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TMI Blog1975 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... on an adjourned date, 5th February, 1975, counsel for respondent No. 5 raised the preliminary objection that the petitioner did not fulfil any of the requirements of section 399 of the Companies Act, and hence the petition was not maintainable at his instance. I heard the objection in a preliminary way, and it was soon discovered that no such point had been taken in the reply filed on behalf of respondent No. 5. Counsel for this respondent conceded this, and prayed for time to move an application for amending the reply so as to raise such an objection. Time was granted, and C.A. No. 75 of 1975 was moved, and has subsequently been heard by me. This order is concerned with that application. For the petitioner it was contended that the Civil Procedure Code was not applicable to proceedings under the Companies Act and, therefore, the court had no power to grant leave to amend a pleading. To my mind this argument is wholly untenable. By section 643( b ) of the Companies Act the Supreme Court is empowered, after consulting the High Courts, to make rules for various purposes mentioned therein "consistent with the Code of Civil Procedure, 1908". In exercise of that power the Companies (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on merits. According to the counsel for the petitioner, the correct procedure in respect of such an objection was to file an application for having the petition dismissed or the order admitting it set aside. In support of these submissions he relied on Bengal Luxmi Cotton Mills Ltd., In re [1965] 35 Comp. Cas. 187 (Cal.). There, an application was filed for the appointment of an administrator and for certain other interim reliefs whilst a petition tinder sections 397 and 398 of the Companies Act was pending. The judgment deals with the former application, namely, the one for interim reliefs. In opposition to that application, it was contended that the main petition was defective in many respects, and since it was not maintainable the application for interim reliefs ought to be rejected simply on that ground. It was held that the alleged defects in the main petition were not so patent nor of such obvious validity as to lead to the conclusion that the application for interim reliefs must be disallowed. In the passage dealing with this argument, on page 200 of the report, the following sentence occurs : "But once the petition is admitted, the question of maintainability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suggestion that the plea proposed to be raised by the amendment can only be tried on an application to have the petition dismissed or the admitting order set aside, To overcome the criticism directed against the main petition in the Bengal Luxmi Cotton Mills' case [1965] 35 Comp. Cas. 187 (Cal.), to which I have just referred it was argued that the objections were of a kind as could properly be raised only by moving a separate application either for dismissal of the petition or for setting aside the admitting order. In support of this argument some cases were cited which are noticed on page 198 of the report. Those cases hold that the question whether an action has been brought by the authority of the named plaintiff ought to be tried by an application to strike out his name, and not as a defence to the action on merits. Such a question usually arises when the plaintiff is a corporate body. The nature of the objection sought to be raised in the case before me is altogether different. It is not disputed that the petition has been instituted by the petitioner named. What is sought to be questioned is his right to apply, and on the ground that he does not fulfil any of the requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in controversy between the parties on the pleadings as they stand. In the pleadings it was admitted that the petitioner held ten shares of Rs. 1,000 each. One of the alternative conditions stated in section 399 which the member or members applying under sections 397 and 398 may fulfill is the holding of "not less than one-tenth of the issued share capital". That is the qualification which the petitioner now claims to have, and which respondent No. 5 disputes. All now depends on what is the paid up capital. Not having sensed the point earlier, I suppose respondent No. 5 did not bother to state what according to him was the paid up capital, whilst generally denying the allegation of the petitioner. The fact that in paragraph No. 6( iv ) of the petition a ground of mismanagement alleged was that the respondents had dishonestly issued shares to various persons who had not in fact subscribed or paid for them is beside the point. I think, the objection which respondent No. 5 now wishes to take did not previously dawn on him or his advisers, whatever the reasons may have been. If, in those circumstances, facts relevant to such an objection were not stated, there could be no suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n controversy between the parties because the very words of sections 397 and 398 of the Companies Act necessitate that the court should be satisfied as to the right to apply. If that be right, then, the words of that part of Order 6, rule 17, which I have quoted being mandatory, there is no discretion left to the court and the application has to be allowed. Assuming, however, that it is a matter of discretion, still, in my opinion, the application ought to be allowed. Counsel for the petitioner cited Syed Mahomed Ali v. R. Sundaramurthy [1958] 28 Comp. Cas. 554 (Mad.) and Jawahar Singh Bikram Singh Pvt. Ltd. v. Smt. Sharda Talwar [1974] 44 Comp. Cas. 552 (Delhi) and urged me to remember that the interests of the company are of paramount importance, and that the proceedings should not be treated as a mere dispute between individuals. The observations in these cases have been made in the context of orders sought under sections 397 and 398 and not on applications for leave to amend. But, even if one has regard only to the interests of the company, surely it is conducive to those interests that the question whether the petitioner has the right under section 399 to apply ought ..... X X X X Extracts X X X X X X X X Extracts X X X X
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