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TMI Blog1968 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ut his having become a shareholder, having due regard to the fact that he had instituted a suit for rectification of the share register only as late as November 21, 1966, though he claimed to have obtained a transfer of shares as early as October 30, 1963. His plea that he delivered the transfer deed to Kishorilal Goenka and that the latter assured him that the necessary changes had been effected in the registers of the company, are all matters to be investigated in the trial of the suit. We are in entire agreement with the conclusions arrived at, at this stage, by the appellate Bench as we are satisfied that a correct approach has been made by it for considering the matters arising at the interlocutory stage of the proceedings. The result is Civil Appeal fails, and is dismissed. - 1412 AND 1413 OF 1968 - - - Dated:- 20-12-1968 - J. M. SHELAT AND C.A. VAIDIALINGAM, JJ. Sarjoo Prasad, K. L. Mehta and S.K. Mehta for the Appellant. C.K. Daphtary, A. K. Sen, B. K. Bachawar, G. L. Sanghi, O.C. Mathur and J. B. Dadachanji for the Respondent. JUDGMENT Vaidialingam, J. These appeals, by the defendant in the suit concerned; arise by special leave, out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that order that "the account in the Bank of India shall be operated by Kishorilal Goenka and Nav Rattan Goenka as it is being done now; the account in the United Commercial Bank Ltd. shall be operated by Ram Autar Jalan in the same manner as it is now being done". Ram Autar Jalan, mentioned in this order, it may be stated, is the appellant before us. The respondent, on coming to know that the appellant was acting as a director of the company, asked for information, on or about June 28, 1966, from the United Commercial Bank as to how Ram Autar Jalan was operating the bank account on behalf of the company. The bank, by its letter dated September 12, 1966, ultimately furnished to the respondent a copy of an extract of the resolution of the company dated August 31, 1964, which had been furnished to them and on the basis of which Ram Autar Jalan was operating the bank accounts. The respondent herein instituted, on the Original side of the High Court of Calcutta, on September 12, 1966, Suit No. 1871 of 1966. The defendant to the action is Ram Autar Jalan, the appellant before us. The respondent-company, after setting out the particulars about the incorporation of the company, its au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an injunction restraining the appellant from, in any manner, operating the current account in the name of Coal Products Private Ltd. in the United Commercial Bank Ltd., Burrabazaar Branch, Calcutta, and also for an injunction restraining him from acting as a director and dealing with the funds of, or using the seal or otherwise interfering in the management of the company, till the disposal of the suit and also for other reliefs. It may be stated here that the plaintiff was the company, Coal Products ( P ) Ltd., and the plaint was verified by Basudev Jhajharia, the manager and as such the principal officer of the company. The defendant opposed the application for injunction on various grounds by his counter-affidavit dated July 19, 1966. The grounds of opposition were as follows : Basudev Jhajharia is not the manager nor the principal officer of the company and, as such, he is not entitled to institute the suit. Only directors have power under article 131(9) of the articles of association to institute legal proceedings on behalf of the company and the directors have no power to delegate their authority. The directors of the company are Kishorilal Goenka, Parameshwari Debi Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution was passed authorising the opening of the current account in the United Commercial Bank Ltd., empowering the defendant and Bhagwati Debi to operate the said account, singly and severally. On September 2, 1964, the Chief Inspector of Mines, Dhanbad, was informed about the defendant having been appointed as a director in the place of Sunil Kumar Ganguli on August 31, 1964. The nominated owner, under section 76 of the Mines Act, for G. L. group was also intimated to be the defendant. On September 12, 1964, the Registrar of Joint Stock Companies, West Bengal, was intimated about the appointment of the defendant as director on August 31, 1964. The United Commercial Bank Ltd. was furnished, on September 28, 1964, with a certified copy of the resolution dated August 31, 1964, appointing the defendant as a director of the company and also authorising the opening of an account in the said bank in the name of the company and further authorising the defendant and Bhagwati Debi, directors of the company, to operate the said account, singly and severally. On September 29, 1954, a lease deed was executed by the defendant, as director on behalf of the company in favour of the Coal Mines L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 147 of 1966 for winding up the plaintiff-company. Harishankar filed Company Application No. 164 of 1966 for the appointment of a provisional liquidator and for other reliefs, in the said company petition. On June 20, 1966, the company judge had appointed the official liquidator as the special officer of the company. On June 27, 1966, the company judge gave certain further directions in which it is stated " that the account in the Bank of India shall be operated by Kishorilal and Nav Rattan Goenka as it is being done now ; the account in the United Commercial Bank shall be operated by Ram Autar Jalan in the same manner as it is now being done ". The said Harishankar Goenka has instituted Suit No. 1272 of 1966 in the Calcutta High Court challenging the issue of new shares by Kishorilal in his name and in the names of his wife and son, Nav Rattan Goenka. He has also obtained an order of injunction of June 27, 1966, restraining Kishorilal, Parameshwari Debi and Nav Rattan Goenka from exercising any rights or powers in respect of the new shares so issued. On September 10, 1966, the appellant before us instituted in the City Civil Court, Calcutta, Title Suit No. 573 of 1966 for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Ganguli. The board, by resolution of that date, authorised the opening of a bank account with the United Commercial Bank Ltd., Burrahbazaar Branch, Calcutta, and authorised Bhagwati Debi, director, to operate the account singly. The plaintiff also produced copy of the letter addressed by it on June 28, 1966, to the United Commercial Bank asking for information as to how a bank account was opened in the name of the company and how it was being operated by the defendant. Though the bank appears to have declined to give this information, later on, by its letter dated September 12, 1966, the bank furnished the plaintiff with a copy of the resolution which had been furnished to it at the time of opening of the account. That copy of the resolution appears to have been certified by the defendant. It is on the basis of all these materials that the plaintiff urged that the defendant is not a shareholder, that he has not been appointed a director and that he has no right to act as such. The learned trial judge was not prepared, at this stage, to accept the contention of the defendant regarding the competency of the suit, as that question will have to be decided at the trial. In this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction only to restraining the defendant from acting as a director. The learned judges consider the claim made by the defendant about his having become a shareholder and appointed as a director and also the case of the plaintiff that such a claim cannot be recognised in view of the articles of association and the registers of the company produced by it. The learned judges are of the view that as the plaintiff has impeached the appointment and authority of the defendant, the plaintiff will have to make out prima facie that those allegations are justified, so as to entitle them to get an order of injunction. The learned judges, after a fairly elaborate consideration of the relevant articles of association and the provisions of the Companies Act, and the documents produced by the company are satisfied that the plaintiff has made out a case that the defendant is not a shareholder of the company and that he has not been appointed as director. In support of this conclusion the learned judges rely upon the minutes, dated August 31, 1964, produced by the company wherein there is no resolution appointing the defendant as a director. The learned judges also accept the case of the plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of injunction will not prevent the defendant from acting as agent or authorised attorney of Bhagwati Debi if she wants to appoint the defendant as agent or authorised attorney on her behalf. That is, the defendant has been restrained from functioning as a director of the company. Mr. Sarjoo Prasad, learned counsel for the defendant-appellant, urged that the appellate court was not justified in reversing the order of the learned trial judge. Counsel urged that instead of considering whether the plaintiff had made out a prima facie case for the grant of an interim injunction, the entire burden had been cast on the defendant. The learned counsel also commented upon the fact that Kishorilal or any other director of the company had not come forward to controvert the allegations made by the defendant. He also urged that from 1964 the appellant had been functioning as a director as the various communications relied on by him would clearly show. These aspects have not been properly dealt with by the appellate court. Mr. Daphtary, learned counsel appearing for the company, has drawn our attention to the fact that the appellate court has made a very correct approach in conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. The appellate court was also perfectly justified in drawing an adverse inference against the defendant about his having become a shareholder, having due regard to the fact that he had instituted a suit for rectification of the share register only as late as November 21, 1966, though he claimed to have obtained a transfer of shares as early as October 30, 1963. His plea that he delivered the transfer deed to Kishorilal Goenka and that the latter assured him that the necessary changes had been effected in the registers of the company, are all matters to be investigated in the trial of the suit. We are in entire agreement with the conclusions arrived at, at this stage, by the appellate Bench as we are satisfied that a correct approach has been made by it for considering the matters arising at the interlocutory stage of the proceedings. The result is Civil Appeal No. 1412 of 1968 fails, and is dismissed with costs. As the merits have been gone into by us in Civil Appeal No. 1412 of 1968, the other appeal, C.A. No. 1413 of 1968, becomes unnecessary and that appeal is dismissed. We make it clear that we express no opinion on the order of the High Court, dated March 25, 1968, out o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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