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Southern Steelmet and Alloys Ltd. Vs. Lakshmi Nivas Mittal and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCivil Revision Petition No. 2618 of 1982
Judge
Reported in[1986]60CompCas132(Kar); ILR1985KAR3091; 1986(1)KarLJ47
ActsCode of Civil Procedure (CPC), 1908 - Order I, Rule 8
AppellantSouthern Steelmet and Alloys Ltd.
RespondentLakshmi Nivas Mittal and ors.
Advocates:H.B. Datar, Adv.
Excerpt:
.....by corporation, by receiving money and adjusting to loan account - letter of confirmation of sale issued by corporation held, offer made to appellant by corporation, that too, with consent of borrower, has resulted into a concluded contract. corporation is obliged to hand over possession and transfer assets to appellant. inaction on part f corporation, being a state authority and unilateral cancellation of contract by it is arbitrary and is violative of article 14 of constitution. writ court can grant relief. that apart, borrower also cannot contend that offer to appellant is not fair. law does not permit a person, to both approbate and reprobate, which principle is based on doctrine of election. indian contract act (9 of 1872) section 10: [s.r. bannurmath & a.n. venugopala..........the court, by its order and november 12, 1981, allowed that application without issuing any prior notice thereon either to the other shareholders of the company or to the defendants in the suit. the validity of that order has been questioned in this revision petition by defendant no. 1 in the suit. 3. it was the contention of shri h. b. datar, learned counsel for defendant no. 1 (petitioner), that i.a.i., in the suit, which the plaintiff (respondent no. 1) had sought permission to institute the suit against the defendants (petitioner and respondents nos. 2 to 6) on behalf of, and for the benefit of, other shareholders of the petitioner-company, could not have been allowed by the court without issuing prior notice to such shareholders and defendants. according to him, clause (a) of.....
Judgment:

N. Venkatachala, J.

1. By consent of learned counsel, this revision petition was treated as having been posted for hearing and heard.

2. The petitioner, a company, was defendant No. 1 in a suit, O.S. No. 3288 of 1981, on the file of the Court of XVI Additional City Civil Judge at Bangalore (for short 'the court'). Respondent No. 1 here, a shareholder of that company, was the plaintiff in that suit, while respondents Nos. 2 to 6 here, directors of that company, were defendants Nos. 2 to 6 therein. The object of the said suit of respondent No. 1 was to obtain a declaration invalidating a resolution dated November 15, 1980, of the board of directors of the petitioner-company relating to issue of fresh equity shares of the company, and other consequential reliefs. For instituting that suit on behalf of, and for the benefit of, other shareholders of the petitioner-company, respondent No. 2 filed an interlocutory application, I.A.I., therein seeking the court's permission therefor under clause (a) of sub-rule (1) of rule 8 of Order 1 of the Code of Civil Procedure, 1908 (for short 'the Code'). The court, by its order and November 12, 1981, allowed that application without issuing any prior notice thereon either to the other shareholders of the company or to the defendants in the suit. The validity of that order has been questioned in this revision petition by defendant No. 1 in the suit.

3. It was the contention of Shri H. B. Datar, learned counsel for defendant No. 1 (petitioner), that I.A.I., in the suit, which the plaintiff (respondent No. 1) had sought permission to institute the suit against the defendants (petitioner and respondents Nos. 2 to 6) on behalf of, and for the benefit of, other shareholders of the petitioner-company, could not have been allowed by the court without issuing prior notice to such shareholders and defendants. According to him, clause (a) of sub-rule (1) of rule 8 of Order 1 of the Code required issue of prior notice and hence the order of the court made I.A.I. without issuing such notice, stands vitiated. He sought to seek support for his contention from the decision of the Bombay High Court in Municipal Council, Amravati v. Govind Vishnu Sarnaik, : AIR1976Bom401 .

4. On the other hand, it was contended by Shri Padubidri Raghavendra Rao, learned counsel, whose assistance was sought in this revision petition, that the express language of clause (a) sub-rule (1) of rule 8 of Order 1 of the Code did not require the court to issue prior notice before grant of permission thereunder, nor could such requirement be implied in the setting of the provisions in which that clause finds its place. According to him, when clause (a) did not contemplate issue of prior notice of the court before grant of permission thereunder, the order of the court allowing I.A.I., without issue of such notice, does not stand vitiated.

5. Sub-rule (1) of rule 8 of Order 1 of the Code, in which clause (a) finds its place, and sub-rules (2) and (3) of that rule 8, may be set out at the outset for a proper appreciation of the above rival contentions of the learned counsel. They read :

'8(1) Where there are numerous persons having the same interest in one suit, -

(a) one or more of such persons may, with the permission of the Court, sue or be sued, or may defend such suit, on behalf of or for the benefit of, all persons so interested;

(b) the court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested.

(2) The court shall, in every case where permission or direction is given under sub-rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or, where, by reason of the number of persons or any other cause, such service is not reasonably practicable, by public advertisement, as the court in each case may direct.

(3) Any person on whose behalf, or for whose benefit, a suit is instituted, or defended, under sub-rule (1), may apply to the court to be made a party to such suit.'

6. Clause (a) of sub-rule (1) above, as seen therefrom, enables one or more of numerous persons having the same interest in one suit, to sue or be sued or defend when sued, on behalf of, or for the benefit of, all persons so interested, with the permission of the court. Clause (b) thereof, as seen therefrom, however, empowers the court to direct, on its own motion (suo motu), one or more of numerous persons having the same interest in one suit, to sue or be sued or defend when sued, on behalf of, or for the benefit of, all persons so interested. From these clauses, it becomes clear that one or more of numerous persons having the same interest in one suit, can represent the remaining persons having the same interest in that suit either with the permission of the court or as directed by the court.

7. Whether or not prior notice under clause (a) above is required to be issued by the court before grant of permission thereunder, is the controversy which calls to be resolved now. The express language in clause (a) above, as is apparent therefrom, does not require issue of prior notice before grant of permission thereunder. Then, can such a requirement be implied in the setting of the provisions in which clause (a) finds its place. Such requirement, in my view, cannot be implied for the reasons which I shall presently state.

8. Clause (b) above which finds its place next to clause (a) above, while empowers the court, on its own motion, to direct one or more of numerous persons having the same interest in one suit, to represent others having the same interest in that suit, does not require issue of prior notice before giving a direction therefor. When the purpose sought to be achieved by clause (b) above is the same as the one sought to be achieved by clause (a) above, it would be incongruous to hold that clause (a) requires issue of prior notice, while clause (b) does not require issue of such notice. If issue of prior notice under clause (a) or clause (b) before grant of permission or issue of direction, as the case may be, was really intended by the Legislature, sub-rule (2) of rule 8, which finds its place next to sub-rule (1) where clauses (a) and (b) find their places, could not have made the requirement of issue of notice subsequent to grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1), mandatory. Sub-rule (2), it cannot be overlooked, requires that the court shall, in every case where permission or direction is given under sub-rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or, where, by reason of the number of persons or any other cause, such service is not reasonably practicable, by public advertisement, as the court in each case may direct. Why issue of subsequent notice by the court under sub-rule (2) above is made obligatory becomes obvious from sub-rule (3) above, in that, it enables any person on whose behalf, or for whose benefit, a suit is instituted or defended under sub-rule (1) to apply to the court to be made a party to such suit. When sub-rule (3) above enables any person on whose behalf, or for whose benefit, a suit is instituted or defended under sub-rule (1) to apply to the court to become a party to such suit, either as plaintiff to support the suit or as defendant to oppose the suit, it is difficult to think that any useful purpose would be served by issue of prior notice to such person either before grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1) of rule 8 of Order 1 of the Code. Issue of prior notice before grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1), if anything, may give an undue handle to the opposite parties to delay or defeat the suit or defence, as the case may be, at the very threshold. Besides, non-issue of prior notice to the persons who may be interested in opposing the grant permission under clause (a) or issue of direction under clause (b), of sub-rule (1), cannot adverse affect their interest inasmuch as a decree passed in a suit under rule 8 would be binding under sub-rule (6) thereof, on all persons on whose behalf, or for whose benefit, the suit is instituted or defended, as the case may be, only when notice required under sub-rule (2) is issued and not otherwise. Thus, from a conspectus of the above sub-rule of rule 8, I am inclined to take the view that no prior notice under clause (a) of sub-rule (1) of rule 8 is required to be issued by the court before grant of permission thereunder.

9. Coming to the decision of the Bombay High Court in Amravati Municipal Council's case, : AIR1976Bom401 , it is, no doubt, held therein that sub-rule (1) of rule 8 of Order 1 of the Code requires prior notice before grant of permission contemplated therein, as pointed out by Shri Datar. The Bombay High Court has held so on the interpretation of sub-rule (1) of rule 8 of Order 1 of the Code, as it stood before its substitution by the Code of Civil Procedure (Amendment) Act, 1976 (for short 'the Amendment Act'), which came into force on February 1, 1977. The sub-rule, as it stood then, read thus :

'8(1). Where there are numerous persons having the same interest in one suit, one or more of such persons may, with the permission of the court, sue or be sued, or may defend, in such suit on behalf or for the benefit of all persons so interested. But, the court shall in such case give, at the plaintiff's expense, notice of the institution of the suit of all such persons either by personal service or, where from the number of persons or any other cause such service is not reasonably practicable, by public advertisement, as the court in each case may direct.'

10. The Bombay High Court, for holding that prior notice was to be given by the court under sub-rule (1) above before it granted permission thereunder, interpreted the word 'But' found in the sub-rule to mean 'except', 'unless' or 'if not'. Such interpretation led it to conclude that it was incumbent upon the court to give notice of the institution of suit to all persons interested in such suit before it could accord permission to sue in a representative capacity under that sub-rule. It is of significance to note that the word 'But' found in sub-rule (1) of rule 8 of Order 1 of the Code as it stood before it was substituted by the Amendment Act, no longer finds a place in the setting of sub-rules (1) and (2) of rule 8. The omission of the 'But' in the substituted sub-rule (2) of rule 8 is sufficient to indicate that the notice contemplated under sub-rule (2) need not precede grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1) of rule 8, as it stands substituted by the Amendment Act. Hence, the decision of the Bombay High Court can lend no assistance in the interpretation of sub-rules (1) and (2) of rule 8, as they stand substituted by the Amendment Act.

11. In conclusion, I hold that clause (a) of sub-rule (1) of rule 8 of Order 1 of the Code does not require a court to issue prior notice before it grants permission thereunder. From this it follows that the order under revision does not call for interference.

12. In the result, I dismiss this revision petition, however, without costs.

13. The records of the court below be sent back forthwith.

14. Before parting with the case, I place on record my appreciation to the assistance of Shri Padubidri Raghavendra Rao, learned counsel, rendered at my request.


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