Mahesh Chandra Sharma v. Tycoon Seeds Pvt. Ltd.

1. This appeal is filed under section 10 (F) of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) seeking to impugn the order dated 21.08.2014 passed by the Company Law Board (in short ‘the CLB’).

2. It is the contention of the appellant that the appellant is the share holder and the director of respondent No.1 company. The appellant and respondent No.2 are running a business in the form of a partnership. Subsequently, in 2007 the company was incorporated. On account of various differences and disputes between the parties, the appellant first filed a suit before this court seeking a decree of permanent injunction to restrain defendant Nos.[1] to 3 therein from carrying out any business or activity in any manner whatsoever in the warehouse. A decree of rendition of accounts was also sought. This suit was filed around April 2013.

3. The present company petition was filed under sections 397 and 398 of the Act seeking a declaration that the acts of respondent Nos.[2] and 3 in managing the affairs of respondent No.1 company is oppressive and prejudicial to the interest of the petitioner and the company.; a declaration 2018:DHC:2951 was also sought to declare the appointment of respondent No.3 as director of respondent No.1 company as null and void and a direction was also sought to return an amount of Rs.[2] crores into the company for having diverted the business of respondent No.1 company and appoint a receiver to manage the affairs of the company.

4. In the suit, the High Court vide its orders dated 12.02.2013 and 17.04.2013 dismissed the suit under Order 7 Rule 11 CPC noting that the plaintiff as director cannot claim stock of the company and also cannot have a right to seek accounts from a co-director.

5. The grievance of the appellant is that by the impugned order the CLB has dismissed the petition on the ground of res-judicata.

6. A perusal of the impugned order would show that the CLB noted that the subject matters of the company petition and the suit are directly and substantially the same. The CLB also noted that the contention of the petitioner that respondent No.2 appointed respondent No.3 as director of the company and diverted the funds of the company and thereafter entered into an agreement with the petitioner. It noted that the same are the grounds in the Civil Suit. The CLB also noted that the petitioner admittedly entered into an agreement dated 06.04.2011 for distribution of the stocks, assets and liabilities of the company equally in between the petitioner and second respondent. In support of the pleadings, the petitioner and the respondents filed documents indicating distribution of the stocks, assets and liabilities between them. The CLB also noted that the petitioner admits that the company has not been filing any annual return or any filings before RoC since 2010 i.e. before filing of the company petition. Hence, apart from holding that the plea is barred by res-judicata, the CLB also noted that the company remains defunct and that it is not a fit case to invoke jurisdiction under sections 397 and 398 of the Act as on the date of the filing of the company petition, the company has not been carrying any business and not filing returns before RoC and there are no assets lying with the company. The petition was accordingly dismissed.

7. I have heard the learned counsel for the parties.

8. The learned counsel for the appellant vehemently argued that as the suit was dismissed under Order 7 Rule 11 CPC, the question of plea of the appellant being barred by res-judicata would not arise. He pleads that in view of the findings that the present petition is barred by res-judicata the CLB has not adjudicated the disputes between the parties.

9. The learned counsel for the respondents confirms that the respondent company has been declared defunct by the RoC.

10. This aspect is denied by the learned counsel for the appellant. He insists that before filing of the petition a return has been filed by the company before the RoC. He further relies upon the judgment of the Division Bench of the High Court of Calcutta in Harihar Das v. Chandra Kumar Guha, 1918 LawSuit(Cal) 229.

11. In my opinion, I need not go into the plea raised by the appellant namely that the petition of the petitioner was not barred by res-judicata and the CLB has wrongly held that the petition of the appellant is barred by resjudicata. The CLB has also gone into the merits of the case.

12. A perusal of the impugned order shows that the CLB noted that from the pleadings of the petition on record that the petitioner entered into an agreement dated 06.04.2011 for distribution of the stock, assets and liability of the company equally between the petitioner and the second respondent. The documents are also filed in court by both the sides indicating distribution of the stocks, assets and liability between the two parties. The CLB also noted that annual returns are not being filed since 2010. The order also notes that address of the company in the memo of parties is the address of the appellant and the registered office is also the same address. CLB concluded that distribution of assets and liability of the company have taken place. The fact that the company is not carrying on any business since 2010 and is defunct, the CLB took the view that it is not a fit case for invoking jurisdiction under sections 397 and 398 of the Companies Act.

13. Section 10(F) of the Companies Act, 1956 reads as follows: “10F. Appeals against the orders of the Company Law Board. Any person aggrieved by any decision or order of the Company Law Board [made before the commencement of the Companies (second amendment) Act, 2002] may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.”

14. In my opinion, no substantial question of law has been raised in this case which warrants interference of this court. No doubt the appellant had sought to assail some of the findings of facts recorded by the CLB, namely that the returns were filed after 2010 and the division of assets is not completed. However, in my opinion, it is not for this court to go into this dispute of facts. There is no merit in the appeal and the same is dismissed.

JAYANT NATH, J. MAY 08, 2018