Gujarat High Court
Niramayiben Wd/O Bipinbhai V Mehta vs Ramesh B Desai & 17 on 23 March, 2015
Author: N.V.Anjaria
Bench: N.V.Anjaria
O/COMA/371/2012 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 371 of 2012
In COMPANY PETITION NO. 35 of 1988
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
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1 Whether Reporters of Local Papers may be allowed to see Yes
the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any order
made thereunder ?
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NIRAMAYIBEN WD/O BIPINBHAI V MEHTA....Applicant(s)
Versus
RAMESH B DESAI & 17....Respondent(s)
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Appearance:
MR ANAL S SHAH, ADVOCATE for the Applicant(s) No. 1
MR DILIP L KANOJIYA, ADVOCATE for the Respondent(s) No. 1
MR HEMANG M SHAH, ADVOCATE for the Respondent(s) No. 14 - 15
MR UTKARSH B JANI, ADVOCATE for the Respondent(s) No. 3
NANAVATI & NANAVATI, ADVOCATE for the Respondent(s) No. 5
SINGHI & CO, ADVOCATE for the Respondent(s) No. 6.2 , 7
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Page 1 of 28
O/COMA/371/2012 CAV JUDGMENT
Date : 23/03/2015
CAV JUDGMENT
The applicant-Nirmayiben, wd/o. Bipinbhai Mehta by filing the present Company Application and taking out Judges Summons therein, has prayed to frame the issues in main Company Petition No.35 of 1988, in addition to the issues framed by this Court by order dated 27th August, 2009, for adjudication.
2. Applicant is original respondent No.11 in the aforesaid Company Petition. Filed by petitioners- opponent Nos.1 to 4 herein, in the said Company Petition No.35 of 1988, prayers are made for rectification of Register of respondent No.5 company- Sayaji Industries Limited as it then existed-of under Section 155 of the Companies Act, 1956 and to delete the names of Bipinbhai Vadilal Mehta, Smt.Nirmayiben Bipinbhai Mehta, Shri Priyambhai Bipinbhai Mehta and Smt.Priyaben Amalbhai Kothari.
3. It would not out of place to mention briefly the controversy surfacing in the main Company Petition. The said Company Petition was filed by one Ramesh Desai and others who were the shareholders of the company, alleging inter alia that Vadilal Mehta was the Chairman and Managing Director, who had two sons namely Bipin Vadilal Mehta and Suhas Vadilal Mehta, as well as four daughters, all married. The family owned several properties including shares in the company, and there was HUF trust and other private limited companies of the said family. A Memorandum of Page 2 of 28 O/COMA/371/2012 CAV JUDGMENT Understanding was executed by the family members on 30th January, 1982. The main object thereof was to entrust management of some of the companies to Bipinbhai Mehta and some to Shuas Vadilal Mehta. It was decided that management of M/s.Sayaji Industries Limited and M/s.C.V. Mehta Private Limited were to be entrusted to Bipinbhai Mehta whereas of other companies, control and management were to be remained with Sureshbhai Mehta. Clauses of the Memorandum of Understanding provided deposit of Rs.40,00,000/- and odd amount by Bipinbhai Mehta with M/s.C.V. Mehta Private Limited. It appears that amount was not paid by Bipinbhai and a modified Memorandum of Understanding was executed on 13th November, 1982 wherein it was provided that Bipinbhai would pay entire amount in two installments. First in sum of Rs.20,00,000/- and get control and management of M/s.Sayaji Industries. The case of the petitioners is that funds of the company amounting to Rs.20,00,000/- were utilised by Bipinbhai in paying the siad amount to M/s.C.V. Mehta Private Limited for the purpose of acquiring shares of M/s.Sayaji Industries and thereby he became the Director of the company and it was alleged that the same was a camouflage adopted to ensure that violation of Section 77 of the Companies Act does not became known.
3.1 With such case put-forth, the petitioners in the Company Petition prayed for directions to the respondents to rectify the Register of company in accordance with Section 155 of the Companies Act and name of Bipinbhai Mehta-now deceased, applicant-
Page 3 of 28 O/COMA/371/2012 CAV JUDGMENTNirmayiben Bipinbhai Mehta and Priyambhai Bipinbhai Mehta may be deleted from the Register of company.
3.2 It may be stated that in the said Company Petition, Company Application No.113 of 1995 was filed praying for dismissal of the said Company Petition on the preliminary ground that the same was barred by limitation. The Company Application came to be allowed by this Court on 12th March, 1996, and consequently the Company Petition No.35 of 1988 came to be dismissed as barred by law of limitation. The O.J. Appeal was preferred against the said order which was dismissed. The matter was carried to the Apex Court by way of Civil Appeal No.4766 of 2001. It was decided as per decision in Ramesh B. Desai and others Vs Bipin Vadilal Mehta and others [(2006) 5 SCC 638]. The orders of the Company Court and of the Division Bench in O.J. Appeal came to be set aside by the Supreme Court. The Supreme Court held that the plea of limitation cannot be decided as abstract principle divorced from facts and that the Company Court and Division Bench in determining the question of limitation as preliminary issue was not justified. The Apex Court remitted back the Company Petition for decision afresh, and the same is pending.
3.3 Coming to the facts in the present Company Application, it appears that this Court framed certain issues for adjudication as per order dated 27th August, 2009 passed in the main petition, which are as under,
(a) Whether the petition is bad in mis-joinder or non- joinder of the necessary parties or not?
Page 4 of 28 O/COMA/371/2012 CAV JUDGMENT(b) Whether the petitioners prove that there was any fraud played in routing the monies of the company i.e. M/s.Sayaji Industries Limited for acquiring the shares or for getting the control over the management of the company as alleged or not?
(c) Whether there is any breach of the provisions of Section 77 of the Companies Act committed by any of the respondents or not?
(d) Whether there is any breach of provisions of Article 20 of the Articles of Association read with Section 36 of the Companies Act or not?
(e) Whether the petition is barred by limitation or not?
(f) Whether any direction deserves to be issued under Section 155 of the Companies Act for ratification of the register of shareholders or not?
(g) Whether status-quo ante deserves to be ordered or not?
(h) Whether reliefs as prayed by the petitioners deserves to be granted or not?
(i) The final operative Order?
3.4 During the pendency of the Company Petition, Bipinbhai V. Mehta-the Chairman and Managing Director of respondent No.5 company died on 08th September, 2009 leaving behind as his heirs and legal representatives who are the present applicant Nirmayiben wd/o Bipinbhai Mehta, Shri Priyam B. Mehta and Shri Priya B. Mehta. In view of death of said Bipinbhai V. Mehta, the original petitioners of the Company Petition No.35 of 1988-respondent Nos.1 to 4 herein filed Civil Application No.193 of 2010 seeking to implead the applicant-Nirmayiben wd/o.Bipinbhai V. Mehta, as well as Priyaben Bipinbhai Mehta and Shri Priyam Bipinbhai Mehta as heirs and legal representatives. This Court allowed the said Company Application by order dated Page 5 of 28 O/COMA/371/2012 CAV JUDGMENT 12th November, 2011 and they came to be joined as respondent Nos.2/1 to 2/3 in the Company Petition in their capacity as heirs and legal representatives of the deceased to the extent of his estate.
3.5 The original petitioners also filed another Civil Application No.194 of 2010 wanting to join the present applicant and respondent Nos.16 to 18, as respondent Nos.11 to 14 in the said main Company Petition No.35 of 1988. By order dated 19th December, 2011 the said Company Application was also allowed. The portion of the order may be extracted.
"3..........learned Senior Counsel appearing on behalf of proposed respondents, who can be said to be main contesting parties, has stated at the bar that they do not invite any further reasoned order while permitting the applicants to join the proposed respondents as respondent Nos.11 to 14 in main Company Petition No.35 of 1988. However, he has submitted that permitting the applicants to join proposed respondents as respondent Nos.11 to 14 may be without prejudice to the rights and contentions of the respective parties in the main Company Petition No.35 of 1988 inclusive of question of limitation. It is submitted that all the defences and contentions, which are available to the respective parties be kept open inclusive of the limitation.
In view of the above, this Court is not assigning any further reasons while permitting the applicants to join proposed respondents as respondent Nos.11 to 14 in main Company Petition No.35 of 1988.
4. In view of the above, the present application is allowed and the applicants are permitted to join the proposed respondents herein as respondent Nos.11 to 14 in main Company Petition No.35 of 1988. However, the aforesaid shall be without prejudice to the rights and contentions of the respective parties in the main Company Petition and all the defences and contentions, which are available to the respective parties are kept open inclusive of the question of limitation, which be considered at the time of hearing of the main Company Petition."
3.6 Thus the applicant and other two parties as Page 6 of 28 O/COMA/371/2012 CAV JUDGMENT above were impleaded as heirs and legal representatives as per order in Company Application No.193 of 2010. Under order passed in Civil Application No.194 of 2010, the applicant herein as well as respondent Nos.16 to 18 were joined in their individual capacity in the main Company Petition. After being so impleaded in the proceedings of the main Company Petition, the applicant herein filed affidavit-in-reply to which the original petitioner filed rejoinder affidavit.
3.7 Now in the present Application, it is the case of the applicant that in view of the additional pleadings and contentions raised in affidavit-in- reply, certain issues are required to be framed in addition to the issues earlier framed as above. Original petitioners by filing reply affidavit has resisted the prayer for framing additional issues, and it is inter alia contended that under the guise of the additional pleadings and contentions and seeking issues to be framed additionally, the applicant wants to reopen and review the issues already framed. It is then contended that deceased Bipinbhai Vadilal Mehta had already filed reply in the petition and on that basis the issues were framed. It is contended that the heirs have only stepped into the shoe of deceased Bipinbhai Mehta and the reply on the factual aspects is the same. It is submitted that therefore no additional issues are required to be framed. The applicant filed rejoinder affidavit and contended that the applicant is joined in individual capacity as transferee of the shares pursuant to order passed in Page 7 of 28 O/COMA/371/2012 CAV JUDGMENT Civil Application No.194 of 2010, therefore applicant has an independent right to oppose the Company Petition.
3.8 The issues which are sought to be framed by the applicant additionally for adjudication, are mentioned in support of the Judges Summons. They are the following issues, "(i) Whether the petition is not maintainable against newly added Respondent Nos. 11 to 14 in view of the omission of Section 155 by the Companies (Amendment) Act, 1988 and the same would now lie before the Company Law Board under Section 111(4) of the Companies Act , 1956?
(ii) Whether the issues raised in the petition can be adjudicated in proceeding under Section 155 (as stood on 30.05.1991) of the Companies Act , 1956?
(iii) Whether the rectification of register under section 155 of the Act be granted when the transactions are not connected to the issue of entries in the register?
(iv) Whether the petition against newly added parties is barred by law of limitation and also barred by principles of latches, waiver, acquiescence or estoppel?
(v) Whether the petition is required to be dismissed in view of the fact of implementation of family settlement arrived at by way of an MOU by two branches of family i.e. B.V. Mehta and family and S.V. Mehta and family since more than 30 years?
(vi) Whether the Petitioners are entitled in facts and law to seek rectification of the Register of Members of the Company in favour of Respondent Nos. 12 and 13 who have never objected to and/or filed any application for rectification of entries at any stage?
(vii) Whether the petition can be entertained at the instance of the present petitioners who are holding a small fraction of shares?
(viii) Whether the Petitioners prove that the amount of Rs.40 lacs (approximately) to be deposited by Respondent No.2 with CVM under the MOU was utilized to pay back debts of Respondent No.12 and family as Page 8 of 28 O/COMA/371/2012 CAV JUDGMENT consideration for getting controlling interest and management of the Company and CVM?
(ix) Whether the Petitioners prove that the transaction regarding shares of CVM was at the time when Respondent No.2 was in management of the company and was in violation of section 77(1) and 77(2) of the Companies Act, 1956 since the control of CVM was a device of ultimate control of considerable shares of the Company?
(x) Whether the petition is vague, lacking any necessary particulars, not filling the requirement for a petition under section 155 of the Companies Act, 1956 and deserves to be dismissed?
(xi) Whether the shares of CVM were purchased for the consideration set out in the MOU, which was wholly distinct, independent and unconnected with the deposit of Rs.39 lacs in CVM?
(xii) Whether the rectification sought for in the petition would be against the interest of members and the company and therefore ought not to be granted?"
4. Learned senior counsel Mr.Mihir Joshi with learned advocate Mr.Anal Shah appeared for the applicant. Learned senior counsel Mr.S.H. Sanjanwala with learned advocate Mr.Dilip Kanojiya was on behalf of respondent No.1, whereas learned senior counsel Mr.Sudhir Nanavati was for Nanavati and Nanavati, for respondent No.5. Mr.Shalin Mehta with learned advocate Mr.Hemang Shah appeared for respondent Nos.14 and 15. Learned advocate Mr.Sunit Shah appeared for respondent No.3. Mr.Sandip Singhi, learned advocate appeared for Singhi & Co., for respondent Nos.6.2 and 7. The respective learned senior counsel and learned advocates made their submissions.
4.1 Learned senior counsel Mr.Mihir Joshi with learned advocate Mr.Anal S. Shah for the applicant submitted that the applicant came to be joined in the main Company Petition, besides in her capacity as heir and legal representative of deceased Bipinbhai Mehta, Page 9 of 28 O/COMA/371/2012 CAV JUDGMENT also as an independent respondent as per order in Civil Application No.194 of 2010. It was submitted that thereafter there had been addition in the pleadings in the main Company Petition. A reply was filed by the applicant in her own capacity, for which rejoinder is also filed. Therefore in the context of the said pleadings, it was submitted, need to frame the additional issues has arisen. It was further submitted that issues could be framed at any stage and in framing of issues principle of estopple, waiver or res judicata do not apply. It was next submitted that omission to frame the issues or where though required to be framed, the issues are not framed, the same can make or mar the case in the appeal. It was submitted that in order to decide the controversy fully, the issues suggested are required to be framed. It was submitted by learned senior counsel for the applicant that there is no bar against framing new issues, more particularly when the new party has been added and the pleadings at her instance are made. He submitted that the framing of issues does not depend upon consent of a party. He next submitted that any issue has been rejected by the Court at any previous point of time, and merely because the issues were earlier framed by this Court, the applicant as newly added, cannot be deprived of prayer of framing issues and put-forth his case.
4.2 Learned senior counsel for the applicant buttressed his submissions by relying on decision of this Court in Naynaben Babubhai and others Vs Keti Farmaji Paliya [2014 (2) GLR 1814], in particular Page 10 of 28 O/COMA/371/2012 CAV JUDGMENT paragraphs 28, 29 and 47 thereof, thereby highlighting the object of Order XIV, Rule 5 of the CPC. He next relied on another decision of this Court in AIA Engineering Pvt. Ltd. Vs Bhatat Dand [2009 GLH-High Court 222192], more particularly paragraphs 5.4, 5.5 and 5.6 thereof, for the same purpose. Decision of Bombay High Court in St.Patrick's Town Co-operative Housing Society Limited and others [2003 (2) MhLj 219] was thereafter relied on. Learned senior counsel next relied on an Allahabad High Court decision in Smt.Kaniz Fatima (deceased) and another Vs Shah Naim Ashraf [AIR 1983 All 450], contending therefrom that if there was no specific order of abandoning issue, additional issue can be framed under Order XIV, Rule 5, CPC. He canvassed proposition that principles of res judicata does not apply for framing issue, by pressing into service paragraph 10 from Delhi High Court decision in S. Surjit Singh Sahani Vs Brij Mohan Kaur [1997 (65) DLT 670].
4.3 Learned senior counsel Mr.S.H. Sanjanwala appearing for respondent No.1 opposed tooth-and-nail the prayer for framing additional issues. He submitted that the entire application of the applicant was futile and time buying exercise. According to him all the questions and aspects of the matter for which the issues are now sought to be framed as additional issues, were considered by the Court during the exercise undertaken for the purpose, which led to order dated 27th August, 2009, by which issues were framed. Learned advocate tried to demonstrate from copy of draft issues then considered, that the issues Page 11 of 28 O/COMA/371/2012 CAV JUDGMENT now requested to be framed are repetition. He submitted that the draft issues covering all the aspects of the controversy were examined by the Court at the relevant time, and the issues were framed. Learned senior counsel submitted that the framing of issues cannot be permitted again and again as the Court had already applied the mind. He submitted that the facts of the case remain the same and applicant only stepped into shoes of the deceased Bipinbhai and said Bipinbhai had never pleaded his case, and the facts remain the same.
4.4 Learned senior counsel for respondent No.1 pressed into service the decision of the Supreme Court in J.C. Chaterjee and others Vs Shri Sri Kishan Tandon and another [AIR 1972 SC 2526] as well as other decisions in Bal Kishan Vs Om Prakash and another [AIR 1986 SC 1952] and also in Vidyawati Vs Man Mohan and others [AIR 1995 SC 1653] for the proposition that when a person is joined as party in capacity of legal representative, he is entitled to make any defence or raise plea appropriate to his character as legal representative only, and can urge only those contentions which the deceased party could. By relying on decision of Calcutta High Court in Babulal N. Shukla Vs Jeshankar N. Shukla [AIR 1972 Calcutta 494], it was submitted that all that representative can do is to take up the suit at the stage at which it was left when the original party died and to continue it.
4.5 It was submitted that legal representative Page 12 of 28 O/COMA/371/2012 CAV JUDGMENT could not have liberty to lead that evidence which was not available to the deceased defendant. By referring to Rajasthan High Court decision in Ramgopal and another Vs Khiv Raj and others [AIR 1998 Rajasthan 98] it was submitted that status of legal representative of deceased defendant is in no way different from the defendant as they would step into the shoes of the deceased defendant. Another two decisions of Rajasthan High Court in Smt.Jamna and others Vs Bhuwana [AIR 1998 Rajasthan 214] and Smt.Chandra Kala and others Vs Kanak Mal and others [AIR 2003 Rajasthan 306] were relied on wherein it was held that after the death of defendant, legal representative brought on record cannot be permitted to take a stand contrary to what has been stated by their predecessor-in-interest. Learned senior counsel lastly relied on decision of Punjab and Haryana High Court in Gaurav Uppal and others Vs Mrs.Sunita Uppa [AIR 2004 Punjab and Haryana 204] wherein legal representatives were refused permission to file additional written statement which was upheld on the ground that he had no independent right when it was not clear as to what kind and nature of defence was sought to be incorporated in the proposed additional written statement.
4.6 Learned advocate Mr. Sunit Shah for respondent No.3 also opposed the prayer for framing additional issues. He took the Court through the provisions of Order XIV and submitted that the issues can be framed from the facts pleaded by one side and disputed by the other side. He submitted that only on Page 13 of 28 O/COMA/371/2012 CAV JUDGMENT the material propositions of facts and aspects of law, the issue can be framed. He submitted that in the present case, all the pleadings in their facts have remained same and there is no change therein even after addition of new party. According to his submission, when the factual background is same and the legal questions are also unchanged, there is no need to frame additional issues. Learned advocate thereafter compared various issues sought to be framed with issues already considered and framed so as to contend that no new issues arise. He also emphasized that the issues were earlier framed. He submitted that for the sake of it, applicant cannot be permitted to seek new issues.
4.7 Learned senior counsel Mr.Shalin Mehta for respondent Nos.14 and 15 contended that the Supreme Court has remanded the main Company Petition. He submitted that the present application is nothing but an abuse of process of law when the applicants seeks to agitate for framing of issues which are totally unnecessary and not require to be framed. It was submitted that all the material issues have already been framed and every party when added, cannot be allowed to seek framing of issues as per his desire, otherwise there would be no end to it. Learned senior counsel submitted to emphasise that even the present application is filed belatedly and is not bona fide. Learned senior counsel vehemently submitted that the applicant is interested in whiling away the time and protract the proceedings which are required to be decided upon being remitted by the Apex Court. It was Page 14 of 28 O/COMA/371/2012 CAV JUDGMENT submitted that even though Rule 5 of Order XIV, CPC permits amending or striking out the issues at any time, it cannot imply that the issues can be framed or reframed or additionally framed even if they are not relevant to be framed and at any stage of the proceedings and in the manner of liking of the party.
5. Order XIV of code of Civil Procedure, 1908 deals with settlement of issues, Rule thereof reads as under
"Framing of issues-
(1) Issues arise when a material proposition of fact or law is affirmed by the one party and denied by the other.
(2) Material propositions are those propositions of law or fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defence.
(3) Each material proposition affirmed by one party and denied by the other shall form the subject of a distinct issue.
(4) Issues are of two kinds:
(a) issues of fact.
(b) issues of law.
(5) At the first hearing of the suit the court shall, after reading the plaint and the written statement, if any, and after examination under Rule 2 of Order X and after hearing the parties or their pleaders ascertain upon what material propositions of fact or of law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend.
(6) Nothing in this rule requires the court to frame and record issues where the defendant at the first hearing of the makes no defence."
5.1 Rule 3 says that the court may frame the issues from the following materials (a) allegations made on oath by the parties, or by any persons present Page 15 of 28 O/COMA/371/2012 CAV JUDGMENT on their behalf, or made by the pleaders of such parties; (b) allegations made in the pleadings or in answers to interrogatories in the suit; (c) the contents of documents produced by either party. Rule 5 is about power of the court to amend, and strike out issues, which is relevant. The said Rule was deleted by the Amendment Act,1999, but came to be restored verbatim with effect from 01st July, 2002 as per CPC (Amendment) Act, 2002 (22 of 2002), "5. Power to amend, and strike out, issues. (1) The Court may at any time before passing a decree amend the issues or frame additional issues on such terms as it thinks fit, and all such amendments or additional issues as may be necessary for determining the matters in controversy between the parties shall be so made or framed.
(2) The Court may also, at any time before passing a decree, strike out any issues that appear to it to be wrongly framed or introduced."
5.2 It is clear from the aforesaid provisions that the issues are framed on the basis of the pleadings. In terms of Order XIV Rule 1, issues arise when material proposition of fact or law is affirmed by one party and denied by the other. Framing of issues is not adjudicatory process. Nor it is a decisional process in itself. Framing of issues in the trial of the suit or any other proceedings facilitates adjudication and decision in the case. They are framed to identify the crux areas of controversy and focus them. The object of framing issues is to shorten the arena of dispute, and to ascertain the real dispute between the parties. The issues can be framed or altered at any stage. Framing of issues has to be a free exercise so long as the issues stem from the Page 16 of 28 O/COMA/371/2012 CAV JUDGMENT pleadings and bring out the points in controversy. The issues are the points for decision. At the appellate stage they are called points for determinations in terms of Order XLI Rule 31 of the Civil Procedure Code, 1908.
5.3 The issues do not decide rights of any of the parties. They are framed in course of the trial by the court so as to properly address the controversy for its complete and wholesome decision. The purpose is to pinpoint the essential postulates in the controversy towards which the adjudication and ultimate decision is to be guided. As Rule 4 of Order XIV of CPC describes the issues are of two kinds-the issues of fact and issues of law. Based on contents and pleadings in the plaint and the written statement, says Rule 5 of Order XIV CPC the issues are material propositions of fact or of law the parties are at variance.
5.4 Decision of the Supreme Court in Makhan Lal Bangal Vs Manas Bhunia, (2001) 2 SCC 652 was pertaining to an election petition, but it explained legal contours of the issues and their importance. What is said by the Supreme Court about issues may be usefully noticed, "The stage of framing the issues is an important one inasmuch as on that day the scope of the trial is determined by laying the path on which the trial shall proceed excluding diversions and departures therefrom. The date fixed for settlement of issues is, therefore, a date fixed for hearing. The real dispute between the parties is determined, the area of conflict is narrowed and the concave mirror held by the court reflecting the pleadings of the parties pinpoints into issues, the Page 17 of 28 O/COMA/371/2012 CAV JUDGMENT disputes on which the two sides differ. The correct decision of civil lis largely depends on correct framing of issues, correctly determining the real points in controversy which need to be decided.
5.4.1 It was further observed, "The scheme of Order 14 of the Code of Civil Procedure dealing with settlement of issues shows that an issue arises when a material proposition of fact or law is affirmed by one party and denied by the other. Each material proposition affirmed by one party and denied by other should form the subject of a distinct issue. An obligation is cast on the court to read the plaint/petition and the written statement/counter, if any, and then determine with the assistance of the learned counsel for the parties, the material propositions of fact or of law on which the parties are at variance. The issues shall be framed and recorded on which the decision of the case shall depend."
5.4.2 It is in the interest of all the parties that appropriate issues encompassing the entire controversy and focusing the material aspects thereof are framed. It was therefore only that in Makhan Lal Bangal(supra), the Supreme Court underlined the role of parties and counsels in assisting the Court in framing proper issues, in the following words, "The parties and their counsel are bound to assist the court in the process of framing of issues. Duty of the counsel does not belittle the primary obligation cast on the court. It is for the Presiding Judge to exert himself so as to frame sufficiently expressive issues. An omission to frame proper issues may be a ground for remanding the case for retrial subject to prejudice having been shown to have resulted by the omission.
5.4.3 The Court stated further, "The evidence shall be confined to issues and the pleadings. No evidence on controversies not covered by issues and the pleadings, shall normally be admitted, for each party leads evidence in support of issues the burden of proving which lies on him. The object of an issue is to tie down the evidence and arguments and decision to a particular question so that there may be no doubt on what the dispute is. The judgment, then proceeding issue-wise would be able to tell precisely how the dispute was decided."
Page 18 of 28 O/COMA/371/2012 CAV JUDGMENT5.5 A decision of Bombay High Court in Shraddha Associates and Anr. Vs. St. Patrick's Town Co- Operative Housing Society Ltd. and Ors. in Revision Application No.72 of 2002 decided on 05th September, 2002 may be referred to with relevance. It was held and observed that, it is primarily for the court to apply its mind to the pleadings and the other materials, as specified in Rule 3 Order XIV for the purpose of framing of the issues. Undoubtedly, the parties and their Advocates are not forbidden from assisting the court in matter of framing of the issues. However, no party as a matter of right can insist for being heard in the matter prior to the framing or re-framing of the issues by the court. Framing of the issues is an obligation of the court in order to find out the exact nature of the controversy.
6. Reverting back to the facts of the case, applicant Nirmayiben came to be impleaded by virtue of order passed in Civil Application No.194 of 2010 in her individual capacity. In the order dated 19th December, 2011 passed in said Civil Application No. 194 of 2010, it was observed that all the defences and contentions available to the respective parties are kept open. Her impleadment as heir of deceased Bipinbhai as per order in Civil Application No. 193 of 2010 apart, she stands in the proceedings of the Company Petition as a separate party independently. She thereafter filed her pleadings in terms of affidavit and rejoinder affidavit has also been filed by the original petitioner in the Company Petition.
Page 19 of 28 O/COMA/371/2012 CAV JUDGMENT6.1 The principle that a party is able to set up his or her individual capacity in addition to capacity as heir and legal representative is recognized. From decision in J.C. Chatterjee & others (supra), this proposition is stated, "Under sub-clause (ii) of R.4 of Order 22, Civil Procedure Code any person so made a party as a legal representative of the deceased respondent was entitled to make any defence appropriate to his character as legal representative of the deceased respondent. In other words, the heirs and the legal representatives could urge all contentions which the deceased could have urged except only those which were personal to the deceased. Indeed this does not prevent the legal representatives from setting up also their own independent title, in which case there could be no objection to the court impleading them not merely as the legal representatives of the deceased but also in their personal capacity avoiding thereby a separate suit for a decision on the independent title."
(Para 11) 6.2 Similarly in Bal Kishan v. Om Parkash [1986 (4) SCC 155 : AIR 1986 SC 1952], the Supreme Court stated that sub rule (2) of Rule 4 of Order XXII, CPC authorizes any person brought on record as legal representative to make his defence appropriate to his character as legal representative and entitles such legal representatives to file additional written statement raising all pleas which the deceased-in that case the tenant-had raised or could have raised. Relying on its own decision in J.C. Chatterjee & others (supra), the Apex Court asserted the very principle as under, "In the instant case Bal Kishan, the appellant could not have, therefore, in the capacity of the legal representative of the deceased respondent Musadi Lal who was admittedly a tenant, raised the plea that he was in possession of the building as a trespasser and Page 20 of 28 O/COMA/371/2012 CAV JUDGMENT the petition for eviction was not maintainable. It is true that it is possible for the court in an appropriate case to implead the heirs of a deceased defendant in their personal capacity also in addition to bringing them on record as legal representatives of the deceased defendant avoiding thereby a separate suit for a decision on the independent title as observed in Jagdish Chander Chatterjee v. Sri Kishan [1973 (1) SCR 850]:[AIR 1972 SC 2526]"
(para-3) 6.3 There is a close-knit relation between pleadings and issues. Both together have bearing on the acceptance or otherwise of the case to be proved, and the evidence to be led, because pleadings form foundation whereas the issue arising from the pleadings focus on the material limbs of controversy. In this context, if the prayer for additional issue is considered, the pleadings in form of affidavit filed by the applicant in her individual capacity as well as affidavit-in-rejoinder filed by the original petitioners in the main petition may be appropriately looked at.
6.4 After the applicant-Nirmayiben came to be joined as party respondent No.11 in the main Company Petition in her individual and independent capacity, she by filing affidavit-in-reply in the main petition contended inter alia that petition was vague and lacking in material particulars, that since she was impleaded as party respondent No.11 only on 19th December, 2011, the petition was time barred against her as the challenge is to the entries in Register of members of the company made on 17th November, 1982; she pleaded applicability of principles of latches, waiver, acquiescence and estople.Page 21 of 28 O/COMA/371/2012 CAV JUDGMENT
6.4.1 Reproducing certain material paragraphs containing her pleadings, she contended in paragraph 3 as under.
"Without prejudice to the contention of the maintainability of the petition under Section 155 of the Companies Act, 1956, even if maintainable, same would lie before the Company Law Board under Section 111(4) of the Companies Act, 1956 against me and other newly added respondents, hence, the present petition is not maintainable."
6.4.2 In paragraph 4 it has been contended, "The proceedings under Section 155 of the Companies Act are summary in nature..... from the allegation made in the petition, the petitioners seek adjudication of complex issues they have raised albeit without substance, which would have to be established by leading oral and documentary evidence. I state that therefore such issues cannot be decided in the context of the summary nature of the present proceedings.... the petitioners are making allegations which are not connected to the issue of entries in the Register and therefore not truly related to rectification of the Register and therefore, beyond the scope of Section 155 of the Act."
6.4.3 In paragraph 7 the following is pleaded by the applicant.
"The present proceeding has a reference to the family settlement namely Memorandum of Understanding executed on 30th January, 1982 and Memorandum of Modification dated 13th November, 1982 arrived at between the two branches of the family namely B.V. Mehta & family and S.V. Mehta family and their respective members of the family, and the said members have made endorsement thereto. Since 30 years, the said family settlement has been implemented and acted upon, and therefore this Hon'ble Court may not disturb the said settlement. In view of the same, the petition is also not maintainable on this ground as well."
6.4.4 Following was pleaded in paragraph 9.
"The present petition is filed by four petitioners claiming to be shareholders of the Respondent No.1 Company. I do not admit the claim and call upon the Page 22 of 28 O/COMA/371/2012 CAV JUDGMENT petitioners to disclose current details and share holding of the same..... in any case the petitioners are not persons aggrieved and do not have the locus to maintain the petition particularly since they claim to have a very small fraction of the total shares of the Respondent No.1 Company..... the present petition is filed at the behest of Respondent No.12 and 13..... they have roped in the petitioner No.1 who had sided with Respondent No.12 against my late husband at the time of the petition..... the other petitioners are merely name lenders and acting merely at the dictates of Petitioner No.1 and Respondent No.12 and 13 and have been added to give a facade of neutrality to the present proceedings..... therefore, at the instance of the said Shareholders, the prayer of status quo ante for rectification of Register after the span of more than 30 years for the alleged transaction of the alleged violation of Section 77 of the Companies act may not be granted in the interest of justice..... in the absence of Respondent Nos. 12 and 13 having moved any Application for rectification of Register, such Application by a third party which seeks rectification in favour of Respondent Nos. 12 and 13 is not maintainable. Moreover, Respondent Nos. 12 and 13 having accepted and acquiesced with transfer, it is not open for any other party to raise any grievance in respect of the same."
6.5 It is also contended as to how the present proceedings were not bona fide and initiated for collateral purpose. It was contended that petition was filed at the behest of respondent Nos.12 and 13 and it was alleged that petitioner No.1 sided with respondent No.12 against deceased-husband of the applicant. It was contended that the Memorandum of Understanding was executed between the two branches of the family and that prayer for status quo ante for rectification of Register was after the span of more than 30 years. It was pleaded that such application by third party which seeks rectification in favour of respondent Nos.12 and 13 was not maintainable. The applicant also pleaded to deny that clause 10 of the Memorandum of Understanding contemplated the condition precedent of depositing amount of Rs.40,00,000/- with M/s.C.V. Mehta Private Page 23 of 28 O/COMA/371/2012 CAV JUDGMENT Limited for consideration of controlling interest and management of the company of M/s.C.V. Mehta Private Limited. In paragraphs 11 to 13.17 of the additional affidavit, the applicant-respondent No.11 in the main Petition, denied the case of the original petitioners put-forth and pleaded in the main Company Petition No.35 of 1988.
6.6 Original petitions filed rejoinder to the said affidavit by applicant-respondent No.11 stating with reference to paragraphs 3, 4, 7 and 9 as under.
"5. With regard to contents of Paragraph No. 3 of the affidavit-in-reply.... this Hon'ble Court has jurisdiction to hear and try the Company Petition. I deny that the only forum that can decide the above matter now is the Company Law Board. I maintain that the whole cause of action has arisen prior to the said amendment having come into force and the petition filed is legally maintainable. My advocate will deal with the said legal argument at the time of hearing.
6. With regard to contents of Paragraph No. 4 of the affidavit-in-reply, I deny that under Section 155 of the Companies Act, 1956, it is a summary procedure or that because of the same, the said petition is not maintainable. I say that the matter is no more res integra but directly covered by the judgment of this Hon'ble Court in the case of Gulabrai which will be referred to at the time of hearing in which it is now clearly held that all complicated questions can be decided under Section 155 of the Companies Act, 1956 and I deny that the allegations made in the petition are not connected with the issue of entries in the register, and therefore, no rectification is called for. I maintain that the petition as filed is maintainable and all questions which are raised can be decided in the present Company Petition.
9. With regard to contents of Paragraph No. 7 of the affidavit-in-reply, the reference made to the family settlement is hardly relevant as far as the present petition is concerned. I say that if the petitioners are entitled to rectification of the share register ex- debitio justicia, then it may kindly be granted and the fact that the family arrangement is implemented for 30 years or not has no relevance as far as the present Page 24 of 28 O/COMA/371/2012 CAV JUDGMENT proceedings are concerned. I maintain that the transactions which are impugned in the present petition are void ab-initio. So as per the settled law, status- quo ante may kindly be maintained and the necessary relief may be granted in the petition.
11. With regard to contents of Paragraph-9 of the affidavit-in-reply, I say that the current details of the shareholding can always be with the Company and there is no reason to call upon me to furnish such detail. I maintain that the petitioners have every locus to maintain the present petition and even shareholders not aggrieved can maintain petition. I deny that it is filed at the behest of respondent Nos. 12 or 13 as stated in the said paragraph. I deny that the respondent Nos. 12 and 13 has roped me for the alleged reasons as stated in the said paragraph or that the petitioners are merely name lenders as stated in the said paragraph. I say that the rectification is required to be arranged in the interest of justice. I say that whether respondent Nos. 12 and 13 have backed me is hardly relevant point of law which will be dealt with by my advocate at the time of hearing. I deny that the respondent No. 12 have accepted and acquiesced with transfer as alleged in the said paragraph. I am aware about the same and, therefore, I deny the same."
6.7 As per the aforesaid pleadings which became part of the record after applicant was joined as respondent No.11 in the main Petition, she set up her case in her individual capacity as she was joined separately; the same came to be disputed by the original petitioners by filing rejoinder extracted hereinabove. The original petitioners also denied various other pleadings and contentions, raised by respondent No.11 in her additional affidavit. These pleadings had have different context of different capacity of the applicant-respondent No.11, who in addition to being on record as legal heir, was entitled to plead her case in her capacity as independent party.
6.8 Therefore with addition of pleadings as above, the impleadment of applicant in her independent Page 25 of 28 O/COMA/371/2012 CAV JUDGMENT capacity and in that way change of context of the contest, request to frame additional issues deserved consideration. At the same time, the points in the controversy which were already covered in the issues previously framed, need not be repeated. In view of rationale of framing of issues and the role the issues play, the contention of the other side that no new issues can be framed because the issues were earlier framed and some of them were not accepted.
6.9 Keeping in view the aforesaid position and principles, from the additional issues suggested by the applicant, issue Nos.1, 3, 4, 5, 6 and 7 could be considered for framing issues on that lines. The first issue is referable to the contention raised in paragraph 3 of the affidavit filed by the applicant and denial thereof by the respondents-original petitioners in paragraphs 5 of their rejoinder. Similarly, issue No.3 arises from the pleadings in paragraphs 4 and 5 of the affidavit of the applicant and denial thereof by original petitioners in paragraph 6 of their rejoinder. Similar is the case in respect of suggested issue No.4. Suggested issue No.5 has the root in the pleadings in paragraph 7 of the applicant's affidavit and denial thereof by original petitioners in paragraph 9 of their rejoinder. So also, proposed issue Nos.6 and 7 could be traced from the pleadings in paragraph 9 of the affidavit and denial from paragraph 11 of the rejoinder. The contention of the other side to object framing of aforesaid issues, that they cannot be framed because they could have been raised by the deceased Bipinbhai Page 26 of 28 O/COMA/371/2012 CAV JUDGMENT at relevant point of time or that the applicant is precluded to raise the same as she has only entered the shoes of deceased Bipinbhai Mehta or even that they were earlier considered by the Court, could not be accepted in the facts and circumstances of the case highlighted hereinabove.
6.10 The Court has both duty and inherent powers to frame the issues. It is trite that in framing issues, Court should exert itself so as to make the controversy sufficiently expressive. All the points and the matters which are necessary to focus on the area of conflict between the parties, should be translated into the issues. Additional issues can be permitted in the changed scenario of the capacity of parties and their pleadings. They are permitted with reference to the addition of pleadings so as to reflect the points of newly added and newly disputed material pleadings.
7. In light of the foregoing discussion of facts and law, framing of following additional issues would be said to be proper. Therefore the following additional issues are framed.
(i) Whether the petition is maintainable against newly added respondent Nos.11 to 14 in view of deletion of Section 155, by virtue of Companies (Amendment) Act, 1988? Whether therefore, the petition would lie before the Company Law Board under Section 111(4) of the Companies Act, 1956?
Page 27 of 28 O/COMA/371/2012 CAV JUDGMENT (ii) Whether the petition is liable to be dismissed having regard to the family
settlement arrived at by means of Memorandum of Understanding between two branches of family, namely B.V. Mehta's Branch and S.V. Mehta's branch since more than 30 years?
(iii) Whether rectification of Register under Section 155 of the Companies Act can be granted when transactions are not connected to the issues of entries in the Register?
(iv) Whether petition is barred against newly added parties, by law of limitation and/or by principles of latches, waiver, acquiescence or estople?
(v) Whether the petition is entertainable at the instance of present petitioner who hold a small fraction of share?
(vi) Whether the petitioner is entitled to seek rectification of Register of members of the company in favour of those newly added respondents who have never objected to and/or filed any application for rectification of entries at any stage?
This Application is allowed in aforesaid terms and to the above extent.
(N.V.ANJARIA, J.) Anup Page 28 of 28