TMI Blog2010 (6) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... , 6 and 7 i.e. all the respondent Companies except respondent No. 4. 3. These applicants challenge the scheme of amalgamation between these respondents and the respondent No. 1 sanctioned by this Court on 16th January, 2003. They seek setting aside of that order on the ground of fraud. 4. One Ambika Prasad Modi, a share holder of the respondent No. 4 filed an application in this Court for setting aside of the said order dated 16th January, 2003 (hereafter the earlier application ) that was nearly three years after sanction of the scheme. The order was assailed on the ground that no notice of the meeting to consider the scheme was received by him. The meeting as said to have been illegally convened, conducted and further vitiated by alleged attendance by dead persons. The applicant Nos. 1 to 6 (hereafter the supporters ) had filed affidavits in that application supporting the applicant, Ambika Prasad Modi. 5. That application was dismissed by my brother Sanjib Banerjee, J. on 3rd December, 2007. 6. From the said judgment and order of Brother Banerjee, J. Ambika Prasad Modi preferred an appeal before the Division Bench of this Court. For more or less the same reasons as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report of the Chairman, the meeting is said to have been attended by one Dinesh Rungta and one Purusottam Lal Rungta, both dead. 11. The authorisation given by the share holder companies was not proper under section 187 of the Companies Act. 12. It is stated that there is no effective denial of the above allegations in the affidavit-in-opposition. 13. On the behalf of the respondents the following submissions were made by Mr. S.K. Kapur, Sr. Advocate: a) The application for setting aside the scheme in 2005 was supported by these self same applicants or their privies by filing affidavits. b) The self same issues were before the Court; c) The Court of first instance upheld the scheme and overruled the objection; d) An appeal was preferred against that order but the Court of Appeal affirmed the order of the trial Court for the same reasons. e) A Special leave petition was preferred before the Supreme Court by the applicants which was dismissed as withdrawn. f) There has been great delay in approaching the Court. There was acquiescence by the applicants. g) All issues which have been raised in this application have been already decided by the Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than Road Company Even if the applicant had due notice of the meeting under section 391(1) convened in respect of Roadco and had attended the same, the applicant would not have had the numbers to upset the resolution in support of the scheme. The Chairman of the meeting has, both in his affidavit and the report, asserted that at the statutory meeting of Roadco the resolution approving the scheme had been unanimously passed. It is not necessary to go into the charges of fraud leveled by the applicant as even if it were to be assumed that the applicant was deliberately and fraudulently kept out of the meeting and kept in the dark in respect of the then proposed scheme of amalgamation, the applicant could not have stopped or stalled the resolutions passed by the concerned company or the other transferor companies or by the transferee company and the applicant lacked the shareholding strength to do so. The vicarious grievance of the supporters cannot ride on the applicant in the absence of such supporters coming to the fore. There were other points also addressed by his lordship as follows: The applicant has also relied on the affidavits filed by various Rungta shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive applicant companies as I have mentioned earlier. Out of these eleven applicants, the supporters filed affidavits supporting the applicant in the earlier application. Now, if these individual share holders were before the Court in the earlier application, holding controlling interest in the five applicant companies herein, could it be said that all the applicants herein were before the Court when the earlier application was heard and decided? Technically speaking, the companies are different entities from their share holders and were not before the Court. The actual fact is that the persons controlling those companies were before the Court. Therefore, the question is whether the interests of those companies were also represented before the Court. 18. To deal with the question of res judicata, let me first try to interpret the meaning of the phrase between the same parties or between parties under whom they or any of them claim, litigating under the same title in section 11 of the Code of Civil Procedure. Now, between parties under whom they or any of them claim means, in my opinion, servants, agents, assigns or privies of the parties, their legal representatives or predec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und by that decision. But sometimes although a person is not a party to a proceeding his interest has been represented in a litigation and such interest decided. Such person is said to be represented through a privy. In the second edition of Jowitt published in 1977 a privy is said to be having a participation in some act so as to be bound thereby relying on an ancient English decision in Wood House v. Jenkins 1832. Bing 441 (Cited by Mr. Kapur). This reference to privy is in the expression or between parties under whom they or any of them claim litigating under the same title in section 11 of the code. In Suloehana Amma v. Narayanan Nair, reported in (1994) 2 SCC 14, the Supreme Court said that a decided issue will bind the parties and their privies. It said that the object of section 11 of the Code of Civil Procedure was to bring conclusiveness with regard to judgments, binding the parties and their privies. The justification for such provision is to be found on public policy as well as private justice. This is akin to the principle of issue estoppel or cause of action estoppel as held by the Supreme Court in IswarDutt v. Land Acquisition Collector Anr. reported in (2005) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing their supporting affidavits in that application. So, the supporters were the privies of these applicant companies or could be said to be representing their interests according to the above principles of res judicata. The Court of appeal by its judgment and order dated 19th March 2009 affirmed the said findings of the learned company judge. 24. On the principles of law discussed by me above, the parties to this particular proceeding are bound by the findings of the learned company judges as affirmed by the Court of appeal. 25. Now, the issue of fraud. 26. Fraud vitiates any act when it is alleged. An action to set aside fraud alleged must also be brought within the period of limitation i.e. the period prescribed by the Limitation Act, after discovery of the fraud or upon it being ought to be discovered by reasonable diligence (see Md. Noorul Hoda v. Bibi Raifunnisa Ors. reported in (1996) 7 SCC 767 and Panna Lal v. Murari Lal (Started AIR 1967 SC 1384). When fraud has been practised on the Court, the court has the power to set aside such order or decree on the ground of and If there is fraud the principles of res judicata will not apply. An act habituated by fraud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meetings, attendance by unauthorised persons, voting by unauthorised persons and the attendance register showing attendance by dead persons. Neither is there any determination whether fraud has been perpetuated. The finding in the said judgments has proceeded on the assumption that even if fraud had been practised the result would have been the same. Therefore, there is determination of the issue of fraud. The Court was able to dispose of matter without deciding the said issue. When such issues remain unresolved the respondents cannot take shelter behind explanation IV and V to section 11 of the said Code. Under section 11 an issue has to be heard and final decided to constitute res judicata constructive. Res judicata principles would apply, if, while granting relief, out of prayers (a) - (e), (a) - (d) are granted. It will be taken as refused. Or a necessary point is not taken in the pleadings or framed as an issue. It would nonetheless be deemed to have been taken under explanation IV. But there can be no res judicata of an issue when it is before the Court but not decided. (See Sheodan Singh v. Daryas Kunwar, AIR 1966 SC 1332). Further, the Court in the earlier proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same......... Further, the appellant's apparent supporters had due notice and knowledge of the meetings and of the scheme propounded and had as such not applied for setting aside the order of sanction but merely chosen to support the appellant. This in itself fastened knowledge of the sanctioning of the scheme on the appellant. ............. The vicarious grievance of the appellant's supporters could not ride on the appellant's shoulder without such supporters coming to the fore................. It further appears that by the scheme of amalgamation in question the respondent Nos. 2 to 7 having their registered offices at Kolkata were algamated with the respondent No. 1 having its registered office at Jaipur in Rajasthan. While the order sanctioning the scheme of amalgamation was passed by this Hon'ble Court on 16th January, 2003, it was passed by the Hon'ble Court at Rajasthan on 17th October, 2003. The G.A. No. 669 of 2005 seeking the recalling and/or setting aside of the order passed by this Hon'ble Court on 16th January, 2003 was, however, filed by the appellant only on 30th September, 2005 after the expiry of more than 2 years and 8 months sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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