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1971 (6) TMI 56

r Respondents: Deb, Adv. ORDER R.M. Datta, 1. A terms of settlement is sought to be put in whereby all disputes in respect of the above suit have been agreed to be referred to arbitration as per agreement dated July 31, 1971. The said agreement has been made an annexure to the said terms of settlement. 2. By an interlocutory order made in this suit, Ghose, J., by an order dated 22nd May, 1970 appointed two joint receivers being the respective representatives of the plaintiff and the defendant herein and directed them to run the colliery belonging to Messrs. Pure Sitalpur Coal Concern Limited (hereinafter called the said company). By the said order the plaintiff, in this suit, inter alia, agreed to advance a sum of Rupees two lakhs and the said joint receivers were directed to invest the same in the said company for the purpose of running the said colliery. The joint 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 .....

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other parties are restrained from acting as directors. Interim order to continue." 6. By virtue of that order and under authority from the said B.B. Sinha, one Promoderai Amritlal Ojha, one of the shareholders in the group for whom Mr. Deb is appearing, was acting as the Liaison Officer of the defendant company. Mr. Deb contends, that the company is being run properly and its position has improved to a great extent since the appointment of the said joint-receivers; now the whole group of Keshavlal Ojha is in collusion and in conspiracy with Gunwantrai Ojha and a few others and have now been trying to oust the said joint receivers and the said Promoderai Ojha from the management of the colliery business of the said company. The said Keshavlal Ojha thereby now intends to have full control over the said defendant company by adopting this round-about process. Mr. Deb contends that prior to the order dated 4th September, 1967 the said Promoderai Amritlal Ojha and a few other members of the Ojha 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 .....

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l Concern Limited until the disposal of this application." 9. After providing for some other directions the said order also provided : "save as aforesaid the ad-interim Order passed herein is varied to this extent." 10. It is argued that the net position has been that the Consent Order dated 18th May, 1971 remains stayed but the said B.B. Sinha and the said Keshavlal Ojha were appointed as joint Special Officers of the company in the Suit filed by Mr. Deb's clients to carry on the business of M/s. Pure Sitalpur Coal Concern Limited. 11. For all these reasons as stated above Mr. Deb contends that his clients are to a great extent interested in resisting the filing of the terms of Settlement inasmuch as apparently the terms might appear to be quite innocent but, if put into action, this will have far-reaching consequences and will adversely go to affect the interest of the company as well as of Mr. Deb's clients. That being the position Mr. Deb prays for leave to intervene and to object to the terms being filed on its merits also. 12. Mr. Mitter on the other hand argues that Mr. Deb's clients have admit .....

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of the company and its members and under the supervision of the Court. Accordingly, it is always desirable and, I should say, incumbent upon the Special Officer to take directions from time to time from the Court appointing him as such Special Officer so that the interest of the company might be, protected in the best possible manner. In any event, his powers and functions should not be, and indeed, cannot be, such so that he would be in a position to achieve his own end or that of his group by sacrificing the existing interests of the other group of shareholders without an order from Court to that effect. Being the sole Special Officer he cannot have that unlimited power in respect of the Company unless the Court specifically clothes him with such powers. Being an Officer of the Court if he would do that, that would be a misuse of his powers. He must not, without an order of the Court do such things that the interest of the company would suffer in his hands and his acts would, in any way, be prejudicial to the interest of the shareholders or creditors or contributories of the company. In my opinion, for the purpose of deciding this case it is not necessary for this court to say an .....

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ent order in a suit which has been kept pending for the purpose of allowing the Special Officer to function and which cannot remain pending after the dispute with Gunwantrai Ojha is settled, now seeks to clothe himself with all the powers to have full control over the company and to run its affairs without any sanction of this Court. He has created himself the Special Officer in a Suit in which he was one of the plaintiffs-directors with the help of some of the other directors but now in this suit which is a suit between the said company and an outsider, by consent he seeks to oust the joint-receivers and to have full control over the colliery. If the directors have been restrained from functioning as directors and if the company's affairs are sought to be managed in this manner, I see no reason why the shareholders cannot come in to intervene and bring it to the notice of the Court in what manner their interests are being sacrificed by obtaining and utilising the various orders of this Court obtained by the consent of the parties in the pending suit. 18. Accordingly, in my opinion under such circumstances, the shareholders have certainly a say in the matter and can .....

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uthority of the said B.B. Sinha whom the Court authorised to keep accounts and to run the company and the colliery is being run by the joint receivers under certain directions of the Court. It is quite obvious that by the Consent Order dated 18th May, 1971 not only Keshavlal is trying to get control over the company but at the same time Promodrai and the joint receivers who are actually managing the affairs of the colliery and as such the main business of the said company, are sought to be removed without obtaining the prior sanction of this Court. It is contended that the said Suit No. 2029A of 1967 (Cal) (Keshavlal Ojha v. Gunwantrai Ojha) is purposely being kept alive and the said consent order has been sought to be obtained by way of an interlocutory order even though, it is apparent that nothing remained in the said Suit. The purpose is to allow Keshavlal to act as the Special Officer of this Court as long as possible by ousting the other persons as indicated above. 21. Mr. Deb contends that the Terms of Settlement ought not to be allowed to be put in because the same has not been properly signed by the parties to it. Mr. Deb contends that the terms, sought to be pu .....

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tion agreement are concerned, the same do not suffer from any defect. I think that that is the correct way of reading the provision of Section 19 and accordingly, the contention of Mr. Deb on this point must be rejected. 24. Mr. Deb next argues that Clause 4 of the said arbitration agreement, which has been made a part of the Terms of Settlement, if allowed to be given effect to, would be in conflict with the latest order that has been passed by this Court whereby both Keshavlal Ojha and B.B. Sinha have jointly been appointed the Special Officers in the suit filed by Mr. Deb's clients. The said Clause 4 of the said arbitration agreement provides that the said joint receivers will hand over possession of the assets, books, papers and documents belonging to the defendant company "represented by Keshavlal Ohja Spl. Officer appointed in Suit No. 2029 A of 1967 by order dated 18th May, 1971." It is true that Clause 4 of the arbitration agreement relates to the tune when the said Terms and the arbitration agreement were signed, namely, on 31st May 1971 but, in any event, the said agreement, if allowed to be put in will be in conflict with the later orders passed .....

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nd on behalf of the company. It must be signed by Board's resolution and in a case where there is no such Board it must have the approval of the general body of the shareholders and in a case where a Special Officer has been appointed he should sign on behalf of the company after obtaining the prior directions to that effect from the court. Mr. Deb has referred to several English decisions and also of this Court but it is not necessary to discuss them because both Mr. Mitter and Mr. S.C. Sen have admitted the principles laid down therein. 28. The last point of Mr. Deb is that the plaintiff is also in collusion and in conspiracy with Keshavlal and his group; the plaintiff in pursuance of the order dated 22nd May, 1970 made by Ghose, J., was to advance a sum of ₹ 2 lakh to the defendant company; the plaintiff failed to comply with the said order but only put in a sum of ₹ 36,000/-. Accordingly, the plaintiff has, an interest to compromise the suit by appointing their own arbitrators and getting an award in their favour without complying with the order of Ghose. J., with the help of Keshavlal. It is alleged that the arbitrators are near relations of the part .....

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