(d) Board of Management and/or Committee of Management will tako necessary steps to hold a meeting
of the shareholders and constitute a Board of Directors as and when possible after issuing notice to the
shareholders by post or by publishing such notice once in Business Standard.
7. A report dated 25 August 1992 filed by the Special Officers suggests that
the company to the Special Officers. Thereafter, innumerable
correspondence has been issued by one of the Special Officers i.e. Mr.
8. The underlying complaint in all these applications is one of fraud. It is
9. During the interregnum, in terms of a letter issued by Punjab National
pittance. The constitution of Nomura Investment and Financial Limited
are Rosario Peter, Pradip Choudhury and Anju Choudhury. Admittedly,
Agarwal. The said Pradip Choudhury is also one of the shareholders of
Nomura. Other shareholders of Nomura include Amit Choudhury and
Choudhury. Anshuman Agarwal being the son of the said Arun Kumar
Agarwal is also a shareholder of Nomura. None of the above allegations
have been controverted by Arun Kumar Agarwal or by any of the parties.
his family members, employees and stooges. In fact, Mr. Arun Kumar
shareholder of Nomura. Nomura has no revenue income and as per the
Balance Sheets & Profit & Loss Account is carrying on no business. As a
contested by Mr. Arun Kumar Agarwal on both sides, i.e, as the applicant
and the respondent/opposite party company (in liquidation). Although,
assigned to Nomura. As appears from the affidavit filed in C. A. No. 1838
of 2021, the defendant/opposite party no. 1, in the DRT proceeding is the
company (in liquidation), and service on its behalf is being received by Mr.
Arun Kumar Agarwal, as Special Officer. In such circumstances, there is
10. Mr. Arun Kumar Agarwala is also one of the directors of Reliance Firebrick
proceedings purchased shares of the company (in liquidation). Mr. Arun
18 March, 2020. However, the list of shareholders would inter alia, show
that all the family members of the said Mr. Arun Kumar Agarwala
including himself are the shareholders of the said company. In such
through himself, his associates, family members, relatives and stooges.
11. There has been no compliance with the directions contained in the order
dated 12 December 1991. There is no accountability of the assets and
December 1991. The specific allegations against the said Arun Kumar
Agarwal are that Mr. Arun Kumar Agarwala has wrongfully and illegally
which was an established casting unit. Mr. Arun Kumar Agarwala has
5, M.M. Feeder Road, Belghoria, Kolkata by way of plotting and the sale
proceeds remain unaccounted for. Mr. Arun Kumar Agarwala has also
purchasers to lift additional scrap/machineries in excess of 14,040 tons.
Mr. Arun Kumar Agarwala as a Special Officer has also dealt with large
to the company (in liquidation) and has not accounted for the same. Mr.
machineries of the company (in liquidation) situated at
Koderma/Hazaribagh/Giridih. Mr. Arun Kumar Agarwala has not taken
1991. There is also no accountability insofar as the remaining assets and
12. For convenience, the prayers made in the different applications are set
B) An order be passed directing the official liquidator to examine the conduct of
Mr. Arun Kumar Agarwala in accordance with law and, if found guilty
compel him to repay or restore the money or property or any part thereof
with interest at such rate as this court thinks just to the company or to
contribute such sum to the assets of the company by way of compensation;
C) An order be passed discharging Mr. Arun Kumar Agarwala to act as special
officer of the company abovenamed with immediate effect;
D) An order be passed directing Mr. Arun Kumar Agarwala to immediately
hand over assets of the company abovenamed to the official liquidator
and/or any other person which this court may deem fit and proper,
E) An order be passed forming a committee of management by appointing all
petitioners along with others family members if required take all necessary
steps to revive the said company and to run the said company;
F) Ad interim orders in terms of the above prayers;
G) Such further or other order orders be passed and/or direction or directions
be given s this Hon'ble Court may deem fit and proper.
C.A. No. 7 of 2023- (application filed by the shareholders of the company namely
Kailash Chandra Agarwala, Umesh Chandra Agarwala, Ratan Kumar Agarwala And
Anand Kumar Agarwala)
A) Leave may be granted to the application to file the instant proceedings with
the short cause title.
B) An order may be passed quashing the report issued by one of the special
officer namely Arun Kumar Agarwala appointed by this Hon'ble Court in the
instant matter;
C) An order may be passed directing the Special Officers appointed by this
Hon'ble court to submit a report before this Hon'ble court regarding the
accounts of the company and the statutory returns filed by the company on
and from 1981;
D) Costs of and incidental to this application be paid by Arun Kumar
Agarwala;
E) Such further or other order or orders be passed and/or direction or
directions be given as this Hon'ble court may deem fit and proper.
C.A. No. 8 of 2023- (application filed by the shareholders of the company namely
Kailash Chandra Agarwala, Umesh Chandra Agarwala, Ratan Kumar Agarwala And
Anand Kumar Agarwala)
A) leave may be granted to the application to file the instant proceedings with
the short cause title;
B) The special officers appointed by this Hon'ble court may be directed to
submit a report before this Hon'ble court, which should specifically contain
the accounts of the company from December, 1991 till date and should
further contain the statutory compliances made by the special officers in
respect of the company or and from December, 1991;
C) The members of the alleged committee of management of the company
namely Mr. Sushanta Dasgupta, one Mr. S. K. Pal and one Mr. Amit Hazra
may be called before this Hon'ble court by issuance of a sub peona;
D) The alleged committee of management of the company namely Mr. Sushanta
Dasgupta, one Mr. S. K. Pal and one Mr. Amit Hazra may be directed to file
a report before this Hon'ble court, which should specifically contain the
accounts of the company from the date if any alleged committee was formed
till date and should further contain the statutory compliances made by the
special officers in respect of the company on and from the date if any
alleged committee was formed;
E) An order may be passed directing examination and cross examination of the
special officers appointed by this Hon'ble court in regard to the report filed
by them before this Hon'ble court and in regard to the assets and the
accounts of the company during their tenure as special officers of the
company;
F) An order may be passed directing examination and cross examination of Mr.
Sushanta Dasgupta, one Mr. S. K. Pal and one Mr. Amit Hazra in regard to
the assets and the accounts of the company during their tenure as the
alleged committee of management of the company, if any formed;
G) The registrar of companies may be directed to file a report containing the
statutory compliances of the company and the shareholding of the company
till December 1991;
H) The registrar of companies may be directed to file a report containing the
statutory compliances of the company, which has been made after
December, 1991 and the shareholding of the company till date;
I) The Calcutta Stock exchange and the Bombay Stock exchange may be
directed to file a report in regard to the statutory compliances made by the
company on and from December, 1991 and the present shareholding of the
company;
J) The Special Officers appointed by this Hon'ble Court in regard to the
company may be discharged and the management of the company may be
transferred back to the shareholders of the company;
K) The alleged Committee of Management of the company consisting of Mr.
Sushanta Dasgupta, one Mr. S. K. Pal and one Mr. Amit Hazra may be
discharged if any and the company may be transferred back to the
shareholders of the company;
L) Ad interim orders in terms of the above prayers;
M) Costs of and incidental to this application be paid by Arun Kumar Agarwal;
N) Such further or other order orders be passed and/or direction or directions
be given s this Hon'ble Court may deem fit and proper.
C.A. No. 9 of 2023 (Application filed by the shareholder of the Company namely Sanjay
Kumar Agarwala)
A) Leave may be given to the applicant to file the instant proceedings with the
short cause title;
B) Leave may be given to the applicant to intervene in the instant proceedings
being impleaded as a necessary party;
C) An order be passed directing the Official Liquidator to examine the conduct
of Mr. Arun Kumar Agarwala in accordance with law and, if found guilty
compel him to repay or restore the money or property or any part thereof
with interest at such rate as this Court thinks just to the Company or to
contribute such sum to the assets of the Company by way of compensation;
D) An order be passed discharging Mr. Arun Kumar Agarwala to act as Special
Officer of the Company above-named with immediate effect;
E) An order be passed directing Mr. Arun Kumar Agarwala to immediately
hand over assets of the Company above-named to the Official Liquidator
and/or any other person which this Court may deem fit and proper;
F) An order be passed forming a Committee of Management by appointing the
petitioners along with others family members if required take all necessary
steps to revive the said Company and to run the said Company;
G) Ad-interim order in terms of above prayers;
H) Such further and/or other orders be passed, direction and/or directions be
given as Your Honour may deem fit and proper.
C.A. No. 10 of 2023 (Application filed by the Intervenor Munish Kumar Agarwala)
A) Leave may be given to the applicant to file the instant application with the
short cause title;
B) An Order be passed that Arun Kumar Agarwal, who has accepted service on
behalf of the Company (In Liquidation), be directed to furnish the information
and documents, requested for in the letter dated 19th April, 2022;
C) The applicant, Munish Kumar Agarwala, the son and legal heir and/or
representative of Ram Kumar Agarwala, be permitted to examine Arun
Kumar Agarwala in accordance with law, and in the event he is found
guilty, to compel him to repay or restore the money or property along with
interest as this Hon'ble Court may deem fit and proper, and to contribute
such sums to the assets of the Company (In Liquidation) by remuneration;
D) An order may be passed directing examination and cross examination of the
Special Officers appointed by this Hon'ble Court in regard to the report filed
by them before this Hon'ble Court and in regard to the assets and the
accounts of the company during their tenure as special officers of the
company;
E) An order may be passed directing examination and cross examination of Mr.
Susanta Dasgupta, one Mr. S. K. Palit and one Mr. Amit Hazra in regard to
the assets and the accounts of the company during their tenure as the
alleged Committee of Management of the company, if any formed;
F) An order may be passed directing the Central Government or any
investigating agency of the Central Government to investigate the offences
and actions committed by the said Mr. Arun Kumar Agarwala as a special
officer, in relation to the Company concerned, alongwith all such powers of
investigating the affairs of the Company as provided under the Companies
Act, 1956, with respect to winding up of the said corporation.
G) The Registrar of Companies may be directed to file a report containing the
statutory compliances of the company which has been made after
December, 1991 and the shareholding of the company till date;
H) Arun Kumar Agarwala be discharged and be directed to hand over the
assets, properties and funds of the Company (In Liquidation) to the
shareholders of the Company (In Liquidation), or any other person as this
Hon'ble Court may deem fit and proper, alongwith other allied and/or
consequential reliefs;
I) Ad interim order in terms of prayers above;
J) Such further and/or other orders be passed and/or direction and/or
directions be given as Your Honour may deem fit and proper.
C. A. No. 11 of 2023- (Application filed by the shareholders of the Company namely
Kailash Chandra Agarwala, Umesh Chandra Agarwala, Ratan Kumar Agarwala and
Anand Kumar Agarwala)
A) An order may be passed directing Arun Kumar Agarwala, being one of the
Special Officers, appointed by this Hon'ble Court to disclose the Annual
Returns of Reliance Firebricks and Pottery Company Limited from the
Financial years 1990-91 till the financial year 2014-2015.
B) An order may be passed directing Arun Kumar Agarwala, being one of the
Special Officers, appointed by this Hon'ble Court to disclose the
shareholding of Chrestien Mica Industries Limited held by Reliance
Firebricks and Pottery Company Limited, from 1990-1991 till 2014-2015.
C) An order be passed directing Arun Kumar Agarwala, being one of the
Special Officers, appointed by this Hon'ble Court to disclose a true and
faithful copy of the accounts of Chrestien Mica Industries Limited during the
time, he was the Special Officer of Chrestien Mica Industries Limited;
D) An order may be passed that the said Arun Kumar Agarwala may be
publicly examined and cross examined as to the conduct of the business of
the company, or as to his conduct and dealings as an officer thereof,
E) An order may be passed sentencing the said Arun Kumar Agarwala to
prison in accordance with Section 540 of the Companies Act, 1956 for
having committed fraud on the said company;
F) An order may be passed such that the Special Officer cannot transfer
and/or alienate the property of the Chrestien Mica Industries Limited to any
third party during the pendency of this instant proceedings;
G) An order may be passed directing the Central Bureau of Investigation
and/or the Serious Fraud Investigation Organization to investigate into the
activities of Arun Kumar Agarwala during the period, when he was acting
as the Special Officer of the company and submit a report in respect thereof,
before this Hon'ble Court.
H) Ad-interim orders in terms of prayers above;
I) Costs of and incidental to this application;
J) Such further or other order or orders be passed and/or direction or
directions be given as this Hon'ble Court may deem fit and proper.
13. The Special Officers were represented separately in these proceedings. On
behalf of Arun Kumar Agarwala, it was submitted that all these
applications were barred by limitation and have been filed after a delay of
more than 30 years. Thus, on the ground of inordinate and unexplained
delay all these applications were liable to be dismissed. It is further
contended that the Company Petition as reflected in the website of this
Court stood dismissed and this Court has no jurisdiction to hear these
applications. It is also urged that pursuant to orders of Court, a
Committee of Management had been appointed and they have been
handed over all the funds which were in the hands of the Special Officers
and neither of them are aware as to how the Committee of Management
has utilized the money. The locus of the applicants in all these
applications has also been challenged. It is contended that the applicants
had full knowledge of all the steps taken pertaining to the company (in
liquidation) and all these applications have been filed with oblique
purpose.
14. On behalf of the other Special Officer Mr. A.C. Kar, Advocate, it is
contended that there is undue delay in the filing of these applications. It is
submitted that payment of Rs.72 lacs by the Official Liquidator was never
received by him. The Special Officer has no recollection of opening any
joint bank account. All funds, properties and documents were always in
the hands of Mr. Arun Kumar Agarwala. In fact, there were disputes and
differences between the two Special Officers inasmuch as Mr. Arun Kumar
Agarwala was exclusively running the affairs and management of the
company keeping him in the dark. There is no specific allegation of
wrongdoing against this Special Officer. In this connection, the Special
Officer relies on correspondence to suggest that Mr. Arun Kumar Agarwala
was single handedly representing the company (in liquidation) and
individually taking all steps. For such reasons, there is no negligence nor
wrongdoing which is attributable to this Special Officer and all the
allegations of fraud are directed only against Mr. Arun Kumar Agrwala.
15. None of the above allegations have been denied nor controverted by Mr.
Arun Kumar Agarwala in any of the affidavits or reports filed by him in
these proceedings. The excuse of these transactions having occurred a
long time ago is simply not available to either of the Special Officers who
were and still remain in a position of trustees. The Special Officers being
officers of Court were bound to ensure that the assets, properties, records,
documents and funds of the company are preserved in a proper manner
and the accounts of the company were also maintained and regular
accounts submitted to this Hon'ble Court and by not doing so have
perpetrated fraud on Court. The Special Officers have not only failed to
comply with the order dated 12 December 1991 but have failed to account
for any of the assets and properties of the company (in liquidation).
16. Reports filed by Arun Kumar Agarwala in his capacity as Special Officer
are distorted and only to mislead this Court. The purported Committee of
Management consisting of Susanta Dasgupta, S.K. Palit and one Amit
Hazra was an obvious sham and all three persons were employees and
stooges of Mr. Arun Kumar Agarwala who remained untraceable despite
orders of Court. In any event, the supervisory control of the Special
Officers over any such Committee or Board of Management of the
company (in liquidation) cannot possibly absolve either of the Special
Officers. No details of appointment were ever filed by Mr. Arun Kumar
Agarwala with the Registrar of Companies, Ministry of Corporate Affairs as
directed by the order dated 12th December, 1991. No Annual General
Meeting has been conducted of the company (in liquidation). The last
available directors/shareholders/is only available as of 2 August, 1972.
There are no available records maintained with the Registrar of
Companies (ROC) or Ministry of Corporate Affairs (MCA). No Director
Identification Numbers (DIN) is available for any of the directors. In effect,
there have been no statutory filings with the Registrar of Companies or
with any other authority for more than four decades as would be evident
from the Report filed by the Registrar of Companies.
17. Strangely, despite orders of this Court, the Special Officer Mr. Arun
Kumar Agarwal and his son Mr. Anshuman Agarwal chose not to appear
personally before this Court. The company Nomura Investment and
Financial Ltd. participated in these proceedings and had also filed an
application being CA 12 of 2024. Reliance Firebricks & Pottery was also
represented and had participated in these proceedings. Mr. Arun Kumar
Agarwala was represented through different Advocates throughout these
proceedings. Several charges against Mr. Arun Kumar Agarwala were not
dealt with on merits and an omnibus plea of delay was taken to feign
ignorance of matters which admittedly occurred during his tenure of
Special Officer. It is to be remembered that the charges against Mr. Arun
Kumar Agarwala were directed qua Special Officers appointed by Court
which demanded the utmost degree of honesty, good faith and fairness.
The Courts have always imposed a duty to act with caution and prudence
on fiduciaries.
18. There is simply no accountability nor trace of Rs. 72 lakhs which was
handed over to the Special Officers pursuant to orders of Court. On the
one hand, Mr. Arun Kumar Agarwala in his report has stated before this
Court that the amounts received by him from the Official Liquidator were
deposited in a joint account opened by the Special Officers. On the other
hand, Mr. A. C. Kar, the other Special Officer in his letter dated 29th
April, 2022' has categorically stated that "I never have signed any papers
relating to the operation of any bank account as Special Officer". The
inconsistency and falsity in the stand of the respective Special Officers is
preposterous. The entire action of Mr. Arun Kumar Agarwala in creating a
sham Committee of Management, showcasing the shareholders of the
company, acting through Reliance Firebrick & Pottery Co Ltd and acting
on behalf of the Punjab National Bank through his shell company Nomura
Investment and Finance Limited amounts to fraud on all the stakeholders
of the company and on this Court. Significantly, any dues insofar as the
Punjab National Bank ought to have been paid in full by virtue of the
order dated 12th December, 1991. In the alternative, the matter should at
least have been brought to the attention of this Court. The selective
compliance with the order dated 12 December 1991 is without any
justification.
19. Mr. Arun Kumar Agarwal has and continues to wrongfully and illegally
hold himself to be the person in charge and in exclusive control of the
company (in liquidation). By a letter dated 19th April, 2022, the Advocates
for the applicant in CA 10 of 2023 had requested the Special Officers, to
provide necessary documents and information pertaining to the company
(in liquidation), including particular information relating to compliance
with the order by which they had been appointed dated 12 December
1991. Mr. Arun Kumar Agarwala has sought to rely upon his alleged
medical conditions i.e. vascular dementia and Parkinson's, to shield
himself from non-compliance with the orders and directions of this Court.
Strangely, the said Mr. Arun Kumar Agarwala had continued to
participate regularly before the Hon'ble High Court at Jharkhand, which
would be apparent from the orders dated 5th May, 2022 passed in SBI v.
Premlata Devi & Ors. S.A. No. 135 of 2007 and S.A. No. 165 of 2007 with
Christian Mica Industries Ltd., through its Special Officer Arun Kumar
Agarwala, Kolkata v. Smt. Premlata Devi & Ors.:. There has been
conscious attempt to mislead, suppress and conceal material documents
and information from Court by Mr. Arun Kumar Agarwala. The actions of
both the Special Officers who were in the position of trustees cannot be
condoned. There is a deliberate and intentional failure by both of them to
perform a manifest duty cast on them and there has been reckless
disregard of the consequences. It is true that there are no specific
allegations of wrongdoing against Mr. A.C. Kar. Nevertheless, inaction or
shirking to such an extent (having voluntarily accepted the appointment)
is unacceptable and cannot be described as an innocent misjudgment. On
the other hand, the actions of Mr. Arun Kumar Agarwala are calculated, ill
motivated and can only be described as deceitful.
20. Fraud is a thing apart. It vitiates judgments, contracts and unravels all
transactions. No Court will allow a person to keep an advantage which he
or she has obtained by fraud. Fraud avoids all judicial acts, ecclesiastical
or temporal. Any judgment or decree obtained by playing fraud on the
Court is a nullity and non est in the eye of the law or decree and can be
challenged in any Court even in collateral proceedings. Recently, in Vishnu
Vardhan @ Vishnu Pradhan vs. The State of Uttar Pradesh 2025 SCC
OnLine SC 1501, the law has been summarized as follows:
61."In decisions abound, the Courts have consistently nullified orders obtained through
fraudulent means. Key excerpts from some of these decisions read thus:
a. In United India Insurance Co. Ltd. v. Rajendra Singh (2000) 3. SCC 581, this
Court reiterated that fraud unravels everything:
3. "Fraud and justice never dwell together" (fraus et jus nunquam cohabitant) is
a pristine maxim which has never lost its temper over all these centuries. Lord
Denning observed in a language without equivocation that "no judgment of a
court, no order of a Minister can be allowed to stand if it has been obtained by
fraud, for, fraud unravels everything" (Lazarus Estates Ltd. v. Beasley, [[1956]
1 Q.B. 702 : [1956] 1 All ER 341 : [1956] 2 WLR 502 (CA)]).
b. In Shrisht Dhawan (Smt) v. Shaw Bros (1992) 1 SCC 534, it was held:
Fraud and collusion vitiate even the most solemn proceedings in any civilised
system of jurisprudence. It is a concept descriptive of human conduct. Michael
Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to,
'wing me into the easy-hearted man and trap him into snares'. It has been
defined as an act of trickery or deceit. In Webster's Third New International
Dictionary fraud in equity has been defined as an act or omission to act or
concealment by which one person obtains an advantage against conscience
over another or which equity or public policy forbids as being prejudicial to
another. In Black's Legal Dictionary, fraud is defined as an intentional
perversion of truth for the purpose of inducing another in reliance upon it to part
with some valuable thing belonging to him or surrender a legal right; a false
representation of a matter of fact whether by words or by conduct, by false or
misleading allegations, or by concealment of that which should have been
disclosed, which deceives and is intended to deceive another so that he shall
act upon it to his legal injury........
c. In A.V. Papayya Sastry v. Govt. of A.P. (2007) 4 SCC 221, this Court held:
21. Now, it is well-settled principle of law that if any judgment or order is
obtained by fraud, it cannot be said to be a judgment or order in law. Before
three centuries, Chief Justice Edward Coke proclaimed:
"Fraud avoids all judicial acts, ecclesiastical or temporal."
22. It is thus settled proposition of law that a judgment, decree or order
obtained by playing fraud on the court, tribunal or authority is a nullity and
non est in the eye of the law. Such a judgment, decree or order--by the first
court or by the final court--has to be treated as nullity by every court, superior
or inferior. It can be challenged in any court, at any time, in appeal, revision,
writ or even in collateral proceedings.
23. ***
24. In Duchess of Kingstone, Smith's Leading Cases, 13th Edn., p. 644,
explaining the nature of fraud, de Grey, C.J. stated that though a judgment
would be res judicata and not impeachable from within, it might be
impeachable from without. In other words, though it is not permissible to show
that the court was "mistaken", it might be shown that it was "misled". There is
an essential distinction between mistake and trickery. The clear implication of
the distinction is that an action to set aside a judgment cannot be brought on
the ground that it has been decided wrongly, namely, that on the merits, the
decision was one which should not have been rendered, but it can be set aside,
if the court was imposed upon or tricked into giving the judgment.
25. It has been said: fraud and justice never dwell together (fraus et jus
nunquam cohabitant); or fraud and deceit ought to benefit none (fraus et dolus
nemini patrocinari debent).
21. Since fraud affects the solemnity, regularity and orderliness of
proceedings of the Court and also amounts to an abuse of the process, all
Courts are bestowed with inherent powers to set aside an order obtained
by fraud practiced upon Court. No judgment of a Court, no order can be
allowed to stand if it has been obtained by fraud. This power is necessary
for the orderly administration of the Court's business. All Courts
especially of superior jurisdiction have inherent powers to enable them to
maintain their dignity, secure obedience to its process and rules, protect
its officers from indignity and to punish unseemly behaviour. If this were
otherwise, the entire foundation of the system would be shaken. [Takhar
v. Gracefield Developments Ltd. & Ors. (2019) UK SC 13 and National
Insurance Company Ltd. vs. Maya Devi & Ors. (2024) SCC OnLine SC
4086].
22. Ordinarily, companies are limited liability companies. The special feature
of limited liability of human agencies is prone to abuse and wrongdoing.
Upon a company being wound up by the Court, the Official Liquidator
becomes the custodian, under section 456 of the Companies Act, 1956 of
the company's properties. Such proceedings are in rem and bind all the
stakeholders, creditors and contributories. To this extent, the Company
Court acts as a trustee for all the creditors insofar as the company (in
liquidation) is concerned. The statute requires the Official Liquidator to be
promptly apprised of the company's business and assets and there is a
duty cast on the officers of the company upon an order being made to file
statements before the Official Liquidator and ensure that all of the wound-
up company's assets are placed in his hands. The stringency is necessary
at the end of the company's run i.e. in the liquidation proceedings in order
to ensure that business ventures floated with limited liability by the
human agencies are not deliberately run aground and their assets
fraudulently dissipated before the company is sent into liquidation.
[Official Liquidator vs. Samdev Dasgupta & Ors. 2007 SCC OnLine Cal 751,
Ganapati Commerce Ltd. (In Liquidation) vs. Recovery Officer, Debts
Recovery Tribunal & Ors. 2007 SCC OnLine Cal 576, Stiffel Und Schuh
(India) Ltd. & Ors. vs. Samdev Dasgupta & Ors. (2008)146CompCas119
(Cal) and Oriental Civil Engg. Co. Ltd. (In Liqn.) vs. Sree Ram Bagla & Ors.
2012 SCC OnLine Cal 6626 and].
23. The separate legal personality of a limited liability company was firmly
established by the House of Lords in the leading case of Solomon vs.
Solomon & Co. Ltd. [1897] AC 22. To this extent, a company is a body of
bodies, technically an artificial person composed of natural persons. It is
true that Courts for reason of policy disregard this personality in a
number of exceptional cases. However, the principle of separate corporate
personality continues to remain the bedrock of company law. Now what
did Arun Kumar Agarwala achieve by virtue of orders of the Court?
24. The company was put into liquidation. Thereafter, the Official Liquidator
was side-lined after having taken practically no steps for close to a decade.
Subsequently, Special Officers were appointed and there was a stay of the
winding up order. Arun Kumar Agarwala was an interested party and had
a direct interest in the affairs and management of the company. His
multiple roles as a legal heir of Late Ramanand Agarwala (who was a
shareholder and director of the company) as well as guarantor per se
disentitled him from acting as a Special Officer. This fact was suppressed
from Court which in effect, permitted Arun Kumar Agarwala to operate
solely and exclusively for decades unchecked. During the interregnum as
Special Officer, the said Arun Kumar Agarwala has surreptitiously and in
a clandestine manner purported to become both the single largest creditor
and majority shareholder of the company (in liquidation). In International
Coal Corporation vs. Pure Sitalpur Coal Concern Ltd. AIR 1972 CAL 45, it
has been held as follows:
"14. The position and the powers of a Special Officer have not been provided either in
the Companies Act, 1956 or under any other law. It is settled law that to run the
affairs of the company such as this, a Receiver should not be appointed. In order to
remove a deadlock in a company this Court often had to resort to the appointment of a
Special Officer of the company so that the affairs of the company could be run most
beneficially by way of interim measure through the said Special Officer under the
supervision. Of the Court in the pending matter. It is admitted by and on behalf of all
the parties herein that since quite some time past a practice has grown up in this Court
to make such appointments, in a suitable case if the Court so thinks fit and proper
solely with a view that there might not be any deadlock in the ompany and so that
the affairs of the company might be conducted in a suitable manner through such
Special Officer. As to what would be the powers and functions of such Special Officers
have not been laid down in any of the decided cases of this Court.
15.In my opinion, the powers and functions of a Special Officer must vary in
accordance with the facts of each case but such powers and functions must be such so
as to enable him to run the affairs of the company in the best interest of the company
and its members and under the supervision of the Court. Accordingly, it is always
desirable and, I should say, incumbent upon the Special Officer to take directions from
time to time from the Court appointing him as such Special Officer so that the interest
of the company might be, protected in the best possible manner. In any event, his
powers and functions should not be, and indeed cannot be, such so that he would be
in a position to achieve his own end or that of his group by sacrificing the existing
interests of the other group of shareholders without an order from Court to that effect.
Being the sole Special Officer he cannot have that unlimited power in respect of the
Company unless the Court specifically clothes him with such powers. Being an Officer
of the Court if he would do that, that would be a misuse of his powers. He must not,
without an order of the Court do such things that the interest of the company would
suffer in his hands and his acts would, in any way, be prejudicial to the interest of the
shareholders or creditors or contributories of the company. In my opinion, for the
purpose of deciding this case it is not necessary for this Court to say anything more
about the powers and functions of the Special Officer. Suffice it to say, that in
exercising powers as such Special Officer and in functioning in that position such
Officer shall always look to the interest of the company and whenever any step has to
be taken by him which would be likely to be of controversial nature, the said Officer is
bound to take directions of the Court and to act in accordance with such directions As
a sole Special Officer his position and powers are much lesser than that of the board of
directors which runs the business of the company in accordance with the powers
entrusted to it by the Memorandum and the Articles of the Company and by the
Statute. A Special Officer being an Officer of the Court remains answerable to the Court
for his acts and conduct and as such must obtain the necessary directions from the
Court appointing him to clothe himself with special powers. In that respect his position
and powers are different from that of a director or of a board of directors. He cannot
have the full powers of a director unless the Court vests him with such powers."
25. Thereafter, the appointment of a Committee of Management of persons at
the behest of Arun Kumar Agarwala was equally ill-motivated and illegal.
These persons were obviously name lenders, employees and henchmen of
Mr. Arun Kumar Agarwala and were untraceable notwithstanding orders
of Court. The Special Officers were bound to exercise supervisory control
over the Committee of Management in terms of the order dated 28 June
1993. In effect, Arun Kumar Agarwala managed to create a mask or shield
whereby he single handedly and exclusively without any lawful authority
continued to control and manage all the affairs of the company (in
liquidation).
26. On a conjoint reading of sections 291, 292, 293 in Chapter VI of the
Companies Act 1956, it is ordinarily the Board which is to function on
behalf of the company in a specified manner and on certain specified
conditions and restrictions. The Committee of Management or the Special
Officers could not have greater powers unless specifically conferred by the
Court in the order appointing the Committee of Management giving it
such unrestricted powers. Whether the Committee of Management or the
Special Officers, neither of them were permitted to deal with the assets or
properties of the company (in liquidation) without the permission of the
Court. Strangely, having obtained the initial order of appointment, neither
of the Special Officers nor the Committee of Management ever approached
this Court for any order kind of approval, sanction or ratification. There
have been no filings of any kind whatsoever by either of the Special
Officers. [Pramod Kumar Mittal vs. Andhra Steel Corporation Ltd. & Ors.
(1985) 58CompCas 772 (Cal)]
27. Where a receiver is appointed manager, he can carry out all acts which
are only necessary in terms of the orders of Court. When a Court appoints
a manager of a business or undertaking, it in effect assumes the
management into its own hands; for the manager is the servant or the
officer of the Court and upon any question arising as to the character or
details of the management, it is the Court which must act, decide and
direct where appointed by Court, the Special Officer become responsible to
Court. Similarly, a Committee of Management always acts under the
superintendence and direction of the Company Court. No Special Officer
nor Committee of Management has an unchartered license to do whatever
he or they like. Significantly, there is nothing on record to demonstrate
that the matter was ever subsequently placed before the Company Court
after the appointment of the Special Officers or the Committee of
Management or that any permission, sanction or ratification of any of
their acts pertaining to the company (in liquidation) was ever sought for.
28. The wrongdoings and illegalities of Mr. Arun Kumar Agarwala are
innumerable and all this has unfortunately been done in the garb as
Special Officer. One comes to Court to redress a grievance. The legal
process cannot be utilized for an unfair advantage or for collateral
purposes. These proceedings demonstrate a calculated scheme to abuse
the process of Court. [Ebbvale Limited vs. Andrew Lawrence Hosking
(Trustee in Bankruptcy of Andreas Sofroniou Michaelides 2013 UKPC 1].
The directions issued pursuant to the order dated 12 December, 1991 for
convening an Extraordinary General Meeting of the company were never
complied with. There was no handover of the assets or accountability to
the shareholders or directors of the company as mandated by the Court.
On the contrary, Mr. Agarwala wrongfully and illegally retained possession
and control of the company for approximately four decades using his
appointment as Special Officer as a cloak or guise to defeat the rights of
all stakeholders including keeping all the statutory authorities at bay. Any
appointment as Special Officer could only have been for a limited
duration. Nevertheless, Mr. Agarwala continued to exercise authority and
control of the company till date and represent the company before various
authorities. There is nothing to demonstrate that the unsold stocks of
mica were ever accounted for. The company had leasehold rights over
several mines and substantial reserves in warehousing facilities which
were also unaccountable. Similarly, the immoveable properties of the
company (in liquidation) have not been accounted for. On the contrary,
the Court was misled and material facts suppressed. The effect of the
fraud and the abuse of process is so gross that it vitiates each and every
act of the Special Officers, some of which are void ab initio and others
voidable. The fraud perpetrated by the said Arun Kumar Agarwala
involved not only siphoning off the funds and assets of the company (in
liquidation) but also misutilization of his role as Special Officer. [State of
A.P. vs. Suryachandra Rao: (2005) 6 SCC 149, S.P. Chengalvaraya Naidu
vs. Jagannath (1994) 1 SCC 1, Indian Bank vs. Satyam Fibres (India) Pvt.
Ltd. (1996) 5 SCC 550, T. Vijendradas & Anr. vs. Subramanian & Ors.
(2007) 8 SCC 751 and National Insurance Company Ltd. vs. Maya Devi &
Others 2024 SCC OnLine SC 4086].
29. There has also been no attempt by Arun Kumar Agarwal to justify his
actions as Special Officer. There is no shred of remorse shown by Arun
Kumar Agarwal. Through a chain of ill-designed events and series of
wrongdoings and misdeeds, the company has been fraudulently placed in
the hands of Arun Kumar Agarwal without any responsibility whatsoever.
It is a rule of universal application that no person having fiduciary duties
to dischange far less an officer of Court can be allowed to enter into any
transaction or arrangement in which he has or can have a personal
interest conflicting or which may possibly conflict with interests of those
he is bound to protect. There is ample evidence on record to suggest that
this was a clear case of conflict between his duties as Special Officer and
his personal interest as a shareholder of the company (in liquidation).
Regardless of the delay of the applicants in approaching this Court, such
state of affairs cannot be allowed to continue. Moreover, all this has
transpired when the assets of the company were admittedly in custodia
legis. (M/s. Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti &
Ors. AIR 2007 SC 3079, The Baranagore Jute Factory PLC and Ors. vs. The
Official Liquidator APO 48 of 2020 in CP 2 of 1987 dated 5 August, 2022
passed by the High Court at Calcutta). It is fundamental to our
jurisprudence that Courts while enforcing the law shall forbid it from
being misused. This is a clear case of abuse of process of this Court
whereby the integrity of the legal system has been put at risk. [Jang Singh
v. Brij Lal AIR 1966 SC 1631, Busching Schmitz (P) Ltd. v. P.T. Menghani,
(1977) 2 SCC 835, South Eastern Coalfields Ltd. v. State of M.P., (2003) 8
SCC 648 and Madura Coats Ltd. vs. Dunlop India Ltd. 2012 SCC OnLine
Cal 13214].
30. The last available Annual Reports of the company dated 30 June, 1970
contained in the Report filed by the Registrar of Companies reflects that
there were 70 (seventy) shareholders of the company and five directors.
Prior to the order of winding up, the applicant in CA/10/2023 was the
single largest majority shareholder of the company. The last balance sheet
of the company was filed as on 31 December 1968.From the Report dated
16 January 2023 filed by the Registrar of Companies, it appears that the
records pertaining to the company (in liquidation) have not been
digitalized and the same remain untraceable.
31. Despite orders of Court, the Committee of Management chose not to
appear before this Court. It is true that under the inherent powers which
the Company Court possess, the sky is the limit when it comes to
protecting and preserving the assets of the company but the appointment
of any such Committee may in the pretext of revival emasculate the
liquidation machinery and nullify the object and purpose of the Act. There
is simply no accountability nor justification for any such Committee or the
Special Officers and all this is done in the garb of revival of the company
under section 466 of the Act.
32. Rule 9 of the Company Court Rules 1959 provides as follows:
R.9. Inherent powers of Court - Nothing in these rules shall be deemed to limit or
otherwise affect the inherent powers of the Court to give such directions or pass such
orders as may be necessary for the ends of justice or to prevent abuse of the process of
the Court.
On a plain reading of Rule 9, the powers of widest amplitude have been
bestowed on the Company Court. The only discretion which the law
recognizes is discretion in accordance with law. The exercise of any
discretion must always be in good faith, fairly, for the purpose for which
the power is being conferred and without exceeding the limits of such
power. No discretion can be legally unfettered nor unconstrained so as to
be potentially arbitrary. The orders dated 12 December 1991 and 28 June
1993 were passed in exercise of the power under section 466 of the
Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules,
1959. Obviously, any scheme for running of the company has failed and it
is in the best interests of all stakeholders that the company be handed
over to its shareholders.
33. In view of the considerable long passage of time and the fact that no
creditor (secured or unsecured) nor employee nor any third party having
approached this Court, there is no question of the company continuing in
liquidation. As stated above, the company has sufficient assets all of
which were concealed from Court. It is well settled that winding up should
be resorted to as the last resort after exhausting all remedies. In this
context, on a combined reading of the Reports dated 15 November 2022,
25 November 2022 and 20 December 2022 filed by the Officer Liquidator
and the order dated 12 December 1991, there were admittedly immoveable
properties which belonged to the company (in liquidation). These are
sound reasons as to why the company should no longer be treated to be
winding up and the assets and properties which are left or can be traced
should potentially benefit the company. All these facts have been
concealed from Court at the contemporaneous point of time and do not
also find any mention in the order dated 5 November 1979. All that Arun
Kumar Agarwala has achieved through suppression, manipulation and the
pendency of these proceedings is to ensure that the company remain in
his exclusive and absolute control. In any event, Arun Kumar Agarwala
could never have acted unilaterally or singly in terms of the order dated 12
December 1991. To this extent, all dealings, transactions or
representations by Arun Kumar Agarwala acting singly are without lawful
authority and non est.
34. CA 12 of 2024 is an application filed by Nomura Investment and Finance
Private Limited as assignee of the erstwhile Punjab National Bank, a
creditor of the company (in liquidation) inter alia seeking transfer of this
company petition and all connected applications to the National Company
Law Tribunal (NCLT).The applicant alleges to have obtained a registered
assignment of debt dated 31 March 2011 in its favour from Punjab
National Bank being the largest creditor of the company (in liquidation).
35. It is contended on behalf of the applicant that this company petition
alongwith all connected applications ought to be transferred to the NCLT
on the ground that no sale of assets has yet taken place and in view of the
embargo under the Companies Act, 2013, this Court has no jurisdiction to
proceed any further with this application. It is also urged that this
company petition stood dismissed as appears from the Status Report of
the Official Website of High Court as far back as on 15 August, 1947.
36. On behalf of the contributories of the company in liquidation it is
contended that, the applicant has no locus to file this application. This
application has been filed with oblique, collateral and sinister motive. It is
improbable that a petition which was instituted as on 1 January 1979
could have been disposed of on 15 August, 1947. The applicant is seeking
to take advantage of a glaring and obvious mistake of the records of this
Court. In any event, upon the erroneous entry being discovered, the
Department of this Court has since corrected the same and no benefit can
be taken by the applicant. There are serious issues of fraud, suppression
and interpolation of the Court records raised in these proceedings which
can be only adjudicated upon by this Court. As such, there is no merit in
this application and the same is liable to be dismissed with exemplary
costs.
37. By an order dated 14 November, 2022, this Court had observed that the
records of this proceeding reflected that this Company Petition had been
disposed of as far back as on 15 August 1947. This was an obvious
mistake in the Court records and subsequently the records have been
corrected by the Department of this Court. The status of dismissal was
ultimately revoked on 18 July 2023 and the Court records corrected. A
petition filed in 1979 could not have possibly been disposed of as on 15
August 1947. This is preposterous. In fact, the diverse orders which have
all been passed would demonstrate that this Court has been in seisin and
the Company Petition is yet to be brought to a logical conclusion.
38. The prayer for transfer of this proceeding to NCLT is equally mischievous.
The reason behind seeking such transfer is understandable but cannot be
acceded to. In any event, such prayer is inconsistent, irreconcilable and
mutually destructive to the plea that the application had been dismissed
as far back as in 1947. On the contrary, such recording only goes to
demonstrate to what extent the system has been penetrated and the
process abused. There is also a serious issue insofar as locus of the
applicant is concerned. The applicant had been incorporated during the
pendency of these proceedings. As stated hereinbefore, the shareholders of
the applicant are all closely related and family members of Mr. Arun
Kumar Agarwala. In view of the grave allegations of fraud and abuse of
process of this Court which have been made by the contributories any
such issue can only be determined by this Court. Notwithstanding the
amendment to the Companies Act 1956 and the requirement of transfer to
the NCLT, there remains a limited discretion of the Company Court in
appropriate cases to retain proceedings with the High Court. [Action Ispat
and Power Pvt. Ltd. vs. Shyam Metalics and Energy Ltd. (2021) 2 SCC 641]
39. In such view of the matter, CA 12 of 2024 is dismissed as being frivolous
and meritless. This is an application filed in desperation to prevent any
enquiry into the fraudulent acts pertaining to the company (in liquidation)
from scrutiny by this Court. There are serious issues which also go to the
bonafides of the applicant in filing this application.
40. The original records of these proceedings remain untraceable nor are any
current records available with the Registrar of Companies. In view of the
absence of the original records and the presumption under section 114(c)
of the Evidence Act 1872 all allegations as to the veracity and genuineness
of the orders dated 28 June 1993 and 11 June 1993 passed by the
Hon'ble Justice Kalyanmoy Ganguly stand rejected.
41. The wrong which has been done is ultimately 'a wrong to the company'
and it is the company which at its general meeting should decide any
future course of action and that decision is to be made by the majority of
the shareholders. In this context, the company can only act through. the
Board of Directors and the majority of the shareholders. The last available
admitted and indisputable records reflect that as on 30 June 1970 filed
before the Registrar of Companies there were 70 shareholders of the
company and five directors. The applicants in CA 10 of 2023 are the
majority shareholders and this would ultimately be decided at the
proposed meeting. There are no creditors, employees, nor any third party
who has approached this Court for redressal of their grievances. It is true
that the period of 30 years cannot be glossed over in granting reliefs but
this does not justify the status quo continuing ad infitum. Both the Special
Officers are of an advanced age and the applicants have undoubtedly been
sitting over their rights for a long time. Nevertheless, the subsequent
events which have transpired post the winding up order dated 5 November
1979 and the fraud perpetrated on Court cannot be ignored. In such
circumstances, there must be both a pragmatic and holistic approach in
granting reliefs. Accordingly, the following directions are passed:
a. The orders dated 12 December 1991 and 28 June 1993 respectively
stand recalled and vacated.
b. There shall be a permanent stay of the winding up order dated 5
November 1979.
c. The Special Officers Mr. Arun Kumar Agarwala and Mr. A.C. Kar
and the Committee of Management namely S.K. Palit, Mr. Sushant
Dasgupta, Mr. Amit Hazra and the Official Liquidator stand
discharged.
d. The Special Officers, the Committee of Management and the Official
Liquidator are directed to hand over any of the assets, properties,
books and other records pertaining to the company (in liquidation)
to the Board of Directors at the general meeting to be held in terms
of the directions below.
e. Liberty is granted to any of the shareholders, their heirs, legal
representatives or assigns on the basis of the last available Register
of Members as reflected on 30 June 1970 to convene a meeting and
decide on the future management of the company to be re-
constituted for the purposes of running the company.
f. The company is also directed to forthwith reconstitute the Board of
Directors preferably with representatives from each of the six groups
of the Agarwala family details whereof have been mentioned in
paragraph 2 above.
g. Appropriate steps be forthwith taken for rectification of the Register
of Members to reflect the shareholding of the company as on 30
June 1970.
h. In view of the gross fraud and abuse of process at the hands of Arun
Kumar Agarwala, any transfer of shares which has taken place post
the winding up order dated 5 November 1979 by Arun Kumar
Agarwala is declared to be void and should not be taken into
account for the purposes of holding the above meeting. In
particular, any transfer of shares in favour of Reliance Firebricks
and Pottery Company Limited is declared to be illegal, null and void
and no effect be given to the same.
i. As far as Nomura Investment Private Limited is concerned, the
company is directed to take a final decision as to further steps to be
taken insofar as the assignment of the debt and the dues of the
erstwhile Punjab National Bank are concerned and whether to
adopt, ratify or rescind such transaction and all steps taken
pursuant thereto.
j. The company at such meeting is at liberty to take appropriate steps
vis-a-vis the remaining assets (both moveable or immoveable) of the
company and initiate appropriate proceedings for recovery of the
same in accordance with law.
k. The company at such general meeting is also at liberty to initiate
appropriate proceedings in accordance with law against the Special
Officers and the Committee of Management for recovery of the
amount of Rs. 72 lacs alongwith interest and for any other wrong
done to the company. The question of limitation in respect of any
such proposed action would commence from the date of this order.
l. Appropriate steps be taken by the company to file all statutory
compliances, accounts and update all returns, or seek relaxation
thereof in accordance with law. In doing so and for the purposes of
limitation, the statutory authorities are to take into consideration
the pendency of these proceedings and the orders passed therein.
42. With the above directions, CA/1/1996, CA/2/1997, CA/4/1999,
CA/6/2022, CA/7/2022, CA/8/2022, CA/9/2022, CA/10/2022,
CA/11/2022, CA/12/2022 and all applications including CP/117/1979
stand disposed of. Interim orders, if any stand vacated. Significantly, the
records of CA 1 of 1996, CA 2 of 1997 and CA 4 of 1999 were never
produced before this Court. Nor did any of the parties including the
Special Officers make any submissions in respect of such applications. In
view of the disposal of main company petition, all the above applications
stand disposed of.
(Ravi Krishan Kapur, J.)
