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The Madras Vanaspathi Limited Vs. S.V. Chandrapandian and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Reported in(1990)2MLJ62
AppellantThe Madras Vanaspathi Limited
RespondentS.V. Chandrapandian and ors.
Cases ReferredIn K. Mudaliar v. K. Pillai
Excerpt:
.....(1) of the consent order the arbitrators have to give the award by may 15, 1984. therefore the meeting of the company shall not be convened to consider the proposed resolution for continuance or removal of the appellant, till the award is declared and placed for examination by the company judge in the high court and further appropriate directions obtained. according to them the company court had no jurisdiction to entertain an application seeking a direction to hold the general body meeting and to have a chairman appointed for that meeting, and that such relief could be obtained only from the company law board under the provisions of the companies act as amended in 1974. it is also their contention that since the order of the learned trial judge is clearly without-jurisdiction, the..........by its managing director against the order dated 30th november, 1984 passed by shanmukham, j. in company application no.502 of 1984 directing the convening of the meeting of the company on 2-1-1985 and appointing thiru s. vijayarangam as chairman of that meeting.2. the circumstances under which the above order came to be passed may briefly be noted: the appellant in o.s.a. no. 212 of 1984 has been acting as the sole managing director of the madras vanaspathi limited from 1977. in or about 1981, there was an attempt on the part of some of the shareholders to remove him. at that stage the concerned parties agreed for an arbitration and the arbitrators entered upon their duties. however, there was a controversy as to whether the shareholding of the said company was one of the terms of.....
Judgment:
ORDER

G. Ramanujam, J.

1. These two O.S. appeals have been filed, one by M/s. Madras Vanaspati Limited and the other by its Managing Director against the order dated 30th November, 1984 passed by Shanmukham, J. in Company Application No.502 of 1984 directing the convening of the meeting of the company on 2-1-1985 and appointing Thiru S. Vijayarangam as Chairman of that meeting.

2. The circumstances under which the above order came to be passed may briefly be noted: The appellant in O.S.A. No. 212 of 1984 has been acting as the sole Managing Director of the Madras Vanaspathi Limited from 1977. In or about 1981, there was an attempt on the part of some of the shareholders to remove him. At that stage the concerned parties agreed for an arbitration and the arbitrators entered upon their duties. However, there was a controversy as to whether the shareholding of the said company was one of the terms of reference. According to the said appellant the arbitrators are expected to give their award as regards their share-holding in the company, while the other side as well as the arbitrators felt that the share-holding of the company is not one of the terms of reference. It is because of the said controversy the said appellant filed C.S.No.433 of 1983 for a declaration that the management, share-holding and the properties of Madras Vanaspati Limited are also the subject-matter of the reference for arbitration as per the arbitration agreement dated 8-2-1981 and for a mandatory injunction directing the arbitrators to pass an award including the Management and share-holding of the Madras Vanaspathi Limited and apportioning the shares. In the said suit he had also filed an application No.3063 of 1983 for a permanent injunction restraining the defendants 1 to 5 from interfering with the management of the Madras Vanaspati Limited or from altering the Directorship or the Managing Director of the Company. The said applicant was dismissed by Maheswaran, J. on the ground that the apprehension of the application was not well-founded, that defendants 6 to 8 the arbitrators have not declined to go into the question of business and share-holding of the company and that the dispute referred to the arbitrators appears to relate to the management and the share-holding of the company as well. Against the said order of Maheswaran, J. O.S.A. 165 of 1983 had been filed by the said appellant and the following consent order was passed:

1) The arbitrators, viz., defendants 6 to 8 shall pass the award on or before 15-5-1984.

2) It will be open to the defendants 1 to 5 or any shareholder of the Company to give notice of a resolution under Section 188 of the Companies Act and for consideration of the same. Such a resolution shall be placed before the company on or before 15.3.1984.

3) On receipt of such a resolution, the Company shall circulate the same to the shareholders and fix the meeting on 16-5-1984 at 11 A.M. for consideration of the resolution and for adoption if deemed fit.

4) This consideration by the general body of the company will be irrespective of the award.

5) This order will be effective notwithstanding any other order to the contrary obtained by any shareholder in any Civil Court.

Later the said appellant filed a review petition No. 4613 of 1984 seeking to review the said order on the ground that except Clause (1) the other clauses of the order were not passed on consent. The said review petition was, however, dismissed. Later the appellant filed an appeal S.L.P. (Civil) No. 5270-71 of 1984 against the consent order passed in O.S.A. No. 165 of 1983 and the Supreme - Court had rejected the S.L.P. by passing the following Order:

As the order under challenge clearly recites that the same was passed with consent of the parties, we are wholly disinclined to examine the matter on merits or on collateral grounds.

However, we make it distinctly clear that according to Clause (1) of the consent order the Arbitrators have to give the award by May 15, 1984. Therefore the meeting of the company shall not be convened to consider the proposed resolution for continuance or removal of the appellant, till the award is declared and placed for examination by the Company Judge in the High Court and further appropriate directions obtained.

With this observation, we reject the special leave petition.

Later the Arbitrator passed an award on 9.7.1984 and the said appellant filed O.P.No.247 of 1984 for setting aside the award under Sections 16, 30 and 33 of the Arbitration Act and also sought an interim order in the said O.P. staying the operation of the award dated 9.7.1984. The following order was passed in that application by Sengottuvelan, J.

1) The business of the applicant and the respondents 1 to 5 will be carried on as before.

2) New partnership or alienation of the moveable or immovable properties of the partnership shall not take place and

3) O.P. No. 247 of 1984 will be taken up for disposal on 9.10.1984.

The company proceedings in respect of the Madras Vanaspati Limited will be dealt with according to the provisions of the Companies Act. There will be an interim stay in the above terms. Post O.P.No.247 of 1984 for disposal on 9.10.1984.

Against the said order of Sengottuvelan, J. O.S.A. 183 of 1984 was filed and the O.S.A. was disposed by modifying the order of interim suspension passed by the learned single Judge to the following effect:

Since the steps said to have been taken by the appellants on 15-7-1984 are already the subject-matter of contempt application, there cannot be any direction as regards the same as at present. The appellants, however, will not take any fresh step in furtherance or in pursuance of the award till the disposal of the appeal. Since the proceedings arising out of the arbitration are said to have been posted for final disposal along with the contempt application, no further orders are necessary in these C.M. Ps. as at present since final orders can be expected to be passed therein within a week or two.

In the meanwhile, an application under Rule 9 was filed in Company Application No.502 of 1984 by the opposite side for appointment of Chairman and for fixation of a date for holding the general body meeting of the Company. The said application was allowed on 24.9.1984 and 28.11.1984 was fixed as the date for holding the meeting. As against the said order O.S.A. 178 of 1984 was preferred by the said appellant and in that appeal the main question urged was as to the interpretation to be placed on the expression 'till the award is declared and placed for examination by the Company Judge in the High Court and further appropriate directions ' obtained.' According to the appellant the expression 'till the award is declared' will mean till the award is made a decree of the Court and so long as the award is not made a decree of court, no directions could be obtained from the court regarding the holding of the meeting referred to in the order of the Supreme Court. According to the opposite side however, the expression 'till the award is declared' only means till the award is made and as the award has already been made, a direction can be obtained from the Court as per the order of the Supreme Court. It was only this objection that was considered by the Bench and the appellate Court allowed the appeal in part and directed the Company Judge to take up for examination theawares placed before him and pass suitable final orders in the said company application after considering the award of the' arbitrators. Thus the matter was remitted by the appellate Court to the Company Judge to pass appropriate orders after going through and considering the terms of the award. Thereafter, Shanmukham, J. took up the company application for final disposal in the light of the directions given by the appellate Court. It is at this stage the appellant has put forward the following contentions; which were not put forward at the earlier stage: (1) The Company application itself is not maintainable before the Court and such a relief could be obtained only from the Company Law Board as the Company Law Board has got the exclusive jurisdiction under Sections 166, 167 169 and 186 and the Company Court has inherent lack of jurisdiction to deal with that application. (2) The directions given by the learned single Judge purported to be in pursuance of the directions of the Supreme Court are outside the consent order as the consent order does not contemplate the removal of the Director or appointment of a Chairman for the general body meeting to be held. (3) There is no question of res judicata on a question of jurisdiction and the principle of res judicata will not apply and, therefore, it is open to the concerned parties to question the jurisdiction of the Company Court to entertain an application for the reliefs in question.

3. The learned Judge considered the above contentions and held that he is bound by the directions given by the appellate Court which only directs him to consider the award and to pass appropriate orders, and since the appellant did not raise all these questions at the earlier stage, he cannot be permitted to raise the said questions when the matter is considered in pursuance of the remit order passed by the appellate Court. The learned Judge also felt that he has the jurisdiction to direct the holding of the general, body meeting and to appoint the Chairman for the said meeting on the basis of the order passed by the Supreme Court. Thus by an order dated 30.11.1984 Shanmukham, J. has directed the holding of a meeting on 2.1.1985. As against the said order dated 30.11.1984 O.S.A. No. 211 of 1984 has been filed by the Company and O.S.A. 212 of 1984 has been filed by the Managing Director.

4. The learned Advocate:General appearing for the appellant in O.S.A. No. 211 of 1984 and Thiru S. Chellaswamy, learned Counsel appearing for the appellant in O.S.A. 212 of 1984 elaborately argued the question of jurisdiction. According to them the Company Court had no jurisdiction to entertain an application seeking a direction to hold the general body meeting and to have a Chairman appointed for that meeting, and that such relief could be obtained only from the Company Law Board under the provisions of the Companies Act as amended in 1974. It is also their contention that since the order of the learned trial Judge is clearly without-jurisdiction, the order should be taken to be a nullity. Though the above questions were argued in detail, we are of the view that it is not possibly for us to go into the question of jurisdiction as the order passed by the appellate Court has not been challenged by the appellant by filing an appeal before the Supreme Court and so long as that order stands it is not possible to make a collateral attack on that order at this stage. As already stated, the question of jurisdiction of the Company Court and also the maintainability of the company application was not questioned either before the Company Court on before the appellate Court and the appellate Court was asked to consider only one objection raised by the appellant regarding the interpretation of the order passed by the Supreme Court, and no other objections were raised before the appellate Court at the earlier stage. Therefore the appellate Court has proceeded on the basis that the Company Court had jurisdiction to deal with the company application and it is only on that basis a direction was issued to the Company Court to proceed with and pass revised order in the company application. In K. Mudaliar v. K. Pillai : AIR1970Mad328 it has been held that when the High Court remits a case to the lower Court the matters finally disposed of by the order of remand cannot be reopened when the case comes back from the lower court, on the principle of constructive res judicata and the Court which made the order of remand cannot itself reconsider the same when the case came back to it after disposal in accordance with the remit order, though the remit order could have been challenged in appeal, and that it is only the Supreme Court which is competent to consider whether the view taken by the High Court in its order of remand was correct or not even though an appeal had not been taken against the order of remand. Thus virtually the appellants are challenging the correctness of the order appellate Court remitting the matter to the Company my Court which they cannot do before the appellate Court itself. It is open to them to challenge the remit order passed by the appellate Court either on the ground that the Court had no jurisdiction to deal with an application of that kind or that the application is not maintainable for the reliefs claimed therein. Since the appellate Court cannot consider the validity or otherwise of its own order passed in an appeal at this stage, it is not possible for us to go into the question of jurisdiction of the Company Court or the maintainability of the company application and it is open for the appellants to have the remit order challenged in the appropriate forum, if they are so advised. As it is, this Court cannot sit in judgment against its own order remitting the matter to the Company Court for passing fresh orders. The remit order proceeds on the basis that the Company application claiming the relief in question is maintainable' and the Company Court has jurisdiction. The remit order merely directs the Company Court to consider the award and pass appropriate orders. Now that the Company Court has considered the award and passed orders which according to us is quite appropriate, we do not think that any interference is called for. The appeals are, therefore, dismissed with costs. Counsel's fee Rs.500/- in each appeal.


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