Agarwal Industries Ltd. vs Golden Oil Industries (P) Ltd

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1999 Supreme(Bom) 274

IN THE HIGH COURT OF BOMBAY
S.S. Nijjar, J.
Agarwal Industries Ltd...... Petitioners.
Versus
Golden Oil Industries (P) Ltd. ..... Respondents.
Company Application Lodg. No. 246 of 1999 in Company Petition Lodg. No. 305 of 1999, decided on 8-4-1999.
Advocates appeared :
V.M. Kanade, for the petitioners.
J.R. Chinai with Vijay Kumar with Lalit Jain i/b Zohair Co., for the respondents.

Headnote:Order XXXIX, Rule 1-Companies Act, 1956, Sections 433 and 434 -Grant of injunction-Petition for winding up-Petitioner suppressing material facts and making deliberate misstatements-Held both petition and application for injunction deserve to be dismissed. - That non-mention of the summary suit has happened inadvertently and there was no intention to suppress any fact from the Court. Thus, the deponent tenders unconditional apology. It is stated that by not stating the fact, the deponent could not have gained anything. This statement clearly shows that the deponent has scant regard for the sanctity of proceedings. In the Court although the deponent says that an unconditional apology is tendered, yet the affidavit is full of justification for making deliberate misstatements and suppression of material facts. In such circumstances, it is not possible to accept the prayer made by the deponent for withdrawal of the petition. The application and the petition must meet their natural fate that is dismissal. It is established that the ad interim order was made relying on material misstatement of the deponent. Therefore, in my view, both the petition as well as the application deserves to be dismissed.
Sections 433 and 434-Petition praying for winding up of company as it was unable to pay debts-Duty of party asking for injunction to bring to the notice of the Court all facts relevant and material to the issue-Ex parte order obtained without disclosing relevant facts-Dishonest litigant loses his remedy when discretionary relief is obtained by misrepresentation-Facts must not be stated in a manner to mislead the Court as to true facts-Deliberate m/s-statements and suppression of material fads-Company petition dismissed and interim order vacated.
Sections 433, 434-Petition under, for winding up of respondent company as unable to pay its debts-Ex parte interim relief granted-Facts suppressed and Court misled by petitioner-Deliberate mis-statement made in affidavit-Held, petition dismissed.-Inspite of giving this explanation for withdrawing the petition, it is stated in paragraph 4 that non mention of the summary suit has happened inadvertently and there was no intention to suppress any fact from the Court. Thus, the deponent tenders unconditional apology. It is stated that by not stating the fact, the deponent could not have gained anything. This statement clearly shows that the deponent has scant regard for the sanctity of proceedings in the Court. Although the deponent says that an unconditional apology is tendered yet the affidavit is full of justification for making deliberate mis-statements and suppression of material facts. In such circumstances, it is not possible to accept the prayer made by the deponent for withdrawal of the petition. The application and the petition must meet their natural fate, that is dismissal. It is established that the ad interim order was made relying on material misstatement of the deponent. Therefore, in Courts view both the petition as well as the application deserves to be dismissed.

JUDGMENT - S.S. NIJJAR, J.:---Inspite of the courts repeatedly stating and reaffirming the principle that it is the duty of a party asking for an injunction to bring to the notice of the Court all facts material and relevant to the issue, the litigants continue in their efforts to obtain favourable orders from the Court, ex parte, without disclosing all material facts to the Court. This company petition is an ideal example of how an ex parte order was taken from this Court without mentioning the relevant facts which would be necessary for the decision of the winding up petition. As long ago as 1917 the Divisional Court and the Court of Appeal of England laid down solitary principles to be followed by the litigants while seeking equitable relief from the Court. These principles are laid down in the case of (The King v. The General Commissioners for the Purposes of the Income Tax Acts for the District of Kensington)1, reported in 1917 King's Bench Division page 486. Therein the following principles are laid down by Viscount Reading, C.J. :--

"Before I proceed to deal with the facts I desire to say this : where an ex parte application has been made to this Court for a rule nisi or other process, if the Court comes to the conclusion that the affidavit in support of the application was not candid and did not fairly state the facts, but stated them in such a way as to mislead the Court as to the true facts, the Court ought, for its own protection and to prevent an abuse of its process to refuse to proceed any further with the examination of the merits. This is a power inherent in the Court, but one which should only be used in cases which bring conviction to the mind of the Court that it has been deceived. Before coming to this conclusion a careful examination will be made of the facts as they are and as they have been stated in the applicant's affidavit and everything will be heard that can be urged to influence the view of the Court when it reads the affidavit and knows the true facts. But if the result of this examination and hearing is to leave no doubt that the Court has been deceived, then it will refuse to hear anything further from the applicant in a proceeding which has only been set in motion by means of misleading affidavit."

This aforesaid principles were affirmed by the Court of Appeal.

Whilst dismissing the appeal, it was ultimately observed as follows by Warrington, L.J. :--

"........ I express no final opinion, but it may be that the result of this is that the applicant has no further remedy. In the case of Reg. v. Bodmin Corporation (2) Day, J., said; "As I read the authorities, it has always been held, whenever this objection has been taken, and the attention of the courts has been called to the point, that no second application for a prerogative writ will be granted when the first application has been discharged. There are many authorities which support this contention; but I think apart from authority, that it is a most convenient view to take of the jurisdiction of the Court in such matters. It is a view which has commended itself to many Judges who have acted upon it, and it commends itself to me. It is no doubt extremely convenient that no second application for a high prerogative writ should be allowed after a first application has been refused. Such a writ is an extraordinary remedy, and persons seeking it may very reasonably be required not to apply for it unless they have sufficient cause for doing so. They must come prepared with full and sufficient materials to support their application, and if those materials are incomplete I think it is quite right that they should not be allowed to come again."

It may be that the result of our decision is that the applicant loses her remedy. If so, she has only herself and her legal advisors to thank for it."

2.The Supreme Court in the case of (Udai Chand v. Shankar Lal)2, reported in A.I.R. 1978 Supreme Court 765, whilst dealing with the case of a misstatement mad

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