Bijay Kumar Agarwal and ors. Vs. Ratan Lal Bagaria and ors. - Court Judgment

Excerpt:
- order1. this application is made by one company naming thereby m/s. murphy food specialities private limited having registered office at 203, m. g. road, calcutta-700007 (earlier no. 227, a.j.c. bose road, calcutta-700020), under section 41 of the arbitration act, 1940, praying inter alia, leave to the petitioner company to intervene in the present proceedings and to add party respondent there in along with prayer for recalling and/or setting aside the order dated 26th march. 1998, in g.a. no. 3109 of 1997 and inter alia various other reliefs in the nature of giving certain directions to the receiver/special officer and injunction in connection therewith.although various reliefs were sought for in the application but from the advancement of the argument it appears that the application is.....

Judgment:
ORDER

1. This application is made by one company naming thereby M/s. Murphy Food Specialities Private Limited having registered office at 203, M. G. Road, Calcutta-700007 (earlier No. 227, A.J.C. Bose Road, Calcutta-700020), under Section 41 of the Arbitration Act, 1940, praying inter alia, leave to the petitioner company to intervene in the present proceedings and to add party respondent there in along with prayer for recalling and/or setting aside the order dated 26th March. 1998, in G.A. No. 3109 of 1997 and inter alia various other reliefs in the nature of giving certain directions to the Receiver/Special Officer and injunction in connection therewith.

Although various reliefs were sought for in the application but from the advancement of the argument it appears that the application is basically made for recalling and setting aside of the order passed by this Court on 26th March. 1998 in G.A. No. 3109 of 1997 at the instance of allcontesting parties.

2. One of such contesting parties was Sri Bijay Kumar Agarwal, happened or happens to be the Director of this applicant company.

3. This Court had come to the ultimate finding on 26th March, 1998 upon hearing the parties on numerous occasions and after passing several interim orders which are all available in the record. Even the order dated 26th March, 1998 was also modified thereafter as on 23rd April, 1998 at the instance of said Sri Bijoy Kumar Agarwal but no prayer is made herein to recall or set aside such modified order.

4. At all material times an impression was given to this Court that the dispute exists about ownership of the goods i.e. teas lying in the warehouse of one M/s. Services & Supplies (India) in between 'Agarwal Group' and 'Bagaria Group'.

5. Pith and substance of the original order dated 26th March, 1998 was to clear off the teas from the warehouse of the petitioner therein i.e. M/s. Service & Supplies (India), a non-interested party to such dispute.

6. The petitioner herein contended that teas which were directed to be sold are of the applicant company. Therefore their right was interfered with by such order without hearing them.

7. This Court cannot shutout it's eyes without observing very much existence of the said Sri Bijoy Kumar Agarwal at the time of hearing or passing order or orders in the erstwhile application, at the time of making modification application and also at the time of presenting this application in the name of the Company M/s. Murphy Food Specialities Private Limited.

8. According to the applicant said Sri Bijoy Kumar Agarwal resigned from the Board of Directors of the applicant company on 2nd April, 1992 and sold/transferred his shareholding in favour of one Sri Lalit Dhanuka and his family members. There was no knowledge of the applicant company about the G.A. No. 3109 of 1997 and the order passed on 26th March, 1998 ultimately came to know from an employee of M/s. Ratan Export & Industries Ltd. having registered office at New Delhi whose name cannot be disclosed for fear or reprisal. Said employee of the above company provided with the pleadings and order in the G.A. No. 3109 of 1997 to them.

9. The respondents jointly contended that the order passed on 26th March, 1998 is not the original order for sale hut order of implementation of order for sale originally passed by a Single Bench of this Court on 17th August, 1993 at the instance of this applicant company being M/s. Murphy Food Specialities (Pvt.) Ltd. itself in an application in the matter between Bijoy Kumar Agarwal v. Ratan Lal Bagaria.

10. Secondly M/s. Murphy Food Specialities Pvt. Ltd. applicant company herein as well as M/s. Alfa International Commodities represented by Sri Bijoy Kumar Agarwal are carrying on business admittedly at and from same office address at 227, Acharya Jagadish Chandra Bose Road, Calcutta-700020 but even thereafter surprisingly the applicant company explained about their knowledge of hearing and passing order by this court from a so called employee of a company having registered office at New Delhi and even his or her name cannot be disclosed. Therefore it is clear that the applicant company has not come with clear hands which is the basic element for the purpose of recalling and setting aside the original order.

11. Thirdly, the company having warehouse issued ownership certificate on 28th August, 1992 about invoice number, grade, chest, in all, quantity of the tea in favour of M/s. Murphy Food Specialities Pvt. Ltd. under instruction of Sri Bijoy Kumar Agarwal, after the date of his alleged retirement.

12. Fourthly 'Bagaria Group' contended that transaction in between M/s. Murphy Food Specialities Pvt. Ltd. applicant herein and Alfa International Commodities are sham transaction since goods were shown as delivered in July, 1991 when time period for payment was shown within September, 1992 which is about a year from the delivery of the goods and unthinkable in trade and merchandise.

13. Incidentally it was submitted that this application for recalling and setting aside order is made by one Sabyasachi Mukherjee claiming to be Director/Principal Officer of the applicant company but without any affidavit of competency.

14. However, 1 am briefly on the point as to whether appropriate party represented the case and whether the order passed caused prejudice toany alleged non-appearing party or not.

15. No doubt Sri Bijoy Kumar Agarwal, the keyman was always present, irrespective of his resignation from the Directorship of the Company on 2nd April, 1992 and giving up shareholding of the Company, either in the Court, or in other sphere in connection with the matter. Therefore it cannot be said that the case was unrepresented.

16. The petitioner joined issue therein by saying existence of Sri Bijoy Kumar Agarwal does not necessarily mean existence of the company. The company was un represented having interest in the goods. I cannot agree with the submission made by the petitioner since order of sale was originally made by a Single Bench of this Court at the instance of the applicant company itself as far back as on 17th August, 1993 in the matter of Bijoy Kumar Agarwal when admittedly he had resigned from the company. It is also significant that even goods were stored by said Bijoy Kumar Agarwal on behalf of the aforesaid company as on 28th August, 1992 also after his date of resignation. Therefore now the separate representation of the company for the relief is fake representation with an ill motive of stalling the sale,

17. In the above context let me explain the prejudicial effect of the order passed by this Court upon the applicant company M/s, Murphy Food Specialities Private Limited vis-a-vis Sri Bijoy Kumar Agarwal which are as follows :

a) Originally order of sale was obtained by the applicant Company on 17th August, 1993 which has only been implemented by the order of this dated 26th March, 1998 at the instance of all the patties including Sri Bijoy Kumar Agarwal;

b) Existence of Sri Bijoy Kumar Agarwal cannot be ruled out irrespective of his giving up directorship and shareholdings in the applicant 'company;

c) The order of 26th March, 1998 is modified at the instance of said Sri Bijoy Kumar Agarwal but no such prayer is made to recall such order;

d) Even, in merit, I found that in spite of several notices of the Joint Receivers said Sri Bijoy Kumar Agarwal did not attend the meeting tor the purpose of making inventory of the goods but ultimately became part of the order of the Court for implementation of sale which nowcannot be disputed through the Company. If the company has any grievance of damages as against the company having warehouse, the same is a different cause of action altogether and cannot find place over and above the balance of convenience already drawn in favour of the company having warehouse in this respect in the earlier occasion:

e) The natural justice is not one way traffic. Therefore situation of each case has to be observed separately. In the instant case it appears that original dispute in arbitration is subsided by various interlocutory applications either under Section 41 of the Arbitration Act or in the nature of pro-inter se-suo on different occasions. If there is any dispute with regard to ownership of the goods and monetary claims in connection thereto, the same will be decided by an Arbitrator or Arbitrators but for the same warehouse of a third party cannot he occupied specially when the Tea Board analysed the teas and certified that the same are not fit for human consumption. Now if the Court disallow removal off such damaged goods it may cause prejudice to the interest of public at large;

f) Above all no sale proceeds were directed to be disbursed to any party under original order.

18. Under such circumstances. Judgment reported in : [1971]3SCR247 Smt. Jatan Kanwar Golcha v. Golcha Properties Pvt. Ltd., in liquidation as cited before this Court has no application being factually distinguishable with the present case.

19. Mr. P. C. Sen appearing with Mr. Joy Saha contended that existence of an individual and existence of a company are distinct and different. Therefore, appearance of an individual or his group cannot be said to be appearance of the company. Therefore the order which was admittedly passed in absence of the company who's right has been infringed. This court sitting in hearing an application under Section 41 of the Arbitration Act cannot be able to lift corporate veil to find out who is the person behind it. In support of the contention Mr. Sen cited a judgment reported in : 1986(8)ECC189 . Life Insurance Corporation of India v. Escort Limited and relied upon head Note 'F' therein to establish their stand on the point of lifting of corporate veil. I found from the head note 'F' that the Supreme Court observed thatgenerally and broadly speaking, it may be said that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the corporate veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc.

20. Therefore, although it is broadly speaking that the lifting of corporate veil will be available in the statute like Companies Act. other financial and taxing statute etc. but admittedly one cannot rule out the applicability of the principle elsewhere if the situations are falling under the following categories :

a) Depend upon the relevant statutory or other provisions;

b) The object sought to be achieved;

c) The impugned conduct;

d) The involvement of the element of the public interest;

e) The effect on parties who may be affected.

21. Therefore, I am of the view that logically lifting corporate veil or principles analogous thereto cannot be ruled out from using as a tool of juduciary in the dispute in between two parties. 'Lifting of Corporate Veil' or principle analogous thereto cannot be monopoly of any statute but can be priority of any statute. Therefore, that does not necessarily mean such tool of judiciary either expressly or impliedly cannot be used by the court to prevent the abuse of process of Court of Law which has been caused herein as observed by this Court.

22. Therefore this application is dismissed. Interim order or orders, if any, passed is vacated. However, no order is passed as to costs.

Prayer for stay is made, considered and refused.

Joint Receivers and all parties are to act on a signed copy minute of the Operative Part of the Order upon usual undertaking.