DEVARAJ DHANRAM Vs. FIREBRICKS

JUDGEMENT

(1.) A seemingly innocuous application filed in Company Petition No. 77 of 1989 for permission to withdraw the petition with liberty to reinstitute it has generated a legal controversy of considerable importance. At first blush, it would seem that a litigant has the unfettered right to withdraw a proceeding and if the law permits reinstitution in the same or some other form provided the exercise is not vitiated by mala fides but the reason why the dispute has snowballed is because of the fact that some of the Courts have taken the view that if a Company Petition of this type is withdrawn that there would be a bar to incorporating the grounds or material from the petition that has been withdrawn in a subsequent proceeding which may be maintainable on additional grounds. The learned Counsels who represent the applicant have pointed out to me that it is out of abundant caution that the liberty of this Court has been sought and briefly stated, the reasons stated by them are that the petition in question was instituted in the year 1989 and that it has so far not been disposed off on merits. According to the applicants, there have been a host of developments over the years and they contend that it is very essential that all this additional material be incorporated in the form of a fresh petition. According to them, it would be very necessary to present a new petition and it is not either desirable or permissible to seek to graft on all the additional data to the existing proceeding and that this is the reason why the leave has been sought.

(2.) MR. Raghavan, learned Counsel who represents the respondents has vehemently opposed the grant of any such liberty and he made it very clear to the Court that he is not raising the objection merely for the sake of opposing but that there is a very valid reason for this opposition. He states that it is rather unfortunate that the petitioner in the main company Petition has fallen out with those who are managing the Company and that this hostility has crystallized into litigation which has its own fall out and aftermath. Learned Counsel submitted that as the present case will demonstrate, it was instituted in 1989 and has not been disposed off till 1998 and he submits that if the party is permitted to recommence the proceedings either at this stage or at a future point of time that it would amount to endless harassment of his clients and that this is the main ground on which he is opposing the grant of leave. I see considerable substance in this argument because, quite apart from the facts of the present case the Courts do come across a litigation being used for purposes of either settling scores or some other oblique reason and the party who is required to contest or defend that litigation is undoubtedly subjected to all sorts of harassment, expenditure and even embarassment. Also, having regard to the fact that these litigations drag on almost interminably, there is good ground for a party who is at the receiving end to insist on a degree of finality in litigation and opposing any attempt at elongation. There is a class of litigations that is undoubtedly vexatious and the Supreme Court has had occasion to categorise such litigation as "fake litigation". Courts do come across situations wherein parties start litigations and when they reach the stage of final hearing or disposal, adopt measures that are fully within the framework of the law to redirect that litigation into another one or to another forum or to turn it around and recommence it with the sole object of subjecting the opposite party to interminable turmoil. It is therefore extremely important that when applications of this type are made that the Court must adopt a very circumspect and judicious approach and that liberty is not to be mechanically granted. There may be genuine and valid reasons where the Court may decide to make an exception but by and large, the Courts must normally adopt the principle that one approach to the forum is enough and if the party does not come with a proper case or agitate it properly, that no second round will be permitted. Since these issues have arisen in this proceeding, it is necessary for the Court to say something about the situation.

(3.) DEALING with the main legalities of the application, Mr. Raghavan submitted that the principal ground on which the withdrawal is sought is that additional material namely developments subsequent to the date on which the petition was filed need to be taken into consideration. He raised a two-fold submission. Firstly, he contended that there have been interim stages in this proceeding when applications have been made to the Court pointing out various further developments and interim orders sought which, learned Counsel stated have been refused by this Court. The main thrust of his argument was that it is perfectly permissible for the Court to take into account developments both factual and legal that have taken place after the date of filing of the petition in the present petition without its being reinstituted from the very inception. Learned counsel drew my attention to two decisions: 1. Needle Industries (India) Limited and Others u Needle Industries newey (India) Holdings Limited and Others; 2. 1950 Com. Cas. 555 (Cal.), wherein the Supreme Court and the Calcutta High Court very clearly enunciated the proposition that subsequent events or developments can certainly be taken cognizance of by the Company Court hearing such an application. He thereafter drew my attention to a decision of the Bombay High Court reported in 1961 Com. Cas. 185 (Bom.), wherein the court has held that amendments for purposes of recording developments subsequent to the date of filing can be permitted and he pointed out that under Section 402 of the Companies Act the Court has the power to look at subsequent events because all aspects of the case are required to be taken note of by the Court.