9911796707
TMI Blog1975 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... pril 12, 1972. When this petition came for first order on April 13, 1973, before the learned company judge, he issued a notice before admission returnable on April 29, 1972. An undertaking was taken from the petitioner not to give publicity to these proceedings in newspapers. After receiving such notice the company appeared and filed a detailed reply after claiming several adjournments. The reply has been filed some time in March, 1973. Two defences seem to have been raised. One is that there is no debt of Rs. 31,000 at all. Before the formation of the present private limited company, there was a partnership, in which the respondent had kept a deposit of Rs. 31,000. On the formation of the private limited company, it was agreed that a part of the deposit be converted into share capital. Accordingly, Rs. 20,000 were converted into share capital, partly in his name and partly in the name of his wife. A balance of Rs 11,000 remained with the company as a deposit. So far as this deposit of Rs. 11,000 is concerned, the further defence was raised that the respondent was himself a director of the private limited company, which had obtained loan from the State Industrial and Investment C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being his view, he allowed the amendment application. Being aggrieved, the present appeal has been filed by the company. Objection is being raised to the maintainability of the appeal. Two questions, therefore, arise for our consideration, namely, whether the appeal lies and if so, whether the order directing the amendment is justified ? The question relating to the maintainability of the appeal is again agitated on two different grounds. Mr. Khanna, the learned counsel for the respondent-original petitioner, argued that the original company petition is yet not admitted and it is still at the preliminary stage of being considered for admission. He disputed seriously the argument of the company's lawyer that by amending the petition new grounds were sought to be introduced so as to change the nature of the original petition. He argued that the cause of action is the same but grounds which were already present in the original petition are now being stated in detail in an enlarged manner after collection of information which flows from the inspection of records. Assuming for the time being, he says, that the respondent wants to add new grounds by amending the petition, the stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords to satisfy himself about the correctness or otherwise of the allegations made in the defences. He wanted to verify whether in fact there was any board meeting on the particular date alleged and whether it was so resolved to accept the loan from SICOM on certain terms and conditions. He also wanted to verify whether in any lawfully held meeting of the board of directors allotment of shares took place as pleaded. Not only a detailed inspection was directed and given but the petition was in the meanwhile directed to be put up for hearing. In this respect, our pointed attention has been drawn to an order dated 29th March, 1974, passed by the company judge. The order is as follows : "Put up for hearing the petition on 15th April, 1974. Application for production of documents will also be considered. Company to keep documents ready." It appears that the petition again came before the same company judge on April 24, 1974, when he passed a further detailed order as follows : "The list of documents which the petitioner's counsel seeks to inspect personally has been discussed and settled in the open court. Mr. Bobde on behalf of the company undertakes to give the inspection tom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is a composite petition on grounds contained in section 433( e ) as well as in section 433( f ) of the Companies Act, 1956. He took us through the recitals in the main petition starting with paragraph 12. Undoubtedly, there is some reference to the deliberate ousting of the respondent from the affairs of the company and allegation of some mismanagement thereof. He also says that the company is unable to meet the current demand. There is an allegation that some of the annual reports have not been properly prepared and filed. There is some reference to the allegation of the company regarding the allotment of shares also in paragraph 16. However, when all these paragraphs are read together along with the two concluding paragraphs 17 and 18, we are satisfied that the petitioner merely wanted to claim winding-up order because of the inability of the company to pay debts which is a separate and distinct cause of action provided by clause ( e ) of section 433 of the Companies Act. The various clauses of the Companies Act give distinct and different reasons why the compulsory winding up under the orders of the court can be done. There is no doubt that the grounds covered by clauses ( e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application for amendment says that subsequent to the filing of the present petition, there has been considerable development in the matter in dispute in the present petition. There have been acts of mismanagement, misappropriation of company funds, misfeasance and falsification of the statutory records, account-books, etc., by T.R. Goenka, managing director, with the active connivance, abetment and aid of directors, K.C. George and P.R. Maheshwari. After further allegations in the same vein, the paragraph concludes by saying that it was, therefore, necessary in the interests of justice to amend the petition for effective and proper adjudication of the dispute involved in the present petition. Thereafter, it is proposed that paragraphs 18 to 67 of the proposed amendment be allowed to be added to the original petition. They contain specific instances of what the petitioner calls misfeasance, malfeasance, misappropriation, falsification of accounts and records, etc. In other words, because of the several misdeeds which have crept into the management of this company, it appears to be now just and equitable that the company be wound up. The allegations in the amendment can fall squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted on record. In other words, the company's right to oppose admission and to satisfy the court that the petition may not be admitted at all is lost altogether. An important stage or step in the procedure is got rid of by indirect manner of amending a petition which is already admitted. This is not to say that the amendment is not possible in a petition which is already admitted. Since the provisions of Order 6, rule 17, in its principle apply as far as they go to the pleadings before the company court, it would be logical to assume that the amendments would normally be allowed to bring out the real dispute between the parties, but where the amendment transgresses the original dispute and introduces a new cause of action altogether, even if the court has the right to do so, it will be slow to permit such an amendment if it adversely affects the right of the party concerned. Whether the order allowing amendment is an appealable order by itself was another question raised by Mr. Khanna. According to him, the order of the company judge permitting the amendment is not a "judgment" within the meaning of that expression used in clause 15 of the Letters Patent. It is also not an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrusted to or wielded by a person who functions as a court is not decisive of the question whether the act or decision is administrative or judicial. But we conceive that an administrative order would be one which is directed to the regulation or supervision of matters as distinguished from an order which decides the rights of parties or confers or refuses to confer rights to property which are the subject of adjudication before the court. One of the tests would be whether a matter which involves the exercise of discretion is left for the decision of the authority, particularly if that authority were a court, and if the discretion has to be exercised on objective, as distinguished from a purely subjective, consideration, it would be a judicial decision." The principle that must be remembered is thus clear. The first question that should be asked in such circumstances is whether the order impugned is judicial order and, if so, does it affect adversely or otherwise the rights of any party. If these queries are raised in the present litigation, we are of the view that the answer to them will be such that the order would become appealable. Undoubtedly, a company has a right to be he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular loan claimed under a winding-up petition under clause ( e ) is not payable, they will just ignore the advertisement and may not appear before the company court. However, an advertisement under clause ( f ) is likely to cause confusion and may not give clear information to the persons interested in the company. Not only the business, but the stability of the company, is likely to be seriously affected by an advertisement of this kind. We are thus of the view that, by allowing the amendment, the right of the company to be heard before the amendment is prejudicially affected. Undoubtedly, this is an order in which judicial considerations had to be given and the learned company judge undoubtedly had the judicial discretion either to accept or to refuse the amendment. The impugned order thus, according to us, falls squarely under the provisions of section 483 of the Companies Act and, as such, it is appealable. Mr. Khanna for the respondent referred us to the judgment of the Supreme Court in Shanti Kumar R. Canji v. Home Insurance Co. of New York [1974] 2 SCC 387. The Supreme Court was considering in that case clause 15 of the Letters Patent, for purposes of finding out wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 433 is a distinct cause of action and though there is no prohibition to the combination of clauses ( e ) and ( f ), it is open to anyone to file successive and different company petitions. In the present case, an admitted petition is being opposed on merits and the company hopes to point out a valid defence. If the amendment is now to be allowed and the matter is to be heard together, there is likelihood of some prejudice being caused to the company because the matters which are strictly not relevant under clause ( e ) might affect the psychology of the judge who may be considering the other petition. It would be advisable, therefore, that even if a separate petition could also be filed under clause ( f ) it may be heard and disposed of on its own merits without mixing up the matter with the earlier petition under clause ( e ) of section 433. We are thus clear that the effect of the order is to admit the petition without giving an opportunity to the company to oppose this admission. This affects a valuable right of the company and introduces an element of prejudice against it. On the contrary, if the respondent were to file a separate petition, he is not affected in any manner wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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