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TMI Blog1994 (4) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the nature of the order under challenge and the stage of the proceedings at which the challenge has been undertaken by the parties to the proceedings, we desist from dealing with the merits of the claims pertaining to the main dispute in detail and suffice it to advert to certain salient features of the case strictly relevant for the controversy before us. Respondents 1 and 2 before us (the appellant before the learned Single Judge) were the Managing Director and Director, respectively at the relevant point of time of Sanka Carbon (P.) Ltd., the 3rd respondent in this appeal. The fact remains that some of the shareholders entertained and nourished a grievance against the administration of the affairs of the company by the above two persons from the beginning on the view that the financial affairs of the company were being grossly mismanaged and that the Director Mr. K. Krishnan has made personal gain at the cost of the company and its shareholders. In substance, the grievance appears to be that the actions of the Managing Directors and that other named Director are not only mala fide but also amounted to gross abuse of power with the avowed object of excluding the majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons regarding the administration of the affairs of the company, pending further course of action and final orders and it is unnecessary to delve at length with the details thereof. 4. Aggrieved against the decision on the preliminary issue relating to the maintainability of the petition before the CLB, an appeal in A.A.O. No. 483 of 1993 came to be filed under section 10-F of the Act. The learned Single Judge, by his order under appeal before us, held that the consent obtained in the form as contained in Annexure-2 to the Schedule to the company petition did not constitute valid consent in writing in terms of section 399(3) of the Act and, therefore, the company petition filed before the CLB had to fail, not only for the said reason, but also for the further reason that Mr. C.P. Sodhani had no valid authority to present the company petition. On that, the leaned Judge while allowing the appeal, ordered the dismissal of Company Petition No. 59 of 1992. In arriving at the said conclusion, the learned Judge was of the view that there was no indication or disclosure made on record that the consenting shareholders subscribed their consent to the particular course of action in form and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout demur and interim administration was agreed to be made. 7. Mr. T. Raghavan, the learned senior counsel for respondent Nos. 1 and 2 while adopting the reasons contained in the judgment under appeal, contended that the consent in Annexure-2 lacks the relevant and vital particulars and does not also satisfy the criteria laid down in M.C. Duraiswami's case {supra) , and in the absence of proper and sufficient establishment of the link or nexus between the draft of the final petition and the actual petition filed, the consent could not be claimed to have been accorded after due and proper application of mind. Mr. Vedantam Srinivasan, learned senior counsel appearing for the 3rd respondent, while adopting the submissions of the learned senior counsel Mr. T. Raghavan also contended that the consent in the form in Annexure-2 does not conform to the requirements of law. The learned counsel also adverted to the relevant portions of the pleadings before the CLB to highlight the varying stand said to have been taken for the appellant at different stages and the impossibility of getting the consent said to have been obtained on the same day from different persons residing at different pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext and that they never gave consent to a company petition being filed, as it was done in that case. The consent therein was thus claimed to have been given on misrepresentations and there was no consensus as between them and the person who filed the petition. The learned Single Judge before whom the company petition came up for hearing held that the petition was not maintainable and dismissed the same. The same was challenged before the Division Bench of this Court. After a careful and meticulous analysis of the provisions of the Act as also the scheme and purpose underlying sections 397,398 and 399, the Division Bench speaking through M.M. Ismail, J. (as the learned Judge then was), declared the position of law as hereunder: (a)The foundation of a petition under section 397(1) will be the allegation or complaint that the affairs of the company were being conducted in a manner prejudicial to public interest which will necessarily and naturally involve giving particulars as to how it was prejudicial to public interest. Similarly, an averment or allegation as to the affairs of the company being conducted in a manner oppres sive to any member or shareholder must necessarily involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 398 or under both, without any particulars such as the nature of the allegations or complaints to be made in the petition and the nature of the relief sought to be claimed in the petition, cannot be the result of an application of the mind to the question before them and, therefore, such a consent cannot be a valid consent. (f)The consent contemplated under section 399(3) is an intelligent consent, in the sense, a consent given for the purpose of making a particular allegation in the petition and for the purpose of claiming a particular relief therein and consequently a blanket consent, as in that case, cannot be a consent and contemplated under section 399(3). 9. That apart, on behalf of the respondents, the unreported decisions of the some of the learned Single Judges of this Court to which a reference will be made hereinafter were also, referred to. The decision in C.P. No. 9 of 1976 was the one against which the matter was pursued on appeal resulting in the Division Bench decision in M.C. Duraiswami's case (supra). (a) The decision in N.G. Kathare v. Madras Oxygen & Acetylene Co. Ltd. [C.P. No. 106 of 1977, dated 30-6-1978] was that of Nainar Sundaram, J. (as the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficulty. Under the guise of undertaking an explanatory exercise this decision runs diametrically opposite to the Division Bench decision in M.C. Duraiswami's case (surpa) . ( b) In C.P. No. 30 of 1979, dated 8-2-1980, S. Padmanabhan, J., after adverting to the case law on the subject, observed that it was not held by this Court that all consenting members should be aware of each and every averment contained in the petition and that it is sufficient if the consenting members are shown to be conscious of the various grounds of oppression and mismanagement on the part of those in charge of the management and that they must have thereupon reached the conclusion that a petition under sections 397 and 398 should be filed and must have agreed to the filing of the petition on. On the facts and circumstances of the case, the consent produced therein was found to be not in conformity with section 399(3). ( c) In K.C.A. GnanagiriNadarv. Santha Chemicals Ltd. [C.P. No. 42 of 1979, dated 20-8-1981] and G. Raja Shankarv. Tuticorin Spg. Mills Ltd. [C.P. No. 69 of 1985, dated 1-12-1987], the learned Single Judges of this Court who dealt with them applied only the principles laid down by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the appellant certain decisions were relied upon to which a reference could now be made. In K. Venkataramiah v. Seetharama Reddy AIR 1963 SC 1526 arose in connection with a challenge made of an Election to the Legislative Council of Andhra Pradesh from Telengana Graduates Constituencies before the Election Tribunal. During the pendency of an appeal before the High Court against the order of the Election Tribunal, an application was filed invoking the provisions of order 41, rule 27, Code of Criminal Procedure to produce additional evidence. In that context, the Apex Court held while dealing with the powers of the Appellate Court, that the High Court was justified in doing so and that where additional evidence was taken with the consent of both sides or without objection at the time when it was taken, it was not open to a party to complain of it later. In Billa Jagan Mohan Reddy v. Billa Sanjeeva Reddy 1994 (4) SCC 659, it was held that Appellate Court can receive additional evidence if it considers it to be needed in the interests of justice. In the case before the Apex Court it is seen that the documents were produced at a belated stage before the trial court but the del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso shows that the appellants before the learned Single Judge (respondents 1 and 2 before us) were equally aggrieved against the manner of disposal of the preliminary objection and contended that the CLB ought not to have decided that issue in such a summary fashion and the laconic order passed without objective consideration or assigning any reason therefor cannot be sustained. That apart, several factual issues such as discrepancies in the signatures found in the consenting letter, the varying numbers of such person who subscribed their signatures to the letter of consent are very serious as also vital questions of fact which deserve a proper and effective enquiry or trial in the hands of the CLB. That apart, the locus standi or authority of Mr. C.P. Sodhani, to present the application in the absence of a Resolution of Board of Directors authorising him to do so was also raised. We also find from the order of the CLB challenged an appeal before the learned Single Judge that the CLB has passed a cryptic order holding that after carefully considering the views of both the counsel and the fact of the case they came to the conclusion that the consent given in Annexure-2 meets the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the consenting members giving their consent to have before them the final petition as filed ultimately before CLB, while according consent. Though the learned Single Judge has taken great pains to analyse the case law on the subject, when the question of applying the ratio of those decisions reached for consider ation the learned Judge appears to have been merely carried away by the fact that no effort has been made to establish any nexus between the draft of the final petition which was stated to have been perused and consented to by the signatories and the actual petition filed and pre sented before the CLB, and that there was nothing further to indicate that all the contents of the final draft found place in the petition actually filed, while rendering the judgment. Even that apart, the learned Single Judge has also omitted to consider the legal significance and the consequences flowing from the recitals in the letter of consent filed in this case and in addition thereto the further recital about the signatories to the letter of having read the final draft of the petition and having accorded their consent thereupon, when taken together and finding out whether those materials, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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