AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1447
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....ce expired), having 33 per cent shareholding each, and Ranchod Das Daga, having 1 per cent shareholding. 3. The Articles of Association of the company initially did not permit the members to sell their shareholding in favour of third parties. In the year 2010, Prayag Das and Krishna Das, allegedly unilaterally, altered the Articles of Association to permit unconditional sale of shares to third parties, provided the proposed transfer comprised of 75 per cent or more of the shareholding. 4. Subsequently Prayag Das and Krishna Das caused rights issue of additional shares unilaterally to Prayag, his wife Nirmala and Krishna, increasing their collective shareholding to approximately 89 per cent, while reducing Lakshman's shareholding to 11 per cent. The present respondent no. 5, who primarily contests the review application, is the widow of Late Lakshman Das Daga and inherited her husband's shares on his demise. 5. Pursuant to the above alteration of shareholding, Prayag, Krishna and Nirmala transferred their shareholding to the review applicant (R/A), Saltee Infrastructure Ltd., and one Parimala Mercantile Private Limited, both third-party companies, in the year 2011. 6. Su....
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....the Bench having regular determination to hear company matters to seek transposition. 11. Learned counsel argues that the order under review was passed by ignoring the provisions of Order XXIII Rule 1-A of the Code of Civil Procedure (CPC), read with Order I Rule 10 thereof which is an error apparent on the face of record. 12. On the scope of review, learned counsel appearing for the R/A cites Radha Bhattad v. Rashmi Cement Limited, reported at 2023 SCC OnLine Cal 2570, where it was held by a co-ordinate Bench of this Court that High Courts have obligation under Article 215 of the Constitution to maintain correct records, including the power to correct orders if erroneous. 13. Learned counsel next cites Y. Venkannachowdary & Ors. v. The special Deputy Collector, Land Acquisition (General), Hydrabad District & Ors., reported AIR 1981 AP 232, where a Division Bench of the Andhra Pradesh High Court held that mistake of counsel in not arguing a provision of law is analogous to an error apparent on the face of record, warranting review. 14. Learned counsel further relies on Tinkari Sen & Ors. v. Dulal Chandra Das & Ors., reported at AIR 1967 Cal 518, and Girdhari Lal Gupta v....
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....the appellate stage, as held in Hardatt Sharma v. Jaikishen Shamlal & Sons & Ors., reported at AIR 1983 J&K 29. Order I Rule 10, CPC, it is argued, provides for addition, deletion and substitution of parties including transposition from one status to another so that the subject-matter may be adjudicated in a single lis, avoiding multiplicity of proceedings. Such right specifically kicks in when the plaintiff seeks to withdraw a suit under Order XXIII Rule 1. The wide powers in that regard, it is submitted, were laid down in R. Dhanasundari Alias R. Rajeswari v. A.N. Umakanth & Ors., reported at (2020) 14 SCC 1. 21. With regard to the contention that the provisions of Order XXIII Rule 1-A, read with Order I Rule 10, apply to appeals by virtue of Section 107 of the CPC, learned counsel cites K.K. Abraham v. Joseph Varghese & Anr., reported at AIR 2003 Ker 1, and Govinda Iyer v. Kumar, reported at AIR 1980 Mad 232, in the first of which the Court was dealing specifically with an appeal under Section 10F of the 1956 Act. 22. Learned counsel contends that it has been held by various High Courts that where the plaintiff/appellant seeks to withdraw the appeal while propounding the c....
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....order dated August 24, 2016 passed in the appeal, prior to being withdrawn, by a co-ordinate Bench of this Court where it was apparently recorded that the R/A had no objection with the rest of the impugned decree but for the accounting component. However, it is submitted that this Court had recorded while hearing the recall application that it would not enter into the factual aspects of the case. Thus, the scope of the order dated August 24, 2016 is beyond the scope of the present review application. In any event, it is contended that there was no concession on the part of the R/A recorded in the said order as regards its rights being affected if the appeal was withdrawn. Under Order XLI Rule 33, CPC, it is reiterated, the Court could very well have passed other or further orders even if no appeal was preferred by the respondents against the impugned order. Thus, it was mandatory for this Court, while dismissing the recall application, to consider transposition of the R/A to the category of appellant. 28. Learned counsel for the R/A next submits that the recall application was not dismissed on the ground that the appellants have shown any service of notice of the withdrawal on t....
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....s the R/A to be transposed as an appellant in the appeal. In any event, it is argued that the impugned order under review was not passed on the ground of delay; thus, the said letter becomes insignificant. 36. Per contra, learned counsel appearing for the respondent no. 5, which is the primary contesting respondent in the review application, argues that neither the appeal under Section 10F nor the parent application under Section 397 of the 1956 Act were instituted in representative capacity. The language of Section 10F provides for a statutory right of appeal of "any person aggrieved" by the order of the CLB and does not contemplate an appeal being filed in representative capacity of another. The R/A, it is argued, has failed to show any provision of law or precedent in support of the contention that the appeal was filed in representative capacity. Also, no proof of any assurance allegedly given to the R/A by the appellant regarding the appeal has been brought on record. 37. Learned counsel for respondent no. 5 next contends that the Section 397 proceeding was instituted by Sushila, the respondent no. 5, not in representative capacity on behalf of any other member as contemp....
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....ubmitted that the withdrawal application was running in the list of this Court, as evident from the date mentioned in the endorsement of the Department of this regard, for some time but the R/A, despite receipt of the notice, chose to remain absent at the time of hearing of the same. It is submitted that the learned advocate for respondent no. 5 repeatedly wrote to the respondent no.1-company informing of the withdrawal of the appeal and seeking rectification of its register and records as per the CLB order, which clearly shows knowledge of the R/A, which was in full control of the respondent no. 1-company at that juncture. 44. The R/A, it is argued, chose to be a fence-sitter and its conduct disentitles it from any relief. 45. Learned counsel for respondent no. 5 next proceeds to deal with and distinguish the judgments cited by the R/A, apart from Bhagwati Developers (supra) [Bhagwati Developers Private Limited v. Peerless General Finance Investment Company Limited & Ors., reported at (2013) 5 SCC 455], on which it also relies, in view of the Hon'ble Supreme Court having observed therein, upon taking cognizance of the prior round of litigation, that the High Court Division B....
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....ied that the suit has been instituted through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the Court thinks just." *** "Order XXIII 1A.When transposition of defendants as plaintiffs may be permitted.-Where a suit is withdrawn or abandoned by a plaintiff under rule 1, and a defendant applies to be transposed as a plaintiff under rule 10 of Order I the Court shall, in considering such application, have due regard to the question whether the applicant has a substantial question to be decided as against any of the other defendants." 51. Courts have recognized the general power of the suit court to transpose defendants to the category of plaintiffs within the broad ambit of the power of addition/substitution/deletion of parties conferred under Order I Rule 10 of the CPC. 52. Order XXIII Rule 1-A of the CPC, on the other hand, comes under the heading "Withdrawal and Adjustment of Suits" and provides for transposition of a defendant as a plaintiff in the specific and limited context when the plaintiff seeks to wit....
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.... refers to the proceeding and cannot be extended to a stage after the proceeding is done and dusted. 60. The R/A relies heavily on Bhagwati Developers Private Limited v. Peerless General Finance Investment Company Limited & Ors., reported at (2013) 5 SCC 455. The context of the said case is to be examined to ascertain the tenability of such submission. 61. In the said case, the Division Bench of the concerned High Court, vide orders dated November 16 and November 18, 1993, allowed similar applications dismissing two appeals as withdrawn. Immediately thereafter, on December 22, 1993, the appellant before the Supreme Court filed the two applications for recall of the said orders of dismissal of the appeals and for transposing itself as appellant therein. The said application was rejected on February 2, 1995, against which appeals were preferred before the Hon'ble Supreme Court. The Hon'ble Supreme Court disposed of the said appeals on April 26, 1996, observing that the appellant/transposition applicant may prefer independent appeals against the judgments and orders dated January 13, 1992/January 14, 1992 assailed in the appeals which were dismissed as withdrawn. 62. The said....
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....r, the said application was filed on the strength of Sushila's 11 per cent which, being above 1/10th of the share capital, qualified her to maintain the application under Section 399 (1) (a) of the 1956 Act in her own right. 68. Even from the cause of action espoused therein, it would be evident that it was personal to Sushila and not in representative capacity. It was Sushila who alone was aggrieved by depletion of her original equal (33 per cent) shares with the other groups of shareholders in M/s. Daga Auto Service Pvt. Ltd., by virtue of the unlawful inflation of shares of the other groups of shareholders by unilateral share issued by them in their own favour and alteration of the Articles of Association to carve out an exception in respect of the restriction to transfer to third parties if the shareholders have 75 per cent or more of the shareholding. 69. Thus, does not arise any question of applicability of the ratio laid down in the aforesaid reports, in all of which the applications under Section 397/398 were filed in representative capacity with consent of other shareholders. 70. In R. Dhanasundari Alias R. Rajeswari v. A.N. Umakanth & Ors., reported at (2020) 14 ....
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.... made to protect the interest of the ward. The said ratio is patently distinguishable on facts here. 75. In Hardatt Sharma v. Jaikishen Shamlal & Sons & Ors., reported at AIR 1983 J&K 29, the consideration was in respect of the impleadment of parties and not transposition as such. In the case of a partnership firm, the plaintiff had fraudulently obtained a consent decree without impleading some of the partners in the said case, which is distinguishable from the facts of the present case. 76. In K.K. Abraham v. Joseph Varghese & Anr., reported at AIR 2003 Ker 1, the facts were distinct and different from the present case. In the said case, the application for setting aside the withdrawal and transposition was made on the very day when the appeal was withdrawn. Moreover, the context was that the party seeking to be transposed argued that the appellant-wife had already separated from him and had no right in respect of the suit property. Thus, the said judgment is clearly distinguishable from the present context. 77. In Govinda Iyer v. Kumar, reported at AIR 1980 Mad 232 the matter pertained to a partition suit, where all parties, including the defendants, stand on the footing....
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....y of interest of the appellants and the R/A in the present case, either before the CLB or before this court, is completely absent. Also, as opposed to the said report, in the instant case, no transposition had been filed when the appeal was withdrawn. 83. In Butti Veerpal and Ors. v. K. Vijaya Laxmi and Ors., reported at (2006) 4 ALD 441, the matter also arose from a partition suit, in which all parties had the characteristics of a plaintiff and the cause of action for partition subsisted in the defendants even if the plaintiffs sought to withdraw the suit. In any event, in the said case, there was no case of withdrawal but the plaintiffs were held not to pursue the suit diligently. 84. Thus, none of the above judgments cited by the R/A, which are distinguishable both on facts and in context from the instant lis, come to the aid of the R/A. 85. Hence, this issue is decided against the R/A, by holding that an application for transposition in an appeal cannot be made post-withdrawal of the appeal, particularly keeping in view the inordinate delay occasioned by the petitioner in seeking such transposition, despite having notice of the withdrawal. The question of notice will b....
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....vided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the 1 Tribunal is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the 1 Tribunal may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. 399. RIGHT TO APPLY UNDER SECTIONS 397 AND 398--(1) The following members of a company shall have the right to apply under section 397 or 398 : (a) in the case of a company having a share capital, not less than one hundred members of the company or, not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares ; (b) in the case of a company not having a share capital, not less than one-fifth of the total number ....
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....eing a change brought in the interest of any creditor, debenture holder or class of shareholders of the company, to have taken place in the management or control of the company, to prefer such application. 90. Both Sections 397 and 398, however, are subject to the rider that the applicant member must have a right to apply under the said provisions by virtue of Section 399, which is an umbrella provision. 91. Section 399(1)(a) inter alia provides that in the case of a company having a share capital, an individual member can apply under Sections 397 and 398 only when such member has not less than 1/10th of the issued share capital of the company, provided that applicant has paid off calls and other sums due on his/her shares. The other parameters in Section 399 are attracted only when multiple members apply. Thus, in order for an individual member, in his/her own capacity, to maintain an application under Section 397/398, he/she has to have shareholding of 1/10th or more of the issued share capital of the company. 92. Sub-section (3) of Section 399 stipulates that where any members(in plural) of a company are entitled to make an application by virtue of sub-section (1), any ....
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....d the original appellants could respectively be aggrieved are distinct and different. Whereas the scope of grievance of the appellants would pertain to the CLB setting aside the rights issued unlawfully to increase the share capital of the appellants as opposed to Sushila and the preceding alteration in the Articles of Association to facilitate the same, the scope of grievance of the R/A-Saltee would be restricted to the transfer of such shares by the appellants in its favour and the validity thereof. Thus, the grounds which could be espoused by the appellants and the R/A respectively in the appeal were not common but distinct and different, thereby ruling out the possibility of any common representation by both. 98. Again, before all fora, the appellants and the R/A were represented by different sets of counsel, which holds true not only for the CLB but in the appeal as well. 99. The reliance of the R/A on Order XLI Rule 33 of the Code of Civil Procedure is completely misplaced. The said provision deals with powers of the court and does not carve out any right of the parties to an appeal. The appellate court, under the said provision, has power not only to pass any decree or....
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....LB order and were prosecuting the appeal, could not have any common interest or ground with the R/A, which submitted before the Court in positive terms that it supported the findings of the CLB. 104. In view of the above, the argument of R/A that the appeal was filed by the appellants in representative capacity of the R/A cannot be accepted and is hereby turned down. (iii) Whether the review applicant had prior notice of withdrawal of the appeal 105. The following features mark the present case: (a) Notice of withdrawal of the appeal was sent to the R/A (Saltee), as borne out by the postal receipt and the track report, at its address at AE Block, Salt Lake (Bidhannagar), which is serviced by the CC Block Post Office. From the track report, it is evident that the postal consignment was delivered at the Salt Lake CC Block SO; (b) From the postal receipts, it is seen that the same postal tariff was paid as in respect of the postal articles served on the other parties, who have not disputed receipt of the same, This rules out the insinuation of the R/A that no copy of the withdrawal application was sent to it; (c) R/A (Saltee), by dint of its purchas....
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....the withdrawal application was taken up. 112. Thus, this issue is also decided against the R/A. (iv) Whether the review applicant is barred by estoppel and constructive res judicata from seeking transposition at this stage 113. As discussed earlier, in the order dated August 24, 2016 passed in connection with the appeal, it was categorically recorded by a co-ordinate Bench of this Court that not only did the R/A abstain from raising any objection to the CLB order impugned in the appeal, but it was positively asserted that it "supports the findings" of the CLB. Hence, the R/A cannot be permitted now to resile from such position and do a volta face by seeking to have common ground with the appellant to challenge the order of the CLB. From the said recording of Court, which has never been challenged before the concerned Bench by the R/A at any point of time, it is evident the R/A conceded to the position that it had no grievance to the order impugned in the appeal. Hence, it was barred by the principle of estoppel as well as res judicata, which operates at different stages of the same proceeding, to seek a transposition or pray for prosecuting the appeal even on the date when....
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....ess to grant transposition, if the R/A was otherwise entitled to it in law. Hence, while taking up the recall application, the lack of regular determination of the concerned Bench to take up company matters on that day could not fetter the court from revisiting the order under recall and to consider the position as on the date of such order of withdrawal of the appeal. Hence, the said pretext for not pressing the transposition prayer cannot be accepted. 117. In such view of the matter, this Court comes to the conclusion that the R/A is barred by the principles of estoppel and res judicata/constructive res judicata from re-agitating the self-same issues which have already been decided on merits and set at rest at the time of adjudicating the recall application. At best, the R/A could have preferred a challenge against the order dismissing the recall application on the ground of error of law. However, the review jurisdiction is not the appropriate forum to re-agitate the self-same issues, already decided on merits while dismissing the recall application. (v) Scope of review - how far the questions urged can be re-agitated 118. The respondent no. 5 cites Sanjay Kumar Agarwal ....
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....eing sought to be urged afresh now, merely to protract the litigation indefinitely, much to the detriment of the octogenarian respondent no. 5, Sushila. Moreover, the arguments advanced now by the R/A, at best, could have been errors of law amenable to a challenge against the order dismissing the recall application before a superior forum; however, they do not come within the zone of consideration in review. 124. As such, this court comes to the conclusion that there is no scope of exercise of the review jurisdiction to interfere with the order dismissing the recall application of the R/A dated November 21, 2025. CONCLUSION 125. In view of the above findings, the Court comes to the conclusion that no case for review of the order dated November 21, 2025 has been made out from any perspective. Rather, it is clear from the nature of the review application that it is a mala fide bid to protract the lifespan of the litigation by re-agitating the same issues over and over again in different garbs, to the utter detriment of respondent no. 5-Sushila, the contesting respondent, who is an octogenarian lady and being unnecessarily harassed and deprived of the fruits of the order whic....