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        Companies Law

        1966 (3) TMI 52 - SC - Companies Law

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        Company defence cannot be struck off for a director's non-appearance absent proof the company caused or procured the default. Section 151 CPC cannot be used inconsistently with the Code's express scheme. Order XXIX rule 3 allows a court to require the personal appearance of a ...
                        Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                          Provisions expressly mentioned in the judgment/order text.

                              Company defence cannot be struck off for a director's non-appearance absent proof the company caused or procured the default.

                              Section 151 CPC cannot be used inconsistently with the Code's express scheme. Order XXIX rule 3 allows a court to require the personal appearance of a company director who can answer material questions, even if that director did not sign or verify the pleadings. However, the company's defence cannot be struck off merely because a director disobeys that direction. Corporate liability for such default requires a finding that the company itself caused, procured, or colluded in the non-appearance. On the facts found, no such finding existed, so the striking off was set aside and the suit was directed to proceed according to law.




                              Issues: Whether the defence of a company could be struck off under section 151 of the Code of Civil Procedure for failure of one of its directors to appear in court under Order XXIX, rule 3, and whether the company could be made liable for that default absent a finding that it had prevented the director's appearance.

                              Analysis: The inherent power under section 151 is available to prevent abuse of the process of the court, but it cannot be exercised in a manner inconsistent with express or necessarily implied provisions of the Code. Order XXIX, rule 3 permits the court to require the personal appearance of any director capable of answering material questions, even if that director was not the one who signed or verified the pleadings. However, the Code does not expressly provide that a company's defence must be struck off merely because a director disobeys such a direction. A consequential order under section 151 may be made against the defaulting director, but corporate liability requires a finding that the company itself was responsible for, or colluded in, the default.

                              Conclusion: The striking off of the appellant company's defence was not justified on the facts found, because no finding showed that the company had caused or procured the director's non-appearance; the order was therefore set aside and the suit was directed to proceed according to law.


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