Case Note & Summary
The appellant, Dr. Kirtivan D. Kotian, along with his family members, originally held over 95% shares of M/s S. Manikya Plastichem Private Limited and controlled its affairs until 2006. In 2006, they sold their shareholdings to Sri S.N. Ladhani and his family, reducing their holding to 1.24%, and the appellant himself held no shares at the time of the appeal. Respondent No.1, Mohan Singh, filed a winding up petition (COP No.56/2008) against the company, and on 18.12.2008, the Company Judge ordered the winding up of the company and directed the Official Liquidator to take possession. Nearly five years later, in 2013, the appellant filed applications (C.A. No.326/2013 and C.A. No.327/2013) under Rules 6 and 9 of the Companies (Court) Rules read with Section 151 CPC, seeking to be impleaded as a respondent in the winding up proceedings. The Company Judge dismissed those applications, leading to the present appeals under Section 483 of the Companies Act, 1956. The Court noted that the appellant admitted he had no shareholding in the company and that the application was filed after a long delay. The Court held that a person without any subsisting shareholding has no locus standi to seek impleadment in winding up proceedings, and the delay of nearly five years disentitled the appellant to any discretionary relief. Accordingly, both appeals were dismissed.
Headnote
A) Company Law - Winding Up - Impleadment - Locus Standi - Companies Act, 1956, Section 483 - The appellant, who had sold his entire shareholding and held no shares at the time of application, sought impleadment in winding up proceedings. The Court held that a person without any subsisting shareholding has no locus standi to seek impleadment in winding up proceedings. (Paras 1-3)
B) Civil Procedure - Delay and Laches - Discretionary Relief - Section 151 CPC - The application for impleadment was filed nearly five years after the winding up order was passed. The Court held that such delay disentitles the appellant to any discretionary relief. (Para 2)
Issue of Consideration
Whether a person who has sold all his shares and has no subsisting shareholding in a company can be impleaded as a respondent in winding up proceedings nearly five years after the winding up order was passed.
Final Decision
Both appeals (O.S.A. No. 33/2013 and O.S.A. No. 44/2013) are dismissed.
Law Points
- Locus standi to seek impleadment in winding up proceedings requires subsisting shareholding
- Delay and laches disentitle discretionary relief
- Section 483 Companies Act
- 1956
- Rules 6 & 9 Companies (Court) Rules
- Section 151 CPC
Case Details
2015 LawText (KAR) (02) 20
O.S.A. No. 33/2013 c/w O.S.A. No. 44/2013
Sri. Ajesh Kumar S (for appellant), Sri. Thomas V Peter (for R1), Sri K S Mahadevan (for R2)
Mohan Singh, Official Liquidator of S. Manikya Plastichem Private Limited
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Nature of Litigation
Appeals against dismissal of applications for impleadment in company winding up proceedings.
Remedy Sought
Appellant sought to be impleaded as respondent in winding up proceedings (COP No.56/2008) and to set aside the order dated 25.04.2012.
Filing Reason
Appellant claimed interest in the company despite having sold all his shares, and sought to participate in winding up proceedings.
Previous Decisions
Company Judge dismissed the impleadment applications (C.A. No.326/2013 and C.A. No.327/2013) on 25.04.2012.
Issues
Whether the appellant has locus standi to seek impleadment in winding up proceedings when he holds no shares in the company.
Whether the appellant is entitled to discretionary relief after a delay of nearly five years.
Submissions/Arguments
Appellant argued that he and his family members originally held over 95% shares and were in control of the company, and thus had an interest in the winding up proceedings.
Respondents contended that the appellant had sold all his shares and had no subsisting shareholding, and the application was filed after gross delay.
Ratio Decidendi
A person who has sold all his shares and has no subsisting shareholding in a company has no locus standi to seek impleadment in winding up proceedings. Additionally, delay of nearly five years in filing the application disentitles the applicant to any discretionary relief.
Judgment Excerpts
The admitted case of the appellant is that he, along with his family members, held over 95% shares of the Company in question and they were in control of the affairs of the Company till the year 2006.
It is admitted by the learned Counsel for the appellant that at present the appellant himself has no share holding in the Company.
Nearly five years after such order was passed, in the year 2013, a Company Application was filed by the appellant for impleadment.
Procedural History
Respondent No.1 filed winding up petition (COP No.56/2008) against M/s S. Manikya Plastichem Private Limited. On 18.12.2008, the Company Judge ordered winding up and directed Official Liquidator to take possession. On 25.04.2012, the Company Judge dismissed the appellant's applications for impleadment (C.A. No.326/2013 and C.A. No.327/2013). The appellant filed the present appeals under Section 483 of the Companies Act, 1956 read with Section 4 of the Karnataka High Court Act.
Acts & Sections
- Companies Act, 1956: 483
- Karnataka High Court Act: 4
- Code of Civil Procedure, 1908: 151
- Companies (Court) Rules: 6, 9
