* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 23.12.2011
% Co.A.(SB) 98/2011 & Co. Appl. Nos. 2542-43/2011
STAR LIGHT CREDIT (INDIA) LTD. ..... Appellant
Through: Mr. Sandeep Sethi, Senior
Advocate, with Mr. Anurag Yadav,
Advocate.
versus
SH. ROBIN GUPTA & ORS. .....Respondents
Through: Mr. Amit Sibal & Mr. Rajnish Sinha,
Advocates for the respondents No.
1 to 20.
Ms. Ranjana Roy Gawai &
Ms.Varudha Sen, Advocates for the
respondents No. 21.
Mr. Netesh Jain, Advocate for the
respondents No. 22 to 34.
VIPIN SANGHI, J. (Oral)
Caveat No. 1171/2011 Since the caveator has put in appearance, the caveat stands discharged.
Co.A.(SB) 98/2011 Page 1 of 7 Co.A.(SB) 98/2011 & Co. Appl. Nos. 2542-43/2011
1. The appellant-M/s Star Light Credit (India) Ltd., in this appeal under Section 10F of the Companies Act, 1956, assails the order dated 29.11.2011 passed by the Company Law Board (CLB) in C.A. Nos. 747/2010 and 748/2010 in Co. Pet. No. 35/ND/2010 pending before it.
2. By the impugned order, the CLB has allowed the aforesaid two applications. Whereas C.A. No. 747/2010 had been preferred by the petitioners before the CLB to seek amendment of their company petition under Sections 397 & 398 of the Companies Act, C.A. No. 748/2010 had been preferred by them to implead M/s Star Light Credit (India) Ltd, the appellant herein, as a party respondent.
3. The primary grievance of the appellant is that both these applications have been allowed by the CLB without any notice to the appellant, thereby denying the appellant an opportunity to oppose the said applications. The other grievance of the appellant is that while passing the impugned order, the CLB has returned findings of fact against the appellant without even giving an opportunity to the appellant to defend its position.
4. In support of its submission that that the aforesaid application for impleadment could not have been allowed without prior notice to the appellant, and without granting an opportunity to the appellant to oppose the application, the appellant has placed reliance upon two decisions, namely Tulsidas P. Kheraj & Anr. vs. Association of Co.A.(SB) 98/2011 Page 2 of 7 Engineering Workers & Ors., 2001 (3) MhLJ 572; and Robust Hotels (P) Ltd. & Ors. Vs. E.I.H. Limited, MANU/TN/2327/2010.
5. The appeal is opposed by those of the respondents, who are petitioners before the CLB. Respondent no. 17 has appeared on Caveat and rest of the respondents have appeared on their own, even before notice could be issued in the matter. It is argued by learned counsel for the Caveator/respondents/petitioners before the CLB that the said petitioners had sought amendment of the company petition preferred under Sections 397 & 398 of the Companies Act in relation to the affairs of M/s Sunair Hotels Limited, so as to assail the transfer of 42,57,500 equity shares of M/s. Sunair Hotels Ltd. held by petitioner No. 13, i.e. International Commenter Limited (ICL) before the CLB in favour of the appellant herein, i.e. M/s Star Light Credit (India) Ltd. The petitioners before the CLB had also sought to assail that the transfer of 44,800 equity shares of M/s. Sunair Hotels Limited held by petitioner No. 14 to respondent No. 2 in the company petition. The ground of challenge was that these transfers had been done without following the due procedure of law.
6. It is argued that the said amendment application had been opposed by the existing respondents in the company petition. However, since the CLB found merit in the said application, the amendment was allowed. It was only consequential to the said amendment being allowed, that the appellant herein was impleaded as Co.A.(SB) 98/2011 Page 3 of 7 a party respondent since it is the transfer of 42,57,500 equity shares of M/s. Sunair Hotels Ltd. in its favour, which was sought to be assailed. The said challenge could not have been made behind the back of the appellant and the appellant is a necessary party in the company petition after its amendment. It is also argued by the learned counsel for the contesting respondents that the so-called findings are only a prima-facie view formulated by the CLB on the basis of the material before it, and no final view has been taken, or finding returned, by the CLB.
7. Learned counsel for the contesting respondents further submits that it is not necessary that before impleading a party respondent, that party should necessarily be first put to notice and given an opportunity to be heard before it is so impleaded as a party respondent. In this behalf reliance is placed on a Division Bench judgment of this Court in Walchandnagar Industries Ltd. Vs. Saraswati Industrial Syndicate Ltd. & Anr, 178 (2011) DLT 768 (DB).
8. Having heard learned counsels for the parties and perused the impugned order, as well as the judgments relied upon by the parties, I am of the view that there is no merit in this appeal and the same deserves to be dismissed. The case of the petitioners before the CLB in their application to seek amendment was that at the time of filing of the company petition they were not aware of the alleged transfer of their shareholding in M/s Sunair Hotels Limited, in favour of the Co.A.(SB) 98/2011 Page 4 of 7 appellant herein, i.e. Star Light Credit (India) Ltd. and in favour of respondent No. 2 before the CLB respectively. According to the petitioners before the CLB, said transfers were illegal. The petitioners before the CLB were entitled to assail the said transfers of the shares of M/s Sunair Hotels Limited. The said challenge could have been raised in the already filed company petition under Sections 397 & 398 of the Companies Act in relation to the affairs of M/s Sunair Hotels Limited, or in an independent proceeding. If the said petitioners before the CLB had assailed the said transfers in the originally filed company petition, they could not have been precluded from raising the said challenge and, at the initial stage itself, they could have impleaded the appellant herein, i.e. Star Light Credit (India) Ltd, and the appellant could not have raised a grievance that its impleadment in the company petition could not have been made without putting it to notice, or granting it a hearing. However, the appellant would have had the right to move an application to seek its deletion from the array of respondents in the company petition, if, according to it, it was not a necessary or a proper party to the company petition. That right is available to the appellant Star Light Credit (India) Ltd. even today.
9. The CLB has recorded its reasons for allowing the two applications, namely for amendment of the company petition as well as to implead the appellant herein as a party respondent, inter alia, in para (c). The CLB has recorded in this para as follows: Co.A.(SB) 98/2011 Page 5 of 7
"(c) Unlawful transfer of the shareholding of P-13 and P- 14 in R-1 to Star Light amounts to dilution of their shareholding in R-1 Company. Company Petition CP No.35(ND)/2010 is a composite petition u/s. 397, 398, 399 r/w Section 111A, 402 and 403. The relief for rectification of Register of Members of R-1 Company to restore the shareholding of P-13 and P-14 has also been sought by CA No.747/2010. It would, therefore, be unjust to direct the petitioner P-13 and P-14 to file a separate petition for the reliefs sought by CA No. 747/2010 and CA No. 748/2010. It is incorrect to say that issue of transfer of shares held by P-13 and P-14 in R-1 to Star Light and R-2 respectively could only be alleged as an act of oppression in P-13 & P- 14 Companies by a separate Company Petition as it relates to the affairs of P-13 & P-14 companies only."
10. The findings of the CLB are based on the prima-facie evaluation of the case, and the CLB has not returned any definite findings of fact to the effect that the petitioners in the company petition were not aware of the transfer of the shareholding of M/s Sunair Hotels Limited, inter alia, in favour of the appellant herein on the date of filing of the company petition, i.e. 03.03.2010. The CLB has taken note of the fact that, according to the petitioners in the company petition, they learnt about the transfer only on 04.11.2010 at the Annual General Meeting (AGM) of M/s Sunair Hotels Limited.
11. It goes without saying that it shall be open for the appellant and the other respondents in the company petition to meet the case of the petitioners in the company petition, and only thereafter the CLB shall arrive at its definite findings of fact.
12. So far as the grievance of the appellant that it should have been put to notice, and heard on the application for impleadment, whereby Co.A.(SB) 98/2011 Page 6 of 7 it was proposed to implead the appellant is concerned, I again find no merit in the appellant's submission. The Division Bench of this Court in Walchandnagar Industries (supra) held:
"..... ..... ..... ..... ..... In the normal course, it is a contradiction in terms to issue notice of an application seeking the impleadment of a party to the party proposed to be so impleaded. If the Court is convinced by the Plaintiffs submission of the necessity and expediency of impleading the proposed parties, the proposed party should be impleaded and notice would thereafter be issued to it. There is no scope, nor is this the practice, for obvious reasons, at the very first instance and at the very initiation of the suit to show cause why it should be arrayed as a defendant. Of course, it is always open to the defendant as it would be available to a party impleaded in the course of litigation to file an application under Order I Rule 10(2) of the CPC for striking it out of the array of parties."
13. The observations in the said decision bind me. I am not impressed by the observations made in Tulsidas P. Kheraj (supra) and Robust Hotels (P) Ltd. (supra) which are not binding but have only persuasive force. These decisions do not say what prejudice would be caused to a party, who is impleaded in the lis without hearing him where the relief sought in the lis directly impinges on the rights of the impleaded party. I reject the appellant's reliance on the aforesaid two decisions.
14. For the aforesaid reasons, the appeal stands dismissed.
VIPIN SANGHI, J DECEMBER 23, 2011 'BSR' Co.A.(SB) 98/2011 Page 7 of 7