CASE LIST AND REFERENCES

S.no. Case Name Issue/ Keywords Judgement

1. ● Laid down the importance of a director as

Ferguson v. Wilson The plaintiff was one of the
a representative for the company (The
promoters and directors of the
company has no person).
company and refused to accept
● They become the arms and face of the
back the advances made by him
company.
in return for shares - specific
● Agents and principal relationship.
performance and indemnity.
● If they contract in their name, it is the
company that will be liable and not the
director.

2.
Tristar Consultants The plaintiff sued the director in ● A company is a juristic person acting
v. V. Customer his personal capacity for through its directors who are trustees,
Services India P. Ltd compensation of a contract agents and representatives acting in a
entered between both the fiduciary capacity (benefit) vis a vis the
companies. company.
● Agents to the extent authorised on behalf
of the company. Not liable in a personal
capacity.
● Unless a director has made himself
personally liable by way of guarantee,
indemnity etc. liability of a director under
common law is limited to only cases of
malfiescence and misfiescence

3.
Percival v. Wright The plaintiff claimed breach of ● Separate entity rule of a company and
fiduciary duties of the directors as shareholders.
they engaged in non-disclosure of ● The directors are trustees of the company

material information from the
shareholders.
4.
Peskin v Anderson The plaintiff claimed a breach of
fiduciary duty to disclose the
plans, discussions, proposals and
all material information to the
former members and
shareholders.
5.
Reliance Natural A dispute arose between Ambani
Resources v. Brothers following the decision of
Reliance Industries the Indian Government to allow
Ltd limited private sector
participation in gas exploration
which resulted in MOU effecting
division of business and assets of
the company without
information to the shareholders.
6.
Dale & Carrington The case deals with oppression
v. Prathapan and mismanagement and non-
disclosure of additional share
and must act bona fide for the interests of
the company only.
● Directors have no duty or obligation
towards individual shareholders.
● Establishes that the directors are not
agents and trustees of the members or
shareholders
● Owe no fiduciary duties to them but to the
company.
● Agents and trustees of the company.
● Fiduciary duties between directors and the
shareholders might arise on a factual
situation where the two are in a close
contact.
● The duty to protect the interests of the
shareholders is cast upon the Board, and
the Board has to act in a fiduciary
capacity vis-a-vis the shareholders.
any
● Duty to act on behalf of a company with
utmost good faith, utmost care and skill
and due diligence in the interest of the
 allotment on a mala fide conduct
by the director through which an
upturn of events took place where
majority shareholder (P) became
a minority shareholder without
any knowledge of the same.
7.
Howard Smith Ltd This case dealt with a takeover
v. Ampol Petroleum battle between the two parties
Ltd where one was a majority
stakeholder in the target company
and the other along with the target
company’s management issued
such shares to the appellant
company to flip voting power and
which made the respondents a
minority shareholder.
Claimed improper purpose and
improper exercise of powers of
the director.
company they represent.
● Duty to make full and honest disclosure to
the shareholders regarding all important
matters relating to the company. - issue
shares for a proper purpose.
● Tea Brokers (P) Ltd. v. Hemendra Prosad
Barooah where it was held that if a
member who holds the majority of sharin
in a company is reduced to the position of
minority shareholder in the company by
an act of the company or by its Board of
Directors mala fide, the said act must
ordinarily be considered to be an act of
oppression to the said member.
● Ruled in favour of the respondents even
though the issue of shares was within the
powers of the directors as per the AoA.
● Ascertain as a matter of law the purposes
for which the power may or may not be
used.
● Determine as a matter of fact the purpose
for which the power was exercised in
the particular case and whether that power
is within the category of permissible
purposes
● It is unconstitutional for directors to use
their fiduciary power over the issuance of
new shares in the company purely for the
purpose of destroying an existing

8.
Eclairs Group v. JKX’s share price fell due to
JKX Oil financial difficulties - target of
corporate raids by two companies
- Eclairs & Glengary. - Rejected
the dominant purpose test.
majority, or creating a new majority
which did not previously exist.
● It should be seen under the light of what
purpose such exercise of power served
and whether such purpose was the reason
why this power was conferred upon the
director.
It was held that the power to impose restrictions
were used for an improper purpose by the
directors of JKX. The power under the articles
were for inducing shareholders to comply with a
disclosure notice, to protect the company from
making decisions in ignorance of relevant
information and to impose sanctions for a
‘failure’ to comply with the disclosure notice.
This case laid down the ‘but for’ test which is –
Would the decision have been taken had the
improper purpose not existed? If the answer to
this is yes then it cannot be held to an invalid
decision.
Apply the ‘but for’ test - the decisions of the
board are very calculative in nature and it
becomes very difficult to weigh out the broader
purpose. (their fear of saving their seats, they
wouldn’t have issued the non-disclosure notices)
A breach of fiduciary duties by the directors as
they used this power to restrict the non-disclosure
 notices to manipulate the outcome of the EGM.
9.
Globe Motors ltd. v. Globe Motors got wound up and
Mehta Teja Singh & 6 directors are interested directors
Co in this process and appointed as
the distributors for sale. The
Official Liquidator, on examining
the documents suspected personal
benefit of the directors over the
company as whether or not the
directors are actively doing
anything beneficial for the
company, each of the directors,
through one of its clauses, agreed
to an arrangement of siphoning
off 1.2 Lakhs per month per
director, accruing to their close
association and control over the
Board. (Mutual Backslapping)
10.
Regal (Hastings) Ltd The case involved unaccounted
v. Gulliver profits made by some directors
from the sale of a subsidiary
company by subscribing to the
shares of the company and
making personal profits in place
of the company.
● Violation of duties of a director under
Section 166(4) and 166(5).
● Self-dealing transactions.
● The only purpose found for the
agreements were found to be the personal
benefits of the directors.
● Mere declaration of interests are not
enough and the directors owed a duty to
stop the company from entering into that
agreement.
● The simple act of making a profit, during
the course of execution of office is
enough to be held accountable.
● Liability to account for profits in a
fiduciary relationship does not require
proof of malafide intentions.
● Utilise their opportunities and special
knowledge as directors in order to make
individual profits.

11.
Bhullar v Bhullar This landmark case deals with the
feud between two brothers in
managing a family business
where the respondents claimed a
breach of fiduciary duty of
appellants in informing them
about the purchase of a property
and its benefits to the company.
12.
Foster Bryant The case dealt with the
Surveying Ltd v respondent being the director of
Bryant, Savernake the company who was alleged to
Property Consultants have taken advantage of a
Ltd corporate opportunity soon after
his resignation by forming an
alternate company under his own
name and trying to swindle
clients.
13.
Industrial The case dealt with the corporate
● Any secret profit made during the course
of agency must be disclosed.
● Acting in only one capacity of a director
and seeking the best interests of the
company.
● The directors owed a duty to
communicate such an opportunity to the
company regardless of its interests in
accepting it.
● Line of Business Test: It makes a director
liable to communicate all business
opportunities which fall within the
company’s existing business activities, if
it is not actively looking out for one or the
director has employed resources for the
same.
● The court ruled no breach of fiduciary
duties as his resignation had no ulterior
motive and was not done in bad faith.
● There was a need to to show a rational
nexus to lack of good faith in his conduct
as a director and his resignation being part
of a dishonest plan.
Same as Bhullar.
 Development diversion of a director from his
Consultants Ltd v fiduciary duties as he resigned
Cooley from his position on the pretext of
ill health and entered into
contracts of the company in his
own name for his personal
benefits.
14.
Vaishnav Shorilal The case is similar as it also
Puri v. Kishore involves the directors were
Kundan Sippy alleged of diverting an
unambiguous corporate
opportunity to another company
which it formed by itself.
15.
Cede & Co. v. The case involved claim of a
Technicolor, Inc shareholder alleging fraud on part
of the directors vis-à-vis the
entire merger proceeding and
non-disclosure in the board
meeting. - grossly negligent.
16.
Maharashtra Power The case challenged the veracity
Development of a board meeting as it failed to
Corporation v. meet the quorum requirements of
Dabhol Power the number of directors.
● During the notice period, he was still
under the fiduciary relationship of
informing the company about such
opportunity.
● Where the fiduciary has justified (in this
case, by means of an affidavit) that it is
not encroaching upon a business
opportunity of the Company, it is free to
avail the opportunity for personal benefit
and are not liable in such a case.
● Unyielding fiduciary duty to protect the
interest of the company and shareholders.
● Business Judgement Principle: A
presumption that before making a
decision, the directors acted on an
informed basis, due care, good faith
and honest belief of the best interests.
Holding a Board Meeting to appoint additional
directors to fulfill the quorum requirements is an
essential for functioning of the company and
hence for such purposes, the meeting was valid.
17.
T.M. Paul (Dr.) v. The case dealt with the validity of
City Hospital (P.) the meeting for notice was not
Ltd served properly and resolutions
were passed for a fraudulent
purpose without including it in
the agenda.
18.
Madhusudan A petition was filed to demand
Gordhandas & Co. winding up of a company on
v. Madhu Woollen certain grounds that it was loss
Industries Pvt. Ltd making, unable to pay its debts,
etc. However, many creditors of
the company opposed the winding
up
● Leaving notice at the residence is not
proper service.
● Matters not included in the agenda can be
taken up via residuary clause with the
permission of the Chairman.
● Deliberate Omission resulting in Active
Concealment of the facts and fraudulent
object of taking unfair advantage of
absence.
● Not proper purpose but strengthening the
majority of the Board.
● If there exists a dispute in debt and the
defence of the company is a substantial
one, the court will not order winding up.
● Existence of opposition amongst the
creditors for winding up will have an
important bearing on the reasonableness
of the case.
● The mere fact that the company has
suffered trading losses would not destroy
its substratum unless there is no
reasonable prospect of it ever making a
profit in the future, and the court is
reluctant to hold that it has no such
prospect.
● The shareholders had authorised the sale
of assets of the company and such cannot
be called unauthorized or improvident.
19.
Mobilox Innovations The appellant denied payments to The Appellate Authority gave a wider meaning to
Private Ltd vs the respondents on the grounds of the word ‘dispute’ as it included not only pending
Kirusa Software breach of NDAs and the existence arbitrations and suits but also included
Private Ltd, of a serious dispute. proceedings initiated before any court or tribunal.

The SC also gave a definition to ‘existence of

dispute’ and stated that the word ‘and’ can be
construed as ‘or’ keeping in mind the legislative
intent.

20.
Innoventive This case dealt with a temporary The procedural formalities demanded in both the
Industries Limited v. halt in debt recovery from the Sections stand in complete contrast to each other
ICICI Bank Limited appellant which resulted in the and can only be differentiated on the basis of
filing of the insolvency proings. operational creditor and financial creditor.
(Contrast of scheme of Sec.7 and
8 of IBC).

21.
CoC Essar Steel v. Timeline for completion of CIRP
Satish Kumar Gupta as 180 days with an extension of
90 days upto a maximum of 330
days. In case of beyond 330
days…
● Short period for completion of CIRP is
left beyond 330 days.
● Revival of the corporate debtor (putting
him back on his feet) is preferred over
liquidation in the interests of the
stakeholders.
● The delay in legal proceedings is largely
attributable to the tardy process of
NCLT/NCLAT.

22.
Hindustan Lever The case dealt with merger of two The overwhelming majority of both the
Employee’s Union companies HLL and TOMCO companies which included experts such as
 v. Hindustan Lever where the SER evaluation method financial institutions which approved the scheme
Ltd. was challenged to be unfair and
prejudicial to TOMCO.
23.
Miheer H. Mafatlal The case dealt with the
v. Mafatlal amalgamation of MFL into MIL
Industries Ltd approved by the directors and a
resolution passed by the
shareholders where one opposed
it on the grounds of 2 directors
did not disclose material info,
scheme as proposed was unfair to
minority, SER was unreasonable
to equity shareholders and they
were a separate class and a
separate meeting should have
and the valuation shows no lacking in the
explanatory statement.
The valuation was based on three different tests
and was presented by the director of TOMCO, so
prejudice and bias by HLL would not be likely.
The principle of the 'prudent business
management test' or that the scheme should not
be a device to evade the law. He had no shares in
TOMCO and acted in a purely professional
capacity.
The role of NCLT in such cases is that of an
umpire in a cricket match where he is not
supposed to judge the commercial wisdom of the
company.
● The existence of pending litigation and
the mere 8% votes of the directors
concerned wouldn’t have adversely
affected the soaring high of 95.75%.
● The overwhelming majority of both the
companies which included experts such as
financial institutions approved the scheme
and the valuation shows no discrepancies
pointed out by them.
● Concept of commercial wisdom of the
parties as making an informed decision
and the Court neither has the requisite
 expertise nor the jurisdiction to delve
been held.
deep into the detailed commercial
wisdom.

24.
Rakesh Agarwal v. MD of ABS for more than 25 Held that, although an insider, there was no
SEBI years, Bayers acquired a malafide intention as the Appellant had instructed
controlling stake in the company Mr Kedia to purchase shares to consolidate
(31% through preferential shareholding to sell Bayer for the commitment of
allotment and 20% through public 51%.
offer).
No element of ‘manipulation’ and deceit.
Between the period of his visit to
Germany to Bayers on 6th
September 1996 and the
finalisation of their deal on 1st
October that year, Kedia, brother-
in-law of the appellant, through
his financing, purchased ABS
shares with the UPSI of the joint
venture. His arguments that it was
done in pursuit of the best
interests of the company as the
shares acquired by Kedia were
later transferred to Bayer to make
this JV possible, creates a
dilemma and an impasse between
investor confidence and
personal/company interests at
large as the ones who did not
know of the JV like the appellant
did and might have suffered
 losses prospectively too, it would
become unfair.

25.
V.K. Kaul v. SEBI Mr. V.K. Paul, the appellant is the ● Circumstantial evidence of the statements
director of the parent company of connected persons (Singh and Sethi).
Ranbaxy (1st Jan 2007 - 18th ● Had complete access to all the
December 2008) which has two information and sufficient material on
WoS as Rexel and Solus, who record in terms of telephone calls to
had a partnership firm Solrex. His establish that he was in constant touch
wife Bala is alleged to be an with Singh and thus became insider.
insider in the scrip of Orchid
Chemicals via making large
investments through Solrex
during the period of UPSI (March
17, 2008- April 9, 2008).

26.
Mrs. Chandrakala v. The appellant is the wife of the Based on her trading pattern during the period of
SEBI Promoter and is deemed to be a UPSI and close scrutiny of the same, it appeared
connected person with the that although she was deemed to be a connected
Company and its directors who person, her trading pattern reflected practices
had access to UPSI and alleged to which involved commercial wisdom and were not
be an insider and traded in the influenced by the UPSI as she realised some
scrip of the company. The rate of losses. Therefore, the same was taken as
the dividend was finalised in the circumstantial evidence and considered in favour
meeting of June 30, 2007, and the of the appellant.
agenda for the same was
communicated and finalised
between 19th- 21st June.
Therefore, the period from 19th -
 30th June is considered a period
of UPSI for dividends and the
same pattern was observed for the
issue of bonus shares between
15th - 25th June.

27.
Abhijit Rajan v The appellant was the chairman Reasoned his sale as an attempt to save the parent
SEBI and MD of Gammon, a road company from getting bankrupt.
construction company. In 2012,
Importance of intention in determining the role of
GIPL was awarded a contract by
the insider and his liability.
NHAI and similarly, another
company Simplex Infra Limited Likely to effect the material price must be
(SIL) was awarded a contract by assessed from the perspective of profit motive.
NACL. GIPL passed a resolution
on August 9, 2013, to terminate
the contract with NHAI. The
same was communicated to the
stock exchange on 30th August.
The UPSI period thus became
from 9th-30th August. Mr Rajan
was alleged to have made huge
profits by selling 144 Lacs Shares
on 22nd August. SEBI found him
liable under SEBI PIT and
pronounced him to be liable to
disgorge gains to the amount of
1.2 CR. SAT overturned SEBI’s
orders and removed the liability.
The present case is one made as a
revision petition by SEBI before
 the Hon’ble Supreme Court.

28.
The Chairman SEBI Intention of the parties committing these offences
V Shriram Mutual becomes wholly irrelevant
Fund
Unless the language of the statute indicates the
need to establish the presence of mens rea, it is
wholly unnecessary to ascertain whether such a
violation was intentional or not.

Hence once the infringement is established then

the penalty is to follow.

29.
Foss v Harbottle The defendants were alleged of Dismissed the claim as the corporation as a whole
misusing their powers as directors suffered and not the particular individuals. (A
by purchasing their own lands company formally represented by the directors)
on behalf of the company at
Established 2 rules:
inflated prices and setting off
their remaining calls against the ● Proper Plaintiff Rule: A wrong done to
sale price. the company may be indicated by the
company alone. (Competent to sue or
Claimants (2 minority
safeguard its right).
shareholders) demanded
● Majority Rule: A majority vote over a
accountability and the
decision prevents court intervention.
appointment of a receiver to
(effectively functioning only through the
recover company funds.
majority)

30.
Menier v Hooper’s The object of the company minority shareholder’s action against such
Telegraph Works' included the construction of a practice of exclusion and unfair advantage over
submarine telegraph line from disposal of the assets of the whole company by
 Europe to South Africa under the majority shareholders was allowed.
some government licenses.

The chairman and the defendant

agreed to both benefit
individually from the winding up
of the Company and
abandonment of suit as one would
use the licenses and the other
would sell their cable for better
prices.

31.
Rajahmundry An application for winding up of
Electric Supply Co. a company on certain grounds of
v. Nageshwara Rao gross mismanagement,
misappropriation of funds, debts
to the government and riding
rough on the rights of the
shareholders, Vice Chairman was
the culprit and removed.
153C- A petition valid on the facts at the time of
filing it shall remain valid even in a change of
circumstances. (13 members dropped out from
the complaint)
162 (v) - A company would be wound up by the
court if it cannot pay its debts - Not Applicable as
the company had assets.
162(v) - A company would be wound up by the
court if it is just and equitable. - Decided on the
facts of the case.

There must be a justifiable lack of confidence in

the conduct and management of the company
affairs.

Contained circumstances and instances other than

mere misconduct which made it desirable for the
company to be wound under the just and

32.
Shanti Prasad Jain v The appellant (minority
Kalinga Tubes shareholder) entered into a
“private agreement” (non-binding
as not mentioned in the AoA)
with the majority shareholder’s
group and later alleged them of
oppression as they chose to allot
shares of expansion to outsiders
as a public issue to reduce his
stakeholding.
33. Tata Mistry Case A case where the company did
not satisfy the minimum 10%
requirement to file a complaint
under Section 244 read with 241.
34.
Needle Industries An issue of 16,000 shares change
(India) Ltd. v. the voting power dynamic and
Needle Newey was contested by the Holding Co.
Holding as an abuse of the fiduciary
powers by the Indian Directors
wherein they issued the additional
shares at par (illegal advantage)
and caused a deliberate delay in
posting the notice to Sanders, the
only representative of the foreign
majority stakeholder, Holding
equitable clause.
● Not enough to show ‘just and equitable’
cause for wounding up.
● Events have to be considered as a
“consecutive story” and not in isolation.
● Conduct must be “burdensome, harsh and
wrongful”.
● Facts did not justify the making up of a
winding-up order.
They were allowed to file a complaint as the
Tribunal waived off the requirement to enable
them to complain.
● An unwise, inefficient or careless conduct
of the director cannot give rise to claim
for relief under this section.
● Non-Attendance of Sanders in the March
18 meeting wherein the notice specified
‘Indianization’ as an agenda was clue
enough to attend it wherein he didn’t.
● Power to issue shares is to enable capital
for the company but it is not conditioned
by such need and can be done in pursuit
of other purposes essential for proper
 functioning of the Company. (Compliance
Company.
with the FERA requirements and RBI
Notice)
● Articles of the Needle India did not
contain any provisions allowing for
renunciation of shares to others and a
general permission to do so would have
been detrimental to the company as it
could be abuse of power through
backdoors. Thus, the court found such
recourse of issuing additional capital to
change the voting power to come under
the FERA requirements was the only
option available with the directors which
could be beneficial and viable for the
company.