High Court of KeralaDivision BenchAppeal allowed; matter remitted for disposal

V.K. Chitharanjan v. Sree Narayana Dharma Paripalana Yogam and others

Case / Petition Number:CoA5/2010
Neutral Citation:/

Case Details & Bench

Court
High Court of Kerala
Hon'ble Judges
  • V. Chitambaresh
  • R. Narayana Pisharadi
Judgment Date
2018-12-19
Court Decision / Holding
The Company Appeal is allowed. The impugned judgment is set aside and the Company Petition is remitted to the Company Judge for disposal in light of these observations, to be listed for hearing as per roster. No costs.
Final Disposition
Appeal allowed; matter remitted for disposal

Parties to the Case

Appellants / Petitioners

  • V.K. Chitharanjan

Respondents

  • Sree Narayana Dharma Paripalana Yogam
  • V.K. Natesan
  • Soman
  • M.B. Sreekumar
  • Thushar Vellappally
  • Inspector General of Registration (Registrar designated under Section 2(3) of the Kerala Non-Trading Companies Act, 1961)
  • Registrar of Companies, Kerala
  • Vamadevan N.
  • V.K. Girishkumar
  • N.J. Sukumaran
  • P.K. Vidhyadhar an
  • Harisankar S (Impleaded as 12th Respondent)

Legal Representation & Advocates

Counsels for Petitioners

  • • K. Jagadeesachandran Nair
  • • J. Krishnakumar
  • • Rakesh Kumar P.K.
  • • Jaishankar V. Nair

Counsels for Respondents

  • • A.N. Rajan Babu
  • • P. Gopalakrishnan (MVA)
  • • A.R. Easwar Lal
  • • S. Sujin
  • • Mohan Pulikkal
  • • Manju Rajan
  • • A. Amrutha Vidyadharan
  • • T.K. Shajahan (Senior Govt. Pleader)
  • • N.N. SasI

Case Synopsis & Summary

This is a CoA5/2010 Company Appeal arising from a Company Petition filed by V.K. Chitharanjan seeking reliefs for oppression and mismanagement under Sections 397 and 398 and winding up under Section 433(f) of the Companies Act, 1956. The Kerala High Court initially held that Section 443(2) barred winding up where alternate remedies existed and dismissed the petition, while noting jurisdiction to wind up could be exercised only as a last resort. The appellate court examines whether winding up could be refused under 443(2) when oppression/mismanagement relief remains available and whether the petition was maintainable, given the petitioner’s status as a contributory of S.N.D.P. Yogam, a non-trading entity. The memorandum of association and bye-laws raise questions about whether SNDP Yogam is a company limited by guarantee, a matter requiring evidence and deeper examination (citing In re S.N.D.P Yogam, Quilon and PC Aravindan v. M.A. Kesavan). It also cites M/s World Wide Agencies Pvt. Ltd. v. Margarat T. Desor (AIR 1990 SC 737) to support that a composite petition is permissible and that alternative relief under Section 397 can be granted if appropriate. The court sets aside the impugned judgment, remitting the petition to the Company Judge for disposal after considering the observations, and allows the appeal. No costs.

Provisions of Law Cited

Sections 397 and 398 of the Companies Act, 1956Section 433(f) of the Companies Act, 1956Section 443(2) of the Companies Act, 1956Section 428 of the Companies Act, 1956Section 439(1)(c) of the Companies Act, 1956Section 2(3) of the Kerala Non-Trading Companies Act, 1961

Legal Doctrines & Maxims

  • Winding up shall be the last resort
  • A composite petition seeking winding up and oppression/mismanagement relief is perfectly maintainable
  • Court discretion to grant alternative relief under Section 397 when warranted

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that the Company Petition seeks both oppression/mismanagement relief under Sections 397-398 and winding up under Section 433(f), and that the petition was maintainable with the Court having jurisdiction at the time of its institution. He asserts that he is a contributory of S.N.D.P. Yogam, a non-trading body, and that the MOA and Bye-laws create questions about its constitution (citing In re S.N.D.P Yogam, Quilon; P.C. Aravindan v. M.A. Kesavan). A deeper probe into the MOA and Bye-laws is necessary to determine whether SNDP Yogam is a company limited by guarantee. He argues that Section 443(2) does not extinguish the Court’s jurisdiction to entertain winding up when oppression/mismanagement relief is sought, and that the petition should be heard on merits before winding up relief is discounted.

Contentions of Respondents

The respondents submit that if oppression and mismanagement relief is available, winding up should not be ordered; a composite petition can still be entertained; they rely on Section 443(2) to discourage winding up where other remedies exist and request further evidence and hearing. They emphasize the need to ascertain the true constitution of SNDP Yogam (as to its corporate status) and contend that the petition has to be considered with due process and according to precedent (World Wide Agencies and related authorities).

Cited Precedents (3)

Case NameCitationTreatmentExplanation
M/s.World Wide Agencies Pvt. Ltd. and another v. Mrs.Margarat T.Desor and othersAIR 1990 SC 737PositiveSupreme Court held that a composite petition seeking winding up and oppression/mismanagement relief is maintainable and that winding up is not mandatory; court retains discretion to consider alternative relief under Section 397.
In re S.N.D.P Yogam, Quilon1970 KLT 365Mentioned OnlyUsed to discuss MOA constitution; not treated as binding in the present case.
P.C. Aravindan v. M.A. Kesavan & others1973 KLT 70Mentioned OnlyCited in relation to MOA/Bye-laws; no decisive ruling in the present facts.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR. JUSTICE V.CHITAMBARESH** **&** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **WEDNESDAY, THE 19TH DAY OF DECEMBER 2018 / 26TH AGRAHAYANA, 1940** **Co.Appeal No. 5 of 2010** **AGAINST THE JUDGMENT IN C.P.NO.40/2008 OF HIGH COURT OF KERALA DATED 14-09-2009** ## **APPELLANT/2ND PETITIONER:** **V.K.CHITHARANJAN, AGED 46 YEARS, S/O.KUMARAN, VELLIMATTAM HOUSE, RAMALLOOR, KOTHAMANGALAM P.O., ERNAKULAM DISTRICT.** **BY ADV. SRI.K.JAGADEESACHANDRAN NAIR ADV.SRI.J.KRISHNAKUMAR ADV.SRI.RAKESH KUMAR P.K. ADV.SRI.JAISHANKAR V. NAIR.** ## **RESPONDENTS/RESPONDENTS 1 TO 7 AND PETITIONERS 1, 3, 4 & 5:** - **1 SREE NARAYANA DHARMA PARIPALANA YOGAM, A PUBLIC LIMITED COMPANY HAVING ITS REGISTERED OFFICE AT KOLLAM, REPRESENTED BY THE GENERAL SECRETARY V.K.NATESAN.** - **2 V.K.NATESAN, GENERAL SECRETARY, S.N.D.P.YOUGAM, KOLLAM.** - **3 SOMAN, PRESIDENT, S.N.D.P. YOUGAM, KOLLAM.** - **4 M.B.SREEKUMAR, VICE PRESIDENT, S.N.D.P.YOUGAM, KOLLAM.** - **5 THUSHAR VELLAPPALLY, DEVASWOM SECRETARY, S.N.D.P.YOGAM, KOLLAM.** **6 THE INSPECTOR GENERAL OF REGISTRATION (THE REGISTRAR DESIGNATED UNDER SECTION 2(3) OF THE KERALA NON TRADING COMPANIES ACT, 1961, TRIVANDRUM).** CoA5/2010 -: 2 :- - **7 THE REGISTRAR OF COMPANIES, KERALA.** - **8 VAMADEVAN N., AGED 55 YEARS, S/O.NARAYANAN, CHARUVILA VEEDU, SASIMALA P.O.,, POLPALLY, WAYANAD DISTRICT.** - **9 V.K.GIRISHKUMAR, AGED 32 YEARS, S/O.P.K.KUMARAN, PALLITHAYATTU VEEDU, PARAVOORTHARA, NORTH PARAVOOR, ERNAKULAM DISTRICT.** - **10 N.J.SUKUMARAN, AGED 68 YEARS, S/O.GOPALAN, SREELAYAM, PRAPOYIL P.O., PAYYANNOOR, KANNUR.** - **11 P.K.VIDHYADHARAN, AGED 73 YEARS, S/O.KUNJIKRISHNAN, AMRUTHAM, SREENIVASAPURAM, VARKALA, TRIVANDRUM.** > ADDL. **12 HARISANKAR S, 18 YEARS, S/O. ADV.N.N.SASI, VINAYANANDAMADOM, NEAR ARANMULA, CHIRAYIRAMBU P.O., THOTTAPUZHASSERRY VILLAGE, PATHANAMTHITTA DISTRICT, PIN – 689 549.** **(ADDITIONAL 12TH RESPONDENT IS IMPLEADED AS PER ORDER DT.19.12.2018 IN I.A.NO.3/2018)** **R1 & R2 BY ADV.SRI.A.N.RAJAN BABU ADV.SRI.P.GOPALAKRISHNAN (MVA) ADV.SRI.A.R.EASWAR LAL R3 BY ADV.SRI.S.SUJIN R5 BY ADV.SRI.MOHAN PULIKKAL ADV.SMT.MANJU RAJAN ADV.SMT.A.AMRUTHA VIDYADHARAN R6 & R7 BY SRI.T.K.SHAJAHAN, SENIOR GOVT. PLEADER R12 BY ADV.SRI.N.N.SASI** **THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 17.12.2018, THE COURT ON 19.12.2018 DELIVERED THE FOLLOWING:** ## Judgment ## Chitambaresh, J. 1.The averments in the Company Petition reveal that reliefs of oppression and mismanagement under Sections 397 and 398 as well as winding up under Section 433(f) of the Companies Act, 1956 are sought. Only the Company Law Board was vested with the jurisdiction to grant reliefs under Sections 397 and 398 of the Companies Act, 1956 when the Company Petition was filed. Nevertheless this Court retained jurisdiction to grant relief of winding up at the time of institution of the Company Petition which was lost much later only. The Company Judge has rejected the Company Petition at the threshold itself relying on Section 443(2) of the Companies Act, 1956 which is CoA5/2010 -: 4 :- extracted hereunder: “443. Powers of Tribunal on hearing petition - (1) xxxx xxxx xxxx xxxx (2) Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.” The above provision only means that a company shall not be ordered to be wound up if the Court is of the opinion that other remedies like oppression and mismanagement CoA5/2010 -: 5 :- are available. The remedy of winding up of a company shall be the last resort and the provision does not at all affect the jurisdiction of the Court to entertain a company petition for winding up. Whether the relief of winding up of a company should be granted or not is altogether a different matter which can be decided only after a hearing of the company petition. 2.It was inter alia contended that the petitioner in the Company Petition is not a contributory as defined under Section 428 who alone can maintain a company petition under Section 439(1)(c) of the Companies Act, 1956. The petitioner in the Company Petition asserts that he is a contributory of S.N.D.P.Yogam which is a non-trading CoA5/2010 -: 6 :- company to which the Companies Act, 1956 does apply. Clause (4) of the Memorandum of Association of the S.N.D.P.Yogam speaks both of 'liability' as well as 'shares' making it ambiguous warranting an adjudication as to its constitution. The Memorandum of Association does not give any indication of S.N.D.P.Yogam being a company limited by guarantee as held in In re S.N.D.P.Yogam, Quilon [1970 KLT 365]. Suffice it to say that the matter needs a deeper probe after the evidence is let in by the parties particularly in the context of P.C.Aravindan v. M.A.Kesavan & others [1973 KLT 70]. An advertence to Clause 4 of the Memorandum of Association as well as Clauses 4, 71, 72 etc. of the Bye-laws of S.N.D.P.Yogam may also be essential in the process. CoA5/2010 -: 7 :- 3.The following observations in M/s.World Wide Agencies Pvt. Ltd. and another v. Mrs.Margarat T.Desor and others [AIR 1990 SC 737] at a time when the jurisdiction vested in the High Court only are apposite: “We are in agreement with the High Court that the petition must proceed up to certain stage which is common to both winding up and though there may be some difference in procedure to be adopted, it is not such which is irreconcilable and cannot simultaneously be gone into. Indeed these are made in the manner indicated before. It has to be borne in mind that a discretion is conferred on the Court and it is only when the Court is satisfied that the facts justify the making of a winding CoA5/2010 -: 8 :- up order on the ground that it is just and equitable that the company should be wound up, but if the Court is further of the opinion that it would be a remedy worse than the disease, then the Court can examine whether the alternate relief by way of a direction under Section 397 can be granted.” A composite company petition of the nature filed is perfectly maintainable and this Court had the jurisdiction to grant the relief of winding up at the time of its preferment. We shall not be misunderstood as holding that a case for winding up the company has been made out though the impugned judgment to the extent it holds that this Court lacks jurisdiction is unsustainable. CoA5/2010 -: 9 :- 4.We set aside the impugned judgment and remit the Company Petition to the Company Judge for disposal in the light of the observations above and the same would be listed for hearing as per roster. The Company Appeal is allowed. No costs. Sd/- V. CHITAMBARESH, JUDGE Sd/- R. NARAYANA PISHARADI, JUDGE Sha/171218 CoA5/2010 -: 10 :- ## APPENDIX APPELLANT'S ANNEXURE: ANNEXURE I COPY OF JUDGMENT IN WP(C) NO.36361 OF 2016 DATED 27.3.2018 ## 1ST RESPONDENT'S EXHIBITS: EXHIBIT R1(A)-TRUE COPY OF THE C.P.NO.70/2010 FILED IN AUGUST 2010 BEFORE THE COMPANY LAW BOARD, CHENNAI. EXHIBIT R1(B)-TRUE COPY OF THE ORDER DATED 21-4-2015 IN C.P.NO.70/2010 OF THE COMPANY LAW BOARD, CHENNAI BENCH.