Silvertone Constructions Private ... vs Eastern Manufacturing Private Limited

2. Jupiter Finvest Private Limited, 14/2, Burdwan Road, Kolkata - 700 001. ....Appellants

Vs

1. Eastern Manufacturing Private Limited, 1, Ali Hyder Road, Post Office, Titagarh, 24 Parganas (North), West Bengal - 743 186.

2. Narayanan Sisupalan, Flat No.401, 113, N. S. Bose Road, Kolkata - 700 040.

3. Sujay Seal, 24/2, Sharat Palli, (Griha Na 16-24) Sthir Para Road, Kankinara, Jagaddal, 24 Parganas (North), West Bengal - 743 126.

4. Pawan Jain, 24, Chunapukur Lane, Kolkata - 700 012.

5. Jay Prakash Tibrewal, 493-B-1, G T Road, G Block, Flat - 601, Howrah, West Bengal - 711 102.

Company Appeal (AT) No. 277 of 2017 -2-

6. Sanjay Gupta, Part No. 228, Dumdum Municipality, Kolkata - 700 028.

7. Sunbeam Vanijya Private Limited, 21A, Shakespeare Sarani, Kolkata - 700 017.

8. A. N. Mehta & Co., 13, Pollock Street, Kolkata - 700 001.

9. M/s. Mooldhan Advisory Systems Private Limited, 14/2, Burdwan Road, Kolkata - 700 027.

10. M/s. Namokar Vinimay Private Limited, 14/2, Burdwan Road, Kolkata - 700 027.

11. M/s. Gulnar Dealcomm Private Limited, Tower House, 2A, Chowringhee Square, 5th Floor, Kolkata - 700 069.

....Respondents

Present:

For Appellants: Mr. Arvind Kumar, Ms. Henna George, Advocates

For Respondents: Mr. Ashok Kumar Jain, Mr. Pankaj Jain, Mr. Ankit Kohli, Advocates for Respondent No. 1. Mr. Gaurav Kejriwal, Mr. Atanu Mukherjee, Advocates for Respondent No. 7.

Company Appeal (AT) No. 277 of 2017 -3-

JUDGEMENT

BANSI LAL BHAT, J.

This appeal has been preferred against order dated 3rd July,

2017 passed by National Company Law Tribunal, Kolkata in

Company Petition No. 495 of 2012 whereby and whereunder NCLT,

Kolkata (hereinafter referred to as the 'Tribunal') has allowed the

application being C. A. No. 448 of 2012 filed by Respondent no.7

deleting its name from array of parties.

2. C. A. No. 448 of 2012 came to be filed by Respondent no.7 when

Company Petition No. 495/2012 was pending adjudication before the

Tribunal. Through the medium of aforesaid application, the

Respondent no.7, inter-alia, prayed for striking out the name of

Respondent no.7 from Company Petition No. 495 of 2012. The

Appellants resisted the application filed by Respondent no.7 seeking

deletion from the array of respondents.

3. The stand taken by Respondent no. 7 before the learned

Tribunal was that it was not the shareholder of the Respondent no.1

Company Appeal (AT) No. 277 of 2017 -4-

company and it had no concern whatsoever with the Eastern

Manufacturing Pvt. Ltd. Respondent no.7 maintained before the

Tribunal that it had entered into a transaction with the Eastern

Manufacturing Co. Ltd. and had been wrongly arrayed as party

respondent in the main petition. Respondent no.7 also maintained

that it had entered into a Conversion Agreement dated 29 th May,

2009 with M/s The Eastern Manufacturing Co. Ltd. for using the jute

mill of the company situated at Titagarh, 24 Parganas (North) and

made huge investments for installation of new machinery. It further

maintained that the Appellants had filed Company Petition No. 495

of 2012 against "M/s Eastern Manufacturing Pvt. Ltd." and not

against "M/s Eastern Manufacturing Co. Ltd.". Based upon these

facts Respondent no.7 sought deletion from array of Respondents as

it was in no way related with the "Eastern Manufacturing Pvt. Ltd."

figuring as Respondent no.1 in the main petition.

4. The Appellants resisted the application on the grounds that a

Conversion Agreement had been fraudulently executed with the

object of taking away the Conversion Agreement from premium in

which the Appellants and their group had 53.40 percent

shareholding to a concern where the Appellants had no stake.

Company Appeal (AT) No. 277 of 2017 -5-

5. On consideration of the respective stands adopted by the

contesting parties learned Tribunal noticed that the Appellants had

made a self-contradictory statement qua the Conversion Agreement

which was entered into by Respondent no.7 with M/s Eastern

Manufacturing Co. Ltd. whereas the Company Petition was filed by

the Appellants against Eastern Manufacturing Pvt. Ltd and others.

According to the learned Tribunal, the appellants, apart from a bare

denial, failed to clear the stand which was self-contradictory. The

learned Tribunal was of the view that Respondent no.7, prima facie,

had no link with Eastern Manufacturing Pvt. Ltd. In view of this

finding learned Tribunal found that Appellants petition filed under

section 111, 235, 397, 398, 399, 402 and 403 of The Companies Act,

2013 was not maintainable against Respondent no.7.

6. The impugned order has been assailed on various grounds set

out in the memo of Appeal. It is contended that the finding recorded

by the learned Tribunal is erroneous and the effect of such finding is

that the Appellants have been non-suited qua Respondent no.7. It is

further contended that a small error in the nomenclature of

Respondent no.1 does not render Respondent no.7 as an improper

and unnecessary party, when documents forming part of C.P. No.

Company Appeal (AT) No. 277 of 2017 -6-

495 of 2012 sufficiently identified Respondent no.1 as the company

with whom Respondent no.7 had entered into Conversion Agreement.

Per Contra respondents support the impugned order on the ground

that M/s Eastern Manufacturing Private Limited and M/s. Eastern

Manufacturing Co. Limited are different juristic entities and the

Appellants having fail to demonstrate that there was a nexus between

Respondent no.7 with Eastern Manufacturing Private Limited,

Respondent no.7 was not a proper and necessary party.

7. Heard learned counsel for parties and perused the record. The

question arising for consideration is whether pending adjudication of

Company Petition no.495/2012 filed by the Appellants before the

learned Tribunal, proceedings against Respondent no.7 could be

justifiably scuttled on the ground that it had no link with Respondent

no.1, therefore was liable to be struck out as being an unnecessary

appendage. For determination of this question, it has to be borne in

mind that in civil jurisprudence Plaintiff/Petitioner is the "Dominus

Litus" and is entitled to array a person, juristic or otherwise, as a

party defendant/ respondent, regard being had to the nature of the

lis and the relief claimed therein. The court enjoys ample powers to

add a proper or necessary party if inadvertently left out or strike out

Company Appeal (AT) No. 277 of 2017 -7-

a defendant/ respondent whose arraignment is neither proper nor

necessary for adjudication of the issues raised in the Lis. If a

respondent comes forward with a plea that he or it has been

improperly and unnecessarily arrayed in the Lis as a party

respondent, amounting to abuse of process of law, the onus lies on

such respondent to establish that his or its arraignment is not

essential for the just decision of the case and that the issues raised

in the matter can be effectively and completely adjudicated upon in

his or its absence. The question raised for determination has to be

answered in the light of these principles.

8. It is the Appellants case before the Tribunal that the Jute Mill

of Respondent no.1 has been illegally transferred to Respondent no.7.

Appellants have described the statutory name, the registered office

address and Corporate Identity Number (CIN) of Respondent no.1

based on the records of Registrar of Companies. It emerges from the

record that the registered address of Respondent no.1 is 1, Ali Hyder

Road, Post Office Titagarh, 24 Parganas (North), West Bengal.

Identity of the Respondent no.1 is sufficiently established with

reference to its address and CIN number as reflected in the Annual

Returns filed by the company with the Registrar. The inter-se

Company Appeal (AT) No. 277 of 2017 -8-

agreement between Respondent no.1 and Respondent no.7 dated 29th

May, 2009 in regard to conversion of "The Eastern Jute Mill", records

the name and style of Respondent no.1 as "The Eastern

Manufacturing Company Limited". In the Annual Returns, the name

and style of Respondent no. 1 is described as "Eastern

Manufacturing Company Private Limited". In the notice issued for

convening the Annual General Meeting of members on 28th

September, 2006, the name and style of the Respondent no.1 is

described as "The Eastern Manufacturing Company Limited".

Similar position emerges from notice regarding Annual General

Meeting fixed for 28th September, 2007. From the Memorandum of

Association of "The Eastern Manufacturing Company Limited"

forming part of the record, it comes to fore that the "Eastern

Manufacturing Company Limited" is an existing entity since 1929

with "Indian Jute Shoe (1927) Limited" being its forerunner. Perusal

of the conversion agreement also brings it to fore that Respondent

no. 1 and 7 entered into a conversion agreement with regard to

Eastern Jute Mill, wherein the company is clearly and adequately

identified with reference to its location and address. There is bulk of

material on record to indicate that "The Eastern Manufacturing

Company Appeal (AT) No. 277 of 2017 -9-

Company Limited" and "Eastern Manufacturing Private Limited" are

one and the same entity. It is to be noted that there is no dispute in

regard to the address of Respondent no.1. Certainly there is some

difference in the name and style of Respondent no.1 in some

documents as the word "The" is missing and word "Private" is added.

However, there is ample material on record to demonstrate that "The

Eastern Manufacturing Company Limited" and "Eastern

Manufacturing Private Limited" is one and the same entity which has

entered into conversion agreement with Respondent no.7. Minor

typographical errors in the nomenclature of the company cannot

detract from the fact that the name, CIN number and address of

Respondent no.1 has been clearly stipulated in the statutory

documents forming part of records. The agreement dated 29th May,

2009 is relied upon by both parties in respect of their respective

stands. The disputed agreement relates to Jute Mill of Respondent

no.1 located at 1, Ali Hyder Road, Post Office Titagarh, 24 Parganas

(North), West Bengal which is clearly and sufficiently identified.

Respondent no.1 and 7 have not come forward with an alternate

location or address for the aforesaid Jute Mill. Appellants have

alleged that the aforesaid Jute Mill has been transferred by

Company Appeal (AT) No. 277 of 2017 -10-

Respondent no.1 to Respondent no.7 in pursuance of conversion

agreement. At the time of arguments we clearly asked Counsel for

Respondent no.7 - "Are you in possession of the Company at the

address given as of Respondent no.1?" And the learned Counsel

stated - "Yes". Considering all this and stand taken by Appellants,

deletion of Respondent no.7 from the array of respondents would

prejudicially affect the Appellants. Moreover, the Appellants cannot

be denied the opportunity to explain and establish that despite of

difference in nomenclature, the company is one and the same. Nor

can the Appellants be denied an opportunity to seek an amendment

to rectify the error in the name and style of the Respondent no.1. The

Tribunal overlooked the material facts. Viewed thus, we hold that

Respondent no.7 is a necessary party. The finding recorded by the

Tribunal in passing the impugned order cannot be supported. It

being erroneous is liable to be set aside.

9. In view of the foregoing discussion this Appeal is allowed and

the impugned order is set aside, with costs quantified at Rs.50,000/-

(Rupees Fifty Thousand Only) to be paid to Appellants by Respondent

no.7.

Company Appeal (AT) No. 277 of 2017 -11-

10. The Tribunal shall make endeavors for disposal of the Company

Petition expeditiously.

(Justice A.I.S. Cheema) Member (Judicial)

(Justice Bansi Lal Bhat) (Balvinder Singh) Member (Judicial) Member (Technical)

NEW DELHI 24th November, 2017

AM

Company Appeal (AT) No. 277 of 2017