Research › Search › Judgment

Bombay High Court · body

2012 DIGILAW 1714 (BOM)

Pradeep Mandhana Shivam v. Pramod Jain Green Park Extension

2012-09-10

R.M.SAVANT

body2012
Judgment 1. Rule. By the consent of the parties, made returnable forthwith and heard. 2. The short question which arises for consideration in the above petition is as regards the entitlement of the Petitioner for being impleaded in S.C. Suit No.817 of 2011 filed by the Respondent nos. 1 and 2 herein. The order which is impugned in the Writ Petition filed under Article 227 of the Constitution of India is the one dated 12th April, 2012, by which order, the learned Judge of the City Civil Court, Dindoshi, Mumbai rejected the Chamber Summons being Chamber Summons No.636 of 2011 filed by the Petitioner herein for his impleadment. 3. The suit in question being S.C. Suit No.817 of 2011 has been filed by Respondent nos. 1 and 2 herein principally for the relief, which is contained in prayer clause (b) of the Petition. The said prayer clause (b) is reproduced herein under for the sake of convenience. “(B) that this Hon'ble Court be pleased to declare that the defendants more particularly defendants No.2 to 5 have no right, authority and or power to sale the property more particularly described in Exhibit “A” to the plaint by way of private sale and further it be declare that aforesaid property can not be sold by way of private auction and it is declared that the property more particularly described in Exhibit “A” to the plaint be sold by way of public auction and under the supervision of this Hon'ble Court.” 4. In so far as the averments in the plaint are concerned, suffice it to say that the Respondent nos. 1 and 2 herein claimed to be the holders of about 1000 equity shares of the Golden Tobacco Ltd. i.e. Respondent no.3 to the petition. In the plaint, the averments have been made as regards how the Company is being mismanaged and how the Defendant No. 2 to 5 have dealt with the assets of the company. It is alleged that the said Defendants are involved in diversion of funds of the Company and are attempting to misappropriate the properties of the company. It is further alleged that the Defendant no.2 belongs to a particular group which directly or indirectly controls the Defendant no.1. It is alleged that the said Defendants are involved in diversion of funds of the Company and are attempting to misappropriate the properties of the company. It is further alleged that the Defendant no.2 belongs to a particular group which directly or indirectly controls the Defendant no.1. A reference is made to the Company Petition No. 8 of 2010 filed by the Plaintiffs before the Company Law Board on an earlier occasion, in which Company Petition also, allegations were made against a particular group namely, the Dalmia Group. It has further been averred that an oral settlement was arrived at between the Plaintiffs and the Defendants in the said Company Petition as a result of which, the Company Petition was allowed to be withdrawn on 8th February, 2010 by the Company Law Board. The plaint, therefore, is replete with averments regarding the alleged mismanagement of the Company i.e. the Golden Tobacco Ltd. The Plaintiffs claim to have filed the suit for protecting the interest of all the stake holders of Defendant No.1 i.e. Respondent No.3 Company herein. 5. The Petitioner herein filed an application being Chamber Summons No.636 of 2011 for his impleadment. It was the case of the Petitioner that he holds 4946 shares of the Respondent no.3 and since the Suit is filed in a representative capacity under Order 1 Rule 8 of the C.P.C. purportedly to protect the interest of the stake holders of the Respondent no.3, that the Petitioner in his capacity as a shareholder, is a necessary party. The said application was objected to by the original Plaintiffs i.e. Respondent nos. 1 and 2 by filing their reply. 6. As indicated above, the trial Court i.e. the learned Judge of the City Civil Court has by the impugned order rejected the said application. The gist of the reasoning of the learned Judge is that since the Plaintiffs are seeking to sue in a representative capacity by having recourse to Order 1 Rule 8 of the C.P.C., the interest of the Petitioner i.e. the Applicant is adequately protected by Sub Rule 4 of Rule 8 of the C.P.C., as in the event a settlement is arrived at between the parties, a notice would have to be given to the concerned shareholders. The second ground on which the Application is rejected is that the Petitioner has not produced any material to show that he holds 4946 shares of the Company. 7. Heard the learned Counsel for the parties. The learned Counsel appearing for the Petitioner Shri Dani would contend that since the Suit in question has been filed in a representative capacity, the Petitioner would be entitled to be impleaded in view of Sub Rule 3 of Rule 8 of Order I of the C.P.C. The learned Counsel would contend that since the Suit in question is purportedly filed to protect the interest of the stake holders, the original Plaintiffs cannot have an objection to the Petitioner who has 4946 shares, to be impleaded either as a Co-Plaintiff or as a Defendant. The learned Counsel would contend that the trial Court erred in holding that the Petitioner has not produced any material to substantiate his case that he holds 4946 shares of the Company. 8. The learned Counsel would further contend that the Certificate issued by the Share Registry was placed before the trial Court at the time of hearing of the said Application for impleadment which has not been taken into consideration by the trial Court. For contra, it is submitted by Shri Jaiswal, the learned Counsel appearing on behalf of the original Plaintiffs that as yet the leave under Order 1 Rule 8 has not been granted by the trial Court and, therefore, the applicant cannot claim his impleadment on the basis of Sub Rule 3 of Rule 8 of Order I of the C.P.C. The learned Counsel would question the credentials of the Petitioner in filing the said Application for impleadment. It is the submission of the learned Counsel for the original Plaintiff that the Defendants themselves to nullify the filing of the suit by the plaintiff has put up the applicant. Learned Counsel would contend that though the Certificate has been produced in the present Writ Petition, the said Certificate was not before the Court when the Chamber Summons was heard and decided. 9. Having heard the learned Counsel for the parties and having bestowed my anxious consideration to the rival contentions, in my view, the impugned order is required to be set aside and the matter is required to be relegated back to the trial Court for a de novo consideration of the application for impleadment. 9. Having heard the learned Counsel for the parties and having bestowed my anxious consideration to the rival contentions, in my view, the impugned order is required to be set aside and the matter is required to be relegated back to the trial Court for a de novo consideration of the application for impleadment. It is an undisputed position that as yet leave under Order 1 Rule 8 has not been granted to the Plaintiffs to prosecute the said Suit in a representative capacity. The trial Court as can be seen from the impugned order has proceeded on the basis that the Suit is one filed in a representative capacity and, therefore, has held that in terms of Sub Rule 4 of Rule 8, interest of the Petitioner i.e. the Applicant before the trial Court is adequately protected. 10. If Order 1 Rule 8 were to apply, then, the learned Counsel for the Petitioner is right in his submission that the Petitioner is entitled to get himself impleaded in terms of Sub Rule 3 of Order 8 of the C.P.C. It is pertinent to note that the trial Court has not considered the scheme as elucidated in Rule 8 of the C.P.C. and by merely relying upon Sub Rule 4 has held that the interest of the Petitioner is protected. The trial Court ought to have considered the position in law in the context of the fact that admittedly leave under Order 1 Rule 8 has not been granted to the Plaintiffs and on such consideration ought to have considered whether the Petitioner could be impleaded in the Suit. Insofar as the Certificate is concerned, though there is a dispute between the parties as to whether the Certificate was in fact before the trial Court, in my view, since the Petitioner has the Certificate in his possession now and since the Certificate is the document which is germane to the adjudication of the said Chamber Summons and since the trial Court has proceeded on the basis that the Petitioner has not produced any material to substantiate his case that he was holding 4946 shares of the Company, the remand of the matter is required for the said purpose also, as the trial Court can now adjudicate, the Chamber Summons on the basis that the Petitioner in fact has a Certificate of his share holding. The impugned order is, therefore, required to be quashed and set aside and the matter is required to be relegated back to the trial Court. Hence, the following directions are issued. (i) The impugned order is quashed and set aside and the Chamber Summons No.636 of 2011 is relegated back to the trial Court for de novo consideration. (ii) It would be open for the Plaintiffs to apply for leave under Order 1 Rule 8 of the C.P.C., prior to the Chamber Summons being heard. If leave is granted under Order 1 Rule 8, the consideration of the said Chamber Summons would be on the said basis. If the Chamber Summons is proceeded without such leave, the consideration would be on the basis that it is a lis between the Plaintiffs and the Defendants. (iii) Since the Respondent No. 1 and 2 i.e. the original Plaintiffs are questioning the credentials of the Petitioner on the ground that he is a proxy for the Defendants themselves, the Respondent No. 1 and 2 would be entitled to file an additional affidavit-in-reply to the Chamber Summons to which the Petitioner would be entitled to reply. (iv) The trial Court to take into consideration the material as mentioned hereinabove as also consider the Chamber Summons in terms of directions hereinabove and decide the same within a period of two months from 28th September, 2012, when the Notice of Motion is to come up before the trial Court. (v) The contentions of the parties are explicitly kept open for being urged before the trial Court. The trial Court is directed to hear and decide the Chamber Summons on its own merits and in accordance with law, uninfluenced by the observations made in the impugned order as well as in the present order. 11. Rule is accordingly made absolute in the aforesaid terms with parties to bear their respective costs.