An application under Section 115(1) of the Code of Civil Procedure

DISTRICT : DHAKA

IN THE SUPREME COURT OF BANGLADESH

HIGH COURT DIVISION

(CIVIL REVISIONAL JURISDICTION)

CIVIL REVISION NO. OF _______

IN THE MATTER OF:

An application under Section 115(1)

of the Code of Civil Procedure

AND

IN THE MATTER OF:

X

Son of Late Y

11/1-A Flat No.15 (5th floor)

Kabi Zashim Uddin Road

Kamlapur, P.S. Motijheel

Dhaka

PETITIONER

Versus

1. A

Son of B

Managing Director (Removed)

Chuadanga Flour Mills Limited

“Mita Kunja” (ground floor)

147/6 Peerer Bagh, P.S. Mirpur

Dhaka

RESPONDENT

/OPPOSITE-PARTY

2. The Registrar

Joint Stock Companies & Firms

24-25 Dilkusha Commercial Area (8th floor)

P.S. Motijheel, Dhaka

3. C

Son of D

10, East Kazi Para

P.S. Mirpur, Dhaka

4. Managing Director

Bangladesh Krishi Bank

Head Office

P.S. Motijheel, Dhaka

5. Mr. E

Deputy General Manager

Bangladesh Krishi Bank

Head Office

P.S. Motijheel, Dhaka

6. Mr. F

Manager

Bangladesh Krishi Bank

Chuadanga Branch

P.S. Chuadanga, Chuadanga

7. Mr. G

Proprietor of H Enterprise

Station Road, Rail Bazar

P.S. Chuadanga

Chuadanga

PROFORMA

RESPONDENTS

/PROFORMA

OPPOSITE-PARTY

AND

IN THE MATTER OF:

Judgement and Order dated 18.09.97 passed by Mr. Md. Abdul Hamid, 4th Additional District Judge, Dhaka, in Miscellaneous Appeal No.138 of 1997, dismissing the Appeal filed by the petitioner and Order (No. 11) dated 04.06.97 passed by Mr. Golum Ahmed Khalilur Rahman, 1st Assistant Judge, Dhaka in Title Suit No. 245 of 1996 allowing the application filed by the opposite-party No.1 on 13.10.96 for temporary injunction to restrain the petitioner from working as the Managing Director of Chuadanga Flour Mills Limited, a private Company limited by shares incorporated under the Companies Act, 1913 (hereinafter referred to as the “Company”) and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company.

Application valued at Tk. 1,000.00

To:

Mr. Justice Abu Taher Muhammad Afzal, the Chief Justice and his companion justices of the said Hon’ble Court.

The humble petition on behalf of the petitioner above named most respectfully

SHEWETH:

01. This revisional application is filed against Judgement and order dated 18.09.97 passed by Mr. Md. Abdul Hamid, 4th Additional District Judge, Dhaka, in Miscellaneous Appeal No.138 of 1997, dismissing the Appeal filed by the petitioner and Order (No. 11) dated 04.06.97 passed by Mr. Golum Ahmed Khalilur Rahman, 1st Assistant Judge, Dhaka in Title Suit No. 245 of 1996 allowing the application filed by the opposite-party No.1 on 13.10.96 for temporary injunction to restrain the petitioner from working as the Managing Director of the Company and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company. By the impugned judgement the lower Appellate Court has wrongly sustained the order passed by the trial Court interfering with the internal affairs of the Company.

02. That the petitioner is a shareholder and director of the Company. He holds 1800 shares in the Company. He is also the present Managing Director of the Company.

03. That the opposite-party No.1 is also a shareholder of the Company and the former Managing Director of the Company. The opposite-party No.2 is the Registrar of Joint Stock Companies & Firms. The opposite-party No.3 is also a shareholder and a director of the Company. The opposite-party Nos.4-6 are the officers of the banker of the Company, Bangladesh Krishi Bank (hereinafter referred to as the “Bank”). The opposite-party No.7 is the tenant under the Company.

04. That the Company was incorporated at Dhaka on 02.12.89 with the authorised capital of Tk.1,00,00,000.00 divided into 1,00,000 shares of Tk.100.00 each. The Company was incorporated with the principal object to establish Flour and Husking Mills in order to produce flour, barley etc. from wheat, maize etc. The opposite-party No.1 was the first Managing Director of the Company.

05. That in order to establish a Flour Mill the Company applied to the Bank for a project loan. The Bank sanctioned Tk.42,50,000.00 (Taka forty two lac fifty thousand) only on 10.12.89. But for mismanagement and dishonest activities of the opposite-party No.1 the Mill could not be established with the said loan amount. As a result, upon application of the Company, the Bank further sanctioned Tk. 6,00,000.00 (Taka six lac) only on 28.03.92. Therefore, the Company borrowed in total Tk. 48,50,000.00 (Taka forty eight lac fifty thousand) only from the Bank and a Flour Mill was established at Dingedaho, Chuadanga. The Bank also sanctioned Tk.9,50,000.00 (Taka nine lac fifty thousand) only as working capital and 50,000.00 (Taka fifty thousand) only as Cash Credit (hypothecation) Limit on 18.08.93. The opposite-party No.1 defalcated the amount of Tk.50,000.00 (Taka fifty thousand) disbursed by the Bank as Cash Credit (Hypo) Limit, though he did not take necessary steps for disbursement of the Working Capital sanctioned in favour of the Company.

06. That for the dishonest activities of the opposite-party No.1 the Company failed to repay the instalments of the loan according to the repayment schedule.

07. That the opposite-party No.1 entered into an agreement with the opposite-party No.7 on 01.04.94 to lease out the Mill to the opposite-party No.7 at a monthly rent of Tk.90,000.00 (Taka ninety thousand) only per month and subsequent to the execution of the agreement he informed the Board of Directors of the Company about the agreement, which was against the conditions of the loan sanction advice of the Bank. The agreement was executed without any decision of the Board of Directors of the Company.

08. That the opposite-party No.1 used his own house at Dhaka as the Head Office of the Company. Subsequently upon the pressure of the other shareholders and directors a liaison office at Chuadanga was established, but no papers/documents of the Company was kept in that office. The opposite-party No.1 avoided to show any papers/documents of the Company to the other directors and shareholders on various excuses. No Annual General Meeting of the Company was held after holding the last Annual General Meeting on 01.07.93 and no audited balance sheet is prepared or presented before the shareholders for approval subsequent to that Annual General Meeting.

09. That in the circumstances the opposite-party No.3 several times requested the opposite-party No.1 for holding the Annual General Meeting and for preparation of the audited balance sheet of the Company. But the opposite-party No.1 did not respond to such requests.

10. That the opposite party No.1 misappropriated the fund of the Company. He never deposited the monthly rents in the account of the Company which he received from the opposite-party No.7. The opposite-party No.1 received Tk.10,80,000.00 (Taka ten lac eighty thousand) only from the opposite-party No.7 as the rents for the period from April, 1994 to March, 1995 at the rate of Tk. 90,000.00 per month and Tk. 14,30,000.00 (Taka fourteen lac thirty thousand) only as the rents for the period from April, 1995 to March, 1996 at the rate of Tk. 1,10,000.00 per month. He also received Tk. 7,70,000.00 (Taka seven lac seventy thousand) only as Wheat milling charges for the period from May, 1993 to March, 1994 and Tk. 1,856.00 (Taka one thousand eight hundred fifty six) only from the Insurance Company. The opposite-party No.1 received in total Tk. 32,81,856.00 from various sources, out of which he deposited Tk. 3,11,856.00 (Taka three lac eleven thousand eight hundred fifty six) only in the loan account of the Company with the Bank. As such he defalcated Tk. 29,70,000.00 (Taka twenty nine lac seventy thousand) only from the fund of the Company. For this reason the opposite-party No.1 was prosecuted by the present Managing Director of the Company under Section 406 and 423 of the Penal Code before the 1st class magistrate of Amly Chuadanga, Circle-Ka, being number P-691/97.

After defalcating the fund of the Company the opposite-party No.1 entered into an agreement with the opposite-party No.7 and received money to transfer his all shares in the Company to the opposite-party No.7 without informing anything about such transfer to the Board of the Directors of the Company.

11. That in the circumstances the petitioner and the opposite-party No.3 requested the opposite-party No.1 vide letter dated 03.12.95 to call Board Meeting of the Company and accordingly a Board Meeting of the Company was held on 16.01.96. In that meeting the opposite-party No.1 pressed the petitioner and the opposite-party No.3 for the approval of transfer of his shares to the opposite-party No.7 and for releasing him from the office of Managing Director of the Company. But the petitioner and the opposite-party No.3 requested the opposite-party No.1 to discuss at first about the profit and loss account of the Company from 01.01.93 to 31.12.95 according to the agenda of the meeting. But the opposite-party No.1 failed to furnish any Books of Accounts of the Company. As a result the meeting was adjourned.

12. That the petitioner and the opposite-party No.3 requested the opposite-party No.1 vide letter dated 17.01.96 for holding the adjourned meeting within 7 (seven) days of receipt of the letter. They stated in that letter that in the event of failure in holding the meeting within the stipulated period, they will call a requisitioned meeting of the Board of Directors in order to protect the interest of the major shareholders of the Company.

It may be mentioned here that the Company has 5400 issued shares out of which the opposite-party No.1 holds 1800 shares, while the petitioner and the opposite-party No.3 hold in total 3600 shares in the Company.

13. That the opposite-party No.1 failed to call the adjourned meeting within the stipulated period. Therefore the petitioner and the opposite-party No.3 called a requisitioned meeting of the Board of Directors of the Company to be held on 20.04.96. The notice of the meeting was duly served on 25.01.96 upon the opposite-party No.1 by special messenger. But the opposite-party No.1 refused to receive the notice. The agenda of the meeting was as follows:

a) Appointment of new Managing Director of the Company after removing the present Managing Director Mr. A.

b) Discussion and decision regarding the activities of the present Managing Director since his appointment and discussion on the profit and loss account of the Company.

c) Discussion and decision regarding the present financial position of the Company and future management of the Company.

d) Discussion and decision regarding the unpaid instalments of the loan according to the repayment schedule of the banks.

e) Discussion and decision regarding the transfer of the Head Office of the Company from Dhaka to Chuadanga.

f) Miscellaneous.

The meeting was duly held on 20.04.96 at 10-00 a.m. at the liaison office of the Company at Shahid Abul Kashem Sarak, Chuadanga, but the opposite-party No.1 with a malafide intention willingly and knowingly absented himself in the meeting.

14. That in that meeting a resolution was adopted unanimously removing the opposite-party No.1 from the office of the Managing Director and appointing the petitioner as the Managing Director of the Company. A copy of the resolution of the meeting was sent to the opposite-party No.1 vide registered post as well as special messenger. The copy of the said resolution was also sent to the Bank for necessary steps. After removing the opposite-party No.1 and appointing the petitioner as Managing Director of the Company, Present position of Directors of the Company (P.D.) was duly filed with the opposite-party No.2 on 07.05.96 in accordance with the Companies Act, 1994.

15. That after a long period of six months from the removal of the opposite-party No.1 the opposite-party No.1 as plaintiff filed a Suit for Declaration on 09.10.96 in the First Court of Assistant Judge, Dhaka, being Title Suit No.245 of 1996, impleading the petitioner and the proforma opposite parties as defendants, praying for a declaration that the opposite-party No.1 is the legal Managing Director of the Company and the resolution dated 20.04.96 is illegal and void. In the above suit the opposite-party No.1 subsequently filed an application on 15.10.96 for injunction under Order XXXIX Rules 1 and 2 read with section 151 of the Code of Civil Procedure.

16. That on 17.05.97 the learned Assistant Judge heard both the sides and passed an order after about 20 days on 04.06.97 restraining the petitioner from working as the Managing Director of the Company and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company, while the suit itself was not maintainable. By the order the Assistant Judge interfered with the internal affairs of the Company. The learned trial Court wrongly held that from the written statement filed by the petitioner it was evident that the removal of the opposite-party No.1 was not become effective, but the learned Court did not state that from which paragraph of the written statement it was so evident. The learned Court also stated that the opposite-party No.2 did not give any final decision in connection with the removal.

It may be mentioned here that the opposite-party No.2 is not an authority to pass any resolution of any Company. The learned Court below without understanding the matter passed the impugned order dated 04.06.97 restraining the opposite-party No.2 from passing the resolution. The opposite-party No.1 was lawfully removed from the office of Managing Director of the Company and as soon as the resolution was adopted by the Board of Directors his office had fallen vacant and the petitioner was duly appointed by the Board as the Managing Director of the Company in the vacant post of Managing Director. Therefore the Court wrongly passed the order restraining the petitioner from working as Managing Director of the Company.

17. That being aggrieved by and dissatisfied with the order (No.11) dated 04.06.96 passed by the 1st Assistant Judge, Dhaka, the petitioner preferred appeal in the District Judge, Dhaka. The Appeal was numbered as Miscellaneous Appeal No.138 of 1997 and transferred to the 4th Additional District Judge, Dhaka for disposal. The lower Appellate Court heard the Appeal and passed Judgement on 18.09.97 dismissing the Appeal on the ground that since the opposite-party No.1 was admittedly the Managing Director of the Company, it seems that he has a prima facie case. The lower Appellate Court also stated in its Judgement that the learned trial Court correctly held that the balance of convenience and inconvenience was in favour of the opposite-party No.1, without showing any reason for its such opinion. The Appellate Court failed to hold that, since the suit itself was not maintainable therefore there was no lawful scope of granting injunction in a suit which is not maintainable and refusal of granting injunction would not act harshly on the plaintiff and he would not suffer irreparable loss and injury which could not be compensated in terms of money.

18. That it is submitted that the opposite party No.1 was removed from his post of Managing Director of the Company on 20.04.96. The decision was communicated to the opposite party No.1. After about six months of the resolution, the opposite party No.1 filed Title Suit No.245 of 1996 and prayed for temporary injunction in the said suit by filing an application on 15.10.96. The Company itself is the supreme authority for taking any decision regarding its internal management, hence such decision cannot be challenged in a civil Court. Since the resolution dated 20.04.96 was lawful, the opposite-party Nos. 4-6 approved the petitioner as the new Managing Director of the Company and they decided to take legal action against the opposite-party No.1 for misappropriation of the fund of the project loan sanctioned in favour of the Company in collusion with the opposite-party No.7.

19. That it is further submitted that the matter relates to the internal affairs of a Company which is incorporated under the Companies Act. It is an established practice that the Courts are reluctant to interfere in the affairs of the management of the Company by order of injunction, whether restrictive or mandatory. The learned trial Court erred in law in passing an order of injunction and the lower Appellate Court erred in law in affirming the order passed by trial Court.

20. That it is further submitted that the lower trial Court illegally held that since the opposite-party No.1 was the Managing Director of the Company, he has prima facie arguable case and since the petitioner did not deny the shareholding of the opposite-party No.1 in the Company, the balance of convenience and inconvenience is in favour of the opposite-party No.1 and the lower Appellate Court illegally dismissed the Appeal preferred against such illegality of the lower trial Court affirming the order of the lower trial Court.

21. That being aggrieved by and dissatisfied with the aforesaid impugned Judgement passed by the lower Appellate Court dismissing the Appeal and affirming the order (No.11) dated 04.06.97 passed by the trial Court granting an order of injunction, the petitioner beg to move this Hon’ble Court in revision, amongst other on the following :

GROUNDS

I) For that the learned Appellate Court below in the facts and circumstances of the case has committed an error of law in dismissing the Appeal and affirming the order passed by the trial Court allowing the application filed by the opposite-party No.1 for temporary injunction to restrain the petitioner from working as Managing Director of the Company and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company.

II) For that the impugned order of injunction to restrain the petitioner from working as Managing Director of the Company and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company, is against the principles of granting of injunction. Hence the impugned Judgement passed by the Appellate Court is liable to be set aside by this Hon’ble Court.

III) For that the learned trial Court below has committed an error of law in passing an order of injunction in the internal management of the Company and the Appellate Court below has committed an error of law in affirming the order passed by the trial Court resulting in an error in the decision occasioning failure of justice.

IV) For that the learned trial Court below has committed an error of law in granting the order of injunction while it had no jurisdiction to try the original suit and the lower Appellate Court has committed an error of law in affirming such order of the trial Court without considering that the lower trial Court has acted illegally, resulting in an error in the decision occasioning failure of justice.

V) For that the learned trial Court below has committed an error of law in holding wrongly that from the written statement filed by the petitioner it was evident that the removal of the opposite-party No.1 had not become effective and the lower Appellate Court has committed an error of law in affirming such order of the trial Court without considering that the lower trial Court has acted illegally, resulting in an error in the decision occasioning failure of justice.

VI) For that the learned trial Court below has committed an error of law in holding wrongly that the opposite-party No.2 is the authority to give final decision in connection with the removal of the opposite-party No.1 and the lower Appellate Court has committed an error of law in affirming such order of the trial Court without considering that the lower trial Court has acted illegally, resulting in an error in the decision occasioning failure of justice.

VII) For that the learned trial Court below has committed an error of law in holding that since the opposite-party No.1 was the Managing Director of the Company, he has prima facie arguable case and the lower Appellate Court has committed an error of law in affirming such assumption of the trial Court, resulting in an error in the decision occasioning failure of justice.

VIII) For that the learned trial Court below has committed an error of law in holding that since the petitioner did not deny the shareholding of the opposite-party No.1 in the Company, the balance of convenience and inconvenience is in favour of the opposite-party No.1 and the lower Appellate Court has committed an error of law in affirming such assumption of the trial Court, resulting in an error in the decision occasioning failure of justice.

IX) For that the learned trial Court below has committed an error of law in holding that the opposite-party No.1 would suffer irreparable loss and injury unless an order of injunction would not be granted and the lower Appellate Court has committed an error of law in affirming such assumption of the trial Court, resulting in an error in the decision occasioning failure of justice.

X) For that the impugned Judgement and order are otherwise illegal and liable to be set aside.

Wherefore, it is humbly prayed that the Hon’ble Court may be pleased:

a) To issue Rule upon the Opposite-Parties to show cause as to why Judgement and order dated 18.09.97 passed by Mr. Md. Abdul Hamid, 4th Additional District Judge, Dhaka, in Miscellaneous Appeal No.138 of 1997, dismissing the Appeal and Order (No. 11) dated 04.06.97 passed by Mr. Golum Ahmed Khalilur Rahman, 1st Assistant Judge, Dhaka in Title Suit No. 245 of 1996 allowing the application filed by the opposite-party No.1 on 13.10.96 for temporary injunction to restrain the petitioner from working as the Managing Director of the Company and restraining the opposite-party No.2 from passing the resolution dated 20.04.96 adopted by the Board of Directors of the Company, will not be set aside by this Hon’ble Court and after hearing the parties and perusal of the cause shown, if any, set aside the Judgement of the lower Appellate Court and the Order of the trial Court below,

b) Pending hearing of the Rule, stay further operation of the impugned Judgement and order dated 18.09.97 passed by Mr. Md. Abdul Hamid, 4th Additional District Judge, Dhaka, in Miscellaneous Appeal No.138 of 1997 and Order (No. 11) dated 04.06.97 passed by Mr. Golum Ahmed Khalilur Rahman, 1st Assistant Judge, Dhaka in Title Suit No. 245 of 1996, and/or

c) pass such other or further order or orders as your Lordships may deem fit and proper in the facts and circumstances of the case.

And for this act of kindness, the Petitioners, as duty bound shall ever pray.

AFFIDAVIT

I, X son of Late Y of 11/1-A Flat No.15 (5th floor) Kabi Zashim Uddin Road, Kamlapur, P.S. Motijheel, Dhaka, aged about _______ years, by faith _________, by nationality Bangladeshi, by profession businessman, do hereby solemnly affirm and declare as follows:

1. That I am the petitioner in this Petition in Revision and acquainted with the facts and circumstances and competent to swear this Affidavit.

2. That the statements of facts made in this application are true to the best of my knowledge and belief and rests are submissions before this Hon’ble Court.

Prepared in my office : DEPONENT
_______________________

Advocate

The deponent is known to

me and identified by me.

Solemnly affirmed before me by

the aforesaid deponent on this the

______th day of _____________.

ADVOCATE
Commissioner of Affidavits

Supreme Court of Bangladesh,

High Court Division