Company Law – Section 105-C – Further issue within authorised capital – Bona fides – Appeal dismissed – Directors resolved on 21.02.1945 to issue 4,596 shares at premium and offered them pro rata to members on the register in the ratio 4:5 – Challenge that the issue was mala fide to retain control and that Section 105-C was contravened – Held: Section 105-C mandates a pre-emptive pro-rata offer to existing members and aims to prevent discrimination or preference to outsiders – On facts, the company needed capital and the directors acted bona fide – No breach of Section 105-C established as the offer was proportionate and any unoffered balance remained unissued – Appeal dismissed with costs [Paras 4-7, 13-21, 46, 48-55, 57].

Directors’ fiduciary duty – Mixed motives and protection of corporate interest – Where directors act primarily for the company’s benefit, the presence of a subsidiary motive (resisting an outsider’s attempt to corner control) does not vitiate the action – Directors owed no fiduciary duty to outsider purchasers whose names were not on the register – Equity intervenes only where power is used solely for personal aggrandisement or to defeat the majority – Standard affirmed with reference to Hirsche v. Sims and Beatty – Allegations of mala fides rejected on concurrent findings [Paras 25-29, 35-46].

Section 105-C – Scope and construction – Applies when directors decide to increase capital by issuing further shares within the authorised limit – Distinct from Section 50 increases of nominal capital by the company – Not necessary to import Table A Regulation 42 phrase “as nearly as circumstances admit” into Section 105-C – The section is given a workable, businesslike construction to secure equal and equitable pre-emptive rights while avoiding deadlock – Technical non-absorption of the entire lot by the initial ratio does not constitute contravention so long as the balance is not disposed of contrary to the section [Paras 13-21, 48-55].

Proportional offer mechanics – Directors may choose a practicable ratio for pro-rata rights that equitably reaches all members – Any fractional or residual shares that cannot be conveniently offered remain unissued unless and until lawfully disposed of after members decline – Clause permitting disposal applies only to shares actually offered but not applied for – No disposal of the residual 272-4/5 shares had occurred – Hence, no violation ripened [Paras 19-21, 54-55].

Judicial restraint in corporate discretion – Courts will not interfere with bona fide business decisions taken within statutory limits and in the company’s interest – Interference warranted only where power is exercised to manipulate voting control against the existing majority, as in Fraser v. Whalley, Punt v. Symons, and Piercy – Those cases distinguished as instances of sole improper purpose absent corporate benefit [Paras 41-45].

Decision – Appeal dismissed with costs – Directors’ resolution upheld – Issue held bona fide and consistent with Section 105-C – No ground to disturb concurrent findings [Paras 7, 29, 55, 57].

Criminal Law - Preventive Detention – Validity of Ordinance – Section 88, Government of India Act – Detention Orders Upheld – The appellants challenged their detention under Ordinance IV of 1949, alleging lack of Governor’s competence under Section 88 and repugnancy with existing laws – Held: Satisfaction of the Governor under Section 88(1) is subjective and not justiciable – The Ordinance fell within Items 1 and 2 of Provincial List (public order and preventive detention) – No repugnancy with Criminal Procedure Code – Detention lawful [Paras 5-7, 10-16].

Legislative Competence – Public Order and Preventive Detention – Bihar Ordinance dealt exclusively with maintenance of public order, preventive detention, and ancillary provisions – “Public order” is a comprehensive expression – Offences created under the Ordinance and arrest powers under Section 21 incidental to competence under List II – No necessity to invoke Concurrent List – Pith and substance doctrine applied [Paras 12-15].

Repugnancy – Section 107, Government of India Act – No Conflict with Code of Criminal Procedure – Arrest without warrant under Section 21 and summary trials by Magistrates under Ordinance do not conflict with Sections 54 and 160 CrPC – Section 1(2) CrPC preserves special laws – In absence of repugnancy, Governor-General’s assent unnecessary [Paras 14-16].

Bona fides of Promulgation – Mala fides Allegation Rejected – Ordinance promulgated after earlier Act and extension notifications were declared ultra vires – Failure to prorogue legislature in earlier Ordinance was a mistake, not mala fide – Governor acted bona fide to preserve public order [Para 17].

Validity of Certain Provisions – Sections 23, 24, and Proviso to Section 4(1) – Section 23 (repeal of void laws) treated as superfluous – Section 24 (savings) irrelevant to present detentions, even if invalid not inseparably linked with Ordinance – Proviso to Section 4(1) permitting non-disclosure of all grounds upheld – Legislature competent to enact; courts cannot question policy once subject is within legislative competence – Preventive detention remains valid and not converted into arbitrary detention [Paras 19-24].

Decision – Appeals dismissed – Ordinance within legislative competence – Detention orders valid – No violation of Section 88 or Section 107 of Government of India Act – No illegality in impugned provisions [Paras 25].

Civil Law - Transfer of Property – Part Performance – Section 53-A TPA – Unregistered lease agreement – Defence upheld – A permanent lease was negotiated between the Talukdari Settlement Officer (with Government sanction) and the predecessor of the defendant; though no formal registered lease was executed, the offer and acceptance were in writings signed by the parties and Government – The terms (permanent lease; rent Rs. 290; revision after 50 years) could be ascertained with reasonable certainty – The transferee took possession, erected a factory and paid rent to successive managers – Held, conditions of Section 53-A were satisfied and the transferor/plaintiff was debarred from enforcing ejectment – Assistant Judge’s decree dismissing the suit restored [Paras 3-6, 10-11, 15-18].

Evidence – Secondary evidence of contract – Government records – Admissibility and reliability – Exh. 181 (Government Resolution/letter reciting the correspondence, offer, acceptance and sanction) constituted reliable secondary evidence of the written and signed contract where the primary documents were in the possession/power of the plaintiff/talukdars and withheld despite notice – Adverse inference justified – High Court erred in discarding Exh. 181 as proof of contract and terms [Paras 4, 16-17].

Registration Act – Section 49 – Unregistered instrument as evidence of part performance – Even if a formal lease deed is unregistered or absent, a signed written agreement creating a present demise may be looked into as evidence of part performance; Section 49 permits use of such agreement for the limited purpose – Formal registered lease is not a precondition to invoke Section 53-A TPA [Para 18].

Specific Relief – Section 27-A (active equity in leases) – Scope and temporal reach – The equity of part performance is recognized as an active equity in lease cases under Section 27-A of the Specific Relief Act, but that provision applies only to contracts executed after 01/04/1930; nevertheless, Section 53-A TPA furnishes a complete statutory defence in the present case [Para 16].

Civil Procedure – Second appeal – Interference with concurrent/sustainable findings – Where the Assistant Judge’s conclusion is sustainable on the statutory defence under Section 53-A TPA on the proved record (including admissible secondary evidence), there existed no substantial ground for reversal in second appeal; High Court’s interference set aside [Para 15].

Landlord and Tenant – Plaintiff’s locus/notice – Questions on plaintiff’s title to sue and notice were raised but not decided as unnecessary in view of the success of the Section 53-A defence; High Court’s contrary view on standing does not survive [Paras 14-15].

Decision – Appeal Allowed – Judgment of the High Court set aside; decree of the Assistant Judge restoring dismissal of the suit – Parties to bear their own costs throughout [Para 18 (concl.)].

Civil Law - Agency – Scope of Authority – Commission Note – Authority to Conclude Sale – Construed broadly – The commission note authorised the broker to “negotiate the sale” and “secure a buyer” with stipulations of title being free of encumbrances and good title – Held: Such language implied authority to conclude a binding contract of sale, not merely to introduce a prospective buyer – Subsequent conduct of parties confirmed this understanding – Broker’s acceptance of buyer’s firm offer for Rs. 1,10,000 created binding contract – Commission earned [Paras 7-8, 26-28, 44-46].

Agency – Right to Commission – Negotiating Sale and Securing Buyer – Whether dependent on actual completion at stipulated price – Not dependent – Once broker introduced buyers who made a firm offer at Rs. 1,10,000, and eventual sale was concluded with the same buyers, commission right crystallised on that basis – Principal’s unilateral reduction of price to Rs. 1,05,000 (suspected to deprive broker of dues) cannot defeat broker’s entitlement – Commission payable on Rs. 1,10,000 [Paras 5, 10-11, 22-23, 47-53].

Luxor (Eastbourne) Ltd. v. Cooper – Distinguished – Principle that commission contracts create purely contingent rights applies where commission expressly conditional upon completion – In present case, buyers actually completed purchase – Once event occurred, commission right vested – Principal cannot defeat it by lowering sale consideration – House of Lords case not applicable [Paras 11, 54-57, 59-60].

Contract Act – Sections 188, 219 – Interpretation – Section 188 permits agent to act within express/implied authority – Terms “secure a buyer” and “negotiate sale” imply power to bind principal where conditions of title and price are specified – Section 219 entitles agent to agreed remuneration upon completion of duty – Applied here in broker’s favour [Paras 26, 45-46, 51].

Evidence – Conduct of Parties – Silence as acquiescence – Respondent’s silence upon being informed of concluded bargain, coupled with subsequent clandestine sale to same buyers at reduced price, supported inference that agent acted within authority and that sale for lower figure was collusive to deprive agent of commission [Paras 20, 22, 28].

Decision – Appeal Allowed – Judgment of High Court (awarding only Rs. 1,000 commission) set aside – Decree of trial Judge restored – Appellant entitled to full commission of Rs. 6,000 with costs throughout [Paras 12, 46, 65-66].

Limitation – Execution of Decree – Article 182(3), Limitation Act, 1908 – “Review” must be undertaken and decided – Application under Section 36, Bengal Money-Lenders Act dismissed for default – No review “undertaken” or “decision passed on the review” – Time not extended – Held: Art. 182(3) inapplicable [Paras 3-4].

Limitation – Article 182(2) – “Where there has been an appeal” – Must relate to the decree under execution – Appeal from dismissal under Order IX Rule 9 CPC in collateral Section 36 proceeding does not qualify – No extension of limitation – Held: Art. 182(2) inapplicable [Para 5].

Execution – Starting Point of Limitation – Application filed more than three years after final decree – Not saved by collateral proceedings or dismissed applications – Decree time-barred [Paras 2-3, 4-5].

Decision – Appeal Dismissed – High Court upheld – Execution held barred by limitation; no costs interference warranted [Paras 6-7].

Cooperative Society Disputes – Executability of Decree – Plot Allotment – Merger/Identity – Constructions – Supreme Court upholds High Court’s refusal to treat decree as inexecutable – Photograph shows substantial open land; only a covered passage overlies Plot 5A – Passage directed to be removed and Plot 5A allotted with vacant possession – Intervening shop owners on Plots 4 & 4A protected – Appeals disposed of with directions [Paras 3.4–3.6, 7–13].

Cooperative Court Award – History of Proceedings – Member obtained award (31.03.2000) directing allotment of Plot 5A; Cooperative Appellate Court dismissed appeal (20.04.2002); High Court in W.P. No. 4441/2002 granted liberty to raise executability objections before the executing court (07.10.2006) [Paras 3.1–3.3].

Execution – Inexecutability Plea – Loss of Identity/Merger – The society’s objection that Plot 5A had merged with Plots 4 & 4A and that constructions/approvals made decree impossible was initially accepted by the executing court (27.04.2011) but reversed in appeal (16.10.2015) [Paras 3.4–3.5].

Execution – Appellate Findings – Objection untenable as (i) merger plea not raised before Cooperative fora; (ii) no competent approval of merger; (iii) constructions unauthorised; (iv) illegal structures liable to demolition and vacant possession of Plot 5A to be given [Para 3.5].

Civil Revision – High Court – Dismissal with Costs – High Court concurred with appellate court; dismissed revision with Rs 25,000 costs; conduct found frivolous/malicious [Paras 3.6–3.7].

Interventions – Third-Party Appeals/Applications – SLPs by a shop owner and intervention by other shop owners/members noted [Para 3.8].

Evidence/Fact Appreciation – Photograph – Court finds substantial portion open; only a covered passage over Plot 5A; its existence/nature undisputed; passage not integral to main building and to be removed; thereafter Plot 5A to be allotted and vacant possession handed to decree-holder [Paras 11–12].

Relief – Protection to Non-Parties – Intervening shop owners on Plots 4 & 4A unaffected; their occupation and enjoyment to remain undisturbed [Para 13].

Decision: Civil Appeals disposed of with directions; intervention applications rejected; no interference with High Court order [Para 14].

Criminal Law – Quashing under Article 32 – Large-scale financial fraud allegations – OTS with banks – Petitioners voluntarily depositing entire settlement amount – State proposing full and final figure of ₹5100 crores – Consensus achieved – Held: In extraordinary and peculiar facts, upon full deposit, all FIRs, ECIRs, PMLA attachments, SFIO prosecutions, Black Money Act cases, and Fugitive Economic Offenders proceedings to be quashed – Directions issued for disbursement to banks – Order not to be treated as precedent [Paras 10–12].

Criminal Law – Article 32 – Quashing of FIRs – Extraordinary Jurisdiction – Held: Court may exercise plenary powers in exceptional cases to secure larger public interest where petitioners have agreed to deposit entire defalcated amount and settlement is reached with banks and agencies – Continuation of criminal proceedings would serve no useful purpose after full restitution of public money [Paras 10–12].

Financial Fraud – OTS and Insolvency Proceedings – Computation of Dues – FIR alleged defalcation of ₹5383 crores – OTS amount across Indian and foreign entities aggregated ₹6761 crores – Petitioners deposited ₹3507.63 crores; banks recovered ₹1192 crores under IBC liquidation – Net unpaid amount computed at ₹2061.37 crores – Investigating Agencies, after consultation with banks, sought ₹5100 crores as full settlement – Petitioners consented to deposit entire amount [Paras 1–9, 10].

Settlement – Effect on Criminal Proceedings – Held: Given petitioners’ offer to deposit ₹5100 crores—exceeding assessed dues—Court satisfied that continuation of prosecution unnecessary; consensual full repayment ensures recovery of public funds – Criminal, civil, regulatory and attachment proceedings to be quashed upon deposit [Paras 10–12].

PMLA, SFIO, Black Money Act, FEPA – Quashing of Multiple Proceedings – FIRs, ECIRs, prosecution complaints, attachments, freezing orders, fugitive offender proceedings, and Company Act prosecutions – All such matters directed to be closed in entirety upon fulfilment of deposit condition [Paras 1, 12(i)].

Directions – Deposit and Disbursement – Petitioners to deposit ₹5100 crores on or before 17.12.2025 with Registry – Amount to be kept in short-term interest-bearing fixed deposit until disbursement – Registrar (Judicial–Administration) to proportionately distribute amounts to lender banks after verification – Registrar permitted to seek assistance or clarification from Bench [Paras 12(ii)–12(iv)].

Precedent – Limitation – Held: Directions passed solely in unique factual circumstances involving massive financial irregularity, OTS, and deposit of entire demanded amount – Order not to be treated as precedent [Para 12(vi)].

Decision: Writ petitions allowed – All FIRs, ECIRs, prosecution complaints, attachment and freezing proceedings under PMLA, proceedings under the Fugitive Economic Offenders Act, SFIO prosecution under the Companies Act, and Black Money Act prosecutions against the petitioners directed to be quashed – Quashing to operate upon deposit of ₹5100 crores with the Supreme Court Registry on or before 17.12.2025, to be disbursed proportionately to lender banks – Directions passed in the peculiar facts of the case and not to be treated as precedent [Paras 10–12].