Document Fragment View

Matching Fragments

The principal argument on behalf of Mehra was based upon the judgement of the House of Lords in Ebrahimi vs. Westbourne Galleries Ltd. and Ors., (1972) 2 All ER 492. It was submitted that inasmuch as there were only two promoter Directors, who held, along with their friends and relations, 1500 and 1650 shares respectively, and since they were to remain Joint Managing Directors for life, the principles applicable to a partnership were relevant. There having been an exclusion of Mehra from the business of the company, Mehra was entitled to an order winding up the company. Ebrahimi's case was considered by this court in Hind Overseas Private Limited vs. Raghunath Prasad Junjhunwalla and Anr.. 1976(3) S.C.C. 259. The facts of Ibrahimi case were set out therein thus:

In Ebrahims's case (supra) the company which was first formed by the two erstwhile partners, Ebrahimi and Nazar, was joined by Nazar's son, George Nazar, as the third director and each of the two original shareholders transferred to him 100 shares so that at all material times Ebrahimi held 400 shares, Nazar 400 shares and George Nazar 200 shares. the Nazars, father and son, thus had a majority of the votes in general meeting. Until the dispute all the three remained directors. Later on as ordinary resolution was passed by the company in general meeting by the votes of Nazar and George Nazar removing Ebrahimi form the office of director. That led to the petition for winding-up before the court."
This Court noted that the following features had been found in Ebrahimi's case:
"(1) There was a prior partnership between the only two members who later on formed the company. (2) Both the shareholders were directors sharing the profits equally as remuneration and no dividends were declared. (3) One of the shareholder's son acquired shares from his father and from the second shareholder, Ebrahimi, and joined the company as the third shareholder - director with two hundred shares (one hundred from each).
(4) After that, there was a complete ouster of Ebrahimi from the management by the votes of the other two directors, father and son.
(5) Although Ebrahimi was a partner, Nazar had made it perfectly clear that he did not regard Ebrahimi as a partner but regarded him as an employee in reputation of Ebrahimi's status as well as of the relationship. (6) Ebrahimi through ceasing to be a director lost his right to share in the profits through directors' remuneration retaining only the chance of receiving dividends as a minority shareholder.