TaxTMI 
TaxTMI 
2010 (9) TMI 219
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....ule 8 of the Code was sought on the basis of the averment in the plaint as to the commonality of interest of the named plaintiffs with other unnamed companies. The plaintiffs have issued advertisements under Order I rule 8 of the Code. The original defendants have not applied for revoking such leave, though their application for rejection of the plaint on the ground that it does not disclose any cause of action has recently been dismissed. Several applications have been carried for taking other companies on board in this suit. The earlier applications have been allowed by adding the applicants on the plaintiffs' side despite the objection of the original plaintiffs. The added plaintiffs have been given a second voice, in that an order provides that the added plaintiffs would have separate representations. It is conceivable that this may lead to some embarrassment at the trial of the suit, but the trial of a suit is so distant that the parties may be excused for overlooking the possible conflict on the plaintiffs' side. In the subsequent applications for addition of parties, the applicants have been arrayed as defendants. An initial interim order was made in favour of the plaintiffs....
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....nspection. The plaintiffs rely on the criminal complaints lodged by the original defendants or the first defendant upon the requests not being complied with by the plaintiff companies and the identical allegations contained in the letters for request and the petitions in the criminal proceedings. They say that it is inconceivable that the first defendant would visit the registered offices of several companies on the same afternoon as disclosed in its petitions filed in the criminal Court. They suggest that the criminal proceedings have been instituted with ulterior motive to unnecessarily drag directors of well-known companies to the criminal Court. They argue that the manner in which the original-defendants have gone about making the requests and filing the criminal proceedings would substantiate the plaintiffs' charge that the entire exercise is mala fide and undertaken to wreak vengeance on the plaintiff companies upon their refusal to release advertisements in the first defendant's publication. 5. The ad interim order on GA No. 938 of 2010, which is the original plaintiffs' principal application, stood vacated on 18-8-2010 when the application was dismissed for the petition ....
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....s of section 284" of the Companies Act. The plaintiffs say that the first defendant is a known mischief-monger and the second defendant is his associate and accomplice. The extent of the first defendant's shareholding in the plaintiff companies is detailed at paragraph 19 of the original petition; the first defendant holds one share in one of the plaintiff companies, two shares each in four of the companies, five shares in another plaintiff, ten shares each in two of them and 27 shares and 5,000 shares in the other two. The second defendant holds one share each in two of the plaintiff companies and four shares in a third. The plaintiffs assert that the object of the defendants to acquire shares in the plaintiff and other public or listed companies is to cause nuisance therein or make extortionist demands on the management of such companies. They suggest that the original defendants are not genuine shareholders and have acquired shares in the companies to wrongfully exercise their rights and cause prejudice to these companies. They rely on similarly-worded requests received by eight of the ten plaintiffs between mid-August and mid-September, 2009 for supply of copies of the minutes ....
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.... records and inspect others, it would be foolhardy of a company to deny him the exercise of such right. He says that he needs the information that he has sought for his business purpose and that the subsisting order of injunction prejudices his publication. The first defendant insinuates that the affairs of public and even listed companies in this country are conducted neither in the interest of the companies nor of its shareholders but largely for the personal aggrandisement of those in management thereof. He laments that the statutory authorities responsible for overseeing the conduct of those in management of public or listed companies have failed miserably in discharging their obligation and are, more often than not, in league with the recalcitrant management. He says that he is a financial adviser of sorts and his publication brings out the ills of the manner of corporate management in this country. 9. The first defendant says that he is a shareholder of several hundreds of other public companies. He has named a number of well-known corporate entities that have complied with his lawful requests of similar import. He suggests that the bigger, board-managed companies have no ....
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.... the register of members of the company to communicate his views to other shareholders on the mismanagement in the company. The company cited special circumstances since it was a charity and undertook before court that it would act as an honest mailbox and forward the material supplied by the petitioning shareholder to other members of the company. The court acceded to the request since it upheld the company's stand to maintain the confidentiality of its members. The following passages from the report are of relevance in the context : "16. In support of these submissions Dr. Pelling cited Davies v. Gas Light and Coke Co. [1909] 1 Ch. 248, a decision of Warrington J. on the construction of the Companies Clauses Consolidation Act, 1845, which did not include a provision in the terms of section 356(6) or any equivalent provision. (That procedure for enforcing the right to inspection was not introduced until section 32 of the Companies Act, 1862.) Under the 1845 Act only a member of the company could require a copy of the register and the enforcement of that right was by way of ordinary action and not under a specially prescribed statutory procedure. It was in that context that Warr....
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....th Dr. Pelling that, as a general rule, the court will make a mandatory order to give effect to a legal right. But, as stated by Lord Evershed MR in Armstrong v. Sheppard & Short Ltd. [1959] 2 All ER 651 at 656, [1959] 2 QB 384 at 396 'it is not a matter of unqualified right'. There may be something special in the circumstances of the case which leads the court to refuse to make the usual order. . . ." 12. The plaintiffs rely on a judgment in Dreyfuss & Son v. Benson 239 SW 347. In that case the court disagreed with the contention that a statutory expression which was somewhat similar to the comparable provisions of the Companies Act in this country gave an absolute right to a shareholder to inspect the books and records of the concerned company. In the words of the Court of Appeal of Texas, ". . . To hold this would mean that a court should compel a corporation under this law to open its books and records to a stockholder regardless of whether he is prompted by motives wholly evil and corrupt to seek the information they might reveal....The effect of the statute, at least, is to put upon a corporation, when it resists such right of inspection by a stockholder, the requiremen....
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....of the Companies Act in this country, confers a right on the requisitionist to approach a judicial or a quasi-judicial authority upon the request being declined. 16. Section 163 stands apart from the other provisions under which requests have been made by the original defendants. Section 163(3) permits any person to make extracts from the relevant documents or require copies thereof against payment. Section 196 confers a right to a member of a company to obtain copies of minutes of general meetings of a company. Similarly, section 301 of the Act allows a member of the relevant company to inspect the register of contracts and make extracts therefrom and section 372A also recognises a member's right to inspect and make extracts from the register recording investments or loans made and guarantees given or security furnished to or for another body corporate. 17. The provision now found in section 163(6) of the Act was not originally a part of the comparable section in the 1913 Act. It was introduced by way of an amendment in the 1930s. The similar provision did not find place in the statute in England when the Davies' case (supra) decision was rendered but also was subsequently i....
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....le under section 163(6) may not be the test in the present case; at any rate, in respect of the requests made under sections 196, 301 and 372A of the Act. It is not the person who made the request to the company who has come to court to compel the company to comply with the demand. Indeed, if the person making the request to the company were to come to court, the court would ordinarily direct such person to the forum recognised by the statute and not usurp the authority in every case. The present action as brought by companies seeking to deny the request made by the original defendants. 20. There is a qualitative difference between sections 163 and 196 on the one hand and sections 301 and 372A on the other. Both sections 163 and 196 carry a provision for the implementation of the right to obtain copies or inspect records thereunder. That is in addition to the criminal consequences that may visit the officer of the company who is in default. Sections 301 and 372A carry the penal provision and stipulate that the provision of section 163 would apply to the procedure for obtaining copies or making extracts, but do not specifically provide for either the manner or a forum for the enf....