Kerala High Court
Kalabhavan Studios Ltd vs Mr.P.P.Zibi Jose on 24 May, 2010
Author: Pius C.Kuriakose
Bench: Pius C.Kuriakose, C.K.Abdul Rehim
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Co.Appeal.No. 21 of 2010()
1. KALABHAVAN STUDIOS LTD, FR.ABEL NAGAR
... Petitioner
2. MR.E.P.GEORGE, CHAIRMAN,
3. MR.K.C.RAJU, DIRECTOR,
4. SANTHOSH THOMAS KANADAN,DIRECTOR
5. DR.JOSE CHACKO PERIAPURAM, DIRECTOR
6. MR TOGI MATHEW, DIRECTOR
Vs
1. MR.P.P.ZIBI JOSE, 61/2939
... Respondent
2. SRI.JAMES KULANTHUNKAL
3. THE COMPANY LAW BOARD
For Petitioner :SRI.ANIL D. NAIR
For Respondent :SRI.ANIL XAVIER
The Hon'ble MR. Justice PIUS C.KURIAKOSE
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :24/05/2010
O R D E R
PIUS C.KURIAKOSE & C.K.ABDUL REHIM, JJ.
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C.O.A.No. 21 OF 2010
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Dated this the 24th day of May, 2010
JUDGMENT
Pius C.Kuriakose, J.
Under challenge in this appeal preferred by the contesting respondents in Annexure A petition filed by the first respondent under Sections 397, 398 and 399 of the Companies Act is Annexure J order. Under that order, after observing that Annexure-A company petition is posted for hearing, direction is issued that the respondents (the appellants herein) shall give notice of board meeting of the respondent company to the first respondent herein by registered post with Acknowledgment Due.
2. Several grounds have been raised and it is urged firstly that in the absence of a written application, as contemplated by Section 403 of the Companies Act, Annexure J could not have been passed by the Company Law Board. Relying on the observation made by the Company Law Board in Annexure-C order passed earlier by the Board in an interlocutory proceeding for quashing proceedings of two earlier board meeting, it is urged that there is a categorical finding therein that there is no allegation of mismanagement so as to attract Sections
398. Pointing out that Annexures -C & F orders, already passed by the CLB, were on the basis of the written applications filed by the first respondent, who is described as a very knowledgeable person being the senior most practising company secretary, it is urged that in the absence of compliance with the procedure envisaged by clause (ii) of sub section 1 of Section 53, the CLB could not have directed the company to send notice of prospective meeting by registered post with acknowledgment due.
3. In the appeal a detailed counter affidavit has been filed by the first respondent, wherein inter alia it is contended that the impugned order was passed by the CLB only for giving effect to Annexure F interim order which has attained finally. It is also contended that Annexure J order was passed on consent.
4. We have heard the submissions of Sri.Anil D.Nair, learned counsel for the appellants, who addressed us very persuasively on the basis of the various grounds. The learned counsel referred to the various provisions of the Companies Act such as Sections 53, 397, 398, 399 , 283(1)(g) & 403. The learned counsel argued that Rule 9 of the Company Court Rules, which may enable the Company Court to pass interim orders for the purpose of meteing out justice even on the basis of an oral application, is not applicable to the CLB. Allowing the CLB to pass interim orders on the basis of oral applications, according to the learned counsel, can lead to serious consequences. The first respondent has ceased to be Director by the operation of Section 283 (1)(g) though the same be after Annexure F interim order was passed. Under such a situation, he, who is a knowledgeable person, should have filed at least a written application so that the appellants could resist the same effectively.
5. In answer to a query put by us, Sri. Anil submitted that if this court so directs, the company will refrain from holding board meetings till a written application is filed by the first respondent and orders in that application are passed by the CLB.
6. The learned counsel for the respondent Sri.Anil Xavier however justified Annexure J on the various reasons stated in the counter affidavit. According to him, by passing Annexure J, the CLB has only given effect to earlier orders passed including Annexure-F which is in currency. Even the so called disqualification under Section 283 (1)(g) was entailed according to the allegations of the appellants before the CLB passed Annexure F order. The learned counsel reiterated that the it is virtually on consent that Annexure J order was passed.
7. We have anxiously considered the submissions addressed at the Bar. We do find merit in the submission of the learned counsel for the appellants that the CLB could have passed orders in the nature of Annexure J only on the basis of written applications submitted by the first respondent. We agree with the learned counsel who submitted that it will be unsafe to allow the CLB to pass consequential interim orders on the basis of oral applications especially when there is no provision which specifically empowers the CLB to pass orders in the absence of written applications. Section 403, in our view, contemplates written applications only. So also, according to us, Section 53 will show that the ordinarily mode of service of documents on company members is personal service or by sending it by post to the address of the member registered with the company or if there is no registered address , to the address, if any supplied by the members to the company. The question of issuing notice to a member by Registered Post with or without acknowledgment or under certificate of posting is permissible only when an intimation to that effect is given by the member and he deposits with the company amounts necessary to defray the expenses for doing so.
8. There is nothing in Annexure J or any other material placed before us showing that Annexure J order was passed by the learned CLB on consent. But, we are in agreement with the learned counsel for the respondents that Annexure J order was passed by the learned CLB with the obvious object of giving effect to Annexure F order. As rightly submitted by the learned counsel for the respondents, so long as Annexure F is in currency there cannot be any valid defence to the passage of Annexure J order when the same is sought by filing written application. Disqualification under Section 283 (1)(g) of the Companies Act was entailed by the first respondent if at all, even prior to Annexure F order. That being so, Section 283 (1)(g) cannot be an answer against Annexure J order.
9. However, noticing the merit in the contentions of the appellants, technical though they are, we are inclined to set aside Annexure J. At the same time, realising that it was on considerations of justice and in view of Annexure F that the learned CLB passed order, we are inclined also to sustain the relief which the CLB gave to the first respondent by passing Annexure J.
10. The result of the above discussion is therefore as follows;
i). Annexure -J is set aside.
ii). The first respondent is permitted to file a written application before the CLB seeking the relief granted to him under Annexure -J . The CLB is directed to consider that application and pass appropriate orders keeping in mind that so long as Annexure F is in currency the first respondent will be entitled to attend all the Board meetings of the company in question,
iii). If written application, as directed above is filed by the first respondent within two weeks of his receiving a copy of this judgment, the learned CLB will consider and pass orders on that application with notice to the appellants at the earliest and at any rate within two weeks thereafter.
iv). Till such time, as orders as directed above is passed on the prospective application to be filed by the first respondent, the company is restrained from convening any Board meeting.
PIUS C.KURIAKOSE,JUDGE C.K.ABDUL REHIM , JUDGE dpk