2010 (9) TMI 218 - HC - Companies Law

Whether Central Government ought to have been afforded one more opportunity to file representation? Held that - It is true that the time granted to the Central Government, for making representation, was more than sufficient, but in view of the submissions made by learned Additional Solicitor General of India that the delay took place on account of acts of dereliction of duty on the part of some officials of the concerned Ministry, for which vigilance enquiry is being conducted, we are of the considered view that interests of the depositors, who in this case number more than 85,000, should not be allowed to suffer, because of some acts of omission and commission on the part of the servants of the appellant. Consequently, we allow this appeal, set aside the impugned order and remand the case to the learned Single Judge, who will consider the representation, which was filed and was placed on the record of the Company Petition, after the passing of the impugned order, and decide the petition afresh, after hearing all the parties and taking into consideration the aforesaid representation.

Summary

Issues:
1. Impleadment of deposit holders and transferees as respondents in the appeal.
2. Central Government's right to make representation and appeal under the Companies Act.
3. Allegations of delay in filing representation by the Central Government.
4. Consideration of interests of depositors in the case.

Issue 1: Impleadment of deposit holders and transferees as respondents
The judgment addresses Company Application Nos. 32, 36, 37, 38, 40, and 41, where deposit holders or transferees sought to be impleaded as parties in the appeal, fearing adverse effects if the appeal succeeded. The Additional Solicitor General had no objection, leading to the applicants being allowed to intervene and ordered to be impleaded as respondents.

Issue 2: Central Government's right to make representation and appeal
The appeal under section 391(7) of the Companies Act challenged an order approving an arrangement for fixed depositors' debts. The Central Government, per section 394A, had the right to make representation, which the court must consider. Despite multiple opportunities, the Central Government failed to file its representation before the order was passed, leading to the appeal being filed by the Central Government.

Issue 3: Allegations of delay in filing representation by the Central Government
The Central Government alleged that it was unfairly denied an opportunity to file representation, which contained crucial facts not considered by the Single Judge when passing the order. The delay in filing the representation was attributed to the officials' dereliction of duty, prompting a vigilance enquiry. The court acknowledged the importance of the facts in the representation and granted the Central Government another chance to present its case.

Issue 4: Consideration of interests of depositors
In light of the substantial number of depositors likely to be affected, exceeding 85,000, the court emphasized safeguarding their interests. Despite acknowledging the sufficient time granted for representation, the court recognized the need to prevent depositors from suffering due to officials' negligence. Consequently, the appeal was allowed, the impugned order was set aside, and the case was remanded for a fresh decision, considering the representation and hearing all parties involved to protect the depositors' interests.