MANU/GJ/0104/2004

Equivalent Citation: [2004]52SC L762(Guj)

IN THE HIGH COURT OF GUJARAT

Admirality Suit No. 3 and Misc. Civil Application No. 14 of 2004
Decided On: 09.03.2004
Appellants: Floating Services Ltd.
Vs.
Respondent: MV 'San Fransceco Dipalola'
Hon'ble Judges/Coram:
D.A. Mehta, J.
Counsels:
For Appellant/Petitioner/Plaintiff: M.J. Thakor and A.S. Vakil, Advs.
For Respondents/Defendant: Pratap and R.J. Oza, Advs.

JUDGMENT
D.A. Mehta, J.
1 . This suit has been presented by the plaintiff seeking arrest of defendant No. 1-
Vessel, i.e., M.V. 'San Fransceco Di Paola' in the following circumstances :
2 . The case of the plaintiff is that the plaintiff, a Limited Company, incorporated
under the laws of United Kingdom and having its address as stated in the cause title,
is the owner of defendant No. 1-Vessel. It is stated that the said vessel was
purchased by the plaintiff from one Audrey ventures company on 27-6-2000. That
thereafter the plaintiff entered into a Memorandum of Agreement dated 1-7-2003 with
defendant No. 2 for sale of vessel for a consideration of US $ 4,00,000 and defendant
No. 2 paid 10% of the said consideration. The expected time of delivery of the vessel
was 7-7-2003. However, according to the plaintiff, as defendant No. 2 had not paid
the entire balance consideration, no delivery was given by the plaintiff. It is further
averred that defendant No. 1 - vessel was laid up at the port/Harbour of Oostende
Port, Belgium since 27-6-2000 and hence, there was no crew on board. The case of
the plaintiff is that defendant No. 2 clandestinely removed the vessel from the closed
basin and sailed the vessel out of the Oostende Port without paying the balance
consideration of US $ 3,60,000. That for this purpose, it is averred, the defendant
No. 2 utilized a forged bill of sale dated 30-6-2003 and obtained a certificate of
registration dated 6-11-2003 issued by the Belize Ship Registry.
3. In the circumstances, the plaintiff seeks declaration to the effect that the plaintiff
is the sole owner of the vessel and title vests with the plaintiff, that defendant No. 2
or any person claiming through the said 2nd defendant does not have any right, title
or interest in the vessel and the vessel is required to be restored in lawful possession
of the plaintiff. Over and above such a declaration, the plaintiff has also sought a
mandatory injunction against defendant No. 2 or any other person claiming through
the 2nd defendant and being in possession of the vessel, directing them to hand over

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 the possession of the vessel to the plaintiff.
4 . The suit came to be filed on 1-3-2004. The learned Advocate for the plaintiff
mentioned the matter at 11.00 a.m. on the said day and sought circulation of the
matter on the ground of urgency. Upon such permission having been granted the
matter was taken up for hearing at 2.15 p.m.
5 . Mr. M.J. Thakor, learned senior counsel appearing for Mr. A.S. Vakil, learned
Advocate for the plaintiff submitted that in the aforesaid backdrop of facts and
circumstances the plaintiff had filed the suit claiming possession of ownership of the
vessel and as the same was a maritime lien and claim the suit under the Admiralty
Act was maintainable. It was submitted that the vessel was in port and Harbour of
Alang, i.e., Alang anchorage, and hence within the territorial jurisdiction of this
Court. An apprehension was expressed that defendant No. 2 was likely to enter into a
sale or had already entered into a sale of the vessel with a Ship breaker and hence,
an order seeking arrest of the vessel to protect the interest of the plaintiff was sought
for till the defendants appear and furnish necessary security. Accordingly, on 1-3-
2004 an ex pane order of arrest came to be made by this Court.
6 . The defendants have filed OJMCA No. 14 of 2004 and the same came to be
presented on 4-3-2004. Considering the urgency of the matter both the Misc. Civil
Application and the suit were taken up for hearing on 5-3-2004. Thereafter, the
matters have been heard continuously on 8th & 9th March, 2004. The defendants in
the application presented by them have prayed that the order of arrest dated 1-3-
2004 (wrongly mentioned as 2-3-2004) be set aside and/or vacated. A further prayer
seeking damages @ US $ 4,000 per day for wrongful arrest and detention of the
vessel has also been made and consequential prayer seeking direction to the plaintiff
to furnish a bank guarantee has also been made. The case of the defendants is that
the entire plaint is based on false statements, suppression of material facts and
reckless allegations with complete knowledge that such statements and allegations
are false and hence, it is the say of the defendants that the ex parte order of arrest of
the vessel dated 1-3-2004 be vacated and defendants be compensated by awarding
adequate damages for wrongful arrest. The basis for the stand adopted by the
defendants is the factum of the plaintiff company having been dissolved on 16-12-
2003 after having been struck off from the Register of Companies House of the United
Kingdom.
7. Before adverting to the contentions raised on behalf of the respective parties it is
necessary to briefly recapitulate facts which are admitted and undisputed. The
plaintiff, a limited company, has come into existence on 29-6-2000 bearing company
No. 04023540. The plaintiff purchased the vessel on 27-6-2000 from one Audrey
Ventures Company Limited, U.S.A. The vessel was originally plying under the name
of 'Princess Christine' which has subsequently been changed to the present name,
i.e., MV 'Sari Fransceco Di Paola'. The plaintiff has no other property and no other
business. Since the day the vessel was purchased by the plaintiff it has been lying in
the closed basin of Oostende Port, Belgium. The vessel required extensive repairs.
The last account of the plaintiff company has been made upto 30-6-2002 (dormant)
and similarly last return was made upto 29-6-2002. The next return due was 27-7-
2003. The Company Secretary of the plaintiff is one Eikos International Ltd. and has
been appointed on 29-6-2000. The registered address of the plaintiff is the same as
address of the Company Secretary. The plaintiff has only one Director, who is sole
shareholder and has been appointed in the capacity of Director on 29-11-2002.

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 8 . On 18-7-2003 application for having name of the company struck off from the
register of the Companies House was made by or on behalf of the plaintiff, under
instructions of the plaintiff. The first Gazette notice for voluntary strike off as
statutorily required came to be published on 26-8-2003. Similarly the final Gazette
notice for voluntary strike off as statutorily required came to be published on 16-12-
2003, and upon such publication in the Gazette, as a statutory consequence, plaintiff
company came to be dissolved.
9 . The suit has been filed, as already noticed, by the Limited Company. The plaint
has been signed by the constituted attorney, viz., one Mr. Shridhar Burke. The
dispute between the parties is as to whether the plaintiff had executed the final sale
in favour of defendant No. 2 as per Bill of Sale dated 30-6-2003. The case of the
plaintiff is that the said Bill of Sale (Exh. 'E') is a forged document and hence, there
is no completed contract of sale entitling defendant No. 2 to possess the vessel in
absence of any right, title or interest in the said property. There is a further dispute
between the parties that the consideration for the sale which was fixed as per
Memorandum of Agreement at US $ 4 lacs (US $ 4,00,000.00) has not fully passed
from defendant No. 2 to the plaintiff. The defendants have disputed both the
averments. It is stated that the vessel was already under existing charge and had
various outstanding dues against its name. That defendant No. 2 paid off those dues
either in entirety or at a settled figure and hence, as per the understanding between
the parties the plaintiff had executed the Bill of Sale dated 30-6-2003, which was in
fact executed on 12-7-2003.
10. Mr. M.J. Thakor, appearing on behalf of the plaintiff submitted that it was an
admitted position that the plaintiff company was dissolved on the date of
presentation of the suit, but the sole shareholder who is also the only Director of the
plaintiff company, was not aware of the fact of the name of the company having been
struck off; that the said shareholder-Director became aware of this fact only when
OJMCA was served on the plaintiff, and hence, the plaintiff has taken appropriate
steps to have the company restored to the Register by moving appropriate application
on 8-3-2004. Mr. Thakor also accepted the fact that the vessel being the only asset of
the plaintiff company and having entered into an agreement to sell on 1-7-2003, the
shareholder Director had pursuant to the said agreement directed the Company
Secretary to move an application for having the name struck off from the Register.
That accordingly on 18-7-2003 the Company Secretary had moved such an
application. It is reiterated with emphasis that sole shareholder Director was not
aware of any subsequent developments viz. post 18-7-2003 and hence, the
application seeking restoration. It was submitted that the law was well settled that
upon an order of restoration being made the company would stand restored to the
Register and the consequence of such restoration would be that the company and all
other persons would be placed in the same position as if the company's name had not
been struck off from the Register. Reliance was placed on provisions of Sections 651,
652 and 653 of the Companies Act, 1985 (1985 Act) as well as various decisions to
contend that once an order of restoration was made it shall be deemed as if the
company was never struck off from the Register of Companies House. It was further
submitted that as could be seen from various decisions pressed into service, the said
decisions were rendered in different factual scenario, viz., one, where the company
whose name had been struck off from the Register had applied for restoration before
initiating any proceedings; second, a situation where the company whose name had
been struck off from the register had moved an application for restoration where
proceedings had been initiated but no effective hearing had taken place, and, last a
situation where the parties, including third parties, had acted in pursuance of such

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 dissolution and an application for restoration came to be moved after number of
years, albeit within the statutory period of limitation of 20 years. Thus, according to
Mr. Thakor in any set of circumstances the position in law was that once an
application for restoration had been made and restoration ordered the company was
deemed to be in existence as if its name had never been struck off from the register.
The contention, hence, was that the plaintiff in the present case had already moved
an application for restoration and once an order to restore the plaintiff to the register
was made all actions, including the present suit initiated by the plaintiff would be
legal and valid, being the consequence of the legal position or a legal fiction that the
company was never dissolved. It was further submitted that the dissolution of the
company was as a result of the name of the company being struck off from the
register and the dissolution did not succeed as an order of winding up.
11. Mr. Pratap, learned Advocate appearing on behalf of the defendants contended
that as could be seen from provisions of Sections 651, 652 and 653 of the 1985 Act,
the power of restoration was discretionary in nature and the entire basis on which the
case of the plaintiff has proceeded is not warranted in light of the language employed
in the provisions. It was further submitted that the case built on restoration is not a
case which is coming out from the suit and an entirely different case from the one
stated in the plaint was being argued before the Court. It was further submitted that,
as stated in the OJMCA, the plaintiff had no locus standi to present the suit, the
plaintiff being a non existent entity in law and hence, there was not only a fraud
perpetrated on the Court but the entire plaint was based on suppression of material
facts. It was urged that the Court was required to apply the test as to whether an ex
pane order of arrest of the vessel would have been made by the Court if the factum of
dissolution of the Company had been disclosed in the plaint. The test was, according
to the counsel that there should be full and frank disclosure of all material facts.
11.1 It was further submitted that the plaint was even otherwise bad in law and the
suit should not be entertained as the same had been presented by a person who has
not only failed to identify himself but has prima facie not even shown the authority
on the basis of which the suit has been presented. Inviting attention to the power of
attorney accompanying the plaint, viz., Exh.13, it was submitted that the said power
of attorney did not mention the address of Mr. Shridhar Burke who was signatory to
the plaint nor is the power shown to have been executed and authenticated before a
Notary. Thus, in light of the provisions of Section 85 of the Evidence Act the said
document was not a valid document on the basis of which any person named therein
could have initiated any proceeding. It was further submitted that the power of
attorney was in the name of four different individuals but did not specify as to
whether the said individuals were permitted to act independently or jointly or
severally or in the alternative to each other and hence, a presumption should be
drawn that they were required to act jointly. That the suit having been presented by
only one individual was not in accordance with the authority granted under such
power of attorney. In support of the submissions made various decisions were
pressed into service.
12. Mr. Thakor in response to the objection regarding power of attorney not having
been executed and authenticated by a notary public submitted that it was because of
the urgency of the situation that an ordinary copy received by Fax had been annexed
with the plaint. That he was in possession of copy of the power of attorney which
was duly notarised. That the suit had been presented on 1-3-2004 while power had
been executed on 29-2-2004 (a holiday) at Calais, France and hence could be
notarised only on 1-3-2004 by which time the suit had already been filed. It was

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 further submitted that Section 85 of the Evidence Act only raised a presumption but
that by itself does not impinge upon the validity of such a power of attorney. It was
further submitted that in any event the plaintiff was filing a fresh affidavit sworn
today by Luany Rodriguez Salas, a shareholder of plaintiff, ratifying all the actions
taken hereinbefore on the basis of the power of attorney executed on 29-2-2004.
That the plaintiff was ready and willing to submit a fresh plaint duly signed by the
said shareholder, viz., Luany Rodriguez Salas so as to ensure that the procedural
defects stand cured. It was submitted that the case of the plaintiff was governed only
by virtue of provisions of Sections 652 & 653 of the 1985 Act as could be seen from
the details available at page No. 17 of OJMCA. That the three decisions cited on
behalf of the defendants were dealing with cases of winding up and hence could not
be applied to the facts of the present case.
13. It requires to be noted that the merits of the dispute between the parties have
not been gone into as both the sides have presented their case only in relation to be
preliminary issue : viz., whether the plaintiff could have presented the suit in the
circumstances of the case. In the circumstances, the question before the Court is not
as to what is the effect of an order of restoration but as to whether on the date of
filing the suit a company whose name has been struck off from the register of the
companies and as a consequence dissolved, can initiate any legal proceedings so as
to be valid in law.
14. Section 33 of the Companies Act, 1956 (the Act) provides for Registration of
Memorandum and Articles. The effect of such registration is as laid down in Section
34 of the Act, i.e., the Registrar shall certify under his hand that the company is
incorporated. From the date of incorporation, the subscribers of the memorandum
and other persons, namely the members, shall be a body corporate by the name
contained in the memorandum, capable of exercising all the functions of an
incorporated company, and having perpetual succession and a common seal.
15. One of the characteristics of a company thus is that it is an incorporated body of
persons. It is not mere aggregate of its members : it is not like a partnership firm or
a family. The company is constituted into a distinct and independent person in law
and is endowed with special rights and privileges; it is in law a person distinct from
its members. The advantage of incorporation is that a company never dies. It has
perpetual succession and remains in existence however often its members change,
until its dissolution. This prevents the dissolution of the company by the death,
bankruptcy, or lunacy of any of its members - unlike a partnership firm. This
characteristic offers to a company and its shareholders various special advantages
and privileges; more particularly, the company is permitted to acquire and hold
property in its corporate name, and enables the company to use, a common seal, to
contract with its shareholders and others.
16. A company is a separate legal entity notwithstanding the fact that there was only
one governing director who also held a majority of the shares of the company. The
separate legal entity enabled the director, representing the company, to enter into a
contract of employment with himself in his individual capacity. - Lee v. Lee's Air
Farming Ltd. [1961] 31 Comp. Cas. 233 (PC).
17. Companies incorporated under the Act are capable of suing and being sued in
their corporate names. A company's right to sue arises when some loss is caused to
the company, i.e., to the property or the personality of the company, as distinct from
a loss occasioned to the directors of the company. The rights of the company and the

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 rights of its shareholders are not co-extensive. Where a company was the recipient of
a cheque which was dishonoured, it was held that the company was competent to
make a complaint under Section 138 of the Negotiable Instruments Act. The money
represented by the cheque was the company's money and not that of its functionaries
and therefore the company alone could file a complaint - Nandgopal v. NEPC Agro
Foods Ltd. MANU/TN/0075/1993 : [1995] 83 Comp. Cas. 213 (Mad.). Incorporation
brings into existence a legal person which develops into its own separate existence as
a business or enterprise. A company, as a person separate from its members, may
even sue one of its own members for libel. The publication of any statement which
disparages the business of the company, defames the company at the same time.
Hence, the company is entitled to sue in damages for libel or slander as the case may
be. - Metropolitan Saloon Omnibus Co. Ltd. v. Hawkins [1859] 28 L.J.CL. 830.
18. In the case of Agarwalla H.P. v. Union of India [1963] BLJR 127, it has been held
that a limited company has a separate legal personality and its directors cannot be
made liable for legal liability incurred by the company.
19. A one-man company is a distinct assessable and legal entity as much as any
other company - O.K. Trust v. Rees 23 TC 2l7; Stanely v. Gramophone & Typewriter
5 T C 358 ; I.R. v. John 8 TC 20 .
An individual may control a company; but it does not necessarily follow, because the
individual controls the company, that the business carried on by the company
controlled is necessarily a business carried on by the Controller. - Kodak v. Clark 4
TC 549.
20. In the case of Mrs. Bacha F. Guzdar v. CIT MANU/SC/0072/1954 : AIR 1955 SC
74, the Apex Court was called upon to decide the rights of shareholder qua the rights
of a company. It has been laid down :
"... That a shareholder acquires a right to participate in the profits of the
company may be readily conceded but it is not possible to accept the
contention that the shareholder acquires any interest in the assets of the
company....
A shareholder has got no interest in the property of the company though he
has undoubtedly a right to participate in the profits if and when the company
decides to divide them. The interest of a shareholder 'vis-a-vis' the company
was explained in the 'Solapur Mills case' - 'Charanjit Lal v. Union of India',
MANU/SC/0009/1950 : AIR 1951 SC 41 at pp. 54, 55(B). That judgment
negatives the position taken up on behalf of the appellant that a shareholder
has got a right in the property of the company. It is true that the
shareholders of the company have the sole determining voice in
administering the affairs of the company and are entitled, as provided by the
articles of association, to declare that dividends should be distributed out of
the profits of the company to the shareholders but the interest of the
shareholder either individually or collectively does not amount to more than
a right to participate in the profits of the company.
The company is a juristic person and is distinct from the shareholders. It is
the company which owns the property and not the shareholders...." (p. 77)
It is necessary to note that the aforesaid law has been enunciated by the Apex Court
in the context of the contention raised before it to the effect that when an investor

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 buys share of a limited company the investor buys in the first place a share of the
assets of the company proportionate to the number of shares he has purchased. It is
this contention which has been negatived by the aforesaid statement of law.
21. Applying the aforesaid principles to the present case it is apparent that today the
limited company is no longer in existence, at least was not in existence on the date
the suit was presented. The suit has been brought in relation to the property owned
by and belonging to the limited company. Even if it could be stated that the
shareholder had any interest by virtue of the shareholding, as stated by the Apex
Court, it is only a right to participate in the profits. In the aforesaid decision in the
case of Mrs. Bacha F. Guzdar (supra) it is further laid down that a shareholder has,
over and above a right to participate in the profits of the company, a further right to
participate in "assets of the company which would be leftover after winding up" but
not in the assets as a whole.
2 2 . Therefore, a shareholder has a limited, restricted right only after an order of
winding up is made, liabilities of the company discharged and then if any surplus of
assets is left. In the present case it is not possible even for the plaintiff to make a
statement that the shareholder is entitled to the vessel as being net surplus of assets
after discharging all liabilities of the company. In fact, during the course of hearing a
stand is adopted that one Mrs. Luany Rodriguez Salas, is the sole shareholder and
director of the plaintiff company and hence is an interested person. Once the position
is admitted that the company is struck off from the register and dissolved as a
consequence there is no question of any particular shareholder, even the sole
shareholder, making a claim to the property of the company without showing that all
liabilities of the company stand discharged.
23. One more aspect of the matter is that the limited company is a separate legal
entity distinct from its shareholder. Merely because there is only one shareholder, the
entities which are otherwise distinct, one is a natural person and the other is an
artificial juristic person, it cannot be contended that the said entities merge and one
can act for and on behalf of other. The principle of agency has to be understood and
appreciated in light of the provisions of the Act, Memorandum and Articles of
Association of the company.
24. Section 291 of the Act deals with general powers of the Board; but this does not
include power to institute suits/legal proceedings. The provisions of Section 291 of
the Act while entitling a Board of Directors of a company to exercise all such powers
provide, by way of exception that the Board shall not exercise any power which is
required to be exercised by the company in general meeting, as required by the
provisions of the Act or any other law for the time being in force as well as
Memorandum or Articles of the company. Similarly the second Proviso carves out a
further exception, that the Board while exercising powers shall be subject to the
provisions contained in the Act or any other law for the time being in force as well as
memorandum and articles of the company, and further that such exercise shall not be
inconsistent with provisions of the Act or requirement of the Memorandum or Articles
of the company.
2 5 . Therefore, unless the power to institute a suit is specifically conferred on a
particular director, he would have no authority to institute a suit on behalf of the
company. Needless to state that such a power can be conferred by Board of Directors
only by passing the resolution in that regard. Individual directors are vested with
only such powers as are available to them either under the memorandum or articles

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 of the company, or otherwise by the Board of Directors. A Managing Director also
does not have any power to manage the affairs of the company over and above those
available to the Board; the Managing Director can exercise only such powers as have
been delegated to him. A company cannot orally authorise another person to sign a
plaint on its behalf. A company can act only as provided under its Articles of
Association. The provisions of Order VI Rule 14 of the Code of Civil Procedure, 1908
read with Order XXIX Rule 1 stipulate that pleadings of a corporation shall be signed
by an authorised Director, Secretary or other Principal Officer.
26. In the case of United Bank of India v. Naresh Kumar MANU/SC/0002/1997 : AIR
1997 SC 3 while deciding the question whether the plaint was duly- signed and
verified by a competent officer, the Apex Court laid down as under :
"9. In cases like the present where suits are instituted or defended on behalf
of a public corporation, public interest should not be permitted to be
defeated on a mere technicality. Procedural defects which do not go to the
root of the matter should not be permitted to defeat a just cause. There is
sufficient power in the Courts, under the Code of Civil Procedure, to ensure
that injustice is not done to any party who has a just case. As far as possible
a substantive right should not be allowed to be defeated on account of a
procedural irregularity which is curable.
10. It cannot be disputed that a company like the appellant can sue and be
sued in its own name. Under order 6 Rule 14 of the Code of Civil Procedure a
pleading is required to be signed by the party and its pleader, if any. As a
company is a juristic entity it is obvious that some person has to sign the
pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil
Procedure, therefore, provides that in a suit by or against a corporation the
Secretary or any Director or other Principal Officer of the Corporation who is
able to depose to the facts of the case might sign and verify on behalf of the
company. Reading order 6, Rule 14 together with order 29, Rule 1 of the
Code of Civil Procedure it would appear that even in the absence of any
formal letter or authority or power of attorney having been executed a person
referred to in Rule 1 of order 29 can, by virtue of the office which he holds,
sign and verify the pleadings on behalf of the corporation. In addition thereto
and de hors order 29, Rule 1 of the Code of Civil Procedure, as a company is
a juristic entity, it can duly authorise any person to sign the plaint or the
written statement on its behalf and this would be regarded as sufficient
compliance with the provisions of order 6, Rule 14 of the Code of Civil
Procedure. A person may be expressly authorised to sign the pleadings on
behalf of the company, for example, by the board of directors passing a
resolution to that effect or by a power of attorney being executed in favour of
any individual. In absence thereof and in cases where pleadings have been
signed by one of its officers a Corporation can ratify the said action of its
officer in signing the pleadings. Such ratification can be express or implied.
The Court can on the basis of the evidence on record, and after taking all the
circumstances of the case, specially with regard to the conduct of the trial,
come to the conclusion that the corporation had ratified the act of signing of
the pleading by its officer." (p. 5)
2 7 . The plaintiff would like to adopt the approach laid down in paragraph 9 as
reproduced hereinbefore. However, the observation regarding sufficient power being
available to the Court to ensure that injustice is not done to any party who has a just

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 case has to be read not only in the context of the facts of the case which were there
before the Apex Court, but also while applying the principle facts of the present case
have to be borne in mind. The distinction between a public corporation representing
public interest and limited company has to be taken into consideration for the
purpose of deciding whether it is only a procedural defect or it affects the rights of a
party.
2 8 . The question is not as to whether such a remedy is permissible, or whether
defect is required to be permitted to be cured by ratification of the action, as is
sought to be done by filing an affidavit dated 9-3-2004 by one Luany Rodriguez
Salas, a shareholder of the plaintiff, but whether this can really amount to a
procedural irregularity only. At the cost of repetition it requires to be reiterated that
on the date of presentation of the suit the company was admittedly struck off from
the Register and dissolved. There can be therefore, no question of ratification of an
action which a non existent entity could not have initiated in the first instance.
29. As laid down by the Supreme Court in the case of United Bank of India (supra) in
the case of a corporation primarily a pleading is required to be signed by the
Secretary, or any director or other Principal Officer who is able to depose to the facts
of the case. That ;such person may sign and verify pleadings even in absence of any
formal document authorising such person by virtue of the office such person holds;
and if he does so, the action can be ratified by the corporation subsequently
expressly by a resolution, or impliedly by conduct. Here admittedly, the plaint is
signed and verified by a person who is neither secretary, nor director, nor Principal
Officer of the plaintiff. Hence, he is not a person who is able to depose to the facts of
the case. This becomes abundantly clear when one reads the verification of the plaint.
3 0 . In the plaint in paragraph 25 it is stated that one Mr. Shridhar Burke a
Constituted Attorney of the plaintiff who has made himself conversant with the facts
of the case on the basis of instructions, information and documents received has
signed and verified the plaint. Page No. 14 is the verification and the same reads as
under :
"I, Shridhar Burke, of adult, Indian Inhabitant, having my office at.... the
Constituted Attorney of the plaintiffs abovenamed do hereby solemnly declare
that what is stated in the foregoing paragraph Nos. 1 to.... is based on
documents made available to me and instructions received by me and what is
stated in the remaining paragraph Nos...... to..... is based upon legal advise
and I believe the same to be true.
Solemnly declared at Ahmedabad this 1st day of March, 2004."
As can be seen from the verification the said gentleman after stating having my office
at ......., has left the space for inserting address blank and in relation to paragraph
numbers also except for mentioning paragraph No. 1 the remaining portion has been
left blank; as to what are the paragraphs which are based on documents made
available to him and what are the paragraph numbers in relation to instructions
received by him as well as what are the paragraphs based on legal advice has been
conveniently omitted. Thereafter, reply dated 5-3-2004 tendered in OJMCA has been
affirmed by Luany Rodriguez Salas, a shareholder of the plaintiff company.
Subsequently an affidavit dated..... day of March, 2004 sworn at Mumbai by Luany
Rodriguez Salas has been placed on record on 8-4-2004. In the said affidavit the
deponent has not been identified by anyone nor does the notary state that he

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 personally knows the lady. Similarly another affidavit has been tendered again sworn
at Mumbai which has been counter signed by the learned Advocate for the plaintiff
and notarized on the same day, viz., 7-3-2004. Today, i.e., 9-3-2004 one more
affidavit has been filed wherein it is stated to have been sworn by Luany Rodriguez
Salas but once again the deponent has not been identified by anybody though the
rubber stamp has been affixed showing.
Identified by me.
Advocate.
3 1 . In reply to OJMCA in paragraph 5 Mrs. Luany Rodriguez Salas states : "An
application for restoration of the plaintiff to the register has been made and the
restoration shall, in law, relate back". In the same paragraph further it is stated : "the
plaintiff had filed the suit in extreme urgency and could not make an application for
restoration". This affidavit is sworn on 5-3-2004. As against the two statements made
by the same person there is one more affidavit without date, notarized on 7-3-2004
and presented in the Court on 8-3-2004 wherein it is stated that : "I say that I have
signed the witness statement of claim and sent it to Holman Fenwick and Willan,
London Solicitors to enable them to take all necessary steps for restoration of the
company. I have been informed that the filing procedure will be completed by London
opening on Monday, 8th March, 2004 and an application would be made to the Court
for urgent restoration of the company...."
Hence, we have three statements of the same lady stating at one place that
restoration application is already made on 5-3-2004, another where it is accepted
that as the suit was filed in extreme urgency the plaintiff could not make an
application for restoration and third one where it states that the application is being
moved on 8-3-2004. These by themselves do not determine the lis between the
parties, and appear to be small blemishes when viewed in isolation, but are factors
which when cumulatively considered reflect upon the conduct of the
plaintiff/shareholder.
32. Along with the second affidavit notarized on 7-3-2004 Luany Rodriguez Salas has
annexed a copy of the witness statement of claim. This is what is stated in relation to
dissolution of the company.
"16. I understand that, in compliance with my instructions, on 16th July,
2003 an application was filed for the voluntary dissolution of the company
(p.2). On 21st July, 2003, the Registrar of Companies wrote to the directors
of the company acknowledging receipt and stating that he would take the
requisite steps to remove the company from the Register (p. 3, 4).
1 7 . Unfortunately, the sale of the Vessel did not materialize as expected.
Under the MOA, the delivery of the Vessel was to be effected on 7th July,
2003 with a cancellation date of 7th August, 2003 (in the buyer's option). By
early August 2003 Simbolo had not paid the balance of the purchase price
and sought time extensions for various reasons. As the Company did not
have another potential purchaser for the Vessel, it did not terminate the MOA.
The first Gazette notice for voluntary strike off was done on 26th August,
2003.
1 8 . At this stage I should have ensured the withdrawal of the company's
application for voluntary dissolution. I now realise it was inappropriate for

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 the Company to be struck off from the Register whilst it still held assets and
whilst it still had to perform the MOA (i.e. give delivery of the Vessel under
the MOA).
19. Regrettably, I did not give sufficient consideration to the fact that the
Company Secretary had already instigated a procedure for the voluntary
winding up of the company and that this procedure would be continued with
unless the Company Secretary or I intervened on behalf of the company. This
was a mistake on my behalf and I apologies to the Court.
20. On 2nd September, 2003 the Registrar of Companies gave notice that,
unless cause was shown to the contrary, at the expiration of three months
from the said date the name of the company would be struck off the register
and the company would be dissolved (p. 5). This notice was received but,
due to my failure to appreciate its significance, I did not instruct the
Company Secretary to withdraw the company's application for dissolution
and show cause as to why the company should remain on the register.
21. Accordingly, the company was struck off from the Register under Section
652(5) of the Companies Act, 1985 on 9th December, 2003 and dissolved by
voluntary dissolution by notice in the London Gazette dated 16th December,
2003 (p. 6)."
Therefore, the contention raised on behalf of the plaintiff that the sole shareholder-
director had no knowledge about the proceedings under Section 652 of the 1985 Act,
or that it had escaped attention is not only not supported by any evidence on record,
but stands falsified by this statement of claim : when she accepts that a letter dated
21-7-2003 and then a notice dated 2-9-2003 were received from the Registrar of
Companies. The statement during course of hearing that she realised (that the
company had been dissolved) only when she was served with OJMCA is thus patently
false.
33. In the case of 'VASSO' (Formerly 'ANDRIA')[1984] 1 LLR 235 the Court of Appeal
says :
"It is axiomatic that in ex parte proceedings there should be full and frank
disclosure to the Court of facts known to the applicant, and that failure to
make such disclosure may result in the discharge of any order made upon the
ex parte application, even though the facts were such that, with full
disclosure, an order would have been justified : See R.V. Kensington Income
Tax Commissioners, ex parte Princess Edmond de Polignac [1917] 1 K.B.
486, Examples of this principle are to be found in the case of ex parte
injunctions (Daglish v. Jarvis [1850] 2 Mac.231), ex parte orders made for
service of proceedings out of the jurisdiction under order 11 of the rules of
the Supreme Court (The Hagen [1908] p. 189 at p. 201, per Lord Justice
Farewell), and Mareva Injunctions (Negocios del mar S.A. v. Doric Shipping
Corporation S.A. (The Assios)[1979] 1 Lloyd's Rep. 331). In our judgment,
exactly the same applies in the case of an ex parte application for the arrest
of a ship where, as here, there has not been full disclosure of the material
facts to the Court."
34. The High Court of Delhi in the case of Seemax Construction (P.) Ltd. v. State
Bank of India MANU/DE/0031/1992 : AIR 1992 Delhi 197 has laid down :

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 "10. The suppression of material fact by itself is a sufficient ground to
decline the discretionary relief of injunction. A party seeking discretionary
relief has to approach the court with clean hands and is required to disclose
all material facts which may, one way or the other, affect the decision. A
person deliberately concealing material facts from court is not entitled to any
discretionary relief. The Court can refuse to hear such person on merits. A
person seeking relief of injunction is required to make honest disclosure of
all relevant statement of facts otherwise it would amount to an abuse of the
process of the Court. Reference may be made to decision in King v. General
Commissioner for the purposes of the Income Tax Acts for the District of
Kensington 1917 (1) King's Bench Division 486 where the Court refused a
writ of prohibition without going into the merits because of suppression of
material facts by the applicant. The legal position in our country is also no
different. [See : Charanji Lal v. Financial Commissioner MANU/PH/0112/1978
(FB)]. Reference may also be made to a decision of the Supreme Court in
Udai Chand v. Shankar Lal AIR 1978 SC 265. In the said decision the
Supreme Court revoked the order granting special leave and held that there
was a misstatement of material fact and that amounted to serious
misrepresentation. The principles applicable are same whether it is a case of
misstatement of a material fact or suppression of material fact." (p. 201)
3 5 . The Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath
MANU/SC/0192/1994 states :
"5. The High Court, in our view, fell into patent error. The short question
before the High Court was whether in the facts and circumstances of this
case, Jagannath obtained the preliminary decree by playing fraud on the
Court. The High Court, however, went haywire and made observations which
are wholly perverse. We do not agree with the High Court that there is no
legal duty cast upon the plaintiff to come to court with a true case and prove
it by true evidence'. The principle of 'finality of litigation' cannot be pressed
to the extent of such an absurdity that it becomes an engine of fraud in the
hands of dishonest litigants. The courts of law are meant for imparting
justice between the parties. One who comes to the Court, must come with
clean hands. We are constrained to say that more often than not, process of
the Court is being abused. Property-grabbers, tax-evaders, bank-loan-
dodgers and other unscrupulous persons from all walks of life find the Court-
process a convenient lever to retain the illegal-gains indefinitely. We have no
hesitation to say that a person, who's case is based on falsehood, has no
right to approach the Court. He can be summarily thrown out at any stage of
the litigation.
6 . The facts of the present case leave no manner of doubt that Jagannath
obtained the preliminary decree by playing fraud on the Court. A fraud is an
act of deliberate deception with the design of securing something by taking
unfair advantage of another. It is a deception in order to gain by another's
loss. It is a cheating intended to get an advantage. Jagannath was working as
a clerk with Chunilal Sowcar. He purchased the property in the Court auction
on behalf of Chunilal Sowear. He had, on his own volition, executed the
registered release deed (Ex. B-15) in favour of Chunilal Sowcar regarding the
property in dispute. He knew that the appellants had paid the total decretal
amount to his master Chunilal Sowcar. Without disclosing all these facts, he
filed the suit for the partition of the property on the ground that he had

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 purchased the property on his own behalf and not on behalf of Chunilal
Sowcar. Non-production and even non-mentioning of the release deed at the
trial is tantamount to playing fraud on the Court. We do not agree with the
observations of the High Court that the appellants-defendants could have
easily produced the certified registered copy of Ex. B-15 and non-suited the
plaintiff. A litigant, who approaches the Court, is bound to produce all the
documents executed by him which are relevant to the litigation. If he
withholds a vital document in order to gain advantage on the other side then
he would be guilty of playing fraud on the court as well as on the opposite
party." (p. 5)
36. The concept of fraud has been enunciated by the Apex Court in its latest decision
in the following words, after discussing the entire case law on the subject, in the case
of Ram Chandra Singh v. Savitri Devi MANU/SC/0802/2003:
"15. Commission of fraud on Court and suppression of material facts are the
core issues involved in these matters. Fraud as is well known vitiates every
solemn act. Fraud and justice never dwell together.
16. Fraud is a conduct either by letter or words, which induces the other
person or authority to take a definite determinative stand as a response to
the conduct of the former either by word or letter.
1 7 . It is also well settled that misrepresentation itself amounts to fraud.
Indeed, innocent misrepresentation may also give reason to claim relief
against fraud.
18. A fraudulent misrepresentation is called deceit and consists in leading a
man into damage by wilfully or recklessly causing him to believe and act in
flasehood. It is a fraud in law if a party makes representations which he
knows to be false, and injury ensues therefrom although the motive from
which the representations proceeded may not have been bad.
19. In Derry v. Peek [1889] 14 AC 337 it was held :
In an action of deceit the plaintiff must prove actual fraud. Fraud is
proved when it is shown that a false representation has been made
knowingly, or without belief in its truth, or recklessly, without caring
whether it be true or false.
A false statement, made through carelessness and without
reasonable ground for believing it to be true, may be evidence of
fraud but does not necessarily amount to fraud. Such a statement, if
made in the honest belief that it is true, is not fraudulent and does
not render the person making it liable to an action of deceit.
20. In Kerr on Fraud and Mistake, at p. 23, it is stated :
The true and only sound principle to be derived from the cases
represented by Slim v. Croucher[1860] 1 De GF & J 518 is thus :
that a representation is fraudulent not only when the person making
it knows it to be false, but also when, as Jessel, M.R., pointed out,
he ought to have known, or must be taken to have known, that it
was false. This is a sound and intelligible principle, and is,

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 moreover, not inconsistent with Derry v. Peek [1889] 10 AC 337. A
false statement which a person ought to have known was false, and
which he must therefore be taken to have known was false, cannot
be said to be honestly believed in. 'A consideration of the grounds of
belief, said Lord Herschell, 'is no doubt an important aid in
ascertaining whether the belief was really entertained. A man's mere
assertion that he believed the statement he made to be true is not
accepted as conclusive proof that he did so.'
** ** **

22. Recently this Court by an order dated 3-9-2003 in Ram Preeti Yadav v.
U.P. Board of High School & Intermediate Education
MANU/SC/0683/2003held : (SCC pp. 316-317, paras 13-15)
'13. Fraud is a conduct either by letter or words, which induces the
other person or authority to take a definite determinative stand as a
response to the conduct of the former either by words or letter.
Although negligence is not fraud but it can be evidence on fraud.
(See Derry v. Peek).
14. In Lazarus Estates Ltd. v. Beasley [1956] 1 All ER 341 the Court
of appeal stated the law thus : (All ER p. 345 C-D).
'I cannot accede to this argument for a moment. No court in this land
will allow a person to keep an advantage which he has obtained by
fraud. No judgment of a Court, no order of a minister, can be
allowed to stand if it has been obtained by fraud. Fraud unravels
everything. The Court is careful not to find fraud unless, it is
distinctly pleaded and proved; but once it is proved it vitiates
judgments, contracts and all transactions whatsoever;'
15. In S.P. Chengalvaraya Naidu v. Jagannath MANU/SC/0192/1994
this Court stated that fraud avoids all judicial acts, ecclesiastical or
temporal.'
2 3 . An act of fraud on Court is always viewed seriously. A collusion or
conspiracy with a view to deprive the rights of the others in relation to a
property would render the transaction void ab initio. Fraud and deception are
synonymous.
** ** **

29. In Chittaranjan Das v. Durgapore Project Ltd. [1995] 2 Cal.L J 388 it has
been held : (Cal LJ p. 402, paras 57-58).
'57. Suppression of a material document which affects the condition
of service of the petitioner, would amount to fraud in such matters.
Even the principles of natural justice are not required to be complied
with in such a situation.
58. It is now well known that a fraud vitiates all solemn acts. Thus,
even if the date of birth of the petitioner had been recorded in the
service returns on the basis of the certificate produced by the

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 petitioner, the same is not sacrosanct nor the respondent company
would be bound thereby.'" (pp. 327-330)
Applying the aforesaid principles it is clear that : (i) there is absence of full and frank
disclosure; (ii) there is a misstatement of a material fact or suppression of material
fact; and, there is withholding of a vital fact by the plaintiff. This amounts to
commission of fraud on the Court. Misrepresentation itself amounts to fraud. A
representation is fraudulent not only when the person making it knows it to be false,
but also when, he ought to have known, or must be taken to have known, that it was
false. The plaintiff is a limited company - a juristic entity - acting through a living
person. That person herein claimed to be sole shareholder-director, who admits : (i)
she instructed the Company Secretary in July 2003 to apply for having the name of
the company struck off from the Register; (iii) received letter and notice from the
Registrar in July and September 2003 : and yet expects the Court to believe that
there is no suppression. There is no offer/attempt to amend the plaint even after
receipt of OJMCA. The offer, during course of hearing, is only to substitute the plaint
to remove defects. Therefore, this is a clear case of deception. Fraud and deception
are synonymous.
37. As already seen a non existent entity cannot ratify any action which it could not
have initiated : there is no director, no secretary, no principal officer. The company
having been dissolved there is no entity/person who can authorise anyone. A
shareholder of erstwhile company cannot claim any right, title or interest in any
particular asset/property of the company. Then there is no question of executing any
power of attorney as authorised signatory. - [1986] BCLC 342 (CA).
3 8 . In the case of Pierce Leslie & Co. Ltd. v. Miss. Violet Ouchterlony Wakshare
MANU/SC/0221/1968 : AIR 1969 SC 843 it is laid down thus :
"12. As already stated, technical escheat of the real property of dissolved
company was abolished in England in 1929 and Section 354 of the
Companies Act, 1948 now provides that all property and rights of a dissolved
company shall be deemed to be bona vacantia and shall accordingly belong
to the Crown. There was no statutory provision like Section 354 before 1929.
In the absence of such a provision, the Crown took the real property of a
company dissolved before 1929 by escheat and its personal property as bona
vacantia, except in so far as its right was cut down by statute, see 1933-1
Ch. 29 (supra). Likewise in this country, the Government took by escheat or
as bona vacantia all the properties of a company dissolved under the Indian
Companies Act, 1913 except insofar as its right was cut down by that Act.
P.B. Mukherjee, J. expressed a similar opinion U.N. Mandal's Estate (P.) Ltd.,
In re MANU/WB/0135/1959 : AIR 1959 Cal. 493 at p. 498.
1 3 . Accordingly the shareholders or creditors of the dissolved company
cannot maintain any action for recovery of its assets. No effective relief can
be given in such action, as the company is not a party and the assets cannot
be restored to its coffers. On this ground in Coxon v. Gorst 1891-2 Ch. 73 an
action by creditors for recovery of moneys due to the dissolved company was
dismissed, and in re Lewis & Smart Ltd., In re 1954 1 WLR 755 it was held
that a pending misfeasance summons abated on the dissolution of the
company.
1 4 . The plaintiffs' contention that the properties of a dissolved company

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 passed to its shareholders is based upon American law, which is stated in
American Jurisprudence, 2d, Corporations, Article 1659 thus :
** ** **

15. The law in our country is very different. Here the winding up precedes
the dissolution. There is no statutory provision vesting the properties of a
dissolved company in a trustee or having the effect of abrogating the law of
escheat. The shareholders or creditors of a dissolved company cannot be
regarded as its heirs and successors. On dissolution of a company, its
properties, if any, vest in the Government...." (p. 850)
39. In so far as applicability of order VI Rule 14 of the Code of Civil Procedure is
concerned : the moot question is : does the non existent company own any property?
The legal position is now well settled : on dissolution, properties of a company vest
in the Government. As can be seen hereinafter, by virtue of Section 654 of the 1985
Act, even if the property of the company is not sold (as per the plaintiff), the
property has vested in the Crown. Then there is no question of any person, including
a shareholder, staking a claim to the property; and, thus, filing a plaint by self or
through a power of attorney holder,
4 0 . In light of the fact that the entire case of the plaintiff rests on the effect of
restoration of the name of the company to the register it is necessary to examine,
however briefly, the provisions in relation to restoration. At the same time it is
necessary to bear in mind that the present proceedings are not for the purpose of
restoration and this Court is not called upon to decide any such issue but so as to
appreciate the contentions raised on behalf of the plaintiff it is necessary to look at
the provisions dealing with the restoration.
41. Section 651 of the 1985 Act pertains to power of Court to declare dissolution of
company void. Under Sub-section (1) of Section 651, the Court may at any time
within two years from the date of dissolution, where a company has been dissolved,
make an order, on such terms as the Court thinks fit, declaring dissolution to be void,
on an application made for the purpose by liquidator of the company or by any other
person (appearing to the Court to be interested). Sub-section (2) of Section 651
states that thereupon such proceedings may be taken as might have been taken as if
the company had not been dissolved. Under Sub-section (3) a person making
application is required within seven days after the making of the order by the Court
to deliver to the Registrar of the Companies an office copy of the order. Therefore,
under this section only the liquidator of the company or a person who appears to the
Court to be interested can move the Court; and once the Court declares the
dissolution to be void thereupon such proceedings may be taken as might have been
taken as if the company had not been dissolved.
4 2 . In the present case admittedly there being no winding up order a liquidator
stands ruled out. Then question that requires to be looked into is whether the plaintiff
or shareholder can be termed as a person who appears to the Court to be interested.
It is not necessary for the present purpose to determine this question as, on behalf of
the plaintiff, it is an accepted position that the plaintiff does not seek restoration
under Section 651 of the 1985 Act.
4 3 . Section 652 of the 1985 Act provides powers to the Registrar to strike off a
defunct company off the register. Sub-sections (1) and (2) of Section 652 pertain to
the procedure to be adopted. Sub-section (3) provides that if the Registrar either

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 does not receive an answer in response to the communication required to be sent
under Sub-sections (1) and (2), or receives an answer to the effect that the company
is not carrying on business or is not in operation, he may publish in the Gazette a
notice and also send a notice by post to the company that at the expiration of three
months from the date of such notice the name of the company will be struck off from
the register and the company will be dissolved, unless a contrary cause is shown.
Sub-section (4) of Section 652 pertains to a situation where a company is being
wound up and hence, is not relevant for the present purpose. Sub-section (5) of
Section 652 stipulates that at the expiration of the time mentioned in the notice the
Registrar may strike the name of the company off the register, unless contrary cause
has been shown by the company and shall publish notice of such striking off in the
Gazette; and the company is dissolved on the publication of such notice in the
Gazette.
44. Admittedly, in the present case Sub-sections (1) & (2) of Section 652 of the
1985 Act have no play. It is an accepted position that it was the plaintiff who had
moved the Registrar for having the name of the company struck off from the register,
and the Registrar had acted in pursuance of such application resulting in dissolution
of the company, publication in the Gazette as required both under Sub-sections (3)
and (5) of Section 652 having been complied with. The application for striking off
had been made on 18-7-2003. The first notice for voluntary strike off had been
published in the Gazette on 26-8-2003 and the final notice for voluntary striking off
had been published in the Gazette on 16-12-2003, resulting in dissolution on the said
day.
45. Section 653 of the 1985 Act pertains to objection to striking off by an aggrieved
person. Sub-section (1) of Section 653 states that the following sub-section applies if
a company or any member or creditor of the company feels aggrieved by the
company having been struck off the register. Under Sub-section (2) on an application
by the company or a member or creditor within stipulated period of limitation the
Court, may, if satisfied that the company was at the time of striking off carrying on
business or in operation, or otherwise that it is just that the company be restored to
the register, order the company's name to be restored. Sub-section (3) of Section
653 is made up of two parts : The first part states that on an office copy of the order
being delivered to the Registrar of Companies for registration the company is deemed
to have continued in existence as if its name had not been struck off; while the
second part of the provision stipulates that the court may by order give such
directions and make such provisions as seem just for placing the company and all
other persons in the same position (as nearly as may be) as if the company's name
had not been struck off.
46. Thus, on a conjoint reading of provisions of Sub-sections (1) and (2) of Section
653 of the 1985 Act it is apparent that a company or any member or creditor can
apply to a Court if the company or member or creditor feels aggrieved by the name of
the company having been struck off from the register, while Sub-section (2) of
Section 653 of the 1985 Act provides for the condition on fulfilment of which the
Court may exercise discretion of restoring the company to the register. The Court is
required to be satisfied that at the point of time when the name, of the company was
struck off from the register (a) company was carrying on business or was in
operation, (6) or otherwise, that it is just that the company be restored to the
register. Therefore, the person applying for restoration has to be a person who is
aggrieved. The concept of 'aggrieved' here means that the order of striking off has
resulted in a situation which is detrimental to the applicant, viz., company or any

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 member or creditor. Therefore, unless the applicant is 'aggrieved' there is no question
of making an application seeking restoration. Upon an application being made the
Court is required to ascertain whether the company was carrying on business or was
in operation at the time of the striking off the name from the register. In effect, it
means that the reasonable belief entertained by the Registrar of Companies under
Section 652(1) of the 1985 Act is found to be incorrect. For the Court to record such
a finding there must be some material available on record. The other alternative
contention which permits the Court to exercise discretion requires that 'it is just' that
the company be restored to the register. This requirement has to be backed by facts
and circumstances prevailing in a given situation so as to enable the Court to exercise
discretion in favour of the applicant, namely that the action of the Registrar striking
off the name of the company of the register would result in creating a situation which
is unfair and unjust to the applicant.
4 7 . In the present case, admittedly, the plaintiff cannot seek restoration on the
ground that it was carrying on business or was in operation at the time when its
name was struck off, as the plaintiff had applied that its name be struck off from the
register as the company was not carrying on business or was not in operation. In
light of the fact that an application has been moved, as stated at the bar, it is not
necessary to deal with the alternative situation whether it would be permissible for
the Court to exercise discretion on the basis of the consequence of striking off being
unjust to the applicant. Suffice it to state that there has to be cogent and sufficient
material in this regard.
48. Section 654 of the 1985 Act stipulates that property and rights of a dissolved
company are deemed to be bona vacantia and accordingly, belong to the Crown.
Once this is the position, the plaintiff cannot seek any relief on the basis of being
owner of the property without either impleading crown or putting it to notice.
4 9 . In the aforesaid factual matrix even if the plaintiff has moved an application
seeking restoration of the company to the register it is not necessary to await
outcome of such application. The learned counsel on behalf of the plaintiff had orally
requested that the matter may be adjourned to await outcome of the restoration
application. However, considering the fact that an order of arrest is operating against
the defendant it is not possible to the said request, especially in light of the fact that
the plaintiff was not inclined to permit vacation of the ex, parte interim order of
arrest.
50. There is a serious dispute between the parties as regards whether any sale has
been effected by the plaintiff as averred by the defendants in OJMCA. In this context
the defendants have in paragraphs 10 of OJMCA, in support of their averments that
the plaintiff had executed a sale in favour of the defendants, placed reliance on
factum of the Director of the plaintiff having provided a copy of her passport for
identification purpose and provided confirmation that she was a Director of the
plaintiff company. In support of the averment a copy of the passport has been
annexed and marked as Exhibit-6 of OJMCA. No explanation is forthcoming on behalf
of the plaintiff even though an affidavit-in-reply has been tendered as to in what
circumstances the said lady had furnished a copy of her passport to the defendants.
Therefore, this is one factor which remains uncontroverted and would go to show that
the plaintiff has not approached the Court with full and true disclosure of all material
facts.
51. In relation to the payment of sale consideration it is averred by the defendants in

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 paragraph 12 of OJMCA that defendant No. 2 had paid all outstanding dues of
Oostende Port as well as negotiated a settlement with other persons who were having
prior charges over the vessel. In this context reliance has been placed on a copy of
fax message dated 4-11-2003 from Ernst & Young copy of which is annexed as
Exhibit-8. As can be seen from page Nos. 26, 27 & 28 the various charges and claims
outstanding against the vessel have been mentioned. The plaintiff has in its reply
disputed this by stating in paragraph 6(i) that it is not stated who the creditors were,
what were the claims, etc. The details are available at page 28 of OJMCA, but more
importantly, as can be seen from page 39 which is annexed to the reply of the
plaintiff, the plaintiff was aware that there were seizures in place but these were at
the expenses of Audrey Ventures, viz., the previous owner. In the same
communication which is admittedly generated from the office of advocates of the
plaintiff, it is stated as to which amounts have been paid by the defendants to lift
seizures. Thus, prima facie it appears that there were claims outstanding against the
vessel and the averment made by the plaintiff that it has not been paid full
consideration is not found to be absolutely correct. Whether the defendants have paid
the entire amount of consideration or not by discharging such existing claim is not
the question that is required to be decided. The only aspect that requires
consideration at this stage is whether the plaintiff has placed all relevant facts before
the Court or not.
52. In the plaint paragraph 2 reads as under :
"2. At the outset, the plaintiffs wish to state that the present suit is being
filed under circumstances warranting extreme urgency. The plaintiffs only a
very short while ago learnt about the arrival of the 1st defendant vessel at
Alang/Bhavnagar for scrapping. Immediately thereupon the plaintiffs
instructed their Advocates to address a letter dated 28th February, 2004
(Saturday) to the Commissioner of Customs, Bhavnagar, requesting him not
to grant beaching permission to the 1st defendant vessel and not to accept
the Bill of Entry relating to the 1st defendant vessel and informing him that
the plaintiff would be adopting appropriate proceedings. Having regard to the
critical urgency that the matter entails, the plaintiffs have had to file the
present suit on the first working day thereafter. The plaintiffs have thus had
very little time to instruct their Indian Advocates and appraise them of all
facts and documents. The difficulty has been compounded by different time
zones, the fact that many of the documents are in foreign language and the
office of their Belgian lawyers being closed over the intervening week end.
Although every attempt has been made in the circumstances to bring all
relevant facts and documents to the notice of this Hon'ble Court, it is
possible that due to oversight and inadvertence and want of translations,
something may be omitted or overlooked. The plaintiffs therefore crave
liberty from this Hon'ble Court to place the same on record at a later stage,
should this be necessary or advised."
At the time of hearing on 1-3-2004 a specific query was put to the learned counsel of
the plaintiff as to what had prompted insertion of such paragraph in the plaint. The
answer was that having regard to the urgency and the documents being in foreign
language, it was found necessary to make such averment. All that can be said after
hearing the parties in relation to such averment is that it appears that the plaintiff has
sought to prevaricate and build a proposed defence, with the knowledge that the suit
was being presented on behalf of defunct company which had already been struck off
from the Register.

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 53. In the aforesaid fact situation applying the test and adopting the approach stated
by the Apex Court in the case of United Bank of India (supra) it is not possible to
state that these are procedural defects which do not go to the root of the matter and
should not be permitted to defeat a just cause. The plaintiff has failed to make out a
case so as to seek assistance of the aforesaid observations made by the Apex Court.
54. In the result, the OJMCA is allowed and as a consequence the suit is dismissed.
The order of the arrest of the vessel made on 1-3-2004 is hereby vacated/set aside.
The plaintiff shall bear the cost of the suit and the OJMCA. It will be permissible to
the defendants to communicate this order by fax at their own costs. At this stage, Mr.
Thakor, learned counsel appearing on behalf of the plaintiff makes a request that the
order of arrest may be continued so as to enable the plaintiff to approach the higher
forum. On the facts and the circumstances which have come on record the said
request is rejected.

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