Col.(Retd.)Dalip Singh Sachar vs Maa Karni Coal Carriers (P) Ltd & ...
2013 Latest Caselaw 3644 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

                                           Reserved on: 8th August, 2013
%                                     Date of Decision:21st August, 2013

+      CCP(CO.) 25/2005 & Co.Appl.1545/2005
       COL.(RETD.)DALIP SINGH SACHAR                        ..... Petitioner
                          Through Petitioner in person
                          versus
       MAA KARNI COAL CARRIERS (P) LTD & ANR...Respondent

Through Mr Arvind Sharma, Adv.

CORAM:

MR. JUSTICE R.V. EASWAR

R.V. EASWAR, J.:

This contempt petition has been filed by Col.(Retd.) Dalip Singh

Sachar complaining of violation by the respondents of the directions

issued by the Company Judge in his order dated 31.5.2005 passed in

Company Appeal (SB) Nos.2 & 6 of 2005.

2. The brief facts leading up to the filing of the present petition are

these. The petitioner and the respondent No.2 were directors of the

respondent No.1 company. The petitioner filed a petition before the

Company Law Board under sections 397 and 398 of the Companies Act,

1956 complaining of acts of oppression and mismanagement. The CLB

disposed of the petition by order dated 28.12.2004. Both the parties

were aggrieved by the order of the CLB and filed cross appeals before

this Court in Company Appeal (SB) Nos.2 and 6 of 2005.

3. So far as Company Appeal (SB) 2 of 2005 is concerned, it was

filed by the respondent against that part of the order of the CLB in

which it was held that the provisions of section 283(1)(g) would not

come into play and it cannot therefore be said that the petitioner had

vacated the office of Director. So far as Company Appeal (SB) No.6 of

2005 is concerned, the following directions were issued by the Company

Judge (A. K. Sikri, J., as he then was):-

(i) the decision of the Board of Directors to induct Satish K

Thappar, a civilian, as the Additional Director and issuance of

further shares was erroneous and contradictory.

(ii) the decision taken to the above effect in the meetings held on

27.6.1996, 4.7.1996 and 29.8.1996 was invalid. The issuance of

further share capital was also invalid.

(iii) however, it would be open to the company to pass the

necessary resolution for allotment of the shares and the manner in

which they should be allotted.

4. The SLP filed by the respondents against the judgment dated

31.5.2005 was dismissed on 13.7.2005.

5. On 5.10.2005, the respondent-company filed From No.32 with the

Registrar of Companies, showing the petitioner to be appointed as a

director by order of this Court dated 31.5.2005/13.7.2005 and Satish

Thapar as resigned from directorship by the aforesaid orders.

6. The petitioner has filed the present contempt petition on the

ground that the respondents have failed to carry out the aforesaid

directions of this Court. On 22nd April, 2009, the respondent entered

appearance and filed a reply including a copy of Form 32 submitted

with the ROC on 5.10.2005 in compliance with the directions of this

Court. According to this Form, the respondents informed the ROC that

Col. Sachar (the petitioner herein) was appointed as director w.e.f. 13th

July, 2005 and the Additional Director, Satish Kumar Thapar, resigned

from directorship on 13th July, 2005. This Court noticed that the

aforesaid compliance was not proper and in conformity with the

judgment of Sikri, J rendered on 31.5.2005. It was observed by this

Court that since the removal of the petitioner was itself held illegal, he

would continue to be a director on all relevant dates, including the dates

on which the respondents claimed to have removed him, and for the

same reason, the appointment of Satish Thappar having been found to

be null and void, he ceased to be a director from the very date on which

he was appointed to the Board.

7. When this was pointed out by this Court to the respondents, one

more opportunity was prayed for to effect remedial measures to comply

with the directions issued by this Court on 31.5.2005. Four weeks time

was allowed by this Court for compliance. It was also pointed out by

the respondent that the company ceased to be an ex-servicemen

company. But this Court observed that this aspect shall be considered

later.

8. On 19.1.2011 this Court (Manmohan, J) observed that both sides

were in agreement at least on the aspect that a fresh Form 32 needs to be

filed with the ROC to inform that Col. (Retd.) Dalip Singh Sachar

continued as director from 23.9.1996 to 13.11.2005. This Court directed

both the sides to find out what steps have to be taken by the respondent

company to achieve this objective.

9. On 13.7.2011 the respondent submitted an affidavit, a copy of

which was directed to be given to the petitioner.

10. On 19.7.2012 this Court noticed that the directions given on

19.1.2011 have not been complied with and therefore the respondent

was directed to file Form 32 (in physical form) before the Registrar of

Companies evidencing the fact that Col. Dalip Singh Sachchar

continued as director from 23.9.1996 to 13.11.2005 and also the fact that

the civilian director Satish Kumar Thapar was not connected with the

company in the aforesaid period. Directions were issued for the needful

to be done and for filing affidavit of compliance.

11. On 1.11.2012 an affidavit from respondent No.2 was filed which

was taken on record and a copy was also given to the petitioner. He

took time to examine the affidavit. Thereafter, the petitioner filed an

affidavit in response to the respondent's affidavit and a prayer was made

that the matter may be decided on the basis of the written arguments on

record.

12. On 1.5.2013 the application of the respondent for condonation of

delay in uploading the digital version of form No.21 was allowed and

the ROC was directed to accept the uploading of the digital version.

13. In support of the contempt petition, the petitioner who appeared in

person, submitted that the respondents have disobeyed not only the

directions contained in the judgment of Sikri, J.(as he then was)

rendered on 31.5.2005 but have also flouted the directions issued by

Manmohan, J on 19.1.2011 and by Indermeet Kaur, J on 19.7.2012. It

was vehemently contended that the long delay was wholly unjustified

and was intentional, inviting action for contempt. My attention was also

drawn to the written submissions dated 6th August, 2007 filed by the

counsel for the petitioner.

14. On behalf of the respondents, my attention was drawn to the

written submissions dated 25.4.2007. It was pointed out further that the

directions issued on 19.7.2012 by this Court were complied with and an

affidavit to that effect was filed before this Court on 1.11.2012. It is

also submitted that the annual general meeting of the company was

called and conducted on 14.11.2005. It is submitted that in the above

circumstances there was no deliberate defiance of the directions of this

Court. Even the delay in submitting the prescribed Form to the ROC

was on account of the change in the practice of accepting the physical

Form, to the filing of digital Form, due to which the respondents had to

face some difficulty. An application for condonation of delay was filed

before this Court and this Court had, by order dated 1.5.2013, condoned

the delay and directed the ROC to accept the uploading of the digital

version of the Form. It is submitted that in the above circumstances,

there was no disobedience or flouting of the orders of this Court.

15. I have considered the rival contentions and I have also perused the

written submissions filed by both the sides.

16. On 5.10.2005, the respondents filed Form No.32 with the ROC

(Annexure R-I). Therein the petitioner was stated to have been

appointed as director by order of Delhi High Court dated

31.5.2005/13.7.2005. These are the dates on which this Court rendered

the judgment and the date on which the SLP was dismissed,

respectively. In the column "date of appointment or change", the date

given was 13.7.2005. Satish K Thapar, the civilian director was shown

to have resigned from directorship by order of Delhi High Court dated

31.5.2005/13.7.2005. In his case also, the date of appointment or

change was shown as 13.7.2005. It may be noted that this Form was

filed within 3 months from the date on which the SLP was dismissed.

However, this Court by order passed on 22.4.2009 pointed out that

prima facie since the removal of the petitioner was itself illegal, he

would continue to be a director on all relevant dates including the dates

on which the respondents claimed to have removed him and for the

same reason the appointment of the civilian director would cease to have

effect from the date of his appointment itself. Apparently, when this

was pointed out, the respondents realised that the particulars given in

Form 32 were inaccurate and sought 4 weeks time for compliance.

Time was granted. Thereafter, both sides were in agreement that a fresh

form should be filed with the ROC to show that the petitioner continued

as Director from 23.9.1996 to 13.11.2005 and accordingly, this Court,

by order dated 19.1.2011, suggested that both the sides should find out

as to what steps have to be taken by the respondent company to achieve

this objective. It is necessary to mention here the significance of the

date 13.11.2005. This is because the annual general meeting of the

company was called on 14.11.2005 and notices for the same were sent

to everyone concerned, including the petitioner. The company had

earlier received two notices from its shareholders proposing a resolution

for the removal of the petitioner from the office of the director. Copies

of these notices and the proposed resolutions were also sent to the

petitioner on 31.10.2005. The petitioner however did not attend the

annual general meeting, in which the resolutions were unanimously

passed and the petitioner was removed from the office of director of the

company w.e.f. 14.11.2005. This fact was also communicated to the

petitioner by the respondents by letter dated 26.11.2005 (Annexure P-

19). It was because of this development, which was made known to the

Court, that the Court on 19.1.2011 observed that a fresh Form had to be

filed with the ROC showing that the petitioner continued as director

from 23.9.1996 to 13.11.2005, as he had been removed from

14.11.2005. Immediately thereafter an affidavit was filed on behalf of

the respondent dated 13.7.2011, a copy of which was given to the

petitioner. On 19.7.2012 this Court noticed that the earlier directions

given on 19.1.2011 had not been complied with; it accordingly directed

the respondent to file the Form 32 (in physical form) with the ROC. An

affidavit of compliance was directed to be filed within two weeks. An

affidavit of compliance was filed which was taken on record on

1.11.2012 to which the petitioner wanted to respond. His response was

also taken on board. Eventually, on 1.5.2013, the delay in filing the

prescribed form with the ROC was condoned and the ROC was directed

to accept the uploading of the digital version of Form 21.

17. A perusal of the affidavit dated 13.7.2011 filed by the second

respondent (Retd. Major General P C Puri) shows the following

chronology. After the order of this Court dated 19.1.2011 in which both

sides were directed to find steps for filing a fresh Form with the ROC,

there was no response from the petitioner and no suggestion came from

him. Therefore, the respondent approached the ROC on 6.4.2011 and

explained the entire case including the orders passed by this Court on

19.1.2011 and the problem that was faced by the company to get the

order by this Court implemented due to the electronic filing system

which had come into force in the meantime. The Deputy ROC

suggested to the respondent that e-Form 32 may be generated again and

submitted afresh. When this was attempted, the Form was generated but

the system did not accept the same. Therefore, the second respondent

personally handed over the Form 32 to the ROC on 13.4.2011 together

with relevant documents so as to get the order implemented. The

second respondent followed it up on several occasions with the ROC

and on 30.6.2011, the official in the office of the ROC suggested an

alternative, which was to generate an electronic Form 21 and get the

order of this Court scanned. On 6.7.2011, the respondent generated e-

form 21 providing the details as per the orders of this Court i.e. that the

petitioner continued as a director from 23.9.1996 till 13.11.2005. A

scanned copy of the order of this Court passed on 19.1.2011 was also

sent along with the e-form. On 7.7.2011, the receipt of the e-form 21

was acknowledged by the ROC.

18. It was thus stated in the affidavit that it was only on account of

the e-filing system that the Form No.32 was not accepted and after

considerable efforts and discussion with/guidance from the office of the

ROC that the Form No.21 was generated electronically and filed along

with a scanned copy of the order of this Court dated 19.1.2011.

19. The delay in filing the Form was condoned by the order of this

Court passed on 1.5.2013 and the ROC was directed to accept the

uploading of the digital version of Form 21.

20. Having regard to the above circumstances, I am unable to see any

wilful or intentional disobedience of the orders of this Court on the part

of the respondents. Moreover, even the allotment of 3,333 shares was

done in the meeting of the Board of Directors which took place on

20.8.2005 about which due notice was given to the petitioner. In its

order dated 31.5.2005, the allotment was made amongst 6 shareholders

of the company including the petitioner. In its order dated 31.5.2005 the

Court had granted liberty to the respondent company to make allotment

of these shares in accordance with law.

21. Pursuant to order dated 19.1.2011 (Manmohan, J.) the company

filed digital Form 21 after discussion with the office of ROC and after

taking their guidance. However, the company was directed by this

Court (Indermeet Kaur, J.) on 19.7.2012 to file Form No.32 with the

ROC. This direction was complied with on 29.10.2012. I do not

therefore see any disobedience of the orders of this Court. The

compliance with the orders of the court took some time on account of

technical problems which were beyond the company's control. It is

therefore not possible to impute any contumacious conduct on the part

of the respondents. They have made all efforts, bonafide to comply with

the orders of the court.

22. There are a few other allegations by the petitioner. He has

objected to the appointment of Lt. Col. Rajiv Kohli. He is an ex-

servicemen who was inducted as an additional director only with the

permission of the Director Resettlement, Ministry of Defence. His

appointment was confirmed in the annual general meeting held on

2.11.1996.

23. The petitioner's claim that all actions of the respondent company

prior to the judgment of this Court on 31.5.2005 should be recalled and

that inasmuch as they were not recalled there was disobedience, is

without any force. There is no such direction in the judgment. Even

otherwise, section 290 of the Companies Act takes care of the situation.

It says that all acts done by a director shall be valid, notwithstanding

that his appointment is afterwards discovered or declared to be invalid.

The actions of Satish K Thapar, civilian director, cannot therefore be

held invalid. Those actions cannot therefore be recalled.

24, For the aforesaid reasons there is no merit in the contempt

petition. The same as well as the connected application are hereby

dismissed with no order as to costs.

(R.V. EASWAR) JUDGE AUGUST 21, 2013 vld