SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

1975 Supreme(Del) 50

High Court Of Delhi
INDER KUMAR JAIN - Appellant
Versus
OSRA BOTTLING COMPANY , PRIVATE LIMITED - Respondent
Company 75 of 1975
Decided On : 03/17/1975

Advocates Appeared:
G.N.AGGARWAL, SATISH CHANDRA AGRAWAL

The court has the power to grant leave to amend pleadings in proceedings under the Companies Act on the analogy of Order 6, Rule 17 of the Civil Procedure Code.

Headnote:

COMPANIES ACT - SECTIONS 397, 398, 399 - AMENDMENT OF PLEADINGS - POWER OF COURT - CIVIL PROCEDURE CODE, ORDER 6, RULE 17 - APPLICABILITY - CONDITIONS FOR GRANT OF LEAVE TO AMEND - SUPPRESSIO VERI - RELEVANCE - INTERESTS OF COMPANY - PREJUDICE TO PETITIONER - COSTS.

Fact of the Case:

In a petition filed under Sections 397 and 398 of the Companies Act, 1956, alleging oppression of some members of the company, respondent No. 5 filed a reply without raising an objection that the petitioner did not fulfill the requirements of Section 399. After the case proceeded to trial, respondent No. 5 sought leave to amend the reply to raise the objection. The petitioner objected, arguing that the Civil Procedure Code was not applicable to proceedings under the Companies Act, that the objection could not be taken after the petition was admitted, and that respondent No. 5 was guilty of suppressio veri.

Finding of the Court:

The court held that the Civil Procedure Code was applicable to proceedings under the Companies Act by virtue of Rule 6 of the Companies (Court) Rules 1959. It also held that the court had the power to grant leave to amend pleadings on the analogy of Order 6, Rule 17 of the Civil Procedure Code. The court further held that the objection could be raised as a defense to the petition on merits and that respondent No. 5 was not guilty of suppressio veri. The court found that the interests of the company would be best served by determining the question of the petitioner's right to apply under Section 399 and that the prejudice to the petitioner could be compensated by costs.

Issues: 1. Whether the Civil Procedure Code is applicable to proceedings under the Companies Act? 2. Whether the court has the power to grant leave to amend pleadings in proceedings under the Companies Act? 3. Whether the objection that the petitioner did not fulfill the requirements of Section 399 could be raised as a defense to the petition on merits? 4. Whether respondent No. 5 was guilty of suppressio veri? 5. Whether the interests of the company would be best served by determining the question of the petitioner's right to apply under Section 399? 6. Whether the prejudice to the petitioner could be compensated by costs?

Ratio Decidendi: 1. The Civil Procedure Code is applicable to proceedings under the Companies Act by virtue of Rule 6 of the Companies (Court) Rules 1959. 2. The court has the power to grant leave to amend pleadings in proceedings under the Companies Act on the analogy of Order 6, Rule 17 of the Civil Procedure Code. 3. The objection that the petitioner did not fulfill the requirements of Section 399 could be raised as a defense to the petition on merits. 4. Respondent No. 5 was not guilty of suppressio veri. 5. The interests of the company would be best served by determining the question of the petitioner's right to apply under Section 399. 6. The prejudice to the petitioner could be compensated by costs.

Final Decision: The court granted respondent No. 5 leave to amend the reply on condition that he pay Rs. 500 as costs.

T. P. S. CHAWLA, J.

( 1 ) ON 5th November 1969, Inder Kumar Jam filed a petition in this court under Sections 397 and 398 of the Companies Act, 1956 alleging that the affairs of the company known as Osra Bottling Company Private Limited were being carried on in a manner oppressive to some of its members, including the petitioner, and seeking certain directions regarding its management. The company and certain persons associated with it, in one way or other, were made respondents. A reply to the petition was filed only on behalf of Ashok Sarwant, respondent No. 5. It is dated 16th February, 1970 and was filed in court on 24th July, 1970. Thereafter the case proceeded to trial and came on for final hearing before me on 24th January, 1975. Before arguments were re-com- menced on an adjourned date, 5th February, 1975, counsel for res- pondent No. 5 raised the preliminary objection that the petitioner did not fulfil any of the requirements of Section 399 of the Companies Act, and hence the petition was not maintainable at his instance. I heard the objection in a preliminary way, and it was soon discovered that no such point had been taken in the reply filed on behalf of respondent No. 5. Counsel for this respondent conceded this, and prayed for time to move an application for amending the reply so as to raise such an objection. Time was granted, and C. A. No. 75 of 1975 was moved, and has subsequently been heard by me. This order is concerned with that application.

( 2 ) FOR the petitioner it was contended that the Civil Procedure Code was not applicable to proceedings under the Companies Act and, therefore, the court h. a. d no power to grant leave to amend a pleading. To my mind this argument is wholly untenable. By section 643 (b) of the Companies Act the Supreme Court is empowered, after consulting the High Courts, to make rules for various purposes mentioned therein consistent with the Code of Civil Procedure 1908 . In exercise of that power the Companies (Court) Rules 1959 have been framed, and Rule 6 provides :

save as provided by the Act or by these Rules, the practice and procedure of the Court. a,nd the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these Rules. . . . . . .

RULE 2 (4) defines code to mean the Code of Civil Procedure 1908 . In the face of Rule 6, I would have thought that it is not possible to argue that the Code does not apply to proceedings under the Companies Act. Such an argument would render nugatory the words the provisions of the Code so far as applicable, shall apply to all proceedings under the Act and these Rules which are so clear.

( 3 ) HOWEVER, counsel for the petitioner referred to Aluminium Corporation of India Ltd. v. Lakshmi Ratan Cotton Mills Co. Ltd. . 1969 Company causes 23, and Rabinder Nath Maira and others v. Steelsons P. Ltd. and others, 1974 Company Cases 538, in support of his contention. These cases seem to hold that the rules in the Civil Procedure Code are not directly applicable to proceedings under the Companies Act. But, in neither of them does it appear that Rule 6 was referred to. That apart, both contin observations which imply that the principles embodied in those rules are applicable. Even from this it must follow that the court has power to grant leave to amend pleadings on the analogy of Order 6 rule 17 of the Code. An exact authority for this proposition is Bastar Transport and Trading Co. , Jagdalpur and another v. Court of Wards, Bastar and anoher, AIR 1955 Nag 780, in which it is said that-

an application for amendment of a petition for winding up can, therefore, be decided on the principles governing amendment of pleadings under 0. 6, R. 17, Civil Procedure Code.

THUS, whether that rule can be directly invoked in proceedings under the Companies Act (a point which I need not finally decide), or whether leave to amend can be granted by the court in such proceedings on the same principles, assuredly the court has















Click Here to Read the rest of this document

1
2
3
4
5
6
7
8
9
10
11
SupremeToday Portrait Ad
supreme today icon
logo-black

An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers

Please visit our Training & Support
Center or Contact Us for assistance

qr

Scan Me!

India’s Legal research and Law Firm App, Download now!

For Daily Legal Updates, Join us on :

whatsapp-icon Back to top