2021 (1) TMI 240 - HC - Companies Law

Writ appeal against writ petition entertained by the Ld. Single Judge - private parties - mismanagement and oppression of majority shareholders - whether writ petition is maintainable under Article 226 of the Constitution of India, when a party pursues multiple remedies? - company petitions nine in number were pending before the NCLT - Holding AGM and filing of financial documents without without following the prescribed procedure - Appellants apprehended that the 2nd respondent has either forged or has caused to be forged the signatures of the majority shareholders with the intention to suggest that the financial statements have been approved by the shareholders at the Annual General Meeting, in the respective years. - HELD THAT:- the writ court ought not to have entertained W.P.(C) No. 14341 of 2020, when the dispute is purely civil in nature.

Suppression of material facts in the writ petition - HELD THAT:- Applying the principles of law laid down by the Hon'ble Supreme court in ARUNIMA BARUAH VERSUS UNION OF INDIA & ORS [2007 (4) TMI 695 - SUPREME COURT], as regards suppression, equitable remedy and clean hands under Article 226 of the Constitution of India, to the case on hand, we are of the view that there is suppression of material facts in the writ petition.

Whether, the Tribunal should be made a party in a petition filed under Article 226 of the Constitution of India? - HELD THAT:- Though the Larger Bench of the Hon'ble Supreme Court in UDIT NARAIN SINGH MALPAHARIA VERSUS ADDITIONAL MEMBER BOARD OF REVENUE BIHAR [1962 (10) TMI 55 - SUPREME COURT] held that the Tribunal has to be added as a party, in the latter decisions, the Hon'ble Apex Court clarified that the Tribunal not being required to defend the proceedings under Article 226 or 227 of the Constitution of India, and hence, writ petition is maintainable, without the Tribunal being impleaded. In view of the subsequent decisions of the Hon'ble Apex Court, we are not inclined to accept the contention of the learned counsel for the appellants.

Conclusion

Material on record discloses that the dispute between the first respondent company and its shareholders, under challenge, is purely a civil dispute. The remedy under Article 226 of the Constitution of India is available against a State or authority or instrumentality of the State, falling within the ambit of the definition "State" under Article 12 of the Constitution of India - Writ petition filed under Article 226 of the Constitution of India, can be for the enforcement of fundamental rights or for any other purpose, as envisaged under Article 226 of the Constitution. There is no pleadings or materials to substantiate that the appellants are discharging public duties or public functions, and thus, amenable to writ jurisdiction under Article 226 of the Constitution of India.

Difference between the exercise of powers under Articles 226 and 227 of the Constitution of India has been explained in the foregoing paragraphs. Thus, in the case on hand, when none of the parties, State or authority or instrumentality of the State, or any private body, discharging public functions, have been arrayed as respondents, when the writ petition has been filed under Article 226 of the Constitution of India, having regard to the roster followed in listing the cases, writ court ought to have directed the respondents/writ petitioners to make necessary amendments, to the provisions under which the writ petition ought to have been filed, or in the alternative, directed that the writ petition be placed before the concerned court, dealing with the challenges made to the orders passed by Courts, or Tribunals, as the case may be. Admittedly, the order impugned in the writ petition (Exhibit-P1) is not an administrative order, passed by the National Company Law Tribunal.

Thus, there is an error in exercising the jurisdiction under Article 226 of the Constitution of India - The issues raised for consideration are answered in favour of the appellants - Appeal allowed.