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(a) if a special resolution to that effect is passed, by the company in general meeting, or

(b) where no such special resolution is passed, if the votes cast (whether on a show of hands, or on a poll, as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the Chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the board of directors in this behalf, that the proposal is most beneficial to the company (2) Nothing in clause (c) of sub-section (1) shall be deemed

17. On June 17, 1978, the Joint Secretary to the Govt. of India in the Dept. of Company Affairs issued an order under s. 108D which can aptly be called the freezing order. The order stated that it had been brought to the notice of the Central Govt. that the Berlia group were making concerted efforts to gain a controlling interest in the company; that certain persons alleged to belong to the Berlia group had lodged transfers of 27,263 shares in bulk with the company in order to gain controlling interest in the company; that the Berlia group had lodged proxies numbering over 1,74,500 for the extraordinary general meeting of the company held on April 3, 1978, for the appointment of two of their nominees as directors of the company; that the Berlia group had been involved in a number of irregularities committed by the Kapadia group in the affairs of the company prior to the appointment by the Central Govt. of persons to hold office as directors of the company under s. 408; that the Central Govt. was satisfied upon the facts enumerated above and upon the report received from the company that, as a result of the transfer of any share or block of shares of the company, a change in the controlling interest of the company was likely to take place and that such change was prejudicial to the interests of the company. The order directed the company not to give effect to the transfer of any such shares or block of shares and (a) where the transfer of such share or block of shares had already been registered, not to permit any nominee or proxy of the transferee to exercise any voting or other rights attached to such share or block of shares, and (b) where the transfer of such share or block of shares had not been registered, not to permit any nominee or proxy of the transferor to exercise any voting or other rights attached to such share or block of shares. The copy of the freezing order received by the company, which is on record, shows that the company received it on June 19, 1978.

144. Upon this basis in law, I proceed to examine Mr. Cooper's submission. The circumstances that he relied on are :

That after July, 1977, the Berlias had to file suits in the Bombay City Civil Court and petitions for rectification of the company's share register in this court before the company consented to transfer shares to the names of the Berlias.
That even after the agreement and consent terms of December 8, 1977, the company refused to transfer shares to the Berlias.
That in April, 1978, the Berlias demonstrated that the majority of the company's shareholders supported them by lodging about 1,74,000 proxies for an extraordinary general meeting while the institutions had proxies and voting strength to the extent of about 1,04,000.

180. Having regard to this, I have no doubt that the plaintiffs have established the prima facie case that the waiver was actuated by the desire to increase the voting strength of the institutions at the AGM of June 28, 1979, and thus counter the votes and proxies of the Berlias. No director of the defendants has examined to refute the prima facie case. In fact, none of the defendants has examined a witness, who could depose as to what transpired in those last days of May, 1979, or at the meeting of May 31, 1979. I am reluctantly but inevitably impelled to the conclusion that no witness upon this aspect has been examined because his evidence would not have dispelled the prima facie case.