Delhi High Court
Radhey Shyam Gupta And Anr. vs Kamal Oil And Allied Industries Ltd. And ... on 23 May, 2005
Equivalent citations: 2005(82)DRJ530
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
1. CP 1/82, as is clear from its number, was filed in the year 1982. To be precise, on 4th January, 1982. This petition is preferred under Sections 397, 398, 402 and 403 of the Companies Act alleging acts of oppression and mismanagement on the part of respondents no. 2 to 6. Prayer made in the petition is the following:-
(i) S/Shri Kamal Kishore Arora, Kishan Chand Arora, Pran Nath Arora and Ram Nath Arora have vacated their offices of directors w.e.f., 10th September, 1981;
(ii) Petitioner no. 1 Shri Rajdhey Shyam Gupta be appointed as Chairman of the Company.
(iii) Petitioner no. 2 Shri Shyam Sunder Gupta be appointed as Managing Director of the Company;
(iv) A Local Commissioner be appointed to immediately prepare an inventory of all assets and stocks of the Company, to take into custody the statutory books, account books and records of the Company, and to sign books of accounts of the Company at such places as may be indicated by Petitioners or their Advocate;
(v) Petitioners be authorized to appoint at least three persons as security guards to protect the assets of the company; and
(vi) Such other or further orders as may be deemed fit and proper in the circumstances of the case be passed."
2. It may be noted that the respondent had taken objection to the maintainability of this petition. Arguments were heard by the Company Judge on this aspect and vide order dated 7th February, 1984 it was held that the petition as framed, was not maintainable. It was accordingly dismissed. The petitioners however, took the matter in appeal. The Division Bench allowed this Company Appeal no. 8/84 vide judgment and order dated 26th November, 1998. Judgment of the Single Judge was reversed and petition was held to be maintainable. Parties were directed to appear before the Company Judge on 11th January, 1999. After remitting the case to this Court, the Court passed orders from time to time directing the parties to complete the pleadings and it was also directed that evidence be filed by the parties by way of affidavits. The petitioner not filed his affidavit dated 21st October, 2002. The respondent filed evidence by way of affidavit thereafter on 16th November, 2002.
3. As during the pendency of these proceedings the respondent no. 3 died, his LRs were brought on record and they took some time to file the affidavit by way of evidence. However, on October 23, 2003, counsel for the LRs of the respondent no. 3 made a statement that LRs do not intend to file any affidavit by way of evidence. As other affidavits were on record, matter was listed before Joint Registrar on 2nd December, 2003 for recording cross-examination of the deponent of these affidavits. This cross-examination could not take place as on 10th March, 2004, counsel for the petitioner made a statement that she would be filing fresh affidavit as the witness had expired. This witness is none else than the petitioner no. 1. Thereafter CA 1194/04 was filed for bringing the LRs of petitioner no. 1 on record who died on 7th February, 2004. Although, this application was filed on 12th March, 2004 i.e., well within stipulated period of limitation, but no steps were taken for getting this application listed. The registry of this Court had raised certain objections which were not removed. It was taken back from the registry after a lapse of almost seven months i.e., on 5th October, 2004 and the objections were removed thereafter. That too when the respondent filed CA 1164/04 for disposing of the company petition treating the same having been abated as steps for bringing LRs of the petitioner no. 1 were not taken. When the notice in this CA was issued, the petitioner's counsel removed the objection in the application and got it listed. It is, in these circumstances, two applications were heard together namely 1194/04 for bringing LRs of petitioner on record and CA 1164/04 of the respondent praying for disposing of the petition as abated.
4. On November 19,2004 submissions of the learned counsel for the respondent were noted in brief and LRs of petitioner no. 1 were directed to file affidavit explaining the circumstances/ delay in re-filing the application. Applicants filed application i.e., CA 474/05 (explaining the delay in re-filing the application) supported by affidavits of the LRs.
5. In this application, it is stated that the counsel for the petitioner was informed about the death of petitioner no. 1 by his wife. She was advised by the counsel to file application for bringing the LRs on record which was a legal requirement. Application was prepared and filed on 12th March, 2004. However, Along with this application, counsel did not file urgent application and therefore, it could not be listed immediately. In the meantime, one of the LRs namely Navin Gupta approached the counsel and objected to the inclusion of the name of his sister Ms. Deepa Mittal as one of the LRs of the deceased petitioner no. 1 since according to him Deepa did not inherit the estate of their deceased father. Counsel advised Shri Naveen Gupta to verify the matter further and he, in turn, assured that he would produce some documents in support of his claim shortly. However, nothing was heard from him and it was later on learnt that a series of litigation had commenced between the LRs of the deceased petitioner no. 1 with respect his estate. Counsel for the petitioner, in these circumstances, waited for proper and clear instructions which were not forthcoming in view of the split of the legal heirs in two camps. The counsel addressed letter dated 8th July, 2004 to the LRs by registered post requesting them to give proper instructions before 12th October, 2004, the next date fixed in the case. In the meantime respondent filed CA 1164/04 which came up for hearing on 1st October, 2004. At that stage, understanding the seriousness of the matter, counsel for the petitioner took back the application and after removal of the objection he filed the same.
6. It is further stated in this application that a bona fide and genuine doubt came across in the mind of the counsel as to the correctness of the averments in the application in view of disputes between the LRs of petitioner no. 1 and, therefore, he did not get the application listed. Although the said disputes still persist, they have resolved that without prejudice to their rights and contentions, application for impleadment be pressed.
7. Application for bringing the LRs on record was admittedly filed within stipulated period. However, office had placed/returned in under objection which were to be removed and application was required to be refiled within one week. There is substantial delay in removing the objection and getting the application listed. The respondents want the application to be dismissed on this ground. The petitioner, on the other hand, submits that there is sufficient ground for condensation of delay in refiling the application. Referring to the explanation given in the CA , he submitted that this should be treated as bona fide conduct of the applicant. In support of this he relied upon judgment of Supreme Court in the case of Indian Statistical Institute v. Associated Builders and Ors. AIR 1978 SC 335 and of this Court in the case of DSA Engineers (Bombay) and Ors. v. Housing & Urban Development Corporation (HUDCO) 2003(66) DRJ 466
8. Learned counsel for the respondent on the other hand, vehemently opposed the prayer made in this application. Her submission was that when the matter came up for hearing on 1st October, 2004, reason given by the learned counsel for the applicant for not getting the application listed was that LRs of the deceased petitioner no. 1 had not contacted him and he took time for seeking instructions from them as to whether they were interested in proceeding with this case or not. This is contrary to the reason given now in the application explaining the circumstances in re-filing. She further submitted that the objections were removed without awaiting instructions from the LRs. When this could be done at this stage, nothing prevented the counsel for the applicant to undertake this exercise earlier as well. Therefore, such an explanation is neither bona fide nor would it constitute sufficient cause. She took support of the following judgments:-
(i) Parvati and Ors. v. Anand Prakash alias Nand Lal, AIR 1987 Del 90
(ii) S.V. Khadekar v. Shri Ram Scientific Industrial Research Foundation
(iii) Bawa Ninal Singh v. State of Punjab through Land Acquisition Collector (1996) 10 SCC 95
(iv) Suraj Bhan and Ors. v. Bharat Singh and Ors. , 1989 Supp (2) SCC 456 SRF Finance Limited v. Mardia Copper Products Ltd. 2001 1 AD (Delhi) 793 Current Transport and Finance P. Ltd. v. Sardar Singh and Ors. 1986 (59) Co. Cases 767
9. These judgments essentially deal with two aspects:-
a) Effect of not taking steps for bringing the LRs on record within limitation and if the application is filed belatedly and un-accompanied by explanation for delay, effect would be that proceeding shall abate.
b) Other judgments deal with situation when there are more than one appellants and on death of one of the appellants, if his LRs are not brought on record, under what circumsances, entire appeal qua other appellants shall also abate.
10. In the present case as already pointed out above, the application for bringing the LRs was moved well within the period of limitation. Delay is in removing the objections and refiling the application after removal of the said objections. Though provision of Section 5 of the Limitation Act would not be applicable in such an eventuality, at the same time, it is necessary for the applicant to explain the delay that has occurred in removing these objections. Law on this aspect has been amplified this Court in the case of Parvati and Ors. v. Anand Prakash alias Nand Lal (Supra). After taking note of various judgments of different High Courts and particularly Punjab and Haryana High Court (as the issue arose that reference to the rules of removing such defects which are adopted by this Court as well) and the Apex Court, the illegal possession was sound up as under:-
11. The sum and substance of these authorities therefore, is that while Section 5 of the Limitation Act would not be attracted to a case where, "an appeal/objection has been initially filed within the prescribed period of limitation and the same does not suffer from any infirmity of a vital nature but delay in refiling the appeal after removing the defects as pointed out by the Deputy Registrar while returning memorandum of appeal/petition has to be explained and the High Court may in exercise of its discretionary power condone the same or not. Of course, the rigours of law of limitation would not apply to such a situation and the Court has simply to satisfy itself that there is a plausible explanation for the delay. Since Rule 5(1) chapter I A of the High Court Rules and Orders, Volume V, prescribes a maximum limit of 40 days up to which time can be allowed by the Deputy Registrar for refiling the appeal after removing the objections it was incumbent on the appellants to seek extension of time from the Deputy Registrar hinder the said Rule. Therefore, the appellants could approach the Court for condoning the delay if it had not occurred due to any avoidable lapse on their part. However, nothing of the kind was done and the appellants slept over the matter for as long as nine months. Surely it cannot be said by any stretch of reasoning that there is no sanction behind the aforesaid rule and the Court will be powerless to reject the memorandum of appeal or impose any other appropriate penalty if the appellant behaves in a totally negligent, reckless or erratic manner in not refiling the appeal after removing the defects within a reasonable time. He cannot just sit at home quietly and act as leisure. While some indulgence in the matter may be permissible but it will be wrong to say that the Court will have no option but to accept the memorandum of appeal as and when refiled despite sheer negligence and lack of responsibility on the part of the appellant or his counsel in complying with the direction of the Deputy Registrar observed the Supreme Court in Kalipada Dass and Ors. v. Bimal Krishna Sen Gupta, AIR 1983 SC 876:
"SUPPLYING paper-books is a procedural reauirement devised to facilitate rendering justice. In other words, it is a procedural step in aid of justice and not substantive justice itself.
The institution of judiciary may not be able to function if there is no sanction behind the Court's order. But penalty of failure to comply with Court's order providing a procedural stage in aid of justice must be commensurate with the gravity of the lapse. If the penalty imposed is disproportionate to the gravity of the lapse or omission, the procedural stage instead of becoming a step in aid of justice would be * road block to justice."
12. As a learned Judge of Punjab & Haryana High Court said in Gurbachan Singh v. Mastan Singh, etc., 1984(1) Rcj 619:
"THESE rules have been made by the High Court of further the ends of justice. A party cannot be given undue latitude in complying with the orders of the Registry to remove the defects pointed out in appeal. The appellant cannot be permitted to move at leisure. If great latitude is given to the litigants then they might not only take months but years for complying with the orders".
13. The appellant in the said case had taken 85 days to refills the appeal after removing the defects pointed out by the Registry. The position in the instant case is still worse as the appellants took nearly nine months in refiling the appeal and no explanation for this inordinate delay except the vague averment that the file was misplaced is forthcoming. Indeed, the learned counsel for the appellants did not try to justify the delay in re-presenting the appeal and his main plank was that the original order of the Deputy Registrar in returning the appeal was not warranted by law."
14. Therefore, it is clear that power to condone the delay is discretionary. However before exercising this power, Court has to satisfy itself that there were justified circumstances in removing the objections and re-filing the application. Learned counsel for the respondent submitted that the explanation given was not satisfactory and relying upon the aforesaid judgment in the case of Parvati and Ors. v. Anand Prakash (Supra) argued that in that case also the delay of 9 months was not condoned. She also submitted that in S.V. Khadekar v. Shri Ram Scientific Industrial Research Foundation (Supra), the Court refused to condone the delay by observing:-
"The contention is that originally the appeal was filed within limitation but it was returned for removing certain objections and thereafter the file was misplaced and the appeal could not be filed within the time allowed. The further contention is that once the appeal has been filed within the limitation then the refiling of the appeal cannot be dismissed as time-barred. It can only be rejected in view of order 41 Rule 3 CPC. In support of his submission, he relied upon a judgment reported as 1972 Plr 241, wherein under similar circumstances, the learned Judge condoned the delay in refiling the appeal. I do not agree with any of his submission. The fact remains that the objections pointed by the Registry were not only format but substantive in nature. One of the objections was that the certified copy of the lower court was not duly stamped. Rule 13 of Chapter I (High Court Rules & Orders), Vol. V specifically lays down that the improperly stamped documents remain invalid unless filed through mistake and time extended for making up the deficiency. In this case, no such application was moved nor any order from the Court was sought."
15. The court relied upon its earlier judgment in the case of Smt Parvati v. Anand Prakash (supra) in coming to the aforesaid conclusion. She also points out that the Supreme Court had dismissed the appeals when it found that the matter shall not being prosecuted deligently in the case of Bawa Nihal Singh (supra). This brief order reads as under:-
"It is very unfortunate that the matter is not being prosecuted diligently. It is seen from the office report dated 25-10-1994 that after issue of notice by this Court on 3-5-1993, letters were issued to the counsel for the appellant on 15-5-1993, 13-6-1994, 15-7-1994 and 6-8-1994 with a default clause to pay the requisite deficit process fee and also to file copies of the applications. However, no action was taken. Again when the matter was listed on 3-5-1993, it was reported that one of the appellants died and his legal representatives were directed to be brought on record, notice to be taken and process fee along with miscellaneous petition was required to be deposited. The Registry of this Court has given notice to the counsel for payment of the requisite process fee along with the copies of the petitions but that was also not done. When the matter was again posted before the Court on 2-1-1995 for further orders, this Court ordered:
"Four weeks for complying with the office objections. In default, the Civil Miscellaneous Petitions Nos. 4315-17 of 1987 shall stand dismissed."
Therefore, the applications by self-operation of the said order stand dismissed.
Consequently, the appeal also requires to be dismissed as having abated as a whole. It is accordingly dismissed. No costs."
16. The admitted position which has come on record is this:-
Matter was listed for cross-examination of those who had filed their affidavits. On behalf of the petitioners affidavit was filed by the petitioner no. 1. On 10th March, 2004, when the matter came up for hearing, learned counsel for the petitioner informed that the petitioner no. 1 had died and therefore fresh affidavit was to be filed. Petitioner no. 1 had died on 07.02.04. No doubt, application for bringing the LRs on record was filed on 12th March, 2004. However, no steps were taken for getting this application listed. The matter, in the meantime, came up before the Registrar again on 23rd April, 2004 and following order was passed:-
"Counsel for the petitioner states that she has moved an application for substituted service. Such application is however, not on record. Counsel to check up in the registry and have the application placed on record.
To come up on 8th July, 2004."
17. Application filed by the applicants was put under objection from 12.3.2004 till 23.4.2004. After moving the application, no steps were taken for getting it listed. When the counsel for the petitioner was informed on 23rd April, 2004 that the same is not on record and was asked to check up in the registry, no steps were taken by the petitioner to find out as to why this application was not listed. On the contrary, when the mater came up on 8th July, 2004, counsel for the petitioner made a statement that he would be moving the application for bringing on record the LRs of petitioner no. 1 and seek further instructions from the petitioner. May be the statement was made under erroneous belief that such an application had yet to be moved. However, fact remains that if the application had already been moved no steps were taken in getting the objections removed. Matter was adjourned to 12th October, 2004. Till 1st October, 2004 when no steps were taken, respondent filed CA 1164/04 which was listed on 1st October, 2004 and on that date only learned counsel for the petitioner appeared and informed the Court that application filed by him was lying under objection and he had taken the same from the registry and he also informed the Court that after moving the application, LRs of the petitioner no. 1 had not contacted him and therefore, he would be seeking instructions from them as to whether they are interested in pursuing these proceedings or not. Thereafter, objections were removed and the application was listed. CA 1194/04 was listed on 8th October, 2004. Although these objections were removed after a delay of almost 7 months, at that time no application for condensation of delay was filed. When this was pointed out by the learned counsel for the respondent on 19th November, 2004, learned counsel for the LRs of petitioner no. 1 took time to file an affidavit explaining the circumstances/delay in re-filing the application. Two weeks time was granted for that purpose and matter was adjourned to 4th February, 2005. Arguments were heard in part and the matter was adjourned to 7th February, 2005 for remaining arguments. On that date, arguments were heard. However, till that date application of the LRs explaining the delay was not on record, although at the time of arguments, learned counsel for the petitioner stated that such an application had been filed and copy thereof was supplied to the other side as well as to the Court. Matter was reserved for orders on 7th February, 2005. However, the averments made in the application seeking condensation of delay could be considered only if such an application was on record. Till 29th March, 2005, LRs did not take any steps for getting this application also listed. In these circumstances, on 4th April, 2005, matter was listed for direction and this fact was pointed out to the learned counsel for the petitioner. Only thereafter he took steps for getting that application listed which was listed on 6th April, 2005 as CA 474/05. This aspect is highlighted with a view to indicate the callous attitude of the LRs of the petitioners at every stage. This is inspite of the fact that they had to face tough opposition during the argument in CA 1194/04.
18. In the aforesaid back-drop, I revert to the explanation given in CA 474/05. As already pointed out above, explanation is that after the filing of the application one of the LRs namely Mr. Naveen Gupta approached the counsel and objected to the inclusion of name of his sister Deepa Mittal. Counsel advised Shri Naveen Gupta to verify further and waited for his instructions. But instructions were not forthcoming in view of split of LRs in two groups. This explanation is contrary to the statement made by the counsel for the petitioner in the Court on 1st October, 2004 wherein counsel had stated that LRs of the deceased petitioner no. 1 had not contacted him after moving the application. Even if it is presumed that the counsel, while making the aforesaid statement was having in mind the fact that LRs had not contacted him after meeting with Mr. Naveen Gupta, fact remains that Mr. Naveen Gupta or any of the LRs also did not contact the counsel for number of months. This would also show reckless attitude of the LRs. After waiting for many months, the respondent moved CA 1164/04 for dismissal of the petition as abated. Driven to the brink, the LRs of the petitioner no. 1 now woke up and as per explanation now given it was decided at that time that even when there are disputes between two groups of the LRs of petitioner no. 1, all should join so far as this application is concerned. Counsel for the respondent is, in these circumstances, right in her submission that such a step could have been taken even earlier. On the basis of explanation submitted by the LRs one thing is clear, Had CA 1164/04 not been filed by the respondent, LRs would not have got the application for substitution listed as they purportedly understood the seriousness of the situation only when this application was filed. There are disputes between two groups of the LRs. It is well known fact that settlement for such disputes may take years. Was it the decision of the LRs not to pursue this application for years i.e., till such disputes are decided? If no, there was no reason to wait for all these months for getting these applications listed and therefore the explanation given is clearly not satisfactory. If yes, in that case, also the conduct of the LRs is clear namely they did not want to pursue the present petition, as they were willing to wait for a long period, that too uncertain period, for taking further steps in the matter. From any angle the matter is to be looked into, case for condensation is not made out.
19. It has been held by this Court in Current Transport and Finance P. Ltd. v. Sardar Singh and Ors. (Supra) that provisions of Order 22 R. 4 CPC apply to an application made by liquidator to the Company Court under Section 446 of the Companies Act and if after the death of the respondent the liquidator does not apply within 90 days being the party prescribed by article 120 of the Limitation Act to have the LRs of the deceased respondent brought on record the application abates. By necessary implication, it can be said that the provisions of Order 22 R. 4 CPC shall apply to petition under Section 397-398 of the Companies Act as well. In SRF Finance Limited v. M/s. Mardia Copper Products Ltd. (supra) where under Order 37 CPC application for leave to defend Along with the application for condensation of delay of 21 days were filed by the defendant and certain objections were pointed out by the registry in the said application on 13th August, 1997 which were removed and the application re-filed on 4th August, 1998 but no application was filed seeking condensation of delay in removing the defects and explanation for delay refiling the application was not furnished, the Court dismissed the application on the ground of delay in refiling. As pointed out above, in this case also no such application was filed at the time of removing the objection and getting the application listed. It is only when the respondent pointed this out that the petitioner took time to file such an application. In any case, circumstances explained in the application are not found to be satisfactory. CA 1194/04 filed by the LRs of the petitioner is accordingly dismissed.
CA 1164/0420. CP 1/82 was filed by two petitioners. Petitioner no. 1 died. Application to bring his LRs on record has been dismissed in view of orders passed above. The respondent in this application has prayed for abatement of the petition, even when petitioner no. 2 is still there. In this context, question of abatement has to be considered.
21. Learned counsel for the applicant, respondent in the petition submitted that in the instant case even with the death of the petitioner no. 1, the entire petition should be treated as abated. As the claim raised by the petitioners could not be swift up and it was joint and in-severable. In support of this preposition she relied upon following judgments:-
1. Municipal Council, Mandsaur v. Fakiorchand A-1997 SC 1251
2. Dinabandhu Bahera v. Kalandi Charan Mishra A-1995 Orissa 237
3. State of Hyderabad v. Mohammad Afjal A-1968, Andhra Pradesh 47
4. Bibijan and Ors. v. Murlidhar, 1995 (1) J.T. 141
5. Amarjit Singh and Ors. v. Promod Gupta and Ors., 43 (1991) DLT 753
22. However it may not be necessary to deal with this aspect conclusively. Fact remains that this case was all along been prosecuted by petitioner no. 1 only. Learned counsel for the petitioner has virtually accepted this position which is recorded in order dated 1st October, 2004. This becomes abundantly clear from the conduct of the parties as well. It is the petitioner no. 1 only who filed the affidavit of evidence. When he was to be cross-examine and the case was listed before the Registrar (Company) on 10th March, 2004, counsel for the petitioner made a statement that fresh affidavit would be filed as the witness (petitioner no. 1) had expired. It was directed that needful be done before the next date of hearing and the matter was adjourned to 21st April, 2004. No fresh affidavit is filed till date. If the petitioner no. 2 was interested, his affidavit would have been filed. On the contrary, only application for bringing the LRs of the petitioner no. 1 was filed and the manner in which even that application was dealt with has already been explained above. There is, thus, no evidence of the petitioners on record. More than two years have passed after the statement dated 2nd October, 2004 was made for filing fresh affidavit. From all this, it can be concluded that the petitioner no. 2 is not interested in pursuing the present petition. The petition qua petitioner no. 1 is abated. Petition qua petitioner no. 2 is to be dismissed for non-prosecution. The result would be to dismiss the petition itself.
23. This application is disposed of in the aforesaid terms.
CP 1/8224. In view of the aforesaid discussion, CP 1/82 is dismissed. No cost.
25. With this, all pending Case are disposed of.