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Hanuman Prosad Verma and ors. Vs. Stock and Finance Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Petition No. 323 of 1975
Judge
Reported in1983(1)CHN25,[1985]58CompCas338(Cal)
ActsCompanies Act, 1956 - Sections 314, 397, 398 and 406; ;Companies Rules - Rule 11, 11(18) and 11(19)
AppellantHanuman Prosad Verma and ors.
RespondentStock and Finance Ltd. and ors.
Appellant AdvocateS.B. Mukherjee, Adv.
Respondent AdvocateSomnath Chatterjee, Adv.
DispositionApplication dismissed
Cases ReferredColaba Land and Mill Co. Ltd. v. Vasant Investment Corporation Ltd.
Excerpt:
- padma khastgir, j.1. this application has been taken out by hanuman prosad verma, shyam chandra ghosh and upendra charan pal against the company, m/s. stock & finance ltd. and others, for various reliefs in the nature of directions on the special officer to prepare a correct list of members and upon approval of the said list, the special officer be authorised to issue share certificates to members who have not received the same, a direction upon the special officer to assess in respect of each of the directors of the amount of remuneration drawn by them in violation of section 314 of the companies act and upon such determination, necessary orders be passed directing each of the directors to refund to the company the amounts received by them in violation of the provisions of the companies.....
Judgment:

Padma Khastgir, J.

1. This application has been taken out by Hanuman Prosad Verma, Shyam Chandra Ghosh and Upendra Charan Pal against the company, M/s. Stock & Finance Ltd. and others, for various reliefs in the nature of directions on the special officer to prepare a correct list of members and upon approval of the said list, the special officer be authorised to issue share certificates to members who have not received the same, a direction upon the special officer to assess in respect of each of the directors of the amount of remuneration drawn by them in violation of Section 314 of the Companies Act and upon such determination, necessary orders be passed directing each of the directors to refund to the company the amounts received by them in violation of the provisions of the Companies Act, 1956, a direction upon the special officer to calculate the amounts taken by H.C. Mitra, P.C. Mitra, A. Mitra and Tarun K. Mukherjee either individually or jointly by different methods without proper accounting or supporting documents including cash shortages detected in the cash book, direction upon the special officer to calculate the rent received from the company by Sri H.C. Mitra, and also for a declaration that H.C. Mitra, P.C. Mitra, A. Mitra, Tarun K. Mukherjee have conducted either individually or jointly the affairs of the company with the intent to defraud and/ or deceive the other members, creditors and public at large and have falsified books and have altered records to avoid liabilities and/or punishments, enquiry as to non-maintenance of the statutory books, enquiry as to the damages suffered by the company on account of various acts of misfeasance committed by H.C. Mitra, P.C. Mitra and Tarun K. Mukherjee and for other consequential reliefs. This application has been taken out in the matter of Company Petition No. 323 of 1975.

2. Mr. S.B. Mukherjee appeared in support of this application and submitted this application as arising out of the said company petition being No, 323 of 1975, which was taken out on September 20, 1975, under Sections 397, 398, 399, 403 and 406 of the Companies Act for various reliefs. On the said application, various orders were passed from time to time and, finally, an order was passed by Mr. Justice Salil K, Roy Chowdhury on March I, 1977. Against the judgment and order of the learned trial court, an appeal was preferred on May 7, 1979, and the appeal was disposed of by the learned appeal court presided over by Mr. Justice A, N. Sen and Mr. Justice B. C. Basak. The order passed both by the trial court as also by the appeal court have been annexed to the petition.

3. Under Clause 15 of the appeal court's order, liberty was given to the special officer and all parties to apply to court for appropriate direction and it was further directed in the said order that such application for any direction, whether oral or written, must be made before the learned company judge. As Mr. Bimalesh Roy Chowdhury, a chartered accountant, was appointed as the special officer, the learned company judge, being known to the said Mr. Roy Chowdhury, did not take up the present application and it was specially assigned to this court for determination of the said application. The main point of opposition in the application is that the said company petition under Sections 397 and 398 being disposed of by the appeal court, there is no lis pending in which the present application could be made. It has been submitted that Schedule II to the Companies Act could apply only in a case where an application had been taken out in the course of proceedings of such petition. Under the circumstances, the application under Sections 397 and 398 being finally disposed of by the learned appeal court, there is no proceedings under Sections 397 and 398 in which the present application could be made. It has been submitted by the respondents that not only a novel procedure has been adopted by the petitioner but also in fact the petitioners had lost their case under Section 397 as also Section 398 proceedings, by hot being able to obtain any order in their favour. On the contrary, after having taken part in the election directed to be held by the appeal court in which not only all the applicants participated in the said meeting but some of the parties allowed themselves to be held as the candidates for such election and after having lost at such meeting held by the special officer pursuant to the order of the appeal court, by an overwhelming majority, they have frantically come before this court for getting reliefs on an application which is not maintainable in law. Under the Companies (Court) Rules, 1959, Rule 1l(a), Sub-rule (18) and (19), all such petitions could be made in the course of the proceedings taken under Sections 397 and 398 of the Companies Act.

4. Mr. Somnath Chatterjee opposed this application with Mr. P.C. Sen and Mr. Dipak Basu. He submitted that, on merits, the reliefs that have been prayed for are declaratory in nature and also in effect the applicants are seeking that this court should delegate its powers of investigation to a special officer. Moreover, by granting the reliefs, this court would take punitive actions against the respondents in a summary manner without affording them an opportunity of meeting the charges levelled against them Moreover, all the reliefs that have been prayed for in this petition are based on the report prepared by the special officer, Sri Bhimalesh Roy Chowdhury. In some of the findings, the special officer had remarked that in the absence of books of account and other relevant documents, it was not possible for him to come to any final finding. Under the circumstances, it would be extremely unsafe and hard on the respondents if this court directs such an enquiry to be made as prayed for on a report which is not conclusive in nature. Under these circumstances, the respondents prayed that this application should be dismissed with costs not only on the ground that such application is not maintainable in law but also on merits.

5. Under Rule 11(a), Sub-rule (18), application for a declaration under Section 542 (Schedule XI) can be made in the course of proceedings under Section 397 or Section 398 and that a person who was knowingly a party to the carrying on of business in a fraudulent manner shall be personally liable for all or any of the debts or other liabilities of the company. According to Mr. S. B. Mukherjee, the present application has been taken out under the said rule; hence declaration as prayed for could also be granted on an application. Section 406 of the Companies Act provides that in relation to an application under Section 397 or Section 398, Sections 539 to 544, both inclusive, shall apply in the form set forth in Schedule XI. The provisions of Sections 539 to 544 deal with offences by officers of the company after winding up, involving penalties for falsification of books, for frauds committed by the officers, for failure to keep proper accounts and for fraudulent conduct of business and of the power of court to assess damages against such delinquent directors, etc. The same provisions are, by Schedule XI, made applicable to cases where, without any proceedings being taken for winding up, proceedings are taken under Section 397 or Section 398 for relief against an oppression or mismanagement. As regards the procedure to be adopted in respect of applications, those are specified in Schedule XI, the Companies (Court) Rules, 1959, Rule 11(a), more particularly, Sub-rules (18) and (19). The question that has arisen in this proceeding is whether after the termination of the proceedings under Section 397 or Section 398, whether any subsequent application could be made in the same matter under Section 397 or Section 398 for further reliefs. It is the definite case of the respondents that the proceedings started under Section 397 and Section 398 in the year 1975 before Salil K. Roy Chowdhury J. had terminated with the order passed by the learned appeal court as indicated earlier. No reservation has been made in the said order for any future action as it is done in mest of the cases whereunder the matter is kept pending for some time to enable the parties to exhaust their remedies in respect of the said Section 397 an4 s, 398 proceedings. In the instant case, no such reservation was made. On the contrary, the aggrieved persons participated in the election held by the special officer pursuant to the order of the court and being defeated at such election, they have come up again to agitate on some points which were before the learned appeal court, but no order was passed in their favour. As for instance, there was a prayer before the learned appeal court for preparation of a fresh list of shareholders by the special officer and there were similar allegations before the learned appeal court and the learned appeal court chose not to grant any order in their favour. Hence, the respondents have termed this proceeding as a ' second round of fight' over the same cause of action. It is the submission of Mr. Mukherjee that the use of the word ' in relation to' appearing under Section 406 indicates that any application could be taken out in relation to a proceeding under Section 397 or Section 398. Moreover, the use of the word 'in relation to' in an application indicates that subsequent applications could be taken out in relation to any matter arising out of Section 397 or Section 398 proceedings, and this application is definitely in relation to such proceedings under Sections 397 and Section 398 as necessary directions had been sought for in view of the report submitted by Mr. Roy Chowdhury, the special officer appointed under the order of the learned appeal court. Whereas it is the case of the respondents that in view of the provisions of Rule 11(a) of the Companies (Court) Rules, 1959, Sub-rules (18) and (19) indicate that such application for any declaration under Schedule XI could be taken in the course of proceedings under Section 397 or Section 398. In view of the said proceedings under Sections 397 and 398 having come to an end, there is no 'lis' pending in the course of which the present application could have been taken out.

6. Although in the learned appeal court's order it has been mentioned that the parties would have liberty to apply, yet such liberty did not entitle the petitioners to take such proceedings afresh. The expression 'liberty to apply' has been interpreted in the case reported in Cristel v. Cristel [1951] 2 All ER 574 (CA) as to apply for direction for the purpose of clearly working out the order passed. In the learned appeal court's order, although a direction had been given to apply for direction, such could not be construed to mean that liberty had been given to reopen the case all over again on all the points which were before the learned appeal court or to obtain orders which are punitive in effect summarily. The other shareholders of the company have no grievance except those who had been defeated by a majority of votes of the shareholders. Hence, the petitioners cannot take advantage of the liberty given by the learnedappeal court in the said order.

7. In the case of Colaba Land and Mill Go. Lid. V. Vasant Investment Corporation Ltd., : AIR1964Guj107 , it has been held that the application for compensation under Section 543 on the basis of misfeasance or misapplication must be preceded by appearance of evidence on record of a petition :under Section 397 or Section 398, and in the course of the proceedings therein. It is neeessary that at least some materials, therefore, must appear in the course of proceedings under Sections 397 and 398, According to this decision, proceedings under Section 543 should be by independent and fresh application (headnote):

'Prima facie, the enquiry under Section 398 has no connection with theenquiry under Section 543 (Schedule XI) at least in so far as the enquiry under the latter section is to be directed against the promoters and past officers of the company. But, at the same time, it cannot be said that there is a complete divorce between the objects of Section 397 and/or Section 398 on the one hand and those of Section 543 (Schedule XI) on the other.

Section 543 has been designed with a view to provide a summaryremedy to the creditors and shareholders of a company which enables themto obtain and order for compelling the delinquent officers of the company tocontribute towards the funds and assets of the company which they haveillegally obtained during the course of their management or Which havebeen lost as a result of such management. Under the general law of theland, a right to resort to such summary procedure is not given to anycreditor or shareholder of the company whilst the company is in existenceThat right is not an absolute or untrammelled right. The right is circtimscribed or limited by the conditions mentioned in Section 543 (Schedule XI) and oneof the conditions mentioned is that, before an application for examinationof the person concerned and an order for compensation are made againsthim, prima facie evidence must appear against such concerned person in thecourse of a proceeding under Section 397 or Section 398. Therefore, a proceedingunder Section 543 (Schedule XI) is an emanation from a proceeding under Section 397 or Section 398. All that an applicant under Section 543 (Schedule XI) has to satisfy whenpresenting an application under it is that a case for misfeasance has cometo light in the course of a petition under Section 397 or Section 398.

In order to make an application under Section 543 (Schedule XI), it is not necessary that a proceeding under Section 397 or Section 398 should be subsisting. A peetitionunder Section 398 need not be dismissed outright. Once a petition is broughton the file of a court, it is entirely discretionary with the court as to whenthe proceeding therein should terminate....

Thus a fresh application is necessary for starting proceedings under Section 543 (Schedule XI). Petitions under Section 397 or Section 398 and Section 543 (Schedule XI) cannot be combined together or simultaneously made. The petition under the latter section must follow after a prima facie case has come to light in the course of the proceedings under the former sections. A court dealing with a petition under Section 397 or Section 398 has nothing to do with the launching of proceedings under Section 543 (Schedule XI), but that it is a matter which is entirely within the scope of the right of a creditor or a member. The application under Section 543 (Schedule XI) must be by an independent application.'

8. In the case of Life Insurance Corporation of India v. Hari Das Mundhra [1966] 36 Comp Cas 371, 375 (All), it was held that in a particular case the board of directors was guilty of misconduct and one of the directors was liable to pay compensation to the Corporation to the tune of Rs. 6,65,592 under Section 543 read with (Schedule XI). It was further held that in the proceedings under Sections 389 and 399, it is open to the court to order a director to pay compensation under Section 543 read with (Schedule XI) although there is no separate application under Section 543. When the said judgment was given by the Gujarat High Court in Colaba Land & Mill Co. Ltd. v. Vasant Investment Corportation Ltd., : AIR1964Guj107 , the rules framed by the Supreme Court under the Companies Act did not come into existence. Rule 11 mentions applications which are to be made by petition and amongst these applications is included in Clause 19 an application under Section 543 (Schedule XI) in the course of proceedings under Sections 397 and 398 of the Act. It was observed in the said judgment that the application before the learned judge was not in accordance with the present rules framed under the Companies Act as these rules were not in existence, circumscribing the procedure that was to be adopted by the applicant. The learned judge observed that an application under Section 543 (Schedule XI) must be made after the petition under Section 397 or Section 398 was filed cannot be supported in view of the rules that have been framed thereunder. Moreover, from the said case, it would not appear whether the said proceedings under Sections 397 and 398 came to an end or they were pending at the time when an application was taken out under Section 543. The main dispute that arose in that case is as to whether an application under Sections 397 and 398 as also an application under Section 543 should be made simultaneously combining the said applications together or an application under Section 543 could only be taken after a prima facie case has come to light in the course of the proceedings under Sections 397 and 398. The learned judge was of the view that Section 543 should be an independent petition and could only be taken as a sub-application under the main petition under Section 397 or Section 398 as, according to the learned judge, a court dealing with a petition under Section 397 or Section 398 has nothing to do with the launching of proceedings under Section 543 (Schedule XI) as, according to the learned judge, it is a matter entirely within the scope of the right of a creditor or a member. Hence, the learned judge held that an application under Section 543 must be by an independent application but there is no finding in the said judgment that such an independent application could be made even after the proceedings under Section 397 or Section 398 has come to an end. The rule provides that such application be taken in the course of the proceedings under Section 397 or Section 398 under Sub-rule (19) in Rule 11. In fact, the main application in that particular case was adjourned for a period of three months within which period either the petitioner company or any other person interested in the matter could take such steps as are necessary in regard to the acts of misfeasance alleged to have been committed by the respondents and the matter was adjourned for final orders after three months. Under the circumstances, it appears that the main petition under Sections 397 and 398 was kept pending by the learned judge to enable the aggrieved party to take out necessary application in the course of such proceedings.

9. The provisions of Schedule XI and Sections 539 to 544 could be availed of in the course of proceedings under Sections 397 and 398. Even Section 406 of the Companies Act provides that in relation to Sections 397 and 398, Sections 539 to 544, both inclusive, shall apply in the form set forth in Schedule XI. The provision of Sections 539 to 544 have been set out under Schedule XI. Even the Companies (Court) Rules, 1959, Rule 11(a), Sub-rules (18) and (19), provide for an application for a declaration under Section 542 (Schedule XI) in the course of proceedings under Section 397 or Section 398. Similarly, under Sub-rule (19) application by a creditor or member under Section 543 (Schedule XI) shall be made in the course of proceedings under Section 397 or Section 398. To take advantage of Schedule XI, the rules framed under the Companies Act will have to be adhered to. Under the circumstances, the procedures laid down under the Companies Act and the Companies (Court) Rules, 1959, must be followed and the petitioner cannot adopt a procedure which is not yet known to law. The expression 'emanate from 'is not the language used under the statute and/or the rules framed thereunder. Hence, it is not in consonance with the language used in the statute and the rules framed thereunder which provides that the applications could be taken out in the course of Section 397 or Section 398 proceedings or in relation to or in respect of such proceedings. Under these circumstances, it appears that the present application is not maintainable as proceedings under Sections 397 and 398 have come to an end which had not been kept pending by the learned appeal court for the purpose of getting necessary reliefs upon the report filed by the special officer. Besides that, on merits, the various directions that have been sought for in the petition are severe in nature as the consequences of such finding would be punitive in nature. Under the circumstances, it would not be proper to pass any order summarily with regard thereto.

10. It is well settled that the rules made by the Supreme Court under the Companies Act have statutory force. Under these circumstances; various sections given in the Companies Act and the rules framed thereunder have to be given a harmonious construction. It appears that under the provisions as contained in Section 406 read with Rule 11, Sub-rules (18) and (19), an application under Schedule XI could only be made in the course of proceedings under Section 397 or Section 398 of the Companies Act. It has to be in relation to an application under Section 397 or Section 398. Most of the cases cited by Mr. S. B. Mukherjee support the principle that a comprehensive application could be made under Sections 397 and 398 and 543. Under the circumstances a combined application under Sections 397 and 398 along with Schedule XI is maintainable. The instant application is not in conformity with the ruled framed under the Companies Act. Some of the reliefs asked for in the application are beyond the scope of Schedule XI. Under the circumstances, no order could be passed in accordance with these prayers. In the body of the petition, various charges made against the respondent are vague and are of general nature. Hence, passing of order in a surtunary manner would definitely work as a hardship against the persons against whom various allegations have been made. Even in misfeasance proceedings, charges are specifically framed with particulars, so that the persons charge ed with the same have a fair opportunity of dealing with the same. Their points of claim supported by summons give the full particulars of the claim and the alleged delinquent officer is given an ample opportunity of filing their point of defence and dealing with the same which is followed by a direction for discovery of document as also inspection of the same and after issues are framed, the person initiating the proceedings has to discharge the onus of proving the acts of misfeasance and the delinquent officer has an opportunity not only to meet the same by adducing proper evidence both oral and documentary but also get a chance of cross-examining the witness. Under the circumstances, the misfeasance proceedings are more or less in the nature of a suit. Applying the same principle, in the instant case, it appears that the petitioners are trying to get reliefs which they are, not entitled to under the law summarily in an application.

11. Although Mr. Mukherjee submitted that in order to invoke the jurisdiction of the court under Sections 397 and 398, certain minimum share qualifications are required as provided in Section 399, such limitation is not there under Schedule XI as Schedule XI (Section 543), as amended, provides that any creditor or member of a company may apply. According to Mr. Mukherjee, the only limitation in invoking the court's jurisdiction under Sections 539 to 543, as amended, in Schedule XI, seems to be that proceeding under sections included in Schedule XI must ' emanate ' from a proceeding under Section 397 or Section 398; But such expression 'emanate from' has been borrowed by, Mr. Mukherjee from the single Bench decision of the Gujarat High Court in the case of Colaba Land and Mill Co. Ltd. v. Vasant Invsstmsnt 'Corporation Ltd., : AIR1964Guj107 , where it was held that an application under Schedule XI has to be an independent application not depending on, any prima facie finding of any misfeasance if an application under Section 397 or Section 398 were, adjourned for the, purpose of enabling the parities to make a 9omprehensive application under Section 543. Similarly, in the case , of Colaba Land and Mills Co. Ltd. v. V.J. Pilani [1971] 41 Comp Cas 1078 (Guj), a comprehensive application was filed by the cojnpany in accordance with the direction as given in the case of Colaba Land and Mill Co. Ltd. y, Vasant Investment Corporation Ltd., : AIR1964Guj107 , where it was held that it was not necessary for the purpose of taking out an application under Schedule XI, that Section 397 or Section 398 proceedings should be subsisting. However, it appears that such observation is by way of obiter dictum , as in the case in Colaba Land and Mill Co. Ltd. v. Vasant Investment Corporation Ltd., : AIR1964Guj107 . In fact, an application under Section 397 or Section 398 was kept pending to enable the partiesto take proper steps. However, such observation is not in consonance withthe language used either in Section 406 or in Rule 11(a), Sub-rules (18) and (19), ofthe Companies (Court) Rules. As indicated earlier, by a proper construction of the said section as also the rules, it appears that such applicationcould be made, ' in the course of proceedings ' or 'in relation to' anapplication under Section 397 or Section 398.. It is undoubtedly true that this application is one arising in respect of the-proceedings under Sections 397 and 398 beingCompany Petition No. 333 of 1975 and Appeal No. 73 of 1977 inasmuch asthe petitioner has sought the relief on the report filed by the special officerand in consequence thereof have prayed for the reliefs to be granted infavour of the petitioners in view of the various, findings of the special officer.But the fact remains that the said Company Petition No. 323 of 1975 hascome to an end after the final order was passed by the appeal court inAppeal No. 73 of 1977 and there is no 'lis' pending in the course of whichor in relation to which the present application could be taken out.

12. Mr. Mukherjee relied one the case of Cosmosteels P. Ltd. v. Jairam Das Gupta : [1978]2SCR422 , and submitted that the scheme of Sections 397 and 406, constitutes a court by itself by, granting relief to the oppressed minority shareholders and for granting, appropriate relief, a power of widest amplitude, inter alia, lifting the ban on company purchasing its shares under the court's direction is conferred on the court. It is true that the powers of the court is of the widest amplitude in a proceeding under Section 397 for providing relief to the oppressed minority. Here, in the instant case, in the application under Section 337, necessary orders were passed by the judge in charge of company matters which were ultimately disposed of by the learned appeal court. There is no case pending under Section 397 or Section 398.' The present application does not lie as it is not in relation to or in the course of proceedings under Section 397 or Section 398. Under the circumstances, I am of the view that this application is not maintainable.

13. In the case of fBennet Coleman and Co. v. Union of India, [1977] 47 Comp Cas 92 (Bom) it has been held that (headnote at p. 96):

' That Chapter II of the Act, which includes Section 255, deals with corporate management of a company through directors in normal circumstances, while Chapter VI, which contains Sections 397, 398 and 402, deals with emergent situations or extraordinary circumstances where the normal corporate management has failed and has run into oppression or mismanagement and steps are required to be taken to prevent oppression and/or mismanagement in the conduct of the affairs of the company. In the context of this scheme having regard to the object that is sought to be achieved by Sections 397 and 398 read with s, 402, the powers of the court thereunder cannot be read as subject to the provisions contained in the other chapters which deal with normal corporate management of a company. Further, an analysis of the sections contained in Chapter VI of the Act will also indicate that the powers of the court under Section 397 or Section 398 read with Section 402 cannot be read as being subject to the other provisions contained in sections dealing with usual corporate management of the company in normal circumstances. The topic or subjects dealt with by Sections 397 and 398 are such that it becomes impossible to read any such restriction or limitation on the powers of the court acting under Section 402....

It will all depend, on the facts and circumstances of each case, as to how, in what manner and to what extent the court should allow the voice of the shareholders directors on the board of directors to prevail over that of the other directors and the court's powers in that behalf could not in any manner be curbed. Therefore, the position is clear that while acting under Section 398 read with Section 402 of the Companies Act, the court has ample jurisdiction and very wide powers to pass such orders and give such directions as it thinks fit to achieve the object and there would be no limitation or restriction on such power that the same should be exercised subject to the other provisions of the Act dealing with normal corporate management or that such orders and directions should be in accordance with such provisions of the Act.'

14. But, in the present proceedings, the question of the court's jurisdiction to grant necessary relief under Section 397 or Section 398 or Section 402 is not under consideration. The only point that needs consideration is whether after termination of such proceedings, an independent application could be taken out which is not arising in the course of such proceedings under Section 397 or Section 398. As discussed earlier, I am of the view, that such an independent proceeding after termination of Section 397 or Section 398 proceedings and over the same points agitated before the appeal court, no such proceeding under Section 397 or Section 398 is not maintainable. However, this would not prevent the rights of the petitioners to file a suit for proper redress.

15. In the case Sheth Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd. : (1964)0GLR804 , Justice P. N. Bhagwati, as he then was, dealt with the powers given to court under Sections 397 and 398 and held that these sections should receive a liberal interpretation and the court should give such construction as will advance the remedy, that is to suppress an acknowledged mischief and applying the principles of interpretation, the learned judge held, the widest power may be inferred for the court to interfere in the internal management of the company with a view to put an end to oppression or mismanagement on the part of the controlling shareholders so as to advance the remedy and suppress the mischief. The main contention before the learned judge was whether such power could be inferred to set aside or interfere with the past and concluded transactions between a company and third parties which are no longer continuing wrongs. The various powers of the court have been considered under Section 406 read with Section 543 as set forth under Schedule XI in an application under Section 397 or Section 398 to bring to book the delinquent directors, managing agents, secretaries and treasurers, managers and other officers of the company and to enforce the companys' claim against them if they have misapplied or retained or became liable or accountable for any money or property of the company or committed any misfeasance or breach of trust but these powers would be exercised in an application under Section 397 or s, 398 at the instance of the aggrieved shareholders. The point for consideration in the instant case is not whether such powers could be exercised in an application under Section 397 or Section 398 which would require a liberal construction. But, in the instant case, in view of the fact that Section 397 or Section 598 proceedings having come to an end culminating with the order passed by the learned Appellate Bench, whether it is possible for the petitioner to re-agitate the same in an independent application not arising in relation to or in the course of such proceedings.

16. In the case reported in Colaba Land and Mill Co. Ltd. v. Vasant Investment Corporation Ltd., : AIR1964Guj107 , it has further been observed that the discretion vested in the court must be exercised on sound judicial principles and having regard to the scheme of the Act and the rules, in an application under Section 543 (Schedule XI) the court will not be justified in liberally departing from the procedure laid down by the rules unless there are very strong and cogent grounds in support of any such procedure.

17. Under the circumstance, in the peculiar facts and circumstances of this case-and on merits, I am of the view that the petitioners are not entitled to any order. Hence, this application is dismissed with costs. All interim orders stand vacated.


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