2001 (10) TMI 1000 - SC - Companies Law

Whether the Special Court ought to have allowed the appellants to lead evidence for proving its case that the transaction in question was opposed to public policy? Held that - Appeal dismissed. In our opinion the decision of the Special Court calls for no interference. The plea which had been taken in the written statement essentially was that there was a squaring up of the transaction. This did not succeed as there was lack of evidence. The other plea of repayment also failed. We see no infirmity with the decision of the Special Court on this account with regard to the contention that the transaction was opposed to public policy. The Special Court was right in observing that no such plea has been raised in the written statement and we agree with the Special Court that permitting such a plea to be raised would be contrary to the plea already taken in the written statement namely of squaring up or of repayment.

Summary

Issues Involved:
1. Non-joinder of necessary parties.
2. Jurisdiction of the court.
3. Joint and several liability of defendants.
4. Maintainability of the suit against certain defendants.
5. Limitation period for the claim.
6. Liability of trustees.
7. Informal arrangement and transactions.
8. Squaring off of transactions.
9. Entitlement to decree and interest.
10. Admissibility of evidence and public policy.

Issue-wise Detailed Analysis:

1. Non-joinder of Necessary Parties:
The court addressed whether the suit was bad for non-joinder of necessary parties. The Special Court found that this issue did not arise and answered it in the negative.

2. Jurisdiction of the Court:
The jurisdiction of the Special Court to entertain and try the suit was questioned. The Special Court held that it had the jurisdiction, answering the issue in the negative.

3. Joint and Several Liability of Defendants:
The issue of whether the defendants were personally, jointly, and severally liable to the plaintiffs was raised. The court did not press this issue and thus did not provide a detailed analysis.

4. Maintainability of the Suit Against Certain Defendants:
The maintainability of the suit against certain defendants was contested. The Special Court ruled this issue did not arise, answering it in the negative.

5. Limitation Period for the Claim:
The claim's potential barring by limitation was examined. The court found that this issue did not arise and answered it in the negative.

6. Liability of Trustees:
The liability of certain defendants who had ceased to be trustees was questioned. The court ruled this issue did not arise, answering it in the negative.

7. Informal Arrangement and Transactions:
The court examined whether there was an informal arrangement involving the plaintiffs and Hiten P. Dalai, and whether subsequent transactions were disguised sales. The Special Court found no evidence supporting these claims and answered the related issues in the negative.

8. Squaring Off of Transactions:
The appellant argued that the transactions had been squared off. The Special Court found this plea lacked evidence, and the appellant chose not to lead further evidence. The court answered this issue in the negative.

9. Entitlement to Decree and Interest:
The court found the respondent entitled to a decree in the sum of Rs. 60,64,71,275.12 with interest at 20% per annum from 25-11-1991 until payment. The Special Court decreed the suit in favor of the respondent, and the Supreme Court affirmed this decision.

10. Admissibility of Evidence and Public Policy:
The appellant sought to introduce evidence (a cheque) to prove an internal arrangement opposed to public policy. The Special Court rejected this plea, stating it was not pleaded in the written statement and was contrary to the established pleadings. The Supreme Court agreed, noting that no such plea had been raised initially, and it was too late to amend the written statement. The court found no merit in the contention that the transaction was void on public policy grounds, affirming the Special Court's observations and decisions.

Conclusion:
The Supreme Court concluded that the Special Court's decision required no interference. The appeal was dismissed, affirming the decree in favor of the respondent with no order as to costs. All interlocutory applications were also dismissed.