WPMS/3007/2018 of SANJAY KUMAR NAGALIA Vs M/S ZX SOURCES PVT. LTD. DEHRADUN

HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 3007 (M/S) of 2018

Sanjay Kumar Nagalia

..…Petitioner

Versus

M/s ZX Sources Pvt. Ltd.

.…Respondent

Mr. Ajay Srivastava, Advocate for the petitioner.

Dated: 6[th] October, 2018

JUDGMENT

Hon’ble Sharad Kumar Sharma, J.

The petitioner is plaintiff in suit for declaration, being Suit No. 45 of 2013, Sanjay Kumar Nagalia Vs. M/S ZX Sources Pvt. Ltd. On the date of the institution of the suit, i.e. 29[th] January, 2013, the defendant was represented through its Directors, Mr. Sher Singh Rana and Mr. Vishal Suri. There had been series of the proceedings which has been undergoing during the pendency of the suit, but the issue which is to be considered by this Court at this stage is the implication of recall application under Order 9 Rule 7 of the CPC seeking to set aside the order dated 7[th] April, 2014, passed by the Trial Court directing the suit to proceed ex parte as against the defendant.

The defendant, herein, in the instant suit, happens to be Company, which under the relevant statutes acquires the status of the legal entity and its interest is represented through the Directors adorning the company. The argument of the learned counsel for the petitioner is that since there application under Order 9 Rule 7 of the CPC would not be maintainable, the Court ought to have rejected it.

The issue of maintainability of an application under Order 9 Rule 7 of the CPC had earlier travelled to this Court at the behest

of the respondent in Civil Revision No. 129 of 2014, wherein, the Coordinate Bench of this Court had passed the following orders :-

“11. In view of above, the civil revision is allowed by holding that the application under Order 9 Rule 7 CPC is maintainable. That part of impugned order, whereby it was held that the application under Order 9 Rule 7 CPC is not maintainable, is set aside. The matter is remitted back to the court below to consider the application of the defendant under Order 9 Rule 7 CPC on merits and if the defendant is able to assign good cause for his previous non-appearance, the said application must be allowed. The court below shall do so independently without being influenced by its observations made in the impugned order.”

Wherein, the High Court while exercising the revisional power has held that the application under Order 9 Rule 7 at the behest of the defendant was maintainable and consequently, the same was remitted back to be decided on merits.

It is on the revival of the proceedings that the application under Order 9 Rule 7 has been adjudicated by the Trial Court by the impugned order dated 15[th] September, 2018 and the same has been recalled and as result thereto, the order directing to proceed ex parte has been set aside and the suit has been directed to be decided on merits.

The arguments which has been extended by the learned counsel for the petitioner is to the effect that on scrutiny of the application under Order 9 Rule 7 of the CPC as filed by the then erstwhile Director, Mr. Sher Singh Rana at the time of the filing of the application under Order 9 Rule 7 of the CPC, he was shareholder of the Company and the application thus filed under Order 9 Rule 7 of the CPC by the applicant who was in the status of being shareholder only and hence, his application in the said capacity would not be tenable because according to the argument of the learned counsel for the petitioner, the respondent, being legal entity ought to be represented by the competent authority, i.e. Directors of the Company.

At this stage, this Court is not accepting the arguments as extended by the learned counsel for the petitioner, for the reason

being that the issue pertaining to the maintainability of the application has already been decided by the Coordinate Bench of this Court when the revision itself was decided by this Court.

The only thing which was to be re-considered on the remand made by the judgment dated 28[th] August, 2018, was an adjudication of the application under Order 9 Rule 7 on merits which has been considered by the Court and has been allowed by the impugned order dated 15[th] September, 2018.

Under the Company law, shareholders, who are investors in the capital of Company have right and interest in company and if the interest of the company is jeopardized because of the dereliction by the Director, the law will not preclude the shareholders to protect the interest of the company.

Considering the aforesaid facts, this Court is not inclined to interfere in the impugned order. Consequently, the Writ Petition is dismissed.

Shiv

(Sharad Kumar Sharma, J.)06.10.2018