Case Law Details

Case Name : Rishima SA Investments LLC Vs Registrar of Companies, West Bengal & Ors. (Calcutta High Court)
Appeal Number : W.P. No. 20044 (W) of 2016
Date of Judgement/Order : 01/03/2017
Related Assessment Year :
Courts : All High Courts (2930) Calcutta High Court (116)

The pleadings and the contentions of the rival parties give rise to the following issues:-

1. Is a person, not being a member or a creditor or the company itself, entitled to challenge the striking off of the name of the company under Section 560 of the Companies Act, 1956?

2. Does the petitioner have the locus standi to file and maintain the present writ petition?

The petitioner seeks relief with regard to an action taken by the Registrar of Companies under the provisions of Section 560 of the Companies Act, 1956. The Registrar of Companies by the impugned writing dated September 10, 2015 had issued a notice to the effect that, the name of Rama Inn (International) Private Limited (Company) has been struck off from the Register of Companies and that, such company is dissolved. The Registrar of Companies has exercised powers under Section 560 of the Act of 1956 in doing so.

At the time of filing of the writ petition, the provisions of the Companies Act, 2013 relating to striking off of a company had not been notified. The maintainability of the writ petition has to be considered on the basis of the law prevailing on the date of filing of the writ petition. Moreover, the action of the Registrar of Companies under Section 560 of the Act of 1956 is under challenge in this writ petition.

Existence of statutory alternative remedy is not a complete bar to the maintainability of a writ petition. Notwithstanding the existence of a statutory alternative remedy, a writ petition is held to be maintainable when a fundamental right is violated or where the authority has acted without jurisdiction or the decision complained of is perverse.

In the present case, the issue of maintainability of the writ petition is on the basis that, Section 560(6) of the Act of 1956 recognizes the categories of persons who are entitled to apply thereunder to question a decision of the Registrar of Companies rendered under Section 560 and since the petitioner is not such a recognized person, the petitioner cannot be allowed to maintain a writ petition to assail an order of the Registrar of Companies under Section 560 which cannot do under Section 560(6) of the Act of 1956.

Basanti Cotton Mills (1998) Private Limited (supra) and Meghdoot Services Limited & Anr. (supra) are of the view that, the company directed to be struck off or a member or a creditor of such company, if aggrieved by the striking off of the name of the company can approach the Company Court for redressal. These two authorities were concerned with the right to approach the Company Court under Section 560(6) of the Act of 1956. Considering Section 560(6) of the Act of 1956 which stipulates the categories of persons who are capable of approaching the Company Court for the purpose of redressal of grievances under Section 560 of the Act of 1956, their Lordships have held that, no other person is entitled to approach the Company Court.

Sections 560(5) and 560(6) of the Companies Act, 1956 are as follows:-

“560(5) At the expiry of the time mentioned in the notice referred to in sub- section (3) or (4), the Registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register, and shall publish notice thereof in the Official Gazette; and on the publication in the Official Gazette of this notice, the company shall stand dissolved: Provided that-

(a) the liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company, shall continue and may be enforced as if the company had not been dissolved; and

(b) nothing in this sub- section shall affect the power of the Court to wind up a company the name of which has been struck off the register.

560(6) If a company, or any member or creditor thereof, feels aggrieved by the company having been struck off the register, the Court, on an application made by the company, member or creditor before the expiry of twenty years from the publication in the Official Gazette of the notice aforesaid, may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register; and the Court may, by the order, give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.”

The Court referred to Section 560(6) of the Act of 1956 is defined in Section 2(11) of the Act of 1956. Read with Section 10 of the Act of 1956, in the facts of the present case, would mean the Hon’ble High Court at Calcutta. Sections 2(11) and 10 of the Act of 1956 are as follows:-

“2(11). “the Court” means,-

(a) with respect of any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10;

(b) with respect to any offence against this Act, the Court of a Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence.”

“10. Jurisdiction of Courts.

(1) The Court having jurisdiction under this Act shall be-

(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of subsection (2); and

(b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district.

(2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred-

(a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive;

(b) in respect of companies with a paid- up share capital of not less than one lakh of rupees, by Part VII (sections 425 to 560) and the other provisions of this Act relating to the winding up of companies.

(3) For the purposes of jurisdiction to wind up companies, the expression” registered office” means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up.”

The petitioner is not the company nor its member or creditor. It is not the person named in Section 560(6) of the Act of 1956. It does not have the statutory right to apply under Section 560(6) of the Act of 1956. In absence of such statutory right can the petitioner be said to be remediless? There is a remedy for every violation of a right. The petitioner claims violation of its rights by the impugned decision of the Registrar of Companies. It cannot be said that, the petitioners does not have any forum before which it can ventilate its grievances or seek redressal with regard to the impugned decision of the Registrar of companies.

Section 560(6) of the Act of 1956 cannot be read to say that, persons not specified therein are remediless in respect of a decision of the Registrar of Companies regarding the striking off of the name of a company. Section 560(6) permits the categories of persons noted therein to approach the Company Court. Persons who are not noted in such sub-section are entitled to approach a Writ Court or for that matter a Civil Court for the purpose of redressal of their grievances. Approaches to these forai are not barred under Section 560 of the Companies Act, 1956 or any other provision therein. The constitutional right to approach a Court under Article 226 of the Constitution of India cannot be taken away by statute. The impugned decision of the Registrar of Companies is justiciable under Article 226 of the Constitution of India. Unless expressly excluded by the statute, the right to approach a Civil Court for redressal of civil disputes cannot be curtailed. Ouster of jurisdiction of a Civil Court should not be readily inferred. Section 560 of the Act of 1956 does not contain any provision excluding the jurisdiction of a Civil Court. It does not say that the persons not named therein cannot approach a Civil Court for redressal. It has been recognised in various judicial pronouncements that, where persons, who do not have the requisite qualification as prescribed under the Companies Act, 1956 to approach the Company Court or the forum designated thereby, can approach the regular Civil Court or any other appropriate forum for redressal. The Companies Act, 1956 has not excluded the jurisdiction of the Civil Courts in respect of matters governed by it where the disputes are civil in nature. The regular Civil Courts, however, does not have the same powers as are vested in “the Court” defined under Section 2(11) read with Section 10 of the Act of 1956. That does not mean that a regular Civil Court has no jurisdiction to adjudicate upon the civil disputes in respect of an infringement of the provisions of the Act of 1956 or an action taken purportedly under the Act of 1956. Readily the provisions of Sections 397, 398 and 399 of the Act of 1956 come to mind with regard to the right to approach the Company Court and after amendment of the Companies Act, 1956, the Company Law Board. Section 399 of the Act of 1956 provides the right to apply under Sections 397 and 398 of the Act of 1956. It stipulates the eligibility criteria to approach the forum designated by Sections 397 and 398 of the Act of 1956. Persons not having the requisite qualification under Section 399 are not entitled to the approach the designated forum under Sections 397 and 398 for redressal of the grievances relating to oppression and mismanagement in relation to the affairs of the company. Absence of eligibility criteria laid down under Section 399 does not mean that, persons who do not have such eligibility cannot have their grievances with regard to the affairs of a company redressed at all. A regular Civil Court has been recognized to have jurisdiction to entertain a suit with regard to the affairs of a company at the instance of a person who does not have the requisite share holding to file a petition under Sections 397 and 398 of the Act of 1956. Similarly, a person who is not named under Section 560 of the Act of 1956 cannot be held to be remediless in respect of an action taken by the Registrar of Companies purporting to exercise powers under Section 560 of the Act of 1956. Such a person can approach a regular Civil Court or apply under Article 226 of the Constitution of India for redressal of his grievances in respect of a decision of the Registrar of Companies striking off the name of a company under Section 560 of the Act of 1956.

The petitioner claims to have entered into a tripartite agreement in which the company is involved. The petitioner claims a jural relationship with the company. The rights of the petitioner stand affected by the decision of the Registrar of Companies in striking off the name of the company from the Register. In the facts of the present case, the petitioner cannot be said to be a busy body so far as the affairs of the company is concerned.

The first two issues are answered in the affirmative in view of the discussion above.

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