Kharibari Tea Company Limited v. Shiv Shankar Kamal Kumar
2002-02-12
Bhaskar Bhattacharya
body2002
DigiLaw.ai
JUDGMENT Bhaskar Bhattacharya, J.: This is an application for recalling of consent order dated August 29, 2000 passed by Mr. Justice P. K. Samanta by which the disputes involved in the suit out of which the present revisional application arises were referred to Mr. Justice M. K. Mukherjee, a retired Judge of Supreme Court, as Arbitrator on the prayer of the both parties. It is alleged in this application that the aforesaid order was obtained by practising fraud upon Court. 2. Initially, this application was presented before Samanta, J, but His Lordship on April 26, 2000 released the matter on the ground that at that point of time His Lordship had no determination over the subject matter. Thereafter, the matter appeared before this Court as this Court has the required determination to take up a civil revisional application. 3. The respondent No.1 viz. Shiv Shankar Kamal Kumar filed a suit being Title Suit No.25 of 2000 against the present petitioners and one Sudip Kumar Das thereby claiming for the following reliefs:- "a) a decree declaring that the agreement dated 25.02.1998 is still continuing and subsisting; b) a decree declaring that the agreement dated 25.02.1998 cannot be cancelled or rescinded without complying with the required conditions such as the service of notice of at least 30 days and the clearance of the dues and the payment of compensation as enumerated in the same; c) a decree declaring that the letter under reference No. SCTE/2000-2001/22 of dated 04.05.2000 as issued by the defendant Nos.1 and 2 is illegal, arbitrary, unreasonable, void, in-operative and not binding upon the plaintiff in any way; d) a decree by way of an injunction for restraining the defendants from entering into any agreement in relation to the scheduled garden with any other person; e) a decree by way of an injunction for staying the operation of the letter dated 04.05.2000 as issued by the defendant Nos. 1 and 2 ; f) a decree for an interim temporary injunction against the defendants from entering into any agreement in relation to the scheduled garden with any other person, as prayed for in para (d) hereinabove; g) a decree for any other relieves to which the plaintiff is found entitled to receive as per law; and h) cost of the suit." 4.
In the said suit, the plaintiff filed an application under Order 39 Rules 1 and 2 of the Code of Civil Procedure thereby praying for temporary injunction restraining the defendants from entering into any agreement in relation to the tea estate mentioned in the schedule. On such application, the learned trial Judge issued notice upon the defendants to show cause why the prayer of plaintiff for temporary injunction should not be granted, but refused to grant any ad interim order of injunction. Subsequently, on May 9, 2000 the plaintiff filed another application under section 151 of the Code of Civil Procedure thereby praying for modification of the earlier order refusing to grant ad interim injunction. The learned trial Judge by Order No.3 dated May 9, 2000 modified the earlier order refusing to grant interim injunction thereby passing an order of temporary injunction restraining the petitioners from entering into any agreement with others except the plaintiff till May 20, 2000. 5. The present petitioners, the defendants No.1 and 2, it appears from the record, appeared by filing a vakalatnama along with an application under Order 39 Rule 4 of the Code of Civil Procedure and also under section 8 of the Arbitration and Conciliation Act thereby praying for vacating the interim order earlier granted and for stay of the suit in view of existence of an alleged arbitration agreement between the parties. The plaintiff also filed an application for extension of the interim order granted earlier. Ultimately, by order dated June 3, 2000, the learned trial Judge allowed the application under Order 39 Rules 1 and 2 and extended the ad interim order of injunction earlier granted. The prayer for stay under section 8 of the Arbitration and Conciliation Act was however rejected. 6. Being dissatisfied, defendant Nos. 1 and 2 preferred the instant revisional application before this High Court which was entertained by Samanta, J and there was an order of stay of all further proceedings till the disposal of the revisional application. 7. Ultimately, on August 29, 2000, when the matter appeared before His Lordship, both the parties agreed that the disputes involved in the suit may be referred to Mr. Justice M. K. Mukherjee, a retired Judge of Supreme Court of India. His Lordship accepted the aforesaid proposal of the parties and the parties were directed to approach Mr. Justice M. K Mukherjee in accordance with such agreement.
Justice M. K. Mukherjee, a retired Judge of Supreme Court of India. His Lordship accepted the aforesaid proposal of the parties and the parties were directed to approach Mr. Justice M. K Mukherjee in accordance with such agreement. The revisional application was disposed of with the aforesaid observation. 8. Subsequently, on April 19, 2001, the instant application has been filed by defendant Nos. 1 and 2 through a different lawyer thereby praying for setting aside the consent order dated August 29, 2000 passed by His Lordship and for dismissal of the revisional application itself. The ground taken for recalling such order may be summarized thus:- a) The defendant No.1, Kharibari Tea Company Limited is a public limited company within the meaning of Companies Act. The company owns a tea estate known as Sachindra Chandra Tea Estate which is defendant No.2 in the suit. b) In the year 1993, Board of Directors of the Company comprised of Pradyut Kumar Mitra, Renukana Mitra and Tapan Kumar Mitra did not enjoy the support of the majority of shareholders of the company. In view of such fact, some of the shareholders of the company holding about 40% of the paid up share capital in the company filed a suit in the Court of learned Assistant District Judge, Jalpaiguri being O. C. Suit No.139 of 1993 for perpetual injunction restraining the above Mitras from acting as Directors of Company and for various other reliefs. c) By a judgement and decree dated May 24, 1995 the Trial Court passed a decree permanently restraining Mitras from acting as Directors of the Company and appointed an Administrator for holding General Meeting of the Company for electing a Board of Directors of the Company. The Trial Court appointed Mr. Justice P. K. Banerjee, a retired Chief Justice of Rajasthan High Court, as Administrator but the said Administrator did not function and informed the Court that he was not interested in holding such office. d) Thereafter, Mitras for themselves and also in the name of the company preferred an appeal before this Court being FAT. No. 1905 of 1995. In the said appeal the appellants prayed for stay of the operation of the decree. By order dated August 30, 1995, a Division Bench of this Court directed the parties to maintain status quo with regard to the management of the tea estate of the company.
No. 1905 of 1995. In the said appeal the appellants prayed for stay of the operation of the decree. By order dated August 30, 1995, a Division Bench of this Court directed the parties to maintain status quo with regard to the management of the tea estate of the company. By another order dated September 12, 1995, the Division Bench of this Court in the said appeal granted liberty to the Principal Officer and/or Garden Manager of the tea estate of the company to make payment of weekly wages and bonus to the employees and to operate the bank account of the company for the above purposes. Thereafter, by another order dated September 22, 1995 the Division Bench permitted the principal officer and/or the Garden Manager of the tea estate of the company to make payment of a sum of Rs. 83,000/- towards arrears and current provident fund and also Rs. 35,000/- towards ration for the employees. As neither Board of Directors of the Company nor Administrator was functioning, the Division Bench by an order dated April 10, 1997 appointed a Committee of Management for conducting the affairs of the Company during the pendency of the appeal. Challenging the said order dated April 10, 1997, the Mitras filed a special leave application before the Hon'ble Supreme Court. e) By an order dated August 19, 1997, the Supreme Court granted special leave and set aside the said order dated April 10, 1997 and directed the Registrar of Companies, West Bengal to hold an Annual General meeting of the company for the purpose of electing a Board of Directors of the Company. The Hon'ble Supreme Court further directed that until the out come of the meeting, the management of the company would be carried on in accordance with the orders dated August 30, 1995, September 12, 1995 and September 22, 1995 passed by the Division Bench of this Court in the said appeal. On May 4, 1998 the Supreme Court modified the order dated April 10, 1997 with regard to holding of the General Meeting. f) On the date of passing of the decree by Trial Court that is to say May 24, 1995 one Debendra Shyankar Choudhury was acting as Principal Officer and one Jayanta Mitra was acting as Garden Manager of the Company. The said Debendra Shankar Choudhury died in July 1997.
f) On the date of passing of the decree by Trial Court that is to say May 24, 1995 one Debendra Shyankar Choudhury was acting as Principal Officer and one Jayanta Mitra was acting as Garden Manager of the Company. The said Debendra Shankar Choudhury died in July 1997. According to the present petitioners', the said Jayanta Mitra abandoned the tea garden without handing over any charge in October, 2000. g) After the decree passed by the Trial Court, as the Company did not function properly, the workers conducted the business of the Company in accordance with their sweet will. Neither the Principal Officer nor the Garden Manager kept any proper accounts of their dealings and transactions with funds, assets and properties of the company. By an order dated November 10, 2000 the Division Bench of this Court appointed Sri Pinaki Ranjan Sarker, a retired District Judge, as Administrator to run and manage the company. The said Administrator took charge on December 1, 2000. h) Therefore, between May 24, 1995, the date of decree passed by Trial Court and November 30, 2000, the date just preceding the day on which the Administrator obtained charge, no person had any authority to enter into any contract with any third party or to borrow any fund in the name of the company. Neither the Principal Officer nor the Garden Manager had any right or authority to bind company vis-a-vis any third party. i) On March 22, 2001 the present petitioners were served with a copy of the application under section 9 of the Arbitration and Conciliation Act filed by respondent No.1 in the Court of learned Civil Judge, Senior Division, Siliguri being Miscellaneous Application No.79 of 2000. In the said application the respondent No.1 filed copies of the agreement dated February 25, 1998 and supplementary agreement dated July 24, 1998 and March 10, 1999. j) After assuming charge, the Board of Directors of the company perused the books, papers, documents and records of the company which were made available to it by the Administrator and upon such perusal the Board of Directors of the company came to know of the consent order dated August 29, 2000 passed by Samanta, J wherefrom it transpired that by consent of the parties His Lordship appointed Mr. Justice M. K. Mukherjee as Arbitrator to adjudicate upon the alleged dispute between the parties.
Justice M. K. Mukherjee as Arbitrator to adjudicate upon the alleged dispute between the parties. Petitioners thereafter on March 14, 2001 applied for certified copy of the said order and certified copy was made available on April 18, 2001. k) Immediately after coming to know about the said order the company through its Advocate wrote a letter dated March 14, 2001 to the learned Arbitrator and requested the learned Arbitrator to postpone and/or keep in abeyance the arbitration sittings to enable the Board of Directors of the Company to get acquainted with the affairs of the company. l) On March 26, 2001 the company received a letter dated March 13, 2001 from the Private Secretary of the said learned Arbitrator. The enclosures to the said letter were the minutes dated March 8, 2001 of a sitting held by the learned Arbitrator wherefrom the com1Jany learnt that Sri Rajesh Khaitan, Advocate appeared on behalf of the respondent No.1 and none appeared on behalf of the company. From the said letter it also appeared that the learned Arbitrator heard the matter ex parte and directed that the award would be passed in due course. m) Immediately after receiving the said letter, the company through its Advocate sent another letter dated March 28, 2001 to the learned Arbitrator informing the learned Arbitrator that no one had any authority to enter into any contract on behalf of the company during the period between May 24, 1995 and March 2, 2001. n) By a letter dated March 30, 2001, the learned Arbitrator informed the said learned Advocate that the learned Advocate had not submitted any letter from the company authorizing him to appear before the learned Arbitrator and the learned Arbitrator regretted his inability to consider the request made by the said advocate. o) Thereafter, by a letter dated March 31, 2001 the said learned Advocate sent a certified true copy of the Board resolution of the company dated March 12, 2001 authorizing the said Advocate to represent the company in all matters relating to the claim of respondent No.1.
o) Thereafter, by a letter dated March 31, 2001 the said learned Advocate sent a certified true copy of the Board resolution of the company dated March 12, 2001 authorizing the said Advocate to represent the company in all matters relating to the claim of respondent No.1. Instead of supplying any paper or document, the learned Arbitrator by a letter dated April 12, 2001 informed the petitioners' Advocate that the request for furnishing copies of the pleadings and documents could not be entertained and further informed that he was postponing delivery of the final order/award till April 30, 2001 to enable the petitioners to obtain appropriate order from competent Court. 9. On the basis of the aforesaid allegations, the petitioners contend that on August 29, 2000 no one had any authority on behalf of the company to refer any alleged dispute raised by the respondent No.1 to arbitration and the said Garden Manager had merely authority to operate the bank account for payment of wages and bonus to the employees of the company and of other statutory dues, if any. The Garden Manager had no authority to enter into any arbitration agreement on behalf of the company and as such the said order dated August 29, 2000 should be recalled. 10. The aforesaid application has been opposed by the respondent No.1 by filing written objection thereby denying the allegations made by the petitioners in this application. The respondent No.1 has relied upon the plaint case made in the suit filed before the learned trial Court and has contended that the Garden Manager was quite competent to act in terms of the order of the Division Bench and the agreement entered into between respondent No.1 and the company through the Garden Manager was binding upon the company. It is further contended that the Administrators appointed by this Court was fully aware of the existence of the consent order by which matter was referred to the learned Arbitrator as will appear from different documents. Therefore, according to the respondent No.1 even if the consent was not initially granted by competent authority, by subsequent act and ratification the company has accepted such order: thus the prayer for recalling that order appointing Arbitrator should be rejected.
Therefore, according to the respondent No.1 even if the consent was not initially granted by competent authority, by subsequent act and ratification the company has accepted such order: thus the prayer for recalling that order appointing Arbitrator should be rejected. The respondent No.1 contends that sole object of the company is to delay the realization of dues of the respondent No.1.It is further pointed out that the company itself raised objection before the learned trial Court stating that there was a clause of arbitration and preferred the said revisional-application before this Court. The respondent No.1 accepted the aforesaid contention of Company and accordingly matter was referred to the learned Arbitrator. Knowing fully well that company has no case to defend the suit, they are trying to drag the matter unnecessary after the hearing before the learned Arbitrator is complete. It is further contended that this Court should not recall the earlier order as the company cannot suffer loss if the matter is referred to the learned Arbitrator instead of unnecessary prolonged proceedings before the learned trial Judge. 11. The main question that falls for decision in this application is whether the disputes were referred to the Arbitrator with the consent of the company. The other question is, even if it is assumed that valid consent was not given on behalf of the company, but somebody else having no authority to give consent agreed to refer the matter to arbitration, whether there is subsequent ratification on part of the company, accepting the arbitration. 12. As regards the first question, it appears that the instant revisional application was preferred against order dated June 3, 2000 passed in Title Suit No.75 of 2000 by which the learned trial Judge rejected the prayer of the defendants No.1 and 2 of the suit for stay. This revisional application has been affirmed by Jayanta Mitra by describing himself as Manager of the 'petitioner'. It appears from the said revisional application that Kharibari Tea Company Limited is the petitioner No.1 and Sachindra Chandra Tea Estate is petitioner No.2. The vakalatnama annexed to the said application indicates that the same was executed by Jayanta Mitra by describing himself as Manager of 'Sachindra Chandra Tea Estate'.
It appears from the said revisional application that Kharibari Tea Company Limited is the petitioner No.1 and Sachindra Chandra Tea Estate is petitioner No.2. The vakalatnama annexed to the said application indicates that the same was executed by Jayanta Mitra by describing himself as Manager of 'Sachindra Chandra Tea Estate'. Although, the Kharibari Tea Company Limited was petitioner No.1, it appears that the company did not execute any vakalatnama in favour of Jayanta Mitra but the said vakalatnama was really filed on behalf of the petitioner No.2 as a Manager of the Tea Estate. Therefore, it is apparent that the instant revisional application was not supported by any vakalatnama whatsoever of the 'Kharibari Tea Company Limited'. It is admitted fact that Sachindra Chandra Tea Estate is only an Estate owned by the company. Therefore, the alleged manager of the said estate cannot give consent for referring the dispute to any arbitration on behalf of the company. Moreover, on the date of giving such consent, Jayanta Mitra had only authority to make payment of wages and bonus of the employees of the company and some amount on the account of Provident Fund and ration of the employees as per orders of the Division Bench on August 30, 1995, September 12, 1995 and September 22, 1995. But those orders did not authorize the said Jayanta Mitra either to initiate any legal proceedings or to bind the company by referring any dispute to arbitration. I thus find substance in the contention of Mr. Bose appearing on behalf of the company that the company was not at all represented in the revisional application before this Court and the alleged consent was also not binding upon the Company. It may not be out of place to mention here that after this application was filed, this Court gave notice to the learned advocate who originally appeared on behalf of the petitioners. But the said advocate informed this Court that he had no instruction to appear on behalf of his clients and as such he did not appear any further. It is therefore clear that the said learned advocate was never authorized by the company to file this revisional application or to give consent on behalf of the company as will appear from the vakalatnama annexed to the revisional application.
It is therefore clear that the said learned advocate was never authorized by the company to file this revisional application or to give consent on behalf of the company as will appear from the vakalatnama annexed to the revisional application. The order dated August 29, 2000 was thus passed on the basis of consent given by a person who had no authority to represent the company at the relevant point of time; such order thus cannot bind the company. 13. The next question is whether by subsequent act or ratification of the company, the said order can be given effect to. I have gone through the affidavit filed by the respondent No.1. It appears from the annexures that the Administrator who took charge on December 1, 2000 was informed that matter has been referred to arbitration before he assumed charge but there is no material to show that the administrator took any step for contesting the said proceedings. There is also no dispute that the company has not appeared before the learned Arbitrator and the learned advocate who was previously acting on behalf of the company informed the learned Arbitrator that his clients were not contacting him. Thus, the question is whether mere knowledge of the Administrator about a reference pending before learned Arbitrator will amount to ratification or consent on behalf of the company. In my view, if a person has not given any consent to refer a dispute to arbitration but if he comes to know that somebody on his behalf claiming to be authorized agent has referred any matter to arbitration, he is under no obligation to approach the learned Arbitrator pointing out that such arbitration is without any authority; because any award passed on such reference will not be binding upon him. Position however would have been different, if such agent was initially authorized but agency had been subsequently terminated. If a sale deed is executed on behalf of an owner by a person claiming to be his constituted attorney, although no such power has ever been given to him, the owner is not required to file any suit for cancellation of such sale deed because there was no authorization on his part to the said alleged constituted attorney at any point of time and the person taking such property will acquire no title.
Inaction on the part of the owner inspite of knowledge of such sale cannot be termed as "implied ratification" and will not vest the purchaser with title. The present case can be equated with the above situation. Thus, inaction of the Administrator during his short period of office does not amount to ratification and the Arbitrator appointed by the consent of a party having no authority to give consent cannot bind company. It is therefore abundantly clear that the consent order dated August 29, 2000 was obtained by practising fraud upon Court as if a valid consent was really given on behalf of the company. It was the duty of the office of this Court to check up at the very beginning of the proceedings whether the application was supported by proper vakalatnama of the company. Although, there was no vakalatnama executed by company, on the strength of vakalatnama filed by Manager of the petitioner No.2, this revisional application was entertained. 14. I thus recall the order dated August 29, 2000 as the same was obtained by practising fraud upon this Court. Pursuant to the said order, if any amount has been paid to the learned Arbitrator as his remuneration by the respondent No.1 alone, he is free to realize the same from Jayanta Mitra, the then Manager, who has not even cared to either appear before learned Arbitrator or before this Court when this application was heard. I have already indicated that the learned Advocate who originally appeared for the company on the strength of the vakalatnama executed by Jayanta Mitra was given notice but he did not participate as he had 'no instruction'. I thus allow this application. Order dated August 29, 2000 passed by Samanta, J on consent is recalled. The revisional application initially filed being C. O. No.1641 of 2000, is also dismissed as nobody properly represented the petitioner No.1 and the learned advocate who represented the petitioner No.2 on the basis of alleged power of the Garden Manager is also not coming forward to press the revisional application. The revisional application itself is thus dismissed with costs which I assess at 500 Gms. payable to the respondent No.1 to be realized from the person who executed the vakalatnama viz. Jayanta Mitra personally. Jayanta Mitra is also directed to pay the entire remuneration of the learned Arbitrator in his personal capacity.
The revisional application itself is thus dismissed with costs which I assess at 500 Gms. payable to the respondent No.1 to be realized from the person who executed the vakalatnama viz. Jayanta Mitra personally. Jayanta Mitra is also directed to pay the entire remuneration of the learned Arbitrator in his personal capacity. Such amount must be paid within one month from the date of communication of this order to him. Appeal allowed.