Rajender Nath Bhaskar And Another vs Bhaskar Stoneware Pipes (P.) Ltd. ...
1990 Latest Caselaw 65 Del

JUDGMENT

Mahesh Chandra, J.

1. Petitioner have filed this company appeal under Order 22, rule 4 of the civil Procedure Code, 1908, read with rule 9 of Companies (Court) Rules, 1959, for bringing on record the legal representatives of the deceased respondent No. 2 in the main company petition C.P. No. 41 of 1982. The application is opposed on behalf of the proposed legal representative and other respondents.

2. I have learned counsel for the parties.

3. The contention of learned counsel for the legal representative and counsel for the respondents is that the main company petition had been filed under section 397, 398 and 433 of the Companies Act, 1956, on the ground of alleged acts of oppression and whatever role had been assigned to deceased respondent No. 2 in the alleged oppression was as a director of the respondent-company and, consequently, his legal representative cannot be imp leaded in his place after his death. Reliance has been placed upon J.K. Investment Trust Ltd. v. Muir Mills Co. Ltd. [1962] 32 Comp Case 893 (All) in which the Division Bench has held as follows (headnote) :

"In proceedings instituted under section 397 and 398 of the Companies Act, 1956, for prevention of oppression and mismanagement, it is not permissible to implead the heirs and legal representatives of deceased director and continue the proceedings against them."

4. As against, it has been urged by learned counsel for the petitioner that in para 21 of the company petition, it has been stated that, on the death of Shri R. N. Bhaskar, his shares were appropriated at the instance of Shri B. N. Bhaskar and as many as 400 shares were allotted to deceased V. N. Bhaskar also and, consequently, this aspect having formed the basis of the company petition, his legal representative should be imp leaded.

5. After giving my considered though to the matter before me, I am of he view that it would not be possible to agree with the submission of earned counsel for the petitioner Keeping in view the scope of the present company petition and the language of sections 397, 398 and 433, the question of appropriating of the shareholding of Shri R. N. Bhaskar by the deceased-matter of enquiry in this petition. Furthermore, the acts of oppression which have been alleged against deceased V. N. Bhaskar cannot be ascribed to his legal representatives. The proposed legal representatives are now only ordinary shareholders and have no other connection with the management. The acts of Shri. V. N. Bhaskar, challenged in this petition, are those of a director, rather than of an individual shareholders. In view of these facts it cannot be said that his legal representatives have become necessary or even proper parties to this petition. No cause of action can be said to exist vis-a-vis the legal representatives of V. N. Bhaskar in favor of the petitioners. I do not think that it would even be open to this court, much less appropriate to bring on record the heirs of the deceased directors, respondent No. 2. This Court cannot pass order against the legal representatives which could have been passed under some other provisions of the law. There is no doubt that the intention of the Legislature in enacting section 398 was to arm the court with full powers, but the powers so widely conferred could be utilised only within the limited scope of section 398. It is in this context that it has also been observed by the Division Bench in J. K. Investment Trust Ltd.'s case [1962] 32 Comp Case (All) in para 7, as follows (at page 895, 896) :

"It will be noticed that the intention of the Legislature in enacting the sub-section was to arm the court with full powers if it was of opinion that the situation mentioned in sub-section (1) of section 398 had arisen. But the powers so widely conferred could be utilised only to bring to an end the situation which had already continuing in future... it is settled that the liability can be enforced only against a living director and not against his heirs or legal representatives after his death. It is, therefore, not possible to accept the argument of learned counsel for the applicant that the heirs of the deceased, Sri Hari Shanker Bagla, can be brought on record and proceeded against in these proceeding without having recourse to section 406 or the provisions of this Act."

6. In view of my discussion above, this application is dismissed.