Date of Judgement:
8th March 2022
Coram/judge:
Hon’ble Justice Shekhar B. Saraf
Parties to the Case:
Petitioner– Concast Steel & Power Limited
Respondents - Sarat Chatterjee and Co. (Vsp) Pvt. Ltd. & Ors
Legal Provisions
- Order 22 Rule 8 of Civil Procedure Code (CPC), 1908- which deals with situations where plaintiff’s insolvency bars suit.
Overview
- Defendant no.2 had filed an application seeking dismissal of the suit on the ground of abatement by the liquidator and to direct the special officer appointed by the court to restrain from carrying out the valuation and sale of the concerned goods.
- Another application had been filed to seek necessary amendment of the plaint to bring the liquidator of the plaintiff company on record to represent it in the instant suit.
- Both the applications were taken up in the present case. The original suit was filed by Dankuni Steels Ltd., later it was amalgamated in one of the companies which was a party to the suit. Subsequently,diverse orders had been passed in the suit from time to time by competent courts and a special officer was appointed to deal with property, which was the subject matter in the original suit.
- The amalgamated company had gone into liquidation by an order dated September 26, 2018, passed by the National Company Law Tribunal, Kolkata Bench.
- In the meeting held by the Special Officer, appointed as receiver by the court,on October 19, 2020, and January 13, 2021,the learned Advocate for defendant no.2, a company in liquidation, informed the Special Officer that his client went into liquidation and therefore the company will not be able to share any costs for the suits and proceedings since they do not have the funds to do so. The liquidator was present and took part in the said meeting and supported the submission made by the learned Advocate appearing for the company in liquidation.
- Thereafter, in the meeting held on September 17, 2021, the Advocate appearing on behalf of the Company in Liquidation submitted that the Special Officer does not have any jurisdiction or power to decide on the issue of whether he can proceed with the sale process in view of the fact that the plaintiff company had been ordered to go into liquidation. In the above meeting the Special Officer had decided to proceed with the sale and for such purpose had fixed a meeting on October 5, 2021, on a virtual platform for discussing the sale notice and the terms and conditions for sale.
Arguments Advanced by The Petitioner
- The Learned Counsel appearing for defendant no.2 emphasized on Order 22 Rule 8 and contended that the liquidator had declined or neglected to pursue the litigation. So, in light of the same, the suit stands abated.
- He hadfurther submitted that as the suit had abated, the sale of the ten thousand metric tons of Met Coke should be stayed and his client should be given possession of the same.
Arguments Advanced by The Respondents
- The Learned Counsel for the liquidator, had submitted that the liquidator was always acting in the suit as would be evident from the appearance of the liquidator before the special officer appointed by this Court with regard to the sale of ten thousand metric tonnes of met coke
- He submitted that in the present case the suit was not abated as there was no direction from the Court and no notice was given to the liquidator with regard to the abatement of the same. He further submitted that the Court has not directed for any security and, therefore, the question of any security does not arise in the present case.
Issue
Whether the act of liquidator in the special meeting and not impleading himself amounts to abatement of the suit under Order 22 Rule 8 of CPC,1908?
Judgment Analysis
- From Order 22 Rule 8, it was clearly established that in the case of a company that goes into liquidation, the suit shall not abate unless the liquidator declines to pursue the said suit. The other conditions were held irrelevant in the present case.
- The liquidator was appearing before the Receiver with regard to the sale of ten thousand metric tons of Met Coke and had also appeared before the Court with regard to the sale of the coke. There was no positive assertion to decline the suit by the liquidator. Although the liquidator was careless in impleading himself into the suit.
- The Court observed that to Implead the liquidator wasjust a technical requirement. Also Rule 9 Order 22 of CPC, with certain conditions, clearly allows the liquidator or the company for applying to set aside the abatement or the dismissal of the suit.
- The Honourable Court relied on the Judgement of Khunni Lal v. Rameshwar & anr. wherein it was held by the Hon’ble Allahabad High Court that till order wasn’t obtained under Order XXII, Rule 8 of the Code of Civil Procedure, the proceedings cannotabate and must be deemed to continue.
- In the present case, there had been no order of the Court seeking an explanation from the liquidator or any order of Court seeking security for the costs incurred by the defendants. It was very clear that the liquidator had been acting in the suit and took all necessary steps therein. Under these circumstances, it would be erroneous to hold that the liquidator has declined to continue the suit.
- A mere delay in making an application for substituting liquidator’s name in the file of the suit would not in any way lead to an abatement of the said suit.
- The presence of a liquidator in the meetings held by the receiver appointed by the court indicates a constant effort to protect the interest of the liquidating company.
- Hence, G.A. No. 7 of 2021 in C.S. No. 77 of 2013 seeking abatement of the suit was dismissed and G.A. No. 8 of 2021 in C.S. No. 77 of 2013 seeking amendment of the plaint to bring the liquidator on record was allowed.
Conclusion
Hence the Honourable High Court construed the provision relating to abatement of the civil suit in corporate matters as laid down by Order 22 Rule 8 of Civil Procedure Code of 1908. Ending up a series of hearing for the said application the Learned Judge, in the light of given circumstances, dismissed the prayer to declare the suit as abated and accepted to implead the liquidator in the proceedings to the main suit.
Click here to download the original copy of the judgement
