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HIGH COURT OF CALCUTTA
B. C. MITRA, GHOSH
JALPAIGURI CINEMA CO. LTD. - Appellant
Versus
PROMOTHA NATH MUKHERJEE - Respondent
Company Petition 398 Of 1972
Decided On : MAY 13, 1974
COMPANY - Winding up - Petition under Sections 397 and 398 of the Companies Act, 1956 - Withdrawal of petition - Power of court to add or substitute parties - Whether order allowing addition of parties is appealable - Companies (Court) Rules, 1959, Rules 100, 101, 102 - Companies Act, 1956, Sections 397, 398, 405, 643 - Code of Civil Procedure, 1908, Order 1, Rule 10.
Fact of the Case:
The original petitioner, Dilip Kumar Ganguli, filed a petition under Sections 397 and 398 of the Companies Act, 1956, seeking various reliefs against the appellant company. The petition was made returnable on November 21, 1972. On May 7, 1973, the petitioner submitted to the court that he did not want to press the petition. The respondents, Pramotha Nath Mukherjee and Monoranjan Mukherjee, objected to the withdrawal or dismissal of the petition. On May 9, 1973, the respondents applied for being added as parties to the petition and substituted in the place and stead of the original petitioners. The company opposed the application. On November 29, 1973, the company court ordered rectification of the share register as prayed for by respondent, Pramotha Nath Mukherjee. Thereafter, the order was made in the application made by the first two respondents for being added as parties to the Company Petition No. 398 of 1972, from which the present appeal has been preferred.
Finding of the Court:
The court held that the order allowing the addition of parties was not appealable as it was not a "judgment" within the meaning of Clause 15 of the Letters Patent. The court further held that the order was passed in exercise of the court's inherent jurisdiction under Section 151 of the Code of Civil Procedure. The court also held that the respondents were entitled to be added as parties to the petition as they were interested in the subject-matter of the petition and had the oppression or wrong alleged in the petition remedied.
Issues: 1. Whether the order allowing the addition of parties was appealable? 2. Whether the court had the power to add or substitute parties in a petition under Sections 397 and 398 of the Companies Act, 1956? 3. Whether the respondents were entitled to be added as parties to the petition?
Ratio Decidendi: 1. The court held that the order allowing the addition of parties was not appealable as it was not a "judgment" within the meaning of Clause 15 of the Letters Patent. The court further held that the order was passed in exercise of the court's inherent jurisdiction under Section 151 of the Code of Civil Procedure. 2. The court held that the court had the power to add or substitute parties in a petition under Sections 397 and 398 of the Companies Act, 1956, by virtue of Order 1, Rule 10, of the Code of Civil Procedure, which is applicable to proceedings under the Companies Act by virtue of Rule 6 of the Companies (Court) Rules, 1959. 3. The court held that the respondents were entitled to be added as parties to the petition as they were interested in the subject-matter of the petition and had the oppression or wrong alleged in the petition remedied.
Final Decision: The appeal was dismissed with costs.
( 1 ) THIS appeal is directed against the judgment and order dated November 29, 1973, directing, inter alia, the respondents Pramotha Nath Mukherjee and Monoranjan Mukherjee to be added as parties to the Company Petition No. 398 of 1972 and granting leave to the said respondents to continue the said company petition and all proceedings thereunder, and further directing the original petitioner, Dilip Kumar Ganguli of the said Company Petition No. 398 of 1972, to be transposed to the category of respondents and all consequential amendments to be carried out in the cause title of the said company petition.
( 2 ) THE said company petition was filed on October 3, 1972, by the original petitioner, Dilip Kumar Ganguli, who was at all material times and still now is a shareholder of the Jalpaiguri Cinema Company Ltd. , an existing company within the meaning of the Companies Act, 1956, under Sections 397 and 398 of the Companies Act, 1956.
( 3 ) THE company was incorporated under the Indian Companies Act, 1913, in 1948. One of the promoters of the company was Nagendra Nath Ganguli. The company started construction of a cinema hall, but failed to continue the construction for paucity of funds and created three several mortgages on the assets and properties of the company and obtained loans for carrying on the business of the company. The last mortgage which was the third mortgage was created by the company in favour of the respondents Nos. 8, 9 and 10. The said mortgage was a usufructuary mortgage.
( 4 ) THE respondents Nos. 8, 9 and 10 as mortgagees were put in possession of the cinema house of the company and have been running the same. Between January 4, 1967, and January 12, 1967, the respondents, Pramotha Nath Mukherjee and Monoranjan Mukherjee, purchased equity shares in the said company of the face value of Rs. 2 lakhs 14 thousand and lodged the same with the company for registration. Upon refusal of the company to insert the name of the said respondents, Pramotha Nath Mukherjee and Monoranjan Mukherjee, as the holders of the said shares in the share register of the company, the said respondents appealed to the Central Government under Section 111 of the Companies Act. The Central Government on December 19, 1969, directed the company to register the said shares in the name of the said respondents, Pramotha Nath and Monoranjan Mukherjee.
( 5 ) THE company challenged the said direction of the Central Government in a proceeding taken under Article 226 of the Constitution at the Delhi High Court. The company's application for quashing the said direction of the Central Government was dismissed by the Delhi High Court. The Delhi High Court also dismissed the company's application for leave to appeal to the Supreme Court against its aforesaid order. The Supreme Court also rejected the company's prayer for special leave to appeal to the Supreme Court against the said order,
( 6 ) THEREAFTER, in November, 1971, Dilip Kumar Ganguli and another applied to the company court under Sections 397 and 398 of the Companies Act for various reliefs. In the said application an order was made, inter alia, appointing a special officer for making an inventory of the books of account of the company and restraining the directors of the company from doing anything except carrying on day-to-day management of the company and pass resolutions only in regard to the pending litigations to which the company was a party.
( 7 ) THE said application under Sections 397 and 398 of the said Act was, however, directed to be taken off the file inasmuch as the letter giving consent by the requisite member of shareholders to move the said application was not annexed to the petition. The interim orders passed in the said application were, however, directed to continue until November, 1972.
( 8 ) ON October 3, 1972, the Company Petition No. 398 of 1972 was filed by the said Dilip Kumar Ganguli under Sections 397 and 398 of the Act and obtained various ad in
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