A Shareholder of a Company brought an action for damages against the Company and its two Directors on the ground that they have been negligent in selling a property owned by the Company for ₹75 crore whereas its real val

The principle of non-interference as laid down in Foss vs. Harbottle (1843) 2 Hare 461, 67 ER 189 says no action can be brought by a member against the directors in respect of a wrong alleged to be committed by a company. The company itself is the proper party for such an action. The general principle of company law is that every member holds equal rights with other members of the company in the same class. The scale of rights of members of the same class must be held evenly for the smooth functioning of the Company. In case of difference (s) among the members the issue is decided by a vote of majority since the majority of members are in an advantageous position to run the company according to their command, the minorities are often oppressed. The company law provides for adequate protection when their rights are trampled by the majority. However, protection of minority is not generally available when the majority does anything in the exercise of the powers for internal administration of a Company, the courts will not usually interfere at the instant of the shareholders in matters of internal administration so long as they are acting within the powers conferred on them by the articles of the company The facts of the case asked are similar to the case in Pavlides vs. Jensen (1956) where the minority shareholders brought an action for damages against three directors and against the company itself on the ground that they have been negligent in selling a mine owned by the company for £ 182,000 whereas its real value was £ 1000,000. It was held by the Judge that it was open to the company on the resolution of a majority of the shareholders to sell the mine at a price decided by the company and it is open to all the members of company by a vote of majority to decide that if the directors by their negligence or error of judgment has sold the company's mine at an undervalue, proceedings should not be taken against the company. Accordingly, unless the Shareholder is a holder of majority of the shareholding of the Company, the suit will not be maintainable.