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1998 Supreme(Kar) 704

Karnataka High Court
DEVARAJ DHANRAM - Appellant
Versus
FIREBRICKS - Respondent
Decided On : 11-09-98
COMPANY PETITION : 77 of 1989

Advocates:
K.G.RAGHAVAN, P.B.Appaiah, UDAYA HOLLA

The court emphasized the need to consider substantial developments subsequent to the original filing and allowed the incorporation of additional material in a new petition, rather than attempting to amend the existing petition.

Headnote:

Withdrawal of Company Petition - Legal Controversy - Companies Act, Section 402, Order 23 Rule 1 - The court discussed the right to withdraw a proceeding and the implications of reinstituting it, considering the developments subsequent to the original filing. The court also considered the provisions of Section 402 of the Companies Act and Order 23 Rule 1 of the CPC, allowing for corrective action within existing proceedings.

Fact of the Case:

An application was filed for permission to withdraw a company petition with liberty to reinstitute it due to substantial developments subsequent to the original filing.

Finding of the Court:

The court found that the substantial developments warranted the incorporation of additional material in the form of a fresh petition, as attempting to amend the existing petition would overload and overhaul it to an impermissible extent.

Issues: The main issue was whether the application to withdraw the petition with liberty to reinstitute it should be allowed, considering the substantial developments subsequent to the original filing.

Ratio Decidendi: The court held that the substantial developments warranted the grant of liberty to incorporate the material in a new petition, imposing a deadline for refiling to address the prolonged litigation.

Final Decision: The application to withdraw the company petition with liberty to reinstitute it was allowed, with a deadline for refiling, failing which the original petition would be treated as dismissed. No costs were awarded.

M. F. SALDANHA, J.

( 1 ) A seemingly innocuous application filed in Company Petition No. 77 of 1989 for permission to withdraw the petition with liberty to reinstitute it has generated a legal controversy of considerable importance. At first blush, it would seem that a litigant has the unfettered right to withdraw a proceeding and if the law permits reinstitution in the same or some other form provided the exercise is not vitiated by mala fides but the reason why the dispute has snowballed is because of the fact that some of the Courts have taken the view that if a Company Petition of this type is withdrawn that there would be a bar to incorporating the grounds or material from the petition that has been withdrawn in a subsequent proceeding which may be maintainable on additional grounds. The learned Counsels who represent the applicant have pointed out to me that it is out of abundant caution that the liberty of this Court has been sought and briefly stated, the reasons stated by them are that the petition in question was instituted in the year 1989 and that it has so far not been disposed off on merits. According to the applicants, there have been a host of developments over the years and they contend that it is very essential that all this additional material be incorporated in the form of a fresh petition. According to them, it would be very necessary to present a new petition and it is not either desirable or permissible to seek to graft on all the additional data to the existing proceeding and that this is the reason why the leave has been sought.

( 2 ) MR. Raghavan, learned Counsel who represents the respondents has vehemently opposed the grant of any such liberty and he made it very clear to the Court that he is not raising the objection merely for the sake of opposing but that there is a very valid reason for this opposition. He states that it is rather unfortunate that the petitioner in the main company Petition has fallen out with those who are managing the company and that this hostility has crystallized into litigation which has its own fall out and aftermath. Learned Counsel submitted that as the present case will demonstrate, it was instituted in 1989 and has not been disposed off till 1998 and he submits that if the party is permitted to recommence the proceedings either at this stage or at a future point of time that it would amount to endless harassment of his clients and that this is the main ground on which he is opposing the grant of leave. I see considerable substance in this argument because, quite apart from the facts of the present case the Courts do come across a litigation being used for purposes of either settling scores or some other oblique reason and the party who is required to contest or defend that litigation is undoubtedly subjected to all sorts of harassment, expenditure and even embarassment. Also, having regard to the fact that these litigations drag on almost interminably, there is good ground for a party who is at the receiving end to insist on a degree of finality in litigation and opposing any attempt at elongation. There is a class of litigations that is undoubtedly vexatious and the Supreme Court has had occasion to categorise such litigation as "fake litigation". Courts do come across situations wherein parties start litigations and when they reach the stage of final hearing or disposal, adopt measures that are fully within the framework of the law to redirect that litigation into another one or to another forum or to turn it around and recommence it with the sole object of subjecting the opposite party to interminable turmoil. It is therefore extremely important that when applications of this type are made that the Court must adopt a very circumspect and judicious approach and that liberty is not to be mechanically granted. There may be genuine and valid reasons where the Court may decide to make an exception but by and large, the Courts must normally adopt the principle that one ap








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