Davendra Nath vs Prem Nath Motors Ltd. And Ors.
1998 Latest Caselaw 731 Del

JUDGMENT

Devinder Gupta, J.

1. The order dated 21.6.1998 passed by learned Single Judge in I.As.No.5259/98 and 5260/98 in Suit No.2492/88 is under challenge in this appeal, which was preferred on 16.7.1998. We have heard learned counsel for the parties and been taken through the record.

2. The grievance of the appellant is that the impugned order passed by learned Single Judge is contrary to the facts of the case and the settled law, the same is in gross violation of principles of natural justice. The appellant was not heard by learned Single Judge before passing such a harsh order by which the appellant was suspended as a Director of respondent No.1 company till further orders. There was no urgency disclosed in the two miscellaneous applications necessitating in passing of such harsh order and that too ex parte. The allegations made in the miscellaneous applications were not sufficient to enable the Court to grant ex parte order of injunction.

3. The order passed on 21.6.1998 by learned Single Judge reads:-

"Present:- Mr. S.C. Dhanda for the applicants-plaintiffs.

I.A.No.5959/98 (u/s 203 Companies Act) & I.A.No.5960/98 (Under Order 39 Rules 1 & 2 C.P.C. in S.No.2492/88

I.As. be registered.

Notice for 14th October, 1998, the date already fixed.

I have heard the learned counsel for the applicants.

Having regard to the history of the case and in particular the report of the Chairman appointed by this Court the Hon'ble Mr Justice Avadh Behari Rohtagi, I am satisfied that Shri Devinder Nath, the second defendant in the suit is trying to scuttle the attempt of the Company to get the agency and thus is acting adverse to the interest of the Company. Therefore, he is suspended of being a Director and is also restrained directly or indirectly or otherwise through any body else through Mrs.Surindri Bhel and Shri Shivinder Bhel from interfering in the activities of the petitioner company and in the process of it getting agency or other business activities until further orders.

A copy of this order be given dasti."

4. The. aforementioned two miscellaneous applications were filed during summer vacation alleging that in case the appellant is not removed as a Director of the company, his acts of omission and commission is likely to ruin the entire company. This averment was made in I.A.5260/98 duly supported on the affidavit of Shri Surinder Nath son of Shri Prem Nath, Joint Governing Director of the Company. The facts necessitating in moving the application were disclosed in I.A.5299/98. After narrating history of the litigation, which has been pending in this Court for the last about one decade (from 4.10.1988), the application stated that the Company had been dealing with Motor Cars, manufactured by Premier Automobiles Ltd., namely, Premier Padmini and 118NE, models, which have became obsolete having no market. With a view to compete in the market, the company was exploring the possibility of obtaining the agency of some modern technology cars. After stating the efforts, which were made to obtain the agency of Uno Cars and the circumstances under which the respondent Company was denied the agency of Pal-Peugeot Ltd. and Uno Cars, which according to the respondent was due to the acts of the appellant, who was directly opposed to the interest of the Company and acted in a manner so as to ruin the Company, it was specifically alleged in the application that the smooth management of the Company was not being allowed by the appellant, who was out to ruin the Company.

5. The application further stated that the Fiat- Italy has set up a Company in India in collaboration with Premier Automobiles Ltd. Shri Surender Nath, respondent had good relations with PAL and FIAT Company, as all along he had been dealing in their cars. He sought to revive the application of Prem Nath Motors for the agency of UNO cars. The appellant on coming to know about the same immediately adopted the same modus- operandi, which he had adopted in the case of the application made to Maruti Udyog Ltd. Again a letter was written by the appellant through his wife Smt.Surendri Behl and his son Shri Shivinder Behl, stating that the agency may not be given to the company. On the receipt of this complaint FIAL became reluctant in the grant of agency to Prem Nath Motors. They expressed their fears, in this behalf vide in letter dated May 13,1998. Thereafter there was a meeting between the officials of FIAL and Prem Nath Motors, when representative of FIAL categorically stated that the agency cannot be given unless the Board of Directors of Prem Nath Motors passed a resolution. Shri Surender Nath then approached the Chairman for the passing of the proposed resolution. The appellant opposed this resolution also and desired that the required resolution may not be passed. The obtaining of an agency of a modern technology car is absolutely essential for its survival. The desire of the appellant is that the Company loses its business. The action of the appellant in opposing the application (I.A.No.6502/96) for the agency of UNO cars, then approaching Maruti Udyog Ltd., representing that the agency of Maruti cars may not be given and the FIAL for the non grant of the agency of UNO cars and finally opposing the resolution required by FIAL to be passed, clearly shows that the efforts of the appellant is that the Company may not get the agency of a modern technology car, because if no such agency is obtained the Company will close down.

6. The application further stated that the facts disclosed in the application were sufficient to infer that the appellant, even though a Director of the Company was acting contrary to the interest of the Company and was out to harm the Company. He being on the Board of Directors, instead of being conducive to the smooth running of the Company was damaging its interest and in case the appellant is allowed to continue on the Board of Directors, the Company was bound to close down as such there was an urgent need for passing the orders prayed for in the application, otherwise the Company was bound to lose opportunity of getting the agency of modern technology car. On the basis of the averments aforementioned and the other material on record, learned Single Judge formed an opinion that the appellant was trying to scuttle the attempt of the Company to obtain agency and urgent orders were necessitated.

7. No doubt the impugned order on the face of it appears to be harsh in so far as the appellant is concerned, and in the facts and circumstances, when the suit has been pending for the last about a decade, in normal course, it would have been but proper to serve notice on the appellant before passing such an order. However, the question is whether in the facts and circumstances learned Single Judge was justified in passing the impugned order ex parte without issuing any notice.

8. Power to grant injunction is an extra ordinary, vested in Courts, which is to be exercised, taking into consideration the facts and circumstances of a particular case. When this power is exercised without notice or without hearing the party, who is to be affected directly by the order to be passed, the Courts have to be more cautious and for that reason alone Rule 3 of Order 39 of the Code requires that in all cases before grant of injunction notice of the application is to be given to the opposite party, except where it appears to the Court that the object of granting injunction itself will be defeated by the delay. The impugned order on the face of it do suggest that the learned Single Judge did apply his mind to the facts of the case and satisfied himself that prima facie there was enough material on record that the appellant was trying to scuttle the attempt of the Company to get the agency, which act prima facie was found to be adverse to the interest of the Company. In this back ground, learned Single Judge proceeded to pass the impugned ex parte order, which obviously was passed by the Court on further satisfaction that in case such an order is not passed without notice, the entire purpose of filing of application was likely to be rendered infractuous. Facts stated in the application, as have been noticed above, do suggest that the averments made in the application were sufficient to clothe the Court with jurisdiction to pass ex parte order and if the ex

parte order was not passed, there was every likelihood of the purpose of moving the application become redundant. In such like matters of exercise of jurisdiction by a Court well settled principles, it will not be appropriate for the Appellate Court to substitute its own discretion.

9. In Wander Ltd. and Anr. v. Antox India P. Ltd, 1990(Supp) S.C.C. 727, it was held that if the discretion has been exercised reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion, whose order was under appeal. An appeal against the exercise of discretion is on principle. The appellate court will not re-assess the material and seek to reach a conclusion different from the one reached by the Court, whose order is under challenged, if the one reached by that Court was reasonably possible on the material.

10. We are satisfied that the learned Single Judge was justified in having passed the impugned order ex parte, keeping in view the exigencies of the circumstances. The impugned order being interlocutory in nature, it is open for the appellant to show cause against the impugned order and seek variation or vacation of the order on filing appropriate application under Order 39 Rule 4 C.P.C. and in case such an application for variation is moved, there is no reason why learned Single Judge will not hear and dispose of the same on merits.

11. Consequently, we find no force in the appeal. The same is hereby dismissed. It is hereby made clear that observations made herein are only for the purpose of deciding this appeal and will not effect the merits of the case or of the application, if any, moved for variation or modification of the impugned order.