Gujarat High Court
Bhupendra Bhagwatprasad Patel & vs Girish Bhagwatprasad ... on 18 January, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, Mohinder Pal
O/OJA/53/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
O.J.APPEAL NO. 53 of 2015
In
COMPANY APPLICATION NO. 34 of 2013
In
COMPANY PETITION NO. 264 of 2008
In
COMPANY APPLICATION NO. 427 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE MOHINDER PAL
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1 Whether Reporters of Local Papers may be allowed to see the
judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as to
the interpretation of the Constitution of India or any order
made thereunder ?
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BHUPENDRA BHAGWATPRASAD PATEL & 1....Appellant(s)
Versus
GIRISH BHAGWATPRASAD HUF....Opponent(s)
=======================================================================
Appearance:
MR SN SOPARKAR, SENIOR ADVOCATE assisted by MR AS VAKIL, ADVOCATE for the
Appellant(s) No. 1 - 1.2 , 2
MR NAVIN K PAHWA, ADVOCATE with MR PRATIK Y JASANI, CAVEATOR for the
Opponent(s) No. 1
RULE SERVED for the Opponent(s) No. 1
=======================================================================
CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE MOHINDER PAL
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Date : 18/01/2016
ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the original respondents challenging judgment dated 06.11.2015 passed by the learned Company Judge in company Application No.34 of 2013 in Company Petition No.264 of 2008. This litigation has a chequered history. Briefly as possible, we may record relevant facts.
2. The issue concerns one Prasad Mills Ltd., a company in liquidation, which was ordered to be wound up some time in August 1988. IDBI Bank and SBI were both the creditors of the said company and had instituted proceedings before DRT for recovery of their unpaid dues. One Girish Bhagwatprasad, father of Aastik Girishbhai along with his brother were the guarantors to secure such loans given by SBI and IDBI Banks. After death of Girishbhai, his son Aastik Girishbhai, his widow Naynaben were joined to represent his interest. Girish Bhagwatprasad HUF was holding certain shares of the said company and had pledged such shares with the financial institutions. Some time in July 2008, the appellant No.2
- RPPL started acquiring shares of Prasad Mills Ltd. by entering into various share purchase agreements. The said appellant along with appellant No.1 - Bhupendra Bhagwatprasad Patel filed Company Application No.427 of Page 2 of 26 HC-NIC Page 2 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT 2008 for convening /dispensing with the meetings of the creditors, equity shareholders and workmen for considering the scheme of compromise presented under Section 391 of the Companies Act. On 25.08.2008, the learned Company Judge ratified the assignment in favour of IDBI by passing an order in Company Application No.414 of 2007. Aastik and his mother Naynaben filed OJ MCA No.187 of 2012 in Company Application No.414 of 2007 and prayed for multiple reliefs including those for cancellation of the deeds of assignment dated 25.08.2007, transfer of shares and for recall of the said order passed by the learned Company Judge. This application was filed after a ling delay and was strongly opposed by the present appellants on various grounds including on the ground of delay, laches and limitation. 2.1 The learned Company Judge by his judgment dated 28.01.2014 in OJ MCA No.187 of 2012 allowed the application for recall and directed that the applicants therein Aastik and Naynaben be arraigned as party respondents in Company Application No.414 of 2007, which may be heard and disposed of afresh. This order of the learned Company Judge dated 28.01.2014 was challenged by the present appellants before the Division Bench of the High Court by filing OJ Appeal No.2 of 2014. The Division Bench by judgment dated 15.12.2014 allowed the Page 3 of 26 HC-NIC Page 3 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT appeal primarily on the ground of limitation, holding that the applicants of review application were aware about the passing of the order by the learned Single Judge, despite which the application for recall was not filed before the Court within three years from the date of the judgment or at any rate, from the date of knowledge. This judgment has been challenged by the original applicants - Aastik and Naynaben before the Supreme Court, where SLP is pending. In such pending proceedings, the Supreme Court has passed following interim order:-
"Heard in-part.
Put up for further hearing on 3rd November 2015. As agreed to by the learned counsel for the parties, it shall be taken up at 2.00 p.m. It is hereby made clear that no adjournment shall be granted in the matter. Learned counsels for the parties are requested to file their compliance volume, as well as the written notes/submissions on that day.
The proceedings going on before the learned Company Judge as regards the Scheme, shall continue but the ultimate result shall be subject to the final result of this special leave petition. It is submitted that the petitioner has filed C.Appl. No.34 of 2013 before the Company Judge. The learned Company Judge shall consider the same in accordance with law. It is further directed that status quo as regards the landed property shall be maintained till the final decision in this special leave petition.
S.L.P. (C) Nos.290282-29284/2008, S.L.P. (C) No.2353/2014, S.L.P. (C) No.4816/2012 and S.L.P. (C) No...... CC 18727/2015.
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Let these matters be de-lined from S.L.P. (C) No.6169/2015 and be listed in the third week of January, 2016."
2.2 In the meantime, the present appellants presented a scheme of compromise before the learned Company Judge on 06.10.2008. Said Company Petition being 264 of 2008 is admitted and statutory advertisements are ordered to be issued. This Company Petition, according to the appellants, was heard before the different learned Company Judges. However, hearing could not be completed, final judgment was not delivered. At that stage, objector filed Company Application No.34 of 2013, which was titled as Judges Summons for appropriate direction, in which following prayers were made:-
"(A) This Hon'ble Court may be pleased to take upon record the objections filed by the applicant for opposing the sanction of scheme of compromise /revival of the company in liquidation and be pleased to consider the same before deciding the petition finally, in the interest of justice and equity;
(B) That this Hon'ble Court be pleased to grant such other and further reliefs as may be deemed fit and proper by this Hon'ble Court, in the interest of justice;"
2.3 In support of such prayers, the objector had also filed an affidavit dated 06.02.2013, in which following averments were made:-
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HC-NIC Page 5 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT "1. That I am the applicant above named. I am duly competent to file the present affidavit in support of the judges summons.
2. I say and submit that the applicant is one of the original shareholders of the company in liquidation. I say that upon company in liquidation has been floated by one Riverfront Properties Pvt. Ltd. and others, I after going through the papers of the said scheme learnt that there has been various manipulations and fraud committed by the concerned company floating the said scheme of compromise.
3. I say and submit that I have prepared a detailed objections in the form of an affidavit objecting to the said scheme of compromise by putting on record all the relevant and necessary documents. The objections so prepared by me are annexed hereto and marked as ANNEXURE-A to this application.
4. I say and submit that the affidavit /objections so prepared by me are very much relevant for the consideration of the petition pertaining to revival of the company in liquidation. I say and submit that if my objections are not considered by this Hon'ble Court, then I along with my other family members will be severely prejudiced of our valuable right.
5. I say and submit that the applicant has also filed OJMCA No.187/2012 for certain reliefs, which application is ordered to be tagged with the proceedings of the present petition. I say that it would also be in the interest of justice that the objections of the applicants are taken on record and considered before deciding both the proceedings finally.
6. I say and submit that considering the above facts and circumstances, this Hon'ble Court may be pleased to make suitable orders in terms of the reliefs prayed in the Judges Summons, in the interest of justice."Page 6 of 26
HC-NIC Page 6 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT 2.4 Along with this, the petitioner filed objections in form of affidavit dated 05.02.2015. An additional affidavit dated 08.02.2013 was filed by the objector. In such affidavit, the grounds of objections were elaborated. Primarily, it was contended that the objector is a member as defined under Section 41 of the Companies Act and that therefore, would have a right to oppose the scheme of compromise. An attempt was also made to highlight, which according to the objector were the grounds on which the scheme of compromise should not be accepted by the Court. It was contended that the present appellant No.2 had started acquiring shares of the existing company by adopting various means. According to the objector, any such acquisition of shares of the company in liquidation, after the commencement of the winding up, was void. It was contended that the interest of the workmen was also not taken into account. No provisions have been made for benefit of the workmen. The case of the objector was that the petition for acceptance of the compromise is fraud on the Court. Inter alia on such grounds, the scheme was opposed. 2.5 The objector had also filed notice of intention to appear in form No.9 as required under Rule 34 of the Companies (Court) Rules, 1959 (hereinafter to be referred Page 7 of 26 HC-NIC Page 7 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT as "the Rules of 1959") on 23.09.2015.
2.6 The prayers of the objector were stoutly opposed by the appellants before the learned Company Judge. The learned Company Judge gave a detailed hearing to both sides and by impugned judgment dated 06.11.2015, rejected all objections of the present appellants and allowed Company Application No.34 of 2013 filed by the objector and thereby permitted the objector to appear and submit objections in the main company petition. The learned Judge was of the opinion that Rule 34 of the Rules of 1959 does not provide for any limitation for serving notice and in any case, the Company Judge would have inherent powers under Rule 9 which can be exercised in a given case. There was, therefore, no question of condoning the delay with or without application filed by the objector, opposed to what was contended before him by the appellants. The learned Company Judge was also of the opinion that:-
"E) While granting the leave, the Court has to consider that whether Scheme can be approved or not and for such consideration, the grounds in support of the Scheme or objections against the Scheme, decide that whether particular person should be allowed to file objections or not. Therefore, even if Court is not to decide merits of those objections, atleast bare minimum facts of such objections need to be examined while deciding the application seeking leave to appear."Page 8 of 26
HC-NIC Page 8 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT 2.7 It is this judgment of the learned Company Judge which has been challenged by the original respondents in this OJ Appeal.
3. Learned Counsel Shri Soparkar for the appellants, referring to the relevant Rules contained in the Rules of 1959 and in particular 34 thereof, contended as under:-
I. The objector has no locus standie to oppose the scheme since he does not hold any shares of the company. Rule 34 of the Rules of 1959 does not give right to an unrelated person to raise objections and the question of locus standie must be judged on the basis of his relations with the company.
II. The Division Bench of this Court in the judgment dated 15.12.2014 in OJ Appeal No.2 of 2015 has already held that Aastik, under the assignment deed, had been left with no shares even as 'karta' of the HUF of late Shri Girishbhai Patel. Despite pendency of the SLP, these findings of the Division Bench could not have been ignored Page 9 of 26 HC-NIC Page 9 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT by the learned Company Judge. In that view of the matter, there was no scope of entertaining the application of the objector, who had no right to raise such objections.
III. It was contended that in any case, the application was filed after much delay.
The company application was presented in the year 2008, in which the present Company Application No.34 of 2013 came to be filed much later when the hearing of the main application was to be taken up before the Company Court shortly. Neither in the application nor in the supporting affidavit, the objector has made out any grounds for condoning of delay. Though in terms of Rule 34 of the Rules of 1959, the learned Company Judge could have entertained such an application after delay also, in absence of any application explaining such delay and in absence of the learned Company Judge condoning such delay, such application even otherwise could not have been entertained.
3.1 Counsel relied on following decisions in
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support of the contention that in such facts, the
discretionary relief could not have been granted in
favour of the objector:-
I. In case of Zarina Siddiqui Vs. A.Ramalingam
alias R.Amarnathan, reported in (2015) 1 SCC, page No.705.
II. In case of K.Nanjappa vs. R.A.Hameed & Ors., reported in AIR 2015 SC, page No.3389.
4. On the other hand, learned Counsel Shri Pahwa for the objector opposed the appeal contending that:-
I. The learned Company Judge after detailed consideration of all aspects came to conclusion that the objections raised by the objector are required to be taken into account, which discretionary power the learned Company Judge undoubtedly possesses.
II. As held by the learned Company Judge, there is no time limit provided in Rule 34 of the Rules of 1959. Question of either praying for condonation or of explaining the delay, therefore, does not arise.
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III. The decision of Division Bench dated
15.12.2014 in OJ Appeal No.2 of 2014 is challenged before the Supreme Court. The findings of the Court are, therefore, not final.
IV. Name of the objector, despite the so called divesting of the shares of the company, continues to be on the record of the company and as long as such position prevails, the objector would have a right to file the application.
V. It was further submitted that in any case,
the objector was a creditor of the
company. It was in this capacity that
Aastik Girishbhai had remained present in the meeting of the company which was convened on 25.09.2008, referred to by the Division Bench in the said judgment dated 15.12.2014 in OJ Appeal No.2 of 2014.
VI. Counsel alternatively contended that even
if the objector is held not to have the
right to be a party and object to the
scheme being sanctioned, there is nothing in the Rules preventing the learned Page 12 of 26 HC-NIC Page 12 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT Company Judge from taking into consideration the contents of the objections. He, therefore, submitted that at any rate, appropriate direction may be issued so that such objections are considered by the learned Company Judge. 4.1 In support of his contentions, Counsel relied on decision of the Supreme Court in case of Severn Trent Water Purification Inc. Vs. Chloro Controls (India) Private Ltd., reported in (2008) 4 SCC, page No.380, in which one Severn Trent Water Purification had acquired shares of a company, but had not yet been registered in the register of the members of the said company. Said Severn Trent Water Purification at that stage filed a petition for winding up. The Supreme Court held that such winding up petition would not be maintainable. It was observed that if there is any omission, default or illegal action on part of the company in not registering the name of the contributory even though it can be said to be a contributory by holding the shares as required under Section 439 the law provides a remedy. It was, however, held that till the name of the company is registered, it cannot maintain a petition for winding up.
5. We would divide consideration of the rival submissions in two parts. First would be touching the Page 13 of 26 HC-NIC Page 13 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT question of delay, laches and limitation in filing the company application by the objector. In this regard, we may recall, the company petition for sanctioning of the scheme was presented sometime in the year 2008. However, the present Company Application No.34 of 2013 for raising objections to the scheme came to be filed on or around 06.02.2013. It is true that the application for Judges Summons for appropriate direction does not record any reasons for applying to the Court after such a gap of time. Even the affidavit in support of the Judges Summons does not elaborate the ground of delay. It primarily states that upon perusal of the scheme, it was learnt that there are various manipulations and fraud committed by the concerned company in presenting the scheme. The objector and other family members would be severely prejudiced and their valuable rights would be affected.
6. Rule 23 of the Rules of 1959 pertains to summons for direction. Rule 24 pertains to advertisement of petition. Rule 34 pertains to notice to be given by persons intending to appear at the hearing of petition and reads as under:-
"Every person, who intends to appear at the hearing of a petition, whether to support or oppose the petition, shall serve on the petitioner or his advocate, notice of his intention at the address given in the Page 14 of 26 HC-NIC Page 14 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT advertisement. The notice shall contain the address of such person, and be signed by him or his advocate, and save as otherwise provided by these rules shall be served (or if sent by post, shall be posted in such time as to reach the addressee) not later than two days previous to the day of hearing, and in the case of a petition for winding-up not later than five days previous to the day of hearing. Such notice shall he in Form No.9, with such variations as the circumstances may require, and where such person intends to oppose the petition, the grounds of his opposition, or a copy of his affidavit, if any, shall be furnished along with the notice. Any person who has failed to comply with this rule shall not except with the leave of the Judge, be allowed to appear at the hearing of the petition."
7. As per this Rule 34 of the Rules of 1959, therefore, every person intending to appear at the hearing of a petition whether to support or oppose the petition, shall serve on the petitioner or his advocate, notice of his intention. Such notice would contain the requisite details and would have to be served not later than two days previous to the date of hearing and in case of a petition for winding-up, not later than five days previous to the day of hearing. The notice would be in prescribed format. The Rule further provides that any person who fails to comply with this rule, shall not, except with the leave of the Judge, be allowed to appear at the hearing of the petition. Thus, Rule 34 of the Rules of 1959 lays down a procedure to enable a person intending to appear at the hearing of a petition to put Page 15 of 26 HC-NIC Page 15 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT all to notice in advance. The requirement of serving of the notice before hand and in appropriate format would ensure orderly progress in any company proceedings. However, this Rule is not made inflexible when in the later portion, it is provided that a person failing to comply with the Rule would not, without the leave of the Court, be allowed to appear at the hearing of the petition. Two things emerge from this expression. Firstly, without substantial compliance of the requirements of the Rules, a person would not, as a matter of right be allowed to participate at the hearing of the company petition. However, with the leave of the learned Judge, it would always be open for such a person to so appear.
8. Rule 34 of the Rules of 1959 does not provide for any time limit. Only requirement is to file an application in the prescribed format and to serve the same on the person atleast two days before the date of hearing. Even such requirement can be waived by the learned Judge, of course on being satisfied about the requirement of exercising such discretionary powers.
9. In the present case therefore, the learned Judge, in our opinion, correctly came to the conclusion that the application of the objector was not required to be dismissed merely because it was presented long time Page 16 of 26 HC-NIC Page 16 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT after the company petition was filed and that there was no specific explanation for such delay. The question of explaining delay and correspondingly the requirement of the Court to condone such delay by passing a judicial order would arise in a situation where the statute provides for a period of limitation and also provides for condonation of delay typically on sufficient cause being shown. The question of demonstrating sufficient cause and the prayer for condonation of delay would arise when there is a period of limitation prescribed. When we do not find any such fixed period of limitation for filing application as envisaged under Rule 34, there was no onus on the objector to file a formal application seeking condonation of delay, making grounds of sufficient cause for such purpose. We may recall, Rule 34 vests discretionary powers in the Company Judge to allow a person to appear and present at the hearing of the petition even though he may not have complied with the requirements of the Rules. These powers are entirely discretionary vested in the Company Judge and do not arise out of the requirement of filing a proceeding within certain time limit and the power of the Court to condone delay on sufficient cause being shown. Further, in facts of the case, it may be that earlier two learned Company Judges might have made attempt to hear and dispose of the company petition, nevertheless final order Page 17 of 26 HC-NIC Page 17 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT could not be passed. The objection petition was filed atleast two clear days before the date of hearing of the company petition before the new Company Judge. In our opinion, therefore, requirement of Rule 34 was substantially complied with and it was within the discretionary power of the learned Company Judge to entertain such application, even if there had been element of slowness in presenting the same on part of the objector.
10. This brings us to the second aspect of the matter, viz. whether the objector could maintain the application and exercise right of appearing during the proceedings of company petition. Though Rule 34 of the Rules of 1959 refers to every person who intends to appear at the hearing of the petition, who may present such a petition as prescribed, it is clear that Rule 34 by itself does not create any right. It is only a procedural provision and in that view of the matter, it was not even the case of the objector that any unconnected person, any person who had no connection with the company in liquidation, could have maintained such an application. The question of locus standie of the objector, therefore, would be of utmost relevance. In this connection, we may refer to the decision of the Constitution Bench of the Supreme Court in case of Page 18 of 26 HC-NIC Page 18 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT National Textile Workers' Union & Ors. Vs. P.R.Ramakrishnan & Ors., reported in (1983) 1 SCC, page No.228, in which the question of right of workers of the company or trade unions representing them to appear and be heard and contest a petition for winding up came up for consideration. It was held that workers and the unions would have right to appear at the hearing of winding up petition and participate in it. It was further observed that Rule 34 of the Rules of 1959, however, does not confer a right on the workers to appear at the hearing of a winding up petition. The Rule merely provides the procedure to be followed before a person who is otherwise entitled to appear in a winding up petition can be heard in support or opposition of the winding up petition. The Rule, however, postulates that apart from the creditors and contributories, there may be other persons who are entitled to appear at the hearing of the winding up petition.
11. From the said judgment, it emerges that independently of the procedure under Rule 34, the objector would have to establish his right to raise such objections. Such rights may not be confined only in shareholders and creditors and as held by the Supreme Court, would also include workers and the workers' unions. Nevertheless, in the context of the present Page 19 of 26 HC-NIC Page 19 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT case, we must judge the right of the objector to file such a petition and insist on being heard and the objections be considered before the company petition seeking validation of the compromise is decided. In this context, we notice that as observed by the Division Bench in the judgment dated 15.12.2014 in OJ Appeal No.2 of 2014, the objector was left with no shares of the company in liquidation. The Court had made following observations:-
"55. This conclusion must be seen in the background of several other attendent circumstances. Firstly Naynaben Patel had participated in the meeting and actually voted in favour of the scheme. This was on the strength of limited five shares of the company left after the transfer through assignment. Astik under such assignment had been left with no shares even as the Karta of HUF of late Shri Girish Patel. Instead RPPL had voted on the strength of entire chunk of 3669 shares acquired through the assignment deed....."
12. We are conscious that against the said judgment of the Division Bench, an SLP is pending. However, in absence of stay against the said judgment and in fact, since the Supreme Court has desired that the company petition be heard and disposed of as early as possible, we cannot disassociate ourselves from such conclusions. In other words, subject to the further order that may be passed by the Supreme Court in the SLP, we would have to apply the said findings of the Division Bench noted Page 20 of 26 HC-NIC Page 20 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT above. In any case, nothing contrary has been brought to our notice to substantiate that the objector continued to hold the shares of the company in liquidation. In that view of the matter, a serious question-mark over the locus standie of the objector to file such application would arise. In absence of any other co-relations between the objector and the company which would give right to the objector to raise such objections and be heard at the company petition, such application would be simply not maintainable at the hands of the objector.
13. It was contended by Mr.Pahwa for the objector that the objector having followed the procedure prescribed under Rule 34, had a right to be heard and press the objections before the before the Company Judge. This contention cannot be accepted since it completely ignores the concept of locus of the person seeking to raise objection. If the contention is accepted, it would imply that any person - a stranger, a busy body - completely unconnected with the company and the subject matter of the proceedings, may, by simply following the procedure under Rule 34, could assert his right to be impleaded as respondent and to be heard in support or opposition of the scheme. This is not the purport of Rule 34. This was not so held by the Constitution Bench judgment of the Supreme Court in case of National Textile Page 21 of 26 HC-NIC Page 21 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT Workers' Union (supra)
14. Merely because from the register of the company, name has not been deleted, in our opinion, would not materially change this position. The decision of the Supreme Court in case of Severn Trent Water Purification Inc. (supra) was rendered in a very different background. It was a case where the petitioner company, on the strength of acquiring certain shares of another company, presented petition for winding up of such company. Strong objection was raised to the maintainability of such petition on the ground that the name of Severn Trent Water Purification was not entered in the register of the company as its members. It was in this background, the Court held and observed that the remedy of the Severn Trent Water Purification, if its application for transfer was not allowed, would lie elsewhere, but in any case, at the hands of such company, winding up petition would not be maintainable. These observations were made in view of the background of statutory provisions contained in Section 439 of the Companies Act, 1959 which pertains to provisions as to applications for winding up. As per sub-section (1) of Section 439, an application for winding up of a company could be made, besides other, by any contributory. In this context, sub-section (4) of Section 439 requires registration of the name of the Page 22 of 26 HC-NIC Page 22 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT contributory. Relevant portion of sub-section (4) of Section 439 reads as under:-
"(4) A contributory shall not be entitled to present a petition for winding up a company unless-
(b) the shares in respect of which he is a contributory, or some of them, either were originally allotted to him or have been held by him, and registered in his name, for at least six months during the eighteen months immediately before the commencement of the winding up, or have devolved on him through the death of a former holder."
15. An attempt was made on part of the objector to canvass that in any case, the objector is a creditor. This was sought to be urged on the premise that even as per the appellants, Aastik Girishbhai had remained present in the meeting dated 25.09.2008. According to the Counsel, his presence only be either as a shareholder or as a creditor. It was argued that in any case, objector continues to be the creditor of the company and in that capacity, had a right to raise objections.
16. We are afraid, such contention cannot be accepted. Firstly, it is an admitted position that nowhere in the pleadings of the voluminous documents presented and relied upon by both the sides, there is even a mildest whisper that the objector is a creditor of the company. Neither in the application for Judges Summons nor in the affidavit in support of such Page 23 of 26 HC-NIC Page 23 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT application nor in the lengthy detailed objections sought to be raised by the objector, there is any such averment made. Even when the present appellants opposed the locus standie on the ground of not being shareholder of or in any other capacity having right to raise objection, no such averment was made. Even in this appeal, one of the two main grounds raised by the appellants and pressed before us during the course of arguments has been that the objector had no locus standie to file application as it had no concern with the company in liquidation. At no stage in response to such contention raised in the appeal memo as well as till the oral arguments before us were concluded on 11.01.2016, such ground was raised. It was only today when the matter was kept for dictation of judgment that learned Counsel Shri Pahwa with the leave of the Court orally argued this issue.
17. We are not inclined to examine such contention, which has never formed part of the record earlier before the learned Company Judge or before us, that too at a stage in the proceedings where time and again the Supreme Court has directed the learned Company Judges to dispose of the company petition within a time frame. On 01.09.2015, in one of the proceedings arising out of the said Company Petition, the Supreme Court had directed that the High Court should dispose of the petition by end Page 24 of 26 HC-NIC Page 24 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT of November 2015. The Court would not grant adjournment to either party and parties shall not seek any adjournment before the High Court. The present proceeding arises out of an order passed by the learned Company Judge in such proceedings an intermediatory order.
18. Having said that, we cannot lose sight of the inherent powers of the Company Court under Rule 9 of the Rules of 1959 which reads as under:-
"9. Inherent powers of Court - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court."
19. Under the circumstances, the Company Judge has inherent powers to give such directions or to pass such orders as may be necessary for the ends of justice or to prevent the abuse of process of the Court. If, therefore, despite the limitation of the right of the objector to present the objection petition and to be heard on the objections so sought to be presented, we see no limitation on the learned Company Judge from examining the same and taking into account such objections suo motu. The objector, however, we are clear, would have no right to maintain the application in question or insist Page 25 of 26 HC-NIC Page 25 of 26 Created On Fri Jan 22 00:52:14 IST 2016 O/OJA/53/2015 JUDGMENT on being joined as party in the company petition and be heard on such objections.
20. Subject to the above observations, the OJ Appeal is allowed. Judgment of the learned Company Judge is reversed. Consequently, Company Application No.34 of 2013 of the objector stands dismissed.
21. At this stage, learned Counsel Shri Pahwa for the objector prayed for stay against the judgment. We have already, despite directions of the Supreme Court, delayed the hearing of the Company Petition, which we do not intend to continue any longer. This request is, therefore, refused. Resultantly, it would be open for the learned Company Judge to proceed with the hearing of the company petition further.
(AKIL KURESHI, J.) (MOHINDER PAL, J.) SHITOLE Page 26 of 26 HC-NIC Page 26 of 26 Created On Fri Jan 22 00:52:14 IST 2016