisory Committee in order to enable the Administrator to avail of the official machinery of the Court for getting his decisions implemented. Dhanuka, J. has also stated in his order that the meetings and the working of the Advisory Committee may be organised, as far as practicable, in a way so as not to hamper performance of normal duties by the above referred to Court officials. On the basis of the material on record, we are of the view that it would be in the general interest of this Court if the two senior Officers who are working on the Committee of Advisors are spared. One of the officers has been recommended and is being paid remuneration of Rs.5,000/per month. We have also found that the said member was asked to visit hotel at Aurangabad to make a report of the Civil work of renovation of rooms to be carried out. She had also gone to Delhi to attend the proceedings before the Company Law Board. Even during the hearing before us, she remained present in this Court for a number of days and she mentioned that she is representing the Administrator. Taking into consideration that both the Court officials are very senior Officers of this Court and taking into consideration the bitter and contentious litigation between the parties, we are of the view that unless impossible, the senior Officers of the Court or for that matter any officer of the Court should not be unnecessarily exposed to possible allegations and made to work in a private organization, may be under the Administrator. The reasons for avoiding such situation, in our opinion, are too obvious. We make it absolutely clear that we have found absolutely nothing objectionable in the conduct of the said officials. We are not suggesting even remotely anything against the said officers. Our only anxiety is to avoid the involvement of the Court officials in any private and personal disputes of the parties. We are also of the view that the time and energy of such senior officers should not be allowed to be spent except for their official duties. In the administration and management of a hotel business, we do not find any necessity for any Court official being involved in any manner. Any other professional or expert could more fruitfully and usefully be appointed. However, we feel that this aspect pertains to the discipline and administration of this Court which is best left to the learned Chief Justice of this Court and, accordingly, we direct the registry to place the matter for appropriate orders in that behalf before the learned Chief Justice.67.We are also of the opinion that taking into consideration the fact that litigation between these parties have exercised several forums, in several proceedings even on interim orders, it is necessary that the suit is decided as expeditiously as possible. However, for obvious reasons, we decline to fix a peremptory date of hearing of the suit which must be left to the learned Judge dealing with suits. Therefore, we grant liberty to the parties to approach the appropriate Court for expeditious disposal of the suit.68.At the time of the admission of the appeal on 16.6.1997, the Division Bench presided over by the learned Chief Justice had directed that holding of the Annual General Meeting which was held on that day and the Resolutions passed therein would be subject to the final decision which may bepassed by this Court in this appeal. If the appeal is ultimately allowed, this Court would pass appropriate orders for calling Annual General Meeting to consider the Resolutions which are moved by the Shareholders. In view of the discussion in the earlier part of this judgment, we hold that the learned Administrator was not authorized to determine and settle the resolutions and the agenda of the 16th and 17th Annual General Meetings of the respondent no.6 company. The normal result would be that the entire proceedings of the 16th and 17th Annual General Meetings will have to be quashed and set aside. However, with a view to avoiding any inconvenience as also in view of the submissions made by Mr.Kapil Sibal as recorded in para 60, we do not think it necessary to quash the proceedings and the resolutions so far as item no.1 i.e. to receive, consider and adopt the audited Balance Sheet as at 31st March, 1995 and the profit and loss account for the year ended on that date together with reports of the Directors and Auditors thereon, and item no.2 i.e. to confirm the appointment of M/s. J.G. VermaCo., as Auditors for the financial year ended 31.3.1996 for which the Auditors Report dated 26th November 1996 has been submitted and to approve the remuneration of Rs.65,000/paid to them, held to have been passed in the 16th Annual General Meeting held on 16.6.1997 are concerned. For the very reason, we are also not quashing the resolutions passed in terms of item no.1 i.e. to receive, consider and adopt the audited Balance Sheet as at 31st March, 1996 and the profit and loss account for the year ended on that date together with Reports of the Directors and Auditors thereon, item no.2 i.e. to confirm and treat the interim dividend declared and paid as the final dividend, and item no.3 i.e. to appoint and fix the remuneration of the Auditors M/s.J.G.VermaCo., Chartered Accountants who retire at the conclusion of the Annual General Meeting and being eligible offer themselves for reappointment in the 17th Annual General Meeting of the respondent no.6 held on 16th June, 1997. However, resolutions no.3 and 4 held to have been passed in the 16th Annual General Meeting of the Respondent No.6 on 16th June, 1997 are hereby quashed. We direct that the 16th Annual General Meeting shall be held in accordance with the provisions of the Companies Act and in accordance with law and the observations made in thisto the Notice of Motion No.2156 of 1997, we find it impossible to grant prayer (a) that the suit filed by the plaintiff be dismissed. We are not impressed by the submission that the plaintiff has obtained orders from the Court and is obstructing the implementation thereof. Freezing of various shares, including those of Fashion Wears Pvt. Ltd., is done under the orders of the competent Court which were passed on the basis of the facts and circumstances and requirement of particular proceedings before different Courts. The refusal of Ramesh to agree to particular arrangements cannot be treated as unwillingness or obstruction in the implementation of the orders of the Court. In that view of the matter, we are not inclined to grant any prayers made in Notice of Motion No.2156 of 1997 and the said Notice of Motion is, accordinglyare also of the opinion that the learned Judge in the impugned order was not right to decline to grant any relief to the plaintiff on the ground that it is not open to the plaintiff who has not cared to participate in the management and to assist the Administrator, though he is a member of the Advisory Committee to contend that the appointment of the 1st defendant as the Managing Director of the defendant No.6 company is illegal. Even if the conduct of the plaintiff is objectionable, the legal submissions made on behalf of the plaintiff or his rights as a shareholder under the provisions of the Companies Act cannot be denied.62.Assuming that the Administrator was competent to determine the agenda, in our opinion, the entire tenor and spirit of the order of Dhanuka, J. ought to have been taken into consideration before proposing Rama to be the Managing Director and Rohit to be the Joint Managing Director as has been done by the learned Administrator. It is extremely relevant to notice that the travesty of justice was management by the defendant nos. 1 to 5 to the exclusion of the plaintiff and redressal of that injustice was the theme of the judgment of Dhanuka, J. which is evident from various passages which we have quoted from Dhanuka, J.s judgment in the earlier part of this judgment. The justification that Rama is ready to undertake the liability, in our opinion, is no good reason. It does not depend on the volition of the Managing Director or the other Directors of the company to accept the liability or the statutory obligations. It is by force of law that any person who is a Managing Director or Director is obliged to comply with the statutory requirements and upon failure is exposed to statutory liabilities. Anyone holding the post of Managing Director or Director is exposed to statutory obligations and is automatically responsible by force of the provisions of the Companies Act. Under the circumstances, even if the Administrator wanted to settle the agenda, he ought to have seen that to the extent practicable, the spirit and intention of the order of Dhanuka, J. is implemented. We are also not impressed by the observations of the learned Administrator as well as the learned Judge that Rama is appointed a nominal Managing Director in the executive capacity. Indeed the post gives substantial monthly payments and several perquisites as indicated in the explanatory note to the resolution. As such, in any event, the Administrator could have suggested Managing Directorship to Rama and Joint Managing Directorship toour opinion, this was beyond the competence of the Administrator in his capacity as an Administrator under the orders of Dhanuka, J. The learned Judge, in our opinion, was not right in approving that part of the report of the Administrator and, consequently, the learned Judge was also not right in rejecting prayer (a) of the application made by plaintiff which ought to have been allowed. We make it clear, however, that whatever is the result of the Annual General Meeting held in accordance with the provisions of the Companies Act and whosoever may be the Managing Director or Joint Managing Director or Director, obviously, will be bound to obey the order of Dhanuka, J. so far as it restrains the Board of Directors from interfering with themanagement of the business of the defendant no.6 by thefar as these authorities cited by Mr.Dave are concerned, we are in complete agreement with the submission made by Mr.Seervai, learned counsel appearing for the defendant no.1, that the observations relied upon will have to be appreciated on the basis and in the context of the facts and circumstances and in the context of submissions and issues raised in each particular case.