M/S Sun Biotechnology Ltd. V. The Union Of India through its Director, Bureau of Indian Standards and Bureau Of Indian Standards through its Director General and Director General, Bureau Of Indian Standards and Director and Head, Bureau of Indian Standards, Patna Branch Office and Scientist, 'F' & Head, Bureau Of Indian Standards, Patna Branch Office and M/S Sun Bic Manufacturing Private Limited and Ramawatar Ashopa and M/s. Sun Biotechnology Ltd. and Katihar Mazdoor Sangh

CWJC/11486/2011

AI Insights

The case involves M/S Sun Biotechnology Ltd., which is embroiled in a dispute over management control and the validity of lease agreements. The petitioner, represented by director Sourav Banerjee, challenged an order from the Bureau of Indian Standards (BIS) that seemed to recognize a lease agreement signed by a rival faction led by director Kali Chand Sharma. The court noted the complexity of the management dispute and directed the Company Law Board to resolve these issues, including which faction legally controls the company and whether the lease agreements were validly executed.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 803461 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 05-02-2013
• Assessment Year: misc
• Laws Referred To: Bureau of Indian Standards (Certification) Regulations, 1988, Companies Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RASHID IZHAR; JITENDRA SINGH; SURAJ SAMDARSHI; ASHISH GIRI; MRIGANK MAULI; SATYABIR BHARTI
• Assessee Lawyers: Y V GIRI; RAJU GIRI
• Keywords: Bureau of Indian Standards; Company Law Board; Lease agreement; Management Control; Quashing order
• Section: 4; 398(1)(b)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.11486 of 2011 ====================================================== M/S Sun Biotechnology Ltd. A Company Havinf Its Office At Milanpur, Rehabari, Gauhati, Assam Thru Director Sourav Banerjee S/O Santosh Kumar Banerjee Having Its Administrative Office At 21 A, Shakespware Sarani, P.S.- Shakeshpeare Sarani, Kolkata- 700017 .... .... Petitioner/s Versus 1. The Union Of India through its Director, Bureau of Indian Standards having its Office at 'Manak Bhawan', 9, Bahadur Sahh Zafar Marg, New Delhi- 110002 2. Bureau Of Indian Standards through its Director General having Its Office At 'Manak Bhawan', 9, Bahadur Sahh Zafar Marg, New Delhi- 110002 3. Director General, Bureau Of Indian Standards having its Office at 'Manak Bhawan', 9, Bahadur Sahh Zafar Marg, New Delhi- 110002 4. Director and Head, Bureai of Indain Standards, Patna Branch Office, Patliputra Industrial Estate, Patna- 800013 5. Scientist, 'F' & Head, Bureau Of Indian Standards, Patna Branch Office, Patliputra Industrial Estate, Patna- 800013 6. M/S Sun Bic Manufacturing Private Limited Having Its Office At 89, Netaji Subhash Road, 1st Floor, Kolkata- 700001 and Its Industrial Unit at Daharia Mills, Katihar, Bihar 7 Ramawatar Ashopa, son of late Baluram Asopa, Resident of 70, Golf Linke, 1st Floor, New Delhi – 110003 8. M/s. Sun Biotechnology Ltd., Administrative Office at 21A Shakespeare Saram, Kolkata-17 through its Director Kali Chand Sharma, son of Bhagat Sharma 9. Katihar Mazdoor Sangh, Rajendra Ashram, Aatgarha Chowk, Katihar through its president Vikash Singh, S/o Sri Sheonarain Singh .... .... Respondent/s ====================================================== Appearance : For the Petitioner/s : M/s. Y.V.Giri, Sr. Advocate and Raju Giri For the Resp. 1 to 5 : M/s. Rashid Izhar and Jagjit Roshan For the Resp. 6 : M/s. Jitendra Singh, Sr. Advocate and Suraj Samdarshi For the Resp. 7 : Mr. Ashish Giri For the Resp. 8 : Mr. Mrigank Mauli For the Resp. 9 : Mr. Satyabir Bharti ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER Patna High Court CWJC No.11486 of 2011 (23) dt.05-02-2013 2 / 6 2 23 05-02-2013 Heard learned counsel for the petitioner and learned counsels for respondent nos. 1 to 5, 6,7, 8 and 9. The writ application was filed for quashing the order dated 29.4.2011 passed by the Scientist ‘F’ & Head, Bureau of Indian Standards, Patna and for consequential orders. This is the second round of litigation before this Court. On the earlier occasion the respondent no. 6 had approached this Court by filing CWJC No. 931/2011 which was disposed of by order dated 1.3.2011 with a direction to the Director & Head of Bureau of Indian Standards, Patna Branch Office to take up the matter afresh and decide as to whether Ramawatar Ashopa was the Director of M/s. Sun Bio Technology Limited on the relevant date and had signed the lease agreement and also to consider and decide the matter of renewal of licence of the petitioner of that case (respondent no. 8 in this case). From the facts stated in the pleadings of the parties there appears to be a dispute between two factions in the petitioner-company one represented through its Director, Saurav Banerjee who has filed the writ application on behalf of the Company and the other through another Director, Kali Chand Sharma, who has been allowed to represent the Company which Patna High Court CWJC No.11486 of 2011 (23) dt.05-02-2013 3 / 6 3 has also been added as respondent no. 8 to the present writ application. The same position was also noted in the earlier order dated 1.3.2011. While passing the impugned order dated 29.4.2011, the Scientist, ‘F’ & Head, Bureau of Indian Standards, Patna could not arrive at any specific conclusion as to whether the lease agreement had actually been executed by Mr. Ashopa since Mr. Ashopa appearing before him denied the said execution but relying only upon the fact that lease rent of Rs. 25 lacs was duly paid to the lessor and the same was also accepted and encashed by the lessor and necessary income tax was also deducted from the said payment, came to the conclusion that by accepting the payment of lease rent, it seems that the Lease Agreement has been acted upon. However, it was held that it is a complicated question of law and the issue can only be decided by a competent Court of Law. It is not in dispute that under Regulation 4 of the Bureau of Indian Standards (Certification) Regulations, 1988, the licence can only be granted to an applicant having regard to requisite skill, equipment, systems, resources, previous performance and antecedents relevant to the issuance of the licence in respect of the article or class of articles manufactured Patna High Court CWJC No.11486 of 2011 (23) dt.05-02-2013 4 / 6 4 by the applicant or in respect of the process employed in any manufacture work. Thus, any claim of respondent no. 6 for grant of a licence would depend solely on the question as to whether it has valid lease agreement, i.e., lease agreement with the faction of the company which is legally and validly in control of the management of the company. From the impugned order dated 29.4.2011 as contained in Annexure-16, it does not appear that the said issue has been resolved. In my view, the said issue can only be properly resolved after taking appropriate evidence by authorities under the Companies Act, in this case, the Company Law Board. It is apparent that issues of management and control of the company in such circumstances could have been brought to the notice of the Company Law Board and its decision sought under Section 398 (1)(b) of the Companies Act and had that been done, the matter would have been resolved by now. However, considering the fact that complicated issues of fact as to who is in actual control and management of the company has arisen and repeatedly both the factions are approaching this Court as being the true representative of the company, it would be in the interest of the company as also the parties who claim like respondent no. 6 to have taken lease of company’s plant and machinery and Patna High Court CWJC No.11486 of 2011 (23) dt.05-02-2013 5 / 6 5 factory. Let the said issue be resolved by the Company Law Board efficaciously. The writ application is, accordingly, disposed of with a direction to the Company Law Board to decide the issue as to which of the factions is in control and management of the Board of Directors of the Company including as to which of the Directors are entitled to remain on the Board of the Company taking into account the fact that several resolutions are in existence stating that some of the Directors have been removed by the Board of Directors. Let all these issues be considered and decided by the Company Law Board after giving opportunity to both the parties to be heard in the matter within a period of three months from the date of appearance of the parties before it. Both the petitioner and respondent no. 8 are directed to be personally present before the Company Law Board, Kolkata on 20th February, 2013 upon which the Company Law Board shall proceed to consider and dispose of the matter within the time frame as stated above. If one or the other parties fails to appear before the Company Law Board, the Company Law Board shall still proceed in the matter and decide the issue within the aforesaid time-frame. Patna High Court CWJC No.11486 of 2011 (23) dt.05-02-2013 6 / 6 6 It is made clear that the order dated 29.4.2011 shall not be acted upon until it is resolved as to whether the lease agreement dated 7.2.2009 as also the lease agreement dated 29.8.2011 were entered into with a Director of the Company who was legally authorized by the company on that date to sign the lease agreement, which issue shall also be decided by the Company Law Board while deciding the main issue. S.Pandey/- (Ramesh Kumar Datta, J) "