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2015 (5) TMI 325 - CALCUTTA HIGH COURT

2015 (5) TMI 325 - CALCUTTA HIGH COURT - TMI - Review application - Matter becomes functus officio as soon as the judgment is delivered and order is passed - Execution application is time barred as the Article 136 of the Limitation Act 1963 provided for a period of 12 years - Limitation period for payment of dividend is three years under Article 113 of the Limitation Act - It is settled law that executing Court cannot go behind the decree - Non payment of dividend - Held that:- We have heard the .....

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efore three years of the presentation of the application continuous to be in operation, there will be no question of limitation. We do not accept the broad proposition that the events which had taken place three years before the presentation of application are barred by Article 137 of the Limitation Act”. We find Section 47 of the Code of Civil Procedure empowered the executing Court to interpret a decree and hold that it was a decree for payment of money.

From the conduct of the ‘TML .....

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e ‘‘TML’’ we have no hesitation to hold that the purported resolution dated 27th January, 1975 was fraudulently fabricated to deprive the ‘Hungerford’ from its legitimate unpaid dividend. Non-payment of dividends was a continuous offence so long the payment is not made. Therefore, there is no question of limitation. Hence the theory of limitation would not be applicable in the present case as has been argued by Mr. Bose.

We find that the Division Bench undoubtedly adjudicated on the i .....

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ar of limitation.

The decisions referred by Mr. Utpal Bose, the learned senior Counsel on the ratio that executing Court cannot go beyond the decree have no manner of application considering the aforesaid discussions that non-payment of money to the ‘Hungerford’ by the ‘TML’ towards the unpaid dividends clearly indicates that the appellant was directed by the said Division Bench order to make payment towards the unpaid dividend in respect of the specific period. Therefore, to realize .....

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d.

Regarding the review application of the order dated 22nd August, 2008 we find that the grounds taken in the said application have failed to satisfy the essential ingredients of the Order 47 of Code of Civil Procedure. We find that there is no merit in the said review application. Therefore, the review application is hereby dismissed. But that will not preclude the applicant to take appropriate steps before the appropriate forum if so advised. - Decided against the appellant. - A.P. .....

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judgment of My Lord Samapti Chatterjee, J.. I am in full agreement with His Lordship both on findings as well as the ultimate result in the appeal as well as the application for review. However, I wish to add a few words on the review application. When a Bench hears a matter and disposes it on merits, it becomes functus officio as soon as the judgment is delivered and order is passed. Application for review is entertained by the same Court on a limited scope that My Lord has referred to, while .....

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site shareholding although, the appellant would contend, its 50 per cent shareholding could not be ignored merely because the same was attached by the Income Tax Department. On being aggrieved, the applicant approached the Division Bench, the Division Bench, however, did not entertain the appeal and disposed of the same vide order dated September 29, 2003 holding it as infractuous in view of a settlement, that the applicant did not recognize. The applicant would contend, he was the Chairman of t .....

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uld become infractuous. In the meantime, against an interlocutory order, an appeal was pending that the Division Bench disposed of on consent of parties by an order dated March 9, 2007. Subsequently, the learned Single Judge disposed of the matter vide judgment and order dated June 21, 2007 that became the subject matter of the appeal. The Division Bench vide judgment and order dated August 22, 2008, dismissed the appeal. The present application for review would relate to the said judgment and o .....

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y Lord Justice Samapti Chatterjee rightly directed dismissal of the review application, I agree with the same. SAMAPTI CHATTERJEE, J: 1. The facts of the case would depict that HUNGERFORD INVESTMENT TRUST LIMITED (hereinafter referred to as Hungerford ) owned 100 per cent share in TURNER MORRISON & COMPANY LIMITED (hereinafter referred to as TML ). John Geoffrey Turner and Nigel Frederic Turner, (both since deceased), were the owners of 100 per cent shares of Hungerford . The entire share ca .....

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the balance 51 per cent share of TML within five years. 2. Pursuant to the agreement the 49 per cent of the shares in TML were sold and transferred to Mundhra and his nominee British Indian Corporation. Thereafter a suit for specific performance of contract being suit no.600 of 1961 was filed by Mundhra against Hungerford , TML and others in the Original Side of this Hon ble Court praying inter alia for specific performance of the agreement to sell the 51 per cent shares. Mundhra however, ultima .....

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Hungerford from selling the shares to any person other than Mundhra . 3. Against that decree Hungerford preferred an appeal but did not proceed with the same ultimately. As a result the appeal was dismissed for non-prosecution. On 30th August, 1965 by a master s summons Hungerford made an application praying that Mundhra might be directed to implement the decree by paying a sum of ₹ 86, 60,000/-. It was also prayed that Hungerford might be directed to execute proper transfer deeds in respe .....

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. In view of that Mundhra was restrained from alienating, transferring , or changing his right title interest in decree for specific performance. 4. In February 1965, Bank Hofman A.G obtained a decree from Queen s Bench Division, London for $ 657,345-17-9d with interest at 4 ½ per cent per annum from the date of the decree against Romanigo Holdings S.A.H., a holding company of Hungerford and also against Hungerford . Bank Hoffman executed the decree in the Court of the District Judge, De .....

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yment made by TML to income tax authorities on behalf of the Hungerford . A further claim was also made in the suit for possession and sale of the 229.5 shares in the exercise of TML s lien on those shares under Article 22 of the Article of Association of the Company. On July 8, 1966, Mr. K.M. Bose was appointed a receiver in respect of said 229.5 shares. This court approved the appointment of the receiver and directed that the receiver would be at liberty to deliver the 51 per cent share to Mun .....

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appeal was partly allowed on September 2, 1968 by setting aside the direction given to the receiver to tender shares to Mundhra as also the direction that the lien of TML would shift to the purchase money to be paid by Mundhra . Further on March 21, 1967 Hungerford made an application praying that agreement dated October 30, 1956 and the decree dated February 25, 1964 passed in suit no.600 of 1961 be rescinded, that the injunction granted by the decree in the suit would be vacated also unless M .....

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res and directed Mundhra to pay ₹ 86, 60, 000/- to the receiver within a fortnight from the date of the order and the receiver to handover 50 per cent of the shares to Mundhra s solicitors. The receiver was further directed to pay the amount to the solicitors of Hungerford also. The stay order that was granted was vacated and liberty was given to the Certificate Officer for the Tax Recovery Officer, 24-Parganas to take such steps against Mundhra in default of payment of ₹ 86, 60, 000 .....

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d was dismissed. Thereafter , Hungerford preferred an appeal to the Supreme Court. The Supreme Court allowed the appeal and ordered the recession of the decree for specific performance passed in suit no.600 of 1961 and also directed the receiver appointed in suit no.2006 of 1965 to produce the said 229.5 shares before the Supreme Court and give custody of the same to the Registrar of the Court and the Registrar was directed to handover those to the Hungerford . Ultimately, lien suit no.2005 of 1 .....

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ain application under Sections 397 and 398 of the Companies Act the Learned Judge framed as many as 15 issues. Out of those 15 issues most of the issues were infractuous in efflux of time and only issue no.1, 2, 3 and 4 which are as follows were dealt with by the Appeal Court. 1. Is the petitioner entitled to maintain this application or claim any of the relief ? 2. Is the application maintainable in the absence of the subsidiary companies and their directors and share holders ? 3. Whether in th .....

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agraphs 87 to 89 of the petitioner ? 8. The said company appeal no. 274 of 1967 was disposed of by the judgment and order dated 21st May, 1981 interalia as follows:- It is ordered that the order of trial Court dated the twenty fourth day of June in the year one thousand nine hundred and seventy be and the same is hereby set aside And it is further ordered that the affairs of the respondent Turner Morrison & Co. Ltd. abovenamed and its subsidiaries being respondents Loda Colliery Company (192 .....

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hs from the date hereof send a copy of this judgment to Ministry of Law Justice and Company Affairs, Government of India And it is further ordered that all interim orders passed herein shall stand vacated And as other respondents abovenamed have not appeared at the hearing of this appeal and this Court does not think fit to make any order as to the costs of any incidental to this appeal. 9. Since no special leave petition was filed challenging the said order by the TML before the Hon ble Supreme .....

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said execution application as well as the amendment were disposed of by the Learned Single Bench on February 22, 1993 with following order :- Therefore, it is ordered that the respondent company will pay ₹ 12,16, 350.00 to the applicant within eight weeks from date. In default of such payment there will be an order in terms of prayer (a) of col.10 of the Tabular Statement ad Mr. Subhasis Biswas, Advocate is appointed Receiver on a remuneration of 50 Gms. p.m. for that purpose. Receiver wil .....

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tion and directed the TML to furnish a bank guarantee for the entire amount of ₹ 12,16,350/- with any nationalised bank in favour of Registrar, Original Side. Hungerford also preferred a cross appeal against the order dated 22nd February, 1994. 11. Mr. Utpal Bose, learned senior counsel appearing for the appellant contended that payment of dividends order was passed by the Single Bench but no payment order was made by the Division Bench vide Division Bench order dated 21st May, 1981. 12. M .....

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by Supreme Court in place of Justice G.N. Roy and is still functioning as Chairman of the TML . 14. Mr. Bose further contended that the Division Bench only directed investigation under Section 237 and 251 of the Companies Act, 1956 of the affairs of TML for the period January 1967 to September 1972 and consequential orders. Therefore, from the bare reading of the ordering portion of the Division Bench in fact, there was no judgment debtor as no payment order was made by the Division Bench. At b .....

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der dated 21st May, 1981 also observed that Hungerford after judgment of Hon ble Supreme Court got back the control of TML . 16. Mr. Bose further submitted that since there was no order for payment of dividend, therefore, it cannot be described that Hungerford is a decree holder for realizing payment and TML is a judgment debtor for not making payment. 17. Mr. Bose also vehemently contended that execution application is time barred as the Article 136 of the Limitation Act 1963 provided for a per .....

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66 amounting to ₹ 12,60,350/- is time barred and not supported by any cogent reason. He also pointed out that limitation period for payment of dividend is three years under Article 113 of the Limitation Act. 19. Mr. Bose further contended that balance sheet for TML for the financial year ending at 31st December, 1971 contained the signature of N.S. Hoon Chairman of Hungerford and there is similar acknowledgement in the balance-sheet for the year 31st December, 1983 containing the signature .....

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ourt cannot go behind the decree. In view of the fact that the decree contained only a declaratory relief without any consequential payment of monetary benefits, the executing court was right in refusing to grant the relief. The High Court was, therefore, clearly in error in directing payment of back wages . 21. On the same point Mr. Bose also relied on a Supreme Court decision reported in (2009) 2 Supreme Court Cases Page-294 Para-8 (Deepa Bhargava And Another vs Mahesh Bhargava And Others) and .....

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fore the Court by the appellants created an instance of practicing fraud on Court. 24. Mr. Hoon further contended that Justice M.M. Dutta (former Supreme Court Judge) never acted as Chairman of TML and Mr. Hoon is still functioning as Chairman of the Company. Therefore, question of filing of restoration of Mr. Hoon s position as Chairman is not required as Justice M.M. Dutta (former Supreme Court Judge) vacated the post of Chairman of the said company in the year 2007. 25. Mr. Hoon further conte .....

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n was) in C.A. No. 2 of 1988 connected with C.P No.33 of 1988, thus, directing payment of arrear dividend upto February 3, 1977 and payment to be made subject to the permission of RBI. 28. Mr. Hoon also contended that by order dated 22nd February, 1989 The Hon ble Justice S.B. Mitra (as His Lordship Then was) directed stay of sale of Hungerford s shares and recovery of arrear tax. 29. Mr. Hoon further urged that the judgment of the Division Bench is a decree within the meaning of Section 2 of th .....

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years it would be within the time and the executing Court can interpret a decree for payment of money as has been laid down under Section 47 of the Code of Civil Procedure. 32. Mr Hoon further vehemently urged that the non-payment of dividend by the company amounts to criminal offence under the Companies Act and therefore, Directors and Principal Officers are liable to be prosecuted and it is a settled position that such offences are continuing offences so long payment is made. Therefore there .....

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Bench order which is quoted below :- ..Therefore, the question is no longer a debatable one and it must be held that the dividend of Hungerford from 1963 was unreasonably withheld and such withholding of dividend was an act of mis-management and oppression . 34. Therefore, it is submitted by Mr. Hoon that Division Bench not only directed making of payment but also indicated further that by withholding payment of dividend the TML is guilty of mismanagement/ oppression. In point of limitation Mr. .....

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urther contended that under Section 205 A of the Companies Act no limitation for non payment of dividend. It is nothing but a continuous offence under the law. 37. Mr. Hoon drew our attention at Page 12 of the Judgment dated 21st May, 1981. 38. We have heard the rival contentions of the parties. We have carefully scrutinized the records and we find that there are some substance in the argument of Mr. Hoon. We also find that in the Judgment dated 21st May, 1981 the Hon ble Division Bench observed .....

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ntation of application are barred by Article 137 of the Limitation Act … And also the extract of the Division Bench judgment dated 21st of May, 1981 as follows:- Therefore, the question is no longer a debataise one, and it must be held that the dividends of Hungerford from 1963 were unreasonably withheld and such withholding of dividend was an act of mismanagement and operation to Hungerford within the meaning of Section 397 of the Company s Act. 39. We find Section 47 of the Code of Civi .....

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ing the decree and not by a separate suit. 40. From the conduct of the TML it creates a doubt in our mind that it was the intention of TML not to transfer the unpaid dividend in favour of the Hungerford . Therefore, they prepared purported resolution dated 27th January, 1975 with the intention that in the balance sheet signed on 3rd November, 1975 with resolution dated 21st January, 1975, the Directors would not disclose the same in the balance sheet though in the auditor s report for the said y .....

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that litigation for dividend initiated in the year 1967 was finally disposed of by the Division Bench order dated 21st May, 1981. Therefore, during process of those litigations there cannot be any limitation. Non-payment of dividend is continuous offence under the law. Further, Section 2 Sub Section 2 of the Civil Procedure Code defines what a decree means is quoted below :- Section 2 Sub Section 2- decree means the formal expression of an adjudication which, so far as regards the Court express .....

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ing non-payment of dividend to the Hungerford by the TML . Therefore, the order passed by the Division Bench is a decree within the meaning of Section 2 of the Code of Civil Procedure. Further, Section 36 of the Code of Civil Procedure provides :- Application to orders.- The provisions of this Code relating to the execution of decrees (including provisions relating to payment under a decree) shall, so far as they are applicable, be deemed to apply to the execution of orders (including payment un .....

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ent of dividend as per Division Bench order is a continuous offence committed by the TML for which limitation is not a bar. Therefore, question of payment of dividend by the TML to Hungerford reached its finality by judgment of the Division Bench dated 21st May, 1981 within the same parties which was put into execution by that proceedings. 45. The decisions referred by Mr. Utpal Bose, the learned senior Counsel on the ratio that executing Court cannot go beyond the decree have no manner of appli .....

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ind and hold that non-payment of unpaid dividend is a continuous offence committed by the TML of which limitation cannot be a bar. 47. With this aforesaid discussions we hold that the impugned judgment and order passed by the Learned Trial Court is a well reasoned one and there is no infirmity, illegality which would deserve any interference. Therefore we have no hesitation to hold that the Appeal No.289 of 1994 preferred by TML has no merit and the same should be dismissed. 48. Accordingly, the .....

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