Swadeshi Polytex Ltd. vs V.K. Goel And Others
1987 Latest Caselaw 275 Del

JUDGMENT

S.S. Chadha, J.

1. This appeal under section 10 of the Delhi High Court Act, 1966, is directed against the order dated February 2, 1987, passed by G. C. Jain J. dismissing an appeal under rule 4, Chapter II, of the Delhi High Court (Original Side) Rules, 1967, against the order of the Registrar dated November 14, 1986, directing that certified copies of the proxies be supplied to the plaintiff in the suit as per the rules.

2. In order to appreciate the preliminary objection that the appeal is not maintainable, it is necessary to state certain facts. M/s. Swadeshi Polytex Limited (hereinafter referred to as "the company"), defendant No. 2 in the suit/appellant before us, is a public limited company duly incorporated under the Companies Act. Shri V. K. Goel, plaintiff in the suit, is a registered shareholder of 50 equity shares of Rs. 10 each in the company. The secretary of the company issued on January 23, 1986, a notice for holding the 16th annual general meeting of the company on March 15, 1986, at its registered office. Shri Raghu Raj was appointed as the chairman of this annual general meeting of the company. Section 176 of the Companies Act, 1956, gives a right to the members of a company entitled to attend and vote at a meeting to cast their votes by proxy. Some members of the company executed two instruments of proxies each, appointing proxies which were duly lodged with the company. The proxies appointed under one set voted for Dr. Rajaram Jaipuria and his nominees. Proxies appointed by the same members under another set voted for Sri Mahendra Swarup and his nominees. The plaintiff raised objections to the proxies and submitted a letter to the chairman of the meeting in this regard. The objection was that the instruments of proxy by virtue of which the proxies voted in favor of Dr. Rajaram Jaipuria and his nominees were from all over India but had been signed and dated March 13, 1986. In other words, this dating was not done at the time of the execution of the proxies by the members but was done at the time of submission of proxies to the company with the object of making these proxies the last proxies of the members and this act amounted to tampering with the original instruments of proxy with the result that the said proxies were liable to be rejected by the chairman and other scrutinising officers. It was contended that in case there was more than one proxy by the same member, then the matter be investigated to find out which was the last proxy executed by him. The plaintiff by another letter dated April 2, 1986, invited the attention of the chairman that the investigation in terms of article 91 of the articles of association may be made in this behalf. The chairman declared the result on April 4, 1986, after taking into account the votes by proxies objected to by the plaintiff. Being aggrieved, he filed a suit on April 5, 1986, seeking a decree for declaration that the instruments of proxy executed last shall prevail over those executed earlier regardless of the date mentioned in the instrument of proxy; a decree for mandatory injunction commanding the defendants to make an enquiry/investigation into the execution/revocation of the various instruments of proxies and that the results of the poll announced at the 16th annual general meeting were invalid and void besides another relief of an injunction restraining the persons declared as directors of the company from acting as directors of the company.

3. The suit came up for admission before a learned single judge of this court on April 5, 1986. One of the ex parte orders passed was a direction to the defendants to deposit the proxies in court on April 7, 1986. The defendants were served in the forenoon of April 7, 1986, any they put in appearance in court. The proxies were not deposited in court on April 7, 1986, when the court directed that the order of the deposit of proxies be complied with by April 9, 1986, and after the proxies are deposited, the same be kept in a sealed cover. The defendants moved an application dated April 9, 1986, under section 515 of the Code of Civil Procedure, 1908, being I. A. NO. 2351 of 1986, Informing the court of the circumstances under which the order of the court for deposit of the proxies could be complied with. It was pointed out therein that the court of the Sub-Civil Judge. Ghaziabad, in a suit filed by one Shri Mahabir Preshad Malmia against the chairman of the annual general meeting has by an order directed that the proxies lying with defendant No. 2 company should be seizes and deposited in the said court and had appointed a commissioner to serve the order as well as to seize the proxies, and he had served the orders and had seized the proxies.

4. The issues in the suit were framed on August 19, 1986. Issue No. 10 is whether the proxies in favor of Shri Rajaram Jaipuria and his nominees dated March 13, 1986, had been executed by the shareholders concerned on the same date, i.e., March 13, 1986, and if not, whether the said proxies were invalid ? This issue also covered the question whether the proxies bearing the later date would not prevail over a proxy bearing an earlier date. Issue No. 11 is whether the shareholders who had given proxies in favor of Dr. Rajaram Jaipuria and his nominees had also given proxies in favor of Shri Mahinder Swarup and his nominees, and if so, whether the proxies given in favor of Dr. Rajaram Jaipuria and his nominees would stand revoked on that ground ? Issue No. 12 is whether some of the shareholders who had given proxies in favor of Dr. Rajaram and his nominees had revoked those proxies, and if so when and to what effect?

5. The suit was being made ready for trial. The plaintiff moved an application under Order XIII rule 10 of the Code of Civil Procedure, 1908, praying to the court to send for the records of the suit pending in the Court of Sub-Civil Judge, Ghaziadad, being Suit No. 329 of 1986 and inspect and/or permit the plaintiff to inspect the same and also to send for the proxies deposited in the Court of the Sub-Civil Judge, Ghaziabad, in Suit No. 329 of 1986 and inspect and/or permit the plaintiff to inspect the same. G. C. Jain J., by order dated September 26, 1986, observed that it could not be disputed that the proxies alleged to have been filed in that case are relevant documents for the purpose of the disposal of the case and he, therefore, directed that the file of Suit No. 329 of 1986, pending in the court of Shri Kartar Singh, entitled "M. P. Dalmia v. Raguraj" be summoned in accordance with the rules. The clerk of that court brought the summoned file of the suit together with the documents in two sealed trunks. The sealed envelope containing the judicial file was returned but the clerk was directed to deliver the documents contained in the sealed trunks containing the proxies to the office of this court. The trunks containing the documents were deposited. Directions as to preparation of inventory, etc., were given.

6. The plaintiff then moved an application under section 151 of the Code of Civil Procedure, 1908, being I. A. No. 6171 of 1986, for obtaining the certified copies of the documents. The plaintiff submitted that the proxies and other documents including revocation letters, which are lying in two trunks, are necessary had relevant for the purpose of disposing of the suit and that the plaintiff requires certified copies of all these documents in order to refer to them and to demonstrate that the election of defendants Nos. 3 to 6 is illegal and invalid, the learned single judge directed that the matter be listed before the learned Registrar on November 14, 1986, for orders. The Registrar by order dated November 14, 1986, directed that the certified copies be supplied as per rules within one week from the date and the application was disposed of accordingly.

7. The defendants challenged the validity of the order of the Registrar dated November 14, 1986, by way of an appeal under rule 4 of Chapter II of the Delhi High Court (Original Side) Rules, 1967. The contention of the counsel was the a copy of only a judicial record could be granted in the manner prescribed by rule 1 of the Chapter 5B of the Rule and Orders of the Punja High Court, Vol., as applicable to Delhi, to any person who is legally entitled to receive it, the submission was that the term "judicial record" or record used in those rules meant the record of the suit only and did not include in its ambit the record of the suit pending in the Ghaziabad court which had been summoned by this court and, therefore, copies of the documents, which were part of the case pending in the Ghaziabad court which had been summoned by this court and, therefore, copies of the documents, which were part of the case pending in the Ghaziabad court, could not be given G. C. Jain J., in the order under appeal, observed that there may be merits in the contention raised by the learned counsel for the appellant. However, he did not like to go into details but expressed the opinion that the order made by the learned Registrar does not affect the right of the appellant and that, moreover, to prove his case, the plaintiff was required to produce the copies of the instant proxies. He did not find any justification for interference with the order of the Registrar and dismissed the appeal.

8. Shri C. M. Oberoi, learned counsel for the appellant, submits that so far as the record of the Ghaziabad Court is concerned, the plaintiff is a stranger to the suit in the Ghaziabad Court and as a stranger he cannot obtain the copies of a judicial record during the pendency of the suit pending in judicial record after disposal. Undisputedly, the said proxies did not form part of the record of the suit pending in this court. Reliance is placed on Punjab High Court Rules and Orders, Vol. V, Chapter 5B, which are applicable to this court. Under it, a party can obtain a copy of the judicial record but it is urged that he has no right to obtain copies of documents that form part of the record of the file of the Civil Judge, Ghaziabad. Rule 1, Chapter 5B does not permit urges the counsel, the issue of copies of the record of the Ghaziabad Court by this court. Another submission is that in the scheme of the Companies Act, 1956, there is no provision for any member or shareholder to obtain copies of proxies lodge with the company or the specimen signatures of the shareholders maintained with the company. There is only a very limited right of inspection granted to a shareholder in connection with the proxies lodged with the company after issue of there days' notice to it and such a right does not entitle, says the counsel, any shareholder to obtain copies of the proxies or the signatures or the writings thereon.

9. Mr P. P. Malhotra, learned counsel for the contesting respondent No. 1 has raised a preliminary objection to the maintainability of the appeal. Under the Delhi High Court (Original Side) Rules, 1967, Chapter II, rule 4, an appeal is provided to a judge in chamber, from an order passed by the Registrar. It is urged that the order passed by the learned single judge was passed while exercising the appellate powers and by virtue of sub-section (2) of the section 104 read with Order 43, rule 1, of the Code of Civil Procedure, no appeal can lie from any order in appeal under the said section. Assuming that the provisions of section 104 of the Code of civil Procedure are in applicable and the appeal is under section 10 of the Delhi High Court Act, 1966, then the submission is that the order under appeal is not a "judgment" as the order does not determine any right or liability of the appellant. The order of the learned single judge is also supported on merits.

10. Section 10 of the Delhi High Court Act, 1966, provides that where a single judge of the High Court of Delhi exercises ordinary civil jurisdiction conferred by the sub-section (2) of the section 5 on that court, an appeal shall lie from the judgment of the single judge to a Division Bench of that High Court. Under section 5, jurisdiction vested in the High Court of Delhi in respect of the territories for the time being included in the Union Territory of Delhi for all such original, appellate and other jurisdictions, as under the law in force immediately before the appointed day, is exercisable in respect of the said territories by the High Court of Punjab. Under sub-section (2), not with standing anything contained in any law for the time being in force, the High Court of Delhi is also vested, in respect of the said territories, with ordinary original civil jurisdiction in every suit the value of which exceeds rupees one lakh. The question of construction of section 10(1) read with section 5(2) of the Delhi High Court Act was decided by a Full Bench of this court in University of Delhi v. Hafiz Mohd. Said, . The question arose as to what interpretation is to be given to the expression "judgment" in section 10(1) of the said Act. One view advanced was that the word "judgment" should be given the same meaning which has been given by various High Courts while interpreting their Letters Patent. The Full Bench did not agree with this view because of various reasons given in the judgment. One is that the construction of the word "judgment" in the Letters Patent by the various High Courts did not yield any consistent or uniform meaning of it. The Full Bench also held that keeping the historical perspective and the long years for which appeals on the original side were only maintainable either against a decree or against orders enumerated under Order 43, rule 1, the Legislature could not have intended that those orders which were not appealable when passed by the subordinate judge prior to November 1, 1966, when the jurisdiction vested in the High Court of Delhi, should suddenly become appealable. In para 44, it is held (at page 108) :

"Our conclusion, therefore, is that an appeal under section 10(1) of the Act against the order of a single judge in the exercise of ordinary original civil jurisdiction to a Division Bench lies only in those words, apart from the orders which have the force of the decree, appeals will, therefore, like only against those orders passed by the single judge which are mentioned in section 104 read with Order 43, rule 1 of the Code and no appeal will lie against other which are outside these two provisions. "

11. The Supreme Court in Jugal Kishore Paliwal v. S. Sat Jit Singh, have expressed that this decision is no longer good law in view of the decision in the case of Shah Babulal Khimji v. Jayaben . Paragraph 115 at page 1816 of the above referred decision was extracted :

"Thus, in other words, every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned. Similarly, orders passed by the judge deciding question of admissibility or relevancy of a document also cannot be treated as judgments because the grievance on this score can be corrected by the appellate court in appeal against the final judgment. "

12. In Shah Babu Lal's case, , it was expressed that a judgment cannot be of three kinds, a final judgment, a preliminary judgment and intermediary or interlocutory judgment. The word "judgment" has undoubtedly a concept of finality in a broader and not a narrower sense. In respect of intermediary or interlocutory judgment, it was expressed (at pages 1815 and 1816) :

"Most of the interlocutory orders which contain the quality of finality are clearly specified in clauses (a) to (w) of Order 43, rule 1, and have already been held by us to be judgments within the meaning of the Letters Patent and, therefore, appealable. There may also be interlocutory orders which are not covered by Order 43, rule 1, but which also posses the characteristics and trappings of finality in that, the orders may adversely affect a valuable rights of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment, the adverse effect on the party concerned must be direct and immediate rather than indirect or remote. For instance, where the trial judge in a suit under Order 37 of the Code of Civil Procedure refuses the defendant leave to defend the suit, the order directly affects the defendant because he loses valuable right to defend the suit and his remedy is confined only to contest the plaintiff's case on the his own evidence without being given a chance to rebut that evidence. As such an order vitally affects a valuable right of the defendant, it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to a larger Bench. Take the converse case in a similar suit where the trial judge allows the defendant to defend the suit in which case although the plaintiff is adversely affected but the damage or prejudice caused to him is not direct or immediate but of a minimal nature and rather to remote because the plaintiff still possesses his full right to show that the defense is false and succeed in the suit. Thus, such an order passed by the trial judge would not amount to a judgment within the meaning of clause 15 of the Letters Patent but will be purely an interlocutory order.

Similarly, suppose the trial judge passes an order setting aside an ex parte decree against the defendant, which is not appealable under any of the clauses of Order 43, rule 1, though an order rejecting an application to set aside the decree passed ex parte falls within Order 43, rule 1, clause (d), and is appealable, the serious question that arises is whether or not the order first mentioned is a judgment within the meaning of Letters Patent. The fact, however, remains that the order setting aside the ex parta decree puts the defendant at a great advantage and works serious injustice to the plaintiff because as a consequence of the order, the plaintiff has how to contest the suit and is deprived of the fruits of the decree passed in this favor. In these circumstances, therefore, the order passed by the trial judge setting aside the ex parte decree vitally affects the valuable rights of the plaintiff and amounts to an interlocutory judgment and is, therefore, appealable to a larger Bench. "

13. We may recall that the relief claimed in the suit is on the allegations that the instrument of proxies in favor of proxies who voted for Dr. Rajaram Jaipuria and his nominee, which were counted, were illegal and invalid and instruments of proxies by virtue of which votes were cast in favor of Shri Mahindra Swarup and his nominee, which were disallowed, were valid. The proxies are thus material and relevant documents for the purpose of the disposal of the suit. The learned single judge in the order under appeal had upheld the order made by the Registrar for supply of certified copies as per rules and expressed that it does not affect the right of the appellant. In our view, he is perfectly justified in saying so. The learned single judge had by an ex parte order made on April 5, 1986, directed the defendants to deposit the proxies in court on April 7, 1986, and on the next date, i.e., April 7, 1986, directed in the presence of counsel for the parties that the order of deposit of proxies be complied with by April 9, 1986. The appellant moved an application dated April 9, 1986, under section 151 of the Code of Civil Procedure, being I. A. No. 2351 of 1986, in which it was stated that the registered office of the company is at Ghaziabad where the proxies and records have been kept and where the annual general meeting had taken place and that the secretary of defendant No. 2 company, Shri Anil Jhala, had gone to Ghaziabad that morning with a view to collect proxies in order to have the same deposited in this court and sealed . The inability to file the proxies was then expressed as the same had been seized by a Commissioner appointed by the Court of Sub-Civil Judge, Ghaziabad. The appellant had thus expressed his willingness to deposit stand of the appellant is that the proxies form part of the record of the civil suit of Ghaziabad Court, and similarly it would have formed part of record of this court, if filed. It is not disputed that if the appellant had deposited the proxies in this court, the plaintiff would be entitled to obtain certified copies. We see no prejudice to the appellant if the copies are obtained out of the summoned record because it was filed in Ghaziabad Court and not in this court.

14. Section 176 of the Companies Act, 1956, provides that any member of the company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself. Sub-section (7) of section 176 provides that every member entitled to vote at a meeting of the company or on any resolution to moved thereat shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the company. The statutory provisions made it clear that the proxies deposited with a company are open to inspection and there is no secrecy either in the signatures or in at any time be revoked. As a rule, a proxy is not revoked unless written notice of the revocation has been received by the company. The case of the plaintiff is that the proxies executed in favor of Dr. Rajaram Jaipuria and his nominees had been revoked by execution of later proxies by the same personnel. The proxies or their certified copies can cause no prejudice except that the appellants may want to withhold the documentary evidence from the court at the trail. The direction for the issue of certified copies by the Registrar and upheld by the learned single judge under orders in appeal makes no decision affecting the merits of the suit. It does not affect any vital or valuable right of the appellant except the procedural irregularity, if any, of issuing certified copies of documents contained in the summoned record of the suit in which the plaintiff is not a party.

15. Section 176 of the Companies Act, 1956, provides that any member of the company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself. Sub-section (7) of section 176 provides that every member entitled to vote at a meeting of the company or on any resolution to be moved thereat shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the company. The statutory provisions make it clear that proxies deposited with a company are open to inspection and there is no secrecy either in the signatures or in the other particulars contained in the instrument of proxy. A proxy can at any time be revoked. As a rule, a proxy is not revoked unless written notice of the revocation has been received by the company. The case of the plaintiff is that the proxies executed in favor of Dr. Rajaram Jaipuria and his nominees had been revoked by execution of later proxies by the same person. The proxies or their certified copies can cause no prejudice except that the appellants may want to withhold the documentary evidence from the court at the trial. The direction for the issue of certified copies by the Registrar and upheld by the learned single judge under orders in appeal makes no decision affecting the merits of the suit. It does not affect any vital or valuable right of the appellant except the procedural irregularity, if any, of issuing certified copies of documents contained in the summoned record of the suit in which the plaintiff is not a party.

16. The learned single judge had exercised the power and discretion under order XIII, rule 10 of the Code of Civil Procedure for summoning the records from the Ghaziabad court. The plaintiff had shown in the application supported by an affidavit for calling for the record that those documents are material and he had also shown that he could not obtain a duly authenticated copy of the record or such portion thereof and that the production of the original record is necessary for the purposes of justice. The appellants has no grievance against that order and it has become final. The production of the record not obtain a duly authenticated copy of the record from the Ghaziabad court. At the trial, the proxies will be scrutinised and referred to in oral evidence because of the issues formed in the suit. The proxies may be admitted in evidence and their certified copies will have to form part of the record of the suit in this court. The ordinary copies prepared at the trial by the witness may be objectionable. The learned single judge has done substantial justice between the parties. His order does not decide any aspect of the trial or even an ancillary proceeding in the suit. The issue of certified copies does not adversely affect any right of the company who is the appellants before us. The company should, on the contrary, assist in the ascertaining and determining by the court whether the election to the board of directors is legal and valid or not. We cannot comprehend even remote prejudice to the company by the impugned order. Applying the ratio of Shah Babulal's case, , that every order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned, we find that the order under appeal cannot be treated as a "judgment" within the meaning of section 10(1) of the Delhi High Court Act.

17. We leave the other question open for decision in an appropriate case. The appeal is not maintainable and is hereby dismissed with no order as to costs.