C.A. Nos. 40 and 53 and of 2010 and C.P. No. 252 of 1985. Case: 1. Subrata Sen and Anr. 2. Nischintapur Tea Company Limited Vs 1. Nischintapur Tea Company Limited and Ors. 2. Ajit Kumar Agarwal. Company Law Board
| Case Number | C.A. Nos. 40 and 53 and of 2010 and C.P. No. 252 of 1985 |
| Counsel | For Appellant: S.B. Mookerjee, Sr. Adv. and Chanchal Kumar De, Adv. in C.A. No. 53 of 2010, Pratap Chatterjee, Sr. Adv., Promit Kr. Roy, Aditya Kundaliya, Anshumala Bansal, Advs. in C.A. No. 40 of 2010 and For Respondents: S.N. Mookerjee, Sr. Adv., Ratnanko Banerjee, S. Agarwal and M.Z. Rahaman, Advs. |
| Judges | Sanjib Banerjee, J. |
| Issue | Companies Act, 1956 - Sections 111A, 156, 237, 397, 398, 403 and 406; Civil Procedure Code (CPC) - Sections 144, 151 and 152 - Order 1, Rule 8 - Order 21, Rule 100 - Order 34, Rule 4(1); Constitution of India - Article 215; Companies (Court) Rules, 1959 - Rule 88(2) |
| Judgement Date | March 11, 2010 |
| Court | Company Law Board |
Judgment:
Sanjib Banerjee, J.
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A piquant situation has arisen with the parties claiming that there was an obvious mistake in the order dated April 12, 2007 passed on an application in proceedings under Sections 397 and 398 of the Companies Act; and, another person suggesting that there was neither any mistake in the recording of the order nor should it otherwise be corrected since valuable rights have accrued pursuant thereto.
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One Amita Sen, since deceased, instituted CP No. 252 of 1985 under Sections 156, 237, 397, 398, 403 and 406 of the Companies Act, 1956 complaining of there being a serious dispute as to the structure of the company''s paid-up capital and citing oppression of the shareholders and mismanagement in the affairs of the company. The original petitioner claimed to be entitled to 3472 equity shares amounting to 15.1 per cent of the valid paid-up capital in the company. The original petitioner also claimed to have the support of shareholders making up a further 7.11 per cent of the total paid-up capital in the company.
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Following the death of the original petitioner, the action was continued in the name of her four sons upon the petition being amended pursuant to orders dated December 21, 2005 and January 24, 2006. The amendments were carried out on or about February 8, 2006.
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CA No. 302 of 2007 was taken out in April, 2007 by three of the substituted petitioners. The prayers in the Judge''s summons dated April 5, 2007 were as follows:
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An order should be passed that the aforesaid company petition be treated as withdrawn and all applications connected thereto as not pressed.
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Such further and/or other orders be made and directions be given as to this Hon'ble Court may seem fit and proper.
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The affidavit in support of the summons ran into six paragraphs with the first as the introduction and the fifth setting out the prayers from the Judge''s summons. The last paragraph claimed the statements in the affidavit to be true to the knowledge of the applicants. The substantive averments in support of the orders sought on the application are found at paragraphs 2, 3 and 4 thereof:
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Upon death of the said Mrs. Amita Sen, (1) Mr. Subrata Sen, (2) Mr. Sudipta Sen, (3) Mr. Ranjan Sen, (4) Mr. Sanjoy Sen, have been substituted in said Petitioner as the Petitioners in place of the said Mrs. Amita Sen.
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Subsequently, the Petitioner No. 2 in the company petitioner Mr. Sudipta Sen died on 16.4.2006 but no substitution in his place have been made as yet.
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We, do not want to proceed and/or continue with the Company Petition and/or contest the Company Petition any further and as such wants to withdraw the said Petition and all applications connected thereto as not pressed.
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In fact, the cause title running into three pages was longer than the body of the application. It was, however, indicated in the cause title in CA No. 302 of 2007 that the application was for withdrawal of Company Petition No. 252 of 1985 and all connected applications.
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The application for withdrawal of the Sections 397/398 proceedings appeared on board on April 12, 2007. What transpired at the obviously brief hearing cannot be recounted with any accuracy nearly three years down the line. The order that came to be made upon the hearing is set out:
The Court:- It is submitted on behalf of the applicants that the matter need not be proceeded with.
Company Application No. 302 of 2007 is dismissed as not pressed.
There will be no order as to costs.
Urgent photostat certified copy of this order, if applied for, be made available to the parties concerned upon compliance with all requisite formalities.
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The applicants in CA No. 53 of 2010 narrate the preliminaries in the first four paragraphs of the affidavit in support of the summons and mention that several orders were passed in the Sections 397/398 proceedings including orders dated June 21, 1985, July 3, 1986 and September 18, 1987. These applicants state that the order of June 21, 1985 "provided for an interim order of status quo to be maintained with regard to the shareholding of the respondent company." Paragraphs 5 to 10 of the application read as follows:
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The applicants state that during the pendency of the said proceedings, the applicants had entered into a terms of settlement and a Memorandum of Understanding dated 26th February, 2007 for the purpose of sale of their shares and rights in the respondent company. In terms of such Memorandum of Understanding and terms of settlement, the then petitioners, namely, the three surviving sons of Mrs. Amita Sen including the applicants had abandoned C.P. No. 252 of 1985 and all applications thereto. The then petitioners including the applicants had also waived all their rights arising out of the petition and declared that they shall not press for any orders passed in the petition. The then petitioners including the applicants had also agreed to withdraw C.P. No. 252 of 1985 and also cause vacating of all orders with retrospective effect within 30th April, 2007. The then petitioners under the Memorandum of Understanding had received the entire consideration for the transfer of their shares and had given up all their rights in respect of the respondent company. The applicants crave leave to refer to the said terms of settlement and Memorandum of Understanding at the time of hearing of this application, if necessary.
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In the aforesaid circumstances, the then petitioners including the applicants had caused an application to be prepared and filed before this Hon''ble Court for withdraw of the company petition being C.P. No. 252 of 1985 and all applications connected thereto. This company application was affirmed and filed before this Hon''ble Court on 5th April, 2007. The Judge''s Summons was made returnable before the Hon''ble Company Court on 12th April, 2007. A copy of the Judge''s Summons along with a copy of the affidavit in support of the Judge''s Summons are annexed hereto and collectively marked "A". The petitioners in C.A. No. 302 of 2007 had engaged one Mr. Sushil Kumar Saha as the Advocate-on-Record for moving the said application and for withdrawal of C.P. No. 252 of 1985 and all applications connected thereto. The intention of the applicants was to withdraw the petition and to have all interim orders vacated so as to give effect to the Memorandum of Understanding as they had no further interest in the said company matter.
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We say that an order was passed on the said application on 12th April, 2007. A copy of the said order dated 12th April, 2007 is annexed hereto and marked "B". The applicants after 12th April, 2007 had not given any further attention to the orders and was under the impression that the company petition being C.P. No. 252 of 1985 and all applications connected thereto had been dismissed as withdrawn.
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We say that all of a sudden, in or about 30th January, 2010 the applicants were contacted by the present directors of the respondent company and the applicants were shocked to know that in connection with another proceedings, it has been contended that C.P. No. 252 of 1985 and the applications in connection thereto has been shown pending in the Case Status Information System of this Hon''ble Court. A copy of the Case Status Information System of this Hon''ble Court is annexed hereto and marked "C".
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We say that we are surprised to find out about the pendency of C.P. No. 252 of 1985 as prayers have been made before this Hon''ble Court for dismissal of C.P. No. 252 of 1985 on 12th April, 2007. Order was also passed on 12th April, 2007 on the application of the applicants. However, after making further enquiries on January, 2010 and after perusal of a copy of the order dated 12th April, 2007, it appears that in the said order due to inadvertence or mistake on the part of the advocates appearing for the applicants as well as the respondent company, it has been recorded that C.A. No. 302 of 2007 has been dismissed as ''not pressed''. We state and submit that the intention of the applicants and the then petitioner was to withdraw C.P. No. 252 of 1985 and not have C.A. No. 302 of 2007 dismissed. Such mistake is apparent on the face of the record and on the face of the order dated 12th April, 2007. We further state and submit that the mistake on the face of the order had not been noticed earlier by the applicants and the advocates appearing for the applicants also did not point out such obvious mistake.
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In the aforesaid facts and circumstances, we have been advised and we have made this application for correcting and/or rectification of the order dated 12th April, 2007 so as to reflect the dismissed of C.P. No. 252 of 1985 and all applications in connection thereto. We state and submit that, in any event, C.P. No. 252 of 1985 and all applications in connection thereto should be treated as dismissed as withdrawn on and from 12th April, 2007. The applicants had no interest and have not proceeded with C.P. No. 252 of 1985 or any application in connection thereto on and from 12th April, 2007.
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The applicants claim that the mistake in the order is prejudicial to the interest of the applicants and also to the company and its other shareholders. They assert that they had accepted and acted on the basis that the petition and all applications therein had been dismissed and, consequently, all interim orders stood vacated. The applicants say at paragraph 3 of the application that one of the substituted petitioners, Sudipta Sen, had died a bachelor and there was no need for further substitution since his only legal heirs were his three brothers who were already on record. Sudipta Sen had died prior to CA No. 302 of 2007 being made though such application did not specify that his heirs were already on record. Paragraph 13 of the affidavit in support of summons in CA No. 53 of 2010 indicates that a second of the substituted petitioners had died on February 6, 2009 and since he was a bachelor his heirs were...
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