1986 (11) TMI 330 - HC - Companies Law

Court dismisses appeal, finds decree executable. Appellants estopped from challenging. Locus standi lacking. Objections barred by res judicata.

The appeal was dismissed as the court found the decree to be executable, the appellants were estopped from objecting to the absence of a final decree, and ... Winding up - Appeals from orders, Distribution of property of company Issues Involved:1. Executability of the decree.2. Necessity of a final decree before execution.3. Validity of the sale in absence of a final decree.4. Locus standi of appellants Nos. 2 and 3.5. Applicability of res judicata and estoppel.6. Alleged irregularities and fraud in the execution process.Detailed Analysis:1. Executability of the Decree:The appellants contended that the decree was inexecutable as it did not permit any process against the immovable properties without a final decree. The court held that the decree, being partly final and partly preliminary, was executable. The decree directed the sale of hypothecated movable properties and treated the sale of mortgaged immovable property as preliminary. The court concluded that the decree, as it stood, was executable.2. Necessity of a Final Decree:The appellants argued that the absence of a final decree rendered the execution proceedings void. The court referred to Order 34, Rule 5, Civil Procedure Code, which speaks of a final decree in a suit for sale. The court observed that the decree was partly final and partly preliminary and that the mortgaged property could be auctioned. The court also noted that the appellants had waived their right to object by not raising this issue at the appropriate stages.3. Validity of the Sale in Absence of a Final Decree:The court examined whether the sale could be set aside on the ground that a final decree had not been passed. It was held that the appellants were estopped from raising this objection due to their conduct during the execution proceedings. The court emphasized that objections to the executability of the decree should have been raised at the earliest opportunity, such as when notice under Order 21, Rule 22, was issued.4. Locus Standi of Appellants Nos. 2 and 3:The court addressed the issue of whether appellants Nos. 2 and 3 had the right to represent the dissolved company. It was held that appellants Nos. 2 and 3, being merely shareholders or directors of a dissolved company, had no locus standi to maintain the appeal. The court noted that the dissolution of the company put an end to its legal existence, preventing any proceedings against it.5. Applicability of Res Judicata and Estoppel:The court invoked the doctrine of res judicata, explaining that objections which could and ought to have been raised at earlier stages could not be raised later. The court also applied the rule of estoppel, noting that the appellants' conduct during the execution proceedings precluded them from raising the objection about the absence of a final decree at this belated stage.6. Alleged Irregularities and Fraud in the Execution Process:The appellants alleged various irregularities and fraud in the execution process, including the adequacy of the sale price, the involvement of a false bidder, and the lack of proper publicity. The court found that these objections had been sufficiently and correctly dealt with by the executing court. The court emphasized that mere irregularity or fraud, without substantial injury, was not a ground for setting aside the sale.Conclusion:The appeal was dismissed on both grounds of maintainability and merits. The court held that the decree was executable, the appellants were estopped from raising objections about the absence of a final decree, and the alleged irregularities did not warrant setting aside the sale. The connected Civil Revision No. 377 of 1985 was also dismissed without any order as to costs.