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TMI Blog2011 (7) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... entative proceedings - the consent of those persons who supported the petitioners was the minimum requirement, in the facts of this case, before applying to the Court for withdrawal of the section 397, 398 application. Nothing has been shown to me that these persons have given their consent. After the consent of these persons, leave as required under Rule 88(2) of the Company Court Rules, could be considered by the Court. Perhaps, that is why the prayer in the Judge's Summons is for an order of the Court for dismissal of the section 397, 398 proceedings. Right of intervenor - held that:- the intervenor's father died in 1968. He claims that his mother and brother transferred shares to him in 1975. His mother died in 2000. Ever since the death of his father in 1968 till 2006 no steps were taken by the intervenor. If he is transposed as a petitioner he will be given the right to prosecute a petition, which he does not now have right to file, by efflux of time. Due to technical difficulties, as discussed above, the Court will not be in a position to allow the petitioners in the sections 397, 398 application to withdraw from the application. This application has been pending in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation for dismissal made by the company was incompetent and should be dismissed. This point had to be decided by the court first. So much so, that at the close of submissions a separate application was made by Ajit Kumar Agarwal being C.A. No. 541 of 2011 imploring me to decide the question first when I delivered the judgment. At the time of close of arguments, I reserved judgment in that application also to be delivered with the judgment in the other two applications. The sections 397, 398 application 5. The whole dispute between the parties concerns the Company, Nischintapur Tea Company Ltd. It was incorporated on 12-2-1950. Sometime in 1985, the said application under sections 397, 398 of the Act was made by Amita Sen. She stated that she was the registered holder of 3472 equity shares of the company which was 15.10 per cent of its total paid up capital. She had the support of other shareholders who held 7.11 per cent of the total paid up capital. They were six in number and held 1635 shares as stated in paragraph 7( i ) of the sections 397, 398 petition. Therefore, the petitioner and the shareholders supporting her had together 5107 shares. As I have been able to und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay and Sudipto were substituted as petitioners. Subsequently, Sudipto also died on 16-4-2006. Only his death was recorded and his name deleted from the cause title, as he was a bachelor and the surviving petitioners were his heirs. 10. It appears that the matter rested like this for many, many years. More than two decades passed after the order dated 21-6-1985. Nothing was done to prosecute this proceeding. Judge's summons dated 12th April, 2007 11. Then on 5-4-2007, a Judge's Summons was taken out by the petitioners in the sections 397, 398 application that the application (C.A. No. 252 of 1985) 'be treated as withdrawn and all applications connected thereto as not pressed'. That application was numbered as C.A. 302 of 2007. It was a four paragraph application. It narrated the death of Amita Sen and substitution of her four sons as petitioners. It also mentioned the death of Sudipto Sen. It was said that the petitioners were not interested in proceeding with the sections 397, 398 proceedings (C.P. No. 252 of 1985). 12. This application C.A. No. 302 of 2007 came up for consideration before brother Sanjib Banerjee, J. on 12-4-2007. 13. The following order wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re heard in great detail and disposed of by a very elaborate judgment and order, made on 11-3-2010 by brother Sanjib Banerjee, J. His Lordship refused to correct the records of the Court for, inter alia , the sheer delay in making the application for correction. Hence, C.A. No. 53 of 2010 was dismissed. The application of Ajit Kumar Agarwal (C.A. No. 40 of 2010) was also dismissed on the ground that Ajit's right in the Company was pending adjudication before the Company Law Board in the section 111A proceedings and his prayer had to 'await the result in the Company Law Board matter.' 19. I will read the material parts of his Lordship's judgment : "The essence of the matter is as to whether the court intended to dismiss the petitioner or permit the withdrawal thereof but erroneously recorded the dismissal of the application. If it can be said that the intention was one and the recording another then there would be a mistake that can be rectified at any time, subject to equitable considerations as rights having accrued to others on the basis of the erroneous recording. But if it does not appear that the order intended to dismiss the petition and erroneously recorded the dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondone any transfer of shares in the company that may have taken place during the currency of the injunction. Clearly, the order of April 12, 2007 was not intended to dismiss the petition or allow the withdrawal thereof but was intended to imply only what is apparent therefrom. ..CA No. 53 of 2010 is dismissed but without any order as to costs. Though the applicant in CA No. 40 of 2010 argues that on an application to be impleaded as a party the applicant does not have to conclusively demonstrate a right but a mere assertion of right is enough, since such applicant's locus qua the company is pending adjudication before the Company Law Board in the proceedings under section 111A of the Act, his prayer has to await the result in the Company Law Board matter. CA No. 40 of 2010 is dismissed with liberty to the applicant to apply afresh if he is found to be entitled to be a shareholder in the company. There will be no order as to costs." 20. Shortly before filing these two applications, on 27-1-2010 Ajit Kumar Agarwal had instituted a very comprehensive suit in this High Court against, inter alia , the Company and the petitioners claiming inter alia the following reliefs : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annual General Meeting Extraordinary Annual General Meeting, appointment of auditors, filing books of Account and any other documents required to be filed with the Registrar of Companies and/or other statutory authorities under the provisions of the Companies Act, 1956 and/or any other law for the time being in force; ( v )From operating any bank accounts in the name of and/or in relation to and/or connection with the Respondent No. 1; ( vi )From causing any interference of the Plaintiff's right to and enjoyment of 33.76 per cent shares of the Respondent No. 1 including the shares particulars whereof are given in paragraph 2 of the present pleading. ( d ) decree of mandatory injunction appointing a Receiver/Administrator and/or Special Officer directing the person concerned ( i )to Register and transmit 33.76 per cent shares particulars whereof are given hereinabove in favour of the Plaintiff; ( ii )to allow the Plaintiff to act as 33.76 per cent shareholding of the Defendant No. 1; ( e ) to ( k ) ** ** **" 21. He inter alia alleged that he held 7762 shares, which was 33.76 per cent of the total issued share capital of the Company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two petitioners in the sections 397 and 398 proceedings. Those appeals were dismissed by a common judgment and order made on 5th August, 2010 by the Hon'ble Appeal Court comprising of brothers Pinaki Chandra Ghose and Harish Tandon, JJ. The following was inter alia held : "The ratio laid in the aforesaid judgments are all based upon the fact that there has been a clerical or ministerial mistake in the judgment decrees or orders or there has been an error arisen therein from any accidental slip or omission. Here is a case where the Hon'ble First Court itself recorded that there is no such error, omission or a mistake in recording of the statement of fact of the happing of such state. Such recording of statement is conclusive and neither the lawyer nor the litigant may claim to contradict before the appellate court except before the judge himself ( See State of Maharashtra v. Ramdas Shrinivas Nayak AIR 1982 SC 1249) We do not find any merit in the instant appeals. Thus, both the appeals being APOT No. 188 of 2010 and APOT No. 189 of 2010 are hereby dismissed. However, there shall be no order as to costs." 23. An appeal was also preferred by Ajit Kumar Agarwal from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had the right to withdraw from that application at any point of time. 28. Ajit Kumar Agarwal's father died in 1968. He received, according to his assertion the entire shares of his father and shares from his mother and brother by way of gift on 2-5-1975. His mother died in 2000. Therefore, after this long delay he should not be allowed to participate in the proceedings. After the death of his father and the above alleged gift, no steps were taken by him, to claim rights arising out of those events. I may mention that Ajit Kumar Agarwal's contention is that his father and mother held 800 and 1940 shares respectively aggregating to 2740 shares. They together held more than 11 per cent of the paid up capital of the Company. By virtue of the said gift those shares vested in him together with the shares of his pre-deceased brother. 29. Mr. S.N. Mookerjee, learned senior counsel, who took over the arguments from Mr. S.B. Mookerjee learned senior advocate cited Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 11 SCC 314/ 57 SCL 476 (SC) (Para 181) to submit that the interest of the Company from the point of view of the shareholders was the consideration in a sections 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... status quo order made on 21-6-1985. Having such share-holding he was competent to prosecute the sections 397, 398 proceeding by being substituted in place of the said petitioners, if necessary. Mr. Chatterjee cited R. Ramamurthi Aiyar v. Raja V. Rajeswara Rao AIR 1973 SC 643 (Paragraph 12). 34. It was further contended on behalf of the intervenor that the Company had no locus standi to make the application. Mr. Sujit Kumar Chatterjee had not been authorised by the Board of Directors. He was not the constituted Attorney of the Company. There is no Affidavit-of-Competency made by him. 35. Furthermore, any increase in shares or any allotment of transfers made in contravention of the status quo Order of this Court dated 21-6-1985 was void. Mr. Chatterjee showed me the decision in Century Flour Mills Ltd. v. S. Suppiah AIR 1975 Mad. 270/ 45 Comp. Cas. 444 (Mad.) (Paras 4, 5 and 10). Such allotment of shares was liable to be cancelled and the parties put back to the position that they were on the date of the status quo order. 36. He also cited Krishna Kumar Khemka v. Grindlays Bank P.L.C. [1990] 3 SCC 669 (Para 15) to submit that by acting in violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act for a party. Such agent according to Rule 2 is inter alia a constituted attorney. Now Order VI Rule 14 provides that a pleading is to be signed by a party or a person duly authorised by him, in case a party cannot sign it due to a good cause. Then again Rule 15 of the same Order permits a party or a person duly acquainted with the facts to verify a pleading. Order XXIX relates to suits by or against Corporations. It says that a pleading on behalf of a corporation is to be signed by any director or secretary or principal officer of the corporation. Chapter VII of the Original Side Rules stipulates that the rules embodied in Order VI of the Code will apply to plaints. Chapter IX relating to written statement provides that the rules of Chapter VII will apply. Rule 8 of Chapter VII however, lays down that any person other than a party, verifying a plaint must file an affidavit, which by practice is known as the affidavit of Competency. 41. The objection is that Sujit Kumar Chatterjee is not the Constituted attorney and has not filed an affidavit of competency as required by Chapter VII Rule 8. United Bank of India v. Naresh Kumar AIR 1997 SC 3 comes to Sujit's as well th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevent the intervenor to challenge his authority at this stage. 46. Therefore, this objection is rejected. 47. The next point which needs to be disposed of is whether the instant proceedings are representative and whether leave of the Court is specifically required to withdraw them, under the Code of Civil Procedure read with Rule 88(2) of the said Rules? Furthermore, whether the intervenor has the right of transposition? 48. Section 399(3) of the said Act provides that any member out of a body of shareholders eligible to make an application under sections 397, 398 of the Act may make the application with the consent in writing of the rest. The next part of the paragraph is most important for the purpose of consideration of this issue. It stipulates that having obtained such consent, it can maintain the action for the said body of shareholders and for their benefit. This provision has the same characteristics as Order 1 Rule 8 of the Code of Civil Procedure. Sub-rule 4 says inter alia that no part of the claim may be abandoned or the suit be withdrawn without notice to all persons whose interests were being represented. The Court has the power to substitute any pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminately increased its share capital and allotted shares so as to reduce the share-holding of Ajit Kumar Agarwal to 0.17 per cent. Even at the time of hearing of his application for rectification under section 111A of the said Act, before the Company Law Board, on 25-4-2008 it was recorded in an order of the Board that 'the valid shares come to 2740 shares'. 54. It may be mentioned at this point of time that Ajit Kumar Agarwal claims to be the sole heir of his father's shares, transferee of the shares of his deceased brother Om Prakash Agarwal. He also claims to be the transferee of his mother's shares which were gifted to him in 1975. Sometime in 2000, his mother died. He claims to be the beneficial owner of the shares held by his father and mother in the Company as also those of his brother. 55. According to the Company his claim could not be entertained as he could not produce any succession certificate or probate or deed of gift in his favour to establish such right. 56. But the fact is that the proceedings for rectification of the share register taken out by Ajit Kumar Agarwal is pending in the Company Law Board. So far there is no determination that he is entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner, in those proceedings. 61. Moreover, the intervenor's father died in 1968. He claims that his mother and brother transferred shares to him in 1975. His mother died in 2000. Ever since the death of his father in 1968 till 2006 no steps were taken by the intervenor. If he is transposed as a petitioner he will be given the right to prosecute a petition, which he does not now have right to file, by efflux of time. 62. I am not called upon to adjudicate the purport of the status quo order in this application. In these circumstances there is no need for me to comment on the decision in S. Anand Deep Singh case ( supra ). Neither am I called upon to decide the alleged violation of that order and its effect. So I do not consider S. Suppiah ( supra ), Krishna Kumar Khemka ( supra ). 63. Due to technical difficulties, as discussed above, the Court will not be in a position to allow the petitioners in the sections 397, 398 application to withdraw from the application. This application has been pending in the file of this Court for more than 25 years. The cause of action mentioned therein no longer survives. Therefore, using my discretion I order dismissal of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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