Delhi High Court
Star Light Credit (India) Ltd. vs Sh. Robin Gupta & Ors. on 23 December, 2011
Author: Vipin Sanghi
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 23.12.2011
% Co.A.(SB) 98/2011 & Co. Appl. Nos. 2542-43/2011
STAR LIGHT CREDIT (INDIA) LTD. ..... Appellant
Through: Mr. Sandeep Sethi, Senior
Advocate, with Mr. Anurag Yadav,
Advocate.
versus
SH. ROBIN GUPTA & ORS. .....Respondents
Through: Mr. Amit Sibal & Mr. Rajnish Sinha,
Advocates for the respondents No.
1 to 20.
Ms. Ranjana Roy Gawai &
Ms.Varudha Sen, Advocates for the
respondents No. 21.
Mr. Netesh Jain, Advocate for the
respondents No. 22 to 34.
VIPIN SANGHI, J. (Oral)
Caveat No. 1171/2011
Since the caveator has put in appearance, the caveat stands
discharged.
Co.A.(SB) 98/2011 & Co. Appl. Nos. 2542-43/2011
1. The appellant-M/s Star Light Credit (India) Ltd., in this appeal
under Section 10F of the Companies Act, 1956, assails the order dated
29.11.2011 passed by the Company Law Board (CLB) in C.A. Nos.
747/2010 and 748/2010 in Co. Pet. No. 35/ND/2010 pending before it.
2. By the impugned order, the CLB has allowed the aforesaid two
applications. Whereas C.A. No. 747/2010 had been preferred by the
petitioners before the CLB to seek amendment of their company
petition under Sections 397 & 398 of the Companies Act, C.A. No.
748/2010 had been preferred by them to implead M/s Star Light Credit
(India) Ltd, the appellant herein, as a party respondent.
3. The primary grievance of the appellant is that both these
applications have been allowed by the CLB without any notice to the
appellant, thereby denying the appellant an opportunity to oppose the
said applications. The other grievance of the appellant is that while
passing the impugned order, the CLB has returned findings of fact
against the appellant without even giving an opportunity to the
appellant to defend its position.
4. In support of its submission that that the aforesaid application for
impleadment could not have been allowed without prior notice to the
appellant, and without granting an opportunity to the appellant to
oppose the application, the appellant has placed reliance upon two
decisions, namely Tulsidas P. Kheraj & Anr. vs. Association of
Engineering Workers & Ors., 2001 (3) MhLJ 572; and Robust
Hotels (P) Ltd. & Ors. Vs. E.I.H. Limited, MANU/TN/2327/2010.
5. The appeal is opposed by those of the respondents, who are
petitioners before the CLB. Respondent no. 17 has appeared on Caveat
and rest of the respondents have appeared on their own, even before
notice could be issued in the matter. It is argued by learned counsel
for the Caveator/respondents/petitioners before the CLB that the said
petitioners had sought amendment of the company petition preferred
under Sections 397 & 398 of the Companies Act in relation to the
affairs of M/s Sunair Hotels Limited, so as to assail the transfer of
42,57,500 equity shares of M/s. Sunair Hotels Ltd. held by petitioner
No. 13, i.e. International Commenter Limited (ICL) before the CLB in
favour of the appellant herein, i.e. M/s Star Light Credit (India) Ltd. The
petitioners before the CLB had also sought to assail that the transfer of
44,800 equity shares of M/s. Sunair Hotels Limited held by petitioner
No. 14 to respondent No. 2 in the company petition. The ground of
challenge was that these transfers had been done without following
the due procedure of law.
6. It is argued that the said amendment application had been
opposed by the existing respondents in the company petition.
However, since the CLB found merit in the said application, the
amendment was allowed. It was only consequential to the said
amendment being allowed, that the appellant herein was impleaded as
a party respondent since it is the transfer of 42,57,500 equity shares of
M/s. Sunair Hotels Ltd. in its favour, which was sought to be assailed.
The said challenge could not have been made behind the back of the
appellant and the appellant is a necessary party in the company
petition after its amendment. It is also argued by the learned counsel
for the contesting respondents that the so-called findings are only a
prima-facie view formulated by the CLB on the basis of the material
before it, and no final view has been taken, or finding returned, by the
CLB.
7. Learned counsel for the contesting respondents further submits
that it is not necessary that before impleading a party respondent, that
party should necessarily be first put to notice and given an opportunity
to be heard before it is so impleaded as a party respondent. In this
behalf reliance is placed on a Division Bench judgment of this Court in
Walchandnagar Industries Ltd. Vs. Saraswati Industrial
Syndicate Ltd. & Anr, 178 (2011) DLT 768 (DB).
8. Having heard learned counsels for the parties and perused the
impugned order, as well as the judgments relied upon by the parties, I
am of the view that there is no merit in this appeal and the same
deserves to be dismissed. The case of the petitioners before the CLB
in their application to seek amendment was that at the time of filing of
the company petition they were not aware of the alleged transfer of
their shareholding in M/s Sunair Hotels Limited, in favour of the
appellant herein, i.e. Star Light Credit (India) Ltd. and in favour of
respondent No. 2 before the CLB respectively. According to the
petitioners before the CLB, said transfers were illegal. The petitioners
before the CLB were entitled to assail the said transfers of the shares
of M/s Sunair Hotels Limited. The said challenge could have been
raised in the already filed company petition under Sections 397 & 398
of the Companies Act in relation to the affairs of M/s Sunair Hotels
Limited, or in an independent proceeding. If the said petitioners before
the CLB had assailed the said transfers in the originally filed company
petition, they could not have been precluded from raising the said
challenge and, at the initial stage itself, they could have impleaded the
appellant herein, i.e. Star Light Credit (India) Ltd, and the appellant
could not have raised a grievance that its impleadment in the company
petition could not have been made without putting it to notice, or
granting it a hearing. However, the appellant would have had the right
to move an application to seek its deletion from the array of
respondents in the company petition, if, according to it, it was not a
necessary or a proper party to the company petition. That right is
available to the appellant Star Light Credit (India) Ltd. even today.
9. The CLB has recorded its reasons for allowing the two
applications, namely for amendment of the company petition as well
as to implead the appellant herein as a party respondent, inter alia, in
para (c). The CLB has recorded in this para as follows:
"(c) Unlawful transfer of the shareholding of P-13 and P-
14 in R-1 to Star Light amounts to dilution of their
shareholding in R-1 Company. Company Petition CP
No.35(ND)/2010 is a composite petition u/s. 397, 398, 399
r/w Section 111A, 402 and 403. The relief for rectification
of Register of Members of R-1 Company to restore the
shareholding of P-13 and P-14 has also been sought by CA
No.747/2010. It would, therefore, be unjust to direct the
petitioner P-13 and P-14 to file a separate petition for the
reliefs sought by CA No. 747/2010 and CA No. 748/2010.
It is incorrect to say that issue of transfer of shares held by
P-13 and P-14 in R-1 to Star Light and R-2 respectively
could only be alleged as an act of oppression in P-13 & P-
14 Companies by a separate Company Petition as it relates
to the affairs of P-13 & P-14 companies only."
10. The findings of the CLB are based on the prima-facie evaluation
of the case, and the CLB has not returned any definite findings of fact
to the effect that the petitioners in the company petition were not
aware of the transfer of the shareholding of M/s Sunair Hotels Limited,
inter alia, in favour of the appellant herein on the date of filing of the
company petition, i.e. 03.03.2010. The CLB has taken note of the fact
that, according to the petitioners in the company petition, they learnt
about the transfer only on 04.11.2010 at the Annual General Meeting
(AGM) of M/s Sunair Hotels Limited.
11. It goes without saying that it shall be open for the appellant and
the other respondents in the company petition to meet the case of the
petitioners in the company petition, and only thereafter the CLB shall
arrive at its definite findings of fact.
12. So far as the grievance of the appellant that it should have been
put to notice, and heard on the application for impleadment, whereby
it was proposed to implead the appellant is concerned, I again find no
merit in the appellant's submission. The Division Bench of this Court in
Walchandnagar Industries (supra) held:
"..... ..... ..... ..... ..... In the normal course, it is a
contradiction in terms to issue notice of an application
seeking the impleadment of a party to the party proposed
to be so impleaded. If the Court is convinced by the
Plaintiffs submission of the necessity and expediency of
impleading the proposed parties, the proposed party
should be impleaded and notice would thereafter be issued
to it. There is no scope, nor is this the practice, for obvious
reasons, at the very first instance and at the very initiation
of the suit to show cause why it should be arrayed as a
defendant. Of course, it is always open to the defendant as
it would be available to a party impleaded in the course of
litigation to file an application under Order I Rule 10(2) of
the CPC for striking it out of the array of parties."
13. The observations in the said decision bind me. I am not
impressed by the observations made in Tulsidas P. Kheraj (supra)
and Robust Hotels (P) Ltd. (supra) which are not binding but have
only persuasive force. These decisions do not say what prejudice
would be caused to a party, who is impleaded in the lis without hearing
him where the relief sought in the lis directly impinges on the rights of
the impleaded party. I reject the appellant's reliance on the aforesaid
two decisions.
14. For the aforesaid reasons, the appeal stands dismissed.
VIPIN SANGHI, J
DECEMBER 23, 2011
'BSR'
