Madras High Court
Tamilnad Mercantile Bank Ltd., ... vs Tamilnad Mercantile Bank Shareholders ... on 28 March, 2002
Equivalent citations: (2002)2MLJ437
Author: P. Sathasivam
Bench: P. Sathasivam
ORDER P. Sathasivam, J.
1. Tamilnad Mercantile Bank Limited, Tuticorin and their Chairman S. Krishnamurthy, questioning the filing of Civil Suit in O.S.No.419 of 2001 pending on the file of the Principal District Munsif, Tuticorin, have preferred C.R.P.No. 4203/2001 under Article 227 of the Constitution of India.
2. In C.R.P.No. 11 of 2002, S. Krishnamurthy, Chairman, Tamilnad Mercantile Bank Limited challenges the filing of complaint in unnumbered C.C.No. /2001 on the file of the Judicial Magistrate, No.II, Tuticorin and prays for quashing of the same.
3. The case of the petitioner in C.R.P.No. 4203/2001 is as follows:-
The first petitioner is a banking company incorporated under the provisions of the Companies Act, 1956. The company is governed in its functioning by the Banking Regulation Act, 1949 and is a Board Managed Banking Company. The first respondent herein filed the said suit (O.S.No. 419/2001) on the file of the Principal District Munsif, Thoothukkudi to declare the withdrawal of the monthly salary and enjoyment of perks by the 2nd defendant in the absence of ratification by the Annual General Meeting of the 1st defendant bank is illegal and consequently to restrain the 1st defendant by an order of permanent injunction from imposing the salary and perks to the 2nd defendant, and to order the 6th defendant by an order of mandatory injunction not to grant extension of time for convening the Annual General Meeting. The main allegations of the first respondent in the above suit is that the 73rd Annual General Meeting of the first petitioner bank took place on 1-7-97 and thereafter no meeting was convened. The second petitioner is the cause for non-holding of Annual General Meeting and further drawing higher salary without ratification/approval of the shareholders in the Annual General Meeting, hence suit is filed for the said relief. The first respondent and its Secretary are habitual in filing civil suit and criminal complaints against the petitioners and the Directors/Officers of first petitioner. The allegations, averments and the alleged cause of action in the said suit (O.S.419/2001) is verbatim of earlier suits filed by the first respondent and its Secretary. Those suits are C.O.S.No. 2/2000 on the file of District Judge, Thoothukkudi, filed by the first respondent and the same was subsequently withdrawn; C.O.S.No. 24/1998 the file of the District Munsif, Thoothukkudi, filed by the Secretary of the first respondent in his individual capacity and was subsequently withdrawn as not pressed; and C.C.No. 543/1998 on the file of the Judicial Magistrate-II, Thoothukkudi filed by the Secretary of the first respondent in his individual capacity for the offences under Sections 420, 480 and 406 I.P.C. read with Section 168 of Indian Companies Act, on the same set of allegations and was subsequently compounded for the reasons as 'settled our of court'.
4. The second petitioner who is Chairman of the first petitioner bank has been appointed and approved by the Reserve Bank of India under the provisions of 35B of the Banking Regulation Act, 1949. As per the said Regulation, no amendment of any provision relating to the remuneration of the Chairman of the bank whether the provision is contained in the Company's Memorandum or Articles of Association shall have effect unless approved by the Reserve Bank of India in terms of section 35B(2) and 35B(2a) of the said Act. In view of the legal position, no ratification is needed in the Annual General Meeting. Frivolous and vexatious suits, suits on the same set of facts filed by same person or at the instigation by some vested interest group and the suits without valid cause of action were filed against the first petitioner, its Chairman, officers, abusing the process of the Courts. In such circumstances, the first petitioner bank is put to much hardship in its administration and smooth functioning. If the said situation is allowed to persist it will hamper the activities and the effective functioning of the first petitioner bank. The shareholders at large, the employees, constituents of the bank and the public interest will be seriously prejudiced; hence the petitioners are constrained to approach this Court for appropriate direction under Article 227 of the Constitution of India.
5. Notice to respondents 2 to 9 are given up by the counsel for petitioners. The only contesting respondent, namely, the first respondent, though duly served with notice, has not chosen to contest the revision by engaging a counsel.
6. In C.R.P.No.11/2002, it is stated that the respondent filed a criminal complaint in Crl.M.P.No.7388 of 2001 in unnumbered C.C.No. of 2001 before the Judicial Magistrate-No.II, Thoothukkudi for the offence alleged to have been committed punishable under Sections 420, 418 and 406 of I.P.C. read with Section 168 of the Companies Act. The allegation of the respondent in the complaint is that the petitioner herein who is the Chairman of the Tamilnad Mercantile Bank Limited (hereinafter referred as "TMB") did not take any steps to convene the Annual general Meeting of TMB and is not convening the same which will amount to an offence punishable under Section 168 of the Companies Act and it will cause damage to the bank and the shareholders. The respondent further alleged that the petitioner herein is drawing salary which is higher and compared with the previous chairman of the bank and has been making wrongful gains by drawing bata, allowances, etc. during the monthly board and committee meeting without being approved by the shareholders in the Annual General Meeting of TMB, hence the complaint was filed to harass the petitioner. The complaint is a clear abuse of process of law. The respondent has no locus standi to file the above complaint and he is not in any way aggrieved since he is only a minor shareholder holding shares which represents less than 1 per cent of the total shareholding. The complaint itself is exfacie not maintainable in the absence of the other shareholders who are vested with a right to appoint or remove any Director in the bank; hence the Revision under Article 227 of the Constitution of India by the petitioner.
7. The respondent filed a counter affidavit disputing various averments made by the petitioner. Since no impugned order was passed against the petitioner in Crl.M.P.No. 7388/2001, the petitioner has no locus standi to invoke Article 227 of the Constitution of India. Likewise in the said Crl.M.P., there is no order or summons to the petitioner till date. Before entering appearance in the lower court the petitioner without any locus standi has filed this Revision which is quite obvious. Regarding the question to be decided, it is unnecessary to refer the other details furnished in his counter affidavit.
8. Mr. A.L. Somayaji, learned senior counsel for the petitioners in both cases, after taking me through various earlier proceedings, orders therein, would contend that the filing of the present suit in O.S.No. 419/2001 before the Principal District Munsif's Court, Thoothukudi is a clear case of abuse of process of Court; accordingly the same is liable to be set aside. Likewise, the present complaint by the respondent in C.R.P.11/2002 is also not maintainable in view of the order of acquittal of the learned Magistrate under Section 257 Cr.P.C. As stated earlier, the only respondent in C.R.P.No. 4203/2001 is un-represented. Mr. M. Ravindran, learned senior counsel appearing for the respondent in C.R.P.No. 11/2002, would contend that in the light of Sections 190, 200, 202, 203, 204 of the Cr.P.C. and considering the fact that the complainant was not examined, and summons was not issued to the accused, the present revision questioning the same is not maintainable and liable to be dismissed. According to him, the claim made by the petitioner in C.R.P.11/2002 is premature.
9. I shall first dispose of C.R.P.No. 4203/2001.
It is the case of the petitioners that in view of dismissal of earlier suits filed at the instance of the shareholders, the present suit namely O.S.419/2001 on the same cause of action claiming same relief cannot be sustained. In order to substantiate the above claim, learned senior counsel for the petitioners has brought to my notice the first suit filed by M.P.T. Muthuraj in C.O.S.No.24/98 beofore the District Court, Tuticorin against Tamilnad Mercantile Bank as first defendant, S. Krishnamurthy as second defendant and Reserve Bank of India as third defendant. Defendants 1 and 2 are the petitioners in this revision. In that suit the plaintiff M.P.T. Muthuraj prayed for a relief of declaration declaring the withdrawal of the monthly salary and enjoyment of perks by the second defendant in the absence of ratification by the Annual General Meeting of the first defendant bank is illegal and consequently to restrain the first defendant by an order of permanent injunction from disbursing the salary and perks to the second defendant. Pending the suit, the plaintiff filed an application in I.A.No.87 of 98 for recording of a Memo stating that the suit in C.O.S.No.24/98 and the interim applications may be dismissed as 'not pressed' without costs. Based on the said Memo, C.S.O.No.24/98 was dismissed "as not pressed". Thereafter, the very same plaintiff, namely, M.P.T. Muthuraj as Secretary of Tamilnad Mercantile Bank Shareholders welfare Association, has filed C.O.S.No.2/2000 against TMB, its Chairman and Officers of the Reserve Bank of India before the District Court, Thoothukudi. In that suit, the plaintiff has prayed for a decree and judgment against the defendants declaring the withdrawal of the monthly salary and enjoyment of perks by the second defendant in the absence of ratification by the Annual General Meeting of the first defendant bank is illegal and consequently to restrain the first defendant by an order of permanent injunction from disbursing the salary and perks to the second defendant and for other reliefs. Here again, after some time, the plaintiff filed a Memo dated 21-6-2000 stating that since the plaintiff is not willing to proceed with the case as the case is based on mistake of fact, the suit may be dismissed as not pressed without costs. By recording the Memo, the learned Principal District Judge dismissed their suit "as not pressed" on 28-6-2000. Before going further, as requested by the learned senior counsel for the petitioners, I have verified and compared the plaint averments and the reliefs prayed for in both the suits. I am satisfied that the allegations/averments and the reliefs prayed for are identical in both the suits. I have already referred to the fact that at the instance of the plaintiff, both the suits were dismissed.
10. Now I shall consider the third suit viz., O.S.No. 419/2001 on the file of the Prl.District Munsif, Thoothukudi, which is under challenge in this Civil Revision Petition. This suit was also filed by the very same M.P.T. Muthuraj, Secretary, Tamilnad Mercantile Bank Shareholders Welfare Association. The defendants were TMB, its Chairman and various officers of Reserve Bank of India. In that suit, the plaintiff prayed for declaration declaring the withdrawal of the monthly salary and enjoyment of perks by the 2nd defendant in the absence of ratification by the Annual General Meeting of the first defendant bank is illegal and consequently to restrain the first defendant by an order of permanent injunction from imposing the salary and perks to the 2nd defendant, and for mandatory injunction not to grant extension of time for convening the Annual general Meeting. Here also, I have carefully gone through the various plaint averments and the relief prayed for. As rightly argued by Mr. A.L. Somayaji, the very same plaintiff has filed the third suit claiming the same relief which were already rejected and dismissed by the competent court. I have already referred to the fact that the averments and allegations in the plaint as well as the relief sought for are identical in all the 3 suits. The same relief has been prayed for against the very same defendant. Though it is elaborately argued that the plaintiff has no locus standi to seek the relief as he is not in any way aggrieved since he is only a minor shareholder which represents less than 1 per cent of the total shareholding, I am of the view that in view of the dismissal of the suits on two occasions without specific relief to file a fresh suit on the same cause of action, the plaintiff should not be permitted to pursue the present suit, namely, O.S.No.419/2001. Likewise, the learned Senior counsel, by drawing my attention to the various provisions of the Companies Act and the Reserve Bank of India Guidelines, has highlighted the reason for non-convening of Annual General Meeting, and also stated that for the very same reasons, the plaintiff should not be permitted to raise the same issue again and again just to harass the defendants and that in such a circumstance, the plaintiffs are entitled to invoke the jurisdiction of this Court under Article 227 of the Constitution of India. In this regard it is relevant to refer a decision of S.S. Subramani, J., in Henry, A. and another v. St. Georges Church and others, reported in 1999-3 L.W. page 49, wherein the learned Jude has held that when the plaintiff concedes that he has no claim and wanted to put an end to the litigation by endorsing as 'not pressed' and did not want any leave of Court for instituting another litigation, he should not be again permitted to file another suit under the same cause of action. In Kanagaraj, P.S.K. and 3 others v. Kamaraj and another, reported in 1997-3-L.W. 909, the same view was expressed by the very same learned Judge.
11. In the light of what is stated above, I accept the contention of the learned senior counsel for the petitioners that plaintiff should not be permitted to institute such a suit, and if he is permitted, it will only encourage him (plaintiff) to abuse the process of Court. When plaintiff concedes that he has no claim and wanted to put an end to the litigation and did not want any leave of Court for instituting another litigation, he should not be again permitted to file another suit under the same cause of action. Accordingly, I hold that the suit, viz., O.S.419/2001 on the file of the Principal District Munsif, Tuticorin stands struck off the file.
12. Now I shall consider C.R.P.No. 11/2002. The petitioner, who is Chairman of the Tamilnad Mercantile Bank, has filed this revision questioning the filing of a complaint by the respondent before the Judicial Magistrate-No.II, Thoothukudi. By pointing out the earlier complaint in C.C.No. 543/98 by M.P.T. Muthuraj and the subsequent filing of a compromise memo, seeking permission of the Court to compound the same under Section 320(2) Cr.P.C., the learned senior counsel would contend that the present complaint on the same nature at the instigation of the earlier complaint cannot be sustained. Regarding the fact of acquittal of the accused viz., Krishnamurthy, petitioner herein, under Section 257, Cr.P.C., based on the memo filed by the complainant, Mr. Somayaji has referred to various decisions of the Supreme Court and prays interference by this Court under Article 227 of the Constitution of India. At this juncture, Mr. Ravindran, learned senior counsel for the respondent, by drawing my attention to various provisions of the Code of Criminal Procedure, namely, Sections 190, 200, 202, 203 and 204 of Cr.P.C., would contend that inasmuch as the complainant was not examined and the Court has not issued summons for appearance of the accused/petitioner herein, the present claim and the revision is premature. There is no dispute that the complainant is yet to be examined and admittedly, the criminal court has not issued summons to the accused therein/petitioner herein. In this regard, it is relevant to refer the following conclusion of the constitution Bench of the Supreme Court in Chandra Deo v. Prokash Chandra Bose alias Chabi Bose "7. Taking the first ground, it seems to us clear from the entire scheme of Ch. XVI of the Code of Criminal Procedure that an accused person does not come into the picture at all till process is issued. This does not mean that he is precluded from being present when an enquiry is held by a Magistrate. He may remain present either in person or through a counsel or agent with a view to be informed of what is going on. But since the very question for consideration being whether he should be called upon to face an accusation, he has no right to take part in the proceedings nor has the Magistrate any jurisdiction to permit him to do so. It would follow from this, therefore, that it would not be open to the Magistrate to put any question to witnesses at the instance of the person named as accused but against whom process has not been issued; nor can he examine any witnesses at the instance of such a person. Of course, the Magistrate himself is free to put such questions to the witnesses produced before him by the complainant as he may think proper in the interests of justice. But beyond that, he cannot go. It was, however, contended by Mr. Sethi for respondent No.1 that the very object of the provisions of Ch.XVI of the Code of Criminal Procedure is to prevent an accused person from being harassed by a frivolous complaint and, therefore, power is given to a Magistrate before whom complaint is made to postpone the issue of summons to the accused person pending the result of an enquiry made either by himself or by a Magistrate subordinate to him. A privilege conferred by these provisions can, according to Mr. Sethi, be waived by the accused person and he can take part in the proceedings. No doubt, one of the objects behind the provisions of Section 202, Cr.P.C. is to enable the Magistrate to scrutinise carefully the allegations made in the complaint with a view to prevent a person named therein as accused from being called upon to face an obviously frivolous complaint. But there is also another object behind this provision and it is to find out what material there is to support the allegations made in the complaint. It is the bounden duty of the Magistrate while making an enquiry to elicit all facts not merely with a view to protect the interests of an absent accused person, but also with a view to bring to book a person or persons against whom grave allegations are made. Whether the complaint is frivolous or not has, at that stage, necessarily to be determined on the basis of the material placed before him by the complainant. Whatever defence the accused may have can only be enquired into at the trial. An enquiry under Section 202 can in no sense be characterised as a trial for the simple reason that in law there can be but one trial for an offence. Permitting an accused person to intervene during the enquiry would frustrate its very object and that is why the legislature has made no specific provision permitting an accused person to take part in an enquiry...".
13. In Thanikachala Mudali v. Ponappa Mudali (1947 M.W.N. 98), it was held that when a Magistrate dismisses a complaint without issuing process to the accused, the accused person cannot be said to have been discharged within the meaning of the proviso to Sec. 436, Cr.P.C., and therefore a notice is necessary to him when the Sessions Judge directs further inquiry into the complaint. It is clear from the above decisions that the object behind the provisions of section 202, Cr.P.C. is to enable the Magistrate to scrutinise carefully the allegations made in the complaint with a view to prevent a person named therein as accused from being called upon to face an obviously frivolous complaint. The another object behind this provision and it is to find out what material there is to support the allegations made in the complaint. It is the bounden duty of the Magistrate while making an enquiry to elicit all facts not merely with a view to protect the interests of an absent accused person, but also with a view to bring to book a person or persons against whom grave allegations are made. It is further clear that whether the complaint is frivolous or not has, at that stage, necessarily to be determined on the basis of the material placed before him by the complainant. Whatever defence the accused may have can only be enquired into at the trial. It is further clear that an enquiry under Section 202 can in no sense be characterised as a trial for the simple reason that in law there can be but one trial for an offence. Permitting an accused person to intervene during the enquiry would frustrate its very object and that is why the legislature has made no specific provision permitting an accused person to take part in an enquiry. Accordingly, in the absence of examination of the complainant, and non- issuance of summons to the accused by the Magistrate after satisfying himself, I hold that the petitioner has no role to play or challenge the same before any Forum. On this ground, C.R.P.No. 11/2002 is liable to be dismissed as premature.
14. In the light of what is stated above, C.R.P.No. 4203/2001 is allowed; C.R.P.No. 11/2002 is dismissed. No costs. The interim stay granted in C.M.P.Nos. 22794/2001 and 116/2002 is vacated. V.C.M.P.No. 1771/2002 is closed.