Case: Bhagwati Developers Pvt. Ltd Vs. Peerless Gen.Finance Invest.Co.Ltd.&amp;Ors

A. Shri S.K. Roy (Respondent No. 2) issued and allotted 30,000 shares of the Respondent No. 1 company to himself and his relatives, and being the majority share holder therein, hence acquired control over the respondent-company.B. Shri Ajit Kumar Chatterjee (3.66% shares) and Shri Arghya Kusum Chatterjee (1.01% shares) filed Company Petition No. 222 of 1991 under Sections 397 and 398 of the Act 1956, before the High Court of Calcutta with the consent of M/s Bhagwati Developers Pvt. Ltd. (4.78% shares) (hereinafter referred to as `theand Shri R.L. Gaggar (7.61% shares), alleging mis-management and oppression.C. Respondent No. 2 contested the said Company Petition by raising the preliminary issue of maintainability, stating that the valid shares held by the petitioners and consenting parties therein, were valued at less than 10 per cent of the total shareholding, and thus, the petition itself was not maintainable. The Company Court Judge vide order dated 13/14.1.1992, dismissed the said Company Petition as not maintainable, allowing the aforementioned preliminary objection, without entering into the merits of the case.D. Shri Ajit Kumar Chatterjee and Shri Arghya Kusum Chatterjee, both petitioners therein, filed two appeals being Nos. 40 and 35 of 1992 respectively, before the Division Bench of the Calcutta High Court challenging the dismissal of the Company Petition on the ground of maintainability. Both the appeals were consolidated and heard together.E. On 16.11.1993, Shri Ajit Kumar Chatterjee joined the Board of Directors of the company and filed applications for withdrawal of the appeals. The Division Bench of the High Court, vide order dated 16.11.1993 allowed the said applications, and dismissed his appeal as withdrawn. A similar order was passed by the Division Bench on 18.11.1993 while allowing a similar application filed by Shri Arghya Kusum Chatterjee, and therefore, his appeal was also dismissed as withdrawn.F. The appellant filed two applications before the Division Bench on 22.12.1993 for the purpose of recalling the order of dismissal of the said appeals, and for the transposition of the Chatterjee brothers as proforma respondents, whilst substituting the appellant as the sole appellant therein. The Division Bench, vide order dated 2.2.1995 dismissed the said application by a detailed judgment, labelling the appellant as a stranger having no locus standi whatsoever, and observing that as the appeal was no longer pending, the question of transposition of parties did not arise. Moreover, it was observed that there had been an inordinate delay in the filing of such an application.G. Aggrieved, the appellant preferred S.L.P.(C) Nos. 19193 and 19217 of 1995 before this court, challenging the order dated 2.2.1995. This Court entertained the said petitions, granted leave, and disposed of the appeals vide judgment and order dated 26.4.1996, observing that the appellant may prefer independent appeals, challenging the judgment and order dated 13/14.1.1992, passed by the learned Single Judge, further stating that if such an appeal was infact filed, the same would not be dismissed by the Division Bench on grounds of limitation or locus standi. However, it would be open for Respondent No.2 to contend, that the ground upon which the Company Court Judge had dismissed the Company Petition, was indeed just, i.e. the respondent could defend the order passed by the Company Court Judge. Further, the effect of withdrawal of the appeals by Chatterjee brothers on the appeals filed by the appellant, would also be examined. Additionally, the dismissal of the appeals as withdrawn, preferred by Chatterjee brothers, would not come in the way of the appellant raising such contentions as are permissible and available to it in law. This Court disposed of the said appeals without expressing any opinion on merit.H. In pursuance of the order dated 26.4.1996 passed by this Court, the appellant preferred appeal Nos. 346 and 347 of 1996, which have been dismissed vide impugned judgment and order dated 24.11.2003. Hence, these appeals.

Reasoning:
The right to apply for the winding up of a company is available, provided that the applicant satisfies the requisite requirements under Sections 397, 398 and 399 of the Act 1956, with respect to holding 10% shares in the total share-holding of the company. It is not necessary that the petitioner(s) must hold the same individually. Such a winding up petition can even be filed after obtaining the consent of other shareholders, so as to meet the requirement of having an aggregate of 10 per cent out of the totalcase at hand is required to be considered in the light of aforesaid settled propositions of law, which provide that where the Company Petition is filed with the consent of the other shareholders, the same must be treated in a representative capacity, and therefore, the making of an application for withdrawal by the original petitioner in the Company Petition, would not render the petition under Sections 397 or 398 of the Act 1956, non-existent, or non-maintainable. The other persons, i.e., the constructive parties who provide consent to file the petition, are in fact entitled to be transposed as petitioners in the said case. Additionally, in case the petitioner does not wish to proceed with his petition, it is not always incumbent upon the court to dismiss the petition. The court may, if it so desires, deal with the petition on merit without dismissing the same. Further, there is no requirement in law for the shareholder himself, to give consent in writing. Such consent may even be given by the power of attorney holder of the shareholder. If the shareholder who had initially given consent to file the Company Petition to help meet the requirement of 1/10th share holding, transfers the shares held by him, or ceases to be a shareholder, the same would not affect the maintainability and continuity of thecourts have consistently held, that a suit filed in representative capacity also represents persons besides the plaintiff, and that an order of withdrawal must not be obtained by such a plaintiff without consulting the category of people that he represents. The court therefore, must not normally grant permission to withdraw unilaterally, rather the plaintiff should be advised to obtain the consent of the other persons in writing, even by way of effecting substituted service by publication, and in the event that no objection is raised, the court may pass such an order. If the court passes such an order of withdrawal, knowing that it is dealing with a suit in a representative capacity, without the persons being represented by the plaintiffs being made aware of the same, the said order would be an unjustified order. Such order therefore, is withoutDivision Bench has gravely erred in taking the aforesaid view, as the same renders the order of this Court dated 26.4.1996, a nullity. This Court had passed the order after hearing the present respondents on the basis of suggestions made, and concessions offered by them. It was in fact, suggested by the learned counsel appearing on behalf of the respondents, that if the appellant prefers such appeals in the High Court even now, the respondents shall not raise any objection on the ground of limitation, and that they would not also object on the ground of the locus standi of the consenting shareholders. Thus, the same makes it clear, that the right of maintenance of an appeal against the judgment of the learned Single Judge dated 2.2.1995, was in fact an offer made by the respondents themselves, with a further undertaking being provided by them with respect to the question of limitation and locus standi of the appellant, stating that the same would not be raised. What was granted to them, was only permission, to raise the contention that, as on the date of actual filing of the Company Petition before the company court Judge, the petitioners alongwith the constructing parties, had 10 per cent share holding out of the total stakeholding of the company.The aforesaid terms of this Court have made it crystal clear, that this Court was entirely oblivious of the fact that there had been two orders passed by the Division Bench, permitting the withdrawal of the appeals and further, dismissing the application of the appellant for recalling the said orders. If this Court did not set aside the said orders, we fail to understand the purpose of asking the appellant to file an appeal against the judgment and order of this Court dated 2.2.1995. Thus, by the impugned order, the High Court has rendered the entire exercise undertaken by this Court, a futile one. In our humble opinion, the Division Bench has hence, erredare of considered opinion that the Division Bench erred in holding that after the judgment of this Court dated 26.4.1996, it was permissible for the High Court to hold that the Company Petition under Sections 397/398 of the Act 1956, was non-existence in the eyes of law while placing reliance on the earlier judgments of the Division Bench of the High Court dated 16.11.1993 and 18.11.1993.