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5. The learned company judge, on consideration of the entire case, came to the conclusion that none of the contentions advanced in support of the petition could be accepted and none of the allegations of oppression of the petitioners as shareholders and mismanagement of the affairs of the company are made out ; the petitioners have not made out any case for grant of any relief to them either under Section 397 or under Section 398 of the Companies Act and the petition has, accordingly, been dismissed and the resolution dated May 8, 1981, has been upheld. It has further been held that the resolution is not contrary to Clause 31 of the articles of association nor contrary to Section 312 read with Sections 252 and 291 of the Companies Act ; the article in question permits the term of the managing director to exceed more than one year ; the resolution dated May 8, 1981, was passed unanimously and an agreement was also executed on that day incorporating the terms of the resolution ; though the meeting dated September 22, 1981, could have been called by petitioner No. 2 but in that meeting, the resolution dated May 8, 1981, could not have been superseded till such time the agreement which was validly executed on May 8, 1981, was cancelled or superseded by a competent court ; under that resolution and agreement, respondent No. 1 being the managing director, was given sole charge of the management of the company ; merely because the petitioners were given only an advisory role under that resolution, they did not cease to be directors and there was no assignment of their office ; as such there was no contravention of Section 312, nor was there contravention of any provision in the appointment of respondent No. 2 as managing director as a stop-gap arrangement ; respondent No. 2 was put in charge of the affairs of the company in the absence of respondent No. 1 ; Clause 31, as incorporated in the body of the articles of association furnished by the petitioners was not correctly reproduced as is evident from the certified copy produced by the respondent ; the resolution and the agreement dated May 8, 1981, are valid and binding on the petitioners and they cannot avoid the same ; the grievance of the petitioners about their equal participation in the management has no merit because they have voluntarily and freely passed the resolution and executed the agreement; Section 283(1)(g) provides that a director shall cease to hold office for his continuous absence in three meetings or for a continuous period of three months ; merely because the petitioners were permanent directors under Clause 18 of the articles of association, Section 283(1)(g) would not be applicable to them is not correct and this section will apply to permanent directors also ; the probabilities of the case go to show that the petitioners had notice of the meetings held on November 30, 1981, and the subsequent meetings thereafter ; this is fortified by the certificate of posting showing issuance of notices ; the notices were properly addressed and stamped, though presumption of service is not so strong in case of certificate of posting, but the inaction on the part of the petitioners even after the receipt of notice dated April 19, 1982, which is not disputed, goes to show that these notices were duly received by them ; for the first time in the petition which was filed on July 9, 1982, it has been alleged that the petitioners had no notice of the meetings ; the petitioners had never defrayed the expenses as required under Section 53 of the Companies Act to send notices by registered post ; similarly, the petitioners were given option to purchase new shares, but they refused to purchase any share ; D.P. Khanna, respondent No. 6, was duly nominated as a director of the company on September 17, 1981, by the M. P. Finance Corporation under the State Financial Corporations Act, 1951, as amended by the Amending Act of 1972 ; the first act of mismanagement alleged was of not holding any meeting which has been falsified ; the next act of mismanagement alleged was failure to hold the annual general meeting within 18 months of the incorporation of the company on November 18, 1980 ; since the annual general meeting was held on May 17, 1982, it was within 18 months, as the resolution dated September 22, 1981, was invalid, respondent No. 1 was justified in flouting the same ; another act of mismanagement alleged was that a parallel company known as Amit Chemicals Pvt. Ltd. has been formed by the respondents in July, 1982 ; but that company has not commenced its business ; the petitioners have admitted that they had access to the company premises till September 22, 1981 ; it has not been proved that respondent No. 1 had manipulated the accounts or misused the overdraft facility ; the allegations are also not factually correct ; there is no material on record to indicate that the company used to get the goods released without informing the bank ; no grievance has been made by any of the creditors regarding non-payment of their dues ; some of the alleged creditors are relations of the petitioners but they are not being recognised by the company ; as such, there does not appear to be any just and equitable ground for winding-up of the company ; consequently, no case is made out for relief under Section 397 ; the total liabilities of the company is Rs. 20,00,000 and so the company was in a position to liquidate the liabilities with the available resources if it is permitted to function without any unnecessary obstruction.

7. Shri M.P. Sapre, learned counsellor respondents Nos. 1 to 5, on the other hand, submitted that the appellants are for the first time raising the issue of not being given opportunity to lead evidence, when in fact, before the learned company judge, the appellants never desired nor expressed any intention to lead evidence nor have they taken this matter in the grounds of this appeal ; the parties wanted the case to be decided on the basis of the affidavits and documents filed in the case ; it is true that the partnership concern was converted into a private limited company and the appellants and respondents Nos. 1 to 5 were made permanent directors ; but Section 283(1)(g) applies to permanent directors also and this provision is applicable to private limited companies as per Sub-section (3) ; since the appellants failed to appear in the meetings of the board of directors for a continuous period of three months in spite of service of notice on them, they automatically ceased to be directors under the aforesaid section ; the appellants having voluntarily, wilfully and unanimously passed the resolution dated May 8, 1981, appointing respondent No. 1 as chairman-cum-managing director for a period of five years after realising that appellant No. 1 was not in a position to run the affairs of the company which was in serious financial difficulties and production was seriously hampered ; in the absence of any misrepresentation, fraud or coercion, the resolution and agreement dated May 8, 1981, voluntarily entered into by the parties could not be avoided ; under Clause 33 of the articles of association, the managing director can be appointed for a period of more than one year and there was nothing illegal in the resolution and the agreement dated May 8, 1981 ; on November 30, 1981, respondents Nos. 2 to 5 were appointed additional directors and the appellants now cannot take any grievance, as they have chosen to remain absent at the meetings of the board of directors in spite of service of notice ; since the company was in direct need of additional funds, it was decided to issue fresh shares in order to make up the paid-up capital of the company and before offering the shares to respondents Nos. 2 to 5, these shares were offered to the appellants ; but they declined to purchase any share ; the appellants were not in a position to purchase any share and that is one of the reasons why they remained absent from the meeting ; the appellants thus deciding that the management of the company should be solely in charge of respondent No. 1 in view of the resolution and the agreement dated May 8, 1981, and the appellants having refused to subscribe to further shares, they cannot now make a grievance that they have been reduced to minority shareholders ; there is no oppression of the minority shareholders nor is there mismanagement ; in fact, under the managing directorship of respondent No. 1, the liabilities of the company to the extent of Rs. 10,00,000 have been liquidated and the company is making progress; the appellants have not proved any mismanagement against respondents Nos. 1 to 5, nor is there any evidence of diversion of funds nor tampering with the records ; the learned company judge has given cogent and valid reasons while dismissing the petition and there is no case for interference ; this court should permit respondents Nos. 1 to 5 to purchase the shares of the appellants in order to bring the dispute to an end for all time.

10. Ebrahimi's case [1972] 2 All ER 492 ; [1973] AC 360 (HL) has no application here. Although the partnership business was converted into a private limited company, each partner having equal share in the management and profits of the company, but after running the business for about 1 1/2 years' and appellant No. 1 appointed as managing director, it appears that he" was not in a position to run the company on sound lines and the company was not in a position to clear off its liabilities and was under serious financial stringency. Therefore, on April 19, 1981, it was resolved to hand over the management of the company to the M. P. Finance Corporation which had served a notice for recovery of Rs. 4,89,600.14. It may be mentioned that this liability was taken over by the company from the partnership which had borrowed a sum of Rs. 4,18,500 from the M. P. Finance Corporation on May 9, 1975. Thereafter, another meeting was held on May 8, 1981, in the presence of the general manager of the M. P. Finance Corporation at Indore, and it was resolved that respondent No. 1 be appointed as the managing director for a period of five years and the earlier resolution was superseded and it was resolved that respondent No. 1 will be in sole charge of the day-to-day business of the company and the appellants would work only in an advisory capacity as directors. An agreement was also executed on the same day, and it was further stipulated that this arrangement will continue for a period of five years ; and in no case, they will be changed. Thereafter, a meeting was called by respondent No. 1 as managing director on November 30, 1981 ; but the appellants had chosen to remain absent at that meeting which was attended by respondent No. 1 and respondent No. 6 who was nominated as a director by the M. P. Finance Corporation with effect from September 17, 1981, in accordance with the provisions of the M. P. Finance Corporation Act, 1951, as amended by Amending Act of 1972. In that meeting, respondents Nos. 2 to 5 were appointed as additional directors. This has been necessitated because the appellants had refused to co-operate with respondent No. 1. In fact, appellants Nos. 1 and 2 called a meeting of the board of directors on September 22, 1981 ; and in that meeting resolved to remove respondent No. 1 as managing director and appoint respondent No. 2 in her place. It may be that because of this resolution, the appellants did not attend the meeting on November 30, 1981. As has been mentioned earlier, the company was in serious financial trouble ; and required additional finances and so it was resolved on December 3, 1981, to issue 2,920 new shares so as to make up the paid-up capital of the company. Respondent No. 1 wrote a letter to the appellants asking them to purchase the new shares but the appellant did not respond to this and so on December 26, 1981 ; 650 shares were allotted to respondent No. 1 ; 820 to respondent No. 2 and 150 each to respondents Nos. 3 and 5. The appellants again did not attend the meetings of the board of directors held on March 4, 1982, March 19, 1982, and the annual general meeting on May 17, 1982. In the meeting held on March 4, 1982, respondent No. 1 was authorised to take suitable action against the appellants for their continuous absence for over three months at the meetings of the board of directors. She, accordingly, wrote a letter to the appellants intimating about their default, but instead of showing cause, they again remained absent at the next meeting held on March 19, 1982, when it was resolved that they have ceased to be directors of the company. Accordingly, respondent No. 1 wrote a letter dated April 19, 1982, informing the appellants about the fact that they ceased to be directors. Therefore, the appellants themselves abstained from the management of the company on their own volition and respondents Nos. 1 to 5 are not at all responsible for the same ; firstly, the appellants handed over the complete management of the company to respondent No. 1 on May 8, 1981, and subsequently, they remained absent at the meetings of the board of directors, they ceased to be directors in view of Section 283(1)(g) read with Sub-section (3) of the Companies Act.

11. Now, the question remains as to whether the appellants had notice of these meetings. According to them, they never received any notice of these meetings and filed their affidavits to this effect. On the other hand, respondents Nos. 1 to 5 have asserted that notices of these meetings were despatched well in time by post under certificate of posting, and filed an affidavit of respondent No. 3, who was previously the secretary of the company and now a director. They have also produced the certificates of posting in support. Section 53(2)(a) provides that a document may be served by a company on any member thereof either personally, or by sending it by post to him to his registered address by properly addressing, pre-paying and posting the letter containing the documents, provided that where a member has intimated to the company in advance that documents should be sent to him under a certificate of posting or by registered post and has deposited with the company, a sum sufficient to defray the expenses for it, service of the document shall not be deemed to be effected unless it is sent in the manner intimated by the member. Clause (b)(i) provides that in the case of a notice of a meeting, the service will be taken to have been effected 48 hours after the despatch of the letter. Under this provision, a presumption has to be drawn as to whether the notices were sent by properly addressing, pre-paying and posting the notices to the members. According to learned counsel for the appellants, such a presumption can only be drawn if there is an affidavit on record to show that the notices were sent properly addressed, pre-paid and posted. It is true that in the affidavit of respondent No. 3, this has not been stated in so many words ; but he has verified as true the information received from the record. It has been mentioned in, the return that all these letters were sent under certificate of posting and in spite of notices, the appellants did not attend the meetings. Certificates of posting proved the fact that the notices were posted to the proper addresses after pre-paying postage. The addresses are given on the certificates and it is not the case of the appellants that the addresses so given are not correct. Besides, the appellants, in their letter dated January 25, 1982, mention that they had come to know that certain resolutions have been passed against them. All these appellants are residents of Burhanpur where the registered office of the company is located. It is difficult to believe that the appellants were not aware as to what was going on in the company during all this period ; but they deliberately remained absent after they found themselves to be in a minority ; and as has been observed by the learned company judge, took the plea later on, that they had no notice of the meetings. Curiously enough, the appellants have admitted the receipt of the letter dated April 19, 1982, informing them that they ceased to be directors of the company. According to the ordinary course of human nature and conduct, if the appellants had not received any notices of the meetings, they would have promptly protested about the same and challenged the resolution whereby they ceased to be directors. The total silence of the appellants belies the fact that they had no notices of the meeting. It is pertinent to note that respondent No. 6 who was a nominated director of the company did attend the meeting held on November 30, 1981, and he did not attend the subsequent meetings, but has been sending intimations and telegrams about his inability to attend the meetings showing that he had received the notices of the meetings which were despatched under the same set of certificates of posting. It is, therefore, clear that the appellants, deliberately did not attend the meetings which were held on November 30, 1981, December 3, 1981, December 26, 1981, March 4, 1982, and March 19, 1982, and, therefore, they ceased to be directors of the company under Section 283(1)(g) read with Sub-section (3) of the Companies Act. Although respondent No. 1 had written to the appellants letters about their absence, they did not show any cause and their removal as directors was automatic. This provision applies to private limited companies also, as is clear from the wording of Sub-section (3) which further empowers a private company to provide that the office of the director shall be vacated on any grounds in addition to those specified in Sub-section (1). Out of the appellants, only appellant No. 1 wrote a letter dated November 14, 1981, informing respondent No. 1 that all notices be sent to him by registered post with acknowledgment due. Respondent No. 1, in his reply dated November 18, 1981, told appellant No. 1 that he should defray the expenses, if he wants all notices to be sent by registered acknowledgment due ; but no amount was defrayed, by appellant No. 1. So, respondent No. 1 was not bound to send the notice by registered acknowledgment due. Section 28 of the M. P. General Clauses Act has to be read along with this special provision contained in Section 53(2)(a) of the Companies Act. The Supreme Court in Puwada Venkateswara Rao v. Chidamana Venkata Ramana, AIR 1976 SC 869, has held that where a notice sent by registered post, was returned with the endorsement "refused", it is not always necessary to produce the postman who tried to effect service. A denial of service by a party may be found to be incorrect from its own admission or conduct. The Supreme Court in Mst. L.M.S. Ummu Saleema v. B.B. Gujral [1983] 53 Comp Cas 312, has held that neither Section 16 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, nor Section 114 of the Evidence Act compel the court to draw a presumption. The presumption may or may not be drawn. On the facts and circumstances of the case, the court may refuse to draw the presumption. In that case, the Supreme Court had observed that after all, there have been cases in the past, though rare, where postal certificates and even postal seals have been manufactured. In that case, the detenu claimed that he had retracted his admission by sending a letter under certificate of posting ; but along with his representation against detention, he only appended the certificate of posting without enclosing a copy of the letter withdrawing his admission. Therefore, the Supreme Court refused to rely on the certificate of posting that the said letter was sent.