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TMI Blog1984 (1) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... into for amalgamation of Centron with Brooke Bond. The said scheme has been approved by the majority of shareholders of both these companies. Brooke Bond and Centron have moved the High Court at Calcutta and this High Court respectively for sanction thereto. Proceedings in that respect are pending in both these High Courts. One Dinkar V. Landge, a shareholder of Centron, filed in the City Civil Court, Suit No. 6778 of 1983, against Brooke Bond and took out notice of motion for interim relief. On December 1, 1983, he obtained an ex-parte ad interim injunction which in effect sought to restrain Brooke Bond and its shareholders from transacting any business whatever at the company's 71st annual general meeting scheduled to be held at Calcutta at 10.30 a.m. the next day, December 2, 1983. . However, this order reached Brooke Bond at Calcutta in the afternoon of December 2, 1983, after the annual general meeting was held. Immediately on receipt thereof, Brooke Bond stayed implementation of the resolutions earlier passed at the said meeting. It then filed in this High Court an appeal against the aforesaid order and moved for urgent reliefs. This appeal was admitted on December 6, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of December 20, 1983. As will presently be seen, the notice of motion was for more than one reason liable to be dismissed. At the very threshold, one finds that the suit itself is beyond the pecuniary jurisdiction of the trial court. The plaintiff seeks relief, permanent as also interim, in respect of Rs. 688 lakhs as also in respect of the distribution of dividends, the quantum whereof was more than rupees three crores. In the face of these disclosures in the plaint itself, patently untenable avermenf has been made in the valuation clause, para. 42, that the reliefs were not capable of monetary valuation. This should have struck the trial court at the forefront and at once put it on guard. On this short ground, viz ., patent want of jurisdiction, the plaint and the motion were liable to be returned for presentation to the proper court. There is also another significant feature of this litigation. When the suit was filed in December, 1983, the plaintiff was not even a shareholder of Brooke Bond. Undisputedly, his name did not stand in the register of members of the company. Once upon a time he held two hundred equity shares of which 150 shares were transferred in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the amalgamation of Centron with Brooke Bond. A number of pages have been devoted thereto. One would have thought that with even half the anxiety shown therein, the plaintiff would not have failed to move the Calcutta High Court where sanction proceedings are pending. One then finds reference to a scooter project as also to certain excise liability which has already stood discharged, vide affidavit on behalf of Brooke Bond. There is also a reference to one R.J. Ballaster in respect of whom an ordinary resolution was moved at the 71st annual general meeting approving the remuneration paid/payable to him as a whole time director for the period October 1, 1982, to April 2, 1983, as already approved by the Central Govt. by its letter dated September 14, 1982, as amended by subsequent letters of November 27, 1982, and June 8, 1982. Moreover, on each of these matters, the Brooke Bond management has been acting in the best interests of the company and its shareholders. Also interesting is the fact that several pages of the plaint stand devoted to an altogether unconnected litigation, viz. , Suit No. 2303 of 1979. It is difficult to see the relevance of all these averments. Prolix a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich, according to the plaintiff's learned counsel, are statements which may ultimately turn out to be not correct even when made bona fide . Suffice it to note that going through the plaint and the annexures and the affidavits, I have gathered a strong impression that the statements in question were made not bona fide but deliberately with ulterior motives and consciously misquoting authentic documents with a free recourse to the pernicious modus of suggestio Jalsi and suppressio veri. It was submitted by the plaintiffs' learned counsel that the scheme of amalgamation is in fact being implemented by Brooke Bond. There is nothing on the record to support this contention. Indeed, the record is just to the contrary. The scheme itself states that its implementation is conditional upon various approvals in question and that the amalgamation shall be deemed to be effected on the date on which the last such approval is obtained. The scheme is under challenge in two High Courts. Sanction of the High Court at Calcutta as also of this High Court to the said scheme is still being awaited. The scheme itself also categorically states that "the transfer date" means the close of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... narrower than that usually attributed to it in framing accounts. For the purposes of the Companies Act, the word 'provision' must not be used, as it commonly is used in practice, to describe amounts set aside to provide for prospective or even potential losses or liabilities ; it must only be employed to indicate known depreciation or diminution in the value of assets, and known liabilities, the amount of which, however, cannot be estimated with reasonable accuracy." Such being then the statutory as also the legal position, any attempt on the part of Brooke Bond to make any provision for liability, which may arise in the future in the event of the scheme of amalgamation going through, would not be legal and valid. Indeed, liability arising out of the scheme of amalgamation, if it goes through, cannot today be said to be even a contingent liability. Thus, the Brooke Bond management must be held to have acted prudently and wisely by following and adhering to the correct principles of accounting as also by following and adhering to the statutory provisions of the Companies Act, 1956, and in the process also acting in the best interests of the company and its shareholders. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to make out any real case. The notice of motion fails to fulfil the requisite tests for an order sought therein. The same is liable to be dismissed. One cannot help observing that this suit reflects a frivolous and vexatious litigation constituting a clear abuse of the process of courts and the instruments of justice. It is precisely to meet situations, inter alia , as the one here that the Legislature amended O. 39 of the CPC, highlighting the duty of the litigant and the responsibility of the court. But to sub-serve ulterior motives and collateral purposes the plaintiffs have deliberately acted in breach thereof. Their action and conduct is bereft of bona fides and their motives are suspect. With full knowledge of an almost exactly similar proceeding by Landge, the same learned advocate of Landge obtained yet another ex parte interim order under virtually the same averments as in Landge's suit. Indeed, major part of the plaint in the present cases is almost verbatim the same as in Landge's. And as Landge, the original plaintiff here also is not even a shareholder. Also unfortunate is the conduct of obtaining adverse orders having serious consequences with out notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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