Bhaskar Publication and Allied Industries Pvt. Ltd. , Gwalior vs Kishori Devi Agrawal

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2011 Supreme(MP) 724

2011 (3) JLJ 379
S.N. Aggarwal and Sheel Nagu, JJ.
Bhaskar Publication and Allied Industries Pvt.Ltd., Gwalior and others
v.
Smt. Kishori Devi Agrawal and others
Company Appeal No.1 of 2010 (Gwalior) : against order of Company Judge dated 13.9.2010, passed in M.C.C. No.63 of 2010;
Decided on : 21.9.2011.

Advocates Appeared:
U.K. Chaudhary with Ms. Srishti Singh and Nitin Agrawal for appellants;
Prashant Chandra with Sameer Shrivastava for respondent No.1;
Sunil Kumar Jain for respondent No.2.

Headnote:(1) Companies (Amendment) Act, 1988 -- S.68 -- pending proceeding -- means of -- company petition filed before amendment -- petition dismissed by Registrar on 7.6.2006 for non-compliance of Court‘s order -- Registrar has no jurisdiction to dismiss the petition -- it means case was pending in the High Court -- restoration application filed before High Court is maintainable -- aggrieved party cannot compel to file application before Company Law Board -- such narrow interpretation of section 68 will be unreasonable and unjust -- Court which had dismissed petition in default alone is competent to deal with restoration application.
       Held: The argument of the learned senior counsel that after dismissal of the company petition, restoration application ought to have been filed before the Company Law Board by virtue of the amendment having been incorporated in the interregnum is not tenable. It appears that the said submission has been made only to be rejected in as much as no Tribunal, Board or subordinate Court can look into the correctness, legality or validity of the orders passed by the High Court. We feel that even otherwise, it is the first principle of law that the Court which had dismissed the petition In default for non-prosecution alone is competent to deal with its restoration. It may be noted that on the date the company petition was dismissed by the order of the Registrar dated 28th June, 2006 for non-compliance of the Court‘s order dated 7th September, 2005, the case was pending in the High Court and the parties were litigating with each other for more than 18 years. In our opinion, it would be wholly unreasonable and unjust to give a narrow interpretation to section 68 of the Companies (Amendment) Act, 1988 that after dismissal of the company petition for non-prosecution, the restoration ought to be filed before the Company Law Board. [Para 15]
       Having considered the various pros and cons of the arguments of the learned senior counsel appearing on behalf of the respondents regarding powers of the High Court to entertain restoration application in view of the provision contained in section 68 of the Companies (Amendment) Act, 1988, we are left with no doubt in our mind except to hold that the High Court which had dismissed the company petition in default for non-prosecution is fully competent to entertain and decide the restoration application filed by the aggrieved party. 123 (2005) DLT 114, 1994(79) Company Cases 53 and AIR 2000 Delhi 377 distinguished. (2003)3 SCC 272 referred to. [Paras 17 & 18]
        (2) Companies (Court) Rules, 1959 -- Rr.6 and 9 -- Civil P.C., 1908 -- S.151 -- company petition dismissed by Registrar for non-compliance of Court‘s order -- restoration application before Company Judge is maintainable -- nature of proceeding is procedural -- case can be restored under inherent powers -- law and procedure are meant to regulate and doing substantial justice and not foreclosure of substantial rights of a citizen -- procedure is handmaid of justice and not meant to hamper cause of justice. [Para 16]
       (3) High Court of Madhya Pradesh Rules, 2008 -- Ch. V(A), R.1(4) -- jurisdiction of Registrar -- seven days time given by Court for filing process fee -- default in filing the same -- Registrar has no jurisdiction to dismiss the case on such default -- he call list the case before the Court. [Para 20]
       (4) Limitation Act, 1963 -- S.5 -- scope of -- company petition dismissed by Registrar in default for non-filing process fee -- dismissal order suffers from jurisdictional error as Registrar has no jurisdiction -- application for restoration filed after 1309 days -- delay condoned by Company Judge on sufficient cause and petition restored its original number -- no interference called for in appeal against such order. [Paras 19 to 21]
        ¼1½ daiuh la‘kks/ku vf/kfu;e] 1988 && /kkjk 68 && dk;Zokgh yafcr && ls vfHkizk; && la‘kks/ku ls iwoZ daiuh ;kfpdk izLrqr dh xbZ && U;k;ky; ds vkns‘k dk ikyu u fd, tkus ls jftLVªkj }kjk 7-6-2006 dks ;kfpdk [kkfjt dh xbZ && jftLVªkj dks ;kfpdk [kkfjt djus dh vf/kdkfjrk ugha gS && bldk vk‘k; ;gh gS fd mPp U;k;ky; esa ;kfpdk yafcr gS && mPp U;k;ky; ds le{k izLrqr izR;korZu vkosnu pykus ;ksX; gS && O;fFkr i{kdkj dks daiuh fof/k eaMy ds le{k vkosnu izLrqr djus ds fy, foo‘k ugha fd;k tk ldrk && /kkjk 68 dk ,slk lhfer fuoZpu djuk vuqfpr rFkk vU;k;iw.kZ gksxk && U;k;ky; ftlus =qfV esa ;kfpdk [kkfjt dh Fkh ogh vdsyk izR;korZu vkosnu ij fopkj djus ds fy, l{ke gSA

       vfHkfu/kkZfjr % fo}ku ofj"B vf/koDrk dk ;g rdZ leFkZu djus ;ksX; ugha gS fd daiuh ;kfpdk ds [kkfjt gksus ds i‘pkr~ varjky esa la‘kks/ku laLFkkfir fd, tkus ls izR;korZu vkosnu daiuh fof/k eaMy ds le{k izLrqr fd;k tkuk pkfg, FkkA ;g izrhr gksrk gS fd mi;qZDr rdZ dsoy blfy, fd;k x;k gS fd [kkfjt fd, tkus ij vf/kdj.k] eaMy vFkok v/khuLFk U;k;ky; mPp U;k;ky; }kjk ikfjr vkns‘k dh ‘kq)rk] oS/krk vFkok fof/kekU;rk ugha ns[k ldrkA ge ekurs gSa fd vU;Fkk Hkh] fof/k dk ;g izFke fl)kar gS fd ftl U;k;ky; us lapkyu u djus dh =qfV esa ;kfpdk [kkfjt dh Fkh dsoy ogh blds izR;korZu vkosnu ij fopkj djus ds fy, l{ke gSA ;g /;ku nsus ;ksX; gS fd jftLVªkj }kjk ftl fnukad 28 twu 2006 dks U;k;ky; ds vkns‘k fnukad 7 flrEcj 2005 dk lapkyu u djus ds dkj.k daiuh ;kfpdk [kkfjt dh Fkh] izdj.k mPp U;k;ky; esa yafcr Fkk rFkk i{kdkj 18 o"kZ ls vf/kd ,d&nwljs ds lkFk eqdnesackth dj jgs FksA gekjs er esa] daiuh ¼la‘kks/ku½ vf/kfu;e] 1988 dh /kkjk 68 dk ;g lhfer fuoZpu djuk iw.kZr% vuqfpr rFkk vU;k;iw.kZ gksxk fd lapkyu u djus dh =qfV esa daiuh ;kfpdk djus ds i‘pkr~ izR;korZu vkosnu daiuh fof/k eaMy ds le{k izLrqr fd;k tkuk pkfg, FkkA

       ¼iSjk 15½

       daiuh ¼la‘kks/ku½ vf/kfu;e] 1988 dh /kkjk 68 esa of.kZr mica/kksa dh n`f"V ls izR;korZu vkosnu ij mPp U;k;ky; dh ‘kfDr;ksa ds laca/k esa izR;FkhZx.k dh vksj ls mifLFkr dkmUlsy }kjk i{k&foi{k esa fd, x, vusd rdksZa ij fopkj djrs gq,] gekjs er esa ;g Bgjkus ds flok, dksbZ lansg ugha jg tkrk fd mPp U;k;ky; ftlus daiuh ;kfpdk lapkyu u djus dh =qfV esa [kkfjt dh Fkh og O;fFkr i{kdkj }kjk izLrqr izR;korZu vkosnu dks xzg.k rFkk fofu‘p; djus ds fy, iw.kZr% l{ke gSA 123 ¼2005½ Mh,yVh 114] 1994¼79½ daiuh dslst 53 rFkk , vkb vkj 2000 nsgyh 377 izHksfnrA ¼2003½3 ,l lh lh 272 fufnZ"VA

       ¼iSjk 17 rFkk 18½

       ¼2½ daiuh ¼U;k;ky;½ fu;e] 1959 && fu- 6 rFkk 9 && flfoy izfdz;k lafgrk] 1908 && /kkjk 151 && U;k;ky; ds vkns‘k dk ikyu u djus ls jftLVªkj }kjk daiuh ;kfpdk [kkfjt dh xbZ && daiuh U;k;k/kh‘k ds le{k izR;korZu vkosnu pykus ;ksX; gS && dk;Zokgh dh izd`fr izfdz;kRed gS &&izdj.k varfuZfgr ‘kfDr;ksa ds v/khu izR;kofrZr fd;k tk ldrk gS && fof/k rFkk izfdz;k lkjoku~ U;k; fofu;fer djus dks gS vkSj ,d ukxfjd ds lkjoku vf/kdkj tIr djus ds fy, ugha && izfdz;k U;k; dh nklh gS rFkk U;k; esa ck/kk Mkyus dk bjknk ugha gSA

       ¼iSjk 16½

       ¼3½ mPp U;k;ky; e/; izns‘k fu;e] 2008 && v/;k; ik¡p ¼d½ && fu- 1 ¼4½ && jftLVªkj dh vf/kdkfjr && vkgo~ku ‘kqYd izLrqr djus ds fy, U;k;ky; }kjk 7 fnol dk le; fn;k x;k && ogh izLrqr djus esa =qfV && ,slh =qfV ij jftLVªkj dks izdj.k [kkfjt djus dh vf/kdkfjrk ugha gS && og izdj.k U;k;ky; ds le{k lquokbZ esa yxk ldrk gSA

       ¼iSjk 20½

       ¼4½ ifjlhek vf/kfu;e] 1963 && /kkjk 5 && dh O;kfIr && vkgo~ku ‘kqYd izLrqr u djus dh =qfV esa jftLVªkj }kjk daiuh ;kfpdk [kkfjt dh xbZ && [kkfjt fd, tkus dk vkns‘k vf/kdkfjrk dh =qfV ls xzflr D;ksafd jftLVªkj dks vf/kdkfjrk ugha gS && 1309 fnol i‘pkr~ izR;korZu ds fy, vkosnu izLrqr fd;k x;k && daiuh U;k;k/kh‘k }kjk i;kZIr vk/kkj ij foyac ekQ fd;k x;k rFkk ;kfpdk blds ewy dzekad ij izR;kofrZr dh xbZ && ,sls vkns‘k ds fo:) vihy esa gLr{ksi visf{kr ughaA

       ¼iSjk 19 ls 21½

JUDGMENT (Oral)

Aggarwal, J. -- 1. This appeal under section 483 of the Companies Act, 1956 filed by the appellants is directed against the order of the learned Company Judge dated 13th September, 2010 in M.C.C. No.63 of 2010 whereby the company petition of the respondents (C.P. No.2/88) dismissed in default for non-prosecution vide Court's order dated 7th September, 2005 read along with the order of the Registrar dated 28th June, 2006, has been restored for hearing on merits after condoning the delay of 1309 days in filing of the restoration application.

2. Briefly stated the facts of the case giving rise to this appeal are that appellant No.1 Company "M/s. Bhaskar Publication and Allied Industries Private Limited" is a company incorporated under the Companies Act, 1956 and is stated to be engaged in the business of publication of a newspaper "Dainik Bhaskar" situated at Gwalior. The respondents along with Bishambhar Dayal Agrawal (dead), Dwarka Prasad Agrawal (dead) and appellants No.2, 3 and 5 were stated to the Directors of the appellant company at the time the respondents had filed company petition (C.P.No.2/1988) against the appellants under sections 397, 398, 402 and 403 of the Companies Act, 1956 read with rule 9 of the Companies (Court) Rules, 1959. The said petition was filed by them in the High Court on 7th April, 1988. It was alleged in the petition that appellant No.2 had fraudulently increased the authorized share capital of the company from Rs.3,39,700/- to Rs.l0,00,000/- and the said increased authorised capital was illegally allotted by the company to appellant No.2 without convening any meeting and without any consideration. It was further alleged that the said fraudulent allotment of shares to respondent No.2 was done to reduce the share holding of the respondents into the minority and gain control over the management of the company and to oust the respondents from the management of the company. It was also alleged in the petition that the appellant No.2 had not paid off the loans, which were raised in favour of the company against-personal FDRs of the respondents No.1 and 2 from various Nationalised Banks. On the basis of the facts pleaded by the respondents in their company petition, they had prayed for the following reliefs in their company petition filed in the High Court on 7th April, 1988 :

(i) Declare that only six persons mentioned in the petition were alone Directors of the company;

(ii) Declare that the increase in authorised share capital of the company and consequent allotment of shares to respondent No.2 was illegal and void;

(iii) Declare that appellant No.2 was unfit and disqualified from managing the affairs of the company;

(iv) Restrain appellants No.2. 3 and 4 from interfering in the management of the affairs of the company by the petitioners;

(v) Appoint receiver for taking custody and inspection of books of the company.

3. Shortly after the abovementioned company petition was filed by the respondents in the High Court, the Companies Act, 1956 was amended by Companies (Amendment) Act, 1988 and the amendment became effective from 10th June, 1988. As per amended provisions contained in section 67 of the Companies (Amendment) Act, 1988, powers of the High Court to deal with company petitions under sections 397 and 405 of the Companies Act, 1956 were transferred to the Company Law Board. It was provided that after the date of amendment, any petition to be filed under sections 397 to 405 of the Companies Act, 1956 shall be filed before the Company Law Board. However, section 68 of the Companies (Amendment) Act, 1988 contains a transitional provision according to which any matter or proceedings under the Companies Act, 1956 pending in the High Court immediately prior to the commencement of the Companies (Amendment) Act, 1988 were to continue and disposed of by the Court in which those proceedings were pending.

4. In view of the aforementioned transitional provision contained in the Companies (Amendment)

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