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2012 (9) TMI 821 - HC - Companies LawDemerger - challenge the principle of res judicata - prayer for correction of the drawn up order as according to them, since jute division stood transferred by demerger, the North Mill also came through such demerger, subject to the agreement for sale. Since sale was frustrated in absence of permission from the Land Ceiling Authority, it should retain with them. However, because of the mistake crept in the order so drawn up, it would need correction. - Held that - the parties to the arbitration proceeding and the company proceeding are different, having Gloster a common feature. Section 11, on a close reading, would depict two requisites, the matter in issue, must be the same and both the proceedings must be between the same parties. The decision in the other Court might have a persuasive value in the latter proceeding. However, it would not operate as res judicata as parties were not same that would take care of the plea of res judicata The jute business and cable business as of 1992 would be divided between two groups of Bangurs through demerger. We thus allow prayer (a) to the extent that the order dated May 31, 1998 as drawn up be corrected by incorporating the following words, and all other the property, rights and powers of the transferor company in jute division .
Issues Involved:
1. Ownership and Rights Over North Mill 2. Res Judicata and Its Applicability 3. Correction of the Drawn-Up Order 4. Limitation and Delay in Filing the Application Detailed Analysis: Ownership and Rights Over North Mill: The dispute revolves around the ownership and rights over North Mill, which were initially transferred from Fort Gloster to Hooghly Mills Ltd. in 1988, subject to governmental permissions. The demerger in 1992, which separated Fort Gloster's cable and jute divisions, did not explicitly address North Mill. Gloster Ltd. argued that since the sale to Hooghly was not completed due to the lack of permissions, North Mill should revert to Gloster. Fort Gloster and Bowreah Jute Mills (which acquired North Mill from Hooghly) contended that the sale was effectively concluded, and North Mill was not part of the demerger. Res Judicata and Its Applicability: The principle of res judicata was debated, with Fort Gloster and Bowreah arguing that a previous arbitration decision, which ruled that North Mill did not vest in Gloster, should preclude Gloster from claiming rights over North Mill. The court, however, noted that the arbitration involved different parties (Gloster and Hooghly) and did not include Fort Gloster. Therefore, the principle of res judicata did not apply as the parties were not the same, and the matter in issue was not identical across the proceedings. Correction of the Drawn-Up Order: Gloster filed an application in 2009 to correct the order drawn up in 1993, arguing that it omitted statutory language required by Form No. 42 of the Company Court Rules, 1959. The court acknowledged that the drawn-up order should have included the phrase "and all other the property, rights and powers of the transferor company in jute division." The court allowed this correction but did not grant Gloster's broader request to include North Mill explicitly, citing the need to avoid prejudicing ongoing or future civil litigation. Limitation and Delay in Filing the Application: Fort Gloster and Bowreah argued that Gloster's application was grossly delayed and barred by the Limitation Act. Gloster countered that the mistake in the order became apparent only during subsequent proceedings, prompting the application. The court did not find the delay to be a bar to correcting the statutory omission but refrained from making broader corrections that could affect substantive rights. Conclusion: The court modified the judgment to correct the drawn-up order by incorporating the omitted statutory language but did not grant broader corrections regarding North Mill. The court emphasized that its observations should not prejudice the parties in pending or future civil proceedings. The request for a stay of the judgment was rejected.
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