TMI Blog1971 (8) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner and the fifth respondent took out Applicaton No. 433 of 1969 under rules 9, 11( b ) and 88(2) of the Companies (Court) Rules, 1959, praying for leave to withdraw the company petition. In the affidavit that was filed in support of that application, they stated that the respondents in that petition had agreed to purchase the shares of the present petitioner and set out certain terms for certain mutual domestic arrangements. That petition was not opposed, with the result C. P. No. 68 of 1969 was dismissed on December 4, 1969, as withdrawn. This petition was filed on 17th December, 1970, repeating the allegations of mismanagement and oppression which were set out in C. P. No. 68 of 1969 and further alleging that even after the dismissal of C.P. No. 68 of 1969 the affairs of the company are being mismanaged and that respondents Nos. 1 to 5 are guilty of several acts of oppression of the petitioner. It is also the case of the petitioner that respondents Nos. 1 to 5 failed to act up to the terms of the compromise. The main prayer of the peti ioner is that an administrator may be appointed to take charge of the affairs of the company. His alternative prayer is to get relief as regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the court. Similar provision is made in rule 100(1) which says that a petition for winding up shall not be withdrawn alter presentation without the leave of the court. Relying upon rule 6 it is contended on behalf of the respondents that by virtue of section 141 of the Code of Civil Procedure, the procedure laid down in the Code in regard to suits shall be followed as far as it can be made applicable in all proceedings in any court of civil jurisdiction. The argument is that under Order 23 of the Code if a plaintiff wants to withdraw a suit or abandon a part of his claim with liberty to institute a fresh suit in respect of the subject-matter of such a suit or such part of the claim, the plaintiff should obtain the permission and that if he fails to obtain the permission and withdraws the suit, he is precluded from instituting a fresh suit in respect of such subject-matter or such part of the claim. It is contended that this provision which is applicable to a suit is equally applicable to all proceedings in any court of civil jurisdiction by virtue of section 141 of the Code and that reading these provisions with rale 6 of the Companies (Court) Rules, it would follow that if a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator to have his claim admitted, one of the directors of the company raised objection regarding the truth of the debt. It was held that the winding up having been ordered without contest, it amounted to a constructive decision of the question of the petitioner being a creditor and of the amount claimed by him and that the principle of res judicata enunciated in section 11 of the Code of Civil Procedure would be attracted. In Exchange Bank v. Kulkarni [1953] 23 Comp. Cas. 474 (Bom.), it was held that misfeasance proceedings under section 235 of the Companies Act, 1913, are legal proceedings in a Court of civil jurisdiction within the meaning of the expression in section 141 of the Code and that the liquidator has power under section 234 of the Companies Act, 1913, to compromise a misfeasance claim subject to the sanction of the court. Mr. Raghavachari, appearing for the petitioner, cited the decision of the Allahabad High Court in Official Liquidator v. Liaqat Husein A.I.R. 1933 All. 205 by a single judge. In that case the court held that a misfeasance proceeding under section 235 is merely an examination by the court into the conduct of an officer of the company, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that any compromise suggested should be acceptable to the court whose powers are set out in section 402. Strong reliance was placed upon the observation "proceedings under sections 397 and 398 of the Companies Act are not like suits" in support of the argument that a petition withdrawn without leave to file a fresh petition on the same cause of action is not a bar for the maintainability of a fresh petition. I am unable to accept this argument. The limited scope of the question which arose for consideration before the Bench was as to the powers of the court in dealing with compromise in a petition under sections 397 and 398 of the Companies Act. In an ordinary suit all that the court is concerned, in considering the question of compromise, is to see, whether to the satisfaction of the court the suit has been adjusted wholly or in part by any lawful agreement or compromise or whether the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit. If this condition is satisfied, the court is enjoined with a duty to order such agreement, compromise or satisfaction to be recorded. But in the case of a compromise in a proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of the Code of Civil Procedure to all proceedings under the Companies Act in so far as the provisions of the Code are applicable. Mr. Raghavachari next cited a decision of a Bench of this court in Periyakarupa Thevar v. Vellai Thevar A.I.R. 1963 Mad. 338 , in which it was held that the provisions of section 141 and Order 9, rule 13, of the Code of Civil Procedure, do not apply to proceedings in a civil court on a reference under section 146 of the Code of Criminal Procedure. It was held that the procedure to be followed by the civil court in a reference under section 146 of the Criminal Procedure Code is just what is contained in that provision itself and that it is not possible to enlarge the scope of that procedure by resorting generally to the provisions of the Civil Procedure Code. It was, therefore, held that a petition under Order 9, rule 13, to set aside an ex parte order and an application to bring on record the legal representatives of a deceased party could not be maintained. Mr. Raghavachari fairly brought to my notice the decision of the Supreme Court in Ram Chandra v. State of U.P. A.I.R. 1966 S.C. 1888 in which the Supreme Court referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onably applicable". It cannot be said that requiring a petitioner to obtain the leave of the court to file a fresh petition on the same cause of action would be unreasonable. To hold that the requirement is necessary if he should approach the court with a petition on the same cause of action, is in no way inconsistent with the rules. Such a view is necessary in the interest of the company and those who are in charge of the affairs of the company against whom relief can be claimed under sections 397 and 398. It would be abuse of the process of the court to allow a person to drag to court the company and those in charge of the affairs of the company by filing a petition under sections 397 and 398 after withdrawing a petition founded on the same allegations, without the express orders of the court granting leave to file a fresh petition, whatever be the reason for the withdrawal. The motive for the withdrawal is irrelevant in considering the maintainability of the subsequent petition. If a petition filed under sections 397 and 398 is unconditionally withdrawn, the petitioner, in my view, is, by virtue of Order 23, rule 1, precluded from instituting a fresh petition on the allegations ..... X X X X Extracts X X X X X X X X Extracts X X X X
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