TMI Blog1998 (4) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... elf 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 M/s Thakur Vaidyanath Aiyar Co., Chartered Accountants be and are hereby appointed Auditors of the company to hold such office from the conclusion of this meeting until the conclusions 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 though 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 be retire by rotation. 5.3 "Resolved that Shri H.S. Dubey, be and is hereby appointed as Director of the Company, liable to be retire by rotation. 5.4 Resolved that Shri R.P. Sharma, be and is hereby appointed as Director of the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as the said scrutineers were not independent persons but were employed by the defendants and more specifically the defendant Nos. 2 and 3 to represent them in certain proceedings before the Hon'ble Company Law Board. Both the scrutineers are Company Secretaries who have represented the defendant 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 are the meeting itself and vide their separate letters dated 11-12-1997, 15-12-1997 and 17-12-1997. 53(E.) That despite the request of the plaintiffs to appoint impartial scrutineers, vide their letter dated 22-12-1997, the plaintiff No. 1 company was informed of the fact that the adjourned 27th AGM would be held on 16-1-1998. This is indicative of the fact that the concerned defendants were manipulating the proxy votes and ballot papers specially because they had refused all requests and demands of inspection of the votes raised by the plaintiffs. The pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the results have been doctored by the defendant Nos. 1 to 10 except defendant No. 5 and more specifically defendants 6 to 10, is clear from a letter addressed by the counsel of the defendant No. 6 to the Local Commissioner which is dated 24-1-1998 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 uncontrovertable that when the results are admitted to have been declared on 20-1-1998, the change in accepted number of ballots on a later date indicate a continuous manipulation of results. That it is reliably learnt that subsequently 5 ballot papers which could not be rejected on any valid grounds, have been accepted as valid by the defendant No. 6. 53(H.) That it is significant to note that although the authorisation of the plaintiff and financial institutions and more specifically of the plaintiff No. 1 which is the sweeping vote, have not been accepted by defendant No. 1 to 5 on frivolous grounds. It is most respectfully submitted that the authorisation of the plaintiff Nos. 1 and 2 and other financial institutions are valid and strictly in accordance with provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the results of the poll held on 8-12-1997 were published in leading daily newspapers. That the cause of action further arose on 24-1-1998 when the 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 20-1-1998 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 the 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 Directors held on 14-8-1997 and 29-8-1997 of the defendant company be declared illegal, beyond jurisdiction and ultra vires. Further declaration was sought that the appointment of defendant No. 6 as Chairman and Managing Director was illegal and the appointment of defendant Nos. 7 to 9 as Additional Directors was also illegal. 3. A decree for permanent injunction was sought against defendant No. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976] 1 SCC 194 and Shikharchand Jain v. Digamber Jain Praband Karini Sabha [1974] 1 SCC 675. 5. On the other hand, Mr. P. V. Kapur, the learned counsel appearing for the defendant 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 decision of meeting of 14-8-1997 on the ground that the appointment of defendant No. 6 as Chairman and Managing Director as well as defendant 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 new cause of action inasmuch as the AGM of the defendant No. 1 - company, the election result and the appointment of scrutineers are different and distinct cause of actions for which the plaintiff ought to have filed separate suit, therefore, Mr. Kapur has contended that all the paras, i.e., paras 53 (A) to (I) as enumerated above give separate cause of actions for which separate evidence has to led and the same are not connected with the reliefs sought in the suit and hence the application for amendment should be dismissed. He has further contented that the amendments sought for in the prayer cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 suit for distinct cause of actions. 8. I have given my careful consideration to the submissions advanced by the learned counsel appearing for the parties. It is not disputed that the financial institutions as well as the plaintiff together have got 49 per cent of share in the defendant No. 1 company whereas the other Swarup Group has got approximately 25 per cent of share in defendant No. 1 company. In the original plaint serious and grave allegations of collusion between defendant No. 6 and Swarup Group has been made in paras 48, 49 and 50 of the original plaint against the mathod and manner in which appoint- ment of defendent No. 6 as Chairman and Managing Director as well as appointment of defendant Nos. 7 to 9 as the Additional Directors were made. Para 53 of the original plaint read as under: "The board of directors under the Chairman and Managing Director illegally appointed in the circumstances, as stated above, will engage themselves in various acts which gravely affect the interest of the company. Immediately after the ille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision 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 the 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 extend the tentacles of their grip over the company and its affairs." 9. Therefore, the disputes essentially were between the plaintiff and the method and manner of appointment of defendant Nos. 6 to 9 by the Board of Directors of the company. When the suit was filed only the meetings of 14-8-1997 and 29-8-1997 had taken place, therefore, the plaintiffs filed the suit. The subsequent events, ie., ratification of these appointments by the AGM which was held on 5-12-1997, appointment of scrutineers by defen- dant No. 6, rejection of proxies and ballot papers and authorisation under section 187 of the financial institutions and the plaintiff are the events of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case ( supra ) 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 records, 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 the parties that subsequent events, which have taken place, should be allowed to be amended by this application. 11. In Rameshwar's case ( supra ) , the Supreme Court held : "... Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take note of such supervening facts with fundamental impact. Venkateswarlu ( supra ) , read in its statutory setting, falls in this category. Where a cause of action is deficient but later events have made up the deficiency, the Court may, in order to avoid multiplicity of litigation, permit amendment and continue the proceeding, provided no prejudice is caused to the other side...." I do not see t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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