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Bhagwati Prasad Bajoria and ors. Vs. British India Corporation Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany;Civil
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Appln. No. 232 of 1962 in Sp. A. No. 299 of 1961
Judge
Reported inAIR1964All75
ActsCompanies Act, 1956 - Sections 398; Code of Civil Procedure (CPC) , 1908 - Sections 151 - Order 20, Rule 3; Companies (Court) Rules, 1959 - Rules 6, 7 and 9
AppellantBhagwati Prasad Bajoria and ors.
RespondentBritish India Corporation Ltd. and ors.
Appellant AdvocateAmbika Pd. and ;K.L. Grover, Advs.
Respondent AdvocateSatish Chandra, ;R.S. Pathak and ;S.N. Kakkar, Advs.
DispositionApplication allowed
Excerpt:
.....in any case. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the maharashtra act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. teacher employed in the school run by cantonment..........period for the management of the interim committee. it is open to us to abridge that time under rule 7. rule 9 deals with inherent powers of court, and runs thus :'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.'it is to be noted that under rule 9, the court may exercise its inherent power notwithstanding rule 6.15. it is immaterial whether the present application is treated as an application under section 151, c. p. c., or as an application under rules 7 and 9 of the companies (court) rules, 1959. i hold that the present application under section 151, c. p. c. is maintainable.15a. now, as regards.....
Judgment:

Oak, J.

1. I agree with my learned brother that the application should be allowed. I would like to add a few words on the question of maintainability of the application.

2. Mr. S.N. Kakkar appearing for Sri L.N. Dalmia, objector contended that, the application under Section 151, C. P. C. is not maintainable. Mr. Kakkar advanced two reasons in support of his contention. He argued that the present applicants were not parties in Special Appeal No. 299 of 1961. Secondly, the Court has no power to alter its judgment, dated 14-2-1962.

3. Mr. Kakkar relied upon Order XX, Rule 3, C. P. C. Order XX, Rule 3, C. P. C. states :

'The judgment shall be dated and signed by the Judge in open Court at the time of pronouncing it and, when once signed, shall not afterwards be altered or added to, save as provided by Section 152, or on review.'

4. In Sajjadi Begam v. Dilawar Husain, AIR 1915 All 98 a Court made a decree in plaintiff's favour conditional upon his paying an extra court-fee within a certain time. It was directed that the suit would stand dismissed in the case of non-compliance with the condition. It was held that the Court had no jurisdiction to interfere with the decree by extending the time for payment of the extra Court-fee.

5. In Perumal Moopan v. M.K. Venkatachariar, 68 Ind Cas 910 : (AIR 1922 Mad 193) it was held by Madras High Court that, a stranger to a litigation cannot intervene after a suit or a proceeding is disposed of, and claim the protection of Section 151, C. P. C. or appeal to the inherent powers of the Court to do justice.

6. In Allah Rabul Almin v. Ganga Sahai, AIR 194/All 211 (FB) a Civil Revision under Section 115, C. P. C.was filed before the High Court. A learned single Judgewent through the judgment under, revision, and left satisfied that it was not a fit case where he would like tointerfere in the exercise of the revisional jurisdiction ofthe Court. He, therefore, delivered a judgment dismissingthe revision on merits and signed the judgment. It washeld by a Full Bench of Allahabad High Court that, Itwas not competent to the Court to recall and alter thatjudgment at the request of either party. There is no lawwhich would justify a Judge in recalling or altering ajudgment except in those cases where the Court may haveinherent jurisdiction to rectify its own mistake. In thisrespect no practice in derogation of law can grow up orcan be recognized.

7. It is to be noted that in the Full Bench case the High Court initially passed an order dismissing the Civil Revision. The nature of the controversy between the parties does not appear from the judgment of the Full Bench.

8. In Jagannath v. Bishwa Ratan, AIR 1933 Oudh 241 a Sub-Judge allowed the plaintiff to amend his plaint on his paying deficit court-fee and costs within a certain time. It was directed that, if he failed to do so, the appeal would stand dismissed. The Sub-Judge granted more than one extension of time. It was held that as coon as the final order had been signed by the Sub-Judge, he became functus officio, and it was not open to him to extend the time fixed by his order.

9. On the other hand, there is authority for the view that, if a Court frames a scheme under Section 92, C. P. C. it is open to the Court to make modifications in the scheme subsequently. In Mahadev v. Govindrao, AIR 1937 Bom 124 it was held that, if a scheme under Section 92. C. P. C. has been framed providing for the removal of trustees for unfitness, the exercise of that power is not contrary to Section 92, C. P. C.

10. In Rai Ram Nath Bhargava v. Sri Swami Goverdhan Rangacharia : AIR1936All97 it was held that, the Court had jurisdiction to reserve to itself the power to amend a scheme in future. The inherent power of the Court to modify a scheme prepared by itself should be exercised within the narrow scope of where it is necessary to prevent abuse of the process of the Court or where the ends of justice plainly demand it.

11. In Raje Anandrao v. Shamrao AIR 1961 SC 1205 it was held that, it is open in a suit under Section 92 C. P. C. to provide in the scheme for modifying it as and when necessity arises by inserting a clause to that effect.

12. In Ganga Ram v. K.R. Vinchurka AIR 1943 Bom 146 it was held that, where a scheme is framed by the High Court under Section 92, C, P. C., the High Court has inherent power to alter the scheme under Section 151, C. P. C. on an application in this respect, even if the scheme does not provide for liberty to apply for its modification, on proper cause being shown, namely, that the scheme does not operate beneficially. Order XX, Rule 3, C. P. C. does not bar the exercise of such a power.

13. One will readily accept the broad proposition laid down in Order XX, Rule 3, C. P. C. But that general principle may require modification in special cases. One has to bear in mind that the judgment delivered by us on 14-2-1962 arose out of an application under Section 398 of the Companies Act, 1956. We appointed an Interim Committee of Management. Such a Committee has necessarily to function under the supervision of the Court. The Committee may approach the Court from time to time for advice and guidance. The Court may issue instructions to the Committee. To issue such directions or instructions to the Interim Committee would not amount to infringement of Order XX, Rule 3, C. P. C.

By our Judgment dated 14-2-1962 we fixed the term of the Committee up to 31-1-1963. That term was fixed in the light of the circumstances, which existed In February, 1962. We fixed a fairly long term, because it was apprehended that Hari Das Mundra might interfere in the affairs of the Company. The present applicants have shown that, that apprehension no longer exists. Hari Das Mundra has transferred most of his shares. Under the altered circumstances, it should be possible to curtail the period of management by the Interim Committee. The order passed under Section 398 of the Companies Act, 1956 was for the protection of shareholders. If the applicants are able to satisfy us that it would be in the interest of the Company to curtail the period of Interim Management, the Court has power to order such curtailment.

14. Proceedings before this Court under the Companies Act, 1956 are regulated by the Companies (Court) Rules, 1959. Rule 6 of the Companies (Court) Rules, 1959 states :

'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 these Rules...........'

It is to be noted that, although Rule 6 makes the C. P. C. applicable to proceedings under the Companies Act, the application is to be 'so far as applicable'. With this restriction, some departure from the provisions of the Code of Civil Procedure is permissible. Rule 7 provides for power of Court to enlarge or abridge time. Rule 7 runs thus ;

'The Court may, in any case in which it shall deem fit, extend or abridge the time appointed by these Rules or fixed by an order of the Court for doing any act or taking any proceeding, upon such terms (if any) as the justice of the case require....,......,.'

By our judgment dated 14-2-1962 we fixed a certain period for the management of the Interim Committee. It is open to us to abridge that time under Rule 7. Rule 9 deals with inherent powers of Court, and runs thus :

'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.'

It is to be noted that under Rule 9, the Court may exercise its inherent power notwithstanding Rule 6.

15. It is immaterial whether the present application is treated as an application under Section 151, C. P. C., or as an application under Rules 7 and 9 of the Companies (Court) Rules, 1959. I hold that the present application under Section 151, C. P. C. is maintainable.

15a. Now, as regards merits of the application have already pointed out that, there is no longer any apprehension that H. D. Mundra is likely to interfere in the proper management of the Company. The present application is supported by share-holders owning about 75% of the Corporation shares. The application is supported on behalf of the Central Government. Apart from the fact that the Central Government owns shares in the Company, the Central Government plays an important role under the Companies Act, 1956. We must, therefore, pay due regard to the fact that the application is supported by the Central Govt. Mr. R. S. Pathak appearing for the British India Corporation Limited, Kanpur stated that, he has no objection if the period of interim management is curtailed as proposed by the 13 applicants. This fact is also significant.

16. I note that as many as four members of the interim Committee of Management have resigned during the last few months. That factor is an indication that all is not well with the Interim management. Taking all the circumstances into consideration, I am of opinion that the application under Section 151, C. P. C. should be allowed. It will be sufficient if the Interim Committee of Management is kept in office up to the end of October, 1962 only.

Dwivedi, J.

17. By our order in appeal we upheld the order of learned single Judge removing the elected Directors for mismanagement, directed H.D. Mundhra to pay certain compensation to the British India Corporation Ltd., and reduced the term of the Committee of Management appointed by learned Judge from four years to January 31, 1963. Bhagwati Prasad Bajoria and others (hereinafter called Bajorias) have now applied for immediate election of Directors of the Corporation by the Shareholders and for entrusting management of the affairs of the Corporation to them. They say that they have acquired 261/2 lakh ordinary shares of the Corporation from K. D. Mundhra's group, and that between them they, the Life Insurance Corporation and President of India own about 75 per cent of the ordinary shares. They further say that all the three are in favour of early election of Directors and immediate entrustment of management to them. According to them it is now not possible for H.D. Mundhra and his group to capture management or control of the Corporation.

Counsel for the Life Insurance Corporation and theCentral Government support their application, it is however vehemently opposed by L.N. Dalmia, Sagarmal Ghualewala and Kanhaiyalal Kapoor. L.N. Dalmia became ashareholder in the Corportion after the application of Bajoria had been moved by purchasing 200 shares in the firstweek of May. Sagarmal Ghualewala also became a shareholder after the application of Bajorias had been movedby purchasing 100 shares. Kanhaiyalal Kapoor and hisbrother hold 207 shares. They object on one or the otherof these grounds : 1. Bajorias have not acquired 261/2 lakhshares; 2. Between them Bajorias, Life Insurance Corporation and President of India do not own 75 per cent ofthe total share-holding; 3. Bajorias are mismanaging thecompanies already under their control; 4. Bajorias havebeen set up by H. D. Mundhra as his tool; 5. We haveno power to alter or amend our order in regardto the term of the Committee of Management appointedby us.

18. We have not allowed objectors to produce evidence nor have we heard them with respect to their third objection. We are not asked to appoint any one of the Bajorias as Directors of the Corporation. The alleged mismanagement of some other companies by them has little relevance to the question of immediate handing over of management of the Corporation to Directors elected by shareholders.

19. From the affidavits filed on behalf of Bajorias it is fairly clear that 22,20,338 ordinary shares are registered in the books of the Corporation either in their names or their bankers and nominees, and that they have sent another 4,29,662 shares for registration in similar manner. The objectors' evidence does not show that this is not a fact. In their statement L N. Dalmia and Sagarmal Ghualewala admit that they have not come across any document contradicting the affidavits of Bajorias. The latter has stated that the register of shareholders shows that about 3 lakh shares are held by two persons as nominees of H.D. Mundhra. This statement does not disprove Bajoria's affidavits. I would therefore hold that Bajorias have acquired about 261/2 lakh shares of the Corporation.

20. Sagarmal Ghualewala and Kanhaiya Lal admit in paragraph 10 of their objections that between them the Life Insurance Corporation of India, President of India and Bajcrias own about 75 per cent of the Corporation shares, L. N. Dalmia does not appear to dispute this position seriously. His stand is that if H.D. Mundhra succeeds in the litigation going on in the Calcutta High Court between himself and certain Banks from whom the Life Insurance Corporation of India and President of India have purchased shares once held by H.D, Mundhra, the shareholding of these persons would be considerably reduced. . He admits in his statement that he has not read the plaint and the written statement in that litigation. He is deposing on hearsay. It is also admitted by him that the Life Insurance Corporation and President of India are not parties in that litigation. In view of this admission it is difficult to comprehend how the fate of that litigation would affect their shareholding in the Corporation. In my judgment it is proved from the record of this case that Barojias, the Life Insurance Corporation of India and President of India own about 75 per cent of the Corporation shares.

21. There is little reliable evidence to prove that Bajorias have been set up by H. D. Mundhra with the ulterior object of retaining control of the Corporation in his hands except the solitary testimony of L. N. Dalmia. He says that on May 20, 1962 C. L. Bajoria, the head of the Bajoria family, told him that 'Mundhra's interest In B. I. C. would not end'. In his cross-examination he states that C. L. Bajoria pressed on him to withdraw his objection in this case under the impression that he was connected with Mundhra. He further states that he had clearly denied that he was connected with Mundhra. I would hesitate to take him at his word. If C. L. Bajoria was under the impression that he was a man of Mundhra, I think that then pressure would have been exercised on H. D. Mundhra to make him withdraw his objection. Again, it is hardly credible that C. L. Bajoria would have held out officious assurances for security of Mundhra's interests in the Corporation even though at the outset of their talk Daimia had clearly denied that he was connected with H. D. Mundhra.

22. Before we pass on to the last question it should be noticed that out of the members of the Committee of Management constituted by the Court Sarvashri H.S. Chaturvedi, S.N.M. Tripathi, C.C. Desai and Padampat Singhanla have resigned and Sarvashri K.N. Wilcox and Calloway have gone to England on several months' leave. The Committee is now reduced to two members, Sarvashri Jagadish Swarup and T.N. Jhaveri and Shri Satish Chand who has now been appointed Chairman in place of Shri H.S. Chaturvedi.

23. The last question touches on out jurisdiction to reduce the term of the Committee of Management constituted under our appellate order. It is maintained that our order is a judgment within the meaning of that term in the C. P. C. and that every part of it is made immutable by Rule 3 of Order 20 of the Code.

24. It is conceded by learned Solicitor General that the Code of Civil Procedure would apply to a proceeding under Section 398 of the Companies Act. Our appellate order would be judgment as defined in the Code. We are however not asked to alter our order as regards removal of the elected Board of Directors or payment of compensation by H.D. Mundhra. Bajorias have made a restricted request of determining the term of the Committee of Management and directing it to hand over charge to Directors elected by shareholders. It seems to me that it is implied in our order that the Committee of Management may be dispensed with whenever thought necessary by the Court. Even if it is not so implied, I think that Section 151 of the Code, gives us power to change the term of the Committee if we find that a change is called for in the interests of justice. The Board of Directors or Management is according to one prevailing opinion in the position of trustee. The Committee of Management is a creature of, and subject to the oversight of, the Court. We are therefore unable to comprehend how the Court would be powerless to do away with the Committee if justice so demands. Section 393 would not in my judgment apply to a case of mismanagement of affairs of the Corporation by the Committee, and it can be dealt with only under Section 151 of the Code. It would show that in an appropriate case the Court may out short the term of the Committee in the interests of justice. Section 398 bears some affinity with Section 92 of the Code, and the view taken by me is supported by two decisions under the latter provision : AIR1936All97 and AIR 1948 Bom 146.

25. The Committee does not object to the reduction of its term. Indeed the Committee appointed by us has virtually withered away. As H, D. Mundhra no longer holds a controlling interest of justice (sic) that shareholders of the Corporation should be permitted self-management of their enterprise, In the changed situation Court's continued supervision would not be just and equitable.

26. I would accordingly direct that the Chairman of the Committee should call a meeting of the shareholders to elect Directors of the Corporation by October 15, 1952 and the Committee should hand over charge to the elected Directors on November 1, 1962.


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