1998 (4) TMI 431 - HC - Companies Law

Court permits amendment to address new events at annual meeting, emphasizing continuity of original dispute. Allegations of manipulation recognized.

National Textile Corpn. (UP) Ltd. Versus Swadeshi Polytex Ltd.

National Textile Corpn. (UP) Ltd. Versus Swadeshi Polytex Ltd. - [1998] 93 COMP. CAS. 814 (DELHI) Issues Involved:1. Amendment of the plaint.2. Legality of the annual general meeting and the resolutions passed.3. Appointment of scrutineers and the validity of their actions.4. Allegations of manipulation and unfair practices by the defendants.5. Continuing cause of action and subsequent events.Detailed Analysis:1. Amendment of the Plaint:The plaintiffs sought to amend para 53 of the plaint by adding new sub-paragraphs (A) to (I) and to substitute para 54. The amendments were necessitated by subsequent events, including the annual general meeting held on December 5, 1997, and the actions taken therein. The court considered whether these amendments introduced new causes of action or were a continuation of the original cause of action. The court concluded that the amendments were necessary to do complete justice and avoid multiplicity of suits, as the subsequent events were part of the same sequence of actions that began with the board meetings on August 14, 1997, and August 29, 1997.2. Legality of the Annual General Meeting and Resolutions Passed:The plaintiffs contended that the annual general meeting held on December 5, 1997, and the subsequent adjourned meetings were conducted in violation of the Companies Act. They argued that the poll demanded by the plaintiffs was not conducted within the stipulated 48 hours, and the appointment of scrutineers was biased. The court noted that these issues were interconnected with the original cause of action regarding the appointments made in the board meetings of August 1997.3. Appointment of Scrutineers and Validity of Their Actions:The plaintiffs challenged the appointment of scrutineers, alleging that they were not independent and were associated with the defendants. They argued that this compromised the fairness of the poll. The court considered these allegations as part of the broader dispute over the fairness and legality of the actions taken by the defendants in the annual general meeting and subsequent adjourned meetings.4. Allegations of Manipulation and Unfair Practices by the Defendants:The plaintiffs alleged that the defendants manipulated the proxy votes and ballot papers, rejecting valid votes cast by the plaintiffs and financial institutions on frivolous grounds. They claimed that the defendants fabricated and forged proxies to secure a numerical victory. The court acknowledged these allegations as part of the plaintiffs' broader claim of unfair practices and manipulation by the defendants.5. Continuing Cause of Action and Subsequent Events:The plaintiffs argued that the subsequent events, including the annual general meeting and the actions taken therein, were a continuation of the original cause of action. They contended that the amendments were necessary to address these ongoing issues. The court agreed, stating that the subsequent events were part of the same sequence of actions that began with the board meetings in August 1997 and were not separate causes of action.Conclusion:The court allowed the amendment application, recognizing that the subsequent events were part of the same cause of action and necessary to address the ongoing dispute comprehensively. The court emphasized that the amendments did not introduce new causes of action but were a continuation of the original issues raised in the suit. The amended plaint was to be filed within one week, with the amended written statement and replication to follow. The matter was listed for further hearing on May 14, 1998.