1977 (11) TMI 119 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the High Court to grant relief to directors in case of defaults.
2. Interpretation of section 633(2) of the Companies Act, 1956 regarding the concurrent powers of the High Court and Magistrate.
3. Anticipatory relief by the High Court and relief during an actual trial.

Detailed Analysis:
The judgment deals with the issue of jurisdiction of the High Court to grant relief to directors in cases of defaults. The petition under section 633(2) of the Companies Act, 1956 was filed by the directors of a company seeking relief for defaults related to holding the annual general meeting and other consequential defaults. The central question was whether the High Court has jurisdiction to provide relief after a complaint has been filed before a Magistrate regarding the same defaults. The court emphasized that the power of the court to grant relief in cases of director defaults is outlined in section 633(1), allowing relief if the officer acted honestly and reasonably despite the default. Additionally, section 633(2) grants the High Court the power to provide relief if a director anticipates proceedings against them.

The judgment delves into the interpretation of section 633(2) concerning the concurrent powers of the High Court and the Magistrate. It clarifies that the power of the High Court is anticipatory and can be exercised when there is an apprehension of proceedings, not after the initiation of actual proceedings. The court highlighted that the power of the High Court is the same as that of the Magistrate, but it can only be invoked when there is an anticipation of proceedings. The judgment referenced previous cases to support the conclusion that the High Court's power is anticipatory and distinct from the power of the trial court during actual proceedings.

Moreover, the judgment elaborates on the concept of anticipatory relief by the High Court and relief during an actual trial. It explains that if a director anticipates proceedings, they can seek relief from the High Court. However, if actual proceedings have commenced, the director must apply to the relevant court under section 633(1) to prove they acted reasonably and honestly. The judgment underscores the two-stage operation of the section, where the High Court can grant anticipatory relief, and during actual trials, only the court handling the proceedings can provide relief. Ultimately, the court dismissed the petition, upholding the objection on jurisdiction and emphasizing the distinct roles of the High Court and trial courts in granting relief to directors in cases of defaults.