Radhey Shyam Gupta Through Legal ... vs Kamal Oil And Allied Industries ...
2006 Latest Caselaw 679 Del

JUDGMENT

S.N. Aggarwal, J.

1. To condone, or not to condone, is the only short question that needs our consideration in this appeal. What we have to consider here in this appeal is the effect of delay in re-filing of an application for substitution of legal heirs after removal of objection put up by the Registry on the said application.

2. The facts that have led to the filing of this appeal are that the appellant along with respondent No. 7 had filed a Company Petition being CP No. 1/1982 in the year 1982 under Sections 397, 398, 402 and 403 of the Companies Act, 1956. The said Company Petition was dismissed as not maintainable by an order passed by the then Company Judge on 7.2.1984. Aggrieved by this order of dismissal, the appellant along with respondent No. 7 filed a Company Appeal being Company Appeal No. 8/1984 which was allowed by a Division Bench of this Court vide order dated 26.11.1998 and the case was remitted back to the Company Judge for disposal on merits.

3. Subsequent to remand, while the case was pending before the Company Judge, respondent No. 3 expired and his legal heirs were brought on record but they did not file any affidavit in their evidence. The petitioner No. 1 had filed his affidavit in evidence on behalf of the petitioners on 21.10.2002. After filing of the affidavit in evidence, the petitioner No. 1 expired on 7.2.2004 He died leaving behind his widow, two sons and two daughters. An application under Order XXII Rule 3 CPC for substitution of the above legal heirs of petitioner No. 1 was filed on 12.3.2004 This application was within limitation of 90 days prescribed for the said purpose. However, the Registry put an objection on the aforementioned application for substitution of legal heirs of petitioner No. 1 and the objection of the Registry was that the advance copy of the application was not served on one of the respondents. After demise of petitioner No. 1, there was dissension amongst his legal heirs and they divided in two camps. The objection raised by the Registry on the application for substitution of legal heirs was not removed on behalf of the legal heirs of petitioner No. 1 for about 6? months. The application was taken back by the counsel from the Registry on 5.10.2004 and after removal of objection was re- filed on 12.10.2004 Before this application could be re-filed, the respondents filed an application being CA No. 1164/2004 for dismissal of the petition as having abated and the legal heirs of petitioner No. 1 filed an application being CA No. 1194/2004 for condensation of delay in re-filing of application for substitution of legal heirs after removal of objections raised by the Registry.

4. Both the aforesaid applications were heard by the learned Single Judge together and have been disposed of by a common order impugned in the present appeal. The reason for condensation of delay in re-filing given in the application (CA No. 1194/2004) is that Mr. Naveen Gupta, elder son of petitioner No. 1 had contacted the petitioners' counsel and asked him as to how the name of his sister, Mrs. Deepa Mittal was included in the list of legal heirs of petitioner No. 1. It was further stated that thereafter no instructions were received by the counsel and for that reason the objections could not be removed in time. It was further contended that later on it was realised that all the legal heirs left by petitioner No. 1 at the time of his death should be brought on record for the purpose of decision of the Company Petition filed by petitioner No. 1 along with respondent No. 7.

5. The respondents filed their reply to the above application (CA No. 1194/2004) and opposed the reasons for condensation of delay given therein. The reasons for condensation of delay in refiling of application for substitution of legal heirs given by the legal heirs of petitioner No. 1 in their application (CA No. 1194/2004) did not find favor with the learned Single Judge who vide impugned order not only dismissed the said application but also dismissed the main petition as having abated.

6. We have gone through the impugned order and other related material carefully and have given our consideration to the rival contentions advanced before us by counsel for the parties. In our view, the learned Single Judge went wrong in dismissing the application of legal heirs of petitioner No. 1 (CA No. 1194/2004) and also in dismissing the main Company Petition as having abated qua respondent No. 7 (petitioner No. 2.). The same yardstick cannot be applied for condensation of delay in refiling after removal of objections raised by the Registry and delay that occurs in initial filing. `Sufficient cause' to be shown for condensation of delay envisaged in Section 5 of the Limitation Act, 1963 is not required to be shown for explaining the delay in refiling, as is required to be shown to explain the original delay.

7. A Division Bench of this Court in S.R. Kulkarni v. Birla VXL Limited 1998 V AD (Delhi) 634, had an occasion to consider the same question of condensation of delay in refiling the application for leave to defend. The relevant portion of the said judgment is reproduced hereinbelow:-

Notwithstanding which of the aforesaid Rules are applicable, the question of condensation of delay in refiling of an application has to be considered from a different angle and viewpoint as compared to consideration of condensation of delay in initial filing. The delay in refiling is not subject to the rigorous tests which are usually applied in excusing the delay in a petition filed under Section 5 of the Limitation Act (See Indian Statistical Institute v. Associated Builders and Ors. AIR 1978 Supreme Court 335). In the present case, the initial delay of 7 days in filing the application for leave to defend stood condoned and that has not been challenged by any of the parties. It is no doubt true that the counsel for the appellant had not been very diligent after filing of application for leave to defend on 19th August, 1995 as counsel did not check whether the application was lying in the Registry with any objection or not. Considering, however, the nature of the objections, it was a matter of removal of the objections by the counsel and on the facts of the present case, it is difficult in this case to attribute any negligence to the party. On the facts of the case, the effect of negligence or `casual approach', which would be appropriate term to be used here, of the counsel on his client, does not serve to be so rigorous so as to deny condensation of delay in refiling the application. The casual approach of the counsel is evident as no timely efforts were made firstly to find out after filing application on 19th August, 1995 as to whether the registry had raised any objection or not. Secondly, despite order of the Joint Registrar dated 9th January, 1996, the objection was removed only on 4th March, 1996 i.e. after the date which the Joint Registrar had fixed for the application being posted for hearing before the Court. When the application was refiled on 4th March, 1996, one would expect the person filing to be more careful thereby not giving an opportunity to the Registry to raise any other objection. But that was not so. The result was that the second objection was raised which, as noticed above, was removed on 21st March, 1996, but application was refiled only on 27th March, 1996. Apart from this casual approach, we do not find any mala fide intention on the part of the appellant to delay the proceedings. When there is negligence or casual approach in a matter like this in refiling of an application, though the Court may not be powerless to reject an application seeking condensation and may decline to condone the delay but at the same time, passing of any other appropriate order including imposition of cost can be considered by the Court to compensate the other party from delay which may occur on account of refiling of the application.

8. It is apparent from the above that while condoning the delay in refiling, the approach of the Court has to be absolutely liberal though to condone or not to condone is in the discretion of the Court depending on the facts of the case. In S.R. Kulkarni's case (supra), the Court had condoned the delay of about 7 months in refiling of leave to defend application after removal of objections. Same are the facts in the case in hand. In our view, the ratio of law laid down by the Division Bench of this Court squarely applies to the facts of the present case. We are further of the view that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

9. In the present case, the petitioner No. 1 had expired after he had filed his evidence on affidavit. Even the respondents had also filed their evidence. The case was almost at final stage when petitioner No. 1 expired and faced with that situation the learned Single Judge ought not to have dismissed the application for substitution of legal heirs of deceased petitioner No. 1. Even if it was to be presumed that the legal heirs of petitioner No. 1 were callous in their approach in prosecuting their application filed for their substitution, still the said lapse on their part was not of such a grave magnitude that it warranted dismissal of their main petition solely on this ground. Any such delay in refiling could have been adequately compensated in terms of costs against the erring party.

10. Learned counsel for the respondents had argued before us that this appeal is not maintainable. His challenge to the maintainability of the appeal is based upon the fact that the Company petition in which the impugned order has been passed could not be legally maintained since oppression and mismanagement within the meaning of Section 397 of the Companies Act is to be alleged by the minority against the majority. Learned counsel for the respondents further submitted that even according to the own showing of the appellant and respondent No. 7, they were having major shareholding of respondent No. 1/Company. It was urged that when the main petition was not maintainable, then how this appeal could lie.

11. This argument raised on behalf of the respondents has not impressed us because we are not going into the question about the maintainability of the present appeal. The respondents shall be entitled to raise all arguments on merits as well as on the maintainability of the main Company Petition before the learned Company Judge, who shall deal with the same in accordance with law.

12. In consonance with the justice oriented approach and also bearing in mind a wider perspective in matters of condensation of delay in refiling, we are of the view that the impugned order passed by the learned Company Judge cannot stand the test of judicial scrutiny and the said order is, therefore, set aside.

13. In view of the above, this appeal is allowed and the case is remitted back to the Company Court for disposal on merits as per law. No order as to costs.