1965 PLP 291 (PTD)

HAMOODUR RAHMAN, J.-This appeal has come before us under a certificate granted by the High Court of West Pakistan on the 23rd of October 1956, under Order XLV, rules 2 and 3 read with sections 109 and 110 of the Code of Civil Procedure. It arises out of a petition under section 162 of the Companies Act filed on the 1st of May 1946, in the High Court of Judicature at Lahore for the winding up of the Karnal Distillery Company Limited by the appellant herein. Karnal Distillery was started by one Kishori Lal who carried on the business of manufacture and sale of liquor in the name of Kishori Lal & Sons at Karnal. He died in 1906 leaving him surviving three sons Durga Prasad, Ladli Prasad and Shanti Prasad. After the death of Kishori Lai, Durga Prasad as senior member of the family took over the management of the business which had then become a joint family business. Durga Prasad died in 1934 leaving behind two minor sons, Madan Lal and Sajjan Lal and a widow Suraj Mukhi. The appellant Ladli Prasad being the eldest male member of the family took over the Management of the business as karta of the said family and the business continued as a joint family business till November 1940, when the severance of the joint family was effected and the joint family properties partitioned. The joint family business was, however, first converted into a partnership firm and then a few months thereafter on the 23rd of March 1941, the partnership was again converted into a private limited company under the name and style of the Karnal Distillery Company Limited. It was registered as such under the Indian Companies Act, 1913, on the said 23rd of March 1941, with its registered office at Karnal. Its shareholders were the members of the joint family. Durga Prasad's branch was granted 1,004 shares, Ladli Prasad and Shanti Prasad 1,003 shares each. Under its articles of association it was to have three directors, namely, Ladli Prasad, Shanti Prasad and Suraj Mukhi. Each of them was to get a remuneration of Rs. 250 per month. Ladli Prasad, the present appellant, was to be the Managing Director for 10 years with an option to continue as such for a further period of 10 years. He was, in addition to the Rs. 250 per month payable as director's remuneration, to get a further sum of Rs. 1,850 per mensem as salary and Rs. 350 per mensem as car allowance. He was at the same time to receive 7? % of the profits earned by the company as commission. The shares were allotted in lieu of the assets of the shareholders in the partnership business of Kishori Lal & Sons and the Karnal Distillery, but the articles of association further provided that the shareholders holding 2/3rds of the total share capital would have the power to compel the owners of the remaining 1/3rd shares to transfer their shares to the majority. The main object of the company was to acquire and take over the partnership business of Kishori Lal & Sons and the Karnal Distillery together with the properties, assets, good-will and liabilities thereof as a going concern. Three members were sufficient to constitute a quorum either at a general meeting of the company or at a directors meeting and every member present at a meeting was to have one vote for every share held by him in the event of a poll being desired and one vote each on a show of hands. But Suraj Mukhi was to be allowed to act as the natural guardian of her two sons who were allotted 335 shares each from out of the quota of Durga Prasad's branch. The business of the company was carried on smoothly till July 1941, but from that time onward differences began to arise between the appellant and the other directors mainly on the ground that the others felt that the appellant was taking the largest share out of the profits of the company which was doing good business. The other directors charged the appellant with abusing his position as Managing Director, as, according to them, the appellant who was also carrying on business privately on his personal account with the Government, purchased spirits produced by the company at rates below the market rates to meet the requirements of his own personal business and had also become a shareholder in another liquor manufacturing company called Jagjit Distillery and Allied Indus tries Limited started in Kapurthala State in 1944. The disputes came to a head in 1945 when on the 20th of February 1945, the branches of Shanti Prasad and Durga Prasad held a general meeting of the company in which they purported to remove the appellant from the office of the Managing Director and to appoint Shanti Prasad as Managing Director in his place. The appellant challenged the validity of this meeting on various grounds and refused to hand over the management of the company to Shand Prasad. Ultimately Shanti Prasad was forced to file a suit on the 10th of April 1945, in the Court of the Senior Sub Judge at Karnal praying for a declaration that he was the Managing Director of the company, that the appellant had been lawfully dismissed from the Managing Directorship and for injunctions to compel the appellant to make over all files, documents and other books of the company as also to restrain him from interfering with the management of the company by Shanti Prasad. Ladli Prasad retaliated with another suit for a declaration that Shanti Prasad had himself ceased to be a director of the company, because, he had contravened section 86-D of the Companies Act by entering into a contract with the company itself. In the suit of Shanti Prasad an ad-interim order was also obtained for the appointment of a receiver. The trial Court appointed Suraj Mukhi and her son Madan Lal (who had just attained majority) as joint receivers. The appellant filed an appeal against this order in the High Court and obtained a stay of the operation of the trial Court's order. There was, however, a compromise effected between the parties through the intervention of common friends and relations on the basis that the appellant would give up his position as Managing Director and all the three directors would be placed on an equal footing each being entitled to a remuneration of Rs. 900 per month. Shanti Prasad was to be made Manager with no salary and no travelling allowance and henceforward all resolutions, whether of a general meeting or of the directors, were to be passed unanimously. In pursuance of this compromise a general meeting of the company was held on the 16th of October 1945, and resolutions were passed to give effect to the compromise. It appears that the appellant Ladli Prasad had under the compromise also to transfer proportionate shares from the extra 500 shares which he had got allotted to himself in August 1941, in order to equalise the shares of all the three branches. One of the resolutions passed at this meeting made the appellant a permanent Chairman and Director of the company. The number of directors was fixed at three and the quorum was also fixed at three. The most important resolution, however, that was passed at this meeting was that all decisions must be taken at a meeting of directors unanimously. The purpose of these resolutions was to give the three branches equal shares and equal voice in the management of the business which could henceforward be run only with the assent of all the three branches. No meeting could be held unless all the three directors were present and no decision was to be valid unless it was passed by all the directors. In the general meetings also unanimity was made essential, and it was provided that a meeting of the Board of Directors shall be held on the 1st Sunday of every calendar month. Provision was also made for opening a bank account of the company which was to be operated under the joint signatures of the Chairman and two other directors. The Manager was also required to submit, duly audited accounts, together with a detailed report on the working of the Distillery at every meeting of the directors. Unfortunately the compromise was short-lived and the very next meeting demonstrated that the parties were still at loggerheads. At the meeting of the 4th of November 1945, the directors differed on almost every question. Shanti Prasad thereafter not being well disposed towards those who had been employed by the appellant began dismissing those who still sided with the appellant. The appellant took exception to this and challenged the authority of the Manager to dismiss any employee without the approval of the Board of Directors. Then on the 25th of February 1946, Suraj Mukhi and Madan Lal requisitioned a meeting for the purpose of passing a resolution against Ladli Prasad and for removing him from the office of Chairman and Director, and for making certain amendments to the articles of association. In pursuance of this requisition a meeting of the directors was held on the 3rd of March 1946, but as at this meeting only Madan Lal and Suraj Mukhi were present the meeting was adjourned till the 28th of March 1946. On this date Ladli Prasad, the appellant, was not present, as he alleged that he had no notice of this meeting. It may be mentioned here that under the compromise all notices of meetings were also required to be sent out by registered post-cards. Notwithstanding the absence of Ladli Prasad the meeting was held and a number of resolutions were passed, inter alia, (1) removing Ladli Prasad from the office of Chairman and Director and appointing Suraj Mukhi in his place as a Director, (2) appointing Shanti Prasad as Managing Director with a remuneration of Rs. 1,000 per mensem plus Rs. 200 as car allowance in addition to the director's remuneration of Rs. 900 per month and, (3) deleting the article which empowered the shareholders to the extent of 2/3rds to force the owners of the remaining 1/3rd to sell their shares. The appellant alleging that he came to know of this meeting on the 1st of April 1946, filed the petition for winding up on the 1st of May 1946, from which this appeal arises. He alleged in this petition that the attitude of high-handedness adopted by Shanti Prasad had resulted in a complete deadlock in the management of the company's business and that its sub-stratum had gone making it just and equitable to order the winding up of the company. He further alleged that the company was unable to meet its liabilities on various grounds. This petition was contested by the company and the other directors. After about 8 years this petition came up for hearing before a learned Single Judge of the High Court at Lahore on the 29th of November 1954, and was heard for seven days. The learned Judge framed the following issues:- (1) Is the company unable to pay its debts? (2) Are the debts alleged to be due from the company disputed bona fide? (3) Is it, for the reasons stated in the application, just and equitable that the company be wound up? The first two issues were decided against the appellant, but he succeeded on the third issue and the learned Judge came to the conclusion that there was a deadlock in the affairs of the company, as the relations between the parties had deteriorated to such an extent that they could not possibly agree to anything. Furthermore that since the company was 'only a private limited company and one of the persons entitled to participate in the management had been illegally excluded from taking any part therein, it would be just and equitable to wind up the company. The order for winding up was, accordingly, made on the 26th of January 1955. The company went up in Letters Patent appeal from this order and a Division Bench of the High Court reversed this decision mainly upon the grounds, namely, (1) that there was no equity on the side of the appellant Who had by his own previous misconducts led his brothers and nephews to revolt against him (2) that liquidation would ruin the business and (3) that since the company was now situated in India and its business was carried on there it would be more appropriate to leave the parties to seek remedy under the provisions of the new section 153-C introduced in 1951 in India in the Companies Act which enabled the Courts in India to make appropriate orders for putting an end to disputes between the shareholders of a company without putting an end to the company itself in order to protect the interests of the company or any part of its members. From this decision the appellant has now come up to this Court with a certificate from the High Court. It may be mentioned here that before the Letters Patent Bench the decision of the trial Court on the issue as to whether the company was unable to pay its debts was not challenged. The only question that was urged was that the learned Single Judge was wrong in taking the view that it was just and equitable to order the winding up of the company. On this point it was contended on behalf of the appellant therein that the meeting of the 28th of March 1946, by which Ladli Prasad was ousted from the management was a resolution which had been lawfully passed but the Letters Patent Bench proceeded upon the assumption that even if this meeting was illegal, the case for winding up on the basis of it being just and equitable to do so had not been made out. The only question, therefore, that arises for consideration in this case is whether the Letters Patent Bench was right in taking the view that it was not just and equitable to order the winding up of the company in the facts and circumstances of the case. Before we enter upon a consideration of the merits of the winding up petition we have, however, to dispose of a preliminary objection which has been taken on behalf of the respondent as to the competency of this Court to hear this appeal. Learned counsel for the respondent has contended that since after Partition the company's registered office had fallen in India, the winding up petition filed by the appellant herein on the 1st of May 1946, on the original side of the High Court at Lahore could only be heard and determined by the said High Court by virtue of the provisions of Article 13(2) of the High Courts (Punjab) Order, 1947, and since paragraph (2)(b) of the said Article empowered the High Court at Lahore only to hear an appeal from such an order passed on the original side, no further appeal lay to the Supreme Court of Pakistan, as under paragraph (4) of Article 13 the appellate order of the High Court was for all purposes to have effect not only as an order of the High Court at Lahore but also as an order made by the High Court of East Punjab. It is therefore contended that since an appeal is a creature of a statute, the further appeal, if any, would lie to the Supreme Court of India and not to the Supreme Court of Pakistan. Article 13 is in these terms:- "13(1) Subject as hereinafter provided the High Court at Lahore shall have no jurisdiction in respect of the territories for the time being included in the Province of East Punjab or in the Province of Delhi. (2) Notwithstanding anything contained in this order- (a) any proceedings which, immediately before the appointed day, are pending in the High Court at Lahore on its original side, including any proceedings then pending in the said High Court as a Court of reference, shall be heard and determined by that Court; (b) the High Court at Lahore shall have the like jurisdiction to hear and determine any appeal from an order of a Judge of the said Court on its original side as if this Order had not been made, and the High Court of East Punjab shall have no jurisdiction to hear or determine any such appeal; and (c) the High Court at Lahore shall have the like jurisdiction to review any order made by any Judge of the said High Court as it would have had if this Order had not been made, and the High Court of East Punjab shall have no jurisdiction to review any such order. (3) Subject to the preceding provisions of this Article, all proceedings pending on the appellate side of the High Court at Lahore immediately before the appointed day, shall, where the Court of origin is, as from that day, situated in the Province of East Punjab or in the Province of Delhi, stand transferred by virtue of this Order to the High Court of East Punjab. (4) Subject to the following provisions of this Article with respect to appeals, any order made by the High Court at Lahore either- (a) before the appointed day; or (b) In any proceedings with respect to which the said High Court retains jurisdiction by virtue of paragraphs (2) and (3) of this Article; shall for all purposes have effect not only as an order of the High Court at Lahore but also as an order made by the High Court of East Punjab. (5) Subject to the following provisions of this Article with respect to appeals, any order made by the High Court of East Punjab in proceedings transferred to that High Court by virtue of this Article shall for all purposes have effect not only as an order of that Court but also as an order made by the High Court at Lahore. (6) Where any such order as is mentioned in paragraphs (4) and (5) of this Article has, whether before or after the appointed day, been confirmed, varied or reversed on appeal, effect shall be given to the decision of the appellate Court as if the order appealed from were an order not only of the High Court by which it was made, but also of the High Court at Lahore or the High Court of East Punjab, as the case may be. (7) Any reference in this Article to a High Court shall be construed as including a reference to a Judge or division thereof; and for the purposes of this Article proceedings shall be deemed to be pending in a particular Court until that Court has disposed of all issues between the parties, including any issues with respect to the taxation of the costs of the proceedings." It will be noticed from paragraph (6) above that where any order mentioned in paragraphs (4) and (5) of this Article has, whether before or after the appointed day, been confirmed, varied or reversed on appeal, effect shall be given to the decision of the appellate Court as if the order appealed from were an order not only of the High Court by which it was made but also of the High Court at Lahore or of the High Court of East Punjab, as the case may be. The appeal referred to in paragraph (6) necessarily refers to a further appeal, and not to the appeal mentioned in paragraph (2) (b), for, under the latter paragraph the High Court at Lahore retained the jurisdiction to determine any appeal from an order of a Judge of the said Court on its original side. This provision would thus seem to indicate that an appellate Court having otherwise jurisdiction to hear appeals from an appellate order or decree of the High Court at Lahore would be competent to confirm, vary or reverse the appellate decree and that the judgment given on such an appeal is to receive effect as if the judgment and decree appealed against were also their judgment and decree of the High Court of East Punjab. In other words, this Court is to be regarded for the purposes o4 such pending proceedings as a Court of appeal from that High Court also. A similar view, we find, was also taken by the Federal Court of India in the case of Midnapore Zamindari Company Limited v. The Province of West Bengal and others ((1949-50) F C R 309), where after an appeal had been disposed of by a Division Bench of the Calcutta High Court and leave granted to appeal to His Majesty-in-Council on the 13th of August 1945, the records were actually transmitted to the Federal Court of India after the enactment of the Federal Court (Enlargement of Jurisdiction) Act, 1947, which was enacted after the Partition. An objection was taken before the Federal Court of India as to its competency to hear the appeal on grounds similar to those which have been urged before us, but the Federal Court held that the appeal referred to in paragraph (6) of Article 13 of the High Courts (Bengal) Order, which is in the same terms as paragraph (6) of Article 13 of the High Courts (Punjab) Order, referred to a further appeal, even though such further appeal was entertained under an enactment which came to be enacted after the division of the country. The subsequent extension of such jurisdiction, it was held, did not make any difference, for, even if the scope of the appellate jurisdiction of the Federal Court of India varied from time to time, it did not matter if the Federal Court of India acting within that jurisdiction confirmed, varied or reversed an order of the High Court at Calcutta made before the appointed day" because, its decision would have the effect given to it by paragraph (6) of Article

13. We, accordingly, hold that this Court is competent to hear this appeal. It was next contended on behalf of the respondent that the appellate had no longer any locus standi to ask for the winding up of the company, as he had during the pendency of the winding up petition in the High Court ceased to be a shareholder of the company. The company, it is said, has furthermore completely changed its character, for, it has since been converted in India into a public limited company. It appears that in 1949 by a resolution passed on the 28th of April 1949, the company purported to forfeit the shares of the appellant in exercise of its lien over those shares and to sell those shares to - others, for the alleged refusal of the appellant to refund dividends which had been distributed by him amongst the shareholders illegally. After thus removing the appellant the company was converted into a public limited company. We are unable to accept this contention, firstly, because the rights of the-parties in this matter, are to be adjudged according to the legal position prevailing on the date of the institution of the proceedings for winding up and not on the basis of changes which have since been introduce' without the consent of the appellant pendente lite by the unilateral acts of the others. Secondly, because it appears that the validity of the action taken by the company in forfeiting the shares of the appellant and selling them to others is still under challenge, in another suit filed on the 7th of July 1951, by the appellant in a civil Court in East Punjab for a declaration that the sale of the, said shares was illegal. The appellant, it appears, had also instituted a suit in the Court of the Senior Subordinate Judge, Karnal, on the 26th of November 1946, for a declaration that the meeting of the Board of Directors held on the 5th of March 1946, and the extraordinary general meeting held on the 28th of March 1946 and all meetings of the directors held after the said date were illegal, ultra vires, ineffective and operated as a fraud on the company and that the unanimous resolutions of the extraordinary general meeting held on the 16th of October 1945, continued to remain in force and be operative. This suit was decreed by the trial Court, but reversed on appeal by the District Judge. On second appeal a learned Single Judge of the High Court of East Punjab restored the decree of the trial Court. This was again reversed on Letters Patent appeal. The appellant then obtained a certificate from the High Court and went up in appeal to the Supreme Court of India and the Supreme Court of India on the 17th of December 1962, restored the decision of the learned Single Judge of the High Court, which had declared the resolutions of the 3rd of March 1946 and the 28th of March 1946, invalid and not binding on the appellant it was also observed by the Supreme Court of India that any action taken by the defendant in that suit pursuant to those resolutions may prima facie be regarded as ineffective, but it did not express any final opinion on the question as to whether the forfeiture of the shares of the appellant was valid or not, for, the suit instituted in 1951 to challenge the forfeiture was still pending. No useful purpose will, therefore, be served by speculating as to what will be the result of the said suit or by allowing it to influence our decision in the present case. The fact remains undisputed that the Courts in India have held the resolutions of the 3rd of March 1946, and the 28th o1 March 1946, to be invalid and ineffective. The appellant, we are informed, is taking steps to have the decree of the Supreme Court executed. If he succeeds, the status quo ante will have to be restored and the appellant would continue to remain a permanent director and Chairman of the company and the company will have to be managed in accordance with the unanimous resolutions of the 16th of October 1945, under which, as already pointed out, unanimity amongst the directors is essential for the proper functioning of the company. The learned Single Judge hearing the winding up petition in the High Court at Lahore after a careful and elaborate consideration of the evidence adduced in the case also came to the conclusion that the resolutions of the 3rd and the 28th of March 1946, were invalid and then went on to hold that the result of this decision was that there was a complete deadlock in the management of the affairs of the company, because, the constitution of the company required that the business should be carried on with the consent of all. This was, in the circumstances of the case, impossible to obtain, as the relations between the parties had become so bitter that they could not possibly carryon the business jointly. Subsequent developments that had taken place also affirmed this conclusion, for the appellant, though legally entitled to take part in the management of the company, was being unlawfully excluded therefrom. The learned Judge had in coming to this conclusion taken due note of the fact that the appellant himself may have been, prior to the compromise of October 1945, not entirely free from blame in bringing about such a situation but, nevertheless, he came to the conclusion that it had become just and equitable in the state of affairs existing at that time to order the winding up of the company. The Letters Patent Bench did not reverse any one of these findings of the learned Single Judge but felt that from some of the observations made by the learned Judge himself the previous conduct of the appellant had been such that he had in equity disentitled himself to seek the winding up of the company or to take advantage of a situation which he had himself contributed in creating, particularly, since the effect of the liquidation would be to ruin the business which was a going concern. The Letters Patent Bench was also influenced, in no small measure, in coming to this conclusion by subsequent changes introduced into the Indian Companies Act during the pendency of the petition for winding up, namely, in 1951, which appeared to it to provide an effective alternative remedy to the appellant without resorting to the drastic remedy by way of liquidation. With respect we are unable to agree with the Letters Patent Bench that a change in the law made subsequently in another country could be a relevant consideration for refusing an order for winding up if the appellant was otherwise entitled to the said order. Section 153-C, which was introduced in 1951, did not, it appears, repeal the provisions of sections 162 and 166 of the Indian Companies Act. The latter section gave a right to, amongst others, a contributory to apply for the winding up of a company if the shares in respect of which he was a contributory were originally allotted to him or had been held by him for at least six months during 18 months before the commencement of the winding up, and section 162 gave the power to a Court to wind up a company on such an application if, inter alia, the Court was of opinion that it was just and equitable that the company should be wound up. Section 153-C gave an alternative remedy to a member of a company to apply to the Court for making the kinds of order mentioned therein instead of winding up a company. It gave no power to the Court to suo motu resort to exercise the powers mentioned therein. The choice even after the introduction of section 153-C in the Indian Companies Act was still with the person applying for the remedy. He could either apply for the winding up or apply for orders under section 153-C. In the present case, the appellant, who was a contributory satisfying the conditions of section 166, did apply to the Court for the winding up of the company under section 16 of the Companies Act and the Court could not force him to apply under section 153-C. His petition for winding up was either to be allowed or rejected, but it could not be rejected merely because the Court felt that he could now resort to an alternative remedy. The Court had, in our view, to decide whether the winding up was sought on just and equitable grounds or not. Now in the case of a private limited company the tendency of the Courts has uniformly been to treat it more or less as a partnership and to apply the same principles in the winding up of a private limited company as would entitle a partner to have a partnership firm dissolved. Commonly the exclusion of a partner from the management of the firm, the existence of a state of deadlock between the partners or the justifiable lack of confidence in the management have been regarded as just and proper grounds for dissolving a private limited company. Thus in the case of In re: Yenidji Tobacco Company Limited ((1916) 2 Ch. 426), this principle was applied in England in the case of winding up of a private limited company and the winding up order of the company made by a learned Single Judge was upheld on appeal, as it was proved that the two directors of the company were not on speaking terms, that the so-called meetings of the Board of Directors have been almost a farce or comedy and no business which deserves the name of business in the affairs of the company could be carried on. The Master of the Rolls Lord Cozens-Hardy observed that in affirming the order he had treated it as a partnership, although it was strictly not a partnership, for, according to him, precisely the same principles ought to reply to a case like this where in substance it is a partnership in the form or guise of a private company. Similarly Warrington Lord Justice took the view that "the company ought to be wound up if there exists such a ground as would be sufficient for the dissolution of a private partnership at the suit of one of the partners against the other." Such grounds existed in that case and so the winding up order was held to be just and equitable. In the case of Loch and another v. John Blackwood Limited ((1924) A C 783), the Privy Council went further and applied this principle even in the case of a public company where it appeared that the company, although constituted as a public company, was in effect a company of a domestic nature and had been established in order to carry on the testator's business and to divide the profits of it between the members of his family entitled under his will to share them. The observations made in the case of Yenidji Tobacco Company Limited were quoted with approval and it was observed that when a company is formed not by appeal to the public but is in substance a domestic company where the real partners are the members of a family, then in such a case "all the reasons that apply to the dissolution of private companies on the grounds of incompatibility between the views or methods of the partners would be applicable in terms to the division amongst the shareholders" of such a company, and thus since in the case of the company before them it was found that there was a lack of confidence in the conduct and management of the company's affairs, grounded on the conduct of the directors which displayed a lack of probity in the conduct of the company's affairs, it was just and equitable that the company should be wound up. ?In the case of In re: Davis & Collett Limited ((1935)1 Ch. 693), the dictum of the Master of the Rolls Lord Cozens-Hardy in the case of In re. Yenidji Tobacco Company Limited, was again relied upon and it was held that where the capital of a private company is so owned as to make the company in substance a partnership and one director has purported by means of irregularities to acquire complete control of the company and to exclude the other director or directors from the management of it, it is just and equitable within the meaning of the relevant clause in the English Companies Act, which is in the same terms as section 162 of the Indian Companies Act, to wind up the company. Learned counsel appearing on behalf of the respondent has, on the other hand, argued that even in the case of private companies a dissolution should not be ordered unless there is no way out, and since in the present case section 153-C of the Indian Companies Act offered an alternative remedy since 1951, the Letters Patent Bench was right in refusing the order for winding up. In support of this contention he has relied on the decision of the Chancery Division in England in the case of In re: Cuthber Cooper & Sons Limited ((1937) 1 Ch. 392), where a learned Single Judge of the Chancery Division refused to order the winding up of the limited company in a case in which the personal representatives of a deceased member had sought the winding up on the ground that the directors had refused to register them as shareholders of the company and refused to let them see the last balance-sheet and accounts of the company. In that case there was no evidence that there was any deadlock in the affairs of the company or that any director had been denied participation in the management of the affairs of the company or that any one had acted mala fide with any ulterior motive. The company was also a company which was being run at a profit. In those circumstances, it was held that on the facts of that case the petition was misconceived. But what is to be noticed is that it was not doubted that "the principles applicable to the case were those which would be applied in an action for dissolution of partnership." On the facts, however, it was held that the directors in refusing registration had not exercised their discretion improperly. This case is therefore, of no assistance so far as the principles governing a winding up of a private limited company are concerned. The next case relied upon by the learned counsel for the respondent is that of Charles Forte Investments, Ltd. v. Amanda ((1963) 2 All E R 940). In this case the company had applied on an interlocutory application for an injunction for restraining the respondent in that case from presenting a petition for winding up of the plaintiff company, which was a private limited company, on the ground that the directors of that company had refused to register two transfers of its shares by the defendant. The injunction was sought on the ground that the threat of presenting a winding up petition would really be an abuse of the process of the Court. This injunction was granted, as it was held that it was not a case of deadlock in a quasi-partnership. In this case it was argued on the principles laid down in the case of Yenidji Tobacco Company Limited that the case fell within the rule laid down therein but the Court of Appeal held that the person who threatened to apply for winding up had no part in the running of the plaintiff-company and was merely a very small shareholder representing only 1/75th of the share capital of the plaintiff-company and, therefore, this was not a case which even remotely resembled that of a partnership such as was dealt with in the case of Yenidji Tobacco Company Limited. Hence there was no room for the application of that principle in the circumstances of the case under consideration. This decision also does not lay down any new principle but on facts distinguishes the case of Yenidji Tobacco Company Limited. Upon a review of these decisions we have no hesitation in accepting the principle laid down by Lord Cozens-Hardy, Master of the Rolls, in the case of Yenidji Tabacco Company Limited, which has been consistently followed in England and applying the same principle to the facts of the present case. . We have come to the conclusion that the company with which we are concerned was in substance a partnership, for, its shareholders were only the members of the family of Kishori Lal and no outsider was interested. Under the unanimous resolution of the 16th October 1945, the appellant was made a permanent Director and Chairman of the Board of Directors and he was to have an equal voice in the management of the affairs of the company. Indeed, no decision could be taken to bind the company which was not arrived at unanimously by all the three directors of the company who together formed the quorum for a directors' meeting. In these circumstances, since the trial Court has found that the resolution of the 28th of March 1946, which purported to remove the appellant from the directorship of the company was an illegal resolution and this finding has not been reversed by the Letters Patent Bench, which has proceeded upon the assumption that that resolution was illegal, it clearly follows that the appellant was wrongfully excluded from participation in the management of the affairs of the company and indeed a deadlock was thereafter created by the refusal of the other directors to allow him to participate in the management. The subsequent conduct of the other co-directors and the appellant leaves no room for doubt that feelings had become so embittered that conciliation was now well nigh impossible. They were determined to exclude the appellant completely. Indeed, they had gone even to the extent of forfeiting his shares and selling them to others. The previous conduct of the appellant can now no longer serve as an excuse for the illegal action of the other co-directors, for, it is clear that the compromise of 1945, gave a complete discharge to the appellant in respect of his previous mis-deeds. It expressly recited that "the account and assts, property, movable and immovable of the company have been accounted for by the said Mr. L. P. Jaiswal and we have satisfied ourselves as to the correctness of the accounts of the company and also relating to the property, assets, books, etc., of the company during his Managing Directorship and do herewith release him and for ever discharge the said Mr. L. Jaiswal from all liabilities relating to the management of the company during his tenure of office . . . . . . . hereby give him a clear receipt in respect of all the property assets, books, etc. and the same hereafter vests in the Board of Directors." After this it did not lie in the mouths of the co-directors to say that they were justified in removing the appellant from the directorship of the company. We do not propose to express any opinion as to the subsequent action taken by the company in forfeiting the shares of the appellant, for, that matter is still pending decision in another Court in India. But for the reasons we have given above we have come to the conclusion that the learned Single Judge of the High Court at Lahore rightly held that in the facts proved in the present case it had become clearly just and equitable to dissolve the company. We, accordingly, allow this appeal, set aside the judgment and order of the Letters Patent Bench and restore that of the learned Single Judge. The appellant will be entitled to his costs throughout. A. H.??????????????????????????????????????????????????????????????????????????????????????????????????? Appeal allowed.