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1968 Supreme(Cal) 35
HIGH COURT OF CALCUTTA
A. N. RAY, S. K. MUKHERJEE
COAL PRODUCTS PRIVATE LTD. - Appellant
Versus
RAM AUTAR JALAN - Respondent
Appeal 196 Of 1967
Decided On : MARCH 1, 1968
A.K.SEN, B.K.BACHAWAT, P.C.Sen, S.C.SEN, SOMNATH CHATTERJEE
An interlocutory order made without prejudice to the rights and contentions of the parties is not res judicata and does not prevent a party from obtaining an injunction in a subsequent suit.
Headnote:
COMPANY - Director - Appointment - Qualification - Holding of shares - Transfer of shares - Registration - Articles of Association - Companies Act (I of 1956), Ss. 163, 164, 283 - Injunction - Interlocutory order - Res judicata - Order 39, r. 4, C. P. C.
Fact of the Case:
The plaintiff company filed a suit against the defendant, Ram Autar Jalan, claiming a perpetual injunction restraining him from acting as a director of the company, dealing with its funds, using its seal, or otherwise interfering with its management. The plaintiff alleged that the defendant was not appointed as a director at any meeting of the company nor co-opted as a director of the board of directors. The defendant claimed to be a director since August 31, 1964, but the plaintiff alleged that he did not hold the requisite qualification shares at the time of the alleged appointment and did not obtain the same until the filing of the suit.
Finding of the Court:
The court held that the plaintiff had made a prima facie case that the defendant was not a lawful director and that he should be restrained from acting as such. The court found that the defendant had not produced any evidence of his appointment as a director or of his holding of the requisite qualification shares. The court also found that the order dated June 27, 1966, in the company matter, which authorized the defendant to operate the bank account of the company, was not res judicata and did not prevent the plaintiff from obtaining an injunction in the present suit.
Issues: 1. Whether the defendant was validly appointed as a director of the plaintiff company? 2. Whether the defendant held the requisite qualification shares to be a director? 3. Whether the order dated June 27, 1966, in the company matter, was res judicata and prevented the plaintiff from obtaining an injunction in the present suit?
Ratio Decidendi: 1. The court held that the defendant was not validly appointed as a director of the plaintiff company because he had not been appointed at any meeting of the company or co-opted as a director of the board of directors. 2. The court held that the defendant did not hold the requisite qualification shares to be a director because he had not obtained the same until the filing of the suit. 3. The court held that the order dated June 27, 1966, in the company matter, was not res judicata and did not prevent the plaintiff from obtaining an injunction in the present suit because it was an interlocutory order made without prejudice to the rights and contentions of the parties.
Final Decision: The court granted an interim injunction restraining the defendant from acting as a director of the plaintiff company, dealing with its funds, using its seal, or otherwise interfering with its management. The court also ordered that the defendant be at liberty to operate the bank accounts of the company in terms of the order dated June 27, 1966.
( 1 ) THIS appeal is from the order of Sen J. , dated 7th September, 1967. The order was made on a notice of motion dated September 12, 1966, taken out by the plaintiff. The plaintiffs, inter alia, asked for an order of injunction restraining Ram Autar Jalan from in any -way operating the current account in the name of the Coal Products Private Limited with the United Commercial Bank Ltd. , Burrabazar Branch, Calcutta, till the disposal of the suit and an injunction restraining Ram Autar Jalan from withdrawing and/or in any way dealing with or disposing of the amounts lying in the current account in the name of Coal Products Private Ltd. with the United Commercial Bank Ltd. , Burrabazar Branch, Calcutta, till the disposal of the suit and an injunction restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering in the management of the company till the disposal of the suit.
( 2 ) THERE were several prayers in the notice of motion numbered (a) to (j ). At the outset it may be stated that in the trial court, counsel appearing for the plaintiffs did not press prayers (a) to (e ). The result was that only prayers (g), (h), (i) and (j) were canvassed.
( 3 ) AT the hearing of the appeal counsel appearing for the appellant also confined his arguments and the case mainly to prayer (g) and thereafter to the other prayers, (h), (i) and (j ). Prayer (g) is for an injunction restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering with the management of the company till the disposal of the suit.
( 4 ) THE plaintiff filed the suit and claimed the relief that a perpetual injunction should be granted restraining Ram Autar Jalan from acting as director of or dealing with the funds of or using the seal of or otherwise interfering with the management of the company. The other reliefs aked for were that Ram Autar Jalan should also be restrained by an injunction from preventing or hindering the properly constituted board of directors from acting as directors.
( 5 ) THE company was incorporated on or about August 25, 1945, under the Companies Act, 1913. The authorised capital of the company is Rs. 20,00,000 divided into 2,00,000 ordinary shares of Rs. 10 each, of which Rs. 15,10,000 have been fully paid up. The plaintiff's case is that the directors of the plaintiff are Kishorilall Goenka, Parameshwari Devi Goenka, Nawratan Goenka, Bhag-wati Debi Goenka and Sunil Kumar Ganguly. The plaintiff alleges that Ram Autar Jalan claimed to be a director of the plaintiff since August 31, 1964. The plaintiff alleges that the defendant, Ram Autar Jalan, was neither appointed as a director at any meeting of the plaintiff nor co-opted a director of the board of directors. The plaintiff alleges that the plaintiff came to know of the alleged claim of Ram Autar Jalan some time in the month of August/ September, 1966.
( 6 ) THE plaintiff relies on Article 104 which states that the qualification of a director other than an ex-ofiicio director shall be the holding in his own name solely or jointly with another or others and whether beneficially or as a trustee for another or others or otherwise howsoever of shares in the company of the nominal value of Rs. 500 on which all calls shall have been paid. The plaintiff alleges that the defendant did not hold at the time of the alleged appointment the requisite qualification shares, nor did the defendant obtain the same until the filing of the suit.
( 7 ) IN paragraph 9 of the plaint, the plaintiff alleges that the defendant wrongfully or without authority purported to act as a director of the plaintiff and has been wrongfully dealing with the funds of or interfering with the management of the company. In paragraph 10, the plaintiff alleges that the plaintiff suffered loss and damages assessed at Rs. 7 lakhs. The plaintiff also alleges that the defendant wrongfully or
