# (2011) 1 ILRA 250

- **Citation:** (2011) 1 ILRA 250
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2011-02-18
- **Bench:** Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/2011-1-ilra-250-41856
- **Pages:** 5

## Headnote

Code of Civil Procedure-Section 148-AMaintainability
of
caveat
application
under Chapter 22 rule 5-relating to
proceeding u/s 394/391 of Company
Act-whether maintainable ? held-'No'
but the provisions of C.P.C. Equally
applicable by virtue of rule 6 of company
Rules-hence caveat lodged u/s 1448-Aheld-proper-even the caveator no right
to claim opportunity of hearing at
preliminary stage of issue notice-but
growing tendency of ignoring caveat by
the Registry as well as of the Counselsundermine
the
dignity
of
Noble
Profession-Court
expressed
its
great
concern by issuing general directions.

Held: Para 8

Now Rule 6 of the aforesaid Rules clearly
provides that the provisions of the code
which means Code of Civil Procedure,
1908 shall apply to all proceedings under
the Act and these Rules. In other words
by virtue of Rule 6 of the aforesaid Rules
provisions of C.P.C. have been made
applicable in respect of all proceedings
taken by parties under the Act or under
the aforesaid Rules. There is no dispute
that an application for acceptance of the
scheme of arrangement under Section
391/394 of the Act is in the nature of
proceedings under the Act/Rules and as
such the applicability of C.P.C. to such
proceedings
cannot
be
ruled
out.
Consequently, the provisions of Section
148A C.P.C. which entitles a party to
lodge a caveat gets attracted enabling
the party concern to lodge a caveat in
respect
of
proceedings/applications
under Section 391/394 of the Act.
Case law discussed:
[2009] 147 Company Cases 677.

## Text

250 INDIAN LAW REPORTS ALLAHABAD SERIES [2011

15. It transpires from the record
that the case was lastly listed on
27.7.2007. On that date the interim order
was not extended till the dismissal of the
petition.

16. Accordingly, let the petition be
restored to its original number. Since it
was already admitted It will be treated as
having been admitted.

17. Let it be listed in the next cause
list for hearing on merits.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.02.2011

BEFORE
THE HON'BLE PANKAJ MITHAL, J.

Company Application No. - 15 of 2010

In The Matter Of: Triveni Engineering &
Industries and another
...Applicants

Counsel for the Petitioner:
Sri R.P. Agarwal

Counsel for the Respondent:
Sri S.K. Bisaria

Code of Civil Procedure-Section 148-AMaintainability
of
caveat
application
under Chapter 22 rule 5-relating to
proceeding u/s 394/391 of Company
Act-whether maintainable ? held-'No'
but the provisions of C.P.C. Equally
applicable by virtue of rule 6 of company
Rules-hence caveat lodged u/s 1448-Aheld-proper-even the caveator no right
to claim opportunity of hearing at
preliminary stage of issue notice-but
growing tendency of ignoring caveat by
the Registry as well as of the Counselsundermine
the
dignity
of
Noble
Profession-Court
expressed
its
great
concern by issuing general directions.

Held: Para 8

Now Rule 6 of the aforesaid Rules clearly
provides that the provisions of the code
which means Code of Civil Procedure,
1908 shall apply to all proceedings under
the Act and these Rules. In other words
by virtue of Rule 6 of the aforesaid Rules
provisions of C.P.C. have been made
applicable in respect of all proceedings
taken by parties under the Act or under
the aforesaid Rules. There is no dispute
that an application for acceptance of the
scheme of arrangement under Section
391/394 of the Act is in the nature of
proceedings under the Act/Rules and as
such the applicability of C.P.C. to such
proceedings
cannot
be
ruled
out.
Consequently, the provisions of Section
148A C.P.C. which entitles a party to
lodge a caveat gets attracted enabling
the party concern to lodge a caveat in
respect
of
proceedings/applications
under Section 391/394 of the Act.
Case law discussed:
[2009] 147 Company Cases 677.

(Delivered by Hon'ble Pankaj Mithal, J.)

Re: Civil Misc. Recall Application
No.319680 of 2010

1. The above application has been
filed
by
Ashok
Kumar
Sharma,
Proprietor, A.K. Builders & Suppliers,
Lucknow together with M/s A.K. Builders
& Suppliers claiming to be the unsecured
creditors of the demerged company M/s
Triveni Engineering & Industries Ltd.

2. By the above application they
have prayed for the recall of the order
dated 9.9.2010 passed by me in Company
Application No.15 of 2010 filed under
Section 391/394 of the Companies Act,
1956 for accepting the scheme of
arrangement annexed thereto between the
aforesaid demerged company and the
1 All] In The Matter Of: Triveni Engineering & Industries and another
251
resultant
company
Triveni
Turbine
Limited.

3. The court on the aforesaid
application for acceptance of the scheme
of arrangement, vide order dated 9.9.2010
had directed for convening meetings of
the equity shareholders, secured and
unsecured creditors of the demerged
company in respect whereof notices were
directed to be issued under certificate of
posting and by publication in the two
newspapers published from New Delhi
and the other from Meerut so as to
ascertain their wishes regarding the
scheme of arrangement.

4. I have heard Sri Prashant Kumar,
learned counsel for the applicants, Sri
R.P. Agarwal, learned counsel for the
demerged and resulting companies and
the official liquidator as representative of
Regional
Director,
North
Region,
Ministry of Corporate Affairs, NOIDA.

5. The submission of Sri Prashant
Kumar is that the applicants have lodged
three consecutive caveats in connection
with of the filing of the above company
application for accepting the scheme of
arrangement but none of the above
caveats were reported by the office of the
court with the result applicants were
denied opportunity of hearing before
passing of the order dated 9.9.2010. He
has further submitted that the demerged
company as well as resulting company
had the notice of the lodging of the
caveats by the applicants but even then
they
have
not
chosen
to
serve
notice/copies of the application before
moving the same in the court. The
demerged and resulting companies as
such have not approached the court with
clean hands. Accordingly, the order dated
9.9.2010 is liable to be recalled.

Sri R.P. Agarwal learned counsel
for the demerged and resulting company
to counter the above submissions, has
argued that under the scheme of the
Companies Act 1956 and the Company
Court Rules, 1959 (hereinafter referred
to as an Act & the Rules respectively, for
short) the applicants have no right to be
heard at the time of issuing directions for
convening meetings and issuing notices
as the initial proceedings under Section
391/394 of the Act are to be taken ex
parte. The provisions of lodging a caveat
existing under Section 148A C.P.C. and
under Chapter 22 Rule 5 of the High
Court Rules 1952 are not applicable to
proceedings of such a nature under the
Act. Therefore, the caveat was not even
maintainable.
If
the
office
has
inadvertently failed to report about the
caveats of the applicants, no illegality
has been committed. It is for this very
reason even the demerged and resulting
companies have not cared to serve the
copy
of
the
application/upon
the
applicants. The order dated 9.9.2010
causes no prejudice to the applicants
even if passed ex parte and as such it is
not liable to be recalled. In support he is
relied upon a decision of the Supreme
Court reported in [2009] 147 Company
Cases 677 Chembra Orchard Produce
Ltd. and others vs. Regional Director
of Company Affairs and another.

6. A plain reading of Chapter XXII
Rule 5 of the High Court Rules makes it
abundantly clear that the same is
applicable in connection with filing of
writ petitions under Article 226/227 of the
Constitution of India except for writs in
nature of Habeas Corpus. The provisions
252 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
of Chapter XXII of the High Court Rules
are not applicable in connection with any
other proceedings before the court much
less the proceedings of the nature as
contemplated under the Act. Therefore, in
my opinion, no caveat under Chapter 22
Rule 5 of the Rules can be lodged in
respect of an application/proceedings
under Section 391/394 of the Act.

7. Section 148A C.P.C. also gives a
right to a person to lodge caveat where an
application is expected to be made or has
been made in a suit or proceeding
instituted or about to be instituted in a
court. This right has been given to a
person who is claiming right to oppose
such an application in a suit or any
proceeding instituted or about to be
instituted.

8. Now Rule 6 of the aforesaid
Rules
clearly
provides
that
the
provisions of the code which means
Code of Civil Procedure, 1908 shall
apply to all proceedings under the Act
and these Rules. In other words by
virtue of Rule 6 of the aforesaid Rules
provisions of C.P.C. have been made
applicable in respect of all proceedings
taken by parties under the Act or under
the aforesaid Rules. There is no dispute
that an application for acceptance of the
scheme of arrangement under Section
391/394 of the Act is in the nature of
proceedings under the Act/Rules and as
such the applicability of C.P.C. to such
proceedings
cannot
be
ruled
out.
Consequently, the provisions of Section
148A C.P.C. which entitles a party to
lodge a caveat gets attracted enabling
the party concern to lodge a caveat in
respect
of
proceedings/applications
under Section 391/394 of the Act.

9. In view of the above, I am of the
opinion that a caveat can always be
lodged in proceedings connected with the
matters under the Companies Act/Rules
under Section 148-A C.P.C. read with
Rule 6 of the Rules but not under Chapter
XXII Rule 5 of the Rules. Accordingly,
caveat was maintainable and was rightly
lodged by the applicants.

10. Now let me consider the
question of entitlement of the applicants
to get the order dated 9.9.2010 recalled.

11. In this connection Rule 67 of
the Rules is relevant. It provides that an
application under Section 391 of the Act
for convening meetings shall be by a
judges summons and the summons shall
be moved ex parte provided certain
conditions laid down in the Rule are
fulfilled. It also provides the format of
the summons. It means the motion for
convening meetings by an application
for
acceptance
of
scheme
of
arrangement is to be moved ex parte.
There happens to be no adversaries so
as to oppose the motion. Any opposition
to such a claim for acceptance of the
scheme of arrangement is to be taken
care of in the meetings itself. The
issuance of notice and direction to
convene
meetings
of
the
equity
shareholders and secured and unsecured
creditors as such happens to be an
uncontested
matter.
The
Court
in
directing for convening meetings and in
issuing notices on such an application
does not either adjudicate any rights of
the parties or decides any controversy
intersee which may cause prejudice to
any of them. It is for this reason only
that Rule 67 of the Rules contemplates
that ex parte motion at the preliminary
stage.
1 All] In The Matter Of: Triveni Engineering & Industries and another
253

12. In Chembra Orchard Produce
Ltd. and others (supra) the apex court
has clearly laid down that if hearing is
required to be given to contributors,
creditors and shareholders at the initial
stage in considering application under
Section 391/394 of the Act the entire
scheme would become unworkable and
further that when Rule 67 of the Company
Court Rules categorically states that
summons for directions shall be moved ex
parte the question of prejudice or rule of
natural justice does not come into play.
The moving of an application under
Section 391/394 of the Companies Act is
only a preliminary step and at that stage it
is not necessary for the company to give
notice of hearing to the creditors or the
shareholders.

13. In view of the aforesaid ratio
laid down by the Supreme Court
interpreting the purpose and object of
Rule 67 of the Companies Court Rules,
when this court after due application of
mind and on being prima facie satisfied
about the genuineness of the two
companies in submitting the scheme of
arrangement directs for the issuance of
notices and for holding of the meetings of
the equity shareholders, secured and
unsecured creditors, no caveatable interest
accrues to anyone including the applicants
in the present case.

14. In short the applicants have a
right to lodge a caveat in connection with
an application under Section 391 of the
Act but have no caveatable interest
entitling them to be heard at the above
described preliminary stage.

15. The object of entering a caveat is
to avoid ex parte orders and to afford
opportunity of hearing to a person who is
vigilant and wants to protect his rights by
contesting the proceedings provided he
has right to be heard. However, as
discussed earlier the applicants have no
right of hearing at the preliminary stage of
issuing notice and directing for holding of
meetings of the shareholders or the
creditors for ascertaining their wishes
regarding
the
proposed
scheme
of
arrangement.

16. It is well settled that giving of
opportunity of hearing or observance of
principles of natural justice is not an
empty formality and where despite
affording opportunity the result is to
remain the same, there is no purpose in
giving notice or opportunity of hearing.
An order passed in such a situation
without notice to the other party as such
causes
no
prejudice.
It
may
be
remembered that to sustain an allegation
that the party concern has been denied
opportunity of hearing one has to
establish that prejudice was caused to him
on account of non-observance of the
principles of natural justice. However, no
such prejudice has been established by the
applicants.

17. In view of the above, I do not
consider it to be a fit case for recalling
order dated 9.9.2010 .

18. In the application no other
ground for recalling the order dated
9.9.2010 has been made out.

19. The application is accordingly
rejected with no order as to costs.

20. The court is noticing that in
several cases lawyers are time and again
complaining that the office has failed to
report caveats. This reflects upon the
254 INDIAN LAW REPORTS ALLAHABAD SERIES [2011
working of the office of the stamp
reporter. Once the office of the stamp
reporter has accepted a caveat and has
entered
the
same
in
the
register
maintained for the purpose, it becomes a
bounden duty of the office to submit a
clear report in this connection on any
cause
which
may
be
initiated
in
connection thereto. The non reporting of
the filing of the caveat by the office is a
serious thing which in some cases may
affect the valuable right of a party and at
least tends to caste a stigma on the
working of the counsel. The court is thus,
constrained to sound a note of caution to
the stamp reporter to be careful in future
while making reports with regard to the
caveats.

21. The Registrar General is directed
to call for an explanation of the office of
the stamp reporter as to why the caveat
lodged by the applicants in this case were
not reported and to fix responsibility of
the person concerned.

22. The court has also noticed
tendency on part of the lawyers in
receiving notice of the caveat and still not
supplying
copy
of
the
applications/petitions
to
the
counsel/person lodging the caveat and
further
in
concealing
the
fact
of
knowledge of caveat. It undermines the
nobility of the profession. Therefore, it
needs to be tackled appropriately.

23. Let a note be made and placed
by the registry in this connection on the
administrative side for taking necessary
appropriate steps to check the growth of
such a menace.
---------

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 11.03.2011

BEFORE
THE HON'BLE DEVI PRASAD SINGH, J.
THE HON'BLE S.C. CHAURASIA, J.

Service Bench no. - 59 of 2004

Ram Shanker Shukla

 ...Petitioner
Versus
The State Public Service Tribunal U.P. Lko.
through Its Registrar
 ...Respondent

Counsel for the Petitioner:
R.S.Pandey

Counsel for the Respondent
C.S.C.

Constitution
of
India-Article
226punishment-major
punishment
by
reducing
25%
pension-awarded
by
disciplinary
authority-taking
different
view than-report of enquiry officer-No
opportunity
of
hearing
or
giving
explanation given-in view of law laid
down by Apex Court in Yoginath Bagde-if
disciplinary authority differ from enquiry
report
before
awarding
punishment
opportunity of hearing must-Tribunal
failed to consider this aspect-order not
sustainable.

Held: Para 11

In the present case, a perusal of the
show cause notice at the face of record
shows that the disciplinary authority
formed an opinion without serving a
prior notice containing the points with
regard to difference of opinion with the
enquiry
officer.
Thus,
reasonable
opportunity was not provided by the
disciplinary authority to the petitioner to
advance
his
argument
and
make
representation with regard to tentative
difference of opinion formed by the
disciplinary authority. The purpose of
service
of
notice
containing
the