Johny Chandy vs The Registrar Of Companies on 22 February, 2008

Kerala High Court
Johny Chandy vs The Registrar Of Companies on 22 February, 2008




WA No. 446 of 2008()

                      ...  Petitioner


                       ...       Respondent





                For Petitioner  :SRI.MILLU DANDAPANI

                For Respondent  :SRI.P.SANTHALINGAM

The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.M.JOSEPH

 Dated :22/02/2008

 O R D E R
                            H.L.Dattu, C.J. &  K.M.Joseph, J.


                                  W.A.No.446 of 2008


                       Dated, this the 22nd day of February, 2008



The writ petitioner is the appellant in this Writ Appeal. The writ

petition is filed challenging Exhibit P8 order passed by the Registrar of

Companies permitting allotment of shares.

(2) The appellant filed Exhibit P3 complaint, which is an Investor

Complaint, before the Registrar of Companies pointing out non-compliance with

certain rules contained in Unlisted Public Companies (Preferential Allotment)

Rules, 2003 (“Rules” for short). The appellant and others had also filed a

petition under Sections 397 and 398 of the Companies Act, 1956 (“Act” for

short), before the Company Law Board. This Court directed Exhibit P3

complaint to be considered by the Registrar of Companies. Accordingly, as

directed by the learned Single Judge, the Registrar of Companies proceeded to

pass Exhibit P8 order. In Exhibit P8 order, it is seen that the appellant made

specific reference to Rule 6(a), 6(e) and 6(f) of the Rules besides Rule 7. The

Registrar of Companies called for explanation from the 2nd respondent Bank,

which was forwarded to the appellant and to which appellant filed reply, and

after referring to the contentions, finds that it cannot be said that the Bank has

not complied with the requirements of the Rules. Further, it was found that the

appellant has filed C.P.No.36 of 2006 under Sections 397 and 398 of the Act

before the Company Law Board and the issues raised presently were subject

matter of litigation before the Company Law Board and the Company Law

Board as per order dated 3.8.2006 directed that the Bank is at liberty to

implement the resolution passed by the AGM held on 30.6.2006 pursuant to

W.A.No.446 of 2008 – 2 –

item No.10 of the notice dated 31.5.2006. It is finally stated that:-

“As the Company Law Board has already ordered

implementation of the resolution passed at the AGM held on

30/6/2006 as item 10 of the notice dated 31/5/2006, which is the

subject matter being agitated in Exhibit P-3 by the complainant and

in the light of the order dated 3/8.2006 passed by the Company Law

Board in C.P.36/2006 giving the liberty to the Bank to implement

the resolution, any issue which relates to the passing of the

resolution also stands disposed accordingly. Hence no infirmities

regarding passing of the said resolution exists and the Bank as

directed by the Company Law Board is at liberty to implement the

resolution. Exhibit P3 is disposed of accordingly”.

It was challenging the said order and also seeking a direction to the 1st respondent

to issue necessary directions to the 2nd respondent Bank not to take on record the

allotment made by the 1st respondent in violation of the Rules, that the present writ

petition came to be filed.

(3) The learned Single Judge, taking note of what is stated in

Exhibit P8 and also the fact that the matter is engaging the attention of the

Company Law Board in C.P.No.36 of 2006, took the view that there is no

justification for a parallel proceeding and, accordingly, dismissed the writ petition. It

was made clear that it was open to the appellant to urge all his contentions before

the Company Law Board. It is stated that the Court was sure that the Board will

decide the issue untrammelled by the findings in Exhibit P8. It is being aggrieved

by the aforesaid judgment that the petitioner is before us in the present Writ


(4) We heard Sri.K.P.Dandapani, learned Senior Counsel for the

appellant and Sri.P.Santhalingam, learned counsel for the 2nd respondent.

W.A.No.446 of 2008 – 3 –

(5) Sri.K.P.Dandapani, learned Senior Counsel would point out that

it is a clear case where Rule 6(a), 6(b) and 6(f) besides Rule 7 of the Rules have

been violated. It is further contended that Rule 4 of the Rules has also been

violated, as Rule 4 interdicts that the special resolution should be implemented

within a period of one year. He contends that it is apparent from the facts and

circumstances of this case that there is violation of Rule 4 as the special resolution

was implemented beyond the period of one year. He would submit that it is true

that the appellant had filed C.P.No.36 of 2006 before the Company Law Board, but

that would not prevent the statutory authority from dealing with the Investor

Complaint filed by the appellant and the Registrar of Companies is bound to

consider the matter.

(6) It is not in dispute that the appellant is one of the petitioners in

C.P.No.36 of 2006. It is also not in dispute that while dealing with the said

Company Petition, the Company Law Board has, as an interim measure, permitted

implementation of the very special resolution, which is the subject matter of the

controversy, by order dated 3.8.2006. What the appellant essentially impugning is

Exhibit P8. If the impugned order Exhibit P8 is set aside and the Registrar is

directed to reconsider the matter, it will be in the teeth of the order passed by the

Company Law Board which was seized of the matter on a petition filed by the

appellant among others and as the Senior Counsel submits that the C.P. itself

stand dismissed, it will clearly amount to permitting parallel proceedings. The very

case of the appellant is that the appellant is a minority share holder. He along with

others has sought to challenge the passing of the special resolution before the

Company Law Board. If that be so, the appellant has to work out the remedies

available to him before the appropriate forum. We note that the contention of the

appellant regarding violation of Rule 4 of the Rules, which is sought to be

W.A.No.446 of 2008 – 4 –

projected before us, is not a ground taken by the appellant before the Registrar of

Companies in Exhibit P3 complaint and he cannot certainly be permitted to raise

such a contention in aid of his attack against Exhibit P8 order. In such

circumstances, we are in agreement with the reasoning and conclusion of the

learned Single Judge.

We find no merit in this appeal and it is, accordingly, dismissed.


                                                               Chief Justice


vku/-                                                                 Judge

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