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1971 (6) TMI 56

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..... receivers were also directed to pay up the sum by stated instalments. It was further directed that the said joint-receivers would stand discharged from further acting as joint-receivers subject to their filing of accounts, when the dues of the plaintiff firm would be fully paid off by them, and in that event they would make over possession of the said colliery to the defendant company. 3. The admitted position is that the plaintiff firm in pursuance of that order advanced a sum to the extent of ₹ 36,000/- only and the balance sum had not been advanced by them. The claim in the suit herein is for a sum of ₹ 1,91,616.15 paise. 4. By Clause 3 of the said arbitration agreement, which is annexed to the said Terms of Settlement, it is agreed that all interim orders made in this suit including the order for the appointment of joint receivers would stand vacated. By Clause 4 it is also agreed that after such discharge the joint receivers would hand over possession of assets, books, papers and documents of the company to the company represented by Kashavlal Ojha a Special Officer appointed in suit No. 2029-A of 1967 by an order dated 18th May, 1971 . The said Spe .....

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..... family in that group were acting as directors of the said company but now by adopting this method Keshavlal Ojha's group will have complete control over the defendant company to the complete ouster of the said Promoderai Amritlal Ojha and the group to which he belongs. Mr. Deb contends that B.B. Sinha who was previously a director has since automatically ceased to be a director by retirement by rotation because the company has not called any annual general meeting for the last about 7-8 years. Accordingly, it is contended that since there are no directors of the defendant company the shareholders have become vitally interested in the affairs of the company. 7. To show how and in what manner Keshavlal Ojha became the Special Officer and how he is seeking to have complete control over the said company, Mr. Deb contends that by the Consent Order dated 18th May, 1971, Keshavlal Ojha got himself appointed as a Special Officer at a monthly remuneration of ₹ 1,500/- to manage the affairs of the company till the disposal of the said suit No, 2029 A of 1967 (Cal). The said Keshavlal Ojha was to maintain accounts of the dealings and finance of the company till the disposal .....

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..... e terms being filed on its merits also. 12. Mr. Mitter on the other hand argues that Mr. Deb's clients have admitted the position in their petition before the Appeal Court that B. B. Sinha was acting as the director of the said Company and on that basis the said Promodrai Amritlal Ojha was so long holding the power of Attorney from the said B. B. Sinha and as such was looking after the business of the said company. 13. Mr. Sen on behalf of the plaintiff firm contends that just as the shareholders have no say in the matter of the internal management of the company, when the company is managed by the board of directors, except in certain special circumstances as provided by the Statute, similarly, the shareholders cannot also have any say in a matter where the Special Officer is acting on behalf of the company. It is argued that Mr. Deb's clients have no locus standi to interfere into the putting in of the Terms of Settlement in this suit and the court should not grant them leave to intervene in this matter. 14. It is necessary here to determine the position and the powers of the Special Officers and in what manner they should function after their appoint .....

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..... e company. In my opinion, for the purpose of deciding this case it is not necessary for this court to say anything more about the powers and functions of the Special Officer. Suffice it to say, that in exercising powers as such Special Officer and in functioning in that position such Officer shall always look to the interest of the company and whenever any step has to be taken by him which would be likely to be of controversial nature, the said Officer is bound to take directions of the court and to act in accordance with such directions. As a sole Special Officer his position and powers are much lesser than that of the board of directors which runs the business of the company in accordance with the powers entrusted to it by the Memorandum and the Articles of the Company and by the Statute. A Special Officer being an Officer of the Court remains answerable to the Court for his acts and conduct and as such must obtain the necessary directions from the Court appointing him to clothe himself with special powers. In that respect his position and powers are different from that of a director or of a board of directors. He cannot have the full powers of a director unless the court ve .....

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..... opinion under such circumstances, the shareholders have certainly a say in the matter and can legitimately come up before the court and ask for leave to intervene to bring it to the notice Of the Court in what manner the Court's Officer has been behaving in respect of a particular company and whether he should be allowed to file the Terms of Settlement or not. In my opinion, Mr. Deb's contentions are acceptable and sound. I hold that it is a fit case where I should and, accordingly, I give his clients leave to intervene in this matter. 19. In my opinion, the parties by consent cannot appoint a special Officer of a company. That is a power which a Court can exercise, and indeed very sparingly, if the Court thinks fit under special circumstances by taking into consideration the interest of the company its shareholders, contributories and its creditors. The parties by their acts by means of a Consent Order cannot jeopardise the interest of the shareholders of the company or of the directors or creditors of the company by making an appointment of a Special Officer over a company. 20. While deciding this matter I will not seek to lay down the circumstances under wh .....

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..... erly signed by the parties to it. Mr. Deb contends that the terms, sought to be put in, should have been signed by the Joint Special Officers describing themselves, as such Joint Special Officers appointed in the Suit to Mr. Deb's clients being Suit No. 246 of 1971 (Cal) (Mukundrai Ravishankar Trivedi v. Keshavlal Amritlal). As stated above the terms have been sought to be signed by Keshavlal as Special Officer in Suit No. 2029A of 1967. Mr. Mitter on the other hand, contends that at the relevant point of time when the said signature was put in, the said Special Officer was appointed as such and accordingly, that was his correct designation on that date and consequently there is no irregularity in his signature. On this point I have already expressed my views as stated above. 22. It is argued by Mr. Deb that under the provision of Section 19(2) Clause (c) of the Partnership Act. 1932 one partner has got the implied authority, and the implied authority of such a partner does not empower him, to compromise and to reduce any claim or portion of a claim by the firm. Accordingly Mr. Deb argues that the Terms of Settlement have not been duly signed by both the partners and hen .....

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..... be put in will be in conflict with the later orders passed by this Court whereby the said consent order dated 18th May, 1971 has been stayed and the Joint Special Officers have been directed to act jointly and not singly and as such must necessarily, be entitled to the possession of such books etc. in terms of their order of appointment. I uphold the contentions of Mr. Deb on this point. 25. But the most vital objection which has been raised by Mr. Deb is that there is no petition before this court whereby the matters in suit could be referred to arbitration. If the provisions of Section 21 of the Arbitration Act, 1940 has to be taken recourse to, then there must be an application in writing before this Court. Arbitration rules have been framed in respect of the said section by this Court whereby the application must be, by way of petition. The rules framed by this Court even though they are procedural in nature are meant to be followed and in the absence of compliance of such rules under Section 21 of the Arbitration Act the Court cannot be said to have been properly moved and the court's jurisdiction to determine the Suit cannot be taken away except under the said pro .....

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