1998 (12) TMI 620 - HC - Companies Law

Summary

Issues:
Application for intervention and setting aside of order under Section 41 of the Arbitration Act, 1940.

Detailed Analysis:
The application was made by a company seeking to intervene in proceedings and set aside an order dated 26th March 1998. The company contended that the order interfered with their rights without hearing them. The dispute revolved around ownership of goods in a warehouse between two groups. The original order aimed to clear the goods from the warehouse of a non-interested party. The company claimed that the goods directed to be sold belonged to them, and they were not heard before the order was passed. The company alleged lack of knowledge about the proceedings and order until later disclosed by an employee of another company. The respondents argued that the order was an implementation of an earlier order obtained by the applicant company itself. The company and another entity represented by the same individual were conducting business from the same address, raising questions about the company's credibility in seeking to set aside the order.

The company presented an ownership certificate issued after the individual's alleged retirement, indicating a transaction with another entity. The opposing group contended that the transaction was a sham, questioning the timing of goods delivery and payment terms. The application for setting aside the order was made by an individual claiming to be a director without proper documentation. The court examined whether the appropriate party was represented and if any prejudice was caused to non-appearing parties. The court noted the presence of the individual despite resigning from the company, emphasizing that the company was not unrepresented. The court disagreed with the company's argument that the representation was fake, citing the original order obtained by the company itself.

The court explained the prejudicial effects of the order on the company and the individual, highlighting the history of the order and the involvement of the parties. The court rejected the application, emphasizing that the existence of an individual and a company are distinct, and the court cannot lift the corporate veil without proper grounds. The court discussed the principles of lifting the corporate veil and its applicability in different situations. The court concluded that the application was dismissed, and any interim orders were vacated, with no costs imposed. The prayer for stay was refused, and all parties were directed to act on the signed copy of the order.