LexM/S. HANU MOTEL PVT. LTD. & ORS . versus U.P. FINANCIAL CORPORATION LTD. & ANR.
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[2008] 14 S.C.R. 1207 .,. MIS. HANU MOTEL PVT. LTD. & ORS . A v. U.P. FINANCIAL CORPORATION LTD. & ANR. (Civil Appeal No. 6280-6281 of 2008 etc.) OCTOBER 24, 2008 B [C.K. THAKKER AND D.K. JAIN, JJ.] j Natural Justice - Non-observance of- In legal proceed- ings - Suit by Company through Director - Appeal against interlocutory order in the suit - During pendency of appeal, c Director was removed and new Director authorized to pursue legal proceedings - New Director impleaded in the appeal as well as in suit~ Old Director filing application denying having filed the suit and alleging fraud·- High Court without hearing the Company and the new Director observed that the old Di- D rector did not file the suit - CBI inquiry directed - Review pe- "' titian dismissed by High Court holding that the new Director was wrongly impleaded - CBI report stated that no fraud was played and the old Director had filed the suit - Initiation of criminal proceedings against old Director by Registrar Gen:.. E era/ of High Court - Proceedings quashed by High Court - On appeal, held: High Court order not sustainable on the ground of non-observance of natural justice - The appeal was decided on the basis of one sided version without hearing the Company and the new Director, despite the fact that he was -, impleaded as party - Recalling of impleadment order at the F stage of Review was wrong - Matters remitted to High Court for fresh consideration on merit. Appellant No.1-Company and respondent No.1-Fi- nancial Corporation entered into a loan agreement and G cancelled the agreement and issued demand notice to ... the company seeking payment of balance amount. Appenant-C.ompany filed a suit against the can.cella- tion of loan and the demand .notice through respondent 1207 H i .. 1208 . SUPREME COURT REPORTS [2008) 14 S.C.R. A No. 2 who .was the ·then Director of the Company. The court " granted interim injunction. The Corporation filed appeal against the interlocutory order. During pendency of the ap- peal, the Company passed a resolution to remove respon- dent No.2 as Director of the Company and authorized ap- B pellant No.2 to prosecute the suit and other proceedings. Respondent No. 2 filed an application seeking to delete his name from the array of parties. He denied that \ he had filed the suit and alleged fraud having been com- mitted. Applications of appellant No. 2 for inipleadment in C the suit and the appeal were allowed. High Court finally disposed of the appeal by order dated 6.5.2003 by hearing only the respondents and held that respondent No. 2 did not file .the suit and fraud had 0 been played to abuse the process of law. It directed CBI to investigate into the mater. Company filed Review Petition against the order in the appeal. High Court dismissed the same by order dated 28.5.2003, observing that since the Court held that respon- E dent No.2 did not file the suit, thus no suit existed in the eyes of law and hence the appeal also did not survive. It also held that the court should not have impleaded ap- pellant No. 2. Hence the appeal Nos. 6280-81 of 2008. Pursuant to direct!on of the Court, CBI took up the F investigation. In its Report it stated that the evidence proved that respondent No. 2 had filed the suit as the Di- rector of the appellantqCompany. In the light of the find- ings of CBI, Re.gistrar General of High Court filed a com- plaint against respondent No. 2 u/s. 193 IPC. Re~pondent G No. 2 filed an application in the appeal and sought quash- ing of the criminal proceedings. High Court quashed the same; Hence the appeal No. 6282 of 2008. H I Allowing the appeals and remitting the matter to High Court, the Court M/S. HANU MOTEL PVT. LTD. & ORS. v. U.P. 1209 FINANCIAL CORPN. LTD. & ANR. )' · HELD: 1.1 The orders passed by the High Court can- A not be sustained. It is clear that the suit was filed by two plaintiffs. Plaintiff No. 1 was the Company and plaintiff No. 2 was shown to be a Director. High Court decided the matter without hearing appellant No. 1-Company and ap- pellant No. 2 whose impleadment application was allowed B by the High Court and the High Court was, therefore, ; aware that he was very much on record. The High Court virtually decided the matter on the basis of one sided ver- ·sion of Plaintiff No. 2 who had alleged that fraud was com- mitted against him. [Para 19] (1215-C to F) C 1.2 The High Court followed an easy p
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