Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
The issue of impleading legal
representatives of a deceased party to a proceeding under section 397/398 of
Companies Act, 1956 stands on a different footing to that of a normal Civil
Suit. In a normal Civil Suit before a Civil Court, it is the rule that the
legal representatives of a deceased person to be impleaded in the proceeding.
When it comes to the liability of the legal representatives, it is settled that
it depends upon the nature of liability. If it is purely a personal liability
like facing a criminal proceeding for an act omission or commission, then, it
goes with the person and it is personal liability. Thus, the liability of the
legal representatives for the acts of deceased depends upon the nature of
liability.
Though the issue seems to be
academic and simple, it has got lot of significance in a proceeding under
section 397/398 of Companies Act, 1956. A party to a proceeding under section
397/398 may press for urgent reliefs and may be intolerant to the delay and on
the other hand another will be looking as to how to prolong the matter and
raise technical objections. The legal position with regard to the impleadment
of the legal representatives of the deceased is settled and same both before the
Civil Court and also Company Law Board.
The exception to the general rule
with regard to the impleadment of legal representatives to a proceeding before
the Company Law Board under section 397/398 appears to be that the proceeding
continues even in case where the legal representatives of the deceased
Petitioner are not impleaded. It is based on the object of the Companies Act,
1956 and especially section 397/398 of the Act. The Company Court or the
Company Law Board while entertaining a petition should look at the interests of
the parties who not before it and it is the responsibility of the Company Court
or the Company Law Board to act in accordance with the object of the provision
and the Companies Act, 1956. We have many precedents where the Company Court or
the Company Law Board has considered the interests of the persons who not
actually before the Court or the Board extensively.
The impleadment of the legal
representatives of the deceased Petitioner under section 397/398 of the
Companies Act, 1956 is seen on a different footing from that of the impleadment
of the legal representatives of the deceased respondents in a proceeding under
section 397/398 of the Companies Act, 1956. When it comes to impleading the
legal representatives of the Respondents, then, the issue of nature of
liability alleged is to be seen and it is settled as is the case under settled
Civil Law of liability. But, when it comes to the impleadment of the legal
representatives of the deceased Petitioner, the facts are to be carefully seen.
Section 399 of the Companies Act, 1956 makes it very clear as to who are all
entitled to approach the Board under section 397/398 of the Companies Act,
1956. In some cases, only single shareholder can file a petition under section
397/398 of the Act, 1956 and in such cases, the legal representatives of the
deceased Petitioner should get impleaded as somebody has to constructively
represent before the Board. But, when there are so many shareholders, then, the
impleadment of the legal representatives of a deceased petitioner may not be
vital even when the Petition does not qualify under section 399 with the death
of one of the deceased Petitioner.
The High Court of Delhi, in
Jawahar Singh Bikram Singh Pvt. Ltd. Vs. Smt. Sharda Talwar (1974) 44 Com Cases
552, was pleased to observe “that it was not necessary that the ordinary legal
representatives should be brought on record. For the purpose of petitions under
sections 397 and 398, it was only necessary that members who were already
constructively before the court should continue the proceedings. Since the
widow of the petition was already constructively a petitioner in the original
proceedings, by virtue of her having given her consent in writing, she was
entitled to be transposed as petitioner in place of her dead husband”. On the
same issue, stressing the logic and object, the High Court of Madras, in L.RM.
K.Narayanan and another Vs. Pudhuthotam Estates Ltd. and others (1992) 74 Com
Cases 31, was pleased to observe that “it is not incumbent upon the court to
dismiss a petition because a proceeding under section 397 or 398 of the Act is
a representative proceeding. Even if the original petitioner does not want to
continue the proceedings, the court can not be compelled to dismiss the
petition; Even then, it is open to the court to consider the merits of the case
without dismissing the petition. Section 399(3) of the Act permits an
individual member to make an application “on behalf and for the benefit of all”
members of a company entitled to move the court. He acts clearly in
representative capacity. Rule 9 of the companies (Court) Rules, 1959, declaring
inherent powers of the court gives the court authority to transpose the other
party as applicant in the interest of justice”.
The issue and the propositions on
the issue makes it very clear that the Company Law Board or the Company Court
is different from other adjudicatory forums and the object of the provisions of
the Companies Act, 1956 is considered and given effect always by the Company
Law Board and the Company Court.
Ozg Sarfaesi / DRT Lawyer
Ahmedabad | Pune |
Kolkata | Bangalore | Delhi | Mumbai
VoIP Text / Phone
# 09811415837-61-72-84-92-94
Website: http://sarfaesi.ozg.in
Email: debt@liaisoning.com
