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TMI Blog1974 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... aiguri Cinema Company Ltd., an existing company within the meaning of the Companies Act, 1956, under sections 397 and 398 of the Companies Act, 1956. The company was incorporated under the Indian Companies Act, 1913, in 1948. One of the promoters of the company was Nagendra Nath Ganguli. The company started construction of a cinema hall, but failed to continue the construction for paucity of funds and created three several mortgages on the assets and properties of the company and obtained loans for carrying on the business of the company. The last mortgage which was the third mortgage was created by the company in favour of the respondents Nos. 8, 9 and 10. The said mortgage was a usufructuary mortgage. The respondents Nos. 8, 9 and 10 as mortgagees were put in possession of the cinema house of the company and have been running the same. Between January 4, 1967, and January 12, 1967, the respondents, Pramotha Nath Mukherjee and Monoranjan Mukherjee, purchased equity shares in the said company of the face value of Rs. 2 lakhs 14 thousand and lodged the same with the company for registration. Upon refusal of the company to insert the name of the said respondents, Pramotha Nath Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent, Pramotha Nath Mukherjee, affirmed an affidavit on February 13, 1972, intending obviously to use the same at the hearing of the said Company Petition No. 398 of 1972, no copy thereof was served on the petitioners of the said Company Petition No. 398 of 1972 or on the company. On May 7, 1973, the petitioner in the said Company Petition No. 398 of 1972, submitted to the court that he did not want to press the said Company Petition No. 398 of 1972. Upon the respondents, Pramotha Nath Mukherjee and Monoranjan Mukherjee objecting either to the withdrawal or the dismissal of the said Company Petition No. 398 of 1972, the said application was adjourned. On May 9, 1973, the respondents Nos. 1 and 2 applied for being added as parties to the said petition and substituted in the place and stead of the original petitioners in the Company Petition No. 398 of 1972. The said application made by the respondents Nos. 1 and 2 was opposed by the company. On August 1, 1973, respondent, Pramotha Nath Mukherjee, applied for rectifying of the share register under section 155 of the Companies Act by inserting his name as the holder of the above mentioned shares. On November 29, 1973, orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 397 and 398 is really in the hands of the court and not with the lawyers. And court cannot direct the settlement of such proceedings and provisions of the Code in regard to the dismissal, settlement, and withdrawal of actions become inapplicable. The main contention of Mr. Sen was that it was obligatory upon the court to dismiss the application when the petitioner's counsel submitted that he had not been pressing the application. Mr. Sen, in support of his contention, relied on rules 101 and 102 of the Companies (Court) Rules, 1959. Rule 100 of the said Rules lays down that a petition for winding up of a company shall not be withdrawn without the leave of the court. (See rule 100(1)). Rule 101 provides for substitution of a creditor or a contributory in the place and stead of a petitioner in the winding up petition where such petitioner is not entitled to present a petition or fails to advertise his petition within the time prescribed by the rules or by order of court or consent to withdraw the petition or allow it to be dismissed or the hearing to be adjourned or fails to appear in support of the petition when it is called on, on the day fixed for the hearing of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition or apply to be joined either as petitioners or respondents in the main application. There is no rule framed by the Supreme Court under section 643 of the Act prohibiting addition or transposition of parties in application under section 397 or 398 of the Act. According to Mr. Gupta, even if such rules were framed it would have militated against the provisions of section 643( b ) of the Act. Rules 101 and 102 of the Companies (Court) Rules, 1959, according to Mr. Gupta, are provisions in addition to the provisions contained in the Code of Civil Procedure and in particular in Order 1, rule 10, of the Code. The respondents Nos. 1 and 2 who have been added as petitioners in the main petition are interested in the subject-matter of the main petition and having the oppression or wrong alleged in the main petition remedied. The main allegations or cause of action in the application under section 397 or 398 of the Act are oppression to shareholders and mismanagement of the affairs of the company. This oppression and mismanagement are continuing acts of oppression and mismanagement. In fact, one of the main acts of oppression alleged in the petition are the refusal of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of clause 15 of the Letters Patent. In the instant case Mr. Sen submitted that, by refusing to allow to withdraw the application or dismissing the application when the petitioner did not press the application, the court refused to terminate the proceeding and assumed jurisdiction. In the instant case the court undoubtedly had power not to allow to withdraw the application under rule 88(2) of the said rules and merely added the respondents, Pramothanath and Monoranjan Mukherji, as parties to the proceeding as petitioners and transposed the original petitioners to the category of the respondents. The case of Mohammed Felumeah v. 5. Mondal, AIR 1960 Cal. 582, wherein an ad interim order of injunction granted originally in an application under article 226 of the Constitution restraining one of the respondents from granting any licence under the West Bengal Cinemas (Regulation of Public Exhibition) Rule, 1956, was modified subsequently on an application for vacating the said ad interim order of injunction by allowing the issue of temporary licence in favour of one of the respondents pending the disposal of the rule, the order was held to be a judgment within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally affected in any event a part of the right of the defendant so far as the suit was concerned. Similarly, in Chittaranjan Mondal v. Sankar Prosad Sahani [1972] 76 CWN 781; AIR 1972 Cal. 469 an order refusing to restrain the plaintiff-decree-holder from executing a decree for ejectment in an application filed in appeal against the said decree was held to be a judgment within the meaning of clause 15 on the ground that the order was passed in an independent proceeding which was ancillary to the appeal. Ved Prakash v. Iron Traders (P.) Ltd. [1961] 31 Comp. Cas. 122 (Punj.) decided that a person whose name did not appear on the register of members of a company was not competent to move an application under sections 397 and 398 of the Companies Act. Such person must first have the register rectified before he can bring a proceeding under sections 397 and 398 of the Act. In the instant case, order has been made for rectifying the share register of the company by inserting the names of the respondents Nos. 1 and 2 and as such the said respondents were competent to move an application under sections 397 and 398 of the Act. In any event, such a question has to be decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 398 of the Act, the court may deal with the application on merit. Rule 88(2) of the Rules ensures that no petitioner of an application filed under section 397 of the Act may withdraw the application without the leave of the court. We do not think that a petitioner of such an application may by-pass the provisions of this rule by not wanting to withdraw the application but insisting on the dismissal of the application on the ground that he does not desire to press the same. He cannot, in our opinion, do indirectly what he cannot do directly by virtue of rule 88(2) of the said Rules. The cause of action for making an application under section 397 of the Act is that there must be acts by persons in control of a company prejudicial to public interest or oppressive to any member or members of the company excluding the applicants or oppressive to any member or members of the company including the petitioners in an application under section 397 of the Act. Respondents Nos. 1 and 2 in whose favour orders have been passed by the Central Government under section 111 of the Act as well as by the court under section 155 of the Act directing the appellant to insert their names in the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia , relating to the winding up of companies. Clause ( b ) to sub-section (1) to the said section empowered the Supreme Court to make rules if it so desires consistent with the Code of Civil Procedure in regard to the matters mentioned in different sub-clauses under the said clause as well as in regard to the matters mentioned in the different sub-clauses under sub-section (2) of the said section. Rule 6 of the Companies (Court) Rules, 1959, makes the provisions of the Code applicable to all proceedings under the Acts and the Rules, except as provided by the Act or the Rules. Neither the Act nor the Rules forbid addition or transposition of parties. In fact, rules 100 to 102 of the Rules are additional provisions to what are contained in Order 1, rule 10, of the Code of Civil Procedure. The Code of Civil Procedure, 1908, was an Act enacted to consolidate and amend the laws relating to the procedure of the civil courts and, unless expressly barred from being applicable to the proceedings, under the Companies Act, shall apply to them. The provisions of Order 1, rule 10, of the Code of Civil Procedure have not been made inapplicable to proceedings under the Companies Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring of the main application. It is true that an adjudication need not be on the merit in controversy between the parties. The order under appeal, in our opinion, was a mere step towards final adjudication on merits of the disputes between the parties in the application under section 397 of the Act. Thus, we are of the opinion that the observations of the Full Bench in paragraph 9 of the judgment in the case of Nurul Hoda v. Amir Hasan, AIR 1972 Cal. 449 [FB], apply with full force to the order under appeal. The order under appeal does not satisfy the test of a "judgment" as enunciated in Nurul Hoda v. Amir Hasan, AIR 1972 Cal. 449 at 453 [FB], Laxminarayan Tamkorwalla v. Udairam Khemka, AIR 1961 Cal. 386, Tulsiram Bhagwandas v. Sitaram Srigopal, AIR 1959 Cal. 389, Shesh Giridas Shanbhag v. Sunderrao, AIR 1946 Bom. 361 and Daulatram Agarwalla v. Champalal Jugraj, AIR 1963 Cal. 337 ; 66 CWN 364 at 376. It does not even satisfy the test as laid down in Mansata's case, AIR 1957 Cal. 727 at 731, and in Felumeah's case, AIR 1960 Cal. 582 at 587. The order under appeal merely decides the right of the respondents Nos. 1 and 2 to continue the proceeding filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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