{"id":11557,"date":"2002-08-23T00:00:00","date_gmt":"2002-08-22T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-spartek-emerging-vs-ms-argus-cosmetics-limited-on-23-august-2002"},"modified":"2015-07-27T11:09:06","modified_gmt":"2015-07-27T05:39:06","slug":"ms-spartek-emerging-vs-ms-argus-cosmetics-limited-on-23-august-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-spartek-emerging-vs-ms-argus-cosmetics-limited-on-23-august-2002","title":{"rendered":"M\/S.Spartek Emerging … vs M\/S.Argus Cosmetics Limited on 23 August, 2002"},"content":{"rendered":"
Madras High Court<\/div>\n
M\/S.Spartek Emerging … vs M\/S.Argus Cosmetics Limited on 23 August, 2002<\/div>\n
       \n\n  \n\n  \n\n \n \n IN THE HIGH COURT OF JUDICATURE AT MADRAS\n\nDATED: 23\/08\/2002\n\nCORAM\n\nTHE HONOURABLE MR.JUSTICE C.NAGAPPAN\n\nCOMPANY APPLICATION NO.661 OF 2002\nIN\nCOMPANY PETITION NO.76 OF 1997\n\n\nM\/s.Spartek Emerging Opportunities\n(Mauritius) Ltd.,\nNo.12, Remy Oilver Street,\nPort Louis,\nMauritius.                                      ... Applicant\/Petitioner\n\n-Vs-\n\nM\/s.Argus Cosmetics Limited,\nNo.14, Luz church Road,\nMylapore,\nChennai-600 004.                            ... Respondent\/Respondent\n\n\n!For Applicant  ..  Mr.R.Murari\n\n^For Respondent ..  Mr.Dulip Singh, Senior Counsel\n                for M\/s.King & Patridge\n\n:ORDER\n<\/pre>\n
                In this application, the applicant has sought for revival  and
\nrestoration of Company Petition No.76 of 1997 to file, as per the order, dated
\n23.11.2001.\n<\/p>\n
                2.The  applicant  filed  Company  Petition  No.76  of 1997 for
\nwinding up of the respondent company by reason of its inability to  pay  their
\ndebts.   According to the applicant, while the company petition was pending, a
\nmemo of compromise was entered into  between  the  parties  on  25.3.1998,  in
\nwhich,   the   respondent   admitted   their   liability   to  the  extent  of
\nRs.1,70,70,080\/- and agreed to pay the same in instalments.    The  respondent
\nfailed  to  make payment as per the compromise and the Division Bench directed
\nadmission of the company petition and publication of notice  of  the  same  on
\n28.3.2000.   The respondent filed an affidavit of undertaking to pay the above
\nsaid sum in instalments and it again defaulted.  The petition  was  heard  and
\norder  was  reserved  and  at  the  time  of  pronouncement  of the order, the
\nrespondent once again offered to effect payment of the amount  in  instalments
\nand  based  on that, a further memo of compromise was entered into between the
\napplicant and the respondent on 23.11.2001, whereby it is provided that out of
\nthe total amount of Rs.1,70,70,080\/-, a sum of Rs.1.06 crores  had  been  paid
\nand  the  balance  amount  would  be paid in instalments and if the respondent
\ncommitted default in the payment of even one of the instalment,  it  would  be
\nopen   to   the   applicant  to  revive  the  company  petition  and  in  such
\ncircumstances, the respondent would waive all defences and such default  would
\nbe a  clear  admission of respondent’s inability to pay its debts.  Once again
\nthe respondent failed and neglected to effect payment  in  terms  of  memo  of
\ncompromise.   The  respondent  has no intention of carrying out the assurance.
\nTherefore the present application is filed.\n<\/p>\n
                3.The   respondent   in   its  counter  has  stated  that  the
\napplication is misconceived, without sanction of  law  and  is  liable  to  be
\ndismissed in  limini.    The  winding  up  petition  was  dismissed  based  on
\nmemorandum of compromise  on  23.11.2001.    The  application  to  revive  the
\ndismissed  petition  on  the alleged ground of non adherence by the respondent
\ncannot be sustained in law.  The petition for winding up affects not only  the
\ncompany  but  the  creditors, shareholders, employees and others and hence due
\nprocess of law has to be complied with.  The order, dated 23.11.2001, although
\nprovides for revival, it cannot be considered as restoration of  the  petition
\nand the  applicant  should  follow  the  procedure  afresh.  It is true that a
\nmemorandum of compromise was entered into between the parties  on  23.11.2001.
\nThe  respondent  had already paid Rs.1.06 crores out of Rs.1.20 crores owed to
\nthe petitioner.  The respondent has paid a sum of Rs.5,00,000\/- in  the  month
\nof   November,   2001,   a  sum  of  Rs.4,00,000\/-  on  3.12.2001,  a  sum  of
\nRs.2,50,000\/on 15.2.2002, a sum of Rs.1,50,000\/- on  5.3.2002  and  a  sum  of
\nRs.1,00,000\/- on  17.6.2002.    Thus  the respondent has liquidated the entire
\nmoney owed to the petitioner by way of principal amount.   The  memorandum  of
\ncompromise provides for payment of interest by the respondent.  The petitioner
\nhas received Rs.1.20 crores from the respondent for subscription in its shares
\non  the  express  stipulation  of  the Reserve Bank of India that no person of
\nforeign origin and financial transaction with it need the  prior  approval  of
\nReserve Bank  of India.  The payment of interest is barred by the Reserve Bank
\nof India vide their letter, dated 16.2 .1996.  The respondent has no knowledge
\nof any subsequent authorisation by Reserve Bank of India to pay any sum by way
\nof interest.  The applicant had  produced  a  letter  purportedly  written  by
\nReserve  Bank  of  India, Mumbai, permitting the applicant to receive interest
\ndue from the respondent company and according to it, the interest amounts were
\nto be credited to an NRO Account opened  by  the  applicant.    The  condition
\nstipulated by  Reserve  Bank of India is not complied with.  The respondent is
\nwilling to honour its commitment on interest, provided the applicant  provides
\nit with some legal means to effect the payments.  The applicant is yet to open
\nthe  NRO  Account  and  till  such  time as the NRO Account is not opened, the
\nrespondent cannot  legally  carry  out  its  obligations  under  the  memo  of
\ncompromise.    The  respondent  has  been  prevented  from  carrying  out  its
\nobligations and  it  has  not  neglected  or  failed  in  its  obligation  the
\napplicant.\n<\/p>\n
                4.A reply was filed by the applicant, in which, it has  stated
\nthat the memorandum of compromise was recorded in the order, dated 23.11.2 001
\nand  consequently  the  company petition was dismissed, leaving it open to the
\napplicant to revive the petition in the event of respondent failing to  comply
\nwith one  or  more terms of memorandum of compromise.  The order was passed in
\nthe presence of and with the full concurrence of the  respondent  and  it  has
\nalso not  been  challenged  and has become final.  Having defaulted to pay the
\namounts as per the compromise, the respondent cannot oppose the revival of the
\ncompany petition.  The contention of the respondent that the procedure  should
\nbe followed  afresh  is  more  reprehensible.  The word ‘revive’ means to give
\nlife again and to bring again to life.    Filing  of  a  fresh  petition  will
\ncertainly  not  amount  to revival of petition and therefore the contention of
\nthe respondent has to be rejected.  The subscription amount  is  intended  for
\nsubscribing  to  shares  in  the respondent company and the question of paying
\ninterest on the same did not arise at that point of time.  It is only when the
\nrespondent fraudulently refused to allot shares to the applicant after  having
\nreceived the  entire  subscription  money, the question of interest arose.  In
\nfact, the applicant made an application to Reserve Bank of India, in pursuance
\nof which, the Reserve Bank of India, by their letter,  dated  30.3.2002,  have
\npermitted  the  applicant  to  receive  a  sum  of  Rs.50,70,080\/- and further
\ninterest as per the memorandum of compromise, subject to  the  condition  that
\nthe interest  so  received  would be credited to applicant’s NRO Account.  The
\napplicant has opened an NRO Account and has also intimated  the  same  to  the
\nrespondent.  Hence the contention of the respondent that they could not effect
\npayment on account of non availability of NRO Account is not correct.\n<\/p>\n
                5.The  point for determination is whether the company petition
\nis to be revived as sought for by the applicant.\n<\/p>\n
                6.It is not in dispute that  the  respondent  company  entered
\ninto  a  Memorandum  of Compromise with the applicant\/petitioner on 23.11.2001
\nand this Court recorded it and held that the company petition for  winding  up
\ncannot be continued and it could not be held that the company is unable to pay
\nits  debts and dismissed the company petition with a direction that it is open
\nto the petitioner  to  revive  the  company  petition  in  the  event  of  the
\nrespondent  failing  to  comply with one or more terms of the compromise memo.
\nThe above order, dated 23.11.2001, was not appealed  against  and  has  become
\nfinal.\n<\/p>\n
                7.The  applicant  has  come up with the present application on
\nthe ground that the respondent failed and neglected to effect payment in terms
\nof memorandum of compromise and committed default in complying with the  terms
\nthereon and hence the company petition has to be revived.\n<\/p>\n
                8.Mr.Dulip  Singh,  learned senior counsel for the respondent,
\nraised two contentions and the first one is that the memorandum of  compromise
\nis  void  on  account  of  violation  of  Section  47(2)  of  Foreign Exchange
\nRegulation Act, 1973 and it  cannot  be  enforced.    The  contention  of  the
\nrespondent  is  that  a  sum  of  Rs.1.20 crore was paid to the respondent for
\nsubscription in its shares on the express stipulation of the Reserve  Bank  of
\nIndia  that  no  interest  would  be  payable  thereon  and  subsequently, the
\nrespondent in the memorandum of compromise accepted to  pay  interest  on  the
\nsubscription amount due to the delay in refunding the money but subject to the
\napproval  of  Reserve  Bank of India and there is no express prior approval of
\nReserve Bank of India.    The  respondent  in  its  counter  has  not  pleaded
\nspecifically that the memorandum of compromise is void and it was only argued.
\nMr.R.Murari,   learned   counsel   for   the  applicant,  contended  that  the
\nsubscription amount was intended for subscribing to shares in  the  respondent
\ncompany  and hence the question of paying interest did not arise at that point
\nof time and it is only when  the  respondent  fraudulently  refused  to  allot
\nshares  to the applicant, after having received the entire subscription money,
\nthe question of interest arose and the applicant made an  application  to  the
\nReserve  Bank  of  India,  in pursuance of which, the Reserve Bank of India by
\ntheir letter, dated 30.3.2002, have permitted the applicant to receive  a  sum
\nof  Rs.50,70,080\/-  and  further  interest as per the memorandum of compromise
\nsubject to the condition that the interest so received would  be  credited  to
\nthe applicant’s  NRO Account.  A xerox copy of the letter, dated 30.3.2002, of
\nthe Reserve Bank of India is also produced.\n<\/p>\n
                9.It is true that under Section 47(2) of the Foreign  Exchange
\nRegulation Act, 1973 every contract which is prohibited to be done by or under
\nany  of  the  provisions  of the Act except with the permission of the Central
\nGovernment or the Reserve Bank  of  India,  shall  not  be  done  unless  such
\npermission is  granted.    Mr.R.Murari, the learned counsel for the applicant,
\ncontended that the Foreign Exchange Management Act,1999  came  into  force  in
\nDecember, 1999  repealing  the  Foreign  Exchange Regulation Act, 1973.  Under
\nSection 3 of Foreign Exchange  Management  Act,  no  person  except  with  the
\ngeneral  or  special  permission  of the Reserve Bank of India, shall make any
\npayment or for the credit of any person resident outside India in  any  manner
\nor  receive  any  payment by order or on behalf of any person resident outside
\nIndia in any manner.   The  memorandum  of  compromise  was  entered  into  on
\n23.11.2001 between the applicant and respondent and clause (2) is the relevant
\nclause and it is extracted below.\n<\/p>\n
        ” 2.The aforesaid sum of Rs.1,70,70,080 consists of Rs.1,20,00,000  by
\nway  of  principal  amount,  being  the  share  application money, paid by the
\nPetitioner to the Respondent, for which  the  Respondent  did  not  issue  the
\nshares in  the  Respondent Company.  The Respondent has also undertaken to pay
\nthe balance sum of Rs.50,70,080, subject to the approval of the  same  by  the
\nReserve  Bank  of  India  or subject to the petitioner providing any alternate
\nmode of payment that is not violative of any legal requirement.”\n<\/p>\n
As per the above clause, the respondent had  undertaken  to  pay  the  balance
\namount  to the petitioner subject to the approval of the Reserve Bank of India
\nand there is no element of suppression in it.  There  is  nothing  in  Foreign
\nExchange Regulation Act or Foreign Exchange Management Act to prohibit Reserve
\nBank  of  India  from granting permission at a later date and the law does not
\nrequire permission of Reserve Bank of India before entering into a compromise.
\nIn fact, the Reserve Bank of India in their letter, dated 30.3.2002, addressed
\nto the applicant, have granted permission to the applicant to receive a sum of
\nRs.50,70,080\/- and any further interest from the  respondent  subject  to  the
\ncondition to credit the interest in NRO Account to be opened by the applicant.
\nIn such circumstances, the contention of the respondent that the memorandum of
\ncompromise,  dated  23.11.2001,  is  void  on  account  of  violation  of  the
\nprovisions of Foreign Exchange Regulation Act or Foreign  Exchange  Management
\nAct is  devoid of merit and has to be rejected.  The memorandum of compromise,
\ndated 23.11.2001, is not against public policy and is  not  violative  of  the
\nprovisions of the law and is perfectly legal.\n<\/p>\n
                10.The  second  contention  of  Mr.Dulip Singh, learned Senior
\nCounsel for the respondent,  is  that  though  the  order,  dated  23.11.2001,
\nprovides  for  revival  of  the  company  petition, it cannot be considered as
\nrestoration of the company  petition  and  the  applicant  should  follow  the
\nprocedure afresh.   According to him, the proceedings under Section 433 of the
\nCompanies Act, 1956 are proceedings in rem and  the  company  petition  having
\nbeen  dismissed  cannot  be scurruptuously revived on account of likelihood of
\nsubsequent contracts having accrued after dismissal of the  company  petition.
\nIn  short,  his contention is that default in payment of instalments would not
\nrevive the original cause of action, though that conduct of debtor may  amount
\nto a  fresh cause of action.  Per contra, Mr.R.Murari, the learned counsel for
\nthe applicant, contended that the memorandum of compromise  was  recorded  and
\nthe  company petition was dismissed giving liberty to the petitioner to revive
\nthe company petition in the event of the respondent failing to comply with one
\nor more of its terms and that order having been  made  final,  the  respondent
\ncannot oppose  the revival of the company petition.  He further contended that
\nabsence of specific power of revival under Section 443 of  the  Companies  Act
\nwill  be  of  no  consequence, since the inherent powers are not taken away or
\nrestricted by Section 4 43(1) of the Companies Act and the inherent powers are
\nin addition to the powers that are conferred under Section 443 and  the  order
\nof  revival  has  been  made  by  the Court to meet the ends of justice and he
\nrelied on the decision of a  Division  Bench  of  this  Court  in  RAMAKRISHNA
\nINDUSTRIES (P.) LTD.  AND OTHERS VS.  P.R.RAMAKRISHNAN AND OTHERS, reported in
\n(1988) 64 Comp.Cas.    425.  The Division Bench has followed the earlier Bench
\ndecision of  this  Court  in   RAMAKRISHNA   INDUSTRIES   (P.)   LTD.      VS.
\nP.R.RAMAKRISHNAN, reported  in  (1983) II MLJ 227.  In the above decisions, it
\nwas laid down that the inherent power of the Court is not taken away or in any
\nway restricted by Section 443 (1) of the Companies Act.\n<\/p>\n
                11.Rule 9 of the Companies (Court) Rules, 1959 is  similar  to
\nSection  151  of  Civil  Procedure  Code and the Apex Court and our Court have
\ndealt with the scope of the above provisions in the following decisions.\n<\/p>\n
                In THE NEWABGANJ SUGAR MILLS CO.  LTD.  AND OTHERS  vs.    THE
\nUNION  OF  INDIA  AND  OTHERS<\/a>  –  (AIR  1976  SC 1152), the Apex Court held as
\nfollows.\n<\/p>\n
        “Head Note-A.  …..  Though there are limitations on  the  powers  of
\nthe Court  it  cannot abandon its inherent powers.  The inherent power has its
\nroots in necessity and its breadth is co-extensive with the necessity.  ….”\n<\/p>\n
                In MANOHAR LAL CHOPRA VS.  RAI BAHADUR RAO RAJA SETH HIRALAL –
\n( AIR 1962 SC 527), the Apex Court laid down as follows.\n<\/p>\n
        “Head Note-(a).  ….  Section 151 itself says  that  nothing  in  the
\nCode  shall  be  deemed to limit or otherwise affect the inherent power of the
\nCourt to make orders necessary for the ends of justice.  In the face of such a
\nclear statement, it is not possible to hold that the provisions  of  the  Code
\ncontrol the  inherent  power  by  limiting  it or otherwise affecting it.  The
\ninherent power has not been conferred upon the Court; it is a  power  inherent
\nin  the  Court  by virtue of its duty to do justice between the parties before
\nit.  Further, when the Code itself recognizes the existence  of  the  inherent
\npower  of  the  Court, there is no question of implying any powers outside the
\nlimits of the Code.  ….”\n<\/p>\n
                In SATISH CHURN LAW vs.  GANGULY<\/a> – (AIR 1962 SC 806), the Apex
\nCourt held as follows.\n<\/p>\n
        “8.  ….  Rule 9 of the Companies  (Court)  Rules  preserves  to  the
\nCourt  its  inherent powers to give such directions or pass such orders as may
\nbe necessary for the ends of justice or to prevent abuse  of  the  process  of
\nCourt, and a direction to vacate an order previously made, is in a proper case
\nwithin the Court’s inherent jurisdiction.”\n<\/p>\n
                In KRISHNAN  AND  ANOTHER vs.  KRISHNAMURTHI AND OTHERS<\/a> – (AIR
\n1982 MADRAS 101), a Division Bench of this Court held as follows.\n<\/p>\n
                “5.  …..  Where the Code is silent and where the exercise of
\npower is not opposed to or prohibited by the provisions  of  the  Code,  there
\ncould  be no doubt that the court could invoke its inherent jurisdiction if it
\nis satisfied that it is necessary for the ends of justice or  to  prevent  the
\nabuse of the process of the court.”\n<\/p>\n
                12.The provisions of Civil Procedure Code so far as applicable
\nshall apply  to  all  proceedings  under the Companies Act and the Rules.  The
\ninherent powers can be exercised wherever the  Code  is  silent  in  order  to
\nprevent abuse  of  process of court or to meet the ends of justice.  It cannot
\nbe exercised only where there is express bar by any statute or where the power
\nof the court has to be exercised in a particular manner  as  prescribed  under
\nany particular statute.\n<\/p>\n
                13.The  order, dated 23.11.2001, is passed on the basis of the
\ncompromise memo entered into between the parties as provided under Order XXIII
\nRule 3 CPC and if so, the order becomes non appealable under Section 96(3)  of
\nCPC.   If  the  respondent  could not have filed an appeal against the consent
\norder passed by this Court, he may not be entitled to oppose  the  application
\nfor revival  which  has been permitted by the order itself.  In any event, the
\norder recording the  compromise  is  binding  on  both  the  parties  and  the
\nrespondent  has  avoided  winding  up of the company because of the compromise
\norder and hence he cannot now object to its implementation.\n<\/p>\n
                14.The Apex Court has repeatedly expressed its displeasure  at
\nthe  conduct  of  a  party  who seeks to resile from the terms of a compromise
\nvoluntarily and knowingly entered into by him in the following decisions.\n<\/p>\n
                In SALKIA BUSINESSMEN’S ASSOCIATION AND  OTHERS  vs.    HOWRAH
\nMUNICIPAL  CORPORATION AND OTHERS<\/a> – (AIR 2001 SC 2790), the Apex Court held as
\nfollows.\n<\/p>\n
                “8……  The learned single Judge as  well  as  the  Division
\nBench  of  the High Court have not only over simplified the matter but seem to
\nhave gone on an errand, carried away by  some  need  to  balance  hypothetical
\npublic  interest,  when  the real and only question to be considered was as to
\nwhether the respondent-authorities are bound by the orders passed by the Court
\non the basis of the compromise memorandum, and whether the  proposed  move  on
\ntheir part did not constitute flagrant violation of the order of Court \u2013- very
\nmuch binding  on both parties.  The High Court failed to do justice to its own
\norders.  If Courts are not to honour  and  implement  their  own  orders,  and
\nencourage  party litigants \u2013- be they public authorities, to invent methods of
\ntheir own  to  short  circuit  and  give  a  go-bye  to  the  obligations  and
\nliabilities incurred by them under orders of the Court — the rule of law will
\ncertainly  become  a  casualty  in  the  process \u2013- a costly consequence to be
\njealously averred by all and at any rate by the highest Courts  in  States  in
\nthe Country.   It does not, in our view, require any extraordinary exercise to
\nhold that the memorandum and terms of the compromise in his case  became  part
\nof  the  orders  of  the  High Court itself when the earlier writ petition was
\nfinally disposed of on 13.2.1991 in the terms  noticed  supra  notwithstanding
\nthat there  was no verbatim reproduction of the same in the order.  The orders
\npassed in this regard admits of no doubt or give any  scope  for  controversy.
\nWhile  so, it is beyond ones comprehension as to how it could have been viewed
\nas a matter of mere contract between parties and under  that  pretext  absolve
\nitself  of  the  responsibility to enforce it, except by doing violence to the
\nterms thereof in letter and spirit.   As  long  as  the  earlier  order  dated
\n13.2.91  stood,  it was not permissible to go behind the same to ascertain the
\nsubstance of it or nature of compliance when the manner,  mode  and  place  of
\ncompliance  had already been stipulated with meticulous care and detail in the
\norder itself.  The said  decision  was  also  not  made  to  depend  upon  any
\ncontingencies beyond the control of parties in the earlier proceedings.”\n<\/p>\n
        In SOM  DUTT vs.  GOVIND RAM<\/a> – (AIR 2000 SC 1638), the Apex Court laid
\ndown as follows.\n<\/p>\n
        “4.  ….  It is not in dispute that the premises in question were  in
\nthe occupation of Bishandas, the father of Govind Ram (respondent).  By virtue
\nof  the  compromise which was entered into in 1981 before the appellate Court,
\nthe son of the tenant who was already in possession was  allowed  to  continue
\nfor a  period  of  10  years.    Even  if  there be a creation of tenancy, the
\ncompromise between the parties including Govind Ram was that Govind Ram  would
\nvacate the  premises  on  31st  December  1990.   It is on that basis that the
\ncompromise was arrived at and the order passed by the appellate Court.   Apart
\nfrom anything else, Govind Ram is clearly estopped from filing any application
\nobjecting to  the  execution  of the decree.  On this ground alone, Govind Ram
\nhas to be non-suited.”\n<\/p>\n
                In BAKSHIRAM AND OTHERS vs.  BRIJ LAL –  (1994  Supp  (3)  SCC\n<\/p>\n
198), the Supreme Court has held as follows.\n<\/p>\n
        “Head Note:  …..   Law has to promote justice.  The courts of equity
\nand justice cannot uphold such an unfair stand.    The  respondent  cannot  be
\npermitted to reprobate to his advantage.  The binding effect of the compromise
\ndecree  could not be taken away as it was to operate after death of the donor.
\nMay be a person with a better right, for instance, the sister of the last male
\nholder, could sue the appellants and claim the property being nearer but  that
\ncould not dilute the effect of the compromise decree, even though in nature of
\na declaratory decree, nor it could clothe the alienee with any right to resist
\nthe  claim  of the remote reversioner for recovery of possession on the ground
\nthat the next reversioner being alive the suit  was  not  maintainable.    The
\nrecovery  of possession by the appellants could even be for the benefit of all
\nthe reversioners including the next reversioner,  but  it  certainly  did  not
\nadversely  affect  the suit filed by them for recovery of possession against a
\nthird person.  When the succession opened on the death of the donor, it  would
\nhave been  governed  by  the  law  in force.  His sister being nearer than the
\nappellants could claim by virtue of the decree that the right and interest  of
\nalienor devolved  on her.  But if she did not, it could not recoil against the
\nappellants and in favour of a stranger.”<\/p>\n
\n]\n                In the case of KUKI  LEATHER  PRIVTE  LTD.    AND  OTHERS  vs.\n<\/pre>\n
T.N.K.  GOVINDARAJU  CHETTIAR AND CO.  AND ANOTHER -((2002) 110 Comp.Cas.474),
\na Division Bench of this Court, to which I  am  a  party,  has  laid  down  as
\nfollows.\n<\/p>\n
                “…..   Having  secured that benefit and having made a solemn
\npromise before the Company Law Board which was reduced to writing by the Board
\nand the correctness of that record not having been disputed at  any  point  of
\ntime  by  any  of  the parties, the appellant long after that order came to be
\nmade chose to pretend as if no order  had  been  made  and  it  was  under  no
\nobligation to  purchase  the  shares  which it had undertaken to purchase.  It
\nmust be re-emphasized here that that order was at no point of time  questioned
\nin any legal proceedings by the appellants.  ……….\n<\/p>\n
        The  facts  already set out clearly show that the appellants derived a
\ngreat advantage by making the statements they did through their counsel before
\nthe Company Law Board and persuaded the respondents to agree to the  proposal,
\nand after the agreement came to be recorded, the Company Law Board did not and
\nwas not required to proceed further in the matter regarding investigation into
\nthe affairs  of  the  company.    The  investigation which the respondents had
\nsought into the affairs of the company was thus successfully avoided.   It  is
\nnow  not  open  to  the  appellants to turn round and claim that their actions
\nshould not be regarded as binding on them and that the technicalities  of  the
\nCode  of  Civil Procedure should be imported in order to defeat the justice of
\nthe case.  Acceptance of the arguments now advanced for the  appellants  would
\nclearly  result  in justice being defeated and fraud allowed to be perpetrated
\nby parties and their counsel on the adjudicatory forum.  It would  also  cause
\ngrave  doubts  on the credibility of the statements made by the lawyers before
\nthe adjudicatory forum, which statements are  normally  relied  upon  by  such
\nforums  as statements which are meant to be acted upon, and when acted upon to
\nresult in orders which would bind counsel and the parties represented by  such
\ncounsel.”\n<\/p>\n
                15.The  solemn  agreement,  dated  23.11.2001,  which  is  not
\nagainst public policy and is not violative  of  the  provisions  of  the  law,
\nrecorded  by  this  Court  binds  the  parties  and  it is not now open to the
\nrespondent to turn round and claim that the original cause of action cannot be
\nrevived.                16.The learned counsel for the applicant brings to the
\nnotice of this Court the decision of the Gujarat High Court in  GUJARAT  STATE
\nFINANCIAL SERVICES LTD.   vs.    AMAR  POLYSTER  LTD.   – ((1998) 5 Comp LJ 95
\n(Guj)), in which, it is held that the term in consent giving liberty to revive
\nthe proceeding will not give right to the creditor to ask the court to  revive
\nthe proceeding.    The above judgment will not apply to the facts of this case
\nfor the reason that the company petition therein was  dismissed  as  withdrawn
\nand  that was governed by Order XXIII Rule 1 CPC; whereas in the present case,
\nthe order of the court is based on compromise which is governed by Order XXIII
\nRule 3 CPC.  Moreover, the Gujarat High Court has not discussed the  scope  of
\ninherent  power of the Court either under the Companies Act or under the Civil
\nProcedure Code in the above decision.\n<\/p>\n
                17.Admittedly,  the  respondent  has  committed   default   in
\ncomplying  with the terms of compromise and hence the applicant is entitled to
\nseek for revival of the company petition.\n<\/p>\n
                18.In the result, the application is allowed.\n<\/p>\n
Index:  Yes                                                     23-08-2002.\nInternet:  Yes\ngb.\n\nC.NAGAPPAN,J\nORDER IN\nCOMP.APPN.NO.661\/2002 IN\nCOMP.PETN.NO.76 OF 1997.\n\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Madras High Court M\/S.Spartek Emerging … vs M\/S.Argus Cosmetics Limited on 23 August, 2002 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23\/08\/2002 CORAM THE HONOURABLE MR.JUSTICE C.NAGAPPAN COMPANY APPLICATION NO.661 OF 2002 IN COMPANY PETITION NO.76 OF 1997 M\/s.Spartek Emerging Opportunities (Mauritius) Ltd., No.12, Remy Oilver Street, Port Louis, Mauritius. … Applicant\/Petitioner -Vs- […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-11557","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nM\/S.Spartek Emerging ... vs M\/S.Argus Cosmetics Limited on 23 August, 2002 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-spartek-emerging-vs-ms-argus-cosmetics-limited-on-23-august-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S.Spartek Emerging ... vs M\/S.Argus Cosmetics Limited on 23 August, 2002 - 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