Septagon Builders and Developers India (P) Ltd. v. Ranjan Kuriaokoose and Hannah Ranjan

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ``` PRESENT ``` ## `THE HONOURABLE MR.JUSTICE C.S.DIAS` ``` WEDNESDAY, THE 14[TH] DAY OF DECEMBER 2022 / 23RD AGRAHAYANA, 1944 ``` ``` OP(C) NO. 1354 OF 2021 ``` ``` AGAINST THE ORDER DATED 16.07.2021 IN I.A.NO.4/2021 IN OS 55/2019 OF PRINCIPAL SUB COURT, TRIVANDRUM ``` ## `RESPONDENTS IN I.A./ DEFENDANTS IN O.S.` ``` 1RANJAN KURIAKOSE, AGED 48 YEARS, S/O.T.M. KURIAKOSE, HOUSE NO.3, PRASANTH HILL, NEAR CDS, PRASANTH NAGAR, ULLOOR, MEDICAL COLLEGE P.O., THIRUVANANTHAPURAM PIN 695 011 ``` ``` 2HANNAH RANJAN, AGED 42 YEARS, W/O.RANJAN KURIAKOSE, HOUSE NO.3, PRASANTH HILL, NEAR CDS, PRASANTH NAGAR, ULLOOR, MEDICAL COLLEGE P.O., THIRUVANANTHAPURAM PIN 695 011 ``` ``` BY ADVS.P.B.KRISHNAN P.B.SUBRAMANYAN SABU GEORGE MANU VYASAN PETER ``` ## `PETITIONERS IN I.A./ PLAINTIFFS IN O.S.` ``` 1SEPTAGON BUILDERS AND DEVELOPERS INDIA (P) LTD. 2ND FLOOR, SOPHIA BUILDING IN FRONT OF BISHOP HOUSE, PATTOM, REP.BY ITS DIRECTOR, RENU ABRAHAM, AGED 52 YEARS, W/O.K.P.V.ABRAHAM, M/S. SEPTAGON BUILDERS AND DEVELOPERS INDIA (P) LIMITED, 2ND FLOOR, SOPHIA BUILDING IN FRONT OF BISHOP HOUSE, PATTOM, RESIDING AT NAZARETH, XIX/322, MUTTADA, KUDAPPANAKKUNNU VILLAGE, MUTTADA P.O., THIRUVANANTHAPURAM PIN 695 025 ``` ``` 2K.P.ABRAHAM AGED 55 YEARS S/O.LATE VASU, CHAIRMAN, M/S. SEPTAGON BUILDERS AND DEVELOPERS INDIA (P) LIMITED, 2ND FLOOR, SOPHIA BUILDING IN FRONT OF BISHOP HOUSE, ``` ``` O.P.(C)No.1354/2021 ``` ``` -:2:- ``` ``` PATTOM, RESIDING AT NAZARETH, XIX/322, MUTTADA, KUDAPPANAKKUNNU VILLAGE, MUTTADA P.O., THIRUVANANTHAPURAM PIN 695 025 ``` ``` 3BLESSAN ABRAHAM AGED 26 YEARS S/O.K.P.V.ABRAHAM, MANAGING DIRECTOR, M/S. SEPTAGON BUILDERS AND DEVELOPERS INDIA (P) LIMITED, 2ND FLOOR, SOPHIA BUILDING IN FRONT OF BISHOP HOUSE, PATTOM, RESIDING AT NAZARETH, XIX/322, MUTTADA, KUDAPPANAKKUNNU VILLAGE, MUTTADA P.O., THIRUVANANTHAPURAM PIN 695 025 4RENU ABRAHAM AGED 52 YEARS W/O.K.P.V. ABRAHAM, DIRECTOR, M/S. SEPTAGON BUILDERS AND DEVELOPERS INDIA (P) LIMITED, 2ND FLOOR, SOPHIA BUILDING IN FRONT OF BISHOP HOUSE, PATTOM, RESIDING AT NAZARETH, XIX/322, MUTTADA, KUDAPPANAKKUNNU VILLAGE, MUTTADA P.O., THIRUVANANTHAPURAM PIN 695 025 ``` ``` BY ADVS.G.RAJEEV REJITH RAJENDRAN BINCY JOB AJITH KUMAR.S ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(C)No.1354/2021 ``` ``` -:3:- ``` Dated this the 14[th] day of December, 2022 ## **J U D G M E N T** Confronted with Ext P7 order passed in I.A.No.4/2021 in O.S.No.55/2019 by the Court of the Principal Subordinate Judge, Thiruvananthapuram, the defendants in the suit have filed the original petition. The respondents are the plaintiffs. 2. The antecedent facts leading to Ext P7 order, in a nutshell, are: - (i) The respondents have filed the suit against the petitioners to recover an amount of Rs.2,27,41,755/- and for other consequential reliefs. - (ii) The suit is resisted by the petitioners through Ext P2 written statement. - (iii) On an application filed by the respondents for orders of attachment before judgment and ``` O.P.(C)No.1354/2021 ``` ## `-:4:-` temporary injunction, the court below by Ext P3 common order, rejected the applications. - (iv) The respondents challenged Ext P3 common order before this Court in F.A.O. Nos.79 & 94/2019. - (v) By Ext P4 common judgment, this Court allowed the interim applications and directed that the interim order passed in I.A.No.1/2019 in F.A.O. to continue till the disposal of the suit, with a rider that the court below shall dispose of the suit within nine months. - (vi) Subsequently, the respondents filed I.A.No.4/2021 (Ext P5), seeking leave to amend the plaint. The application was resisted by the petitioners through Ext P6 objection, inter alia, contending that the name of the first respondent was struck off from the Register of Companies and, therefore, the company is no longer in existence. - (vii) The court below, by the impugned Ext P7 ``` O.P.(C)No.1354/2021 ``` ``` -:5:- ``` order, allowed Ext P5 application. Ext P7 order is illegal, erroneous and unsustainable in law. Hence, the original petition. 3. The respondents have filed a counter affidavit, denying the allegations in the original petition. They have contended that the suit was instituted on 19.03.2019. The name of the first respondent was struck off from the Register of Companies only on 19.10.2019. The respondents had no knowledge about the notice issued against them. It is only on 01.11.2019, on receipt of STK-7 notice from the Registrar of Companies, they became enlightened of the proceedings initiated against them. The respondents immediately filed Company Appeal No.20/KOB/2021 under Section 252(3) of the Companies Act, 2013(in short, ‘Act,2013’), before the National Company Law Tribunal, Kochi Bench and Ext R1(a) order was passed reviving the company. ``` O.P.(C)No.1354/2021 ``` ``` -:6:- ``` Therefore, as on today, the company is active. Hence the contentions raised by the petitioners is unsustainable in law and the original petition is only to be dismissed. 4. Heard; Sri. P.B. Krishna, the learned counsel appearing for the petitioners and Sri. G. Rajeev, the learned counsel appearing for the respondents. 5. The question is whether there is any illegality in ExtP7 order?. 6. Ext P1 plaint was instituted on 19.03.2019. The suit was resisted by the petitioners through Ext P2 written statement. 7. Then, the respondents filed Ext P5 application, under Order 6 Rule 17 of the Code of Civil Procedure, 1908,(in short, ‘Code’), seeking leave to amend Ext P1 plaint. The application was resisted by the petitioners through Ext P6 written objection, principally on the grounds that the name of the first ``` O.P.(C)No.1354/2021 ``` ``` -:7:- ``` respondent company has been struck off from the Register of Companies as per order dated 19.10.2019. Hence, the respondents 2 to 4 have no locus standi to represent the first respondent company, by virtue of the provisions of Sections 248 and 250 of the Act, 2013, and that the petitioners have sought for substitution of a new case in the plaint. 8. The court below, after considering the rival contentions, by the impugned Ext P7 order held as follows: “10. The scope and ambit of dissolution of a company by operation of Sec.248(5) is to be considered now. It is made mandatory through Sec.92 of the Companies Act that there shall be an annual return prepared by every company. Sec. 164(2) provides with failure to file financial statement or annual return for a continuous period of 3 financial years will attract disqualification for appointment as a director. Sec.248 prescribes that the registrar shall issue notice to the company as well as the directors who failed to carry on business or operation for a period of 2 preceding financial years and who has not applied for obtaining the status of a dormant company can remove the name of the company from the register of companies. Striking off the name of the company from the register will automatically dissolve the company. It is such dissolution that has occurred to the first plaintiff company through Ext.B1. The first plaintiff company is seen included at Sl.No.1158 in ``` O.P.(C)No.1354/2021 ``` ``` -:8:- ``` Ext.B1. The effect of such dissolution by operation of law is discussed in Sec.250. When a dissolution occurs u/s.248, the company shall cease to operate as a company and the certificate of incorporation issued to shall be deemed to have been cancelled. Such deemed cancellation is applicable except for the purpose of realising the amounts due to the company and for the payment or discharge of the liabilities of the company. Therefore, a deemed dissolution u/s.248(5) will not preclude the first plaintiff company from prosecuting a suit for realisation of the amounts due to it. Therefore, the first plaintiff can maintain the suit for realisation of money due to it, in spite of Ext.B1 notification. 11. Next comes the case of legal status of the signatory to the affidavit. A combined reading of Sec.164(2) and proviso to 167 (1) of the Companies Act will lead to the situation that the signatory to the affidavit will loss his directorship in all other companies except the first plaintiff. This position is clear from the decision of the Hon'ble High court of Kerala in Zacharia Manamkandathil Mohan Vs. Union of India, reported in 2021 (3) KHC 550. Therefore the legal challenges raised against the maintainability of the suit and amendment application are liable to fail. 12. The next contention taken by the defendants is that the plaintiffs are trying to take away admissions made in the original plaint by way of proposed amendments and it is not legally permissible. It is true that an admission made by a party cannot be permitted to be taken away by way of an amendment in the pleadings. The admission made can be explained away or clarified. For considering this aspect, an admission covered by Sec.17 to 21 of the Evidence Act must be there and it should be attempted to be taken away by way of amendment. Except for raising such a contention that admissions made in the original plaint are sought to be effaced from records, the defendants have not been able to specifically point out an admission covered by Sec.17 to 21 made in the UB plaint being sought to be amended. As mentioned above, the amendments sought are by way of clarification of the existing plea Therefore, that contention also fails. ``` O.P.(C)No.1354/2021 ``` ``` -:9:- ``` 13. The next aspect to be considered is the assertions of facts made by the plaintiffs and denied by the defendants in the affidavit and counter affidavit. This being an amendment application, truthfulness or otherwise of the contents of the proposed pleadings need not be looked into at this stage. The defendants will get an opportunity to file additional written statement, once the proposed amendments become part of pleadings. Taking into account the pleadings sought to be brought in the plaint, this court is of the finding that the application can be allowed. In the result, the application is allowed and the plaint is permitted to be amended. Carry out amendments within 7 days and produce amended plaint within 3 days thereafter, with copy to the defence. Parties are directed to suffer their respective costs.” 9. It is undisputed, that the name of the first respondent company was struck off from the Register of Companies on 19.10.2019, for non filing of the returns for the years 2015-16. It is after the first respondent’s name was stuck off, that the third respondent filed Ext P5 application, seeking leave to amend the plaint. At the said point of time, the contention of the petitioners regarding the locus standi of the third respondent to file the application was valid ``` O.P.(C)No.1354/2021 ``` ``` -:10:- ``` and justifiable. 10. Nonetheless, now it is on record before this Court that, on 06.12.2022, the National Company Law Tribunal by Ext R1(a) order restored the first respondent company to its original status, by holding thus: **==> picture [128 x 10] intentionally omitted <==** 17. Having satisfied with the reasons as mentioned in the Appeal and in the light of the above-cited provisions of Companies act, 2013, we are is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies. Hence this Tribunal pass the following orders: - - i. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company, as if the name of the company has not been struck off from the Register of Companies, and take all consequential actions like change of company's status from Strike off to "Active" (for e-filing and to intimate the bankers about the restoration of the name of the Appellant Company to defreeze its accounts). - ii. The Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies. - iii. The Shareholders/Directors of the appellant ``` O.P.(C)No.1354/2021 ``` ``` -:11:- ``` company shall jointly submit an undertaking to the Registrar of Companies stating therein that the accounts of the Company were not used as means to transact tainted money during the period of demonetization. iv. xxx xxx xxx v. xxx xxx xxx vi. xxx xxx xxx vii. xxx xxx xxx viii. xxx xxx xxx” 11. Ext P5 amendment application was filed and the impugned Ext P7 order was passed during the interregnum period, when the first respondent’s name was not in Register of Companies. 12. Sri. G. Rajeev, drew the attention of this Court to Sections 250 and 252(3) of the Act,2013, to drive home his contention that, if a company whose name was earlier struck off from the Register, is re-included in the Register, then the company is revived and deemed to be in the same position as if it was never removed. He placed reliance on the judgment of the ``` O.P.(C)No.1354/2021 ``` ``` -:12:- ``` Hon’ble Supreme Court in **Commissioner of Income Tax, Jaipur v. Gopal Shri Scrips Private Limited** [(2020) 7 SCC 654] and the decision of the National Company Law Tribunal 2017 SCC Online NCLT 15489, wherein it is held as follows: “46. A suave perusal of section 560(6) in between the lines reveals that on restoration of a company to the Register, the Court may, under an order, give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. Therefore, when a defunct company is restored to the Register Companies any time during the period during which it remains so defunct, the effect of such order would be that the company concerned is deemed to have continued its existence as if its name had never been struck off. (Also see section 252(3) of the Act of 2013.” 13. A co-joint reading of Ext R1(a) order passed by the Tribunal and Section 252(3) of the Act, 2013, leaves room for no doubt that, once a company’s name is restored to the Register of Companies, obviously, it would stand restored to the original position and status. ``` O.P.(C)No.1354/2021 ``` ``` -:13:- ``` 14. In the above conspectus, I am of the definite view that, even though Ext P5 application was filed at the time that the company was not in existence, by the restoration of the first respondent through Ext R1(a) order passed, the locus standi of the third respondent to file the application stands ratified conferring competence on her to represent the company. Thus, the action of the third respondent in filing application stands ratified by operation of law. 15. Now, coming to the point whether there is any illegality in the court below granting leave to amend the plaint. 16. The respondents have sought leave to amend the plaint by making certain insertions and deletions of figures and heads of claim in the plaint. In fact, the original plaint claim was to recover an amount of Rs.2,27,41,755/-, which has been reduced to Rs.2,22,93,907/- by way of the amendment. ``` O.P.(C)No.1354/2021 ``` ``` -:14:- ``` 17. In **Life Insurance Corporation of India v. Sanjeev Builders Private Limited & Ors.** [2022 SCC Online 1128], the Hon’ble Supreme Court has laid down the principles to consider an application for amendment. It is held that, if the amendment seeks to introduce an additional claim without introducing a time barred cause of action, the amendment is liable to be allowed even after expiry of limitation. It is only when the amendment seeks to change the nature of the suit or the cause of action, so as to set up an entirely new case, which is foreign to the case in the plaint, then the amendment is to be disallowed. However, the courts should be liberal in its approach and allow amendments, prior to the commencement of trial. 18. On a perusal of Ext P5 application, I find that the respondents have only sought to modify certain figures amplify the pleadings on record and explain the heads of claim which are already on record in Ext P1 ``` O.P.(C)No.1354/2021 ``` ``` -:15:- ``` plaint. There is nothing that alters the original cause of action so as to cause prejudice to the petitioners. Thus, I am of the definite view that there is no error in Ext P7 order, permitting the respondents to amend the plaint. The court below has not overstepped its authority, warranting interference by this Court under Article 227 of the Constitution of India. Nonetheless, the petitioners shall have the right to file their additional written statement to the amended plaint. With the above observation, the original petition is dismissed. Sd/- ## **C.S.DIAS,JUDGE** DST/14.12.22 //True copy/ P.A.To Judge ``` O.P.(C)No.1354/2021 ``` ``` -:16:- ``` ## `APPENDIX` ``` PETITIONER EXHIBITS ``` - `PETITIONER EXHIBITS EXHIBIT P1` - `TRUE COPY OF THE PLAINT DATED 19.3.2019 IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` - `EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT DATED NIL IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` - `EXHIBIT P3 TRUE COPY OF THE COMMON ORDER DATED 12.4.2019 IN I.A.NO.712 OF 2019 AND I.A.NO.71 OF 2019 IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` - `EXHIBIT P4 TRUE COPY OF THE COMMON JUDGMENT DATED 23.2.2021 IN F.A.O. NO.79 OF 2019 IN F.A.O. NO.94 OF 2019 BEFORE THIS HON'BLE COURT.` - `EXHIBIT P5 TRUE COPY OF THE I.A.NO.4 OF 2021 IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` - `EXHIBIT P6 TRUE COPY OF THE OBJECTION DATED 7.7.2021 IN I.A.NO.4 OF 2021 IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` - `EXHIBIT P7 TRUE COPY OF THE ORDER DATED 16.7.2021 IN I.A.NO.4 OF 2021 IN O.S.NO.55 OF 2019 ON THE FILE OF THE PRINCIPAL SUB COURT, THIRUVANANTHAPURAM` ``` RESPONDENT'S EXHIBITS: ``` ``` EXHIBIT R1A ``` ``` TRUE COPY OF ORDER DATED 06.01.2022 IN COMPANY APPEAL / 20/KOB/2021 ON THE FILE OF THE KOCHI BENCH OF THE NATIONAL COMPANY LAW TRIBUNAL. ``` ``` O.P.(C)No.1354/2021 ``` ``` -:17:- ``` ``` EXHIBIT R1BTRUE COPY OF THE LETTER OF SUBMISSION DATED NIL IN COMPLIANCE WITH THE EXHIBIT R1 (A) ORDER AND THE PAYMENT THEREOF TO THE REGISTRAR OF COMPANIES , ERNAKULAM EXHIBIT R1CTRUE COPY OF COMPANY MASTER DATA DATED 24.10.2022 OF THE 1ST RESPONDENT COMPANY SHOWING ITS STATUS AS ACTIVE IN COMPLIANCE OF EXHIBIT R1A ORDER ```