TMI Blog2011 (4) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No.15 and Samit Talukdar, Sr. Adv. for Defendant No. 1 ORDER S. Banerjee, J. 1. Considerable time has been wasted in the Court failing to notice at the outset as to the form of the action. The frame of the suit makes it an apparent derivative action brought by shareholders but the reliefs claimed are as personal to the Plaintiffs as partition of alleged joint family assets. On behalf of the Plaintiffs it has been represented that the suit is for partition of joint properties. Much argument has been made on it being permissible to treat companies and their assets as family properties if the facts so warrant. 2. It was only upon one of the contesting Defendants, the fifteenth Defendant company, referring to the cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Newman Industries Ltd (No 2) (1982) 1 All ER 354 , among others, the inflexibility of the original rule has been moulded to accommodate complaints in several situations. Classically, a derivative action is where a member or some members can sue in his or their name where the beneficiary of the reliefs claimed is the company itself. The member or members suing derive their corporate right to sue on behalf of the company from the company itself. As has been succinctly explained in Pennington's Company Law: In certain circumstances an individual member may bring an action to remedy a wrong done to the company or to compel his company to conduct its affairs in accordance with its constitution and the rules of law governing it, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly arrayed as the first Defendant. The legal basis of the seemingly vicarious action brought for the benefit of the company, is based on the four principal exceptions to the rule in Foss v. Harbottle. The underlying theme of such an action is that the wrongdoers qua the company are in control of the company and would not permit the company's name to be used as the eo nomine Plaintiff. The reliefs in such an action are for the benefit of the company and scarcely for the vindication of the personal rights of the named Plaintiffs, though there would be a thin dividing line between personal rights and corporate rights. Satya Charan Law captures the essence of the legal position: 17. The correct position seems to us to be that ordinaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent suit has this to say on the Plaintiffs' side: 1. Narendra Kumar Berlia for self and as Karta of Narendra Kumar Berlia, HUF and on behalf of all the shareholders of the Defendant Nos. 9 to 21 save and except the Defendant Nos. 1 to 8 and their nominees. 2. Shreya Berlia 3. Megha Berlia All carrying on business from 208 Jamunalal Bajaj Street, Kolkata 700 007, within the jurisdiction aforesaid. Plaintiffs. 7. The Defendant Nos. 1 to 8 are members of the Berlia family. The Defendant Nos. 9 to 21 are companies that the Plaintiffs claim are family companies of the Berlias. The Defendant Nos. 22 to 32 are either human individuals or bodies corporate who, the Plaintiffs insinuate, are nominees of the Defendant Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. One would have expected the for and on behalf of ... to cover all the Plaintiffs; but the Plaintiffs here have come with the first Plaintiff suing on behalf of the several companies with the other two Plaintiffs apparently espousing their personal causes of action. That, by itself does violence to a derivative action. Again, the action is not on behalf of one company but in respect of several companies. Though it is not necessary in the context to consider whether the disparate causes of action of several companies can be espoused in one suit, the head and body and tail are so mutually contradictory and destructive of each other that, to borrow a famous expression from Jhajharia, the animal appears to be unknown to legal science. It de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce a claim belonging to the company. Such an action is entertained and allowed to proceed where the members cannot remedy the illegality complained of. 12. In the present case, the primary relief of partition of the assets of the several companies cannot be a claim falling within the exception to the rule in Foss v. Harbottle. A personal cause of action of the Plaintiffs has been carried by way of a confused derivative action covering, strangely, a number of companies without the first Plaintiff establishing or attempting to establish that he is a shareholder of each of the companies that he professes to sue on behalf of. Add to that the fact that the two other Plaintiffs are not parties to the derivative action and sue for their persona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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