Ajit Kumar Agarwal vs Nischintapur Tea Company Ltd.

K.J. Sengupta, J.—The above appeal is against a portion of the judgment and order of the learned First Court of the Learned Company Judge dated 11th March 2010, whereby and whereunder the appellant''s application being CA No. 40 of 2010 was dismissed. By the said judgment the learned Trial Judge also dismissed the application being CA No. 53 of 2010. The short fact which is relevant to deal with the present appeal is set out hereunder: On or about 21st June 1985, one Amita Sen since deceased the sole petitioner before this Hon''ble Court brought action being C.P. No. 252 of 1985 under sections 397 and 398 of the Companies Act. 1956 (hereinafter in short the said Act) praying for various reliefs as mentioned in the petition. Amita Sen. since deceased died during pendency of the said application. Her four sons viz. Sudipta Sen (since deceased), Ranjan Sen, Subrata Sen and Sanjoy Sen were substituted in the said petition as the petitioners in her place and stead. Subsequently Sudipta Sen a bachelor died intestate and as such there was no need to substitute nor to bring his heirs and legal representatives in the proceedings as his brothers being heirs and legal representatives were already on record. It appears that in the said application on 21st June 1985 an order of status quo was passed by the then learned Company Judge and the same was and still is subsisting. On subsequent development, during pendency of the aforesaid application substituted applicants decided to withdraw the said Company Petition in CP No. 252 of 1985 and all applications connected thereto. Accordingly they through Mr. Sushil Kumar Saha, learned Advocate applied for withdrawing the petition as they were and are not interested any more in the said application. An order was passed on 12th April 2007 on the said application. They were under impression that by this order prayer for withdrawal of the original application under sections 397 and 398 of the said Act being CP No. 252 of 1985 was allowed. However, having found the impression to be wrong going by the records as the said order dated 12th April 2007 really did not allow the prayer for withdrawal of the said original application, an application (CA No. 53 of 2010) was made for correction of the said order dated 12th April 2007 by Subrata and Sanjoy. Having noticed pendency of the said application (CP No. 252 of 1985) the appellant herein filed the said application on Judge''s Summons and prayed for the following reliefs:

(a) Leave be given to the applicant to be added as a party petitioner of Company Petition No. 252 of 1985 instituted and pending before this Hon''ble Court and consequently transpose the existing petitioner as respondent.

(b) Alternatively leave be given to the applicant to be added as a party respondent to Company Petition No. 252 of 1985 instituted and pending before this Hon''ble Court with further leave to carry out proceedings including Company Petition No. 252 of 1985 as a substituted petitioner and consequently transpose the existing petitioner as respondent.

(c) Pending hearing of the present Judge''s Summons, stay of all further proceedings in Company Petition No. 252 of 1985 and/or any application connected thereto save and except the present Judge''s Summons.

(d) Leave be given to serve a copy of the application to Nischintapur Tea Company Limited at 1st Floor, 15 College Street, Kolkata-711 012 being the present address.

In support of the above Judge''s Summons a petition was filed stating amongst other that the appellant is said to have acquired all the shareholdings of one Maidhandas Agarwal and Savita Devi Agarwal who are the parents of the appellant. The appellant had a brother, and on death of both the parents and brother, and further in view of the deed of gift being executed by her mother the applicant is said to have acquired 33 per cent shareholding of the said company. Even going by the records of the respondent company the appellant was entitled to 11.9% shares of the company as on 21st January 2007. Thus the applicant is having locus to maintain any action under sections 397 and 398 of the said Act of its own or come into the proceedings already initiated and pending before the Hon''ble Court since 1985. Despite aforesaid acquisition of shares by way of inheritance and further by virtue of deed of gift the company did not effect rectification of share register recording name of the applicant. Hence, an application has been made before the Companies Law Board u/s 111 of the Companies Act for appropriate relief, and the same is pending for adjudication.

The application for addition of the appellant and transposition of the present petitioner, and application for correction as above were opposed mutually by the parties. By the impugned judgment and order the learned Trial Judge dismissed both the applications. However, the learned Trial Judge observed that the application filed by the appellant is premature and the same must wait for the decision of the Company Law Board, accordingly leave was granted to bring similar action in future. In effect the learned Trial Judge for the time being refused to grant prayer for addition or transposition but right for bringing separate action has not been destroyed. It is worthwhile to mention that apart from the aforesaid application for addition of party the applicant has also filed comprehensive civil suit seeking reliefs against the Company, which essentially could be had by filing application under sections 397 and 398 of the said Act.

Mr. Pramit Kumar Roy learned Advocate led by Mr. Chatterjee contends appearing for the appellant that the refusal to add as party petitioner by the learned Trial Judge on the question of fact stated in the affidavit in support of the Judge''s Summons is legally erroneous. The leave granted by the learned Judge to apply after disposal of the application u/s 111 of the said Act before Company Law Board is meaningless since Company Petition No. 252 of 1985 is sought to be withdrawn and the same might be allowed in future. The learned Trial Judge failed to appreciate that refusal to add appellant as party causes prejudice and will render his client remediless. At the time of filing of CP No. 252 of 1985 predecessor-in-interest of the appellant had been holding 2440 shares in aggregate in the company. The brother of the applicant was owner of 2021 shares in the company, all the shareholdings of his parents and brother consisting of 11.91 per cent has been acquired by the applicant. On 21st June 1985, an order was passed by this Hon''ble Court directing maintenance of status quo with regard to the shareholding. Therefore, the said shareholding of appellants'' parents and brothers and their respective percentage in the total share capital of the Company would not have been altered. It is surprising how the said shareholding of 11.91 per cent as above could be reduced to 0.17 per cent on the face of the order of status quo. Therefore, there must be some illegality and surreptitious change and alteration in the shareholding pattern and also the share capital of the company. In order to legalize this illegal action in derogation of order of the Court repeated attempts have been made to withdraw CP. No. 252 of 1985 so that appellant and its groups are reduced to comprehensive minority. Such act and omission per se are oppression and this proposition is based on decisions of Supreme Court in the cases reported in Dale and Carrington Invt. (P) Ltd. and Another Vs. P.K. Prathapan and Others, According to Mr. Chatterjee leading Mr. Roy. in order to maintain or support the proceedings under sections 397 and 398 of the said Act a person need not be on the Registrar of the Members. If the said Company Petition No. 252 of 1985 is disposed of, then it will adversely affect the interest of the appellant. He urges that as and when a proceeding u/s 397 of the said Act is sought to be withdrawn even if by consent of the parties, the Court is to apply its own mind independently and order of withdrawal is not an automatic exercise. In support of this submission he has relied on the decisions of this Court reported in (1985) 3 CLJ 209, (1984) 56 CC 467, (48) CC 131. To buttress the submission on the plea of appealability, he has referred to the decision of this Court reported in AIR 1984 Cal. 191 and 68 All. Eng. Reporter 328.

Mr. Mukherjee learned Senior Advocate appearing for the respondents submits that impugned order dated 1lth March 2010 is not an appealable one as no appeal lies from any order adding or refusing to add a person as party to the proceeding under Code of Civil Procedure. Indeed the impugned order has decided nothing against the appellant and nor in any way affect his right. As such it is not "a judgment" within the meaning of Clause 15 of the Letters Patent either. Therefore, going by the provisions of Clause 15 of the Letters Patent and the CPC instant order is not appealable. According to him what are the orders termed to be "judgment" to make the same appealable has been settled by the Supreme Court by its decision reported in Shah Babulal Khimji Vs. Jayaben D. Kania and Another, He contends that appellant has not shown any clear right to any share in the company. The parties to the proceedings under sections 397 and 398 of the said Act do not want any adjudication of any of the points which in any event have not taken place for 25 years. Substituted petitioners and the respondents do not want the Court to decide any point. He further submits, placing documents before us, that grievances of the appellant are already made the subject matter of two proceedings brought by appellant himself - one is an application u/s 111 (A) of the said Act before Company Law Board for rectification of registrar of members being CP No. 582 of 2006 and another one is Civil Suit which has been filed in this Hon''ble Court subsequently, being CS No. 10 of 2010. The appellant in these two proceedings has not been able to obtain any interim order. Hence prayer for addition without ascertaining any nature and extent of the right of the appellant and further deciding his title to the shares cannot be allowed. According to him alleged right of the appellant at present is inchoate. If any order allowing addition is made on the prayer of the appellant, it would be tantamount to prejudging the issues in the application u/s 111A of the Companies Act 1956 and C.S. No. 10 of 2010. In any event as the shareholder the appellant is entitled to initiate fresh proceeding of his own. Moreover, he alone cannot claim any right from Maidhan Das Agarwal as he is having five sisters and they have not been made parties to the proceedings. The appellant claims that he is the donee of his brother in respect of the shares held by Omprakash who was not even registered shareholder of any share in the Company.

There are other factual aspects, which have been highlighted in course of argument, in our view these are not necessary to be mentioned as the learned Trial Judge did not take note of the same presumably nothing was addressed before the learned Trial Judge on this aspect.

After having considered the submission of the learned Counsel for the parties the point that has emerged for decision of this Court, is as follows:

Whether the refusal to add the appellant as parties to the original proceedings being Company petition No. 252 of 1985 is just and proper on the facts and circumstances as argued by both the parties?

Mr. Mukherjee learned Senior Counsel has taken a point that the aforesaid portion of the order of the learned Trial Judge is not an appealable order under the provision of Order 43 of Code of Civil Procedure, as nothing has been decided, consequently it is not judgment within the meaning of Clause 15 of the Letters Patent. We think that this point needs to be decided first before we advert to other issues and contentions raised by both the parties. It is settled position of law as it has been laid down by the Supreme Court and the large number of decisions of this Court, the provisions of Order 43 of the said Code is not exhaustive to decide the question of appealability in intra-Court appeal in the Chartered High Court and it is governed predominantly by the provisions of Clause 15 of Letters Patent. The Supreme Court has explained what should be the judgment within the meaning of the aforesaid Clause. In the decision of the Supreme Court in Shah Babulal Khimji Vs. Jayaben D. Kania and Another, of the said report it has been illustrated which of the interlocutory orders would be regarded as judgment. We therefore, set out the relevant portion of the said judgment of the said pages as follows:

Thus, in other words every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital or valuable appealable rights of the parties and which work serious injustice to the parties concerned........(para 114)

What kind of an Order will constitute a judgment within the meaning of Clause 15 of the Letters Patent and will become appealable as such, must necessarily depend on the facts and circumstances of each case and on the nature and character of the order passed.

This Court in Ashru Mati Devi''s case reiterated that a judgment within the meaning of Clause 15 of the Letters Patent would have to satisfy two tests. First, the judgment must be final pronouncement which puts an end to the proceedings as far as the Court dealing with it is concerned. Second, the judgment must involve the determination of some right or liability though it may not be necessary that there must be decision on merits. In finding out whether the order is judgment within the meaning of Clause 15 of the Letters Patent it has to be found that order affects the merits of the action between the parties by determining some right or liability. The rights or liability has to be found out by a Court. The nature of the order will have to be examined in order to ascertain whether there has been a determination of any right or liability. In my opinion, an exhaustive or a comprehensive definition of judgment as contemplated in Clause 15 of the Letters Patent cannot be properly given and it will be wise to remember that in the Letters Patent itself, there is no definition of the word judgment. The expression has necessarily to be construed and interpreted in each particular case. It is, however, safe to say that if any order has the effect of finally determining any controversy forming the subject-matter of the suit itself or any part thereof or the same affects the question of Court''s jurisdiction or the question of limitation, such an order will normally constitute judgment within the meaning of Clause 15 of Letters Patent.

This judgment has been followed in large number of decisions of this Court. One of such decisions has been rendered by the Division Bench of this Court in case of Terai Tea Co. Pvt. Ltd. Vs. Kumkum Mittal and others, . After considering a large number of judgments the Division Bench in our view has taken a correct approach in order to decide what should be the judgment. In paragraph 35 of the said report Justice Ajit Sengupta (as His Lordship then was) speaking for the Bench has expressed Court''s view in the context of examining the effect of order for addition of party under the Code, and has observed that:

The power of the Court to add a party to the proceedings cannot depend solely on the question whether he has interest in the suit property. The question is whether the right of a person may be affected if he is not added as a party. Such right, however, include necessarily an enforceable legal right.

This observation in our view is not inconsistent with the observation of the Supreme Court in Shah Babulal (Supra), rather it is appropriate application of broad principle laid down therein. We think that the Court has to decide if the judgment and order appealed against is not interfered with whether legally enforceable right of the party would be destroyed rendering the party concerned remediless. 12. In this case as it appears that learned Trial Judge has not decided any thing on the question in true sense. This has been kept open for future course of action which might be taken by the appellant. It seems to us the appellant is seeking to ventilate his right of objection to CP 252 of 1985 being withdrawn by the present applicants, that eventually may destroy his right to join above proceedings and to continue. In this backdrop question thus arises whether at this stage refusal to add as a party will affect his right or not. The answer in our view is in negative as we consider right to come in any proceeding or to gain carriage of proceedings is not enforceable right, more so when appellant has already brought separate action by filing Civil Suit as has been rightly contended by Mr. Mukerjee, the nature of the relief claimed in the Civil Suit by the appellant against the company is as follows:

The plaintiff prays for leave under Clause 12 of the Letters Patent, 1865 and leave under Order 11 Rule 2 of the CPC and claims-

a) A decree of declaration declaring that -

i) The forfeiture of 3000 shares particulars whereof are given in paragraphs 11, 12, 13, 25 and 36 against the plaintiff and/or his predecessors in interest are bad;

ii) The transfer, if any, of 3000 shares particulars whereof are given in paragraphs 11, 12, 13, 25 and 36 to parties other than the plaintiff and/ or his predecessors in interest hereinabove are bad and void;

iii) The transfer of 2021 shares as pleaded in paragraphs 14,15, 16, 26 and 37 in favour of persons other than the plaintiff and/or his predecessors in interest are bad and void;

iv) Non-registration and non-transmission of 3000 shares equity shares as pleaded in paragraphs 11, 12, 13, 25 and 36 hereinabove and 2021 equity shares as pleaded in paragraphs 14, 15, 16, 26 and 37 hereinabove as also 800 shares as pleaded in paragraphs 8, 11, 12 and 34 hereinabove and 1940 shares as pleaded in paragraphs 2, 4, and 11 in favour of the plaintiff are bad and void.

v) The transfer of shares and/or fresh allotment of shares as pleaded in paragraphs 19 and 20 are bad and void;

vi) The particulars of illegalities as pleaded in paragraph 21 are bad and void;

vii) Particular actions taken regarding transfer of shares, allotment of fresh shares, appointment of Directors and/or additional Directors after June 21,1985 are bad and void particular in view of the pleadings as pleaded in paragraphs 19. 20 and 21 hereinabove;

viii) The authorized share capital of the Defendant No. 1 is limited to 35000 equity shares and the issued share capital of the Defendant No. 1 is limited to 22,991 equity shares;

ix) That the plaintiff is the holder of 7761 equity shares of the Defendant No. 1 amounting to 33.76% of the total issued share capital;

x) The defendants Nos. 14, 23 and 25 are not the Director of the Defendant No. 1.

b) Administrator/Receiver/Special Officer be appointed over in and in respect of the defendant No. 1 to conduct and an Annual General Meeting of the equity share holder as on June 21, 1985 taking the share holding of the plaintiff to be 33.75% and to elect a new Board with all the powers under law to conduct and manage the business of the defendant No. 1;

c) A decree of perpetual injunction restraining the Defendants and/or each one of them to withhold transmission of shares in favour of the plaintiff In respect of 7761 shares particulars whereof are given in paragraphs 1, 7, 34 and 51 (a)(ix) hereinabove;

d) A decree of perpetual injunction restraining the Defendants and/or each one of them:

i) To issue any further share capital of the defendant No. 1. ii) To increase the share capital of the Defendant No. 1.

iii) To rely upon transfer of shares and/or allotment of any shares as pleaded in paragraphs 19 and 20 of the present pleading and also the actions or documents as pleaded in paragraph 21 of the present pleading;

iv) To act as the share holder and/or Directors of the Defendant No. 1 in any manner whatsoever to conduct any business of the Defendant No. 1 including calling of Annual General Meeting appointment of auditors, filing books of Accounts and any other documents required to be filed with the Registrar of Companies and/or other statutory authorities under the provisions of the Companies Act, 1956 and/or any other law for the time being in force;

v) From operating any bank accounts in the name of and/or in relation and/or in connection with the Respondent No. 1;

vi) From causing any interference of the Plaintiffs right to and enjoyment of 33.76% shares of the Respondent No. 1 including the shares particulars whereof are given in paragraph 2 of the present pleading;

e) A decree of mandatory injunction appointing a Receiver/Administrator and/or Special Officer directing the person concerned -

i) To Register and transmit 33.76% shares particulars whereof are given hereinabove in favour of the plaintiff;

ii) To allow the plaintiff to act as 33.76% shareholding of the defendant No. 1;

f) A decree be passed directing delivery of and cancellation of the documents on the basis of which the transfer of shares and allotment of shares as pleaded in paragraphs 20 and 21 as taken place as also the documents referred to in paragraph 21 hereof and also the documents, if any, of appointment of Defendants Nos. 14, 23, 24, 25 and 22 as Directors of the Defendant No. 1;

g) A decree be passed directing delivery up and cancellation of the documents, if any, in respect of the alleged share holdings of 2021 shares in favour of Defendants Nos. 2 and 3 as pleaded in paragraphs 14, 15, 16, 26 and 37 hereinabove and also transfers, if any of 3000 equity shares as pleaded in paragraphs 11, 12, 13, 25 and 36 hereinabove;

h) Receiver:

i) Injunction;

j) Attachment before judgment;

k) Costs;

1) Further and/or other reliefs.

We think when the appellant has already approached another forum for assertion of his right disclosed, order of refusal to add the appellant by the learned Trial Judge does not affect his interest at all. In the suit itself as it appears from the prayers of the plaint his right or interest can be determined and if proved, his desired reliefs as contemplated to be achieved with addition of party, can possibly be obtained.

We think that the learned Trial Judge had justified reason not to add the appellant though not decided, as unlike in other proceedings under Code in application under sections 397 and 398 of the said Act anyone and everyone cannot come in and join as a party. In order to bring action whether by way of initiation or by addition as petitioner, the person concerned has to satisfy preconditions mentioned in section 399 of the said Act. The appellant is claiming to be the heirs and legal representatives of all the shareholdings of his parents. It will appear from section 399(1) Clause (a) that in order to maintain action under sections 397 and 398 of the said Act a member either singly or jointly in case of more than one of the said Company must have share holding not less than 1/10th of the issued share capital of the company.

It is claimed by the appellant that his parents held, at the time of filing of the above Company Petition, more than 1/3rd shareholding and by way of inheritance he is deemed to have been holding the said shareholding. Therefore, above pre-condition is satisfied. In our view this would have qualified the appellant to make such application had it been an undisputed case of transmission of shareholding from his parents by inheritance consequently addition would have been possible on the strength of the judgment of the Supreme Court in case of M/s. World Wide Agencies Pvt. Ltd. and another Vs. Mrs. Margarat T. Desor and others, provided his parents or his brother had consented to bringing the action on their behalf also. In paragraph 26 of the said report the Supreme Court has held amongst others as follows: "In our opinion, therefore, the High Court was pre-eminently right in holding that the representative of the deceased members whose name is still on the register of members are entitled to petition under sections 397 and 398 of the said Act."

In the Supreme Court judgment quoted above it was a clear case on fact that all the legal representatives applied for claiming controlling majority shareholding of the deceased father who was the members as well as the Managing Director and Chairman of the Company and there was no dispute as to the transmission of shares on death of the deceased shareholder.

In this case, however, whether the appellant is entitled to inherit entire shareholding of their parents or not is absolutely depending upon judgment of the Company Law Board on the application brought for rectification of share register on the strength of the transmission of shareholding by way of inheritance. In case of the Supreme Court the sole heir and legal representative came, however, in this case admittedly the appellant is not one and only heir and legal representative of his parents. Indisputably the appellant''s sisters are also the heirs and legal representatives of their parents they were not before the learned Trial Judge. It is, though, contended and narrated before us as well as before the learned Trial Judge that by virtue of the deed of gift or will the appellant acquires rights of all the shareholding. It is not possible for this Court to examine this aspect in the summary jurisdiction and for which the proceeding before the Company Law Board is complete mechanism for rendering decision on this Issue.

We therefore, hold till decision is taken by the Company Law Board as regard the requisite extent of shareholding as mentioned in section 399 of the Act request for addition cannot be entertained ifye, therefore, hold that this impugned judgment and order is not a judgment within the meaning of Clause 15 of the Letters Patent as nothing has been decided with regard to the right of any extent of the appellant in view of the narration of the fact, has been affected.

Mr. Mukherjee appearing for the respondent has correctly pointed out that if any order is passed then the aforesaid issues are to be adjudicated and obviously this Court will be prejudging the issues which are pending before the Company Law Board. 19. Mr. Chatterjee has tried his best to demonstrate his client''s anxiety and affection in view of refusal to add him as a party as with the passage of time defying order of status quo extent of his parents'' shareholding has been reduced so much so to bring below 1/10th. This fact itself is an oppression which entitled his client to approach in order to avoid multiplicity of judicial proceedings before the learned Trial Judge in the pending proceedings. Since above argument on merit has been advanced, although not decided by the learned Trial Judge, we feel it to discuss the same.

The decision of the Supreme Court cited in case of Dale and Carrington Invt. (P) Ltd. and Another Vs. P.K. Prathapan and Others, explained in paragraph 24 of the report that "if a member who holds the majority of shares in Company by an act of the Company or by its Board of Directors malafide, the said act must ordinarily be considered to be an act of oppression to the said member...." We think that this judgment at present is of no help, for his affectation of right on the merit is one thing and affectation of right by the impugned judgment and order is another thing. According to us his client can approach as rightly argued by Mr. Mukerjee independently by bringing fresh application under sections 397 and 398 of the said Act. Therefore, the other decisions cited by Mr. Chatterjee namely Kamal Kumar Dutta and Another Vs. Ruby General Hospital Ltd. and Others, is also not at the moment helpful for his client to decide the question of appealability or to decide the question of right to be added in the present proceedings.

We are unable to accept the contention of Mr. Chatterjee that since the present action under sections 397 and 398 of the said Act is a representative one his client can come in and join at any time. We agree with his contention that the action under sections 397 and 398 of the said act undoubtedly is a representative one but it is limited to certain classes of persons and not in general as commonly known, and this will be clear from the language of sections 397, 398 and 399 of the said Act. We therefore, set out section 397 of the said Act.

Application to Tribunal for relief in cases of oppression. - (1) Any member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members (including any one or more of themselves) may apply to the Tribunal for an order under this section provided such members have a right so to apply by virtue of section 399.

(2) If, on any application under sub-section(1), the Court is of opinion -

(a) that the company''s affairs are being conducted in a manner prejudicial to public interest of in a manner oppressive to any member or members; and

(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would Justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up, the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit.

It will appear from the above section that entitlement to make application has to be adjudged in the context of conditions as mentioned in section 399.

On reading of the said section read with section 399 of the said Act it appears to us that the representative action will confine to those group of peoples, who are affected by alleged act of oppression by the majority. However, the applicant(s) either jointly or singly must have minimum 1 /10th shareholding in the company. It is also clear from sub-section (2) of section 399 that combined minimum shareholding of 1/10th also qualifies to maintain such application. To make it explicit in this regard if applicant(s) either jointly or singly is not holding 1/10th shareholding by himself or themselves, then he can bring the other shareholders who are equally affected and making good deficient minimum shareholding as above, in this action either directly, or Indirectly by obtaining consent in writing to present such application (see sub-section 3 of section 399 of the Act). Therefore, according to us, if any person was supporting from outside the petitioner he can come and join as the action is taken on his behalf also. To put it differently, shareholder(s) other than those mentioned in sub-section 3 cannot come and join in this proceedings.

In this case the original petitioner did not bring action, on behalf of the parents of the appellant not to speak of appellant himself. It was brought by the petitioner of her own right, and right to continue action confine to the petitioner and petitioner alone and not to any other shareholders. This representative nature of the proceeding has been well explained by a learned Single Judge of the Madras High Court in case of S. Narayanan & Ors. v. Century Flour Mills & Ors. reported in (1985) 3 CLJ 209. The learned single Judge has made a correct survey of the representative action as mentioned in sections 397 and 398. Paragraph 4 of the said report is quoted hereunder:

What is contemplated under order 1 rule 8 CPC is that where there are numerous persons having the same interest in one suit, one or more of such persons may, with the permission of the Court, sue on behalf of or for the benefit of, all persons so interested. Before any one should resort to order 1 rule 8, certain mandatory requirements have to be complied with. In the present case, that is not necessary; so I am avoiding reference to such of the provisions. What is contemplated u/s 399(3) of the Act is that a person with the consent of others is entitled to institute a petition u/s 397 or 398 of the Act not only on behalf of himself, but also on behalf of others for the benefit of other members. It might be that other members may Join as a party or one person alone obtaining the consent of others may continue the proceeding u/s 397 and/ or 398 of the Act. When order 1, rule 8 CPC refers to numerous persons section 399 of the Act refers to some of the members who have either given consent or joined with the one who wanted to pursue the proceedings u/s 397 and/or 398 of the Act. The law is well settled that order 1. rule 8 will not be applicable to numerous persons, if they are not ascertainable. What is provided u/s 399(3) of the Act is that a member himself and on behalf of the other members can present a petition under sections 397 and 398 of the Act. and pursue the petition not only on behalf of himself, but on behalf of other who have given consent or joined in prosecuting the petition u/s 397 and/or 398 of the Act. Thus the principle of representative action is provided for in section 399(3) of the Act in a limited way in the sense that it is the members who can alone either give consent or join with the petitioner who wishes to take out an application u/s 397 and/or 398 of the Act. Section 399(3) contemplates that a member by himself without joining others, but with the consent in writing from that other can maintain the proceeding u/s 397 and/or 398 of the Act. In such a case, the petitioners who gave consent are not parties named in the petition. Yet u/s 399(3), any orders passed in the proceedings instituted by that member with the consent of others are binding to those persons who gave consent as well. It is thus quite patent that the proceedings instituted u/s 397 and/or 398 of the Act with the compliance of section 399(3) Is a representative action.

We are of the view in an action of this nature grievance is ventilated against the company by the member(s) who is(are) qualified u/s 399 of the said Act and there cannot be any other adversary as the company is represented by the majority shareholding. Subsequently, if any of the members later on feels to be affected or aggrieved by the act or omission of the company it is open for him to come separately and in such situation his right would at all not be affected by the previous proceeding as it was not brought on his behalf. The Patna High Court judgment in case of Rai Mathura Prasad v. Hanuman Prasad Bhagat & Ors. reported in (1984) 56 CC 467 has decided the point whether the proceedings under sections 397 and 398 in view of the death of the petitioner abates or not. While deciding the same the Division Bench has reached the same conclusion as we have discussed hereinabove. At page 471 of the report the Division Bench has observed in this context amongst other as follows:

The entire scheme clearly indicates that the Court''s power in this regard is to be used to protect the interest of the public or a group of shareholders. Sub-section(3) of section 399 permits a individual member to make an application "on behalf and for the benefit of all" members of a company entitled to move the Court. Such a person clearly acts in a representative capacity................................

On the other hand the decision of this Court in case of Jalpaiguri Cinema Co. Ltd. &Anr. v. Promotha Nath Mukherjee &Ors. reported in (1978) 48 CC 131 has ruled that an order directing the respondent to be added as a party to a company Petition under sections 397 and 398 and directing the original petitioners to be transposed is not a judgment within the meaning of Clause 15 of the Letters patent of the High Court. This order passed under Order (1) Rule 10 of the CPC or in the exercise of inherent jurisdiction of the Court. No right or liability of any of the parties to the main application are decided. All defences like limitation competency of the petitions, maintainability of the application, etc., are kept open. They will be gone into and determined at the hearing of the main application. Neither the Companies Act nor the Rules thereunder forbid addition or transposition of parties to a petition. Therefore no appeal lies from such an order of the Company Court.

The English decision cited by Mr. Chatterjee in case of Gurtner v. Circuit reported in (1985) 1 All E.R. 328 was rendered in civil action not in the proceedings of this nature under sections 397 and 398 of the said Act. Hence this decision does not lend any persuasive assistance.

In view of the aforesaid discussion we think that this appeal is not maintainable and the same is also dismissed. We are of the fimn view that Mr. Chatterjee''s client cannot come and join in this proceedings in any manner, particularly when the comprehensive civil suit has already been filed. However, we feel that the proceedings pending before the Company Law Board shall be expeditiously disposed of. We therefore, direct the Company Law Board to dispose of as early as possible preferably within a period of two months from the date of communication of this order. However, it will be open for Mr. Chatterjee''s client if so advised to bring appropriate action in accordance with law.

Syamal Kanti Chakrabarti, J.

I agree.