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TMI Blog1989 (3) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment to appoint Inspector( s ) for investigation since incorporation and giving further directions to fix civil liability for making untrue statements in the prospectus and for causing loss to the company on account of mismanagement; ( c ) a declaration that Sh. Balbir Singh, respondent No. 1, was continuing as whole-time working director and entitled to salary, etc., in terms of the appointment letter dated June 2, 1987, and his alleged cessation as director was mala fide, illegal; ( d ) declaration that all or any meeting of the board of directors held without the present respondents was null and void; and ( e ) declaration that the loans taken from Punjab and Sind Bank unauthorisedly were a personal liability of Brig. T.S. Grewal and Sh. M.S. Grewal, appellants Nos. 2 and 3 in this appeal. In the alternative, they sought an order of winding up of the appellant company, M/s. Omni India Limited. By the impugned order, the learned company judge admitted the petition and appointed Justice P.N. Khanna (retired judge of this court), as chairman of the board with direction to give a report regarding the working of the said company within one month or earlier, if possible. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners to present the petition on their behalf, shall be annexed to the petition, and the names and addresses of all the members on whose behalf the petition is presented shall be set out in a schedule to the petition and where the company has a share capital, the petition shall state whether the petitioners have paid all calls and other sums due on their respective shares. Where the petition is presented by any member or members authorised by the Central Government under section 399(4), the order of the Central Government authorising such member or members to present the petition shall be similarly annexed to the petition. A petition under section 397 shall be in Form No. 43, and a petition under section 398 shall be in Form No. 44. (2) A petition under section 397 or 398 shall not be withdrawn without leave of the court, and where the petition has been presented by a member or members authorised by the Central Government under sub-section (4) of section 399, notice of the application for leave to withdraw shall be given to the Central Government." A perusal of section 399(1)( a ) makes it clear that in the case of a company having a share capital, a petition under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is done or proposed by another, acquiescence, permission, capable, deliberate and voluntary agreement to or concurrence in some act or purpose implying physical and mental power and free action. According to Mozley and Whiteley's Law Dictionary, Tenth Edition, "consent" presupposes a physical power, mental power and a free and serious use of them. Examined in the light of these meanings and keeping in view the purpose for enacting section 399, we have no doubt, that the expression "consent in writing" used in section 399(3) means conscious approval of the action proposed to be taken by the persons to whom the consent has been given. We are also of the view that the writing itself should indicate that the persons who have signed the consent letters have applied their minds to the question before them and on application of minds have given consent for a certain action. Under section 402 of the Act, the court, on an application under sections 397-398 and without prejudice to the generalities of the powers of the court, can grant several types of reliefs. In this background, it is necessary that the writing must indicate that the members giving consent had applied their minds to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this case, it was held that under section 397 or 398 or rule 88, there is nothing to indicate that the members giving their Consent should have the petition before them. There is no quarrel so far as this proposition is concerned. These observations, however, do not support the claim of the respondents at all in the present case. The contention advanced before the court in that case was that before the members give their consent, they should have the petition before them and for that purpose the petition should be prepared well in advance of the consent in writing given by the members. It was this contention which was negatived. Learned counsel for the appellants do not challenge its correctness. However, on the basis of this decision, it cannot be said that the member giving their consent in writing need not apply their minds to the question before them. In our view, the term "consent in writing" necessarily implies the application of mind regarding the particular allegations and the relief sought and prayed for. A mere consent for the proposed action against the management for the gross mismanagement of the company affairs and oppression of members, in our view, was not suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section. It is true that a court must, if it can possibly do so, give an interpretation to a section which would not result in difficulties in the working of that section. But, on the other hand, many legislations, and specially modern legislations, have been so framed and so drafted that some anomaly or other is inevitable, and when such anomalies present themselves to the court, the duty of the court is to draw the attention of the Legislature to the removal of these anomalies and not to remove them itself by giving a construction contrary to the intention of the Legislature." We have examined these observations. They are of no help to the respondents. The expression "consent in writing" is to be examined keeping in view the purpose of section 399. The interpretation which we have adopted is not likely to result in difficulties in the working of section 399. It was also contended that the Act has not laid down any form for consent letters whereas the form regarding notice to the creditors to give any proof (Form No. 27) for notice convening meetings (Form No. 36), form of proxy (Form No. 37) and form relating to the report of the term (Form No. 39) have been given. We have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not taken any benefit. In compliance with the impugned order, Justice P.N. Khanna visited the office of the company and submitted his report dated June 24, 1988. There is nothing to indicate that any benefit was taken by the appellants. The appellants were bound to obey the impugned order so long as it was in force. Justice P.N. Khanna had been appointed the chairman of the board and for that reason, the appellants were bound to allow him inspection, etc. There is no question of any waiver or estoppel. In conclusion, we hold that the petition filed by the respondents under sections 397 and 398 was not maintainable. As noticed above, the appellants had also prayed for winding up of the company as an alternative relief. The application for winding up, in our view, could continue. It was not much disputed by learned counsel for the appellants that a joint application under sections 397 and 398 and for winding up could be filed. The impugned order was, however, liable to be quashed because the plea of winding up was an alternative plea and there was nothing to indicate whether the impugned order appointing Justice P.N. Khanna as the chairman of the board was on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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