Deb Kanta Roy vs Glucoseries Pvt. Ltd.

Amitava Lala, J.—This is an application on behalf of the Defendant with a supporting affidavit of one Timirari Bhattacharya dated April 28, 1998 praying inter alia, (a) leave be given to the Petitioner to the effect that the instant suit be defended and the defence of the Defendant be conducted by its present Board of Directors comprising of Mr. Timirari Bhattacharjee and Mr. P.G. Saha and not the Special Officer; (b) If necessary, the instant suit and all proceedings thereunder be stayed till the disposal of the SLP (Civil) No. 17419 of 1991 pending before the Hon''ble Supreme Court of India; (c) Ad-interim order in terms of prayers above; (d) Appropriate orders as to costs of and incidental to this application be made; and (e) Such further or order or orders be made and/or direction or directions be given as to this Hon''ble Court may deem fit and proper;

The sole contention of the Petitioner is to defend the suit upon amending the written statement by making a set off or counter claim therein as against the claim of the Plaintiff in the suit.

There is also an alternative prayer for stay of the suit till the disposal of a SLP (Civil) No. 17419 of 1991 pending before the Hon''ble Supreme Court of India.

The Petitioner annexed various orders of the Court which were passed in connection with an application under Sections 397 and 398 of the Companies Act.

According to the Petitioner, the original orders which were passed in connection with such application by a Single Bench of this Hon''ble Court on June 6, 7, 1984 speak about the various aspects of the running the company including appointment of the Special Officer and steps to be taken by him.

One of the Clause in such order is that. (i) the present Board of Directors of the Company is superseded; (ii) The special Officer already appointed is directed to call a meeting of the share holders of the company on the basis of the share holding as on March 31, 1979 as recorded in the relevant annual return for constitution of a new Board of Directors; (iii) the Special Officer will hand over the charge of the company to the new Board of Directors after the same is constituted; (iv) the Special Officer will file a report after handing over of charge of the companies to the new Board. Till the new Board is elected, the Special Officer will be in-charge of the affairs and the management of the Company.

An appeal was preferred from the said order which was initially admitted by a Division Bench of this Hon''ble Court. Subsequently, by a further order dated September 20, 1984, the Division Bench was pleased to pass an order that the meeting due to be held on January 29, 1984 will be held but no effect shall be given to the resolution to be passed in the said meeting till the disposal of the application. There was also an order of injunction upon the present Board of Directors from selling alienating, pertaining with possession, encumbering or mortgaging any asset, moveable or immoveable of the company. By a further order dated June 24, 1985, a Division Bench of this Hon''ble Court was pleased to pass an order that until the disposal of the appeal preferred by the company against an order made in the application, the Special Officer will continue and no effect will be given to the resolution passed in the meeting. The injunction continued in the order dated September 20, 1984 will continue till the disposal of the application.

On August 7, 1990, the appeal was dismissed for default. The Respondent made certain submissions therein with regard to the contempt application and an application for restoration of the. assets of the company which were recorded in the order.

An application was moved for restoration of the appeal but the same was dismissed on November 14, 1990.

The Plaintiff herein made a SLP on October 11, 1993 in the. Hon''ble Supreme Court of India from the order dated November 14, 1990 passed by the Division Bench of this Hon''ble Court. Although, it was argued before this Court that the SLP was not formally admitted but it appears that upon hearing the Counsel, the Court was pleased to issue a notice on the SLP and the application for condonation of delay. However, such SLP is still pending.

By an order of the Single Bench dated March 5, 1990 in connection with the suit as annexed with the petition it appears that the Special Officer was directed to represent the company by filing written statement, the leave was granted to the Special Officer to take assistance from the share holders of the Defendant''s company who is in his opinion majority share holders. The Petitioner was not allowed to intervene in the matter at that stage.

Mr. S.B. Mukherjee, Learned Senior Counsel appearing for the Petitioner contended by citing the order of the Single Bench dated March 5, 1990 that the Special Officer was allowed to file the written statement and to contest the suit on behalf of the company because the appeal was not finally disposed of at that juncture but the situation of making the present application is different when the appeal has already been disposed of.

By citing a judgment in Hiralal Patni Vs. Loonkaram Sethiya and Others, he contended that durations of the Receivers are briefly as follows: (i) if a receiver is appointed in a suit until judgment, the appointment is brought to an end by the judgment in the action; (ii) if a receiver is appointed in a suit, without his tenure being expressly defined, he will continue to be receiver till he is discharged; (iii) but, after the final disposal of the suit as between the parties to the litigation, the receiver''s functions are terminated, he would still answerable to the Court as its officer till he is finally discharged; (iv) the Court has ample power to continue the receiver, even after the final decree if the exigency of the case so required.

According to the Petitioner, the Special Officer is discharged as soon as the appeal is disposed of. Therefore, he is no more a representative of the company to represent the suit before the Court of law.

Mr. Mukherjee further contended that even from the petition of the Plaintiff before the company Court, it appears that even the Plaintiff has no faith with regard to the Special Officer and made various allegations as against him in the application before the company Court.

I have carefully considered the submissions made by the Petitioner and called upon Mr. S.P. Sarkar, Learned Counsel appearing for the Plaintiff/Respondent.

The contention of Mr. Sarkar is that the Court has to adjudge first at what point of time the Petitioner has come and what is the purpose of making this application. According to Mr. Sarkar even after the disposal of the appeal about 8 years have elapsed and now the Petitioner has not come with a plea to defend the suit on various fictitious grounds. The litigation brought before, the company court and the litigation brought before this Court are totally different. The litigation before the company court arose out of a right of Directorship over and in respect of the company, wherein the instant suit was instituted by the Plaintiff for his remuneration as against Director of the company. The relationship herein is master and servant which is altogether different from the subject matter before the company court. The Special Officer filed his written statement. Initially, a Single Bench of this Hon''ble Court disallowed intervention of the Petitioner in the suit but allowed to assist the Special Officer, even, this Court at the stage of making oral application disallowed the similar prayers.

He further contended that even on the other day, Special Officer was directed by this Court to bring and produce all the papers and documents before this Court which was done at the instance of the Special Officer and kept under the custody of the Registrar, Original Side of this Hon''ble Court.

Incidentally he contended that the Board of Directors consisted of three persons out of which first one is deponent under the affidavit in support of the petition, second one is dead and third one is according to the Plaintiff/Respondent cannot be in any circumstances to be considered as a Director.

In any event, I have to adjudge the effect of the dismissal of default of the appeal by a Division Bench of this Court in connection with the Company petition. Admittedly, the Trial Court''s order will rise in view of the dismissal of the appeal for default irrespective of pendency or no pendency of the Special Leave Petition. Trial Court''s order dated June 6 and 7, 1984 say that the present Board of Directors of the company is superseded. The Special Officer will hand over the charge of the company to the new Board of Directors after the same is constituted. The Special Officer will file a report after handing over charge of the companies to the new Board. Till the new Board is elected the Special Officer will be in-charge of the affairs and the management of the company. Therefore, by disposal of the appeal in default the right of the Petitioner cannot rise automatically irrespective of the nature of the work being ministerial or non-ministerial as alleged or at all.

I have also taken note of the para. 2 of the petition wherein it is admitted that the Board of Directors of the Defendant company, who were purportedly elected in the meeting held on September 21, 1984, could not take charge of the affairs of the Defendant company.

The interpretation of Mr. Mukherjee on behalf of the Petitioner that by virtue of an interim order of the Appeal Court the Special Officer was allowed to continue till the disposal of the appeal and since the appeal is dismissed Special Officer is no longer there is no acceptable by this Court. According to me since the appeal is dismissed for default, all the interim as passed by the Appeal Court time to time is now merged with such dismissal and give rise the scope and effect of the order of the Trial Court. Therefore, order of the Trial Court as to the power of Special Officer exists.

Under the circumstances, the suit court has no other alternative but to adjudge the right of representation according and this being the position that right of representation of the company is under the dispute, the Court cannot direct such parties to represent the suit as a Defendant save and except the right already accrued under an order of Single Bench of this Court dated March 5, 1990.

So far the second prayer of the Petitioner for stay of the suit till the disposal of the SLP by the Supreme Court is concerned, this Court is also unable to accept the contention of the Petitioner due to reason that the disposal of the suit cannot be prejudicial in disposing of the Special Leave Petition. In other words, the SLP arising out of a company petition at the instance of the Plaintiff in which the cause of action is oppression and mismanagement cannot be the subject matter before the Court hearing the suit in connection with his salary and perquisites as Director of the company.

Therefore, the application is dismissed with costs assessed 300 GMs. but payment of such cost by the deponent taken out the application in the name of Company is reserved till the disposal of the suit. Let the suit be placed in the appropriate list of hearing for early disposal on July 13, 1998.

The Special officer and all parties are to act on a signed copy of the minutes of the operative part of the order.