TMI Blog1998 (4) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.To appoint a director in the place of Shri K.L. Koul, who retires by rotation and being eligible offers himself for re-appointment. 4.To appoint auditors and to fix their remuneration and for that purpose to pass the following resolution as a special resolution: "Resolved that pursuant to section 224A and other applicable provisions, if any, of the Companies Act, 1956, Thakur Vaidynath Aiyar and Company, chartered accountants be and are hereby appointed auditors of the company to hold such office from the conclusion of this meeting until the conclusion of the next annual general meeting on such remuneration as may be fixed by the board of directors of the company." Special business: 5. To consider and if thought fit, to pass with or without modification, the following resolutions, as ordinary resolutions : "5.1 Resolved that Shri A.K. Mukhopadhyay, be and is hereby appointed as director of the company, liable to retire by rotation." "5.2 Resolved that Shri S. Natarajan, be and is hereby appointed as director of the company, liable to retire by rotation." "5.3 Resolved that Shri H.S. Dubey, be and is hereby appointed as director of the company, liable to retire by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and A.N. Kukreja, as scrutineers of the poll. It is most respectfully submitted that the appointment of the said scrutineers is against the provisions of the Companies Act as the said scrutineers were not independent persons but were employed by the defendants and more specifically defendants Nos. 2 and 3 to represent them in certain proceedings before the Company Law Board. Both the scrutineers are company secretaries who have represented defendants Nos. 2 and 3 and/or the companies in which they have a substantial interest in various proceedings before various tribunals and forums. Thus, the said scrutineers are not impartial scrutineers as is required under section 184 of the Companies Act. The objections regarding appointment of scrutineers were raised by the plaintiffs at the meeting itself and vide their separate letters dated December 11, 1997, December 15, 1997 and December 17, 1997. 53E. That despite the request of the plaintiffs to appoint impartial scrutineers, vide their letter dated December 22, 1997, plaintiff No. 1 company was informed of the fact that the adjourned 27th annual general meeting would be held on January 16, 1998. This is indicative of the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 The same is evidence from the objections/apprehensions filed by counsel of the plaintiffs with the local Commissioner on January 20, 1998, and the report of the local Commissioner. 53G. The fact that the results have been doctored by defendants Nos. 1 to 10 except defendant No. 5 and more specifically defendants Nos. 6 to 10, is clear from a letter addressed by counsel for defendant No. 6 to the local Commissioner which is dated January 24, 1998, which records that subsequently the number of rejected ballots is 16 whereas the number of rejected ballots was 21 as shown to the local Commissioner. It is uncontrovertible that when the results are admitted to have been declared on January 20, 1998, the change in accepted number of ballots on a later date indicate a continuous manipulation of results. That it is reliably learnt that subsequently five ballot papers which could not be rejected on any valid grounds, have been accepted as valid by defendant No. 6. 53H. That it is significant to note that although the authorisation of the plaintiff and financial institutions and more specifically of plaintiff No. 1 which is the sweeping vote, have not been accepted by defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action further arose on December 5, 1997, when the 27th annual general meeting was held in blatant violation of all principles of fairness and transparency. That the cause of action further arose when the said annual general meeting was adjourned from time to time to December 8, 1997, January 16, 1998, and February 7, 1998. That the cause of action further arose on January 20, 1998, when the results of the poll held on December 8, 1997, were published in leading daily newspapers. That the cause of action further arose on January 24, 1998, when counsel for defendant No. 6 wrote to the local Commissioner that the number of rejected ballots was 16, as opposed to the position which existed on January 20, 1998, when the number of rejected ballots was 21. The cause of action is further continuing since the said persons are indulging in various acts of commission and omission in such alleged capacities, which are patently ultra vires and detrimental to the public interest, and the interest of defendant No. 1 company in particular." Amendments are also sought in paras. 57 and 58 of the plaint. The suit was originally filed, inter alia , praying that the meetings of the board of direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff-applicant, has contended that the amendment is necessary to do complete justice between the parties. He has further contended that the amendments are necessary in order to avoid multiplicity of suits. He had argued that the subsequent events are a continuing cause of action on which the original suit was filed. In support of his contentions, he has cited Mohammad Khalil Khan v. Mahbub Ali Mian, AIR 1949 PC 78, Oshar Louis v. K.V. Saradha, AIR 1991 Ker. 137, Rameshwar v. Jot Ram [1976] 1 SCC 194; AIR 1976 SC 49 and Shikharchand Jain v. Digamber Jain Praband Karini Sabha [1974] 1 SCC 675. On the other hand, Mr. P.V. Kapur, learned counsel appearing for defendants Nos. 2 to 4, has contended that the cause of action, for which the suit was filed by the plaintiff, occurred on the basis of the decision of meeting of August 14, 1997, on the ground that the appointment of defendant No. 6 as chairman and managing director as well as defendants Nos. 7 to 9 as additional directors was illegal and void. As a matter of fact, by the proposed amendment, the plaintiffs are trying to add a new cause of action inasmuch as the annual general meeting of defendant No. 1 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f I.A. No. 1109 of 1998, i.e ., pages 849 and 850 of the paper book, would show that the same are identical as in I.A. No. 1350 of 1998. He has further contended that the power of courts regarding amendments is exercised literally but there is no power, which will enable one distinct cause of action to be substituted for another and the plaintiff has simply filed the amendment application to circumvent the relief as the same was beyond the scope of the suit originally filed by the plaintiff. He has further contended that para. 54 of the original plaint is proposed to be completely substituted by new para. 54 as incorporated above. He has also contended that no prejudice would be caused to the plaintiffs if they choose to file separate suits for distinct causes of action. I have given my careful consideration to the submissions advanced by learned counsel appearing for the parties. It is not disputed that the financial institutions as well as the plaintiff together have got a 49 per cent. share in defendant No. 1 company whereas the other Swarup group has got approximately a 25 per cent, share in defendant No. 1 company. In the original plaint serious and grave allegations of col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share structure, a first step to secure control of the company. It is submitted that the entire thing is forged and no decision has been taken at the said board meeting. In hot haste, the directors of the Swarup group assisted by defendant No. 6 have proceeded to induct three persons as additional directors. This item again was not on the agenda and was never taken up in the meeting. Here again the decision is stated to have been made with the supporting vote of defendant No. 6. As already stated his very presence in and conduct of the board meeting after August 16, 1997, is illegal. Thus, the decision to induct defendants Nos. 7 to 9 as additional directors is a decision taken without any legal basis. The said three persons cannot be treated as directors of the company and entitled to act on its behalf. The said appointments are totally illegal and the Swarup group in connivance with defendant No. 6 has brought about the situation in which persons illegally occupying and now functioning on the board is greatly detrimental to the company. These actions per se and patently illegal actions they will take to undermine the interest of the company and the present shareholders and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning is this: 'A cause of action means every fact which will be necessary for the plaintiff to prove if traversed in order to support his right to the judgment'." At this stage, while deciding the application for amendment, the court has not to go into the merits of the controversy, the cardinal principle of allowing the amendment is that the court should avoid multiplicity of litigation. What has to be looked into by the court at this stage while disposing of the application for amendment is that by the proposed amendment whether the nature of the suit is altogether changed; whether the amendments sought for are mala fide ; and whether by allowing the amendment the period of limitation is going to be extended. Even the authority cited by Mr. Kapur, Vineet Kumar v. Mangal Sain Wadhera [1984] 3 SCC 352 is of no help as the apex court held that where the amendment does not constitute an addition of a new cause of action, or raise a new case, but amounts to no more than adding to the facts already on record, the amendment would be allowed even after the statutory period of limitation. In the case before me, it is in the interest of justice and to do complete justice between th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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