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2003 Supreme(Kar) 179

Karnataka High Court
Ennen Castings (P) Ltd. - Appellant
Versus
M.M.Sundaresh - Respondent
Decided On : 02-20-03
COMPANY APPLICATION : 423 of 1998

Advocates:
A.Murali, DIPAK A.MASIH, H.B.NARAYAN, K.S.Chandrahasa

Headnote:Cross examination of co-respondent

       Section 543 - Sections 159, 161, 162 & 611 -Annual General Body Meeting held on 30/9/2000 -Annual Return submitted on 18/1/2002 -Registrar accepting it after levying additional fee -Does the additional fee exonerate the defaulting company from any other civil or criminal liability? No.

       [Mohan Shantanagoudar, J.] - Where there is belated filing of the Returns and where there is provision to collect "additional fees" and levy fine also for such default, the payment of such additional fee does not exonerate the defaulter from prosecution for the default. As could be seen from the scheme of the Companies Act, it provides penalty for default in filing the documents and returns required by various provisions of the Act. Such default is also a continuing offence for which there is a penalty for every day during which the default continues.

       (INDIAN) COMPANIES ACT, 1956 - Cross examination of co-respondent

       Section 543(1) and Company Court Rules, 1959 -Rules 6 & 9 -Cross-examination of the Co-respondents -Company in liquidation - Company making claim from its Directors -proceedings before the Commissioner- manipulation of accounts by some of the respondents alleged in detriment to the interests of the respondents who sought permission -cross-examination of co-respondents -when to be permitted -stated -whether the allegation made amount to conflict of interests? Yes.

       [N. Kumar, J.] - No evidence should be received against one who had no opportunity of testing it by cross examination; as it would be unjust and unsafe not to allow a co-accused or co-defendant to cross-examine a witness called by one whose case was adverse to him, or who has given evidence against. If there is no conflict of interest, such an opportunity need not be given.

S. N. KUMAR, J.

( 1 ) C. A. No. 423/1998 is filed under Section 543 (1) of the Companies Act, 1956 for a direction to the respondents who are all the Directors of the Company under liquidation to pay the Company a sum of Rs. 6,88,311. 80 along with interest.

( 2 ) THE respondents have filed their statement of objections denying the liability. Thereafter the matter was referred to the Commissioner to record the evidence. Accordingly, the Commissioner recorded the evidence of the Official Liquidator and thereafter the case was set down for the evidence of the respondents. Sri. M. M. Sundaresh, the first respondent in C. A. No. 423/1998 was examined on 21-1-2003. Respondents 7 and 6 requested the Commissioner to permit them to cross-examine the said M. M. Sundaresh and also requested for cross-examination of respondents 4 and 5 in the event of they being examined. The said request of the respondents 7 and 6 was opposed by respondents 1, 4, and 5 contending that a co-respondent has no right to cross-examine the other respondent. Under those circumstances, the Commissioner called upon the respondents 7 and 6 to approach this Court and get the necessary permission to cross-examine. Accordingly, respondents 7 and 6 have filed an application in C. A. No. 110/2003 seeking permission to cross-examine RW1 and other respondents if they are examined in C. A. No. 423/1998.

( 3 ) IN the application it is contended by the applicants that soon after their retirement as Directors of the Company, the Company was taken over by respondents 1, 4 and 5 who are all the members of the same family and after taking over the Company, they have manipulated the accounts of the Company to the detriment of respondents 7 and 6. Therefore, it was contended that the interest of respondents 7 and 6 is in direct conflict with respondents 1, 4 and 5 in these proceedings, as they have made false allegations which would affect the interest of respondents 7 and 6. In the enquiry they should have the liberty to cross-examine the respondents 1, 4 and 5 to expose the falsity of the statement and to place the truth before the Court.

( 4 ) THE application is opposed by respondents 1, 4 and 5. The sum and substance of their objection is that one co-respondent cannot be permitted to cross-examine the other respondent and of course they have denied all the allegations made by the respondents 7 and 6 in the application.

( 5 ) LEARNED counsel appearing for the respondents 6 and 7 submits that when respondent No. 1 has given the evidence accusing the respondents 7 and 6 and that evidence is against the interest of respondents 7 and 6, they have a right to cross-examine them not withstanding the fact that they have been arrayed as respondents in the proceedings.

( 6 ) PER contra, the learned counsel appearing for respondents 1, 4 and 5 contends that in law a co-respondent has no such right.

( 7 ) THEREFORE the short question that arises for my consideration is whether a co-respondent can cross-examine the other respondent, who has given evidence against him.

( 8 ) THE essence of cross-examination is that it is the interrogation by the Advocate of one party of a witness called by his adversary with the object either to obtain from such witness admissions favourable to his cause or to discredit him. Cross-examination is the most effective of all means for extracting truth and exposing falsehood. The object is to impeach the accuracy, credibility and general value of the evidence given in chief to sift the facts already stated by the witness to detect and expose discrepancies or to elicit suppressed facts which will support the case of the cross-examination party. The exercise of his right is justly regarded as one of the most efficacious tests, which the law has devised for the discovery of truth. It is beyond any doubt the greatest legal engine ever invented for the discovery of truth. The right of cross-examination belongs to an adverse party and parties who do not hold that posi














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