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Sorab Dinshaji Dastoor Vs. D.P.R. Cassad and Board of Directors, Nagpur and ors. - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberLetters Patent Appeal No. 8 of 1960
Reported inAIR1963Bom173; (1962)64BOMLR765; ILR1963Bom68; 1963MhLJ44
ActsCompanies Act, 1956 - Sections 397, 398, 399, 402 and 403; Companies (Court) Rules, 1959 - Rules 6, 10, 11 and 88; Code of Civil Procedure (CPC), 1908 - Order 2, Rule 3 - Order 45, Rule 15; Companies Act, 1913 - Sections 153-C
AppellantSorab Dinshaji Dastoor
RespondentD.P.R. Cassad and Board of Directors, Nagpur and ors.
Appellant AdvocateA.S. Bobde and ;M.L. Vaidya, Advs.
Respondent AdvocateM.N. Phadke, ;M.N. Chandurkar and ;M.W. Puranik, Advs.
companies act (i of 1956), sections 397, 398 - companies (court) rules, 1959. rules 11, 88, 6--civil procedure code (act v of 1908), order ii, rule 3--letters patent. clause 15--whether composite petition under sections 397 & 398 maintainable--composite petition made under sections 397 & 398 and court holding that separate applications necessary--court ordering amendment of petition--whether order appealable under clause 15, letters patent.;a composite petition for reliefs under sections 397 and 398 of the companies act, 1956, is competent.;in re hindusthan co-op. insur. society [1961] a.i.r. punj. 485, mohan lal v. punjab company ltd. [1961] a.i.r. cal. 4-13 and bilasarai v. akola electric supply co. (1958) 60 bom. l.r. 906 referred to.;on an application made under sections 397..........he says:'it would also lead to this useful result that when the petition comes up before the company judge after it has been accepted, not only the company will be before the company judge, but also the central government. at that stage the learned judge will give such directions as he thinks proper. with regard to winding up, if he wishes to go further into the matter, he would have the petition advertised as required under the high court rules. if, on the other hand, he thinks that there is no case for binding up, he may dispose of that part of the petition and with regard to sections 397 and 398 he would give such directions as the companies act provides, as we have just pointed out, after hearing both the company and the central government if the petition is not a composite.....

Patel, J.

1. This is an appeal under Clause 15 of the Letters patent against the judgment of Mr. Justice Tambe exercising company jurisdiction.

2. The appellant made an application under the Indian Companies Act, 1956 purporting to be one under Sections 397 and 398 of the Act against the company, known as the Nagpur Electric Light and Power Co., Ltd., of which he happens to be a share-holder. The first three respondents are its directors. According to the application made by him, he alleged that the affairs of the company were so managed as to be prejudicial to the company and also oppressive to the minority share-holders. This application was filed on the 8th February 1960. On the 1st of April1960, respondents Nos. 1 to 4 made an application that such a composite application cannot be made under the Companies Act. They also contended that separate court-fees would be necessary on such application or prayers and, thirdly, that they would be prejudicially affected at the trial because of these two causes Of action together in the same application. The respondents prayed that the petition should be dismissed because it contravened R. 88 framed under the Companies (Court) Rules, 1953 or, in the alternative, to grant three weeks' time to them for filing a detailed reply to the allegations if the Court held otherwise. Mr. Justice Tambe took the view that separate applications would be necessary and, therefore, gave an opportunity to the applicant to file his petition for reliefs under either of the two sections and adjourned the matter for amendment of the petition within a fortnight from the date of his judgment, The applicant filed the Letters Patent Appeal.

3. Mr. Phadke has raised a preliminary objection that the appeal from an order like the present is incompetent tinder Clause 15 of the Letters Patent. According to him, it Is merely a processual order and not one which, in any manner, deals with the merits of the case between the parties and, therefore, does not amount to a judgment Within the meaning of Clause 15. This Court has invariably accepted and applied the definition of 'judgment' formulated in the Justices of the Peace for Calcutta v. Oriental Gas Co., 8 Beng LR 433, where Couch C. J. said;

'We think that 'judgment' in Clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and 3 preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.'

The application of this rule is illustrated by Kally Soondery Dabia v. Hurrish Chunder, ILR Cal 594, where the Court held an appeal lay from an order made by a Single Judge of the Court under Order 45, Rule 15, C. P. C. refusing to transmit for execution an order of His Majesty in Council. Though an order may appear to be processual it may end the case partly or wholly though no decision or merits is given in which case an appeal ought to lie.

4. In Manohar v. Baliram, 1953 NLJ 58 : AIR 1952 Nag 357, a Full Bench decision of the Nagpur High Court, Justice Hidayatullah C. J. said:

'A judgment means a decision in an action whether final, preliminary or interlocutory which decides either wholly or partially, but conclusively in so far as the Court is concerned, the controversy which is the subject of the action. It doss not include a 'decision which is on a matter of procedure, nor one which is ancillary to the action even though it may either imperil the ultimate decision or tend to make it effective. The decision need not be immediately executable per se but if left untouched, must result inevitably without anything further, save the determination of consequential details, in a decree or decretal orders that is to say, an executive document directing something to be done or not to be done in relation to the facts of the controversy. The decision may itself order that thing to be been or not to be done or it may leave that over till after the ascertainment of some details but it must not be Interlocutory having for its purpose the ascertainment of some matters or details prior to determination of the whole or any part of the controversy.'

The case Asrumati Debi v. Rupendra Deb in : [1953]4SCR1159 , relied upon by Mr. Phadke does not decide anything to the contrary. Their Lordships said 'it certainly involves the determination of some right or liability, though it may not be necessary that there must be a decision on the merits' making it at the same time clear that it was not their purpose to frame an exhaustive definition of the word 'judgment'.

5. If the order in question is merely processual and does not end the matter so far as the applicant is concerned in respect of any of the prayers made by him, then certainly it cannot be regarded as a judgment subject to appeal under Clause 15. It appears to us that the order made by the learned Judge must clearly result in denying to the applicant reliefs either under Section 397 or 398 of the Companies Act. If he did not amend the application as directed by the learned Judge, either one or both the prayers may be rejected. In either event it clearly appears to us, therefore, that the judgment under appeal satisfies the condition of its being a final judgment.

6. The next question is whether a composite application is permissible. It is undoubtedly true, as has been observed by the learned Judge, that originally as Section 153-C stood in the Companies Act, 1913, as amended in 1936, it contained subject-matters of both Sections 397 and 398, while in the present Act they have been separated into two separate sections. That, with respect, in our view, does not necessarily mean that the rights under the two are completely separate and so conflicting that they cannot be combined in a single petition. Section 399 requires the same qualifications for those making an application either under Section 397 or 398. The procedural part of giving a notice to the Central Government is also the same and in the later sections the applications under Sections 397 and 398 are treated together. Section 402 enumerates, among other things, the powers which the Court may exercise in an application either under Section 397 or 398. The Court is entitled to exercise any of these powers irrespective of the fact whether an application is either under Section 397 or 398. The reliefs, therefore, available under Section 397 or 398 are the same. The power to pass interim orders under Section 403 is also the same. Though, there-ore, these two causes of action are separated, it would 'not necessarily embarrass the trial of a composite petition in any manner. In view of the above connection between the two merely on this ground it cannot be said that it was Intended that separate applications must be made.

7. The learned counsel relies on the Rules that have been framed under the Companies Act by the Supreme Court and contends that these Rules give a very clear indication that it was never intended that prayers under these two sections could be combined in one application. For this purpose he relies particularly on Rules 11 and 88. Rule 10 is a general rule and provides that;

'Unless otherwise provided by these rules or permitted by the Judge, all applications under the Act shall be made by a petition or by a Judge's summons as hereinafter provided'.

The first part of Rule 11 then specifies cases where applications must he by petitions, and Sub-rule (b) of that rule provides that

'all other applications under the Act or under the Rules shall be made by a Judge's summons, returnable to the Judge sitting in Court or In Chambers as hereinafter pro-vied.'

Rule 11 would appear not necessarily to intend that relief under Sections 397 and 398 must necessarily be by a separate petition. It is intended merely to enumerate in what eases petitions have to be filed and in what cases Judge's summons would be sufficient, it must also be remembered that in many cases petition is likely to be made either under Section 397 or Section 393. It is for this reason that they hava been separately itemised in the rules.

8. Rule 88 deals with petitions under Sections 397 and 398. This would suggest that there is a great deal of similarity between the two. It lays own the requirements of making a proper petition and it then provides that a petition under Section 397 shall be in Form No. 43, and a petition under Section 398 shall be in Form No. 44. The learned counsel also relies on the Forms 43 and 44, substantially the forms ars identical except in so far as paragraph No. 7 in each case requires the petitioner to set out all necessary facts which entitle him to relief under Section 397 or 338.

9. In this connection we must notice R. S, which distinctly states that

'save as provided by the Act or by these Rules, the practice and procedure of the Court and the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and those Rules'.

The mere fact that the two matters are separated in the Companies Act in the manner it is done and that Rules II enumerates as to in what matters petitions are necessary, does not, in our view, amount to 'save as provided by the Act or by these rules'. We must therefore turn to the provision of the Civil Procedure Coda to see if a combination of such causes of action is permitted under the Code. Order 2, Rule 3 of the Civil Procedure Code permits & plaintiff or plaintiffs jointly interested to unite in the same suit several causes of action against the same defendant or defendants jointly. It is difficult to hold therefore that the applicant is not entitled to join the two causes of action in one petition.

10. Cases have occurred where such composite petitions tions have been made to the Court. These are in re,, Hindustan Co-operative Insurance Society Ltd., : AIR1961Cal443 and Mohanlal Chandumal v. Punjab Company Ltd., . It is pointed by the learned counsel for the respondents that in these cases the question was not particularly canvassed. That only shows that the counsel in those cases thought that it would be permissible to make such applications. Coming closer, in Bilasrai Joharmal v. Akola Electric Supply Co., : AIR1959Bom176 , a composite petition was both for winding up and directions under Sections 397 and 398 was filed and was entertained. Chagia, C. J., while delivering the judgment emphasise that as in other matters of life so also in law, a happy compromise is better than an extreme attitude, and he then; proceeded to lay down a rule of practice in respect of seen petitions. He says:

'It would also lead to this useful result that when the petition comes up before the Company Judge after it has been accepted, not only the Company will be before the Company Judge, but also the Central Government. At that stage the learned Judge will give such directions as he thinks proper. With regard to winding up, If he wishes to go further into the matter, he would have the petition advertised as required under the High Court Rules. If, on the other hand, he thinks that there is no case for Binding up, he may dispose of that part of the petition and with regard to Sections 397 and 398 he would give such directions as the Companies Act provides, as we have just pointed out, after hearing both the Company and the Central Government If the petition is not a composite partition and is only a petition under Section 397 or 398, we suggest that a similar practice should be followed.' We think therefore that such a composite petition is competent.

11. In the present case, it was also contended in paragraph 2 of the answer by the respondents that it was difficult for the respondents to clearly understand upon what allegations the petitioner relied for the relief under Section 397 and on what allegations he relied for the relief tinder Section 398. A perusal of this application shows that the applicant made allegations against the management which furnish a cause of action under Section 397 as wen as under Section 398. Really speaking, the application seta out the facts and merely wants the Court to draw an inference of oppression as well as mismanagement from the same facts. By asking the applicant to file another application what we will be requiting him to do would be to file another copy of the same application and then in one pray for relief under Section 397 and in the other, under Section 398. We do rot think any useful purpose can be 'served by such a procedure.

12. The order, therefore, under appeal has to be set aside. We give two months' time to the respondents to file their answer to the application. Costs will be costs in the cause.

13. Order accordingly.

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