Case Law Details

Case Name : Gharda Chemicals Ltd. Vs Jer Rutton Kavasmanek (Bombay High Court)
Appeal Number : Co. Appeal No.(L) NO. 45 OF 2012
Date of Judgement/Order : 20/12/2012
Related Assessment Year :
Courts : All High Courts (3701) Bombay High Court (671)

HIGH COURT OF BOMBAY

Gharda Chemicals Ltd.

Versus

Jer Rutton Kavasmanek

CO. APPEAL (L) NO. 45 OF 2012

CLB CO. APPLICATION NO. 73 OF 2012

CLB CO. PETITION NO. 87 OF 2010

DECEMBER 20, 2012

JUDGMENT

1. Admit.

2. By consent of the parties, the present appeal was heard finally at the admission stage and is disposed of finally by this judgment.

3. This appeal filed under Section 10F of the Companies Act, 1956 is directed against the order dated 13th August, 2012 passed by the Company Law Board, Western Region Bench, Mumbai in Company Application No. 73 of 2012 in Company Petition No. 87 of 2010 which was filed by respondent Nos. 1 and 2 for seeking amendment to CLB Company Petition No. 87 of 2010. By the said impugned order, the Company Law Board (hereinafter referred to as CLB) allowed the amendment application filed by respondent Nos. 1 and 2.

4. The appellants have formulated following questions of law in the Memorandum of Appeal which arise for consideration of this Court :-

 1.  Whether a company petition under section 397/398 of the Companies Act, 1956 which has become infructuous/does not survive/is dead, since the only alleged act complained of has come to an end, can be amended to introduce a completely new and fresh alleged cause of action ?

 2.  Whether a company petition under section 397/398 of the Companies Act, 1956 can be amended to introduce a completely new and fresh alleged cause of action ?

 3.  Whether after holding that the events sought to be introduced by an amendment are not subsequent events, but constitute a fresh cause of action, an amendment to a company petition under section 397/398 can be allowed to introduce such events ?

 4.  Where a company petition is instituted under section 397/398 of the Companies Act, 1956 on the premise that the board of directors of the company have convened an EOGM, whether an EOGM requisitioned by shareholders under section 169 of the Companies Act, 1956 would constitute a subsequent event in continuation of the earlier alleged cause of action which can be introduced as an amendment to the company petition ?

 5.  Whether an extraordinary general meeting convened pursuant to a valid requisition by shareholders under section 169 of the Companies Act, 1956 constitutes a cause of action for an action under section 397/398 of the Companies Act, 1956 against the shareholders who have not requisitioned the meeting ?

 6.  Whether an extraordinary general meeting convened pursuant to a valid requisition by shareholders under section 169 of the Companies Act, 1956 to consider an amendment to the articles of association of the company constitutes a cause of action for an action under section 397/398 of the Companies Act, 1956 against the shareholders who have not requisitioned the meeting ?

 7.  Whether an extraordinary general meeting convened by a company to consider an amendment to the articles of association of the company constitutes a cause of action for an action under section 397/398 of the Companies Act, 1956 ?

 8.  Whether the provisions of Order I Rule 10 of the Code of Civil Procedure, 1908 or principles analogous thereto are in any manner applicable to proceedings before the Company Law Board initiated under section 397/398 of the Companies Act, 1956 ?

 9.  Whether the provisions of Order VI Rule 17 of the Code of Civil Procedure, 1908 or principles analogous thereof are in any manner applicable to proceedings before the Company Law Board initiated under section 397/398 of the Companies Act, 1956 ?

5. Some of the facts emerge from the Memorandum of Appeal filed by the appellants are summarised as under :-

6. On or about 7th March, 1967, the 1st appellant was incorporated as a private limited company under the provisions of Companies Act, 1956.

7. On 17th August, 1988, the 1st appellant became a deemed public limited company under the provisions of Companies Act, 1956.

8. According to appellants, on 13th February, 1990, respondent Nos. 1 to 5 were part of a minority group of seven shareholders collectively referred as Kavasmaneck/Rebello Group who filed a Company Petition NO. 77 of 1990 in this Court inter alia alleging Oppression and mismanagement, on several grounds set out in the said petition and reproduced in the Company Petition No. 87 of 2010 seeking orders and direction under sections 397, 398, 402, 403 and 433(1) of the Companies Act, 1956.

9. According to the appellants, on or about 5th May, 2001, Kavasmaneck/Rebello Group including respondent Nos. 1 to 5 voted against a resolution inter alia resolving to revert to appellant no.1’s original status i.e. private limited company, due to certain amendments in the Companies Act, 1956. As a result of the resolution having been defeated, appellant no.1 acquired the status of a public limited company and continues to remain a public limited company.

10. On or about 8th September, 2008 the respondent Nos. 1 and 2 unconditionally withdrew the said Company Petition 77 of 1990 and Respondent no. 7 and 8 herein continued the said petition.

11. On 14th November, 2008 the Company Petition No. 77 of 1990 was dismissed by a judgment and order of this Court. The said order remains unchallenged and has become final and binding and conclusively holds that Appellant no. 1 is a public company and its shares are freely transferable. The said order and judgment not only binds Respondent no. 4 and 5, but also binds the Appellant and Respondent No. 1 and 2 herein.

12. On 9th December, 2009, respondent no.1 and 2 on the basis of certain newspaper reports which stated that Appellant no. 2 was selling his shares in Appellant no. 1 filed another company petition bearing No. 132 of 2009 before the CLB setting out the same allegations as set out in Company Petition No. 77 of 1990 along with allegations arising out of such news paper reports.

13. On 14th May, 2010, the Company Petition NO.132 of 2009 was dismissed by the CLB by an order dated 14th May, 2010 holding that no case of oppression of mismanagement was made out, appellant no.1 is a public company and that Article 57 of the Articles of Association thereof is void and unenforceable.

14. On 26th May, 2010, respondent Nos. 1 and 2 preferred an appeal against the said order dated 14th May, 2010 before this Court bearing Company Appeal No.24 of 2010.

15. On 16th October, 2010 during the pendency of Company Appeal No. 24 of 2010, the appellant no.1 company issued a notice dated 16th October, 2010 convening an Extra Ordinary General Meeting to be held on 12th November, 2010. One of the purpose of the said meeting was considering the deletion of Article 57 of the Articles of Association of appellant no.1.

16. In the year 2010, respondent Nos. 1 and 2 filed Company Petition No. 87 of 2010 before CLB seeking to restrain the appellants and respondent Nos. 6 and 7 from convening the said EOGM or any other EOGM for the said purpose and applied for an ad-interim injunction for the same.

17. On 3rd November, 2010, the appellant no. 2 filed his affidavit in reply to the said petition and inter alia contended that no petition under Sections 397/398 was maintainable in relation to the holding of the EOGM dated 12th November, 2010.

18. On 9th November, 2010, the CLB rejected ad-interim reliefs by a reasoned order and merely gave directions to the parties to file their replies/rejoinders and directed that the matter be listed for final hearing thereafter.

19. In the year 2010, the respondent Nos. 1 and 2 thereafter filed Company Appeal No. 2 of 2011 against the said order dated 9th November, 2010 before this Court.

20. On 10th November, 2010, this Court permitted appellant no.1 to hold the proposed EOGM on 18th November, 2010 but ordered that the resolution passed thereat shall not be implemented till 18th November, 2010 and directed the appeal to be listed on 15th November, 2010.

21. On 12th November, 2010, the EOGM of appellant no.1 was held on 12th November, 2010 but was adjourned to 10th December, 2010 in view of the pending appeal No.2 of 2011.

22. On 9th December, 2011, the appellant no.1 thereafter also issued a circular dated 9th December, 2010 and intimated its shareholders that the said EOGM was being adjourned in view of the pending proceeding in relation to the same (i.e. Company Appeal No.2 of 2011) and would be held within a period of 2 months for which fresh notice would be issued.

23. Thereafter the Company Appeal No.2 of 2011 was tagged along with Company Appeal No. 24 of 2010 for hearing and was heard together.

24. On 14th June, 2011 this Court by its judgment and order dated 14th June, 2011 dismissed the said Company Appeal No. 24 of 2010 and held inter alia that appellant no.1 is a public company and that Article 57 of the Articles of Association is unenforceable. The said order however continued an injunction granted at an ad-interim stage of the appeal with certain modification whereby appellant Nos. 2 and 3 are restrained from selling, transferring, alienating, pleading, encumbering or in any manner creating any third party rights in shares of appellant no.1 directly or indirectly held by them. Though the Company Appeal No.24 of 2010 was dismissed on 14th June, 2011, no order was passed in Company Appeal No. 2 of 2011 whilst dismissing Company Appeal No. 24 of 2010.

25. Thereafter respondent Nos. 1 and 2 preferred SLP bearing No. 16994 of 2011 before the Supreme Court of India against the said order dated 14th June, 2011.

26. On 22nd and 27th July, 2011, the said SLP has not yet been admitted. The Supreme Court of India by its orders dated 22nd July, 2011 and 27th July, 2011 in SLP (Civil) No. 16994 of 2011, has continued the order of injunction which was continued by this Court in its order dated 14th June, 2011. The SLP is pending. The Supreme Court has not granted a stay of the order dated 14th June, 2011.

27. On 8th August, 2011, the Company Appeal No.2 of 2011 was sought to be withdrawn by respondent Nos.1 and 2 in view of the fact that the EOGM dated 12th November, 2010 was never reconvened within the aforementioned period of two months stated in the circular dated 9th December, 2012. By an order dated 8th August, 2011, the said Company Appeal No. 2 of 2011 was permitted to be withdrawn with liberty to the appellants to adopt appropriate proceedings in case a fresh Extraordinary General Meeting is convened. It was also observed that in the event the fresh EOGM is convened, the same would mean a fresh cause of action, the CLB or any other appropriate authority will decide the same independent of the observations made in its earlier order dated 9th November, 2010 and all contentions including the maintainability of the said proceedings if initiated were kept open.

28. On 22nd April, 2012, appellant no.1 received a requisition dated 31st March, 2012 under section 169 of the Companies Act from respondent Nos.3 to 5, for convening an EOGM for the purpose of considering and thought fit passing a resolution for deletion of Article 57 of Articles of Association of appellant no. 1.

29. In May 2012, respondent Nos. 1 and 2 filed Company Application No. 73 of 2012 in Company Petition No. 87 of 2010 with a view to amend Company Petition No. 87 of 2010. Respondent Nos. 1 and 2 also sought an ad-interim injunction staying the notice dated 25th April, 2012 and also restraining respondents in the said Company Application No. 73 of 2012 from holding the said EOGM dated 22nd May, 2012 or any subsequent date for considering the resolutions mentioned in the notice dated 25th April, 2012.

30. On 21st May, 2012, the CLB by its ad-interim order dated 21st May, 2012 permitted the appellants to hold the EOGM on 22nd May, 2012 but restrained the respondents from implementing the resolution, if passed till further orders in the said Company Application.

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31. On 22nd May, 2012, the EOGM was conducted on 22nd May, 2012 and the resolution for the deletion of Article 57 from the Articles of Association of the appellant no.1 was passed.

32. In the year 2012, the appellant no.1 thereafter filed a Company Application No. 85 of 2012 in Company Petition No. 87 of 2010 for seeking a vacation/modification of the ad-interim order dated 21st May, 2012.

33. In June 2012, the respondent Nos. 1 and 2 filed a further Company Application No. 91 of 2012 to further amend Company Petition No. 87 of 2010 with a view to introduce inter alia a challenge to the conduct of the EOGM dated 22nd May, 2012 and to seek an injunction against the appellants restraining them from implementing the resolution dated 22nd May, 2012, deleting article 57 from the Articles of Association of appellant no.1.

34. On 10th July, 2012, Company Application Nos. 73 of 2012, 85 of 2012 and 91 of 2012 were being heard together and Company Application Nos. 73 of 2012 and 85 of 2012 were part heard on 10th July, 2012 and adjourned to 24th July, 2012.

35. On 24th July, 2012, Company Application Nos. 73 of 2012, 85 of 2012 and 91 of 2012 were listed but at the request of respondent Nos. 1 and 2, they were adjourned to 10th August, 2012.

36. On 9th August, 2012, the advocates for respondent Nos. 1 and 2 issued a letter to the advocates for the appellants and stated that they would be seeking another short adjournment on 10th August, 2012 due to the unavailability of counsel since he was held up in another matter before this Court. Under the instructions from the appellants, the advocates for the appellants intimated the advocates for respondent Nos. 1 and 2 by two letters dated 9th August, 2012 that they had instructions to oppose any further adjournments and that the request for an adjournment would be opposed.

37. On 10th August, 2012, the matter was listed on 10th August, 2012. The CLB did not allow the request for an adjournment since only Company Application Nos. 73 of 2012, 85 of 2012 and 91 of 2012 were specifically listed on board with a view to conclude the hearing. The hearing in respect of Company Application No. 73 of 2012 and Company Application No. 85 of 2012 was concluded and orders reserved. However, the hearing of Company Application No. 91 of 2012 was adjourned to 6th September, 2012 at the request of the advocates for respondent Nos. 1 and 2.

38. On 13th August, 2012, the CLB by a common order disposed off the Company Application No. 73 of 2012 and Company Application No. 83 of 2012 allowing both the applications.

39. In August, 2012, respondent Nos. 1 and 2 filed Company Appeal (L) No. 41 of 2012 against the said order to the extent it allows Company Application No. 85 of 2012 which is being disposed off by a separate order.

40. On 6th September, 2012, the CLB adjourned the hearing of the Company Application No. 91 of 2012 to 3rd October, 2012 and the same is pending.

41. The appellants have impugned the order dated 13th August, 2012 passed by the CLB in this appeal.

42. By the said order, the CLB has permitted impleadment of respondent Nos. 7 and 8 as party respondents to the Company Petition No. 87 of 2010 and has permitted the respondent nos. 1 and 2 to amend the Company Petition No. 87 of 2010 by introducing certain averments.

43. Mr. Subramanian, the learned senior counsel appearing for the appellants made the following submissions :-

(a)  Company Petition (87 of 2010) filed by the respondent no.2 under sections 397 and 398 of the Companies Act, 1956 itself became infructuous. The said petition was filed to prevent holding of EOGM on 12th November, 2010 called by notice dated 16th October, 2010 by the appellants under Article 76 of the Articles of Association read with Section 28 and in compliance with the provisions of sections 171 to 173 of the Companies Act, 1956. This court in Company Appeal (2 of 2011) passed an order dated 10th November, 2010 that the resolution passed at the EOGM shall not be implemented. The appellant adjourned the meeting and informed the shareholders that fresh notice would be given if the EOGM was to be held later. The appellants did not hold any EOGM called by the company by notice issued on 16th October, 2010. This court passed an order dated 8th August, 2011 allowing the prayers of respondent nos. 1 and 2 to withdraw the Company Appeal (2 of 2011) in view of appellants’ adjourning the meeting. This court observed that respondent nos. 1 and 2 may adopt proceedings in an appropriate forum on a fresh cause of action keeping all the questions including maintainability of the appeal open.

(b)  Company Petition (87 of 2010) filed by the 2nd respondent thus become infructuous as the cause of action had ceased to exist and this Court granted liberty to adopt fresh proceedings in a appropriate forum on a fresh cause of action.

(c)  Notice for EOGM dated 22nd May, 2012 constituted a new and different cause of action. Notice dated 25th April, 2012 for holding EOGM on 22nd May, 2012 was issued upon a requisition by three shareholders made on 31st March, 2012 and received by the appellants on 20th April, 2012 under section 169. The requisition of meeting thus constituted an entirely new and different cause of action and could have been questioned only by an appropriate new proceeding in an appropriate forum which would not be the CLB under section 397.

(d)  The CLB by its order dated 21st May, 2012 refused to restrain the holding of the EOGM and directed that the resolution passed therein to be kept in abeyance “till further orders”. The CLB thereafter vacated its ad-interim order dated 21st May, 2012 upon the appellants filing Company Application (85 of 2012) and adjourned the hearing of the Company Application (91 of 2012) and for further amendment of Company Petition No. 87 of 2010. No amendment could have been considered or allowed in Company Petition No. 87 of 2010 under the garb of “subsequent events”. Meeting convened pursuant to a requisition under Section 169 does not constitute a cause of action under sections 397 and 398 of the Companies Act, 1956. In the alternative, it furnished a new and different cause of action. The allegation of collusion and other allegations regarding undermining the jurisdiction of Supreme Court and the invalidity of the resolution dated 22nd May, 2012 raised an entirely new case and new grounds and would require entirely new and different evidence and submissions and thus could not have been introduced by way of amendment in the company petition which had become infructuous.

44. Mr. Subramanian, the learned senior counsel stated that the petition containing a single act of complaint is not maintainable in as much as this court has already held that Article 57 was invalid. The learned senior counsel placed reliance upon portion of the judgment of this court in case of Sitaram Krishna Padhye v. Chimandas Fathechand 1928 (30) Bombay Law Reporter 1300 which reads thus :-

“……….We have, now been asked at this late stage to allow an amendment which would have the effect of introducing not only the evidence which has been already given, which in my judgment; for the reasons already given by me was wholly inadmissible, but which might also allow the amending party to introduce other evidence hereafter if a new trial were granted. In my opinion such an amendment would raise a cause of action entirely different from the cause of action arising upon the hundis sued upon in the present suit, Accordingly it seems to me that in such circumstances an amendment ought to be refused, even upon the terms of the party asking for the amendment paying the whole of the costs thrown away. In a case where an entirely different cause of action is raised, I think that the proper course is to leave the party to bring a fresh suit ab initio, if so advised.”

45. Dr. Saraf, the learned counsel appearing for respondent nos. 7 and 8 supported the appellants in impugning the order passed by the CLB allowing the amendment thereby impleading respondent nos. 7 and 8 as party to the Company Petition. It is submitted that collusion between the appellants and respondent nos. 7 and 8 has not been proved. The learned counsel placed reliance upon the findings of fact recorded by CLB in paragraphs 13 and 39 of the impugned order and submits that once such finding of no collusion is recorded by the CLB, respondent nos. 7 and 8 could not have been impleaded as party respondents. It is submitted that the order allowing impleadment of respondent nos. 7 and 8 after recording such finding shows inconsistency in the impugned order.

46. Mr. Samdhani, the learned senior counsel appearing on behalf of respondent nos. 1 and 2 on the other hand submits as under :-

(a)  Company Petition No. 87 of 2010 filed by the second respondent before the CLB is not infructuous. The challenge in the said petition was not confined only to the EOGM dated 10th November, 2010. The second respondent has impugned in the said petition an attempt of the appellants to take away right of pre-emption per se. The second respondent has sought relief not only against the EOGM of 10th November, 2010 but also against the EOGM in future that might be held for the same or similar purpose.

(b)  The learned counsel placed reliance on the prayers in Company Petition No. 87 of 2010. It is submitted that the Company Petition was filed in November, 2010, i.e. much before the order of S.C. Dharmadhikari, J. When Company Petition No. 87 of 2010 was filed, the appeal against the CLB order dated 14th May, 2010 was already admitted. The purpose/issues were at large and the matter was subjudice.

(c)  The convening of the requisitioned EOGM was a further act of oppression for the same earlier purpose viz. to take away right of the pre-emption. It is submitted that such act was subsequent and was in continuation of oppressive action and thus CLB was right in amendment of the Company Petition No. 87 of 2010 thereby to include the challenge to the convening of EOGM.

47. Mr. Samdhani, the learned senior counsel placed reliance on the judgment of this court in case of Khimji M. Shah v. Ratilal Damodardas Modi [1990] 67 Comp. Cas. 185.

It is next contended on behalf of the respondent that in a company petition of this nature, only the grievance of the petitioners as shareholders can be enquired into; if they have any grievance as directors of a company, such grievance cannot form the subject-matter of a petition under section 397 and/or section 398 of the Companies Act. It is undoubtedly correct that petitions under section 397 deal with applications by members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members. Similarly, section 398 deals with applications by members of the company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interest of the company or that a material change has taken place in the management or control of the company and by reason of such change it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interest of the company. These are all applications by members. In the case of Lundie Brothers Ltd., In re, a petitioner, who was one of three directors and shareholders in a private company, presented a petition for relief under section 210 of the English Companies Act, 1948, which is equivalent to section 397 of the Companies Act. The petitioner was ousted from the control of the company and was removed as a working director of the company. It was held that no element of lack or probity or fair dealing to the petitioner in his capacity as shareholder in the company had been established, for, his having been ousted as a working director related to his status as director and not as shareholder. It was held that the petitioner was not entitled to relief under section 210 of the Companies Act. In the present case, however, the amendments do not deal merely with removal of directors of the fifth respondent-company. The acts complained of relate to requisition various shareholders of the fifth respondent company, as a result of which an extraordinary general meeting is purported to have been held and certain new directors appointed. At this meeting, the chairman and managing director was also sought to be removed. The petitioners contend that some of the directors so appointed are involved in charges of criminal conspiracy and if they are appointed as directors of the company, the affairs of the company; will be so conducted as to be oppressive to the shareholder especially the petitioners’ grievances as directors of the company. The acts complained of affect them as shareholders also. In any case, this is a matter which can be looked into in depth at the hearing of the petition. The amendments cannot be rejected on this ground.

In the premises, the judge’s summons is made absolute in terms of prayer (a). Amendments to be carried out within one week. Liberty to respondents Nos. 1 to 4 to file an additional affidavit-in-reply in Company Petition No. 573 of 1984 confined to the amendments.

Newly added respondents Nos. 6 to 9 to file their affidavit-in- reply within three weeks from being joined as respondents and served.

48. The learned senior counsel also relied upon a portion of the judgment of this court in case of Jer Rutton Kavasmaneck v. Gharda Chemicals Ltd. [2000] 23 SCL 71 which reads thus :-

15. I have considered the arguments put forward by the learned Counsel for the parties. The position with regard to amendment of the pleadings is no longer res integra. The law has been clearly set out in the case of Khimji M. Shah v. Ratilal D. Modi and others, 1988 Mh. L.J. 38 and. In that case it is clearly held as follows:

“6. Mr. Chinoy who appeared for respondents Nos. 1, 2 and 4 to oppose the amendments, stated that he had no objection to respondents Nos. 6, 7 and 8 being added as party-respondents to the Company Petition No. 573 of 1984. He, however, submitted that rest of the amendments should not be allowed because, according to him, these amendments deal with the events subsequent to the filing of Company Petition No. 573 of 1984. It is his contention that such subsequent events cannot be gone into in deciding a Company petition under sections 397 and 398 of the Companies Act. In support he relied upon a decision in the case of Rajamundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao reported in A.I.R. 1956 S.C. 213. In this case the applicants had obtained the consent of not less than 1/10th of the members of the Company while filing a petition under sections 397 and 398 of the Companies Act. After the petition was presented some of the shareholders withdrew their consent. The Court held that this subsequent withdrawal of consent is not relevant if the petition had the support of the requisite number of members at the time when the petition was presented. This case does not support the contention of Mr. Chinoy. The judgment merely states that if a petition is validly filed and complies with all the requirements of sections 397 and 398 of the Companies Act at the date when it is filed, any subsequent withdrawal of consent by some of the shareholders would not invalidate the petition. The decision does not set out that subsequent events cannot be looked into in deciding a petition under sections 397 and 398 on merits.

7. The second case relied upon by Mr. Chinoy was that of Shanti Prasad Jain v. Kalinga Tubes Ltd., reported in. The Court there held that it is necessary in a petition under sections 397 and 398 of the Companies Act to show that the conduct of the majority shareholders was oppressive to the minority as members. Also, the events had to be considered not in isolation but as a part of a consecutive story. It said “There must be continuous acts on the part of the majority shareholders, continuing up to the date of petition, showing that the affairs of the company were being conducted in a manner oppressive to some part of the members”. Mr. Chinoy emphasised the words “up to the date of petition” and submitted that only conduct up to the date of the petition can be looked at in such a petition. I am unable to agree. The judgment points out that there should be a course of conduct which could be considered as oppressive to some of the members, burdensome, harsh and wrongful and such conduct should continue till the date of the petition. Stray acts which may amount to such burdensome conduct cannot be enough. There should be continuous course of conduct upto the date of petition. The judgment does not deal with any subsequent conduct after the date of filing of the petition. It merely says that if there is no such conduct continuing till the date of the petition, the petition would fail. From this a conclusion cannot be drawn that if there are any subsequent acts of oppression or mismanagement after the date of the filing of the petition, those cannot be incorporated in a petition by way of amendment.

8. Under Rule 6 of the Companies (Court) Rules, 1859 the provisions of the Code of Civil Procedure, so far as applicable shall apply to all proceedings under the Companies Act. The provisions relating to amendment of pleadings would, therefore, apply to amendment of pleadings under the Companies Act. There is no bar to an amendment which incorporates subsequent events if the amendment is otherwise necessary for proper determination of issues between the parties. In the case of Promode Kumar Mittal v. Southern Steel Ltd., reported in the Calcutta High Court observed in a petition under sections 397 and 398 of the Companies Act that the Court can take notice of all subsequent events to grant reliefs finally after trial in a company matter and the interim orders passed from time to time by the Court in all applications, the meetings held under the Chairman appointed by the Court, and the resolutions passed by majority shareholders and directors present therein are all relevant. In the case of Inder Kumar Jain v. Osra Bottling Co. (P.) Ltd., reported in the Delhi High Court has held that on an analogy of Order VI, Rule 17 of the Code of Civil Procedure, the High Court has power to grant leave to amend a pleading in a petition under section 397 or 398 of the Companies Act, 1956 for relief against mismanagement or oppression in the affairs of a Company. In the case of Bastar Transport and Trading Co. v. Court of Wards, reported in the Court has held that the provisions of the Code of Civil Procedure, so far as applicable, would govern proceedings under the Companies Act also. There is thus no provision under the Companies Act which prohibits a Court from looking at subsequent events in a petition under sections 397 and 398 of the Companies Act.”

Thus, it becomes evident that it is permissible to bring on record by amendment not only the facts pertaining to the events upto the filing of the petition but also subsequent events. Mr. Manohar had, however, submitted that this judgment does not take note of the law laid down by the Supreme Court in the case of Shanti Prasad Jain v. Kalinga Tubes Ltd. A.I.R. 1965 S.C. 1535. In paragraph 35 of the judgment, the Supreme Court observed as follows:

“35. Nor is there any ground for holding that because of the change which took place in the management after July, 1958 it was likely that the affairs of the Company would be conducted in a manner prejudicial to its interests. The change that took place after July, 1958 was that the appellant no longer remained the Chairman of the Company and the. Patnaik and Loganathan groups practically managed the company without the appellant. But as the High Court has pointed out there were no facts before the Court to come to the conclusion that the change in management was likely to result in the affairs of the Company being conducted in a manner prejudicial to its interests. In this connection reliance is placed on certain matters which transpired after the application was filed on September 14, 1960. These matters however cannot be taken into account for the application has to be decided on the basis of the facts as they were when the application was made. Besides as the High Court has pointed out, it has not been shown that in view of certain actions taken by the new management without consulting the appellant, the Company was landed in any difficulty and loss of profit which would show mismanagement of its affairs.”

I am of the considered opinion that the judgment in Khimji M. Shah [supra] has correctly interpreted the law laid down by the Supreme Court. Even the Supreme Court in Kalinga has held that facts and events leading upto the filing of the petition are relevant. Keeping the aforesaid proposition of law in view, the Court is now required to see as to whether sufficient facts have been pleaded to make out an arguable case of oppression as well as mismanagement. It is a settled proposition of law that whilst exercising powers under Order 7, Rule 11 the courts act with utmost caution. Dismissal of a petition at the threshold leads to very serious consequences. The courts in India as well as in England have been very reluctant to reject the plaint at the threshold. Order VII, Rule 11 (a) of the C.P.C. provides that the Court may reject the plaint/petition if it discloses no cause of action. Similar provision occurring in Rules of Supreme Court Order 18, Rule 19 in England was considered in the case of (Drummond-Jackson v. British Medical Association and others), 1970 All. E.R. 1094 wherein Lord Pearson observes as follows:

“Over a long period of years it has been firmly established by many authorities that the power to strike out a statement of claim as disclosing no reasonable cause of action is a summary power which should be exercised only in plain and obvious cases……….”

Similar views expressed by other Judges are also noticed in that judgment which are as follows.

“In Nagle v. Feilden, 1966 (1) All. E.R. at page 695 Danckwerts, L.J., observes:

“The summary remedy which has been applied to this action is one which is only to be applied in plain and obvious cases, when the action is one which cannot succeed or is in some way an abuse of the process of the Court.”

Salmon, L.J., at page 697 observes:

“It is well settled that a statement of claim should not be struck out and the plaintiff driven from the judgment seat unless the case is unarguable.”

Thus the Rule appears to be that the plaint can be rejected in plain and obvious cases when the action is one which cannot succeed or is in some way an abuse of the process of the Court. The plaint should not be struck out unless the case is unarguable. In the same judgment Sir Gordon Willmer at page 1105 observed as follows:

“The question whether a point is plain and obvious does not depend on the length of lime it takes to argue. Rather the question is whether when the point has been argued, it has become plain and obvious that there can be but one result.”

Thus it becomes clear that the petition could be struck out only if the case put forward is unarguable. In my view, the petition has raised a number of substantial questions of law. Mr. Chinoy has referred to a large number of authorities, English as well as American, which seem to propound a view that dividend squeeze can be accepted in principle as indicative of oppression. On the other hand, Mr. Manohar had cited a number of cases to show that declaration of dividends is purely a commercial matter. It has to be decided by the management as to how much dividend has to be paid. Mr. Manohar has also highligthed that the dividend is usually related to the face value of the shares. In fact, Mr. Manohar had handed over a chart to show that the quantum of amount received by way of dividend by the petitioners has in fact increased. He had also made a pointed reference to the fact that the petitioners are not actively participating in the management of the Company. They can, therefore, hardly complain about the increase in the emoluments of respondent No. 2. He had submitted that keeping these facts and circumstances in view, no material had been placed on the record by the petitioners which would lead this Court to the conclusion that the minority has been oppressed.

16. There are two diametrically opposed propositions given on the interpretation of Article 57 of the Articles of Association. As noticed earlier, it is the claims of the respondents that Articles 57 does not apply to intra member transfers. On the other hand it has been pleaded as well as argued that the shares have to be sold only to the members in order to maintain the principle of proportionality which was the underlying idea of the incorporation of the Company.

17. Keeping the aforesaid facts and circumstances in view, it would not be possible for this Court to hold that the petition is demurrable. Once the petition is held to be maintainable, the petitioners are entitled to bring on record all matters which are germane to decide the issue of oppression. The Orissa High Court in the case of M/s. Kalinga Tubes Ltd. and others v. Shanti Prasad Jain and others, framed various issues in paragraph 7 of the judgment. Issue No. 1 was as follows:

“(i) Is the petition demurrable and liable to dismissal in limine?”

The Division Bench noticed the submissions in paragraph 8 of the judgment made by the learned Attorney-General to the effect that the petition does not make out a case under sections 397 and 398 of the Act and the petitioner could not be permitted to supplement the allegation by subsequent affidavits filed. It is noted by the Division Bench that the petition was filed on 14th September, 1960. The Company filed its counter affidavit on 19th September, 1960. Respondent No. 2 filed his rejoinder on 2nd December, 1960. The Court had earlier ordered that by 15th February, 1961 all rejoinders should be filed. The petitioner filed all rejoinders on 8th February, 1961. On 17th March, 1961 respondent No. 2 filed another affidavit without the leave of the Court and on 13th April, 1961 the petitioner filed a counter affidavit in reply to this affidavit without leave of the Court. The learned Attorney-General contended that the subsequent affidavits filed by the petitioner should not be taken into consideration to supplement the averments made in the petition and that the petition is demurrable. The ratio of the judgment is in paragraph 10 which is as follows:

“10. On a summary of the legal position, it is sufficiently clear that in a petition under sections 397 and 398 of the Act, all material facts must be pleaded. If the facts transpiring on the date of the petition and alleged in the petition are not sufficient to make out a case for winding up on just and equitable ground, then facts arising subsequent to the filing of the application cannot be resorted to for the purpose, and the absence of allegations on the pleadings cannot be substituted by further evidence either by affidavits or oral and documentary evidence.”

From a perusal of the judgment, it becomes abundantly clear that the Orissa High Court was not dealing with a case of amendment of the petition. It was dealing with two affidavits which had been filed pertaining to the facts which had already been pleaded. This is apparent from paragraph 11 of the judgment which is as under:

“11. In this case the entire question is academic. We called upon the learned Attorney-General to give us a list of new facts which were not alleged in the criminal petition but were introduced by subsequent affidavits. Mr. Choudhury furnished us a list and on examination we find that essentially the subsequent affidavits filed by the petitioner either repeat the material facts already pleaded in different forms or supply some fresh materials in reply to the materials given in the counter affidavit of the contesting respondents. It is, therefore, not necessary to examine in detail as to in what manner the departure has been made in the pleading as essentially, in our view, there has been no departure in material facts. The subsequent affidavits are more or less pieces of evidence in support of the averments of material facts pleaded in the petition. Respondent 2 also filed a subsequent affidavit, as already stated, even without permission of the Court. Most of the subsequent affidavits merely place facts already pleaded by both parties. The subsequent affidavits would, therefore, be taken into consideration, but facts transpiring subsequent to the petition would be excluded from consideration.”

Thus the two affidavits were treated as pieces of evidence in support of the averments of material facts pleaded in the petition. The two affidavits were, therefore, taken into consideration excepting the facts transpiring subsequent to the petition but the subsequent events were excluded only for the purpose of deciding the question of whether the petition is demurrable. I am of the opinion that once the Court comes to the conclusion that the petition is maintainable then subsequent events can also be considered in order to do complete justice between the parties and to make appropriate orders for removing the oppression.

18. The aforesaid judgment of the Division Bench was taken to the Supreme Court by way of appeal. The judgment of the Supreme Court in Shanti Prasad Jain v. Kalinga Tubes Ltd., is. A perusal of this judgment shows that the Supreme Court was not dealing with a case of amendment. Mr. Manohar had submitted that the issue was squarely raised in paragraphs 8 and 9 of the judgment and it was answered in paragraph 35 in the negative. I am unable to accept this proposition. The Supreme Court was not considering a case of amendment. It was only considering as to whether subsequent facts can be looked into on the basis of affidavits filed by the parties. The Single Judge of the Orissa High Court had allowed the petition. The appeals were allowed by the Division Bench. The Supreme Court dismissed the appeals against the judgment of the Division Bench. In paragraphs 8 and 9 of the judgment of the Supreme Court, there is no mention of the additional affidavit which had been filed in the Orissa High Court. The observations made in paragraph 35 relate to the relevance of the facts as on the date of the filing of the petition for deciding as to whether or not the petition is demurrable. These observations are of no avail to the respondents in the present case as I have come to the conclusion that there are sufficient pleadings to make out an arguable case and that the petition is not a demurrable. The judgment of the High Court in Khimji (supra) has also been considered by the Gujarat High Court. Similar issue arose in the Gujarat High Court in Company Applications Nos. 3 of 1993 and 755 of 1993 in Company Petition No. 62 of 1986. A learned Single Judge of the Gujarat High Court took notice of the fact that the Company petition has been subsequently amended as per order dated 23-1-1992 in Company Application No. 50 of 1987. Thereafter certain litigation was pending between the parties in the City Civil Court, Bombay which was decided by a consent order dated 1-12-1992. Certain matters were also pending in the Gujarat High Court. In the meantime the petitioner preferred Company Application No. 3 of 1993 in the Company Petition No. 62 of 1986 for incorporating paragraphs 17.9 to 17.28 and also for adding certain prayer clauses to the effect that the resolution of the Company dated 10-11-1992 be set aside. Another application being Company Application No. 755 of 1993 in Company Petition No. 62 of 1986 was filed. Judge’s Summons were also taken out for permitting the petitioner to amend the Petition No. 62 of 1986 on 3rd September, 1993. The proposed amendment was for challenging Resolution dated 10th November, 1992 and the issue of prospectus dated 24th August, 1993. This was clearly a case of bringing subsequent events on the record in order to establish the facts already pleaded in the petition.

19. The learned Single Judge of the Gujarat High Court noticed the judgment of the Madras High Court in the case of S. Narayanan and others v. Century Flour Mills Ltd. and others, 1987 (1) Com. L.J. 25. In that case section 397 of the Act was being considered by the Madras High Court. Certain transactions had taken place subsequent to the filing of the petition which was sought to be brought on record by amendment. It was submitted that the subsequent allegations cannot be looked into nor are the applicants entitled to rely upon them. While repelling the said submissions, the Court observed as follows:-

“Section 397 provides that any member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members may apply to the Court for an order under that provision, if the Court is of opinion that the Company’s affairs are being conducted prejudicially to public interest or in a manner oppressive to any member or members and that to wind up the company would unfairly prejudice such member or members; but that otherwise the facts would justify the making of winding up order on the ground that it was just and equitable that the company should be wound up, the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. It is useful to notice that there is no limitations on the reliefs to be granted by the Company Court under this provision. For, the provision enables the Court to make such order as it thinks fit with a view to bringing to an end the matters complained thereof. The emphasized portion of the above said provision will clearly indicate that any application under that provision shall satisfy the Court that the company’s affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members till the application is taken up for hearing. In other words, it is the persistence of such conduct by the persons in management of the company that it will enable the application under that provision to approach the Court and seek the remedy therein. The subsequent events will amount to pieces of additional evidence to support the petition laid under section 397 and 398 of the Act. If such subsequent evidence were not taken into account at the time when the application under sections 397 and 398 of the Act was taken up for disposal, it is not unlikely that the Court would be flooded with as many applications under the said provisions as there are subsequent conducts on the part of the company. Above all, it causes no prejudice to the respondents as long as the respondents are given all opportunities to adduce rebuttal evidence regarding those subsequent events or transactions.”

The learned Single Judge thereafter noticed the judgment of the Delhi High Court in the case of B.R. Kundra and others v. Motion Pictures Association, Delhi and others, 1978 (48) Com. Cas. 536. Relying on the aforesaid two judgments, the learned Single Judge permitted the amendments incorporating therein the subsequent events.

20. This judgment of the learned Single Judge was taken in Appeal before the Division Bench being O.J. Appeal Nos. 26 of 1993 to 30 of 1993 with Civil Application Nos. 54 of 1993 to 58 of 1993. The Appeal was decided by a Division Bench consisting of G.T. Nanavati & B.C. Patel, JJ. The Division Bench whilst upholding the judgment of the learned Single Judge noticed the submissions made before the learned Single Judge to the effect that the facts and events which are sought to be introduced as additional facts and grounds establishing the mismanagement and oppression are already made in the petition. It was also averred that the amendments seek to bring events which have transpired recently i.e. subsequent to the filing of the petition and which have a necessary and direct bearing on the manner in which respondent Nos. 2 and 3 have and are continuing to mismanage the company and oppress its shareholders. It was also submitted that the amendment was on the same subject matter and the amendment was also with a view to avoid multiplicity of proceedings. It was further contended that the new events indicating a fresh cause of action for filing a new petition would not come in the way of the petitioner in getting the petition amended as the same was meant for supplementing the main contention. It was contended before the Division Bench that amendments ought not to have been granted as it would attract the provisions of Order 23, Rule 1. It was further submitted that as there is a fresh cause of action, proceedings would not be maintainable in view of the amendment under the Companies Act and the forum for the grievance would be the Company Law Board. It was further submitted that the subsequent events are not relevant for deciding the issue in question. It was contended that the additional evidence should be the evidence in addition to the evidence already on record in the form of original pleadings. New material should partake the same character and content as the original petition. As the allegations are altogether different and have no nexus or relevance to the original allegations, the applications ought to have been rejected. It was further submitted that as per the provisions contained in sections 397 and 398 of the Companies Act, petition has to be decided on the facts existing on the date of presentation of the petition and the Court was not concerned with continuous course of conduct. In paragraph 9 of the judgment the Division Bench noticed the judgment of the Supreme Court in Kalinga Tubes and held as follows:

“We have gone through the decisions cited by the learned Counsel. So far as provision regarding withdrawal of the suit is concerned, it is required to be mentioned that the order passed by the Court need not be express and the provisions of Order 23, Rule 1 have to be read with the application and the order passed thereon. It is required to be noted that the subject matter of the amendment application is not the same. The learned Counsel relying upon the decision in the case of M/s. Kalinga Tubes Ltd. v. Shanti Prasad Jain, 1964 (1) Com. L.J. 117, submitted that petition is required to be decided on the averments made in the application itself. We have gone through the decision reported in 1990 (67) Company Cases 185 wherein it is held that provisions of the Code of Civil Procedure in so far as applicable shall apply to all the proceedings under the Companies Act. It is open for Court to take notice of all subsequent events to grant relief finally after the trial of the Company matter, as held by the Calcutta High Court in the case of Pramode Kumar Mittal v. Southern Steel Ltd. 1980 (50) Com. Cas. 555.”

The Division Bench was referring to the judgment of this Court in the case of Khimji M. Shah (supra). The Division Bench also held that it is necessary that with a view to see that there is no multiplicity of proceedings, amendments should be allowed. The aforesaid decisions of the Division Bench makes it clear that the decision of the Supreme Court in Kalinga was not dealing with the case of amendment application and is, therefore, not applicable to the facts and circumstances of this case.

21. At this stage the Court is not required to decide the petition on merits. The petition could be held to be demurrable only if the claim put forward cannot be established even if all the allegations made in the petition are accepted to be true. Such is not the position here. Very complicated questions of fact and law have been raised. It is only at the final hearing of the petition that the Court would be able to decide this issues as to whether the dividend squeeze could amount to an oppression. The Court would also have to decide as to whether or not transfer of shares made in contravention of the Articles of Association would amount to an act of oppression. The Court would also have to decide as to whether or not the remuneration received by respondent No. 2 is an act of oppression. These are all matters which require detailed consideration and have to be decided on merits at the final hearing of the petition.

48.1 And also in the case of Sampath Kumar v. Ayyakannu [2002] 7 SCC 559.

9. Order 6 Rule 17 of the CPC confers jurisdiction on the Court to allow either party to alter or amend his pleadings at any stage of the proceedings and on such terms as may be just. Such amendments as are directed towards putting-forth and seeking determination of the real questions in controversy between the parties shall be permitted to be made. The question of delay in moving an application for amendment should be decided not by calculating the period from the date of institution of the suit alone but by reference to the stage to which the hearing in the suit has proceeded. Pre-trial amendments are allowed more liberally than those which are sought to be made after the commencement of the trial or after conclusion thereof. In former case generally it can be assumed that the defendant is not prejudiced because he will have full opportunity of meeting the case of the plaintiff as amendment. In the latter cases the question of prejudice to the opposite party may arise and that shall have to be answered by reference to the facts and circumstances of each individual case. No strait-jacket formula can be laid down. The fact remains that a mere delay cannot be a ground for refusing a prayer for amendment.

10. An amendment once incorporated relates back to the date of the suit. However, the doctrine of relation back in the context of amendment of pleadings is not one of universal application and in appropriate cases the Court is competent while permitting an amendment to direct that the amendment permitted by it shall not relate back to the date of the suit and to the extent permitted by it shall be deemed to have been brought before the Court on the date on which the application seeking the amendment was filed. (See observations in Siddalingamma and Anr. v. Mamtha Shenoy.

11. In the present case the amendment is being sought for almost 11 years after the date of the institution of the suit. The plaintiff is not debarred from instituting a new suit seeking relief of declaration of title and recovery of possession on the same basic facts as are pleaded in the plaint seeking relief of issuance of permanent prohibitory injunction and which is pending. In order to avoid multiplicity of suits it would be a sound exercise of discretion to permit the relief of declaration of title and recovery of possession being sought for in the pending suit. The plaintiff has alleged the cause of action for the reliefs now sought to be added as having arisen to him during the pendency of the suit. The merits of the averments sought to be incorporated by way of amendment are not to be judged at the stage of allowing prayer for amendment. However, the defendant is right in submitting that if he has already perfected his title by way of adverse possession then the right so accrued should not be allowed to be defeated by permitting an amendment and seeking a new relief which would relate back to the date of the suit and thereby depriving the defendant of the advantage accrued to him by lapse of time, by excluding a period of about 11 years in calculating the period of prescriptive title claimed to have been earned by the defendant. The interest of the defendant can be protected by directing that so far as the reliefs of declaration of title and recovery of possession, now sought for, are concerned the prayer in that regard shall be deemed to have been made on the date on which the application for amendment has been filed.

12. On the averments made in the application, the same ought to have been allowed. If the facts alleged by plaintiff are not correct it is open for the defendant to take such plea in the written statement and if the plaintiff fails in substantiating the factual averments and/or the defendant succeeds in substantiating the plea which he would obviously be permitted to raise in his pleading by way of consequential amendment then the suit shall be liable to be dismissed. The defendant is not prejudiced, more so when the amendment was sought for before the commencement of the trial.

13. For the foregoing reasons, the appeal is allowed. The impugned orders of the High Court and the Trial Court are set aside. The plaintiff is permitted to incorporate the plea sought to be raised by way of amendment in the original plaint foregoing the plea to the extent given up by him before the Trial Court. However, in view of the delay in making the application for amendment, it is directed that the plaintiff shall pay a cost of Rs. 2,000/- (Rupees Two Thousand only) as a condition precedent to incorporating the amendment in the plaint. The prayer for declaration of title and recovery of possession shall be deemed to have been made on the date on which the application for amendment was filed.

49. The CLB has dealt with application for amendment made by the 2nd respondent in paragraphs (10) to (15) of the impugned order passed by the CLB. In para (13) of the impugned order, the CLB has held that proposed respondent nos. 1, 2 and 3 were necessary and proper parties in Company Petition No. 87 of 2010 and allowed Company Application No. 73 of 2012 to that extent giving permission to file fresh memo of parties. The CLB has observed that though the said application was allowed, the applicant had failed to make out the case of collusion between respondent no.2 and the proposed respondents and even the allegations of monetary receipts lack in material particulars.

Paragraph (15) of the impugned order reads thus :-

15. It is noted that the respondents have no quarrel with the case law relied upon by the applicant to support his contentions for allowing of this application for amendment of the C.P., though merits of the case are not be gone into at this stage of considering the application for amendment of the CP for incorporation of certain events which according to the respondents, and rightly so contended, are not subsequent to the date of filing of the CP but are fresh cause of action but are hereby allowed for determination of the issues between the parties and for the purpose of framing the reliefs to avoid multiplicity of litigation, the proposed amendment, it is noted would not constitutionally or fundamentally change the nature and character of the Petitioner’s case in the Company Petition, it is noted that no prejudice would be caused to the Respondents if the amendments are allowed, for proper effective and just adjudication of the matter. The Applicants are allowed to file the amended CP within three weeks. The Respondents are allowed to file Counter Affidavits within three weeks of receipt of the amended CP. Rejoinder within three weeks thereafter.

50. I have heard the learned counsel and have given my anxious consideration to the rival submissions made by the learned counsel.

51. On perusal of the impugned order passed by the CLB allowing company application (73 of 2012) filed by respondent nos. 1 to 3 seeking amendment to company petition (87 of 2010), it is clear that the CLB has rendered a finding that the application for amendment was allowed for determination of the issues between the parties and for the purpose of framing issues for avoiding multiplicity of litigations. The CLB has rendered finding that the proposed amendment would not constitute and fundamentally change the nature and character of the applicants case in the company petition and no prejudice would be caused to the appellants herein if the amendments were allowed for proper, effective and just adjudication of the matter. The CLB has permitted the appellants herein to file counter affidavits within three weeks on receipt of the amended company Petition. The CLB has also rendered a finding that the company Petition (87 of 2010) filed by the respondent nos. 1 to 3 herein has not become infructuous. From the perusal of the company petition (87 of 2010) it is clear that the challenge in the said petition was not restricted to the extra ordinary general meeting dated 10th November, 2010 but was also against any such meeting in future that might be held for same or similar purposes. By application for amendment filed by the respondent Nos. 1 to 3 the applicants therein had prayed for amendment of the petition under section 397 and 398 and to bring on record the subsequent events and development during the pendency of the company petition. It is not in dispute that the company petition (87 of 2010) is pending before CLB. In my view the CLB has exercised its discretionary power to allow the amendment to the petition by permitting the original applicants to place on record subsequent events so as to avoid multiplicity of litigation and has rendered finding that the amendment would not constitutionally or fundamentally change the nature and character of the applicants case in company petition and that no prejudice would be caused to the respondents. In my view, the CLB has rightly exercised its discretion and no fault can be found with the impugned order passed by the CLB in exercising discretionary power so as to avoid multiplicity of proceedings. In my view no question of law arises out of the impugned order passed by the CLB in the present appeal. In my view the facts in the case of Krishna Sitaram Padhye (supra) relied upon by Mr. Subramanian, the learned senior counsel appearing on behalf of the appellant are distinguishable in the facts of this case. In the application for amendment, the applicants had pleaded that the acts complained of which were sought to be brought on record by amendment were further acts of oppression and mismanagement which allegations would have to be gone into in the company petition on its own merits.

52. The respondent nos. 1 to 3 have impugned the order dated 13th August, 2012 passed by the CLB thereby vacating and modifying the ad interim order dated 21st May, 2012 and thereby allowing the company application filed by the respondent nos. 1 and 2 by filing company appeal (L) (41 of 2012) which appeal was heard along with the present appeal and is being disposed of by the separate order and judgment simultaneously. While arguing the said appeal, both the parties have already made their rival submissions in respect of all the issues which were raised not only in the Company Application No. 85 of 2012 but also in Company Application No. 73 of 2012 which was filed by respondent nos. 1, 2 and 3 herein. The learned senior counsel Mr. Samdani appearing for respondent nos. 1 to 3 herein had submitted that in view of the submissions made by both the parties on all the issues, this court shall decide all such issues though they were not fully decided by the CLB and were not the subject matter of the Company Application No. 85 of 2012. Since both the parties had argued on all the issues at length, this court has considered all the submissions including the submissions made by respondent nos. 1 to 3 and the appellants herein in Company Application No.73 of 2012 and Company Application No. 91 of 2012 which is pending before the CLB. In view of this court deciding all the issues by considering rival submissions made by the parties, even if amendment as allowed by the CLB is upheld, in my view no prejudice would be caused to the appellants in any manner whatsoever.

53. In the result, appeal is dismissed. There shall be no order as to costs.

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Category : Company Law (3438)
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Tags : high court judgments (4006) section 397 (31)

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