Companies Act Case Law Dwarka Prasad Agarwal (D) by Lrs. And Another Vs Ramesh Chandra Agarwala and Others

CASE NO.:
Appeal (civil) 4774-76 of 1996

PETITIONER:
Dwarka Prasad Agarwal (D) by Lrs. And Another
RESPONDENT:
Vs.

Ramesh Chandra Agarwala and Others
DATE OF JUDGMENT: 07/07/2003

BENCH:
CJI., S.B. Sinha & [AR Lakshmanan.
JUDGMENT:

 

J U D G M E N T

 

W I T H

 

CIVIL APPEAL NOS.4777-78 OF 1996

 

SINHA, S.B. :

 

These appeals involving identical questions of law and facts were

taken up for hearing together and are being disposed of by this common

judgment.

 

Civil Appeal Nos. 4774-76 of 1996 arise out of the judgments and

orders dated 12.3.1993 and 18.3.1993 passed by the Gwalior Bench of the

Madhya Pradesh High Court in Miscellaneous Petition Nos.1654, 1727 and

1728 of 1991; wherein the legality/validity of three orders passed on

29.5.1991 by the Press and Registration Board purported to be in exercise of

its jurisdiction under Section 8-C of the Press and Registration of Books

Act, 1867 (for short ‘the Act) were questioned by the Respondent No.1

herein.

 

Civil Appeal Nos. 4777-78 of 1996 arise out of the judgment and

order dated 29.6.1991 passed by the Gwalior Bench of the Madhya Pradesh

High Court arising out of Misc. Appeal Nos. 60-61 of 1988.

 

Factual matrix of the matter, shortly stated is as under:

 

Ramesh Chander Agarwal s/o late Dwarka Prasad Agarwal, a partner

of M/s Dwarka Prasad Agarwal and Brothers allegedly upon taking

advantage of his father’s ill-health made an attempt to create a lease in

relation to the right to publish Dainik Bhaskar from Bhopal. According to

late Dwarka Prasad Agarwal, to the best of his knowledge, he did not sign

the said document dated 13.4.1984 and in any event the same was meant to

be applicable only for Bhopal and not for any other place. On 13.4.1985, a

partition/family settlement deed was prepared wherein late Dwarka Prasad

Agarwal was not a signatory. Allegedly, Bishambhar Dayal also did not

agree to the said settlement and did not sign the said purported deed

of family settlement.

 

Ms. Hemlata Agarwal, eldest daughter of late Dwarka Prasad Agarwal

through his second wife, was made a Joint Managing Director of Bhaskar

Publications and Allied Industries. Ramesh Chander Agarwal being

intrigued thereby tried to increase the equity shares of the company to such

an extent that he gets majority in the equity shares purported to be in total

disregard and violation of the provisions of the Companies Act, 1956. The

said respondent also took alleged forcible possession of the Printing Press on

3.7.1987 which had been leased out by M/s Dwarka Prasad Agarwal and

Brothers (the Firm) to M/s Bhaskar Publications and Allied Industries

Private Limited. Allegedly, late Dwarka Prasad Agarwal and his two

daughters were also physically assaulted by the first respondent leading to

initiation of a proceeding under Section 145 of the Code of Criminal

Procedure. In the said proceedings, the Executive Magistrate directed the

police to open the locks put in the premises of the printing press in presence

of both the parties. However, late Dwarka Prasad Agarwal was not

permitted to run the said printing press.

 

Thereafter, Ramesh Chander Agarwal filed a declaration before the

District Magistrate, Jabalpur, wherein he allegedly accepted the partnership

of M/s Dwarka Prasad Agarwal and others as owners of the newspaper

Dainik Bhaskar. In terms of the provisions of Section 5 of the Press and

Registration of Books Act read with the rules framed thereunder,

declarations are required to be filed by the owner as also the printer(s) and

publisher(s) thereof. Six declarations were filed; three each by Respondent

No.2 on the purported authority of late Dwarka Prasad Agarwal and three by

the Respondent No.1. Objections to the said declarations were filed by late

Dwarka Prasad Agarwal before the appropriate authority.

 

By an order dated 6.6.1988, the District Magistrate, Gwalior, in

exercise of his power under Section 8-B of the Act cancelled the said

declarations dated 11.3.1985 filed by Respondent No.1. He preferred an

appeal thereagainst before the Press and Registration Appellate Board, but

the same was ultimately withdrawn.

 

He in the meanwhile filed a writ petition before the High Court for

stay of the proceedings before the District Magistrate. Although an order of

stay was passed therein but before the same could be communicated the

aforementioned order dated 6.6.1988 was passed. Ramesh Chander

Agarwal, Respondent No.1, then filed another writ petition against the said

order dated 6.6.1988 before the High Court but the same was withdrawn on

the ground that he had in the meanwhile availed alternative remedy of filing

an appeal against the same order. During the pendency of the said appeal

before the Board, yet another writ petition was filed by the first respondent

marked as Writ Petition No.798 of 1988 praying therein for quashing of the

order dated 6.6.1988 whereby the declarations were directed to be filed.

 

The said appeals filed by Ramesh Chandra Agarwal were dismissed

by the Appellate Board on 29.5.1991 holding as under :

 

“(a) The document at the top portion is pasted

with thick opaque white paper slips from

both sides, perhaps to cover up and make

unreasonable something which was written

or printed under these slips;

 

(b) Below the seal of the Deputy Collector and

Executive Magistrate, Bhopal (party super-

imposed) appears a somewhat blurred

impressed of the seal of the Executive

Magistrate, Gwalior;

 

(c) The printed proforma of A1 is patently of

Bhopal. That proforma does not tally with

the printed form produced by the Appellant

with his application.

 

Annexure A-1, is only a photocopy of the

original, in the absence of which, the true

effect of these suspicious circumstances (a)

to (c) cannot be correctly assessed.

However, the appellant admits that the

photocopy of the declaration A-1 was

presented by Devinder Tiwari not personally

by him (appellant). This Devinder Tiwari

who, according to the appellant, as a

Director of the Company did not file any

letter of authority on behalf of the Company,

or even from the appellant, to explain why

the declaration was not presented in person

by the appellant”.

 

xxx xxx xxx xxx xxx

 

“Nevertheless, there is no reason to differ

from the finding of the District Magistrate,

that Shri S.C. Shukla (Deputy Collector)

Executive Magistrate, not being a District,

Presidency or Sub-Divisional Magistrate

was not competent, in view of Section 5(2)

of the Act, to entertain and authenticate the

declaration dated 11.3.1985, filed by the

appellant.

 

For all the reasons aforesaid, we would

uphold the order dated 6.6.88 of the District

Magistrate, Gwalior and dismiss the Appeal

No.III filed by Ramesh Chander Agarwal.”

 

 

 

A writ petition was filed by Ramesh Chander Agarwal thereagainst.

Similar writ petitions came to be filed in relation to the orders passed in

respect of other declarations.

 

By reason of the impugned order dated 12.3.1993, the order of the

Appellate Board dated 29.5.1991 as also that of the District Magistrate,

Gwalior, dated 6.6.1988 were quashed and the Appellate Board was

directed to consider the matter afresh within a period of three months.

Strangely enough, however, the same learned Judge on a review application

filed by the first respondent herein by an order dated 18.3.1993 directed that

the inquiry by the District Magistrate should be deferred if an application is

filed before him till the final outcome of the civil litigations by the

parties.

 

Late Dwarka Prasad Agarwal, alleging his alleged illegal

dispossession from the printing press, filed a suit for eviction and permanent

injunction in the court of A.D.J., Gwalior, which was registered as Suit

No.1-A of 1988. An application for grant of injunction in terms of Order 39,

Rules 1 and 2 of the Code of Civil Procedure was filed wherein a prayer was

made for grant of temporary injunction against Respondent No.1

restraining him from publishing the newspaper illegally and furthermore not

to indulge in false propaganda and/or to take forcible possession of the

printing press. Respondent No.1, Ramesh Chander Agarwala also filed a

suit against late Dwarka Prasad Agarwal praying therein for a permanent

injunction restraining him from interfering with the working of the press at

Gwalior and not to take possession thereof. He also filed an application for

grant of interim injunction in terms of Order 39, Rules 1 and 2 of the Code

of Civil Procedure.

 

The First Additional District and Sessions Judge before whom the

matters were pending, disposed of both the applications by a common order

dated 28.5.1988. The court directed maintenance of status quo by the parties

and further directed that Ramesh Chander Agarwal would not interfere with

the working of late Dwarka Prasad Agarwal in the matter of managing the

affairs of the company. However, in his order relating to the application

filed for injunction in Suit No.2-A of 1988 of Respondent No.1, the court

directed the original appellant, late Dwarka Prasad Agarwal not to interfere

in the printing and publishing of the newspaper Dainik Bhaskar from

Gwalior.

 

Both the parties preferred appeals before the High Court against the

said orders which were marked as M.A. No.60 of 1988 and M.A. No.61 of

1988. The High Court allowed the appeal preferred by Ramesh Chander

Agarwal and dismissed Appeal No.61 of 1988 filed by late Dwarka Prasad

Agarwal holding that the suit for temporary injunction was barred under

Section 10 of the Companies Act.

 

These appeals were filed by Dwarka Prasad Agarwal (since deceased),

questioning the legality/correctness of the said orders.

 

The questions, in the aforementioned factual backdrop, which arise

for consideration in these appeals are :

 

1) Whether the High Court was justified in issuing a direction that

its earlier direction contained in order dated 12.3.1993 directing

the Appellate Board to dispose of the appeal within three

months need not be adhered to, if Ramesh Chander Agarwal

files an application for stay of the inquiry by the District

Magistrate during the pendency of the civil suit?

 

2) Whether the civil court had any jurisdiction to entertain the

suit ?

 

Re: Question No.1 :

 

 

At the outset, we may observe that when a disputed question as regard

the right of one partner against the other to file a declaration in terms of the

provisions of the Act had arisen for consideration, the High Court was not

correct in issuing a subsequent direction in the review petition. Such a

jurisdiction the High Court did not have. The conflicting rights of the

parties were required to be determined in accordance with law by the

statutory authority. Such a dispute, it goes without saying, should be

determined as expeditiously as possible inasmuch as the dispute involved

rival claims of the parties to the lis to run and manage newspaper business.

In any event, while directing the statutory authority to dispose of the matter

in accordance with law; it does not stand to any reason as to why a party to

the lis was given such liberty so as to file an application for stay of inquiry

by the District Magistrate till the disposal of the civil suit particularly when

the High Court itself was of the opinion that the suit was not maintainable.

We fail to see any reason as to why one party to the lis should be given

unfair advantage over another in the matter of enforcement of statutory

rights under the said Act. The orders of the High Court are, thus,

absolutely contradictory to and inconsistent with each other, and do not

stand a moment’s scrutiny. The impugned orders are, therefore, set aside

with a direction to the Appellate Board to hear out and dispose of the appeal

as expeditiously as possible but not later than three months from the date of

communication of this order. It would be open to the Appellate Board to

consider the question of adequately compensating the appellants herein on

monetary terms in the event it comes to the conclusion that the appeal was

liable to be dismissed.

 

Re: Question No.2 :

 

 

Sections 9 and 10 of the Companies Act are as under :

 

 

“Act to override memorandum, articles etc.

 

9. Save as otherwise expressly provided in the Act –

 

(a) the provisions of this Act shall have effect

notwithstanding anything to the contrary

contained in the memorandum or articles of

a company, or in any agreement executed by

it, or in any resolution passed by the

company in general meeting or by its Board

of directors, whether the same be registered,

executed or passed, as the case may be,

before or after the commencement of this

Act; and

 

(b) any provision contained in the

memorandum, articles, agreement or

resolution aforesaid shall, to the extent to

which it is repugnant to the provisions of

this Act, become or be void, as the case may

be.”

 

 

“Jurisdiction of Courts.

 

10. (1) The High Court having jurisdiction

under this Act shall be –

 

(a) the High Court having jurisdiction in

relation to the place at which the registered

office of the company concerned is situate,

except to the extent to which jurisdiction has

been conferred on any District Court or

District Courts subordinate to that High

Court in pursuance of sub-section (2); and

 

(b) where jurisdiction has been so conferred, the

District Court in regard to matters falling

within the scope of the jurisdiction

conferred, in respect of companies having

their registered offices in the district.

 

(2) The Central Government may, by

notification in the Official Gazette and subject to

such restrictions, limitations and conditions as it

thinks fit, empower and District Court to exercise

all or any of the jurisdiction conferred by this Act

upon the Court, not being the jurisdiction

conferred –

 

(a) in respect of companies generally, by

sections 237, 391, 394, 395 and 397 to 407,

both inclusive;

 

(b) in respect of companies with a paid-up share

capital of not less than one lakh of rupees,

by Part VII (sections 425 to 560) and the

other provisions of this Act relating to the

winding up of companies.

 

(3) For the purposes of jurisdiction to wind up

companies, the expression “registered office”

means the place which has longest been the

registered office of the company during the six

months immediately preceding the presentation

of the petition for winding up.”

 

A bare perusal of the aforementioned provisions leaves no manner of

doubt that thereby the jurisdiction of the civil court has not been ousted. The

civil court, in the instant case, was concerned with the rival claims of the

parties as to whether one party has illegally been dispossessed by the other

or not. Such a suit, apart from the general law, would also be maintainable

in terms of Section 6 of the Specific Relief Act, 1963. In such matters the

court would not be concerned even with the question as to title/ownership of

the property.

 

In India, it is trite, that a person cannot be forcibly dispossessed

except in accordance with law. [See Lallu Yeshwant Singh (dead) by legal

representatives vs. Rao Jagdish Singh and Others AIR 1968 SC 620 at Page

622].

 

In Suvvari Sanyasi Apparao and Another vs. Bodderpalli

Lakshminarayana and Another (1962) Supp. 1 SCR 8], this Court upon

considering the Press and Registration of Books Act, 1867 observed that the

matter relating to ownership of the press is a matter of general law and the

Court, thus, must follow that law. It was observed that a declared keeper of

the press is not necessarily the owner thereof so as to be able to confer title

to the press upon another.

 

The dispute between the parties was eminently a civil dispute and not

a dispute under the provisions of the Companies Act. Section 9 of the Code

of Civil Procedure confers jurisdiction upon the civil courts to determine all

dispute of civil nature unless the same is barred under a statute either

expressly or by necessary implication. Bar of jurisdiction of a civil court is

not to be readily inferred. A provision seeking to bar jurisdiction of civil

court requires strict interpretation. The court, it is well-settled, would

normally lean in favour of construction, which would uphold retention of

jurisdiction of the civil court. The burden of proof in this behalf shall be on

the party who asserts that the civil court’s jurisdiction is ousted. [See

Sahebgouda (dead) by Lrs. and Others vs. Ogeppa and Others [2003 (3)

Supreme 13]. Even otherwise, the civil court’s jurisdiction is not completely

ousted under the Companies Act, 1956.

 

In R. Prakasam vs. Sree Narayana Dharma Paripalana Yogam [1980

(50) CC 611], it has been held that :

 

“…The purpose of s.2(11) read with s.10 is only

to enable the shareholders to decide as to which

court they should approach for remedy, in respect

of that particular matter. It is difficult to construe

the definition clause as one conferring jurisdiction,

exclusive or otherwise; and even s.10 refers only

to “the court having jurisdiction under this Act”,

i.e., where such jurisdiction is conferred by the

Act, as under Sections 107, 155, 163(2), 237, 397,

425, etc. In other words, the conferment of

jurisdiction on “the court” is not under s. 10, but

by other provisions of the Act like those

enumerated above. If, on the other hand, Sections

2(11) and 10 are construed as not only nominating

the courts, but also conferring exclusive

jurisdiction on them, the specific provisions in the

other sections conferring jurisdiction on the court

to deal with the matters covered by them will

become redundant. It may be that where the Act

specifies the company court as the forum for

complaint in respect of a particular matter, the

jurisdiction of the civil court would stand ousted to

that extent. This depends, as already noticed, on

the language of the particular provisions (like

Sections 107, 155, 397 and others) and not on

Sections 2(11) and 10…”

 

 

 

Yet again in Maharaja Exports and Another vs. Apparels Exports

Promotional Council [1986 (60) CC 353], the Delhi High Court held :

 

“Under section 9 of the Code of Civil

Procedure, 1908, civil courts have jurisdiction to

try all suits of a civil nature excepting suits of

which their cognizance is expressly or impliedly

barred. Unlike some statutes, the Companies Act

does not contain any express provision barring the

jurisdiction of the ordinary civil courts in matters

covered by the provisions of the Act. In certain

cases like winding-up of companies, the

jurisdiction of civil courts is impliedly barred.

 

Where a person objects to the election of

directors and claims a decree for a declaration that

he was one of the directors, there is no provision

which bars the civil court either expressly or by

implication from trying such a suit”

 

In the present suit also, besides other reliefs,

the plaintiff has sought a declaration that all the 27

members of the existing executive committee are

not entitled to hold the respective offices in view

of the judgment of this court and further that the 18

members of the executive committee who have

retired by rotation are not entitled to continue in

office as members of the executive committee.

The judgment, referred to above, fairly and

squarely applies to the facts of the present case and

there is no reason to oust the jurisdiction of this

court to entertain the present suit. Under these

circumstances, this issue is decided in favour of

the plaintiff and against the defendants.”

 

 

 

In that view of the matter, we are of the opinion that the civil suit was

maintainable. In any event, we fail to understand and rather it is strange as

to how the High Court while rejecting relief to the original plaintiff, (late

Dwarka Prasad Agarwal), granted a similar relief in favour of the first

respondent herein.

 

The impugned orders are, therefore, set aside. The matters are

remitted to the Collector/High Court for a fresh decision on merits as

expeditiously as possible within a period of three months, keeping in view

the observations made hereinabove. These appeals are allowed with costs.

Counsel’s fee assessed at Rs.25,000/- (Rupees twenty five thousand only).

 

 

 

 

 

 

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