2002 (4) TMI 938 - SC - Companies Law

Summary

Issues Involved:
1. Restoration of the dismissed suit.
2. Amalgamation of the defendant company and its impact on the suit.
3. Executability of the decree against the amalgamated entity and the State of Orissa.
4. Obligation to implead the Corporation and the State of Orissa in the suit.
5. Setting aside of the ex parte decree and remanding the suit for fresh trial.

Issue-wise Detailed Analysis:

1. Restoration of the dismissed suit:
The plaintiff filed a suit against the defendant for recovery of a sum of Rs. 3,90,210/- with interest. The suit was dismissed for default on 29.08.1990. Subsequently, the plaintiff filed an application under Order IX Rule 9 of the Code of Civil Procedure for restoration of the suit. The defendant did not oppose the restoration, and the application was allowed on 02.09.1991.

2. Amalgamation of the defendant company and its impact on the suit:
On 30.08.1991, the Ministry of Law, Justice and Company Affairs issued Notification S.O. 562 (E) under Section 396 of the Companies Act, 1956, amalgamating the defendant with the Orissa Mining Corporation Limited (the Corporation) and dissolving the defendant. Clause 12 of the Order stipulated that no claims could be made against the dissolved company except for enforcing the provisions of the Order. Clause 7 saved ongoing legal proceedings, allowing them to continue against the resulting company, i.e., the Corporation.

3. Executability of the decree against the amalgamated entity and the State of Orissa:
The plaintiff obtained an ex parte decree on 12.11.1991, which the defendant did not satisfy. The plaintiff then filed an Execution Petition against the defendant, the Corporation, and the State Government of Orissa. The Corporation and the State Government objected, claiming they were not bound by the decree as they were not parties to the suit. The Executing Court overruled their objections, holding them as successors-in-interest of the judgment debtor. The High Court of Orissa upheld this decision, but the Government of Orissa challenged it in the Supreme Court.

4. Obligation to implead the Corporation and the State of Orissa in the suit:
The Supreme Court noted that under normal circumstances, it is for the assignee or successor-in-interest to come on record to defend the suit. However, the Amalgamation Order required the plaintiff to implead the Corporation and the State Government before proceeding with the suit. The Court observed that neither the plaintiff nor the defendant took steps to bring this to the Court's notice, resulting in the decree being passed without impleading the necessary parties.

5. Setting aside of the ex parte decree and remanding the suit for fresh trial:
The Supreme Court concluded that the Corporation and the State of Orissa should have been impleaded in the suit before the decree. The Court set aside the orders of the Executing Court and the High Court, as well as the ex parte decree. The case was remanded to the trial court for a fresh trial, directing the plaintiff to implead the Corporation, the State Government, and TISCO (to whom the assets were sold). The trial court was instructed to proceed with the suit after giving the newly added defendants an opportunity to file their written statements and defend the suit.

Conclusion:
The appeal was allowed, setting aside the ex parte decree and remanding the suit for a fresh trial. The trial court was directed to implead the necessary parties and proceed in accordance with law. The parties were directed to bear their respective costs.