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Coal Products Private Ltd. Vs. Ram Autar Jalan - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberAppeal No. 196 of 1967
Judge
Reported in[1969]39CompCas223(Cal),72CWN805
ActsCompanies Act, 1956 - Sections 153 and 283
AppellantCoal Products Private Ltd.
RespondentRam Autar Jalan
Appellant AdvocateA.K. Sen, ;S.C. Sen and ;B.K. Bachawat, Advs.
Respondent AdvocateSomnath Chatterjee and ;P.C. Sen, Advs.
Cases Referred(Sunil Kumar Ganguly v. Bhagwati Debi Goenka
Excerpt:
- ray, j. 1. this appeal is from the order of sen j., dated 7th september, 1967. the order was made on a notice of motion dated september 12, 1966, taken out by the plaintiff. the plaintiffs, inter alia, asked for an order of injunction restraining ram autar jalan from in any -way operating the current account in the name of the coal products private limited with the united commercial bank ltd., burrabazar branch, calcutta, till the disposal of the suit and an injunction restraining ram autar jalan from withdrawing and/or in any way dealing with or disposing of the amounts lying in the current account in the name of coal products private ltd. with the united commercial bank ltd., burrabazar branch, calcutta, till the disposal of the suit and an injunction restraining ram autar jalan from.....
Judgment:

Ray, J.

1. This appeal is from the order of Sen J., dated 7th September, 1967. The order was made on a notice of motion dated September 12, 1966, taken out by the plaintiff. The plaintiffs, inter alia, asked for an order of injunction restraining Ram Autar Jalan from in any -way operating the current account in the name of the Coal Products Private Limited with the United Commercial Bank Ltd., Burrabazar Branch, Calcutta, till the disposal of the suit and an injunction restraining Ram Autar Jalan from withdrawing and/or in any way dealing with or disposing of the amounts lying in the current account in the name of Coal Products Private Ltd. with the United Commercial Bank Ltd., Burrabazar Branch, Calcutta, till the disposal of the suit and an injunction restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering in the management of the company till the disposal of the suit.

2. There were several prayers in the notice of motion numbered (a) to (j). At the outset it may be stated that in the trial court, counsel appearing for the plaintiffs did not press prayers (a) to (e). The result was that only prayers (g), (h), (i) and (j) were canvassed.

3. At the hearing of the appeal counsel appearing for the appellant also confined his arguments and the case mainly to prayer (g) and thereafter to the other prayers, (h), (i) and (j). Prayer (g) is for an injunction restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering with the management of the company till the disposal of the suit.

4. The plaintiff filed the suit and claimed the relief that a perpetual injunction should be granted restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering with the management of the company. The other reliefs aked for were that Ram Autar Jalan should also be restrained by an injunction from preventing or hindering the properly constituted board of directors from acting as directors.

5. The company was incorporated on or about August 25, 1945, under the Companies Act, 1913. The authorised capital of the company is Rs. 20,00,000 divided into 2,00,000 ordinary shares of Rs. 10 each, of which Rs. 15,10,000 have been fully paid up. The plaintiff's case is that the directors of the plaintiff are Kishorilall Goenka, Parameshwari Devi Goenka, Nawratan Goenka, Bhag-wati Debi Goenka and Sunil Kumar Ganguly. The plaintiff alleges that Ram Autar Jalan claimed to be a director of the plaintiff since August 31, 1964. The plaintiff alleges that the defendant, Ram Autar Jalan, was neither appointed as a director at any meeting of the plaintiff nor co-opted a director of the board of directors. The plaintiff alleges that the plaintiff came to know of the alleged claim of Ram Autar Jalan some time in the month of August/ September, 1966.

6. The plaintiff relies on Article 104 which states that the qualification of a director other than an ex-ofiicio director shall be the holding in his own name solely or jointly with another or others and whether beneficially or as a trustee for another or others or otherwise howsoever of shares in the company of the nominal value of Rs. 500 on which all calls shall have been paid. The plaintiff alleges that the defendant did not hold at the time of the alleged appointment the requisite qualification shares, nor did the defendant obtain the same until the filing of the suit.

7. In paragraph 9 of the plaint, the plaintiff alleges that the defendant wrongfully or without authority purported to act as a director of the plaintiff and has been wrongfully dealing with the funds of or interfering with the management of the company. In paragraph 10, the plaintiff alleges that the plaintiff suffered loss and damages assessed at Rs. 7 lakhs. The plaintiff also alleges that the defendant wrongfully or without authority opened bank accounts and caused various sums of money belonging to the plaintiff to be deposited in the said accounts and withdrawn various sums from the said accounts. The plaintiff alleges to be unable to give particulars until further discovery of such wrongful acts and dealings.

8. It may be stated here that on or about September 2, 1945, Kishorilall was appointed managing agent of the company. On or about December 26, 1950, the company ceased to appoint managing agents. Thereafter, the company appointed Kishorilall as managing director. On or about September 30, 1951, Kishorilall was re-appointed managing director. On or about 1st March, 1962, Jagmohan ceased to be a director. Jagmohan and Kishorilall were two members of the company which was formed in the year 1945. When Jagmohan ceased to be director, his wife, Bbagwati Debi, became a director. In the year 1952, the management of the company was divided into two groups which are, for the sake of brevity, called the G. L. Group and the M. J. Group. The abbreviation, G. L. Group, came from the names of mouza Gogla and mouza Laskarban--Victory colliery and the abbreviation, M. J. Group, came from Madhaipur and Jamihari colliery. Since the month of October, 1953, the Jagmohan group has been in the management of the G. L. Group and Kishorilall's group has been in the management of the M. J. Group.

9. In this state of affairs, some time in the month of June, 1963, Hari Shankar filed an application for winding up of the company. In that application for winding up, an interlocutory order was made on 27th June, 1966. That interlocutory order will appear at page 99 of the paper-book. The portion of the order which was relied on by the parties at the hearing of this application was as follows :

' The account in the Bank of India shall be operated by Kishori Lall Goenka and Nau Ratan Goenka as it is being done now. The account in the United Commercial Bank of India Limited shall be operated by Ram Autar Jalan in the same manner as it is now being done.'

10. By the interlocutory order dated June 27, 1966, in the company matter it was also directed that no cheque on behalf of the company was to be issued unless the counterfoils of those cheques were countersigned by 1he special officer or any other person duly authorized by the special officer. The special officer was given certain other directions as to initialling of counterfoils of cheques and vouchers and passing of cheques. The collections of the G. L. group were directed to be deposited with the United Commercial Bank and the collections of M. J. group were directed to be deposited with the Bank of India Limited. The M. J. group was directed to meet the liabilities in respect of their collieries and the G. L. group was to meet the liabilities in respect of the collieries under their control or management.

11. The plaintiff alleges that some time about June 28, 1966, the company asked from the United Commercial Bank for a copy of the resolution as to how Ram Autar Jalan was operating bank accounts. The company's solicitor by a letter dated September 9, 1966, asked the United Commercial Bank for a copy of the resolution as to how Ram Autar Jalan was operating the bank accounts. On September 12, 1966, the bank sent a copy of the resolution dated August 31, 1964.

12. The present suit was filed on September 12, 1966.

13. It may be stated here that Ram Autar Jalan is the brother of Bhagwati Debi Goenka.

14. The principal contention in this appeal is that the plaintiff has impeached the appointment and authority of Ram Autar Jalan and that the plaintiff has made a prima facie case and, therefore, there should be an interim injunction. Certain articles of the company were relied on by counsel for the appellant. These are Articles 42, 43, 44, 45, 50, 53 and 104. Articles 42, 43, 44 and 45 relate to transfer and transmission of shares and Article 44 states that an application for the registration of transfer of the share may be made either by the transferor or the transferee. Article 43 states that the instrument of transfer shall be signed both by the transferor and the transferee and that the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the register in respect thereof. Article 42 states that no share shall be transferred to a person who is not a member so long as the directors or any member or any person selected by the directors in the interest of the company to be admitted to membership is willing to purchase the same at a fair value to be determined by the auditors. Article 45 requires that before registering any transfer the directors may, if they so think fit, give notice to the registered holder that such transfer deed has been lodged. Article 50 requires that every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred and such other evidence as the directors may require to prove the transfer of shares. The directors may waive the production of any certificate on evidence of its loss or destruction. Article 53 requires payment of a fee of not exceeding Rs. 2 for registration of each transfer. Article 104, to which reference has already been made, requires that the qualification of a director other than an ex-officio director shall be the holding in his own name solely or jointly with another or others and whether beneficially or as a trustee for another or others or otherwise howsoever of shares in the company of the nominal value of Rs. 500 on which all calls have been paid.

15. The relevant provisions of the Companies Act are Sections 163 and 283. Section 163 enacts that the register of members commencing from the date of the registration of the company, the index of members, the register and index of debenture-holders, and copies of all annual returns prepared under Sections 159 and 160, together with the copies of certificates and documents required to be annexed thereto under Sections 160 and 161, shall be kept at the registered office of the company. The register of members is also open to inspection of member or debenture-holder or any other person on payment of fees. Section 164 of the Companies Act enacts that the register of members, the register of debenture-holders, and the annual returns, certificates and statements referred to in Sections 159, 160 and 161 shall be prima facie evidence of any matters directed or authorised to be inserted therein by the Act. Section 283 enacts that the office of a director shall become vacant if (a) he fails to obtain within the time specified in Sub-section (1) of Section 270, or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company. At this stage reference may be made to Article 111 of the company which also states that the office of the director shall ipso facto be vacated if he fails to obtain within two months from the date of his appointment or election or at any time thereafter ceases to hold, the share qualification necessary to qualify him for the office.

16. It is alleged by the plaintiff that Ram Autar Jalan is not the holder of any share. It is also alleged that, though there is allegation by Ram Autar Jalan that he is a director, no evidence has been given by Ram Autar Jalan of his holding of such shares.

17. Counsel on behalf of the appellant relied on the lease dated 23rd eptember, 1964, which bears the seal of the company and shows that the signature of Sunil Kumar Ganguly has been struck out and there is signature of Ram Autar Jalan. It is also said that at one portion the seal which had been on the lease has been torn and, therefore, it is contended on .behalf of the appellant that the lease contains evidence to show that on September 23, 1964, the lease was signed by Sunil Kumar Ganguly as a director and that his name was thereafter struck out and the name of Ram Autar Jalan was put in. Another contention was advanced on behalf of the appellant that the minute book would show that there was a meeting on 31st August, 1964, but the minute book will not show any minute authorising Ram Autar Jalan to open accounts. It was said by counsel for the appellant that the minute books which were initialled are the minute books of the company and the same will show that Ram Autar Jalan was neither appointed as a director nor was any resolution passed authorising him to open accounts. It was contended on behalf of the appellant that there was no evidence given that Sunil Kumar Ganguly vacated the office or that Sunil Kumar Ganguly had been removed. It was also said that there was no evidence as to how Ram Autar Jalan came to be appointed a director as alleged, namely, whether it was by election or by co-option. Emphasis was placed by counsel for the appellant on the fact that no particulars were given as to how Sunil Kumar Ganguly ceased to be a director as alleged by Ram Autar Jalan. Counsel for the appellant extracted a statement from paragraph 14 of the affidavit affirmed by Ram Autar Jalan on 19th September, 1966, where Ram Autar Jalan said 'necessary intimation of my appointment as a director and removal of Sunil Kumar Ganguly was duly given to the Registrar of Joint Stock Companies, West Bengal, on or about 12th September, 1964, at the instance of and with the full approval of Kishorilall Goenka under the signature of Bhagwati Debi as would appear from a certified copy of the return filed before the Registrar on behalf of the company'. It was rightly said by counsel for the appellant that the provisions contained in Section 284 of the Companies Act show that removal of a director requires notice and that the allegation of removal of Sunil Kumar Ganguly as appears in the affidavit of Ram Autar Jalan is unacceptable as a prima facie case because no such notice of removal is alleged.

18. At this stage reference may be made to the return dated April 4, 1966, appearing at page 77 following of the paper-book. It will appear that Nau Ratan Goenka was appointed as a director on December 28, 1965, and further that the return dated April 4, 1966, was presented by Sunil Kumar Ganguly. Counsel for the appellant contended that the return would show that Sunil Kumar Ganguly did not cease to be a director on 31st August, 1964, as was alleged by Ram Autar Jalan. Reference may also be made to the annual return made up to June 30, 1965, of the plaintiff company filed with the Registrar of Companies on July 16, 1965, as will appear at page 93 following of the paper-book. In that return Sunil Kumar Ganguly is mentioned as a director along with Kishorilall Goenka, Bhagwati Debi Goenka, Parameshwari Debi Goenka and Hari Sankar Maheshka. Counsel for the appellant contended that this was indicative of the fact that Sunil Kumar Ganguly was a director in the year 1965 and had not ceased to be a director as was alleged by Ram Autar Jalan.

19. Counsel for the respondent, on the other hand, placed considerable emphasis on the return dated February 3, 1965, appearing at pages 264 to 292 of the paper-book and certain correspondence with the mining authorities in support of the contention that it will appear from the correspondence and the return that Ram Autar Jalan was acting as a director from the month of September, 1964. The return dated February 3, 1965, appearing at page 292 of the paper-book is also referred to at page 264 of the paper-book in paragraph 37 of the affidavit of Kishorilall Goenka affirmed in the month of July, 1966, in company matter. Kishorilall Goenka in the affidavit alleged that Bhagwati Debi Goenka and Ram Autar Jalan fraudulently and illegally purported to have filed a false resolution of the company authorising Ram Autar Jalan to operate upon the bank accounts. Kishorilall Goenka further alleged that he came to know that the G. L. group, meaning thereby Ram Autar Jalan and Bhagwati Debi Goenka, wilfully, fraudulently and deliberately misrepresented to the mines board that the directors of the company were Bhagwati Debi, Bhagwani Bai and Ram Autar Jalan and referred to the annexure marked with the letter 'B' which will appear at page 292 of the paper-book being a form of the return submitted by G. L. group for the year ending 31st December, 1964, with the mines authorities. In that return the names of Ram Autar Jalan, Bhagwani Bai and Bhagwati Debi are shown as directors. It may be stated that Bhagwani Bai was not claimed to be a director by any party. Considerable reliance was placed by the counsel for the respondent on this return to show that the company was aware of the position of Ram Autar Jalan as a director at the time the affidavit in the company matter was filed in the month of June, 1966. Knowledge of such allegations in the month of June, 1966, does not, in my opinion, have much decisive effect on the rival contentions of the parties. In the month of June, 1966, litigation had started. There was the application for winding up. Enquiries were being made by the company as to the authority of Ram Autar Jalan as to how he was operating the bank accounts. The bank was not giving information to the company and the company's solicitor. In that context, the affidavit of Kishorilall Goenka is consistent with his position that Kishorilall Goenka did not accept the return filed by Ram Autar Jalan.

20. The correspondence with the mining authorities on which counsel for the respondents placed reliance would appear at pages 154-159, 162, 163, 165, 166 and 167 of the paper-book. These letters are annexed to the affidavit affirmed by Ram Autar Jalan on September 19, 1966. The letters are addressed to the mining authorities and are signed by Ram Autar Jalan as director and they are of the years 1964 and 1965. Among these letters emphasis was placed on the letter dated 6th March, 1965, appearing at page 155 of the paper-book which was a letter addressed by the chief inspector of mines to the director, Coal Products Private Limited, G. L. group. In that letter the chief inspector of mines stated that the letter dated 19th December, 1964, appearing at page 154 of the paper-book written by Ram Autar Jalan to the chief inspector of mines was a subject of correspondence with the M. J. Group and, therefore, it was said that the M. J. group knew as early as 1965 that Ram Autar Jalan was acting as director. Counsel for the respondent placed reliance on the amdavit-in-reply affirmed by Basudev Jhajharia on September 28, 1966, appearing at page 304 following of the paper-book and contended that in paragraph 36 of the affidavit the deponent said that the letters were wrongful but that the deponent did not say that he did not know of the appointment of Ram Autar Jalan in the year 1965. All the letters which were annexed to the affidavit of Ram Autar Jalan have been dealt with in the affidavit of Basudev Jhajharia where he says that from copies of letters dated 19th December, 1964, and 6th March, 1965, it does not appear that the defendant was appointed as a director of the company. It will depend upon further investigation as to whether the mining authorities sent copy of a letter showing that it was signed by Ram Autar Jalan. The evidence on the present affidavit is, in my opinion, adequate denial that the company did not accept Ram Autar Jalan to be a director.

21. Considerable emphasis was placed by counsel for the respondent on the submission that Jhajharia, who affirmed the affidavit in support of the notice of motion, was a manager and his appointment was disputed and the petitioner did not disclose facts in the petition and that the petitioner was guilty of delay. It was also said by counsel for the respondent that it was nowhere alleged that the board meeting of 1964, as will appear in the minutes, does not show that Ram Autar Jalan was appointed as a director and the resolution of August 31, 1964, was not challenged in the suit. Reliance was placed on the decision reported as Sukhlal v. Devilal in support of the contention that it was necessary to ask for cancellation of the deed or document which was an obstacle to the relief asked for. In interlocutory applications, the-court is to find out whether there is a prima facie case. It is the case of the plaintiff that Ram Autar Jalan was never appointed as a director. The case pleaded is that Ram Autar Jalan wrongfully or without authority acted. If there is a valid resolution, it is for the defendant to prove it. The plaintiff's case is total lack of authority and absence of any appointment. The plaintiff has made that case and it is not the plaintiff's case that there is any resolution.

22. The plaintiff came to know of the unauthorised activities of Ram Autar Jalan in the month of July / August / September, 1966. The plaintiff made attempts to get a copy of the resolution. In cases of such investigation as to the activity of the affairs of the company, the time taken by the plaintiff for enquiry is prima facie explained. In my opinion, there is no delay.

23. The plaintiff has prima facie made the case that the defendant, Ram Autar Jalan, is not a director. As against that, the defendant alleges that there is a resolution. It is true that the defendant alleges that the defendant applied for putting his name in the share register as a result of transfer of shares but it is also to be remembered that Ram Autar Jalan filed a suit for rectification of the share register in the month of November, 1966. Many things have to be explained by Ram Autar Jalan. If it be his case that he lodged the transfer at the time of his appointment why did Ram Autar Jalan wait until the month of November, 1966, to institute the suit Counsel for the appellant said that there was no allegation by Ram Autar Jalan as to how the transfer application had been lodged. No receipt was disclosed for the lodging of the shares as transferred. There was no evidence given by Ram Autar Jalan of the board meeting alleged to be held on 31st August, 1964. There was no evidence given by Ram Autar Jalan of the payment of fee of Rs. 2 required by the Article and no particulars whatsoever were given as to how the shares were lodged with the company for transfer. Counsel for the respondent alleged that the petitioner did not allege in the petition and, therefore, it was not necessary for Ram Autar Jalan to give such information. I am unable to accept that contention. When rival allegations are made impeaching the authority of the director it is the duty of the person who alleges that he is a directorto give satisfactory proof. The date of transfer, the date of lodging of such transfer, will assume importance in regard to limitation of suit. The suit that Ram Autar Jalan filed on the 21st November, 1966, was two months after the plaintiff had filed the present suit. The sequence of events is not without importance.

24. Counsel for the respondent placed reliance on a decision reported as Ukhara Forests and Fisheries Limited v. Sub-Divisional Land Reforms Officer, Asansol, [1965] 69 C.W N. 325 in suport of the contention that a director was required to give an affidavit of competency and that in the present case the affidavit was not adequate. Prima facie the affidavit of competency made by Basudeb Jhajharia as principal officer is adequate.

25. Counsel for the respondent criticised paragraphs 9 and 10 of the petition containing statement based on information from records of Company Petition No. 123 of 1966 to be sufficient evidence of knowledge of the company of the position of Ram Autar Jalan and as also indicative of the fact that if the petitioner knew of withdrawal of money and there was such knowledge in the month of June, 1966, the company was guilty of delay in making the application. I have already expressed my opinion that the plaintiff is not guilty of delay.

26. Counsel for the respondent contended that there was no allegation that Article 104 was not complied with and it was said that Article 104 had no application. It was said that Article 104 would have no application because if the qualification of a director was otherwise good, namely, that if he had become the transferee as alleged, he would be possessing the qualification shares, though his name was not in the books of the company as the holder of shares. Section 283 of the Companies Act was said by counsel for the respondent not to be attracted because the office of a director under that section shall become vacant if he fails to obtain within the time specified in Sub-section (1) of Section 270 or at any time thereafter ceases to hold the share qualification and it was said that Section 270 is not applicable. It was also said that Section 273 of the Companies Act showed that Sections 270 and 272 do not apply to private companies and, therefore, it was said that Section 283(1)(a) would not apply to private companies.

27. Counsel for the appellant contended that Article 104 would indicate that trust was not recognised and that shareholding was to be in the own name of the director. Section 153 of the Companies Act also enacts that no notice is to be taken of trust. Counsel for the appellant relied on the decision of the Supreme Court in Howrah Trading Company Ltd. v. Commissioner of Income-tax : [1959]36ITR215(SC) and rightly contended that the meaning of holding of shares was that a person has to become a member as otherwise he would not be holding shares in his own name. The contention of the respondent is not sound that he holds the shares ' otherwise ' because he lodged the transfer for the obvious reason that the words in the statute are that he has to hold the shares in his own name and that he can do by getting his name entered in the books of the company and by becoming a member of the company. The provisions contained in Section 283(1)(a) of the Companies Act are that directors will hold shares and not cease to hold shares as required by the articles. Section 283 applies both to public and private companies. The provisions contained in Sub-section (3) of Section 283 are that a private company which is not a subsidiary of a public company may, by its articles, provide that the office of director shall be vacated on any grounds in addition to those specified in Sub-section (1). Sub-section (3) of Section 283 enacts that a private company may provide by its articles as to how a director shall vacate his office. In the present case the contentions of counsel for the appellant appear prima facie to be correct.

28. The question is that, if there is a prima facie case that Ram Autar Jalan is not a lawful director, should he yet be allowed to function It may not be out of place to state here that it will appear at page 139 of the paper-book that a case was made that Ram Autar Jalan was appointed a director for efficient working and management. It is not stated that Ram Autar Jalan was appointed in any vacancy. The alleged resolution was that 'Ram Autar Jalan be'and is hereby appointed a director for efficient working and management '. It will appear at page 112 of the paper-book in sub-paragraph (f) of paragraph 11 of the affidavit affirmed by Ram Autar Jalan on September 19, 1966, that he was appointed a director in place of one Sunil Kumar Ganguly. It is also to be found at page 112 of the paper-book in the same affidavit that Ram Autar Jalan said that shares were transferred in his name on October 30, 1963. Again, at page 120 of the paper-book, in paragraph 13 of the affidavit of Ram Autar Jalan, it will appear that he said that he was a shareholder of the plaintiff company holding 1,000 fully paid up equity shares of Rs. 10 bearing Nos. 48,001 to 49,000 covered by certificate No, 5 and that, prior to October 30, 1963, the shares stood in the name of Bhagwati Debi Goenka. In paragraph 14 of the same affidavit Ram Autar Jalan says that, prior to August 31, 1964, Sunil Kumar Ganguly was a director of the company holding 500 equity shares of Rs. 10 each and that by a deed of transfer dated 31st August, 1964, transferred his shares in favour of Bhagwati Debi Goenka and, upon such transfer, he ceased to be a member and director of the company. If Sunil Kumar Ganguly transferred shares on 31st August, 1964, a question will arise whether he would immediately cease to be a director and counsel for the appellant posed this question with a view to emphasising the alleged case of transfer made by Ram Autar Jalan as devoid of merit and substance. I have already referred to page 121 of the paper-book where in the same affidavit Ram Autar Jalan made the case of removal of Sunil Kumar Ganguly. At page 193 of the paper-book, it will appear that another different case was made in the affidavit of Uma Shankar Goenka where in paragraph 49 he said that Kishorilall Goenka obtained the resignation of Sunil Kumar Ganguly from the board. In the same affidavit of Uma Shankar Goenka, at page 185 of the paper book, it is alleged that Ram Autar Jalan became a transferee of shares on October 30, 1963, and the said transfer was made by Bhagwati Debi Goenka in favour of Ram Autar Jalan. Therefore, counsel for the appellant rightly contended that there were totally inconsistent cases of removal, resignation, vacancy and appointment for efficiency and better management.

29. The resolution of appointment of Ram Autar Jalan has not been produced. It was said by counsel for the respondent that there is no affidavit affirmed by Kishorilall Goenka. Counsel for the appellant, on the other hand, contended that Bhagwati Debi Goenka has affirmed no affidavit. Of the two rival contentions, it appears to me that the contention on behalf of the appellant is more sound. The case of Ram Autar Jalan is that Bhagwati Debi Goenka has transferred the shares. The case of Ram Autar Jalan is that there was a meeting on 31st August, 1964, and it is Ram Autar Jalan's case that Bhagwati Debi Goenka was present at the meeting. There is no affidavit of Bhagwati Debi Goenka to support that. The minute book produced by the company shows that there is no resolution on 3Ist August, 1964.

30. Counsel for the respondent contended that the order dated 27th June, 1966, was binding on the parties and relied on the decision of Ram Kirpal Shukul v. Mussumat Rup Kuari , in support of the contention that it would amount to res judicata. The order dated 27th June, 1966, was made in company matter as an interlocutory order. On June 2 CT, 1966, an order was made and that was substituted by another interlocutory order on 27th June, 1966. The proceeding was for appointment of a provisional official liquidator. The title to shares was not in question in the company matter. In the decision in Ram Kirpal v. Rup Kuari, [1883] L.R. 11 I.A. 37; I.L.R. 6 All. 269 the order was final and, therefore, it was res judicata. Counsel for the appellant rightly contended that it was not in issue in the company proceeding as to whether there was title in the same person as the director of the company and the only question was whether the company was to be wound up or not and the interlocutory order was as to whether a provisional liquidator was to be appointed or not. It was said that the company court would neither have concurrent nor exclusive jurisdiction to decide the present suit. Reliance was.rightly placed on the decision of Mst. Gulab Bai v. Manphool Bai : [1962]3SCR483 that one of the tests of res judicata would be whether the court would have jurisdiction to decide the whole suit and not a part of it. Counsel for the appellant relied on the decision of the Judicial Committee in Gokul Mandar v. Pudmanund Singh, (1902) L.R. 29 I.A. 196; I.L.R. 29 Cal. 707 and the observations appearing at pages 201 and 202 of the report in support of the contention that if there was no final order in the same proceeding it would not amount to res judicata.

31. It is manifest as provisions contained in Order 39, rule 4, of the Code of Civil Procedure, indicate that there can be discharge of interlocutory orders in the same suit. The order dated 27th June, 1966, was made without prejudice to the rights and contentions of the parties. The question is whether the order dated 27th June, 1966, will have the effect of res judicata or will be an obstacle in the way of giving the plaintiff any relief in the suit. In my opinion, it would not. If the plaintiff is entitled to an injunction, the order dated 27th June, 1966, cannot stand in the way of the plaintiff getting relief in the suit. Therefore, the order dated 27th June, 1966, in the company matter will not have the effect of res judicata. Counsel for the respondent did not contend that the order dated 27th June, 1966, would stand in the way of the plaintiff getting relief in the suit. What was contended was that it would not be proper to ignore the order dated 27th June, 1966. Propriety is one thing and res judicata is quite another. If an interlocutory order is made without prejudice to the rights and contentions of the parties and if it later appears that another interlocutory order is to be made to meet the exigencies of the situation, the previous interlocutory order should not stand in the way. Counsel for the appellant contended that there might be many interlocutory orders and the subsequent interlocutory order would prevail. In the same suit it cannot be disputed that there may be many interlocutory orders. In the present case can it be said that the order dated 27th June, 1966, will have the effect of disentitling the applicant to any relief, if the plaintiff is otherwise entitled to an interim injunction In my opinion, it should not for the reasons indicated here.

32. Counsel for the respondent contended that the order dated 27th June, 1966, recognised that Ram Autar Jalan was acting as a director and, therefore, his position as a director should not be disturbed. I have already referred to the words in the order. There is a distinction between the portion of the order which relates to the operating of the bank account by Kishorilall Goenka and Nau Ratan Goenka on the one hand and the operating of the bank account by Ram Autar Jalan on the other hand. With regard to Kishorilall Goenka and Nau Ratan Goenka it stated that the account in the Bank of India shall be operated by them as it is being done now. With regard to Ram Autar Jalan it stated that the account in the United Commercial Bank shall be operated by Ram Autar Jalan in the same manner as it is now being done. The words ' in the same manner ' were construed by counsel for the respondent to mean as a director. It is difficult to notice any significance in the words. Counsel for the appellant, on the other hand, contended that the words ' in the same manner ' show that there was a distinction between the position of the admitted directors and the disputed ones. When the hearing was concluded on 21st February, 1968, the matter was reserved for judgment and it appeared on the list on 23rd February, 1968, for judgment. On 22nd February, 1968, counsel for the respondent mentioned that an application would be made by the respondent on 23rd February, 1968. An application was made on 23rd February, 1968 for production of certain documents and records. In that application the respondent alleged that the company alleged that Bhagwati Debi Goenka ceased to be a director on 3rd January, 1968, and on that basis return was filed before the Registrar of Companies, West Bengal, and it was also said that a complaint had been filed by Sunil Kumar Ganguly to that effect. Pursuant to the application, the records of the Registrar of Companies were directed to be produced and the complaint that was filed by Sunil Kumar Ganguly in the court of the Sub-divisional Magistrate, Asansol, being Case No. 401 of 1968 (Sunil Kumar Ganguly v. Bhagwati Debi Goenka) under Section 406 of the Indian Penal Code was also called for. According to counsel for the respondent, the reasons why the respondent made the application were that at the time of argument of this appeal it was suggested that Bhagwati Debi Goenka would be a director of the company and, therefore, if there was an injunction restraining Ram Autar Jalan, no prejudice would be suffered but that it was kept back from the court that the case of the company was that Bhagwati Debi Goenka had ceased to be a director on January 3, 1968, and the company filed a return to that effect. The records, which were called for from the court of the Sub-Divisional Magistrate, Asansol, are now directed to be sent back to that court. I do not wish to express any opinion in connection with that matter which is sub-judice.

33. As for the records filed with the Registrar of Companies it may be stated that counsel for the respondent at some stage contended with reference to some documents that it was the contention of the company that Bhagwati Debi Goenka ceased to be a director because she did not attend the meeting. The case of Bhagwati Debi Goenka is not the subject-matter of this appeal. It is true, counsel for the appellant said, that Bhagwati Debi Goenka was always co-opted as a director in the past whenever she ceased to be a director and that counsel further was willing to give an undertaking that Bhagwati Debi Goenka would be co-opted as a director. That is for the company to decide and we do not wish to express any opinion on this question. We make it quite clear that, as far as Mr. A. K. Sen is concerned, if he had known that such a return had been filed, we have no doubt whatsoever that he would have invited oar attention. If he was not given instruction by his professional or lay clients, no inference should be drawn from the absence of such instruction. It cannot be denied that both parties are at loggerheads. They are engaged in disputes and fights in regard to the company. It should be observed that the company after having filed the return should have given instruction to counsel that such a return had been filed. Not that anything turns on the filing of the return but parties are expected to show the utmost candour in the administration of justice.

34. In the facts and circumstances of this case and for the reasons given above, I am of opinion that the plantiff has made the prima facie case which entitles the plaintiffs to an interim injunction.

35. There will, therefore, be an interim order in terms of prayer (g). The only modification will be that Ram Autar Jalan will be at liberty to operate the bank accounts in terms of the order dated 27th June, 1966, inasmuch as the order gives authority to the special officer to sign counterfoils as well as to sign vouchers. It may be stated even at the risk of repetition that Mr. A.K. Sen stated that his client would see that Bhag-wati Debi Goenka was co-opted as a director to see that the affairs of the G. L. Group would not be put to any difficulty. This order of injunction will not prevent Ram Autar Jalan from acting as agent or authorised attorney of Bhagwati Debi Goenka if she wants to appoint Ram Autar Jalan as an agent or authorised attorney on her behalf. This suit should be heard as quickly as possible and all parties should take steps to bring the suit to hearing.

36. The records produced from the office of the Registrar of Companies be now returned.

37. Costs of the appeal will be costs in the suit.

S.K. Mukherjea, J.

38. I agree.


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