Delhi High Court
Naresh Kumar Aggarwal & Ors. vs Davender Kumar Mittal & Ors. on 25 May, 2001
Equivalent citations: [2001]107COMPCAS527(DELHI), 92(2001)DLT442, 2001(59)DRJ359
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
ORDER Sanjay Kishan Kaul, J.
1. The appellants filed a petition under Sections 433(a), (e) and (f) read with Section 439 of the Companies Act, 1956 for winding up of appellant No. 2 company. A petition under Sections 397 and 398 of the Companies Act was filed before the Company Law Board, prior to the filing of the aforesaid petition and certain interim orders were passed by the Company Law Board in the proceedings before it. The said petition before the Company Law Board was however subsequently withdrawn by the appellants. The appellants contend that since they subsequently came to the conclusion that survival of the company was not in the interest of its share holders, the petition was filed before this Court.
2. Appellants NO. 1 had contended that he is holding more than 99% shares and he is no longer interested in the running of the Hotel at Mussorie which was the purpose of incorporation of defendant No. 2 company and therefore appellant No. 2 company should be wound up on just and equitable ground. The petition of the appellant was, however, dismissed by the learned Company Judge vide the order dated 24.5.1996.
3. Mr. Satish Chandra, learned counsel for the appellants contended that a sum of Rs. 5,73,000/- was given by Appellant No. 1 to respondent No. 1 in good faith as there was a deed of partnership between appellant No. 1 and respondents 2 and 3 for the construction of a Hotel. In terms of the Memorandum of Association of appellants No. 2 company Kamini Hotel Pvt. Ltd., appellants No. 1 and respondents 2 and 3 were the initial subscribers to 200 shares each totalling to 600 shares. Subsequently 44.00 shares of the fact value of Rs. 10/- each were stated to have been issued in favor of respondent No. 1 on 3.10.84 in lieu of the amount of Rs. 5,73,000/- advanced earlier. Reliance was placed on the certified copy of the Form No. 32 in terms whereof the aforesaid equity shares were allotted to appellant No. 1. the form is dated 4.10.94 and is alleged to bear the signatures of Respondent No. 2. The date of the allotment in the said form is stated as 3.10.94. However, this form was filed with the Registrar of Companies, Delhi and Haryana on 20.4.95. It may be stated that there is no dispute about the fact that the plot in question on which the Hotel is running was purchased on 9.7.91 in the name of respondent No.1. It is, however, contended by the learned counsel for the appellants that this was an inadvertent oversight and the same is recorded in the partnership deed dated 4.3.1992 in terms whereof appellant No.1 on the one hand and respondents 1 and 2 on the other are absolute owners of the half share each of the land. Appellant No. 2 company was incorporated on 15.5.1992. The shares are thus stated to have been allotted in terms of the Articles of Association for which admittedly no notice of allotment was issued.
4. Learned counsel for the appellants on the strength of the aforesaid facts and the fact that monies have been paid to respondent 1 and 2 stated that appellant No. 1 was defrauded of the money and since he owned 99% of the share was claiming winding up of the company on just and equitable ground. It may be pointed out that the learned counsel for the appellants accepted the position tat in the absence of the relevant ingredients, sub-section (a) and sub-section (e) of Section 433 of the Companies Act, 1956 really do not apply and the appellant was resting his case on Section 433(f) of the Companies Act.
5. Mr. M.R. Chawla, learned counsel for the respondents opposed the aforesaid appeal on the ground that complete set of documents relating to the alleged allotment of 44,000 shares were fabricated by Appellant No. 1 Respondent No. 2 was stated to be bed-ridden and contended that signature of respondent No. 2 was obviously obtained in goods faith. Learned counsel for the respondents stated that the respondents have already filed a civil suit against appellants No. 1 for appropriate reliefs of declaration and cancellation of the said documents. Learned counsel for the respondents further contended that no notice of the meeting of Board of Directors was given for the allotment of shares and thus, even otherwise there could not be any resolution passed for allotment of the shares. Mr. Chawla sought to rely on the judgment of the Supreme Court in Parmeshwari Prasad Gupta vs. The Union of India in support of his submission that a notice to all Directors of the meeting of Board of Directors is essential for validity of any resolution passed in the meeting. It was contended that in view of the undisputed position about the non-issue of notice, no such resolution could have been passed.
6. Learned counsel for the respondents also relied on the letters addressed by respondent No. 1 to appellant No. 1 dated 21.3.95 and 31.3.95 returning an amount of Rs. 6 lakhs against a sum of s. 5,73,000, the amount borrowed for construction of the Hotel. It was thus contended that there was no consideration which passed on to Appellant No. 2 company for the alleged allotment of 44,000 shares.
7. We have heard learned counsel for the parties at length and have gone through the record. Learned company judge has in the impugned order recorded the admitted position of the plot of land being in the name of Respondent No. 2 and not being a property of Appellant No. 2 company. Learned Company Judge has observed that appellant No. 1 was time and again asked to show any document on the basis of which the amount of Rs. 5,73,000/- was given to the respondents for construction of the Hotel. Even on appellants No. 1 being asked to file an affidavit, the same was not filed. The learned Judge though agreeing with the appellants on the principles of law that a prima facie view has to be taken at the stage of admission of the petition found that even this prima facie view could not be found in favor of the appellants and thus refused to exercise jurisdiction under Section 433, 434 and 439 of the Companies Act. The learned Company Judge did minutely examine the relevant material placed before him and duly considered the same while recording a finding against the appellants.
8. Learned counsel for the appellants relied on the judgment of the Division Bench of this Court in Eastern Linkers Pvt. Ltd. vs. Dina Nath Sodhi 1984 (55) Company Cases Page 462 to contend that filing of the prior petition under Sections 397 and 398 of the Companies Act can not be a bar for a subsequent petition for winding up on just and equitable ground. There can be no dispute on this submission advanced on behalf of the appellants, but the issue is not whether there is a bar to the subsequent petition under just and equitable ground but the issue is that whether the appellants had made out a case for exercise of the said jurisdiction by the learned Company Judge.
9. Mr. Chandra, learned counsel for the appellants relied on the judgment of the Supreme Court in Ammonia Supplies Corporation (P) Led. vs. Modern Plastic Containers Pvt. Ld. and other 1998 (94) Company cases 310 to contend that the Company Judge was fully competent to decide all the questions raised in the petition and the petition should not have been rejected at its threshold. The Supreme Court considered the scope and ambit of Section 155 of the Companies Act (which was subsequently omitted by the Companies (Amendment) Act, 1988 with effect from 31.5.91) and upheld the principles of law laid down by a Full Bench of this Court holding that the power to be exercised under Section 155 is of a summary nature. However, on the facts and circumstances of the said case the Supreme Court remanded the matter to the Company Judge to consider whether the allegations of forgery and fabrication were at least prima facie sustainable to deny the exercise of jurisdiction under Section 155. Certain other directions were also passed in the said case, in view of the petitioner company therein being in liquidation but the same are not relevant for the purposes of the present case. The Supreme Court also considered the reference to "court" under Sub Section (11) of Section 2 and Section 10 of the Companies Act to conclude that the jurisdiction of Civil Court was not totally ousted. If the case came within the ambit and scope Section 155, the Company Court could naturally exercise jurisdiction but in case the Company Court was of the view that there complicated questions of fact involved including allegations of forgery and fabrication, which prima facie require detailed examination and evidence, the parties are to be relegated to a civil suit.
10. Learned counsel for the appellants argued that this was not a goods law, in view of the fact that the judgment in Ammonia Supplies Corporation (P) Ltd. (supra) was delivered by a Bench of two Hon'ble Judges while a contrary position of law was expressed by a Bench of three Hon'ble Judge of the Supreme Court in the case of Canara Bank vs. Nuclear Power Corporation of India Ltd. and other 1995 (84) Company Cases Page 70. We are unable to accept this contention of learned counsel for the appellants since we find no conflict of law laid down in the two decisions aforementioned. Not only this, the decision in the case of Canara Bank (supra) was considered in the Ammonia Supplies (supra) case.
11. Learned Counsel for the appellants further contended that the petition filed before the Company Judge ought to have been admitted as a matter of course and only thereafter it could be examined in merits. He relied on the observations of the Supreme Court in the case of Shanta genevieve Pommerat and another vs. Sakal Paper P. Ltd. and other 1985 (57) Company Cases 469 in support of the said submission. In Shanta Genevieve's case (supra) the Supreme Court considered the case of an appeal arising form the dismissal of a petition under Sections 397, 398 and 403 of the Companies Act, 1996 to hold that the appeal should not have been dismissed in liming and the same was liable to be admitted as a matter of course. This preposition cannot be applied to a petition and would apply to an appeal like the present one before us. Admission of a petition under Section 433 of the Act has very wide and serious ramifications including appointment of provisional liquidator, publication of citation etc. The admission of a winding up petition cannot be as a matter of course. The Company Court is bound to examine the maintainability, both in law and on the facts, of the case. The powers of the Company Court are wide under the just and equitable grounds but in the present case the learned Company Judge, after consideration of the facts and circumstances of the case, refused to exercise the said jurisdiction.
12. We are in agreement with the conclusion of the learned Company Judge. The litle to the plot in question rests with respondent No. 2 on the basis of the registered document. the appellants have failed to establish that any consideration was paid at the stage of allotment of the 44,000 shares. The payment of Rs. 5,73,000/- made earlier on trust and faith by appellant No. 1 to respondent No. 1 is stated to have been refunded back in the form of Rs. 6 lakhs by respondent No. 1 to appellant No. 1. No notice of the meeting for allotment of shares was issued. The respondents have alleged fabrication and forgery in all relevant documents relating to the alleged allotment of 44,000 shares in respect of which a civil suit is now stated to be pending adjudication inter se the parties which is stated to have been filed by the respondents. This is not a case where the Company Judge could have exercised his powers to wind up the company. the controversy relating to the alleged allotment of the shares, the consideration for the same and other related issues are such which as per the circumstances brought on record are liable to be adjudicated upon by the competent Civil Court.
13. In order to arrive at a conclusion whether to entertain or not to entertain the petition of the appellants, the learned Company Judge had to consider the material on record and come at least to a prima facie view. This the learned Company Judge has done. The appellants cannot make a grievance of the same. Needless to say that the observations of the learned Company Judge are only prima facie and that too for the purpose of considering the petition filed by the appellants. The said observations including the one made while deciding the appeal cannot prejudice the rights of either of the parties the controversy which would ultimately will have to be determined by the competent Civil Court on merits uninfluenced by the said observations.
14. We find no merit in the appeal and the same is dismissed with cost quantified at Rs. 5,000/-
15. No interim application survive in view of the aforesaid order.