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In Re: Chandigarh Tourist Syndicate P. Ltd. Vs. Chandigarh Tourist Syndicate P. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberCompany Application No. 180 of 1977 in Company Petition No. 239 of 1977
Judge
Reported in[1978]48CompCas267(P& H)
ActsCode of Civil Procedure (CPC) , 1908 - Sections 151; Companies (Court) Rules, 1959 - Rule 9
AppellantIn Re: Chandigarh Tourist Syndicate P. Ltd.;charan Singh Kharbanda and ors.
RespondentChandigarh Tourist Syndicate P. Ltd. and ors.
Appellant Advocate Des Raj Nanda, Adv.
Respondent Advocate J.S. Narang, Adv.
Excerpt:
.....and the ends of justice, therefore, require that such a direction should issue where the former managing director is refusing to restore the property and records of the company to it. merely on the basis of having preferred the said company petition to withhold the property and records of the company from it would well be within the ambit of abuse of process of the court. the directions sought for, therefore, are well within the inherent powers spelled out in rule 9 of the companies (court) rules, 1959. for the reasons aforesaid the present application must succeed and the directions sought for therein should issue. kharbanda had fairly stated at the bar that the keys of the almirahs laying in the premises of the company and containing its records were with his client and further cash..........office of the company and further to deliver the cash in hand held by him earlier to the present managing director of the company with the requisite details thereof.2. it does not seem to be in dispute that an annual general meeting of the company was called for the purposes of the election of the managing director/chairman on 30th november, 1977. in the proceedings held in the said meeting sh. n.s. kharbanda, who was the incumbent managing director of the company, lost to sh. ajaib singh bachhal, the present applicant, who was elected as the managing director thereafter. it has been averred in the application that in the minutes book relating to the annual general meeting sh. n.s. kharbanda wrote in his own hand on 30th november, 1977, that he lost the election and sh. ajaib singh.....
Judgment:

S.S. Sandhawalia, J.

1. This is an application under Section 151 of the Civil Procedure Code read with Rule 9 of the Companies (Court) Rules, 1959. It seeks directions to Shri N.S. Kharbarida, the former managing director of the Chandigarh Tourist Syndicate (Pvt.) Ltd., to hand over the records relating to the company and also the keys of the almirahs lying in the office of the company and further to deliver the cash in hand held by him earlier to the present managing director of the company with the requisite details thereof.

2. It does not seem to be in dispute that an annual general meeting of the company was called for the purposes of the election of the managing director/chairman on 30th November, 1977. In the proceedings held in the said meeting Sh. N.S. Kharbanda, who was the incumbent managing director of the company, lost to Sh. Ajaib Singh Bachhal, the present applicant, who was elected as the managing director thereafter. It has been averred in the application that in the minutes book relating to the annual general meeting Sh. N.S. Kharbanda wrote in his own hand on 30th November, 1977, that he lost the election and Sh. Ajaib Singh Bachhal, respondent No. 2, was elected instead. It is the applicant's case that at the end of the proceedings Sh. N.S. Kharbanda agreed that the record and cash of the company shall be transferred within ten days thereafter. However, the applicant alleges that Sh. N.S. Kharbanda has not attended the office of the company at all and has not handed over the records of the company in his possession including the keys of the almirahs, which are lying in the premises of the company and similarly has withheld the cash in hand of the company in his possession. It is further alleged that the whole working of the company is hamstrung by the action of Sh, N.S. Kharbanda and it is unable to file the passenger tax monthly returns, returns with regard to the annual general meeting and the failure to do so would render the company liable for heavy penalties. Similarly, the company is unable to effectively pursue the income-tax appeal, which it has filed by producing the necessary records, which equally may entail onerous liabilities. It is also stated that the cheque book, stamp and receipts relating to the company are also lying in the almirahs, without which the company cannot effectively function.

3. In the reply filed by Sh. N.S. Kharbanda, his mainstay seems to be that the applicant has no locus standi to file the present application for the custody of the records of the company. Further, the maintainability of the present application is sought to be challenged.

4. The main stand on behalf of Sh. Kharbanda seems to be as averred in para. 5 of the return that he would have no objection to hand over the records, etc., after the decision of the Company Petition No. 239 of 1977 on merits regarding the validity of the proceedings of the annual general meeting.

5. Mr. J.S. Narang, learned counsel for the applicant, has forcefully contended that having been duly elected as the managing director in the annual general meeting held on November 30, 1977, the applicant is necessarily entitled to the possession in custody of the records of the company and its other property. The minutes book pertaining to the annual general meeting held on November 30, 1977, has been produced to show that Sh. N.S. Kharbanda in his own hand had recorded the minutes relating to the election of Sh. Ajaib Singh Bachhal as the managing director. It has been rightly submitted that the very functioning of the company has been made impossible by the absence of the requisite records and Sh. N.S. Kharbanda is abusing the process of the court by withholding the same from the company under the garb of having challenged the validity of the proceedings of the annual general meeting of the company.

6. Apparently conscious of the total weakness of his case on merits, the learned counsel for Sh. N.S. Kharbanda has vainly sought to contend that the applicant has no locus standi to maintain the present application. Neither principle nor precedent could be cited for this untenable proposition. It is plain that the managing director of the company in his capacity as such would ba entitled to the possession and custody of the records and property of the company on its behalf. The objection on the score of the absence of locus standi of the applicant has, therefore, to be necessarily rejected.

7. It was then submitted that the company court had no jurisdiction to give directions for the return of the company's records and property. Despite repeated opportunity given to the learned counsel for Sh. N.S. Kharbanda, no judgment could be cited to the effect that a direction of the nature sought on behalf of the applicant could not be given under Section 151 of the Civil Procedure Code read with Rule 9 of the Companies (Court) Rules. It appears to be plain that the company in order to function effectively must have an access to and the custody of its records and property and the ends of justice, therefore, require that such a direction should issue where the former managing director is refusing to restore the property and records of the company to it. Merely because Sh. N.S. Kharbanda has filed a petition challenging the validity of the annual general meeting and the consequent election of the managing director, Sh. Ajaib Singh Bachhal, who has been duly recorded as having been elected in the minutes book would not entitle him to withhold the records and the assets of the company till the decision of the said petition which inevitably would take time. Merely on the basis of having preferred the said company petition to withhold the property and records of the company from it would well be within the ambit of abuse of process of the court. The directions sought for, therefore, are well within the inherent powers spelled out in Rule 9 of the Companies (Court) Rules, 1959. For the reasons aforesaid the present application must succeed and the directions sought for therein should issue.

8. Mr. D.R. Nanda on behalf of Shri N.S. Kharbanda had fairly stated at the bar that the keys of the almirahs laying in the premises of the company and containing its records were with his client and further cash in hand was also lying in a small safe inside those almirahs, the key thereof was also with his client. In order to safeguard the interests both of the company and the parties, the learned counsel have themselves agreed that it is necessary that an inventory of the property to be delivered over to the applicant should be made in view of the pendency of the main petition.

9. The learned counsel for the applicant had himself requested that a Commissioner may be appointed in whose presence the records, property and cash would be taken over by the applicant. I accordingly appoint Shri S.N. Nijjar, Bar-at-Law, as the Commissioner for the said purpose. Mr. N.S. Kharbanda is directed to produce the keys of the two almirahs and also of the safe contained therein before the Commissioner who shall open the said two almirahs and the safe and after making an inventory of the record and the cash and other articles therein deliver over the same to the applicant, Shri Ajaib Singh Bachhal, the incumbent managing director of the company.

10. The parties shall appear before the Commissioner at 12 noon tomorrow at the registered office of the company. The respondent, Shri N.S. Kharbanda, shall produce the keys mentioned aforesaid in order to have the inventory, etc., made as directed above. In case the respondent, N.S. Kharbanda, does not appear or produce the keys, etc., the Commissioner is hereby authorised to have the almirahs and the safe opened and get the necessary inventory made. By agreement, the Commissioner's fee is fixed as Rs. 300 payable by the applicant before he undertakes the commission.


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